Document:

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                                                                   Exhibit 10(Y)

                     TRANSITIONAL POWER PURCHASE AGREEMENT

                                BY AND BETWEEN

                         SIERRA PACIFIC POWER COMPANY

                                      AND

                           WPS NORTHERN NEVADA, LLC

DATED:  OCTOBER 25, 2000

ASSET BUNDLE:  TRACY/PINON
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                               TABLE OF CONTENTS

Section                                                                     Page
-------                                                                     ----

 1.   DEFINITIONS..............................................................1
 2.   TERM.....................................................................8
 3.   SECURITY.................................................................9
 4.   SUPPLY SERVICE..........................................................10
 5.   NOTIFICATION............................................................14
 6.   PRICING OF ENERGY AND ANCILLARY SERVICES................................15
 7.   INVOICING AND PAYMENTS..................................................16
 8.   REGULATORY APPROVALS....................................................19
 9.   COMPLIANCE..............................................................20
10.   INDEMNIFICATION.........................................................20
11.   LIMITATION OF LIABILITY.................................................22
12.   FORCE MAJEURE...........................................................22
13.   DISPUTES................................................................24
14.   NATURE OF OBLIGATIONS...................................................27
15.   SUCCESSORS AND ASSIGNS..................................................27
16.   REPRESENTATIONS.........................................................28
17.   DEFAULT AND REMEDIES....................................................29
18.   FACILITY ADDITIONS AND MODIFICATIONS....................................30
19.   COORDINATION............................................................30
20.   EMERGENCY AND NONEMERGENCY CONDITION RESPONSE...........................30
21.   OUTAGE SCHEDULING.......................................................31
22.   REPORTS.................................................................32
23.   COMMUNICATIONS..........................................................32
24.   NOTICES.................................................................33
25.   MERGER..................................................................33
26.   HEADINGS................................................................34
27.   COUNTERPARTS AND INTERPRETATION.........................................34
28.   SEVERABILITY............................................................34
29.   WAIVERS.................................................................34
30.   AMENDMENTS..............................................................35
31.   TIME IS OF THE ESSENCE..................................................35
32.   APPROVALS...............................................................35
33.   PLR SERVICE.............................................................36
34.   CONFIDENTIALITY.........................................................36
35.   CHOICE OF LAW...........................................................37

<TABLE>
<CAPTION>
Exhibits                                                                         Page
--------                                                                         ----
<S>          <C>                                                                  <C>
EXHIBIT A    ASSET BUNDLE CAPACITIES AND OPERATING PARAMETERS.....................A-1
EXHIBIT B    PRICE FLOOR OF ENERGY, PRICE CEILING OF ENERGY, AND PRICE OF
             ANCILLARY SERVICES...................................................B-1
EXHIBIT C    SUPPLIER'S MONTHLY INVOICE...........................................C-1
EXHIBIT D    BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS..........................D-1
EXHIBIT E    YEAR END TRUE-UP INVOICE.............................................E-1
EXHIBIT F    NOTICES, BILLING AND PAYMENT INSTRUCTIONS............................F-1
EXHIBIT G    FORM OF AVAILABILITY NOTICE..........................................G-1
EXHIBIT H    FORM OF GUARANTEE....................................................H-1
EXHIBIT I    COMPANY OBSERVED HOLIDAYS............................................I-1
EXHIBIT J    ADJUSTMENTS TO TPPA AMOUNT...........................................J-1
EXHIBIT K    ADJUSTMENTS TO MINIMUM ANNUAL TAKE...................................K-1
EXHIBIT L    ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE.............................L-1
EXHIBIT M    ASSET BUNDLE CONTRACTUAL AND OPERATIONAL CONSTRAINTS.................M-1
</TABLE>
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                     TRANSITIONAL POWER PURCHASE AGREEMENT

This Agreement is made and entered into as of October 25, 2000 by and between
Sierra Pacific Power Company, a Nevada corporation ("Buyer"), and WPS Northern
Nevada, LLC, a Nevada limited liability company (the "Supplier"). Buyer and
Supplier are referred to individually as a "Party" and collectively as the
"Parties."

WITNESSETH:

WHEREAS, Buyer is selling its Tracy/Pinon generating station and other assets
associated therewith to Supplier (the "Asset Sale");

WHEREAS, notwithstanding the Asset Sale, Buyer expects that it has been
designated as the Provider of Last Resort ("PLR") for its Nevada retail electric
customers who are unable to obtain electric service from an alternative seller
or who fail to select an alternative seller. The load required to serve such
customers, plus the customers under those wholesale sales agreements existing at
the Effective Date, is referred to herein as Buyer's Transitional Resource
Requirement; and

WHEREAS, as a result of the Asset Sale, Buyer will no longer have its interest
in the Tracy/Pinon generating station as a source of supply for its Transitional
Resource Requirement; and

WHEREAS, Supplier has or is willing to secure the necessary resources to provide
a portion of Buyer's Transitional Resource Requirement; and

WHEREAS, Buyer desires to purchase from Supplier and Supplier desires to sell
Energy and Ancillary Services under contract to Buyer; and

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

1.   DEFINITIONS

     1.1  Format.

          1.1.1  References to Articles and Sections herein are cross-references
                 to Articles and Sections, respectively, in this Agreement,
                 unless otherwise stated.

          1.1.2  Any parts of this Agreement which are incorporated by reference
                 shall have the same meaning as if set forth in full text
                 herein.

                                       2
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     1.2  Definitions. As used in this Agreement, the following terms shall have
          -----------
          the meanings set forth below:

          1.2.1  "Agreement" means this Agreement together with the Exhibits
                  ---------
                 attached hereto, as such may be amended from time to time.

          1.2.2  "Adjusted Replacement Cost of Energy" means the Replacement
                  -----------------------------------
                 Cost of Energy that will be due from Supplier after true-up in
                 accordance with the provisions of Section 7.5. Example
                 determinations of the Adjusted Replacement Cost of Energy are
                 shown on Exhibit E.

          1.2.3  "Ancillary Services" means those capacity-related services as
                  ------------------
                 listed in Exhibit B as well as the Energy component of such
                 services. These services are defined in Buyer's OATT.

          1.2.4  "Asset Bundle" means the Tracy/Pinon generating station(s) and
                  ------------
                 other assets associated therewith pursuant to the terms of the
                 Asset Sale Agreement.

          1.2.5  "Asset Bundle Capacity" means, with respect to each unit listed
                  ---------------------
                 in Exhibit A, the net generating capacity (in megawatts ("MW"))
                 of such unit, as modified from time to time in accordance with
                 Section 5.2, Section 20, and Section 21, and not to exceed at
                 any time the net capacity for each unit listed in Exhibit A.
                 Asset Bundle Capacity shall also mean, as the context requires,
                 the Energy (in megawatt-hours ("MWh")) and the Ancillary
                 Services which the units would be capable of producing if they
                 operated at the capacity level described in the first sentence
                 of this Section 1.2.6.

          1.2.6  "Asset Sale" has the meaning set forth in the Recitals.
                  ----------

          1.2.7  "Asset Sale Agreement" means the Asset Sale Agreement between
                  --------------------
                 Buyer and Supplier, dated as of October 25, 2000, to purchase
                 Buyer's Asset Bundle.

          1.2.8  "Asset Sale Closing" means the transfer of Buyer's ownership of
                  ------------------
                 the Asset Bundle through the consummation of the Asset Sale
                 pursuant to the terms of the Asset Sale Agreement.

          1.2.9  "Average Cost of Delivered Energy" means the total cost of
                  --------------------------------
                 Delivered Energy for the Contract Year after the application of
                 the annual true-up mechanism from Section 7.5 divided by the
                 total Delivered Energy for the Contract Year. Example
                 determinations of Average Cost of Delivered Energy are shown on
                 Exhibit E.

          1.2.10 "Availability Notice" means a notice delivered from time to
                  -------------------
                 time by Supplier to Buyer pursuant to Section 5.2 notifying
                 Buyer of changes in the availability of the Asset Bundle.

                                       3
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          1.2.11 "Business Day" means any day other than Saturday, Sunday, and
                  ------------
                 any day that is an observed holiday by Buyer as shown on
                 Exhibit I.

          1.2.12 "Buyer's OATT" means Buyer's then-effective Open Access
                  ------------
                 Transmission Tariff, as it may be amended, which has been
                 accepted for filing by the FERC.

          1.2.13 "CALPX" means the California Power Exchange and any successor
                  -----
                 entity thereto.

          1.2.14 "Confidential Information" has the meaning set forth in Section
                  ------------------------
                 34.

          1.2.15 "Contract Year" means, with respect to the first Contract Year,
                  -------------
                 the period beginning on the Effective Date and, with respect to
                 each subsequent Contract Year, the period immediately following
                 the end of the preceding Contract Year, and in each case ending
                 on the earlier of the date which is twelve (12) months
                 thereafter or the termination date of this Agreement, as
                 provided in Section 2.1.

          1.2.16 "Control Area" has the meaning set forth in Buyer's OATT.
                  ------------

          1.2.17 "Control Area Operator" means an entity or organization, and
                  ---------------------
                 its representatives, which is responsible for operating and
                 maintaining the reliability of the electric power system(s)
                 within the Buyer's Control Area. The Control Area Operator is
                 also referred to as the transmission operator.

          1.2.18 "Credit Amount" shall mean an amount initially equal to $200
                  -------------
                 million, as decreased on a periodic basis in accordance with
                 Exhibit J.

          1.2.19 "Delivered Amount" means, with respect to any Dispatch Hour,
                  ----------------
                 the Energy delivered by Supplier to Buyer at the designated
                 Point(s) of Delivery during such Dispatch Hour, whether or not
                 such Energy was generated by the Asset Bundle, plus any
                 additional amounts pursuant to Section 4.1.2, Section 4.1.3 and
                 the Ancillary Services provided by Supplier for Buyer during
                 any Dispatch Hour pursuant to the terms of this Agreement.

          1.2.20 "Derating" means a reduction to the Asset Bundle Capacity.
                  --------

          1.2.21 "Dispatch Hour" means the prescribed hour(s) when Energy is to
                  -------------
                 be delivered by Supplier to Buyer at the designated Point(s) of
                 Delivery and the prescribed hour(s) when Ancillary Services are
                 to be provided to the ISA by Supplier on behalf of Buyer.

                                       4
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          1.2.22 "EDU" means electric distribution utility, the organization
                  ---
                 with the responsibility for the distribution of energy over
                 Buyer's distribution system to retail end-users.

          1.2.23 "Effective Date" means the date that this Agreement becomes
                  --------------
                 effective, which shall be the date on which the Closing Date,
                 as defined in the Asset Sale Agreement, actually occurs;
                 provided, however, that the Effective Date shall not occur
                 until the FERC has accepted this Agreement or, if modifications
                 to this Agreement are required pursuant to Section 2.2.2, the
                 FERC has accepted the modified Agreement for filing.

          1.2.24 "Emergency Condition" shall mean a public declaration by the
                  -------------------
                 ISA or Control Area Operator that the Control Area is in danger
                 of imminent voltage collapse or uncontrollable cascading
                 outages.

          1.2.25 "Energy" means electricity (measured in MWh) and associated
                  ------
                 power-producing capacity to be provided by Supplier to Buyer
                 pursuant to this Agreement. Also known as "firm energy and
                 associated firm capacity".

          1.2.26 "Event of Default" has the meaning set forth in Section 17
                  ----------------
                 hereof.

          1.2.27 "FERC" means the Federal Energy Regulatory Commission and any
                  ----
                 successor agency thereto.

          1.2.28 "Force Majeure" has the meaning set forth in Section 12 hereof.
                  -------------

          1.2.29 "GAAP" means Generally Accepted Accounting Principles for the
                  ----
                 United States.

          1.2.30 "Good Utility Practice" means the applicable practices,
                  ---------------------
                 methods, and acts:

                 (i)     required by applicable Laws, applicable permits,
                         applicable reliability criteria, whether or not
                         the Party whose conduct at issue is a member
                         thereof, and

                 (ii)    otherwise engaged in or approved by a
                         significant portion of the United States
                         electric utility industry during the relevant
                         time period, which, in the exercise of
                         reasonable judgement in light of the facts known
                         at the time the decision was made, could have
                         been expected to accomplish the desired result
                         at a reasonable cost consistent with applicable
                         Laws, applicable permits, applicable reliability
                         criteria, good business practices, safety,
                         environmental protection, economy and
                         expediency. Good Utility Practice is not
                         intended to be limited to the optimum practice,
                         method or act to the exclusion of all others,
                         but rather to practices, methods or acts
                         generally accepted by the United States electric
                         utility industry.

                                       5
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          1.2.31 "Governmental Authority" means any foreign, federal, state,
                  ----------------------
                 local, tribal or other governmental, regulatory or
                 administrative agency, court, commission, department, board, or
                 other governmental subdivision, legislature, rulemaking board,
                 tribunal, arbitrating body, or other governmental authority.

          1.2.32 "Gross Replacement Costs of Energy" means Buyer's Replacement
                  ---------------------------------
                 Cost of Energy prior to adjustment for the amount that Buyer
                 would have paid for the Energy if Supplier had delivered the
                 Energy to Buyer. Example determinations of Gross Replacement
                 Costs of Energy are shown on Exhibit D.

          1.2.33 "Guarantee" has the meaning set forth in Section 3.1.2 hereof.
                  ---------

          1.2.34 "Guarantor" has the meaning set forth in Section 3.1.2 hereof.
                  ---------

          1.2.35 "Invoiced Replacement Costs" means the Replacement Costs which
                  --------------------------
                 have been billed to Supplier or subtracted from payments to
                 Supplier in accordance with the provisions of Section 4.2 and
                 Section 7.4.

          1.2.36 "ISA" means the Mountain West Independent System Administrator,
                  ---
                 or the regional transmission organization authorized with the
                 responsibility for the scheduling and administration of Energy
                 and Ancillary Services over, through and within the
                 Transmission System in coordination with other interconnected
                 entities to provide transmission services.

          1.2.37 "ISA's OATT" means the ISA's then-effective Open Access
                  ----------
                 Transmission Tariff, as it may be amended, which has been
                 accepted for filing by the FERC.

          1.2.38 "Law" means any law, treaty, code, rule, regulation, order,
                  ---
                 determination, permit, certificate, authorization, or approval
                 of an arbitrator, court or other Governmental Authority which
                 is binding on a Party or any of its property.

          1.2.39 "Limit on Excused Energy" means the amount of energy that can
                  -----------------------
                 be excused under the provisions of Section 12.4 as shown on
                 Exhibit A.

          1.2.40 "Market Price of Energy" has the meaning set forth in Section
                  ----------------------
                 6.2.1.

          1.2.41 "Minimum Annual Energy Take" has the meaning set forth in
                  --------------------------
                 Section 4.1.2.

          1.2.42 "Minimum Hourly Energy Take" has the meaning set forth in
                  --------------------------
                 Section 4.1.3.

                                       6
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          1.2.43 "Minimum Investment Grade Rating" of a Person means that such
                  -------------------------------
                 Person has a minimum credit rating on its senior unsecured debt
                 securities of at least two of the following ratings: (i) BBB as
                 determined by Standard & Poor's Corporation, (ii) Baa2 as
                 determined by Moody's Investors Service, Inc., or (iii) a
                 comparable rating by another nationally recognized rating
                 service reasonably acceptable to Buyer.

          1.2.44 "Minimum Tangible Net Worth" means the total book value of
                  --------------------------
                 shareholder's equity less the balance of goodwill, as reported
                 on the latest quarterly balance sheet prepared in accordance
                 with Generally Accepted Accounting Principles (GAAP).

          1.2.45 "Negotiated Service" has the meaning set forth in the wholesale
                  ------------------
                 generation tariff filed in FERC Docket No. ER00-2018.

          1.2.46 "NERC" means the North American Electric Reliability Council
                  ----
                 and any successor entity thereto.

          1.2.47 "Nonemergency Condition" shall mean the determination,
                  ----------------------
                 direction or order by the ISA, or Control Area Operator to
                 Supplier and/or Buyer to change the Supply Amount which is not
                 a result of or due to an Emergency Condition. A Nonemergency
                 Condition includes an insufficiency of Ancillary Services to
                 securely operate the Control Area.

          1.2.48 "Operating Representatives" means the persons designated by
                  -------------------------
                 each Party to transmit and receive routine operating and
                 emergency communications required under this Agreement.

          1.2.49 "Party" has the meaning set forth in the preamble of this
                  -----
                 Agreement.

          1.2.50 "Permitted Deratings" means those reductions to the Asset
                  -------------------
                 Bundle Capacity of which Supplier may notify Buyer from time to
                 time in an Availability Notice pursuant to Section 5.2.

          1.2.51 "Person" means any natural person, partnership, limited
                  ------
                 liability company, joint venture, corporation, trust,
                 unincorporated organization, or governmental entity or any
                 department or agency thereof.

          1.2.52 "Point of Delivery" means the point (s) which has (have) been
                  -----------------
                 specified as the Interconnection Point(s) in the
                 Interconnection Agreement between Buyer and Supplier, dated
                 October 25, 2000, as it may be amended from time to time, as
                 well as any alternative locations agreed upon pursuant to
                 Section 4.1.6.

          1.2.53 "Price Ceiling of Energy" means the ceiling price of Energy as
                  -----------------------
                 stated in Exhibit B.

                                       7
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          1.2.54 "Price Floor of Energy" means the floor price of Energy as
                  ---------------------
                 stated in Exhibit B.

          1.2.55 "Provider of Last Resort (PLR)" has the meaning set forth in
                  -----------------------------
                 the Recitals.

          1.2.56 "PUCN" means the Public Utilities Commission of Nevada and any
                  ----
                 successor entity thereto.

          1.2.57 "Recourse Service" has the meaning set forth in the wholesale
                  ----------------
                 generation tariff filed in FERC Docket No. ER00-2018.

          1.2.58 "Replacement Costs" means with respect to a period of time, the
                  -----------------
                 difference between (a) the actual costs, including without
                 limitation related penalties and transmission costs, incurred
                 by Buyer to replace any shortfall between (1) the Supply Amount
                 and (2) the Delivered Amounts of Energy (or in the case of
                 Ancillary Services the Supplier's schedule of Ancillary
                 Services) during such period and (b) the payments the Supplier
                 would have been entitled to in respect of such shortfall in
                 delivery; provided that Replacement Costs shall also be subject
                 to the annual true-up mechanism set forth in Section 7.5.

          1.2.59 "Supply Amount" means, with respect to each Dispatch Hour, the
                  -------------
                 amount of Energy and Ancillary Services, not to exceed the
                 Asset Bundle Capacity for such Dispatch Hour, requested by
                 Buyer to be delivered by Supplier during any Dispatch Hour. The
                 Supply Amount for any Dispatch Hour shall be determined
                 pursuant to Section 5.1.

          1.2.60 "Total Amount of Energy Replaced" means the summation of
                  -------------------------------
                 Replacement Energy as shown on Exhibit E.

          1.2.61 "TPPA Amount" means the amount paid by Buyer to Supplier in
                  -----------
                 consideration of this Agreement as provided in Sections 3.1 and
                 4.2 of the Asset Sale Agreement.

          1.2.62 "Transitional Resource Requirement" or "TRR" means the Energy
                  ---------------------------------
                 and loss compensation necessary for Buyer to meet its
                 obligations as a Provider of Last Resort (PLR) for Nevada and
                 under those wholesale sales agreements existing at the
                 Effective Date.

          1.2.63 "Transmission System" means the facilities that are used to
                  -------------------
                 provide transmission service within Buyer's Control Area in
                 accordance with Buyer's OATT or the ISA's OATT.

          1.2.64 "WSCC" means the Western Systems Coordinating Council and any
                  ----
                 successor entity thereto.

                                       8
<PAGE>

2.   TERM

     2.1  Term.
          ----

          2.1.1  Subject to the provisions of Section 2.1.2, unless
                 terminated earlier pursuant to the terms of this
                 Agreement, the term of this Agreement shall commence on
                 the Effective Date and continue until the earlier of the
                 effective date of an order by a Governmental Authority
                 terminating Buyer's PLR responsibility or at 11:59 p.m.
                 (Pacific Time) on December 31, 2002. Supplier shall
                 provide service under this Agreement commencing on the
                 first hour on the day after the Effective Date.

          2.1.2  Provided that this Agreement has not otherwise
                 terminated as a result of an order by a Governmental
                 Authority terminating Buyer's PLR responsibility, Buyer
                 in its sole discretion may provide written notification
                 to Supplier, at any point during October 2002, that it
                 is exercising its unilateral right to take service under
                 the terms and conditions of this Agreement for the
                 period from January 1, 2003 until 11:59 p.m. (Pacific
                 Time) February 28, 2003.

2.2  Termination.
     -----------

          2.2.1  Except pursuant to Sections 2.2.2 or 17.4, this Agreement may
                 not be terminated without the explicit prior written approval
                 of Buyer.

          2.2.2  If, prior to the Asset Sale Closing, the FERC or any other
                 Governmental Authority places conditions on or requires
                 revisions of this Agreement which have a material adverse
                 effect on Supplier or Buyer, the Parties agree to negotiate in
                 good faith those amendments to the Agreement reasonably
                 necessary to preserve the bargain between the Parties. If the
                 Parties fail to negotiate mutually acceptable amendments to
                 this Agreement within sixty (60) days of such action by the
                 FERC or other Governmental Authority, either Party may
                 terminate the Agreement after first notifying the other Party
                 in writing at least ten (10) Business Days prior to the
                 termination date; provided that neither Party may exercise a
                 right of termination pursuant to this Section 2.2.2 after the
                 Asset Sale Closing.

          2.2.3  This Agreement may be terminated with the mutual agreement of
                 the Parties.

          2.2.4  Any termination of this Agreement pursuant to this Section 2
                 shall not take effect until FERC either authorizes the
                 termination or accepts a written notice of termination.

                                       9
<PAGE>

2.3  Effect of Termination.
     ---------------------

          2.3.1  Adjustment of TPPA Amount. If the Effective Date of this
                 -------------------------
                 Agreement is before June 1, 2001, the TPPA Amount shall be
                 adjusted to equal (1) the TPPA Amount multiplied by (2) 100%
                 plus the sum of the monthly adjustments from Exhibit J for each
                 month or portion thereof between the Effective Date and June 1,
                 2001. An example calculation is shown on Exhibit J.

                 If the Effective Date of this Agreement is after June 1, 2001,
                 the TPPA Amount shall be adjusted to equal (1) the TPPA Amount
                 multiplied by (2) 100% minus the sum of the monthly adjustments
                 from Exhibit J for each month or portion thereof between June
                 1, 2001 and the Effective Date. An example calculation is shown
                 on Exhibit J.

                 If this Agreement is terminated on or before December 31, 2002
                 (or March 1, 2003, if Buyer exercises its rights under Section
                 2.1.2 of this Agreement), Supplier shall pay to Buyer an
                 amount, in accordance with the provisions of Section 7, equal
                 to the TPPA Amount which existed before any adjustment in
                 accordance with the first or second paragraph of this Section
                 2.3.1, multiplied by the sum of: (x) the total monthly
                 adjustments for every month or portion thereof between the date
                 on which this Agreement is terminated and December 31, 2002;
                 and, (y) the total monthly adjustments for every month or
                 portion thereof between either (i) January 1, 2003 and March 1,
                 2003, or (ii) if this Agreement is terminated after January 1,
                 2003, the termination date of this Agreement and March 1, 2003.
                 An example calculation is shown on Exhibit J.

          2.3.2  Any default or termination of this Agreement shall not release
                 either Party from any applicable provisions of this Agreement
                 with respect to:

                 2.3.2.1 The payment of liquidated damages pursuant to Sections
                         4.2, 12, 17, 18, or 21.

                 2.3.2.2 Indemnity obligations contained in Section 10, to the
                         extent of the statute of limitations period applicable
                         to any third party claim.

                 2.3.2.3 Limitation of liability provisions contained in Section
                         11.

                 2.3.2.4 Payment of any unpaid amounts in respect of obligations
                         arising prior to or resulting from termination.

                 2.3.2.5 For a period of one (1) year after the termination
                         date, the right to raise a payment dispute and the
                         resolution thereof pursuant to Section 13.

                                       10
<PAGE>

                 2.3.2.6 The resolution of any dispute submitted pursuant to
                         Section 13 prior to, or resulting from, termination.

3.   SECURITY

     3.1  Supplier Certification; Guarantee. As a condition of Buyer's execution
          ---------------------------------
          of, and continuing compliance with, this Agreement, Supplier shall at
          Supplier's option comply with the provisions of either Section 3.1.1
          or Section 3.1.2.

          3.1.1  Supplier Certification. Supplier shall (a) provide a
                 ----------------------
                 certificate from a duly authorized corporate officer of
                 Supplier certifying that, as of the Effective Date, Supplier
                 has a credit rating equal to or higher than the Minimum
                 Investment Grade Rating; or (b) post a letter of credit in a
                 form reasonably acceptable to Buyer in the amount of the Credit
                 Amount from a financial institution with each of: (i) a credit
                 rating of A2 or better from Moody's Investors Service, Inc.,
                 (ii) a credit rating of A or better from Standard & Poor's
                 Corporation, and (iii) a Minimum Tangible Net Worth ("MTNW") of
                 one (1) billion dollars.

          3.1.2  Guarantee. In the alternative to the provisions of Section
                 ---------
                 3.1.1, the Supplier may provide a corporate guarantee, in form
                 and substance as set forth in Exhibit H, made by an entity (the
                 "Guarantor") that:

                 3.1.2.1 has a credit rating equal to or higher than the Minimum
                         Investment Grade Rating, together with a certificate
                         from a duly authorized corporate officer of such
                         Guarantor certifying that, as of the Effective Date,
                         such Guarantor has a credit rating equal to or higher
                         than the Minimum Investment Grade Rating; or

                 3.1.2.2 has a MTNW of no less than one (1) billion dollars,
                         together with a certificate from a duly authorized
                         corporate officer of such Guarantor certifying that, as
                         of the Effective Date, such Guarantor has a MTNW of no
                         less than one (1) billion dollars; or

                 3.1.2.3 posts a letter of credit in a form reasonably
                         acceptable to Buyer in the amount of the Credit Amount
                         from a financial institution with each of: (i) a credit
                         rating of A2 or better from Moody's Investors Service,
                         Inc., (ii) a credit rating of A or better from Standard
                         & Poor's Corporation, and (iii) a Minimum Tangible Net
                         Worth ("MTNW") of one (1) billion dollars.

     3.2  Compliance.
          ----------

          3.2.1  Reporting. If at any time during the term of this Agreement,
                 ---------
                 Standard & Poor's Corporation, Moody's Investors Service, Inc.
                 or another nationally recognized firm downgrades the credit
                 rating of Supplier, the Guarantor, or the financial institution
                 that issued the letter of credit, as applicable, then Supplier
                 shall provide Buyer with written notice of

                                       11
<PAGE>

                        such change of circumstance within two (2) Business Days
                        of any such change. In the event such a downgrade also
                        constitutes an Event of Default pursuant to Section 17,
                        the requirements of this Section 3.2.1 are in addition
                        to, and not in lieu of, the requirements of Section 17.

4.      SUPPLY SERVICE

        4.1     Obligations of the Parties.
                --------------------------

                4.1.1   Supply Amount. Supplier shall be required to provide the
                        -------------
                        Supply Amount in any Dispatch Hour. As provided in
                        Section 5.1, Buyer shall make reasonable efforts to
                        ensure that the Supply Amount is no greater than
                        necessary to satisfy Buyer's TRR.

                4.1.1.1 With the Buyer's prior consent, not to be unreasonably
                        withheld or delayed, Supplier shall be entitled to
                        generate or otherwise procure the Supply Amount from
                        sources other than the Asset Bundle.

                4.1.1.2 Supplier shall deliver the Supply Amount to Buyer during
                        the Dispatch Hour on a continuous basis at the Point(s)
                        of Delivery and shall schedule the Supply Amount in
                        accordance with the Buyer's OATT or the ISA's OATT, as
                        applicable.

                4.1.1.3 The Buyer at its sole discretion shall designate the
                        allocation of the Supply Amount between Energy and
                        Ancillary Services in accordance with the notification
                        provisions of Section 5.

                        4.1.1.3.1 The Parties recognize that operation of the
                                  Asset Bundle is subject to, and thus the
                                  Supply Amount at times may be limited by, the
                                  operational parameters of the Asset Bundle.
                                  The Parties further recognize that the
                                  consolidation of two or more generating units
                                  into an Asset Bundle precludes contractual
                                  provisions addressing such operational
                                  parameters in a matter normally applied to
                                  Energy purchases from specified generating
                                  units. Consequently, Supplier will have the
                                  right to raise concerns regarding the effect
                                  of such operational parameters upon Buyer's
                                  day-ahead requests, and Buyer will make good
                                  faith efforts to alleviate Supplier's
                                  concerns.

                        4.1.1.3.2 The Parties further recognize that the Asset
                                  Bundle also is subject to the contractual and
                                  operating constraints set forth in Exhibit M.

                                      12
<PAGE>

        4.1.2   Minimum Annual Energy Take. The Buyer shall accept a minimum
                --------------------------
                annual energy take during each Contract Year. The Minimum Annual
                Energy Take shall be set forth on Exhibit A.

                4.1.2.1 Buyer's Obligation to Take. If Buyer is unwilling to
                        --------------------------
                        accept the Minimum Annual Energy Take for any Contract
                        Year, as may be adjusted pursuant to Section 4.1.2.2,
                        the difference (in MWh) between the Supply Amount of
                        Energy (including consideration for Energy that would
                        have been taken but was unavailable due to Permitted
                        Deratings or Force Majeure, as well as the Total Amount
                        of Energy Replaced) and the Minimum Annual Energy Take
                        shall be billed at the Price Ceiling of Energy less the
                        Price Floor of Energy. An example of the monthly
                        determination of the amount of Energy to be credited
                        against the Minimum Annual Energy Take is shown on
                        Exhibit L.

                4.1.2.2 Adjustments to Minimum Annual Energy Take. Buyer shall
                        -----------------------------------------
                        have the right to reduce the Minimum Annual Energy Take
                        if the number of customers taking electric service from
                        Buyer falls below the number of customers on December
                        31, 2000. Adjustments will be applicable, on a pro rata
                        basis, on the first (1st) day of the month immediately
                        following Supplier's receipt of Buyer's notice of
                        adjustment. Buyer shall provide supporting data in
                        reasonable detail to support its calculations. An
                        example of the calculation of a revised Minimum Annual
                        Energy Take is shown on Exhibit K.

        4.1.3   Minimum Hourly Energy Take. The Buyer shall accept a Minimum
                --------------------------
                Hourly Energy Take for any Dispatch Hour if the Supply Amount,
                or a portion thereof, is provided to Buyer from the Asset
                Bundle. The Minimum Hourly Energy Take is stated in Exhibit A.

                4.1.3.1 Buyer's Obligation to Take. If Buyer is unwilling to
                        --------------------------
                        accept the Minimum Hourly Energy Take, the difference
                        (in Mwh) between the Supply Amount of Energy (including
                        consideration for Energy that would have been taken but
                        was unavailable due to Permitted Deratings or Force
                        Majeure, as well as the Total Amount of Energy Replaced)
                        and Minimum Hourly Energy Take shall be billed at the
                        Price Ceiling of Energy less the Price Floor of Energy.

        4.1.4   Supplier Rights to Output. Supplier may sell to others any
                -------------------------
                portion of the Asset Bundle Capacity in excess of the Supply
                Amount.

                                      13
<PAGE>

        4.1.5   Point(s) of Delivery. Supplier shall deliver, and Buyer shall
                --------------------
                take delivery of, the Supply Amount of Energy at the Point(s) of
                Delivery. Subject to Section 4.1.6.2, Supplier shall be
                responsible for all costs associated with delivery of the Supply
                Amount of Energy to the Point(s) of Delivery.

        4.1.6   Alternative Points of Delivery. For any Dispatch Hour, either
                ------------------------------
                Party may designate one or more alternative Points of Delivery,
                subject to the other Party's prior approval and consistent with
                Buyer's OATT or the ISA's OATT, as applicable, such approval not
                to be unreasonably withheld or delayed.

                4.1.6.1 If Supplier has designated an alternative Point of
                        Delivery, Supplier shall be responsible for all costs of
                        delivery to such alternative Point of Delivery.

                4.1.6.2 If Buyer has designated an alternative Point of
                        Delivery, Buyer shall be responsible for all costs of
                        delivery to such alternative Point of Delivery.

        4.1.7   Fuel. Buyer shall have no responsibility for any fuel
                ----
                procurement or fuel transportation costs or activities
                associated with the Asset Bundle during the term of this
                Agreement.

        4.1.8   Resale. Except as provided in the next sentence, the Supply
                ------
                Amount may be resold by Buyer only as necessary to satisfy
                Buyer's TRR. If, after submitting the day-ahead request of the
                Supply Amount pursuant to Section 5.1, the Buyer determines that
                the scheduled Supply Amount, together with purchases scheduled
                on a day-ahead basis under Buyer's other Transitional Power
                Purchase Agreements, exceeds Buyer's most current projected TRR,
                then the Buyer also shall resell at wholesale that amount of
                Energy in excess of Buyer's actual TRR as necessary to balance
                its load and resources.

        4.1.9   Right to Review. Buyer and Supplier each shall have the right to
                ---------------
                review during normal business hours the relevant books and
                records of the other Party to confirm the accuracy of such as it
                pertains to transactions under this Agreement. The review shall
                be consistent with standard business practices and shall follow
                reasonable notice to the other Party. Reasonable notice for a
                review of the previous month's records shall be at least a
                twenty-four (24) hour period from a Business Day to a subsequent
                Business Day. If a review is requested of other than the
                previous month's records, then notice of that request shall be
                provided with a minimum of seven (7) calendar days written
                notice by the requesting Party. The notice shall specify the
                period to be covered by the review. The Party providing records
                can make reasonable requests that the receiving Party keep the
                records confidential, and the

                                      14
<PAGE>

                receiving Party shall take reasonable steps to accommodate such
                requests.

        4.2     Liquidated Damages.
                ------------------

                4.2.1   If the Delivered Amount of Energy is less than the
                        Supply Amount of Energy in any Dispatch Hour during a
                        month, and Replacement Costs computed in respect of such
                        month are greater than zero, then Supplier shall
                        reimburse Buyer for such Replacement Costs. If
                        Supplier's schedule of Ancillary Services is less than
                        the Supply Amount of Ancillary Services in any Dispatch
                        Hour during a month, Supplier shall reimburse Buyer for
                        such Replacement Costs for the difference between
                        Supplier's schedule and the Supply Amount of Ancillary
                        Services. An example of the methodology used to
                        calculate Replacement Costs is provided in Exhibit D.

                4.2.2   Supplier also shall be responsible for any costs
                        incurred by Buyer associated with a violation of
                        reliability criteria (including but not limited to
                        imbalance costs or penalties) due to a deviation between
                        the Supply Amount and Delivered Amount.

                4.2.3   The Parties recognize and agree that the payment of such
                        amounts by Supplier pursuant to this Section 4.2 is an
                        appropriate remedy in the event of such a failure and
                        that any such payment does not constitute a forfeiture
                        or penalty of any kind, but rather constitutes actual
                        costs to Buyer under the terms of this Agreement.

        4.3     Supplier Operating Representative. Supplier shall provide and
                ---------------------------------
                maintain a twenty-four (24) hour seven (7) day per week
                communication link with Buyer's control center and with Buyer's
                schedulers. Supplier's Operating Representatives shall be
                available to address and make decisions on all operational
                matters under this Agreement on a twenty-four (24) hour seven
                (7) day per week basis.

5.      NOTIFICATION

        5.1     Scheduling Notification. Buyer shall provide Supplier with a
                -----------------------
                day-ahead request of the Supply Amount one (1) hour prior to
                when day-ahead bids are due to the CALPX. Buyer shall make
                reasonable efforts to ensure that the day-ahead request of the
                Supply Amount is no greater than that amount then projected to
                be necessary to satisfy Buyer's TRR. In addition, for each
                day-ahead request, the change in the Supply Amount from one (1)
                hour to the next hour shall be no greater than the ramping
                capability of the units within the Asset Bundle as shown in
                Exhibit A.

                                      15
<PAGE>

        5.2     Availability Notification.
                -------------------------

                5.2.1   No later than 5:00 a.m. (Pacific Time) of each day,
                        Supplier shall deliver to Buyer an Availability Notice
                        in the form set forth in Exhibit G.

                5.2.2   Availability Notices shall provide, for the ninety-six
                        (96) hour period starting at 6:00 a.m. (Pacific Time)
                        that day, Supplier's hourly projection of the
                        unavailability or derating ("Derating") of the Asset
                        Bundle compared to the Asset Bundle Capacity figures
                        stated for each unit in Exhibit A. Each Availability
                        Notice also shall contain, as applicable:

                        (a) the units which are subject to a Derating;
                        (b) the magnitude of the Derating;
                        (c) the hours during which the Derating is expected to
                            apply;
                        (d) the cause of the Derating;
                        (e) the extent, if any, to which the Derating is
                            attributable to a Permitted Derating; and
                        (f) the projected Asset Bundle Capacity for each unit
                            during the period covered by the Availability
                            Notice, pursuant to Section 5.2.4 below.

                5.2.3   If and to the extent a Derating is the result of one or
                        more of the following causes, it shall be a Permitted
                        Derating:

                        (a) approved planned outages pursuant to Section 21;
                        (b) response to an Emergency Condition as described in
                            Section 20; or
                        (c) subject to the limitations expressed in Section
                            12.5, a Force Majeure event.

                5.2.4   In respect of any Dispatch Hour, the Asset Bundle
                        Capacity of each unit shall be the Asset Bundle Capacity
                        figure stated in Exhibit A minus any Permitted Derating
                        applicable during such hour.

                5.2.5   Neither the Asset Bundle Capacity nor the Supply Amount
                        shall be reduced by Deratings which are not Permitted
                        Deratings. Supplier shall be responsible for all
                        Replacement Costs, pursuant to Section 4.2.1, caused by
                        Deratings that are not Permitted Deratings.

6.      PRICING OF ENERGY AND ANCILLARY SERVICES

        6.1     Overview. The price of Energy paid by Buyer to Supplier shall be
                --------
                based upon a designated hourly market price, subject to monthly
                floor, monthly ceiling, and annual true-up provisions. The Price
                Floor of Energy will ensure that Supplier will receive an
                average price for Energy for each month which is not less than
                the price stated in Exhibit B. The Price Ceiling of Energy
                provision provides that the average price of Energy paid to
                Supplier each month and for each year shall not

                                      16
<PAGE>

                exceed the price stated in Exhibit B.

        6.2     Price of Energy.
                ---------------

                6.2.1   Market Price of Energy. In respect of any Dispatch Hour,
                        ----------------------
                        the designated Market Price of Energy shall be the North
                        of Path 15 ("NP 15") hourly market-clearing price in the
                        day-ahead market from the CALPX as published at the
                        following Web Site (or its successor web site)
                        http://www.calpx.com/prices/index_prices_dayahead_
                        ---------------------------------------------------
                        trading.html. Should this hourly market in the day-ahead
                        ------------
                        market not exist for the entire term, the Parties shall
                        agree upon a similar market price index.

                6.2.2   Price Floor of Energy. The Price Floor of Energy is
                        ---------------------
                        stated in Exhibit B and shall not change during the term
                        of this Agreement.

                6.2.3   Price Ceiling of Energy. The Price Ceiling of Energy is
                        -----------------------
                        stated in Exhibit B and shall not change during the term
                        of this Agreement.

        6.3     Pricing of Ancillary Services. The price of the capacity
                -----------------------------
                component of Ancillary Services is stated in Exhibit B. The
                price of Ancillary Services shall not change during the term of
                the Agreement. Supplier shall make available to Buyer and Buyer
                shall offer to pass through the Energy portion of Ancillary
                Services with respect to the Supply Amount to the ISA, or
                Control Area Operator, at the Price Ceiling of Energy (plus
                expected direct transaction costs). The net proceeds shall be
                credited to the Supplier pursuant to Section 7.

        6.4     Price Revisions. The Parties waive any and all rights to seek to
                ---------------
                revise the provisions of this Agreement, including the prices
                stated, pursuant to Sections 205 and/or 206 of the Federal Power
                Act.

        6.5     Recourse Service. Buyer agrees not to purchase Recourse Service
                ----------------
                during the term of the Agreement. However, Buyer is permitted to
                purchase Negotiated Service during the term of the Agreement.

7.      INVOICING AND PAYMENTS

        7.1     Invoicing and Payment. On or before the tenth (10th) day of each
                ---------------------
                month, Supplier shall send to Buyer an invoice setting forth the
                Supply Amount, Delivered Amount, the Market Price of Energy
                pursuant to Section 6.2.1 for each Dispatch Hour in the previous
                month, any amount due in accordance with Section 7.13 and the
                total due from Buyer. The invoice shall be calculated based upon
                data available to Supplier and shall be in accordance with this
                Section 7 and Exhibit C. Buyer shall promptly notify Supplier if
                Buyer in good faith disputes any portion of the invoice, stating
                in reasonable detail the reason for the dispute.

        7.2     Monthly Invoice Calculation. On each monthly invoice, Supplier
                ---------------------------
                shall calculate the following amounts:

                                      17
<PAGE>

                7.2.1   The Delivered Amount in respect of each Dispatch Hour
                        multiplied by the corresponding Market Price of Energy
                        pursuant to Section 6.2.1, summed over the billing
                        period;

                7.2.2   Sum of the Delivered Amounts in respect of all Dispatch
                        Hours of the billing period multiplied by the Price
                        Ceiling of Energy;

                7.2.3   Sum of the Delivered Amounts in respect of all Dispatch
                        Hours of the billing period multiplied by the Price
                        Floor of Energy;

                7.2.4   For each Dispatch Hour of the billing period, the
                        shortfall, if any, between the Supply Amount and the
                        Delivered Amount (and in the case of Ancillary Services
                        the shortfall between the Supply Amount of Ancillary
                        Services and Supplier's schedule of Ancillary Services);

                7.2.5   The Supply Amount of Ancillary Services for each
                        dispatch hour multiplied by the price of Ancillary
                        Services as stated in Exhibit B; and

                7.2.6   The Delivered Amount of Energy related to Ancillary
                        Services for each dispatch hour multiplied by the Price
                        Ceiling of Energy as stated in Exhibit B.

                7.2.7   If applicable, any amount to be calculated in accordance
                        with Section 7.13.

        7.3     Supplier's Invoice. Supplier will invoice the lesser of the
                ------------------
                amounts calculated in Sections 7.2.1 and 7.2.2, provided that if
                the amount calculated in Section 7.2.1 is less than the amount
                calculated in Section 7.2.3, Supplier shall invoice Buyer the
                amount calculated in Section 7.2.3. Supplier shall also include
                in its invoice the amounts calculated in Sections 7.2.5, 7.2.6
                and 7.2.7. If the Delivered Amount exceeds the Supply Amount,
                Buyer shall not be obligated to pay for the excess amount. Buyer
                shall pay Supplier for the amounts invoiced pursuant to Section
                7.2.6 upon Buyer's receipt of payment from ISA or Control Area
                Operator. Examples of this monthly invoice calculation (and
                annual true-up process) are contained in Exhibit C.

        7.4     Buyer's Invoice. In the event any shortfall occurs pursuant to
                ---------------
                Section 7.2.4 or payment is due to Buyer pursuant to Section
                7.13, Buyer shall within ten (10) Business Days of receipt of
                Supplier's invoice deliver to Supplier a Buyer's invoice
                detailing any Replacement Costs or other payment due. Buyer
                shall provide supporting data in reasonable detail to support
                its calculations of Replacement Costs. Supplier shall promptly
                notify Buyer if Supplier in good faith disputes any portion of
                the invoice, stating in reasonable detail the reason for the
                dispute. If the Buyer's invoice results in an amount due from
                Supplier to Buyer, Buyer may offset such amount from its payment
                of Supplier's corresponding invoice.

                                      18
<PAGE>

                Buyer shall have the right to adjust the invoices issued in
                accordance with this Section 7.4 if Buyer incurs Replacement
                Costs that were not known when earlier invoices were issued.
                Adjusted invoices shall be issued within thirty (30) days of the
                date on which the additional Replacement Costs become known.
                Buyer shall provide supporting data in reasonable detail to
                support its calculations of Replacement Costs. Supplier shall
                promptly notify Buyer if Supplier in good faith disputes any
                portion of the invoice, stating in reasonable detail the reason
                for the dispute. If the Buyer's adjusted invoice results in an
                amount due from Supplier to Buyer, Buyer may offset such amount
                from its payment of Supplier's corresponding invoice.

        7.5     Annual True-Up Mechanism for Energy.
                -----------------------------------

                7.5.1   The annual true-up mechanism will provide adjustments
                        among the Parties with respect to each Contract Year in
                        the following scenarios:

                        (a)     If (i) the Price Ceiling of Energy multiplied by
                                the hourly Delivered Amount of Energy summed
                                over the Contract Year is less than or equal to
                                (ii) the Market Price of Energy for each hour
                                pursuant to Section 6.2.1 multiplied by the
                                Delivered Amount of Energy for each hour during
                                the Contract Year, Supplier shall subtract (x)
                                the amount invoiced by Supplier for Energy
                                pursuant to Section 7.3 summed of over the
                                Contract Year from (y) the Price Ceiling of
                                Energy multiplied by the hourly Delivered Amount
                                of Energy summed over the Contract Year. If the
                                difference calculated in accordance with the
                                preceding sentence is greater than or equal to
                                zero, Buyer shall pay the difference to
                                Supplier. If the difference is less than zero,
                                Supplier shall refund the difference to Buyer.

                        (b)     If (i) the Price Ceiling of Energy multiplied by
                                the hourly Delivered Amount of Energy summed
                                over the Contract Year is greater than or equal
                                to (ii) the Market Price of Energy for each hour
                                pursuant to Section 6.2.1 multiplied by the
                                Delivered Amount of Energy for each hour during
                                the Contract Year, Supplier shall subtract (x)
                                the amount invoiced by Supplier for Energy
                                pursuant to Section 7.3 summed of over the
                                Contract Year from (y) the Market Price of
                                Energy multiplied by the hourly Delivered Amount
                                of Energy summed over the Contract Year. If the
                                difference calculated in accordance with the
                                preceding sentence is greater than or equal to
                                zero, Buyer shall pay the difference to
                                Supplier. If the difference is less than zero,
                                Supplier shall refund the difference to Buyer.

                        (c)     If Buyer incurred Replacement Costs for energy
                                during the Contract Year, Supplier shall
                                multiply the Total Amount of Energy Replaced
                                during the Contract Year by the Average Cost of
                                Delivered Energy after true-up as determined in
                                accordance with

                                      19
<PAGE>

                                Section 7.5.1 (a) or 7.5.1 (b). If the amount so
                                obtained is greater than the sum of the monthly
                                Gross Replacement Costs of Energy from Buyer's
                                Invoices for the Contract Year, the Adjusted
                                Replacement Cost of Energy for the Contract Year
                                shall be zero. If the amount so obtained is less
                                than the sum of the monthly Gross Replacement
                                Costs of Energy from Buyer's Invoices for the
                                Contract Year, the Adjusted Replacement Cost of
                                Energy for the Contract Year shall be the sum of
                                the monthly Gross Replacement Costs of Energy
                                less the amount obtained in accordance with the
                                first sentence of this Section 7.5.1(c).

                                If the Adjusted Replacement Cost of Energy is
                                greater than the sum of the monthly Invoiced
                                Replacement Costs of Energy from Buyer's
                                Invoices for the Contract Year, Supplier shall
                                pay the difference to Buyer. If the sum of the
                                monthly Invoiced Replacement costs of Energy is
                                greater than the Adjusted Replacement Cost of
                                Energy, Buyer shall pay the difference to
                                Seller.

                7.5.2   True-up adjustments will be calculated by Supplier
                        within twenty (20) days after each Contract Year.
                        Examples of the true-up calculations and invoice form
                        are set forth in Exhibit E. Interest shall be calculated
                        pursuant to 18 CFR Section 35.19a and shall be included
                        in the true-up invoice. Invoices for true-up adjustments
                        shall be submitted by Supplier within thirty (30) days
                        after the end of the Contract Year. Payments for such
                        invoices shall be due from Buyer thirty (30) days from
                        receipt of the true-up invoice.

        7.6     Invoice Disagreements. Should there be a good faith dispute over
                ---------------------
                any invoice, the Parties shall promptly seek resolution pursuant
                to Section 13. Pending resolution of the invoice dispute,
                payment shall be made or offsets or credits taken, as
                applicable, based upon the undisputed portion of the invoice.

        7.7     Adjustments. Upon resolution of the dispute, the prevailing
                -----------
                Party shall be entitled to receive the disputed amount, as
                finally determined to be payable along with interest (calculated
                pursuant to 18 C.F.R. (s) 35.19a through the date of payment. No
                invoice (or payment covered thereby) shall be subject to
                adjustment unless notice or request for adjustment is given
                within one (1) year of the date payment thereunder was due.

        7.8     Method of Payment. Subject to Sections 7.3, 7.6 and 7.7, Buyer
                -----------------
                shall remit all amounts due by wire or electronic fund transfer,
                pursuant to Supplier's invoice instructions, no later than
                thirty (30) days after receipt of the invoice.

        7.9     Overdue Payments. Overdue payments shall bear interest from and
                ----------------
                including, the due date to the date of payment on the unpaid
                portion calculated pursuant to 18 C.F.R.(s)35.19a.

        7.10    Buyer Right to Offset. Buyer shall have the right to offset any
                ---------------------
                amounts Supplier

                                      20
<PAGE>

                owes to Buyer, including Replacement Costs (except for such
                amounts disputed in good faith by Supplier), against the amounts
                owed by Buyer to Supplier.

        7.11    Taxes. Each Party shall pay ad valorem and other taxes
                -----
                attributed to its facilities and services provided. Supplier
                shall not include any taxes of any kind in its invoices to
                Buyer. The prices of Energy and Ancillary Services shall not
                change during the term of this Agreement as a result of any
                changes in local, state or federal taxes, fees or levies.

        7.12    Late Invoices. If either Party submits an invoice outside of the
                -------------
                time deadlines set forth herein, that Party shall not forfeit
                its rights to collect the amounts due thereunder, provided that
                such invoice is no more than six (6) months late, and provided
                that changes to invoices remain subject to the deadline in
                Section 7.7.

        7.13    Early Termination. Notwithstanding any other provision herein,
                -----------------
                in the event that this Agreement is terminated before December
                31, 2002 (or March 1, 2003 if Buyer exercises its rights under
                Section 2.1.2), and as a result of such termination Buyer is
                entitled to a payment in accordance with Section 2.3.1, Supplier
                shall include an amount calculated in accordance with Section
                2.3.1 and Exhibit J, to be paid by Supplier to Buyer in the next
                monthly invoice submitted to Buyer following such termination.

8.      REGULATORY APPROVALS

        8.1     This Agreement will be filed with the FERC and any other
                appropriate regulatory agencies by the appropriate Party as may
                be required.

9.      COMPLIANCE

        9.1     Each Party shall comply with all relevant Laws and shall, at its
                sole expense, maintain in full force and effect all relevant
                permits, authorizations, licenses, and other authorizations
                material to the maintenance of facilities and the performance of
                obligations under this Agreement.

        9.2     Each Party and its representatives shall comply with all
                relevant requirements of any authorized Control Area Operator,
                ISA, and/or EDU to ensure the safety of its employees and the
                public, and to ensure electric system reliability and integrity,
                material to the performance of this Agreement.

        9.3     Buyer and Supplier shall perform or cause to be performed, their
                obligations under this Agreement in all material respects in
                accordance with Good Utility Practices.

                                      21
<PAGE>

10.     INDEMNIFICATION

        10.1    To the fullest extent permitted by law, a Party to this
                Agreement ("the Indemnifying Party") shall indemnify, defend and
                hold harmless the other Party, its parent, affiliates, and
                successors and agents (each an "Indemnified Party") from and
                against any and all claims, demands, suits, obligations,
                payments, liabilities, costs, judgments, damages, losses or
                expenses asserted by third parties against an Indemnified Party
                and arising out of, relating to, or resulting from the
                Indemnifying Party's breach of, or the negligent performance of
                its obligations under this Agreement.

                10.1.1  Such indemnity shall also extend to actual courts costs,
                        attorneys' fees, expenses and other liabilities incurred
                        in the defense of any claim, action or proceeding,
                        including negotiation, settlement, defense and appeals,
                        to which this indemnification obligation applies. In
                        furtherance of the foregoing indemnification and not by
                        way of limitation thereof, the Indemnifying Party hereby
                        waives any defense it otherwise might have against the
                        Indemnified Party under applicable workers' compensation
                        laws.

                10.1.2  In claims against any Indemnified Party by an agent of
                        the Indemnifying Party, or anyone directly or indirectly
                        employed by them or anyone for whose acts they may be
                        liable, the indemnification obligation under this
                        Section 10 shall not be limited by a limitation on
                        amount or type of damages, compensation or benefits
                        payable by or for the Indemnifying Party or a
                        subcontractor under workers' or workmen's compensation
                        acts, disability benefit acts or other employee benefit
                        acts.

                10.1.3  Such indemnity shall also extend to all costs and
                        expenses incurred by the Indemnified Party in any action
                        or proceeding to enforce the provisions of this
                        Agreement, but only if and to the extent the Indemnified
                        Party prevails in such action or proceeding.

        10.2    No Negation of Existing Indemnities; Survival. Each Party's
                ---------------------------------------------
                indemnity obligations hereunder shall not be construed to
                negate, abridge or reduce other rights or obligations or
                indemnity which would otherwise exist at law or equity. The
                obligations contained herein shall survive any termination,
                cancellation, or suspension of this Agreement to the extent that
                any third party claim is commenced during the applicable statute
                of limitations period.

        10.3    Indemnification Procedures.
                --------------------------

                10.3.1  Any Party seeking indemnification under this Agreement
                        shall give the other Party notice of such claim promptly
                        but in any event on or before thirty (30) days after the
                        Party's actual knowledge of such claim or action. Such
                        notice shall describe the claim in reasonable detail,
                        and

                                      22
<PAGE>

                        shall indicate the amount (estimated if necessary) of
                        the claim that has been, or may be sustained by, said
                        Party. To the extent that the other Party will have been
                        actually and materially prejudiced as a result of the
                        failure to provide such notice, such notice will be a
                        condition precedent to any liability of the other Party
                        under the provisions for indemnification contained in
                        this Agreement.

                10.3.2  In any action or proceeding brought against an
                        Indemnified Party by reason of any claim indemnifiable
                        hereunder, the Indemnifying Party may, at its sole
                        option, elect to assume the defense at the Indemnifying
                        Party's expense, and shall have the right to control the
                        defense thereof and to determine the settlement or
                        compromise of any such action or proceeding.
                        Notwithstanding the foregoing, an Indemnified Party
                        shall in all cases be entitled to control its defense in
                        any action if it:

                        (i)     may result in injunctions or other equitable
                                remedies in respect of the Indemnified Party
                                which would affect its business or operations in
                                any materially adverse manner;

                        (ii)    may result in material liabilities which may not
                                be fully indemnified hereunder; or

                        (iii)   may have a significant adverse impact on the
                                business or the financial condition of the
                                Indemnified Party (including a material adverse
                                effect on the tax liabilities, earnings or
                                ongoing business relationships of the
                                Indemnified Party) even if the Indemnifying
                                Party pays all indemnification amounts in full.

                10.3.3  Subject to Section 10.3.2, neither Party may settle or
                        compromise any claim for which indemnification is sought
                        under this Agreement without the prior consent of the
                        other Party; provided, however, said consent shall not
                        be unreasonably withheld or delayed.

11.     LIMITATION OF LIABILITY

        11.1    Responsibility for Damages: Except as otherwise provided herein
                --------------------------
                or to the extent of the other Party's negligence or willful
                misconduct, each Party shall be responsible for all physical
                damage to or destruction of the property, equipment and/or
                facilities owned by it and its affiliates and any physical
                injury or death to natural Persons resulting therefrom,
                regardless of who brings the claim and regardless of who caused
                the damage, and shall not seek recovery or reimbursement from
                the other Party for such damage; provided, that in any such case
                the Parties will exercise Due Diligence to remove the cause of
                any disability at the earliest practicable time.

                                      23
<PAGE>

        11.2    No Consequential Damages: To the fullest extent permitted by law
                ------------------------
                and notwithstanding other provisions of this Agreement, in no
                event shall a Party, or any of its Agents, be liable to the
                other Party, whether in contract, warranty, tort, negligence,
                strict liability, or otherwise, for special, indirect,
                incidental, multiple, consequential (including but not limited
                to lost profits or revenues and lost business opportunities), or
                punitive damages related to or resulting from performance or
                nonperformance of this Agreement or any activity associated with
                or arising out of this Agreement. For purposes of clarification,
                Replacement Costs shall not be considered consequential or
                incidental damages under this Section 11.2. In addition, this
                limitation on liability shall not apply with respect to claims
                pursuant to Section 10 hereof.

        11.3    Survival: The provisions of this Section 11 shall survive any
                --------
                termination, cancellation, or suspension of this Agreement.

12.     FORCE MAJEURE

        12.1    An event of "Force Majeure" shall be defined as any interruption
                or failure of service or deficiency in the quality or quantity
                of service or any other failure by a Party to perform any of its
                obligations hereunder to the extent such failure occurs without
                fault or negligence on the part of that Party and is caused by
                factors beyond that Party's reasonable control, which by the
                exercise of reasonable diligence that Party is unable to
                prevent, avoid, mitigate or overcome, including:

                (i)     acts of God or the public enemy, such as storms, flood,
                        lightning, and earthquakes,

                (ii)    failure, threat of failure, or unscheduled withdrawal of
                        facilities from operation for maintenance or repair, and
                        including unscheduled transmission and distribution
                        outages,

                (iii)   sabotage of facilities and equipment,

                (iv)    civil disturbance,

                (v)     strike or labor dispute,

                (vi)    action or inaction of a court or public authority, or

                (vii)   any other cause of similar nature beyond the reasonable
                        control of that Party.

        12.2    Economic hardship of either Party shall not constitute Force
                Majeure under this Agreement. Notwithstanding this, if Buyer
                suffers an event of Force Majeure it shall be relieved of its
                obligation to take delivery of, or otherwise pay for, Energy and
                Ancillary Services under this Agreement for the duration of the
                event of Force Majeure; provided, however, that Buyer shall not
                be relieved of its obligation to pay for any Energy or Ancillary
                Services provided by Supplier under

                                      24
<PAGE>

                this Agreement prior to the event of Force Majeure. In addition,
                if Buyer is unable to have Energy and Ancillary Services
                delivered from the Point(s) of Delivery to its service territory
                due to an outage on the Transmission System, that shall be
                considered a Force Majeure event and shall relieve Buyer of
                performance for the extent of the event.

        12.3    In the event of a Force Majeure, neither Party shall be
                considered in default under this Agreement or responsible to the
                other Party in tort, strict liability, contract or other legal
                theory for damages of any description, and affected performance
                obligations shall be extended by a period equal to the term of
                the resultant delay, but in no event shall exceed the term of
                the Agreement, provided that the Party relying on a claim of
                Force Majeure:

                (i)     provides prompt written notice of such Force Majeure
                        event to the other Party, giving an estimate of its
                        expected duration and the probable impact on the
                        performance of its obligations hereunder;

                (ii)    exercises all reasonable efforts to continue to perform
                        its obligations under this Agreement;

                (iii)   expeditiously takes action to correct or cure the event
                        or condition excusing performance so that the suspension
                        of performance is no greater in scope and no longer in
                        duration than is dictated by the problem; provided,
                        however, that settlement of strikes or other labor
                        disputes will be completely within the sole discretion
                        of the Party affected by such strike or labor dispute;

                (iv)    exercises all reasonable efforts to mitigate or limit
                        damages to the other Party; and

                (v)     provides prompt notice to the other Party of the
                        cessation of the event or condition giving rise to its
                        excuse from performance.

        12.4    Notwithstanding the above provisions, a Force Majeure event
                shall excuse Supplier from its obligation to deliver the Supply
                Amount pursuant to Section 4 of this Agreement only for the
                first twenty-four (24) hours of the Force Majeure event,
                provided that the total amount of energy excused in accordance
                with this Section 12.4 during any Contract Year shall not exceed
                the Limit on Excused Energy set forth in Exhibit A. After such
                twenty-four (24) hour period, Supplier must either deliver the
                Supply Amount at the Point(s) of Delivery or pay liquidated
                damages pursuant to Section 4.2 of this Agreement.

        12.5    If Supplier has notified Buyer of an event of Force Majeure, and
                if Supplier so requests, Buyer will attempt to replace the
                Supply Amount that is not excused in accordance with Section
                12.4 with Energy or Ancillary Services from another Asset
                Bundle. However, Buyer's inability to acquire such replacement
                Energy or Ancillary Services shall not excuse Supplier from
                Supplier's obligation to deliver

                                      25
<PAGE>

                the Supply Amount not otherwise excused in accordance with
                Section 12.4

13.     DISPUTES

        13.1    Any action, claim or dispute which either Party may have against
                the other arising out of or relating to this Agreement or the
                transactions contemplated hereunder, or the breach, termination
                or validity thereof (any such claim or dispute, a "Dispute")
                shall be submitted in writing to the other Party. The written
                submission of any Dispute shall include a concise statement of
                the question or issue in dispute together with a statement
                listing the relevant facts and documentation that support the
                claim.

        13.2    The Parties agree to cooperate in good faith to expedite the
                resolution of any Dispute. Pending resolution of a Dispute, the
                Parties shall proceed diligently with the performance of their
                obligations under this Agreement.

        13.3    The Parties shall first attempt in good faith to resolve any
                Dispute through informal negotiations by the Contract
                Representatives. In the event that the Contract Representatives
                are unable to satisfactorily resolve the Dispute within thirty
                (30) days from the receipt of notice of the Dispute, either
                Party may by written notice to the other Party refer the Dispute
                to its respective senior management for resolution as promptly
                as practicable. If the Parties' senior management are unable to
                resolve the Dispute within forty-five (45) days from the date of
                such referral, thereafter the Parties may agree in writing to
                extend the time period of such senior management negotiations.
                In the event the Parties' senior management do not resolve the
                dispute within the prescribed or extended time period, either
                Party may initiate arbitration through the serving and filing of
                a demand for arbitration and the Parties expressly agree that
                arbitration in accordance with this Section 13 shall be the
                exclusive means to further resolve any Dispute and hereby
                irrevocably waive their right to a jury trial with respect to
                any Dispute, provided that at any time:

                13.3.1  A request made by a Party for provisional remedies
                        requesting preservation of the Parties' respective
                        rights and obligations under the Agreement may be
                        resolved by a court of law located in the County of the
                        principal place of business of Buyer.

                13.3.2  Nothing in this Agreement shall preclude, or be
                        construed to preclude, any Party from filing a petition
                        or complaint with the FERC or PUCN with respect to any
                        arbitrable Dispute over which said agency has
                        jurisdiction. In such case, the other Party may request
                        the FERC or PUCN, as applicable, to reject or to waive
                        jurisdiction. If jurisdiction is rejected or waived with
                        respect to all or a portion of the Dispute, the portion
                        of the Dispute not so accepted by the FERC or PUCN, as
                        applicable, shall be resolved through arbitration in
                        accordance with this Agreement. To the extent that the
                        FERC or PUCN, as applicable, asserts or accepts
                        jurisdiction over the Dispute, the decision, finding of
                        fact or order of FERC shall be final and binding,
                        subject to judicial

                                      26
<PAGE>

                        review under the Federal Power Act or Nevada Revised
                        Statutes and subject to the provisions of Section 2.2.2.
                        Any arbitration proceedings that may have commenced with
                        respect to the Dispute prior to the assertion or
                        acceptance of jurisdiction by the FERC or PUCN, as
                        applicable, shall be terminated to the extent the FERC
                        or PUCN accepts or asserts jurisdiction over such
                        Dispute.

        13.4    Unless otherwise agreed by the Parties, any arbitration
                initiated under this Agreement shall be conducted in accordance
                with the following:

                13.4.1  Arbitrations shall be held within the County of the
                        principal place of business of Buyer.

                13.4.2  Except as otherwise modified herein, the arbitration
                        shall be conducted in accordance with the "Commercial
                        Arbitration Rules" of the American Arbitration
                        Association ("AAA") then in effect.

                13.4.3  Arbitration shall be conducted by one neutral arbitrator
                        who shall be selected pursuant to the AAA rules and the
                        following:

                        13.4.3.1 The Parties agree that the list of potential
                                 arbitrators provided by the AAA shall, if
                                 available, contain twenty (20) candidates, and
                                 at least fifty percent (50%) of the candidates
                                 shall be members of the AAA National Energy
                                 Panel.

                        13.4.3.2 The Parties also agree that each shall be
                                 allowed to strike the names of five candidates
                                 before ranking the remaining candidates and
                                 returning the list to the AAA in accordance
                                 with the Commercial Arbitration Rules. If the
                                 Parties are unable to agree on an arbitrator,
                                 such arbitrator shall be appointed by the AAA.

                        13.4.3.3 The arbitrator shall not have any current or
                                 past substantial business, financial, or
                                 personal relationships with either Party (or
                                 their Affiliates) and shall not be a vendor,
                                 supplier, customer, employee, consultant, or
                                 competitor to either of the Parties or their
                                 Affiliates.

                        13.4.3.4 The arbitrator shall be authorized only to
                                 interpret and apply the provisions of this
                                 Agreement or any related agreements entered
                                 into under this Agreement and shall have no
                                 power to modify or change any provision of this
                                 Agreement. The arbitrator shall have no
                                 authority to award punitive or multiple damages
                                 or any damages inconsistent with this
                                 Agreement. The arbitrator shall within thirty
                                 (30) days of the conclusion of the hearing,
                                 unless such time is extended by agreement of
                                 the Parties, notify the Parties in writing of
                                 his or her decision, stating his or her reasons
                                 for such decision and separately listing his or
                                 her findings of fact and conclusions of law.
                                 Judgment on the award may be entered in

                                      27
<PAGE>

                                 any court having jurisdiction.

        13.5    The Parties shall proceed with the arbitration expeditiously,
                and the arbitration shall be concluded within five (5) months of
                the filing of the demand for arbitration pursuant to this
                Section 13 in order that the decision may be rendered within six
                (6) months of such filing, unless the arbitrator extends such
                time at the request of a Party upon a showing of good cause or
                upon agreement of the Parties.

        13.6    Any arbitration proceedings, decision or award rendered
                hereunder and the validity, effect and interpretation of any
                arbitration agreement shall be governed by the Federal
                Arbitration Act of the United States, 9 U.S.C. (S)(S)1 et seq.

        13.7    The decision of the arbitrator shall be final and binding on
                both Parties and may be enforced in any court having
                jurisdiction over the Party against which enforcement is sought.

        13.8    The fees and expenses of the arbitrator shall be shared by the
                Parties equally, unless the decision of the arbitrator shall
                specify some other apportionment of such fees and expenses. All
                other expenses and costs of the arbitration shall be borne by
                the Party incurring the same.

14.     NATURE OF OBLIGATIONS

        14.1    Except where specifically stated in this Agreement to be
                otherwise, the duties, obligations, and liabilities of the
                Parties shall be several, not joint or collective. The
                provisions of this Agreement shall not be construed to create an
                association, trust, partnership, or joint venture; to impose a
                trust or partnership duty, obligation, or liability or agency
                relationship on or with regard to either Party.

        14.2    Nothing in this Agreement nor any action taken hereunder shall
                be construed to create any duty, liability, or standard of care
                to any person not a Party to this Agreement. Each Party shall be
                individually and severally liable for its own obligations under
                this Agreement.

        14.3    By this Agreement, neither Party dedicates any part of its
                facilities or the service provided under this Agreement to the
                public.

15.     SUCCESSORS AND ASSIGNS

        15.1    This Agreement may be assigned, without express written consent
                of the other Party, as follows:

                15.1.1  Buyer may assign this Agreement or assign or delegate
                        its rights and obligations under this Agreement, in
                        whole or in part, if such assignment is made to an
                        affiliate, parent, subsidiary, successor or any party,
                        provided that such assignee operates all or a portion of
                        the PLR or if such assignment is required by Law or
                        applicable regulations.

                                      28
<PAGE>

        15.2    Supplier may, without the consent of Buyer, assign, transfer,
                pledge or otherwise dispose of its rights and interests
                hereunder to a trustee, lending institution, or any Person for
                the purposes of financing or refinancing the Asset Bundle,
                including upon or pursuant to the exercise of remedies under
                such financing or refinancing, or by way of assignments,
                transfers, conveyances of dispositions in lieu thereof;
                provided, however, that no such assignment or disposition shall
                relieve or in any way discharge Supplier or such permitted
                assignee from the performance of its duties and obligations
                under this Agreement. Buyer agrees to execute and deliver such
                documents as may be reasonably necessary to accomplish any such
                assignment, transfer, conveyance, pledge or disposition of
                rights hereunder for purposes of the financing or refinancing of
                the Asset Bundle, so long as Buyer's rights under this Agreement
                are not thereby materially altered, amended, diminished or
                otherwise impaired.

        15.3    Either Party may, without the consent of the other Party, assign
                this Agreement to a successor to all or substantially all of the
                assets of such Party by way of merger, consolidation, sale or
                otherwise, provided such successor assumes and becomes liable
                for all of such Party's duties and obligations hereunder
                including Section 3 hereof.

        15.4    Except as stated above, neither this Agreement nor any of the
                rights, interests, or obligations hereunder shall be assigned by
                either Party, including by operation of law, without the prior
                written consent of the other Party, said consent not to be
                unreasonably withheld. Any assignment of this Agreement in
                violation of the foregoing shall be, at the option of the
                non-assigning Party, void.

        15.5    Except as set forth above, no assignment or transfer of rights
                or obligations under this Agreement by a Party shall relieve
                said Party from full liability and financial responsibility for
                the performance thereof after any such transfer or assignment
                unless and until the transferee or assignee shall agree in
                writing to assume the obligations and duties of said Party under
                this Agreement and the other Party has consented in writing to
                such assumption; said consent not to be unreasonably withheld.

        15.6    This Agreement and all of the provisions hereof are binding
                upon, and inure to the benefit of, the Parties and their
                respective successors and permitted assigns.

                                      29
<PAGE>

16.     REPRESENTATIONS

        16.1    Representations of the Parties. The Parties represent and
                ------------------------------
                warrant each to the other as follows:

                16.1.1  Incorporation. Buyer is a corporation duly incorporated,
                        -------------
                        validly existing and in good standing under the laws of
                        the State of Nevada. Supplier is a Nevada limited
                        liability company duly organized, validly existing and
                        in good standing under the laws of the State of Nevada.
                        Both Buyer and Supplier have all requisite corporate or
                        limited liability company power and authority to own,
                        lease and operate their material assets and properties
                        and to carry on their business as now being conducted.

                16.1.2  Authority. The Party has full corporate or limited
                        ---------
                        liability company power and authority to execute and
                        deliver this Agreement and, subject to the procurement
                        of applicable regulatory approvals, to carry out the
                        actions required of it by this Agreement. The execution
                        and delivery of this Agreement and the transactions
                        contemplated hereby have been duly and validly
                        authorized by all necessary corporate or limited
                        liability company action required on the part of the
                        Party. The Agreement has been duly and validly executed
                        and delivered by the Party and, assuming that it is duly
                        and validly executed and delivered by the other Party,
                        constitutes a legal, valid and binding agreement of the
                        Party.

                16.1.3  Compliance With Law. The Party represents and warrants
                        -------------------
                        that it is not in violation of any applicable Law, or
                        applicable regulation, which violation could reasonably
                        be expected to materially adversely affect the other
                        Party's performance of its obligations under this
                        Agreement. The Party represents and warrants that it
                        will comply with all Laws, and regulations applicable to
                        its compliance with this Agreement, non-compliance with
                        which would reasonably be expected to materially
                        adversely affect either Party's performance of its
                        obligations under this Agreement.

                16.1.4  Representations of Both Parties. The representations in
                        -------------------------------
                        this Section 16 shall continue in full force and effect
                        for the term of this Agreement.

17.     DEFAULT AND REMEDIES

        17.1    An Event of Default hereunder shall be deemed to have occurred
                upon a Party's (Defaulting Party) failure to comply with any
                material obligation imposed upon it by this Agreement. Examples
                of an Event of Default include, but are not limited to the
                following:

                (i)     Failure to make any payments due under this Agreement;

                                      30
<PAGE>

                (ii)    Failure to deliver the Supply Amount for a period of
                        five (5) consecutive days;

                (iii)   Failure to follow the directions of a Control Area
                        Operator, ISA, EDU, WSCC, NERC, PUCN, FERC, or any
                        successor thereto where following such directions is
                        required hereunder;

                (iv)    Supplier not being in compliance with Section 3; and

                (v)     Failure of the Guarantor to be in compliance with the
                        terms of the Guarantee delivered under Section 3.1.2.

        17.2    An Event of Default shall be excused:

                17.2.1  In the event such Event of Default was caused by Force
                        Majeure provided that the Party claiming a Force Majeure
                        complies with the requirements of Section 12; and

                17.2.2  In the event such Event of Default was caused by
                        transmission and distribution outages or disruptions.

        17.3    Unless excused, in an Event of Default the Non-Defaulting Party
                shall be entitled to provide written notice (or oral notice in
                case of emergency followed by written notice) of the Event of
                Default to the Defaulting Party and to specify a cure period,
                which cure period shall be a minimum of thirty (30) days.

        17.4    If an Event of Default is not cured by the Defaulting Party
                during the cure period specified by the Non-Defaulting Party,
                the Non-Defaulting Party shall be entitled to those remedies
                which are not inconsistent with the terms of this Agreement,
                including termination and the payment of liquidated damages. A
                Defaulting Party shall not be liable to the Non-Defaulting Party
                for any punitive, consequential or incidental damages. For
                purposes of clarification, Replacement Costs shall not be
                considered consequential or incidental damages under this
                Section 17.4.

        17.5    Notwithstanding this Section 17, liquidated damages shall be
                paid to Buyer pursuant to Sections 4.2, 12, 18, and 21.

18.     FACILITY ADDITIONS AND MODIFICATIONS

        18.1    Supplier shall be entitled to make additions and modifications
                to the Asset Bundle subject to the following:

                18.1.1  To the extent additions and modifications interfere with
                        the operation of the Asset Bundle in providing the
                        Supply Amount to Buyer beyond the limits for planned
                        outages set forth in Section 21, liquidated damages
                        shall be paid to Buyer pursuant to Section 4.2.

                18.1.2  Supplier shall use reasonable efforts to minimize any
                        adverse impact on

                                      31
<PAGE>

                        Buyer during the course of making such additions and
                        modifications.

                18.1.3  Such additions and modifications shall be conducted in
                        accordance with Good Utility Practice, and all
                        applicable Laws, regulations, reliability criteria and
                        the Interconnection Agreement between Buyer and
                        Supplier, dated October 25, 2000, as it may be amended
                        from time to time.

        18.2    Supplier shall seek Buyer's prior written approval for all
                Supplier's additions or modifications to the Asset Bundle which
                might reasonably be expected to have an adverse effect upon
                Buyer with respect to operations or performance under this
                Agreement.

19.     COORDINATION

        19.1    Upon knowledge thereof, each Party shall promptly give notice to
                the other Party of any labor dispute which is delaying or
                threatens to delay the timely performance of this Agreement,
                which shall include a description of the general nature of the
                dispute.

20.     EMERGENCY AND NONEMERGENCY CONDITION RESPONSE

        20.1    Buyer and Supplier shall comply with any applicable requirement
                of any Governmental Authority, NERC, WSCC, ISA, Control Area
                Operator, transmission operator, EDU or any successor of any of
                them, regarding the reduced or increased generation of the Asset
                Bundle in the event of an Emergency Condition or Nonemergency
                Condition.

        20.2    Supplier shall not be obligated to deliver the Supply Amount and
                no liquidated damages shall become due, if the Supply Amount is
                reduced in the event of an Emergency Condition or a Nonemergency
                Condition.

        20.3    Each Party shall provide prompt oral notice to the other Party
                of any Emergency Condition or Nonemergency Condition.

        20.4    Either Party may take reasonable and necessary action to
                prevent, avoid or mitigate injury, danger, damage or loss to its
                own equipment and facilities, or to expedite restoration of
                service; provided, however, that the Party taking such action
                shall give the other Party prior notice if at all possible
                before taking any action. However, this Section 20.4 shall not
                be construed to supersede Sections 20.2 and 20.3.

21.     OUTAGE SCHEDULING

        21.1    Supplier shall request Buyer's approval prior to any
                inspections, proposed planned outages or other non-forced
                outages (all hereinafter referred to as "planned outages") of
                the Asset Bundle so as to minimize the impact on the

                                      32
<PAGE>

                availability of the Asset Bundle. Under no circumstances shall
                Supplier conduct a planned outage without the express prior
                consent of Buyer pursuant to this Section 21.

        21.2    Planned Outages.
                ---------------

                21.2.1  Within sixty (60) days following the Effective Date of
                        this Agreement and on or before October 1 of each
                        Contract Year, Supplier shall provide Buyer with a
                        schedule of proposed planned outages for the period
                        beginning on the date of such proposed schedule for the
                        following twelve (12) months. The proposed planned
                        outage schedule will designate days for each unit in
                        which the Asset Bundle Capacity will be reduced in part
                        or total for each such unit. Each proposed schedule
                        shall include all applicable information, including but
                        not limited to the following: Month, day and time of
                        requested outage; facilities impacted (such as Unit and
                        description); duration of outage; purpose of outage;
                        amount of capacity (in MWs) which is derated; other
                        conditions and remarks; and name of contact and phone
                        number.

                21.2.2  Buyer shall promptly review Supplier's proposed schedule
                        and shall, at Buyer's discretion, not to be unreasonably
                        exercised, either require modifications or approve the
                        proposed schedule. Supplier shall use its best efforts
                        to accomplish all planned outages in accordance with the
                        approved schedule. Supplier shall be responsible to
                        Buyer for Replacement Costs (i) if any outage period
                        exceeds its approved schedule, provided that changes to
                        the approved schedule may be requested by either Party
                        and each Party shall make reasonable efforts to
                        accommodate such changes, provided further the Buyer
                        shall have no obligation to agree to Supplier's
                        revisions to the approved planned outage schedule; and
                        (ii) if Supplier conducts a planned outage without the
                        consent of Buyer as provided herein.

22.     REPORTS

        22.1    Supplier shall promptly provide Buyer with copies of any orders,
                decrees, letters or other written communications to or from any
                Governmental Authority asserting or indicating that Supplier
                and/or its Asset Bundle is in violation of Laws which relate to
                Supplier, or operations or maintenance of the Asset Bundle and
                which may have an adverse effect on Buyer. Supplier shall use
                reasonable efforts to keep Buyer appraised of the status of any
                such matters.

23.     COMMUNICATIONS

        23.1    Supplier's Operating Representatives shall be available
                twenty-four (24) hours per day for communications with the
                Control Area Operator and/or the ISA and Buyer to facilitate the
                operations contained in this Agreement.

        23.2    Supplier shall, at its expense, maintain and install real-time
                communications

                                      33
<PAGE>

                equipment at the Asset Bundle to maintain communications between
                personnel on site at the Asset Bundle, Buyer and the Control
                Area Operator at all times. Supplier shall provide at its
                expense:

                (i)     Ringdown voice telephone lines, and

                (ii)    Equipment to transmit to and receive telecopies from
                        Buyer and the Control Area Operator.

        23.3    Supplier shall immediately report to Buyer any "Abnormal
                Condition" that has or may occur, and provide all pertinent
                information, including but not limited to the following:

                (i)     A description of the "Abnormal Condition" and the
                        actions to be taken to alleviate the "Abnormal
                        Condition";

                (ii)    The expected duration including the beginning and ending
                        time of the "Abnormal Condition"; and

                (iii)   The amount of any adjustment to the current (real time)
                        level of Energy and Ancillary Services.

        23.4    Cause of the Condition.
                ----------------------

                23.4.1  An "Abnormal Condition" shall include without limitation
                        any conditions that, to Supplier's knowledge, have or
                        are reasonably likely to:

                        (i)     Adversely affect Supplier's ability to provide
                                Energy and Ancillary Services to Buyer;

                        (ii)    Cause an unplanned reduction in the amount of
                                delivery of Energy and Ancillary Services to
                                Buyer; or

                        (iii)   Cause an unplanned isolation of the Asset Bundle
                                from the transmission system.

        23.5    Supplier shall immediately notify Buyer after such "Abnormal
                Condition" has been alleviated.

24.     NOTICES

        24.1    All notices hereunder shall, unless specified otherwise, be in
                writing and shall be addressed, except as otherwise stated
                herein, to the Parties as set forth in Exhibit F.

        24.2    All written notices or submittals required by this Agreement
                shall be sent either by hand-delivery, regular first class U.S.
                mail, registered or certified U.S. mail

                                      34
<PAGE>

                postage paid return receipt requested, overnight courier
                delivery, electronic mail or facsimile transmission and will be
                effective and deemed to have been received on the date of
                receipt personally, on the date and time as documented by method
                of delivery if during normal business hours or on the next
                succeeding Business Day, or on the third (3rd) Business Day
                following deposit with the U.S. mail if sent regular first class
                U.S. mail.

        24.3    Notices of an Event of Default pursuant to Section 17 and or
                Force Majeure pursuant to Section 12 may not be sent by regular
                first class U.S. mail.

        24.4    Any payments required to be made under this Agreement shall be
                made to the Party as set forth in Exhibit F.

        24.5    Each Party shall have the right to change, at any time upon
                written notice to the other Party, the name, address and
                telephone numbers of its representatives under this Agreement
                for purposes of notices and payments.

25.     MERGER

        25.1    The Agreement contains the entire agreement and understanding
                between the Parties with respect to all of the subject matter
                contained herein, thereby merging and superseding all prior
                agreements and representations by the Parties with respect to
                such subject matter.

        25.2    In the event of any conflict between this Agreement and the
                Asset Sale Agreement, the terms of the Asset Sale Agreement
                shall govern.

26.     HEADINGS

        26.1    The headings or section titles contained in this Agreement are
                inserted solely for convenience and do not constitute a part of
                this Agreement between the Parties, nor should they be used to
                aid in any manner in the construction of this Agreement.

27.     COUNTERPARTS AND INTERPRETATION

        27.1    This Agreement may be executed in any number of counterparts,
                each of which shall be deemed an original.

        27.2    In the event an ambiguity or question of intent or
                interpretation arises, this Agreement shall be construed as if
                drafted jointly by the Parties and no presumption or burden of
                proof shall arise favoring or disfavoring any Party by virtue of
                authorship of any of the provisions of this Agreement.

        27.3    Any reference to any federal, state, local, or foreign statute
                or law shall be deemed also to refer to all rules and
                regulations promulgated thereunder, unless the context requires
                otherwise.

                                      35
<PAGE>

        27.4    The word "including" in this Agreement shall mean "including
                without limitation".

28.     SEVERABILITY

        28.1    If any term, provision or condition of this Agreement is held to
                be invalid, void or unenforceable by a court or Governmental
                Authority of competent jurisdiction and such holding is subject
                to no further appeal or judicial review, then such invalid,
                void, or unenforceable term, provision or condition shall be
                deemed severed from this Agreement and all remaining terms,
                provisions and conditions of this Agreement shall continue in
                full force and effect, unless, however, the effect of the
                severance would vitiate the intent of the Parties hereto, as
                determined by either Party in its reasonable discretion.

        28.2    The Parties shall endeavor in good faith to replace such
                invalid, void, or unenforceable provisions with a valid and
                enforceable provision which achieves the purposes intended by
                the Parties to the greatest extent permitted by law.

29.     WAIVERS

        29.1    No failure or delay on the part of a Party in exercising any of
                its rights under this Agreement or in insisting upon strict
                performance of provisions of this Agreement, no partial exercise
                by either Party of any of its rights under this Agreement, and
                no course of dealing between the Parties shall constitute a
                waiver of the rights of either Party under this Agreement. Any
                waiver shall be effective only by a written instrument signed by
                the Party granting such waiver, and such shall not operate as a
                waiver of, or estoppel with respect to, any subsequent failure
                to comply therewith.

30.     AMENDMENTS

        30.1    The Parties shall negotiate in good faith to determine necessary
                amendments, if any, to this Agreement, provided that in
                negotiating such amendments the Parties shall attempt, in good
                faith, to reasonably preserve the bargain initially struck in
                this Agreement if any Governmental Authority, FERC, any state or
                the PUCN, implements a change in any Law or applicable
                regulation that materially affects or is reasonably expected to
                materially affect Buyer's PLR service under this Agreement.

        30.2    The Parties shall meet to discuss the impact of any changes in
                Buyer's OATT or the ISA's OATT, as applicable, or any rule or
                practice of NERC, WSCC, or any other Governmental Authority on
                the terms of this Agreement upon request by either Party during
                the term of this Agreement.

        30.3    In the event that it is deemed necessary to amend this
                Agreement, the Parties will attempt to agree upon such amendment
                and will submit such mutually agreed upon amendment(s) to the
                FERC for filing and acceptance.

                                      36
<PAGE>

        30.4    Amendments to this Agreement shall be in writing and shall be
                executed by an authorized representative of each Party.

31.     TIME IS OF THE ESSENCE

        31.1    Time is of the essence of this Agreement and in the performance
                of all of the covenants and conditions hereof.

32.     APPROVALS

        32.1    Each Party's performance under this Agreement is subject to the
                condition that all requisite governmental and regulatory
                approvals for such performance are obtained in form and
                substance satisfactory to the other Party in its reasonable
                discretion. Each Party shall use best efforts to obtain all
                required approvals and shall exercise due diligence and shall
                act in good faith to cooperate and assist each other in
                acquiring any regulatory approval necessary to effectuate this
                Agreement. Further, the Parties agree to reasonably support the
                other Party in any associated regulatory proceedings, including
                by being a witness on behalf of the other Party.

        32.2    Notwithstanding the provisions of Section 2.2.2 of this
                Agreement, if any Governmental Authority in its review of the
                Agreement places conditions on or requires revisions of the
                Agreement which do not have a material adverse effect on
                Supplier or Buyer, the Parties agree to execute an amendment to
                the Agreement reasonably acceptable to each Party incorporating
                such conditions or revisions.

        32.3    This Agreement is made subject to present or future state or
                federal laws, regulations, or orders properly issued by state or
                federal bodies having jurisdiction.

        32.4    The Parties hereto agree to execute and deliver promptly, at the
                expense of the Party requesting such action, any and all other
                and further instruments, documents and information which may
                reasonably be necessary or appropriate to give full force and
                effect to the terms and intent of this Agreement.

33.     PLR SERVICE

        33.1    The Agreement is premised on Buyer providing PLR service.
                Notwithstanding anything to the contrary contained herein, if
                Nevada retail electricity restructuring (including
                implementation of retail customer choice of electricity
                suppliers) is delayed beyond the Effective Date of this
                Agreement, the Parties shall continue to perform this Agreement
                in all respects pursuant to the terms and conditions hereof as
                if Buyer was the PLR and Buyer's retail and wholesale customers
                shall be considered as the TRR.

34.     CONFIDENTIALITY

        34.1    Confidential Information. Certain information provided by a
                ------------------------
                Party (the

                                      37
<PAGE>

                "Disclosing Party") to the other Party (the "Receiving Party")
                in connection with the negotiation or performance of this
                Agreement may be considered confidential and/or proprietary
                (hereinafter referred to as "Confidential Information") by the
                Disclosing Party. To be considered Confidential Information
                hereunder, such information must be clearly labeled or
                designated by the Disclosing Party as "confidential" or
                "proprietary" or with words of like meaning. If disclosed
                orally, such information shall be clearly identified as
                confidential and such status shall be confirmed promptly
                thereafter in writing.

        34.2    Treatment of Confidential Information. The Receiving Party shall
                -------------------------------------
                treat any Confidential Information with at least the same degree
                of care regarding its secrecy and confidentiality as the
                Receiving Party's similar information is treated within the
                Receiving Party's organization. The Receiving Party shall not
                disclose the Confidential Information of the Disclosing Party to
                third parties (except as stated hereinafter) nor use it for any
                purpose other than the negotiation or performance of this
                Agreement, without the express prior written consent of the
                Disclosing Party. The Receiving Party further agrees that it
                shall restrict disclosure of Confidential Information as
                follows:

                34.2.1  Disclosure shall be restricted solely to its agents as
                        may be necessary to enforce the terms of this Agreement
                        after advising those agents of their obligations under
                        this Section 34.2.

                34.2.2  In the event that the Receiving Party is requested,
                        pursuant to or as required by applicable Law or by legal
                        process, to disclose any Confidential Information, the
                        Receiving Party shall provide the Disclosing Party with
                        prompt notice of such request or requirement in order to
                        enable Disclosing Party to seek an appropriate
                        protective order or other remedy and to consult with
                        Disclosing Party with respect to Disclosing Party taking
                        steps to resist or narrow the scope of such request or
                        legal process. The Receiving Party agrees not to oppose
                        any action by the Disclosing Party to obtain a
                        protective order or other appropriate remedy. In the
                        absence of such protective order, and provided that the
                        Receiving Party is advised by its counsel that it is
                        compelled to disclose the Confidential Information, the
                        Receiving Party shall:

                        (i)     furnish only that portion of the Confidential
                                Information which the Receiving Party is advised
                                by counsel is legally required; and

                        (ii)    use its commercially reasonable best efforts, at
                                the expense of the Disclosing Party, to ensure
                                that all Confidential Information so disclosed
                                will be accorded confidential treatment.

        34.3    Excluded Information. Confidential Information shall not be
                --------------------
                deemed to include the following:

                34.3.1  information which is or becomes generally available to
                        the public other

                                      38
<PAGE>

                        than as a result of a disclosure by the Receiving Party;

                34.3.2  information which was available to the Receiving Party
                        on a non-confidential basis prior to its disclosures by
                        the Disclosing Party; and

                34.3.3  information which becomes available to the Receiving
                        Party on a non-confidential basis from a person other
                        than the Disclosing Party or its representative who is
                        not otherwise bound by a confidentiality agreement with
                        Disclosing Party or its agent or is otherwise not under
                        any obligation to Disclosing party or its agent not to
                        disclose the information to the Receiving Party.

        34.4    Injunctive Relief Due to Breach. The Parties agree that remedies
                -------------------------------
                at law may be inadequate to protect each other in the event of a
                breach of this Section 34, and the Receiving Party hereby in
                advance agrees that the Disclosing Party shall be entitled to
                seek and obtain, without proof of actual damages, temporary,
                preliminary and permanent injunctive relief from any court or
                Governmental Authority of competent jurisdiction restraining the
                Receiving Party from committing or continuing any breach of this
                Section 34.

35.     CHOICE OF LAW

        35.1    This Agreement and the rights and obligations of the Parties
                shall be construed and governed by the Laws of: (i) the State of
                Nevada as if executed and performed wholly within that state;
                and (ii) the Federal Power Act, to the extent the rights and
                obligations of the Parties are covered by such act.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representative on the date set forth below.

SIERRA PACIFIC POWER COMPANY                     WPS NORTHERN NEVADA, LLC

                                                 By: WPS POWER
                                                 DEVELOPMENT, INC.
                                                 (Its Sole Member)

By:                                             By:
         ------------------------------                -----------------------
         William E. Peterson                           Gerald L. Mroczkowski

Title:   Senior Vice President, General         Title: Vice President
         Counsel, and Corporate Secretary

Date:    October 25, 2000                       Date:  October 25, 2000

                                      39
<PAGE>

                                    EXHIBIT A
                                  TRACY BUNDLE
                 ASSET BUNDLE CAPACITY AND OPERATING PARAMETERS

<TABLE>
<CAPTION>
                                                  NET                         MINIMUM HOURLY
                              NET SUMMER         WINTER        RAMP           ENERGY TAKE
                              CAPABILITY      CAPABILITY       RATE
         UNIT                   (MW)            (MW)          (MW/hr)             (MWh)
-----------------------------------------------------------------------------------------------
<S>                           <C>             <C>             <C>             <C>
Tracy Unit 1                         53              53            40                       21
Tracy Unit 2                         83              83            40                       25
Tracy Unit 3                        108             108            40                       20
Tracy Unit 4 & 5                     89              93            40
Clark Mt.. 1                         10              11            11
Clark Mt.. 2                         10              11            11
Clark Mt.. 3                         69              84            40
Clark Mt.. 4                         69              84            40
Valley Road 1                         2               2             2
Valley Road 2                         2               2             2
Valley Road 3                         2               2             2
Brunswick 1                           2               2             2
Brunswick 2                           2               2             2
Brunswick 3                           2               2             2
Gabbs 1                               2               3             3
Gabbs 2                               2               3             3
-----------------------------------------------------------------------------------------------
Total                               507             545           280                       66
===============================================================================================
</TABLE>

                    Minimum Annual Energy Take: 2,200,000 MWh

                      Limit on Excused Energy:*    12,000 MWh

The summer months shall consist of the months of June through September.

The winter months shall consist of the months of January through May and the
months of October through December.

* The Limit on Excused Energy is an annual figure, to be prorated in any
Contract Year that is less than a twelve month period.

                                      A-1
<PAGE>

                                   EXHIBIT B
                                 TRACY BUNDLE
                      ENERGY AND ANCILLARY SERVICE PRICES

Energy Prices*
--------------

Price Floor of Energy:         $  25.42 per MWh
Price Ceiling of Energy:       $  42.92 per MWh

Ancillary Service Prices*
-------------------------

        Regulation and Frequency Response:

                       On-Peak: $  12.40 per MW-reserved per hour
                      Off-Peak: $   7.09 per MW-reserved per hour

        Operating Reserve- Spinning Reserve:

                       On-Peak: $  16.15 per MW-reserved per hour
                      Off-Peak: $   9.23 per MW-reserved per hour

        Operating Reserve- Supplemental Reserve:

                       On-Peak: $  10.75 per MW-reserved per hour
                      Off-Peak: $   6.14 per MW-reserved per hour

The On-Peak periods shall consist of Hour Ending (HE) 0700 through HE 2200 PPT,
Monday through Saturday. The Off-Peak periods shall consist of HE 0100 through
HE 0600, HE 2300 and HE 2400 PPT, Monday through Saturday; HE 0100 through HE
2400 PPT Sunday and additional Off-Peak days (holidays) as designated annually
by the WSCC.

                                                     *  SUBJECT TO FERC APPROVAL
                                                     ---------------------------

                                      B-1
<PAGE>

                                    EXHIBIT C
                                  TRACY BUNDLE
                           SUPPLIER'S MONTHLY INVOICE

         A          Price Ceiling of Energy          $        42.92  /MWh
         B          Price Floor of Energy            $        25.42  /Mwh

MONTH 1 - ENERGY
----------------

<TABLE>
<CAPTION>
                           C                D              E                F                 G                   H

     Dispatch         Asset Bundle      Delivered       Supplier       Market Price     Market Price x      Market Price x
       Hour          Capacity (MWh)   Energy (MWh)  Shortfall (MWh)  of Energy ($/MWh)  Delivered Energy Asset Bundle Capacity
       ----          --------------   ------------  ---------------  -----------------  ---------------- ---------------------
        <S>               <C>              <C>             <C>            <C>           <C>              <C>
         1                507              507              0             40.00         $ 20,280.00     $     20,280.00
         2                507              507              0             40.00           20,280.00           20,280.00
         3                507              447             60             40.00           17,880.00           20,280.00
         4                507              447             60             40.00           17,880.00           20,280.00
         5                377              367             10             30.00           11,010.00           11,310.00
         6                407              407              0             30.00           12,210.00           12,210.00
         7                497              477             20             20.00            9,540.00            9,940.00
         8                507              507              0             20.00           10,140.00           10,140.00
         9                507              507              0             20.00           10,140.00           10,140.00
        10                507              507              0             25.00           12,675.00           12,675.00
-------------------------------------------------------------------------------------------------------------------------
                        4,830            4,680            150                          $ 142,035.00     $    147,535.00

<CAPTION>

<S>                                                                         <C>        <C>              <C>
I.     Sum of (Delivered Energy times corresponding hourly Market Price)    Sec 7.2.1  $  142,035.00

   IT.     Sum of (Asset Bundle Capacity times corresponding hourly Market Price)                       $      147,535.00

J.    Sum of hourly Delivered Energy multiplied by the Price Ceiling        Sec 7.2.2  $  200,865.60
of Energy

  JT.     Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of Energy                 $      207,303.60

K.    Sum of hourly Delivered Energy multiplied by the Price Floor         Sec 7.2.3  $  118,965.60
of Energy

          KT.     Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of Energy           $      122,778.60

L.    Invoiced Amount - Energy                  Sec 7.3   (K less than I less than J) $  142,035.00

M.    Theoretical Amount for Expected Performance         (KT less than IT less than JT)                $      147,535.00

MONTH 1 - ANCILLARY SERVICE CAPACITY - REGULATION AND FREQUENCY RESPONSE
------------------------------------------------------------------------

<CAPTION>

                           N                O              P                Q                 R                   S

                      Schedule of       Ancillary                                          Price x
     Dispatch          Ancillary        Capacity        Supplier    Capacity Price of     Ancillary        Price x Schedule

                                                                                           Capacity
       Hour          Capacity (MW)    Supplied (MW)  Shortfall (MW)  Services ($/MW)       Supplied     of Ancillary Services
       ----          -------------    -------------  --------------  ---------------       --------     ---------------------
                                                        (N - O)                            (O x Q)             (N x Q)

<S>                        <C>              <C>            <C>             <C>         <C>              <C>
         1                 0                0              0               7.09        $     0.00       $        0.00
         2                 0                0              0               7.09              0.00                0.00
         3                 0                0              0              12.40              0.00                0.00
         4                 0                0              0              12.40              0.00                0.00
         5                30               30              0              12.40            372.00              372.00
         6                 0                0              0              12.40              0.00                0.00
         7                 0                0              0              12.40              0.00                0.00
         8                 0                0              0              12.40              0.00                0.00
         9                 0                0              0              12.40              0.00                0.00
        10                 0                0              0              12.40              0.00                0.00
-----------------------------------------------------------------------------------------------------------------------
                           30              30              0                           $    372.00      $        372.00

<CAPTION>

<S>                                                                 <C>                <C>
T.    Invoiced Amount - Ancillary Service Capacity -                Sec 7.2.5          $    372.00
       Regulation and Frequency Response

U.    Theoretical Amount for Expected Performance                                                       $        372.00
</TABLE>

                                      C-1
<PAGE>

                                    EXHIBIT C
                                  TRACY BUNDLE
                           SUPPLIER'S MONTHLY INVOICE

MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
-------------------------------------------------------

<TABLE>
<CAPTION>
                           V                W              X                Y                 Z                   AA

                      Schedule of       Ancillary                                          Price x
     Dispatch          Ancillary        Capacity        Supplier    Capacity Price of     Ancillary        Price x Schedule

                                                                                           Capacity
       Hour          Capacity (MW)    Supplied (MW)  Shortfall (MW)  Services ($/MW)       Supplied     of Ancillary Services
       ----          -------------    -------------  --------------  ---------------       --------     ---------------------
                                                        (V - W)                            (W x Y)             (V x Y)

<S>                      <C>               <C>           <C>              <C>         <C>              <C>
         1                 0                0              0               9.23        $     0.00       $        0.00
         2                 0                0              0               9.23              0.00                0.00
         3                 0                0              0              16.15              0.00                0.00
         4                 0                0              0              16.15              0.00                0.00
         5                80               80              0              16.15          1,292.00            1,292.00
         6                80               60             20              16.15            969.00            1,292.00
         7                 0                0              0              16.15              0.00                0.00
         8                 0                0              0              16.15              0.00                0.00
         9                 0                0              0              16.15              0.00                0.00
        10                 0                0              0              16.15              0.00                0.00
------------------------------------------------------------------------------------------------------------------------
                         160              140             20                           $ 2,261.00      $     2,584.00

<CAPTION>

<S>                                                                 <C>                <C>
AB.    Invoiced Amount - Ancillary Service Capacity - Spinning      Sec 7.2.5          $   2,261.00
Reserve

AC.    Theoretical Amount for Expected Performance                                                      $       2,584.00

<CAPTION>

MONTH 1 - ANCILLARY SERVICE CAPACITY - SUPPLEMENTAL RESERVE
-----------------------------------------------------------

                           AD              AE              AF               AG                AH                  AI

                      Schedule of       Ancillary                                          Price x
     Dispatch          Ancillary        Capacity        Supplier    Capacity Price of     Ancillary        Price x Schedule

                                                                                           Capacity
       Hour          Capacity (MW)    Supplied (MW)  Shortfall (MW)  Services ($/MW)       Supplied     of Ancillary Services
       ----          -------------    -------------  --------------  ---------------       --------     ---------------------

                                                       (AD - AE)                          (AE x AG)           (AD x AG)

<S>                        <C>              <C>            <C>             <C>         <C>              <C>
         1                 0                0              0               6.14        $     0.00       $        0.00
         2                 0                0              0               6.14              0.00                0.00
         3                 0                0              0              10.75              0.00                0.00
         4                 0                0              0              10.75              0.00                0.00
         5                10               10              0              10.75            107.50              107.50
         6                10               10              0              10.75            107.50              107.50
         7                10               10              0              10.75            107.50              107.50
         8                 0                0              0              10.75              0.00                0.00
         9                 0                0              0              10.75              0.00                0.00
        10                 0                0              0              10.75              0.00                0.00
-----------------------------------------------------------------------------------------------------------------------
                          30               30              0                           $   322.50       $      322.50

<CAPTION>

<S>                                                                 <C>                <C>
AJ.    Invoiced Amount - Ancillary Service Capacity - Supplemental  Sec 7.2.5          $    322.50
Reserve

AK.    Theoretical Amount for Expected Performance                                                      $        322.50

MONTH 1 - ANCILLARY SERVICE ENERGY
----------------------------------

<CAPTION>

                           AL              AM              AN               AO                AP                  AQ

                      Schedule of       Ancillary                                          Price x
     Dispatch          Ancillary         Energy         Supplier     Price Ceiling of     Ancillary        Price x Schedule

       Hour           Energy (MWh    Supplied (MWh) Shortfall(MWh)    Energy ($/MWh)   Energy Supplied   of Ancillary Energy
       ----           -----------    -------------- --------------    --------------   ---------------   -------------------
                                                       (AL - AM)                          (AM x AO)           (AL x AO)

<S>                       <C>              <C>            <C>             <C>          <C>              <C>
         1                 0                0              0              42.92        $     0.00       $        0.00
         2                 0                0              0              42.92              0.00                0.00
         3                 0                0              0              42.92              0.00                0.00
</TABLE>

                           C-2
<PAGE>

                                    EXHIBIT C
                                  TRACY BUNDLE
                           SUPPLIER'S MONTHLY INVOICE

<TABLE>
<CAPTION>
<S>                       <C>              <C>            <C>             <C>          <C>              <C>
         4                 0                0              0              42.92              0.00                0.00
         5                40               40              0              42.92          1,716.80            1,716.80
         6                30               10             20              42.92            429.20            1,287.60
         7                10               10              0              42.92            429.20              429.20
         8                 0                0              0              42.92              0.00                0.00
         9                 0                0              0              42.92              0.00                0.00
        10                 0                0              0              42.92              0.00                0.00
------------------------------------------------------------------------------------------------------------------------
                          80               60             20        $    429.20      $   2,575.20     $      3,433.60
<CAPTION>

<S>                                                  <C>                               <C>              <C>
AR.    Invoiced Amount - Ancillary Services Energy   Sec 7.2.6                         $   2,575.20

AS.    Theoretical Amount for Expected Performance                                                      $       3,433.60

MONTH 1 - TOTAL INVOICE AMOUNT                       Sec 7.3         (L + T + AB + AJ  $  147,565.70
                                                                          + AR)
===============================================================================================================================

MONTH 2 - ENERGY
----------------

                           C                D              E                F                 G                   H

     Dispatch         Asset Bundle      Delivered       Supplier       Market Price     Market Price x      Market Price x

       Hour          Capacity (MWh)   Energy (MWh)  Shortfall (MWh) of Energy ($/MWh)  Delivered Energy   Asset Bundle Cap.
       ----          --------------   ------------  --------------- -----------------  ----------------   -----------------

                                                        (C - D)                            (D x F)             (C x F)

         1                507              507              0             45.00        $  22,815.00     $     22,815.00
         2                507              507              0             45.00           22,815.00           22,815.00
         3                507              447             60             45.00           20,115.00           22,815.00
         4                507              447             60             55.00           24,585.00           27,885.00
         5                377              367             10             55.00           20,185.00           20,735.00
         6                407              407              0             55.00           22,385.00           22,385.00
         7                497              477             20             35.00           16,695.00           17,395.00
         8                507              507              0             35.00           17,745.00           17,745.00
         9                507              507              0             35.00           17,745.00           17,745.00
        10                507              507              0             40.00           20,280.00           20,280.00
-------------------------------------------------------------------------------------------------------------------------
                        4,830            4,680            150                          $ 205,365.00     $    212,615.00

<CAPTION>

<S>                                                                 <C>                <C>              <C>
I.     Sum of (Delivered Energy times corresponding hourly Market   Sec 7.2.1          $  205,365.00
Price)

   IT.     Sum of (Asset Bundle Capacity times corresponding                                            $      212,615.00
hourly Market Price)

J.     Sum of hourly Delivered Energy multiplied by the Price       Sec 7.2.2          $  200,865.60
Ceiling of Energy

  JT.     Sum of hourly Asset Bundle Capacity multiplied by the Price Ceiling of                        $      207,303.60
Energy

K.     Sum of hourly Delivered Energy multiplied by the Price       Sec 7.2.3          $  118,965.60
Floor of Energy

    KT.     Sum of hourly Asset Bundle Capacity multiplied by the Price Floor of                        $      122,778.60
Energy

L.    Invoiced Amount - Energy                       Sec 7.3  (I greater than J)       $  200,865.60

M.    Theoretical Amount for Expected Performance                       (IT greater than JT)            $      207,303.60

MONTH 3 - ENERGY
----------------

<CAPTION>

                           C                D              E                F                 G                   H

     Dispatch         Asset Bundle      Delivered       Supplier       Market Price      Market Price x      Market Price x

       Hour          Capacity (MWh)   Energy (MWh)  Shortfall (MWh)  of Energy ($/MWh)  Delivered Energy   Asset Bundle Cap.
       ----          --------------   ------------  ---------------  -----------------  ----------------   -----------------

                                                        (C - D)                            (D x F)             (C x F)

<S>                       <C>              <C>             <C>            <C>          <C>              <C>
         1                507              507              0             30.00        $  15,210.00     $     15,210.00
         2                507              507              0             20.00           10,140.00           10,140.00
         3                507              447             60             20.00            8,940.00           10,140.00
</TABLE>

                                      C-3
<PAGE>

                                   EXHIBIT C
                                  TRACY BUNDLE
                           SUPPLIER'S MONTHLY INVOICE
<TABLE>
<S>                       <C>              <C>             <C>            <C>              <C>                <C>
         4                507              447             60             20.00            8,940.00           10,140.00
         5                377              367             10             15.00            5,505.00            5,655.00
         6                407              407              0             15.00            6,105.00            6,105.00
         7                497              477             20             15.00            7,155.00            7,455.00
         8                507              507              0             15.00            7,605.00            7,605.00
         9                507              507              0             15.00            7,605.00            7,605.00
        10                507              507              0             15.00            7,605.00            7,605.00
-------------------------------------------------------------------------------------------------------------------------
                        4,830            4,680            150                          $  84,810.00    $      87,660.00

<CAPTION>

<S>                                                                 <C>                <C>              <C>
I.     Sum of (Delivered Energy times corresponding hourly Market   Sec 7.2.1          $   84,810.00
Price)

          IT.     Sum of (Asset Bundle Capacity times corresponding hourly Market                       $       87,660.00
Price)

J.     Sum of hourly Delivered Energy multiplied by the Price       Sec 7.2.2          $  200,865.60
Ceiling of Energy

           JT.     Sum of hourly Asset Bundle Capacity multiplied by the Price                          $      207,303.60
Ceiling of Energy

K.     Sum of hourly Delivered Energy multiplied by the Price       Sec 7.2.3          $  118,965.60
Floor of Energy

          KT.     Sum of hourly Asset Bundle Capacity multiplied by the Price Floor                     $      122,778.60
of Energy

L.    Invoiced Amount - Energy                       Sec 7.3     (I less than K)       $  118,965.60

M.    Theoretical Amount for Expected Performance                (IT less than KT)                      $      122,778.60
</TABLE>

For the purposes of this example, the portions of the monthly invoices
attributable to Ancillary Services for the second and third months were assumed
to be the same as the corresponding portions for the first month.

                                      C-4
<PAGE>

                                   EXHIBIT D

                                 TRACEY BUNDLE

                   BUYER'S MONTHLY INVOICE-REPLACEMENT COSTS

<TABLE>
<CAPTION>

MONTH 1 - ENERGY
----------------

                 A                  B*                    C*                  D
Dispatch    Replacement     Replacement Cost       Replacement Cost    Gross Replacement
 Hour       Energy (MWh)    of Energy ($/MWh)         of Energy         Cost of Energy
 ----       ------------    -----------------         ---------         --------------
                                                                         (A x B) + C
<S>         <C>             <C>                    <C>                 <C>
   1             0                      na              $0.00                $0.00
   2             0                      na               0.00             2,200.00
   3            60                   35.00             100.00             1,850.00
   4            60                   30.00              50.00               350.00
   5            10                   30.00              50.00                 0.00
   6             0                      na               0.00               500.00
   7            20                   25.00               0.00                 0.00
   8             0                      na               0.00                 0.00
   9             0                      na               0.00                 0.00
   10            0                      na               0.00                 0.00
-------------------------------------------------------------------------------------
               150                                                     $  4,900.00

E. Gross Replacement Cost of Energy                                    $  4,900.00

F. Theoretical Supplier's Invoice for Expected Performance             $147,535.00

G. Actual Supplier's Invoice Amount                                     142,035.00
                                                                       -----------
H. Avoided Payment to Supplier                          (F-G)          $  5,500.00

I. Invoiced Replacement Cost - Energy      (E is less than H)          $      0.00
<CAPTION>
MONTH 1 - ANCILLARY SERVICES CAPACITY-REGULATION AND FREQUENCY RESPONSE
-----------------------------------------------------------------------

                 J                  K*                    L*                  M
Dispatch    Replacement     Replacement Cost       Replacement Cost    Gross Replacement
 Hour     Capacity (MWh)  of Capacity ($/MWh)        of Capacity       Cost of Capacity
 ----       ------------    -----------------         ---------         --------------
                                                                         (J x K) + L
<S>         <C>             <C>                    <C>                 <C>
1                0                      na              $0.00                $0.00
2                0                      na               0.00                 0.00
3                0                      na               0.00                 0.00
4                0                      na               0.00                 0.00
5                0                      na               0.00                 0.00
6                0                      na               0.00                 0.00
7                0                      na               0.00                 0.00
8                0                      na               0.00                 0.00
9                0                      na               0.00                 0.00
10               0                      na               0.00                 0.00
-------------------------------------------------------------------------------------
                 0                                                     $      0.00

N. Gross Replacement Cost of Ancillary Capacity-
   Regulation and Frequency Response                                   $      0.00

O. Theoretical Supplier's Invoice Amount for Expected Performance      $    372.00

P. Actual Supplier's Invoice Amount                                         372.00
                                                                       -----------

Q. Avoided Payment to Supplier                          (O-P)          $      0.00
</TABLE>

                                      D-1
<PAGE>

                                   EXHIBIT D
                                 TRACY BUNDLE
                  BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS

MONTH 1 - ANCILLARY SERVICE CAPACITY - SPINNING RESERVE
-------------------------------------------------------

<TABLE>
<CAPTION>
                              R                   S *                   T *                    U
      Dispatch           Replacement        Replacement Cost      Replacement Cost     Gross Replacement
        Hour            Capacity (MW)      of Capacity ($/MW)       of Capacity        Cost of Capacity
        ----            -------------      ------------------       -----------        ----------------

<S>                          <C>                               <C>                  <C>
         1                    0                            na   $       0.00         $       0.00
         2                    0                            na           0.00                 0.00
         3                    0                            na           0.00                 0.00
         4                    0                            na           0.00                 0.00
         5                    0                            na           0.00                 0.00
         6                   20                         40.00         100.00               900.00
         7                    0                            na           0.00                 0.00
         8                    0                            na           0.00                 0.00
         9                    0                            na           0.00                 0.00
        10                    0                            na           0.00                 0.00
---------------------------------------------------------------------------------------------------
                             20                                                      $       900.00

<CAPTION>
<S>                                                                                  <C>
V.     Gross Replacement Cost of Ancillary Capacity - Spinning Reserve               $       900.00

W.     Theoretical Supplier's Invoice Amount for Expected Performance                $     2,584.00

X.     Actual Supplier's Invoice Amount                                                    2,261.00

Y.     Avoided Payment to Supplier                                    (W - X)        $       323.00

MONTH 1 - ANCILLARY CAPACITY - SUPPLEMENTAL RESERVE
---------------------------------------------------

<CAPTION>
                              Z                   AA *                  AB *                  AC
      Dispatch           Replacement        Replacement Cost      Replacement Cost     Gross Replacement
        Hour            Capacity (MW)      of Capacity ($/MW)       of Capacity        Cost of Capacity
        ----            -------------      ------------------       -----------        ----------------
                                                                                         (Z x AA) + AB
<S>                          <C>                               <C>                  <C>
         1                    0                            na   $       0.00         $       0.00
         2                    0                            na           0.00                 0.00
         3                    0                            na           0.00                 0.00
         4                    0                            na           0.00                 0.00
         5                    0                            na           0.00                 0.00
         6                    0                            na           0.00                 0.00
         7                    0                            na           0.00                 0.00
         8                    0                            na           0.00                 0.00
         9                    0                            na           0.00                 0.00
        10                    0                            na           0.00                 0.00
-------------------------------------------------------------------------------------------------
                              0                                                      $        0.00

<CAPTION>

<S>                                                                                  <C>
AD.     Gross Replacement Cost of Ancillary Capacity - Supplemental Reserve          $        0.00

AE.     Theoretical Supplier's Invoice Amount for Expected Performance               $      322.50

AF.     Actual Supplier's Invoice Amount                                                    322.50
                                                                                     ---------------
AG.     Avoided Payment to Supplier                                  (AE - AF)       $        0.00

<CAPTION>
MONTH 1 - ANCILLARY SERVICE ENERGY
----------------------------------

                             AH                   AI *                  AJ *                  AK
      Dispatch           Replacement        Replacement Cost      Replacement Cost     Gross Replacement
</TABLE>

                                      D-2
<PAGE>

                                   EXHIBIT D
                                 TRACY BUNDLE
                  BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS

<TABLE>
<CAPTION>
        Hour            Energy (MWh)       of Energy ($/MWh)        of Energy **        Cost of Energy
        ----            ------------       -----------------        ------------        --------------
                                                                                        (AH x AI) + AJ
<S>                           <C>                               <C>                          <C>
         1                    0                            na   $       0.00                 0.00
         2                    0                            na           0.00                 0.00
         3                    0                            na           0.00                 0.00
         4                    0                            na           0.00                 0.00
         5                    0                            na           0.00                 0.00
         6                   20                         45.00          20.00               920.00
         7                    0                            na           0.00                 0.00
         8                    0                            na           0.00                 0.00
         9                    0                            na           0.00                 0.00
        10                    0                            na           0.00                 0.00
---------------------------------------------------------------------------------------------------
                             20                                                      $       920.00
<CAPTION>
                                                                                     $       920.00
<S>     <C>                                                                          <C>
AL.     Gross Replacement Cost of Ancillary Energy

AM.     Theoretical Supplier's Invoice Amount for Expected Performance               $     3,433.60

AN.     Actual Supplier's Invoice Amount                                                   2,575.20

AO.     Avoided Payment to Supplier                                  (AM - AN)       $       858.40

AP.     Total of Gross Replacement Costs - Ancillary Services    (N + V + AD + AL)   $     1,820.00

AQ.     Total of Avoided Payments to Supplier - Ancillary
        Services                                                 (Q + Y + AG + AO)   $     1,181.40

AR.     Invoiced Replacement Cost - Ancillary Services ***     (AP (more than) AQ)   $       638.60

MONTH 1 - TOTAL INVOICE AMOUNT                                        (I + AR)       $       638.60
===========================================================================================================

MONTH 2 - ENERGY
----------------

<CAPTION>
                              A                   B *                   C *                    D
      Dispatch           Replacement        Replacement Cost      Replacement Cost     Gross Replacement
        Hour            Energy (MWh)       of Energy ($/MWh)         of Energy          Cost of Energy
        ----            ------------       -----------------         ---------          --------------
                                                                                          (A x B) + C
<S>                           <C>                               <C>                          <C>
         1                    0                            na   $       0.00                 0.00
         2                    0                            na           0.00                 0.00
         3                   60                         40.00         200.00             2,600.00
         4                   60                         55.00         100.00             3,400.00
         5                   10                         48.00         200.00               680.00
         6                    0                            na           0.00                 0.00
         7                   20                         35.00         300.00             1,000.00
         8                    0                            na           0.00                 0.00
         9                    0                            na           0.00                 0.00
        10                    0                            na           0.00                 0.00
----------------------------------------------------------------------------------------------------
                             150                                                     $      7,680.00

<CAPTION>
<S>                                                                                  <C>
E.     Gross Replacement Cost of Energy                                              $      7,680.00

F.     Theoretical Supplier's Invoice Amount for Expected Performance                $    207,303.60

G.     Actual Supplier's Invoice Amount                                                   200,865.60
                                                                                     ---------------
H.     Avoided Payment to Supplier                                    (F - G)        $      6,438.00

I.     Invoiced Replacement Cost - Energy                   (E (more than) H)        $      1,242.00

<CAPTION>
MONTH 3 - ENERGY
----------------
</TABLE>

                                      D-3
<PAGE>

                                   EXHIBIT D
                                 TRACY BUNDLE
                  BUYER'S MONTHLY INVOICE - REPLACEMENT COSTS
<TABLE>
<CAPTION>
                              A                   B *                   C *                    D
      Dispatch           Replacement        Replacement Cost      Replacement Cost     Gross Replacement
        Hour            Energy (MWh)       of Energy ($/MWh)         of Energy          Cost of Energy
        ----            ------------       -----------------         ---------          --------------
                                                                                          (A x B) + C
<S>                         <C>                  <C>                  <C>                <C>
         1                    0                     na          $       0.00                 0.00
         2                    0                     na                  0.00                 0.00
         3                   60                  28.00                100.00             1,780.00
         4                   60                  24.00                 50.00             1,490.00
         5                   10                  24.00                  0.00               240.00
         6                    0                     na                  0.00                 0.00
         7                   20                  24.00                 50.00               530.00
         8                    0                     na                  0.00                 0.00
         9                    0                     na                  0.00                 0.00
         10                   0                     na                  0.00                 0.00
--------------------------------------------------------------------------------------------------
                            150                                                     $    4,040.00

<CAPTION>
E.     Gross Replacement Cost of Energy                                             $    4,040.00

F.     Theoretical Supplier's Invoice Amount for Expected Performance               $  122,778.60

G.     Actual Supplier's Invoice Amount                                                118,965.60
                                                                                  ---------------
H.     Avoided Payment to Supplier                                    (F - G)       $    3,813.00

I.     Invoiced Replacement Cost - Energy                   (E (more than) H)       $      227.00
</TABLE>

For the purposes of this example, the portions of the monthly invoices
attributable to Ancillary Services for the second and third months were assumed
to be the same as the corresponding portions for the first month.

* Replacement Costs will be directly assigned whenever causal relationships can
be established; otherwise allocations will be based upon the average of costs
that have not been directly assigned.

** Net of Transaction Costs that Buyer would have incurred if Supplier had
performed.

*** If AQ is equal to AP, the invoiced replacement cost for Ancillary Services
for the month will be zero. If AQ is greater than AP, a credit, which is equal
to AQ minus AP, will be carried forward to subsequent months during the Contract
Year and applied against any Replacement Costs for Ancillary Services that would
otherwise have been billed to Supplier. The total of all Replacements Costs for
Ancillary Services billed to Supplier during each Contract Year shall not be
less than zero.

                                      D-4
<PAGE>

                                   EXHIBIT E
                                 TRACY BUNDLE
                           YEAR END TRUE-UP INVOICE

       A        Price Ceiling of Energy              $       42.92  /MWh
       B        Price Floor of Energy                $       25.42  /MWh

EXAMPLE 1
---------

<TABLE>
<CAPTION>
                       C                 D                    E                   F                    G
                   Delivered       Market Price x      Price Ceiling x      Price Floor x     Supplier's Invoiced
     Month       Energy (MWh)     Delivered Energy    Delivered Energy     Delivered Energy     Amount - Energy
     -----       ------------     ----------------    ----------------     ----------------     ---------------
                                                           (A x C)             (B x C)
<S>                  <C>        <C>                  <C>                 <C>                  <C>
       1             4,680      $    142,035.00      $   200,865.60      $    118,965.60      $    142,035.00
       2             4,680           205,365.00          200,865.60           118,965.60           200,865.60
       3             4,680            84,810.00          200,865.60           118,965.60           118,965.60
       4             5,070           253,500.00          217,604.40           128,879.40           217,604.40
       5             5,070           233,220.00          217,604.40           128,879.40           217,604.40
       6             4,870           224,020.00          209,020.40           123,795.40           209,020.40
       7             5,070           243,360.00          217,604.40           128,879.40           217,604.40
       8             5,070           233,220.00          217,604.40           128,879.40           217,604.40
       9             4,530           212,910.00          194,427.60           115,152.60           194,427.60
      10             5,070           223,080.00          217,604.40           128,879.40           217,604.40
      11             5,070           268,710.00          217,604.40           128,879.40           217,604.40
      12             4,770           228,960.00          204,728.40           121,253.40           204,728.40
-----------------------------------------------------------------------------------------------------------------
     Total          58,630      $  2,553,190.00      $ 2,516,399.60      $  1,490,374.60      $  2,375,669.00
</TABLE>

(Total of Column D) (more than) (Total of Column E) therefore Annual True-up
calculated under Section 7.5.1(a)

<TABLE>
<S>                                                                                                   <C>
H.    Annual True-up - Delivered Energy                                  (Total E - Total G)          $140,730.60

I.    Average Cost of Delivered Energy after True-up ($/MWh)             (Total E / Total C)               $42.92
</TABLE>

<TABLE>
<CAPTION>

                       J                 K                    L                   M                    N
                                                                                                   Invoiced
                  Replacement    Replacement Energy   Gross Replacement  Adjusted Replacement     Replacement
     Month       Energy (MWh)      x Average Cost      Cost of Energy       Cost of Energy      Cost of Energy
     -----       ------------      --------------      --------------       --------------      --------------
                                      (I x J)
<S>                   <C>                            <C>                    <C>                   <C>
       1              150                            $    4,900.00                                $        0.00
       2              150                                 7,680.00                                     1,242.00
       3              150                                 4,040.00                                       227.00
       4               0                                      0.00                                         0.00
       5               0                                      0.00                                         0.00
       6               0                                      0.00                                         0.00
       7               0                                      0.00                                         0.00
       8               0                                      0.00                                         0.00
       9               0                                      0.00                                         0.00
      10               0                                      0.00                                         0.00
      11               0                                      0.00                                         0.00
      12               0                                      0.00                                         0.00
-----------------------------------------------------------------------------------------------------------------
     Total            450       $     19,314.00      $   16,620.00           $        0.00        $    1,469.00
</TABLE>

<TABLE>
<S>                                                                                           <C>
O.    Annual True-up - Replacement Costs                                 (Total N - Total M)      $    1,469.00
</TABLE>

                                      E-1
<PAGE>

                                   EXHIBIT E
                                 TRACY BUNDLE
                           YEAR END TRUE-UP INVOICE

<TABLE>
<S>                                                                                                   <C>
Total Annual True-up *                                                         (H + O)                $142,199.60
==================================================================================================================

EXAMPLE 2
---------

<CAPTION>
                       C                 D                    E                   F                    G
                   Delivered       Market Price x      Price Ceiling x      Price Floor x     Supplier's Invoiced
     Month       Energy (MWh)     Delivered Energy    Delivered Energy     Delivered Energy     Amount - Energy
     -----       ------------     ----------------    ----------------     ----------------     ---------------
                                                           (A x C)             (B x C)

<S>                  <C>        <C>                  <C>                 <C>                  <C>
       1             4,680      $    142,035.00      $   200,865.60     $     118,965.60      $   142,035.00
       2             4,680           205,365.00          200,865.60           118,965.60          200,865.60
       3             4,680            84,810.00          200,865.60           118,965.60          118,965.60
       4             5,070           192,660.00          217,604.40           128,879.40          192,660.00
       5             5,070           172,380.00          217,604.40           128,879.40          172,380.00
       6             4,870           165,580.00          209,020.40           123,795.40          165,580.00
       7             5,070           182,520.00          217,604.40           128,879.40          182,520.00
       8             5,070           212,940.00          217,604.40           128,879.40          212,940.00
       9             4,530           194,790.00          194,427.60           115,152.60          194,427.60
      10             5,070           202,800.00          217,604.40           128,879.40          202,800.00
      11             5,070           248,430.00          217,604.40           128,879.40          217,604.40
      12             4,770           228,960.00          204,728.40           121,253.40          204,728.40
-----------------------------------------------------------------------------------------------------------------
     Total          58,630      $  2,233,270.00      $ 2,516,399.60     $   1,490,374.60      $ 2,207,506.60
</TABLE>

(Total of Column E) (more than) (Total of Column D) therefore Annual True-up
----------------------------------------------------------------------------
calculated under Section 7.5.1(b)
---------------------------------

<TABLE>
<S>                                                                                           <C>
H.    Annual True-up - Delivered Energy                                  (Total D - Total G)  $         25,763.40

I.    Average Cost of Delivered Energy after True-up ($/MWh)             (Total D / Total C)               $38.09
</TABLE>

<TABLE>
<CAPTION>
                       J                 K                    L                   M                      N

                  Replacement    Replacement Energy   Gross Replacement  Adjusted Replacement  Invoiced Replacement
     Month       Energy (MWh)      x Average Cost      Cost of Energy       Cost of Energy        Cost of Energy
     -----       ------------      --------------      --------------       --------------        --------------
                                      (I x J)
<S>                   <C>                            <C>                                        <C>
       1              150                            $     4,900.00                             $              0.00
       2              150                                  7,680.00                                        1,242.00
       3              150                                  4,040.00                                          227.00
       4               0                                       0.00                                            0.00
       5               0                                       0.00                                            0.00
       6               0                                       0.00                                            0.00
       7               0                                       0.00                                            0.00
       8               0                                       0.00                                            0.00
       9               0                                       0.00                                            0.00
      10               0                                       0.00                                            0.00
      11               0                                       0.00                                            0.00
      12               0                                       0.00                                            0.00
-------------------------------------------------------------------------------------------------------------------
     Total            450       $     17,140.91      $ 16,620.00            $          0.00     $          1,469.00
</TABLE>

<TABLE>
<S>                                                                      <C>                    <C>
O.    Annual True-up - Replacement Costs                                 (Total N - Total M)    $          1,469.00

===================================================================================================================
</TABLE>
                                      E-2
<PAGE>

                                   EXHIBIT E
                                 TRACY BUNDLE
                           YEAR END TRUE-UP INVOICE

<TABLE>
<S>                                                                                           <C>
Total Annual True-up *                                                         (H + O)        $         27,232.40
==================================================================================================================

EXAMPLE 3
---------

<CAPTION>
                       C                 D                    E                   F                    G
                   Delivered       Market Price x      Price Ceiling x      Price Floor x     Supplier's Invoiced
     Month       Energy (MWh)     Delivered Energy    Delivered Energy     Delivered Energy     Amount - Energy
     -----       ------------     ----------------    ----------------     ----------------     ---------------
                                                           (A x C)             (B x C)
<S>                  <C>        <C>                  <C>                 <C>                  <C>
       1             4,680      $    142,035.00      $    200,865.60     $     118,965.60     $    142,035.00
       2             4,680           205,365.00           200,865.60           118,965.60          200,865.60
       3             4,680            84,810.00           200,865.60           118,965.60          118,965.60
       4             5,070           162,240.00           217,604.40           128,879.40          162,240.00
       5             5,070           152,100.00           217,604.40           128,879.40          152,100.00
       6             4,870           136,360.00           209,020.40           123,795.40          136,360.00
       7             5,070           141,960.00           217,604.40           128,879.40          141,960.00
       8             5,070           141,960.00           217,604.40           128,879.40          141,960.00
       9             4,530           117,780.00           194,427.60           115,152.60          117,780.00
      10             5,070           121,680.00           217,604.40           128,879.40          128,879.40
      11             5,070           121,680.00           217,604.40           128,879.40          128,879.40
      12             4,770           114,480.00           204,728.40           121,253.40          121,253.40
-----------------------------------------------------------------------------------------------------------------
     Total          58,630      $  1,642,450.00      $  2,516,399.60     $   1,490,374.60     $  1,693,278.40
</TABLE>

(Total of Column E) (more than) (Total of Column D) therefore Annual True-up
----------------------------------------------------------------------------
calculated under Section 7.5.1(b)
---------------------------------

<TABLE>
<S>                                                                      <C>                  <C>
H.    Annual True-up - Delivered Energy                                  (Total D - Total G)  $        (50,828.40)

I.    Average Cost of Delivered Energy after True-up ($/MWh)             (Total D / Total C)               $28.01
</TABLE>

<TABLE>
<CAPTION>
                       J                 K                    L                   M                    N

                  Replacement    Replacement Energy   Gross Replacement  Adjusted Replacement  Invoiced Replacement
     Month       Energy (MWh)      x Average Cost      Cost of Energy       Cost of Energy        Cost of Energy
     -----       ------------      --------------      --------------       --------------        --------------
                                      (I x J)

<S>                   <C>                            <C>                                        <C>
       1              150                            $  4,900.00                                $              0.00
       2              150                               7,680.00                                           1,242.00
       3              150                               4,040.00                                             227.00
       4               0                                    0.00                                               0.00
       5               0                                    0.00                                               0.00
       6               0                                    0.00                                               0.00
       7               0                                    0.00                                               0.00
       8               0                                    0.00                                               0.00
       9               0                                    0.00                                               0.00
      10               0                                    0.00                                               0.00
      11               0                                    0.00                                               0.00
      12               0                                    0.00                                               0.00
-------------------------------------------------------------------------------------------------------------------
     Total            450       $     12,606.22      $ 16,620.00         $           4,013.78   $          1,469.00
</TABLE>

<TABLE>
<S>                                                                      <C>                    <C>
O.    Annual True-up - Replacement Costs                                 (Total N - Total M)    $         (2,544.78)

Total Annual True-up *                                                         (H + O)          $        (53,373.18)
===================================================================================================================
</TABLE>
                                      E-3
<PAGE>

                                   EXHIBIT E
                                 TRACY BUNDLE
                           YEAR END TRUE-UP INVOICE

EXAMPLE 4
---------

<TABLE>
<CAPTION>
                       C                 D                    E                   F                    G
                   Delivered       Market Price x      Price Ceiling x      Price Floor x     Supplier's Invoiced
     Month       Energy (MWh)     Delivered Energy    Delivered Energy     Delivered Energy     Amount - Energy
     -----       ------------     ----------------    ----------------     ----------------     ---------------
                                                           (A x C)             (B x C)
<S>    <C>           <C>        <C>                  <C>                 <C>                  <C>
       1             4,680      $    142,035.00      $    200,865.60     $    118,965.60      $    142,035.00
       2             4,680           205,365.00           200,865.60          118,965.60           200,865.60
       3             4,680            84,810.00           200,865.60          118,965.60           118,965.60
       4             5,070            91,260.00           217,604.40          128,879.40           128,879.40
       5             5,070            86,190.00           217,604.40          128,879.40           128,879.40
       6             4,870            77,920.00           209,020.40          123,795.40           123,795.40
       7             5,070            76,050.00           217,604.40          128,879.40           128,879.40
       8             5,070            70,980.00           217,604.40          128,879.40           128,879.40
       9             4,530            58,890.00           194,427.60          115,152.60           115,152.60
      10             5,070            60,840.00           217,604.40          128,879.40           128,879.40
      11             5,070            60,840.00           217,604.40          128,879.40           128,879.40
      12             4,770            57,240.00           204,728.40          121,253.40           121,253.40
-----------------------------------------------------------------------------------------------------------------
     Total          58,630      $  1,072,420.00      $  2,516,399.60     $  1,490,374.60      $  1,595,344.00
</TABLE>

(Total of Column E) (more than) (Total of Column D) therefore Annual True-up
calculated under Section 7.5.1(b)

<TABLE>
<S>                                                                                           <C>
H.    Annual True-up - Delivered Energy                                  (Total F - Total G)  $      (104,969.40)

I.     Average Cost of Delivered Energy after True-up ($/MWh)            (Total F / Total C)              $25.42
</TABLE>

<TABLE>
<CAPTION>
                       J                 K                    L                   M                    N
                                                                                                   Invoiced
                  Replacement    Replacement Energy   Gross Replacement  Adjusted Replacement     Replacement
     Month       Energy (MWh)      x Average Cost      Cost of Energy       Cost of Energy      Cost of Energy
     -----       ------------      --------------      --------------       --------------      --------------
                                      (I x J)
<S>                   <C>                            <C>                                      <C>
       1              150                            $  4,900.00                           $              0.00
       2              150                               7,680.00                                      1,242.00
       3              150                               4,040.00                                        227.00
       4               0                                    0.00                                          0.00
       5               0                                    0.00                                          0.00
       6               0                                    0.00                                          0.00
       7               0                                    0.00                                          0.00
       8               0                                    0.00                                          0.00
       9               0                                    0.00                                          0.00
      10               0                                    0.00                                          0.00
      11               0                                    0.00                                          0.00
      12               0                                    0.00                                          0.00
--------------------------------------------------------------------------------------------------------------
     Total            450       $     11,439.00      $ 16,620.00         $       5,181.00  $          1,469.00
</TABLE>

<TABLE>
<S>                                                                                           <C>
O.    Annual True-up - Replacement Costs                                 (Total N - Total M)  $      (3,712.00)

Total Annual True-up *                                                         (H + O)        $    (108,681.40)
================================================================================================================
</TABLE>

                                      E-4
<PAGE>

*  Positive  Total  Annual  True-up  is  indicative  of a payment  from Buyer to
Supplier; Negative Total Annual True-up is indicative of a payment from Supplier
to Buyer.

                                      E-5
<PAGE>

                                   EXHIBIT F
                   NOTICES, BILLING AND PAYMENT INSTRUCTIONS

Supplier:
--------
a) Agreement Notices:
   ------------------
         Address:          B. Frank Moon
                           WPS Northern Nevada, LLC
                           c/o WPS Power Development, Inc.
                           1088 Springhurst Drive
                           Green Bay, WI 54304
         Phone:            920//617-6017
         Fax:              920/617-5999

b) Payment Check:
   --------------
         Name:             WPS Northern Nevada, LLC
         Address:          c/o WPS Power Development, Inc.
                           1088 Springhurst Drive
                           Green Bay, WI 54304

c) Payment Wire Transfer:
   ----------------------
         Bank:             Firstar Bank, Milwaukee, N.A.
         ABA#:             075000022
         For:              WPS Northern Nevada, LLC, c/o WPS Power Development,
                           Inc.
         Account No.:      121740515

d) Invoices:
   --------
         Name:             WPS Northern Nevada, LLC
         Address:          c/o WPS Power Development, Inc.
                           1088 Springhurst Drive
                           Green Bay, WI  54304
         Phone:            920/617-6040
         Fax:              920/617-6140

e) Operating Notifications:
   -----------------------
         i) Pre-Schedule            Thomas G. Balzola     Phone:  920/617-6059
                                                          Fax:    920/617-5999
         ii) Real Time              Thomas G. Balzola     Phone:  920/617-6059
                                                          Fax:    920/617-5999
         iii) Monthly Checkout      Thomas G. Balzola     Phone:  920/617-6059
                                                          Fax:    920/617-5999

                                      F-6
<PAGE>

Buyer:
-----
a) Agreement Notices:
   -----------------
         Address:          Gary Craythorn
                           Manager, Resource Contracts
                           Nevada Power Company
                           6226 West Sahara Avenue, M/S 26A
                           Las Vegas, Nevada 89146
         Phone:            702/367-5425
         Fax:              702/227-2455
         E-mail:           gcraythorn@nevp.com

b) Invoices:
   --------

         US Post Office: (Via Certified Mail)   Overnight Delivery
         ---------------                        ------------------
         Address:        Nevada Power Company   Address: Nevada Power Company
                         Attn: Kathy Crews               Attn: Kathy Crews
                         P.O. Box 230, M/S 20            6226 West Sahara Ave.,
                         Las Vegas, Nevada 89151         M/S 20
         Telephone:      702/227-2476                    Las Vegas, Nevada 89146
         Fax:            702/367-5096
         E-mail:         kcrews@nevp.com

c) Schedules:
   ---------
         i)  Pre-Schedule: Primary                 Phone:  702/862-7195
                           Name: Rick Engebretson  E-mail: rengebretson@nevp.com
                           Alternate               Phone:  702/862-7194
                           Name: Tim Schuster      E-mail: tschuster@nevp.com
                                                   Fax:    702/227-2404
         ii)  Real Time:                           Phone:  702/862-7106
                                                   Fax:    702/227-2404
         iii) Monthly Checkout: Kathy Crews        Phone:  702/227-2476
                                                   Fax:    702/367-5096
                                                   E-mail: kcrews@nevp.com

d) Control Area/Transmission:
   -------------------------
         i)  Reliability Dispatch:   Phone: (702) 451-2026
                                           Fax:      (702) 862-7113
         ii) Transmission Dispatch:  Phone: (702) 451-8346
                                           Fax:      (702) 862-7113

                                      F-7
<PAGE>

                                   EXHIBIT G
                         FORM OF AVAILABILITY NOTICE*

Date of Notice:

Time of Notice:

Supplier:

Name of Supplier's
Representative:

Buyer:

Asset Bundle:

Availability Dates (96 hours
total):

<TABLE>
<CAPTION>
                          A               B                C             D             E              F             G           H
                                                                                                                             Asset
                                                                                                                Permitted    Bundle
                      Available                        Permitted   Asset Bundle    Available    Total Derating  Derating    Capacity
Availability  Hour   from Unit 1    Total Derating    Derating of   Capacity of   from Unit 2     of Unit 2    of Unit 2   of Unit 2
   Date      Ending      (MW)       of Unit 1 (MW)    Unit 1 (MW)   Unit 1 (MW)       (MW)          (MW)          (MW)        (MW)
   ----      ------      ----       --------------    -----------   -----------       ----          ----          ----        ----

<S>         <C>       <C>           <C>                <C>          <C>            <C>             <C>          <C>         <C>
                      (A (less         (___ - A)       (C (less       (A - C)      (E (less        (___ - E)    (B (less    (G - E)
                      than) or                         than) or                    than) or                     than) or
                      =  ___)                          = B)                        = ___)                       =

              0600
              0700
              0800
              0900
              1000
              1100
              1200
              1300
              1400
              1500
              1600
              1700
              1800
              1900
              2000
              2100
              2200
              2300
              2400
              0100
              0200
              0300
              0400
              0500
              0600
              0700
               :
 (96 hours total)
               :
              300
              400
              500
</TABLE>

        I**                   J
                    Cause and Expected
    Alternative   Duration of Deratings and
    Point(s) of       Identification of
      Delivery       Permitted Deratings
      --------       -------------------

        * The Parties' operational personnel will develop a similar form for the
other generating units in the bundle.
<PAGE>

** The Parties' operational personnel shall develop the necessary procedure to
document requests and responses to utilize Alternative Point(s) of Delivery.
<PAGE>

                                   EXHIBIT H
                               FORM OF GUARANTY

     This Guaranty is entered into as of October 25, 2000, by WPS Resources
Corporation, a Wisconsin corporation ("Guarantor"), on behalf of WPS Northern
Nevada, LLC, a Nevada limited liability company ("Supplier"), in favor of and
for the benefit of Sierra Pacific Power Company, a Nevada corporation ("SPPC").
SPPC is sometimes referred to herein as "Beneficiary".

     WHEREAS, Supplier and SPPC are entering into a Transitional Power Purchase
Agreement dated as of October 25, 2000 (the "TPPA") by which Supplier has agreed
to sell and SPPC has agreed to buy Energy and Ancillary Services (as defined in
the TPPA) produced by the Tracy/Pinon generating station being sold by SPPC; and

     WHEREAS, it is a condition to the obligation of SPPC to enter into the TPPA
for Guarantor to guaranty the Supplier's obligations under the TPPA on and after
the Effective Date (as defined in the TPPA), subject to the limitations herein
(the "Guarantied Obligations").

     1. Guaranty. Subject to the terms and conditions herein, Guarantor
irrevocably and unconditionally guaranties, as primary obligor and not merely as
surety, the due and punctual payment in full of all Guarantied Obligations
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.(S)362(a)).

     Subject to the other provisions of this Section 1, upon failure of Supplier
to pay any of the Guarantied Obligations when and as the same shall become due,
Guarantor will upon demand pay, or cause to be paid, in cash, to SPPC, an amount
equal to the lesser of: (i) the aggregate of the unpaid Guarantied Obligations
and (ii) the Credit Amount (as defined in the TPPA) as of the date of such
failure of Supplier to pay such Guarantied Obligations. In the event Guarantor
fails to pay the Guarantied Obligations, each and every default in the payment
shall give rise to a separate cause of action and separate causes of action may
be brought hereunder as each such cause of action arises.

     In the event that all or any portion of the Guarantied Obligations is paid
by Supplier, the obligations of Guarantor hereunder shall continue and remain in
full force and effect or be reinstated, as the case may be, in the event that
all or any part of such payment(s) is rescinded or recovered directly or
indirectly from the Beneficiary as a preference, fraudulent transfer or
otherwise, and any such payments that are so rescinded or recovered shall
constitute Guarantied Obligations, subject to the terms and conditions herein.

     2. Expenses. The Guarantor agrees to reimburse SPPC for all reasonable
costs and expenses (including, without limitation, the reasonable fees and
expenses of legal counsel) in connection with (i) any default by Guarantor
hereunder and any enforcement or collection proceeding resulting therefrom,
including, without limitation, all manner of participation in or other
involvement with bankruptcy, insolvency, receivership, foreclosure, winding up
or liquidation proceedings of or involving the Guarantor, judicial or regulatory
proceedings of or involving the Guarantor and workout, restructuring or other
negotiations or proceedings of or involving the Guarantor (whether or not the
workout, restructuring or transaction contemplated

                                      H-3
<PAGE>

thereby is consummated) and (ii) the enforcement of this Section 2.

     3. Guaranty Absolute; Continuing Guaranty. The obligations of Guarantor
hereunder are irrevocable, absolute, independent and unconditional and shall not
be affected by any circumstance which constitutes a legal or equitable discharge
of a guarantor or surety other than payment in full of the Guarantied
Obligations. In furtherance of the foregoing and without limiting the generality
thereof, Guarantor agrees that: (a) this Guaranty is a guaranty of payment when
due and not of collectibility; (b) the obligations of Guarantor hereunder are
independent of the obligations of Supplier under the TPPA and a separate action
or actions may be brought and prosecuted against Guarantor whether or not any
action is brought against the Supplier and whether or not the Supplier is joined
in any such action or actions; and (c) Guarantor's payment of a portion, but not
all, of the Guarantied Obligations shall in no way limit, affect, modify or
abridge Guarantor's liability for any portion of the Guarantied Obligations that
has not been paid. This Guaranty is a continuing guaranty and shall be binding
upon Guarantor and its successors and assigns.

     4. Actions by Beneficiary. The Beneficiary may from time to time, without
notice or demand and without affecting the validity or enforceability of this
Guaranty or giving rise to any limitation, impairment or discharge of
Guarantor's liability hereunder, (a) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations, (c) request and accept other
guaranties of the Guarantied Obligations and take and hold security for the
payment of this Guaranty or the Guarantied Obligations, (d) release, exchange,
compromise, subordinate or modify, with or without consideration, any security
for payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person with respect to
the Guarantied Obligations, (e) enforce and apply any security hereafter held by
or for the benefit of the Beneficiary in respect of this Guaranty or the
Guarantied Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that the Beneficiary may have against any
such security, and (f) exercise any other rights available to SPPC under the
TPPA.

     5. No Discharge. This Guaranty and the obligations of Guarantor hereunder
shall be valid and enforceable and shall not be subject to any limitation,
impairment or discharge for any reason (other than payment in full of the
Guarantied Obligations), including without limitation the occurrence of any of
the following, whether or not Guarantor shall have had notice or knowledge of
any of them: (a) any failure to assert or enforce or agreement not to assert or
enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand or any right,
power or remedy with respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security for the
payment of the Guarantied Obligations, (b) any waiver or modification of, or any
consent to departure from, any of the terms or provisions of any other guaranty
or security for the Guarantied Obligations, (c) the Guarantied Obligations, or
any agreement relating thereto, at any time being found to be illegal, invalid
or unenforceable in any respect, (d) the application of payments received from
any source to the payment of indebtedness other than the Guarantied Obligations,
even if the Beneficiary might have elected to apply such payment to any part or
all of the Guarantied Obligations, (e) any failure to perfect or continue
perfection of a security interest in any collateral which secures any of the
Guarantied Obligations, (f) any defenses, set-offs or

                                      H-4
<PAGE>

counterclaims which the Supplier may assert against the Beneficiary in respect
of the Guarantied Obligations, including but not limited to failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction, and (g) any other act or thing or
omission, or delay to do any other act or thing, which may or might in any
manner or to any extent vary the risk of Guarantor as an obligor in respect of
the Guarantied Obligations.

     6. Waivers for the Benefit of Beneficiary. Guarantor waives, for the
benefit of Beneficiary: (a) any right to require the Beneficiary, as a condition
of payment or performance by Guarantor, to (i) proceed against the Supplier, any
other guarantor of the Guarantied Obligations or any other Person, (ii) proceed
against or exhaust any security held from the Supplier, any other guarantor of
the Guarantied Obligations or any other Person, or (iii) pursue any other remedy
in the power of the Beneficiary; (b) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of the Supplier
including, without limitation, any defense based on or arising out of the lack
of validity or the unenforceability of the Guarantied Obligations or any
agreement or instrument relating thereto or by reason of the cessation of the
liability of the Supplier from any cause other than payment in full of the
Guarantied Obligations; (c) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (d) (i) any
principles or provisions of law, statutory or otherwise, that are or might be in
conflict with the terms of this Guaranty and any legal or equitable discharge of
Guarantor's obligations hereunder, (ii) the benefit of any statute of
limitations affecting Guarantor's liability hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims, and (iv)
promptness, diligence and any requirement that the Beneficiary protect, secure,
perfect or insure any lien on any property subject thereto; (e) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance of this Guaranty; and
(f) to the fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this Guaranty.

     7. Waiver of Rights Against Supplier. Guarantor waives any claim, right or
remedy, direct or indirect, that Guarantor now has or may hereafter have against
the Supplier or any of its assets in connection with this Guaranty or the
performance by Guarantor of its obligations hereunder, in each case whether such
claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise and including without limitation (a) any right of
subrogation, reimbursement or indemnification that Guarantor now has or may
hereafter have against the Supplier, (b) any right to enforce, or to participate
in, any claim, right or remedy that the Beneficiary now has or may hereafter
have against the Supplier, and (c) any benefit of, and any right to participate
in, any collateral or security hereafter held by the Beneficiary. Guarantor
further agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement and indemnification as set
forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation, reimbursement or
indemnification Guarantor may have against the Supplier or against any
collateral or security shall be junior and subordinate to any rights the
Beneficiary may have against Supplier, to all right, title and interest the
Beneficiary may have in any such collateral or security, and to any right the
Beneficiary may have against such other guarantor.

     8. Representations and Warranties of Guarantor. Guarantor represents and
warrants to SPPC as follows:
                                      H-5
<PAGE>

     (a) Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. Guarantor has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.

     (b) Guarantor has the corporate power and authority to execute and deliver
this Guaranty and to consummate the transactions contemplated hereby. The
execution and delivery of this Guaranty and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of Guarantor, and no other corporate proceedings on the part of
Guarantor, including the approval of its shareholders, are necessary to
authorize this Guaranty or to consummate the transactions so contemplated. This
Guaranty has been duly and validly executed and delivered by Guarantor and
constitutes a valid and binding agreement of Guarantor, enforceable against
Guarantor in accordance with its terms.

     (c) There are no legal or arbitral proceedings by or before any
governmental or regulatory authority or agency, now pending or (to Guarantor's
knowledge) threatened against Guarantor or its subsidiaries that could
reasonably be expected to have a material adverse effect on the consolidated
financial condition, operations or business taken as a whole of it and its
subsidiaries.

     (d) The representations and warranties made herein will remain true until
Guarantor has fulfilled all obligations to pay in full the Guarantied
Obligations.

     9. Set Off. In addition to any other rights the Beneficiary may have under
law or in equity, if any amount shall at any time be due and owing by Guarantor
to the Beneficiary under this Guaranty, the Beneficiary is authorized at any
time or from time to time, without notice (any such notice being expressly
waived), to set off and to appropriate and to apply any indebtedness of the
Beneficiary owing to Guarantor and any other property of Guarantor held by the
Beneficiary to or for the credit or the account of Guarantor against and on
account of the Guarantied Obligations and liabilities of Guarantor to the
Beneficiary under this Guaranty.

     10. Disputes. Any action, claim or dispute arising out of or relating to
this Guaranty (any such action, claim or dispute, a "Dispute") shall be
submitted in writing to the other Party. In the event Guarantor and SPPC are
unable to resolve the Dispute satisfactorily within thirty (30) days from the
receipt of notice of the Dispute, either Guarantor or SPPC may initiate
arbitration through the serving and filing of a demand for arbitration.
Guarantor and SPPC expressly agree that such arbitration shall be the exclusive
means to further resolve any Dispute and hereby irrevocably waive their right to
a jury trial with respect to any Dispute, provided that at any time a request
made for provisional remedies requesting preservation of respective rights and
obligations under the Guaranty may be resolved by a court of law located in the
County of the principal place of business of SPPC. Arbitration shall be
conducted in accordance with Sections 13.4, 13.5, 13.6, 13.7, and 13.8 of the
TPPA.

     11. Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guaranty, and no consent to any departure by
Guarantor therefrom, shall in any event be effective without the written
concurrence of SPPC and, in the case of any such amendment or modification,
Guarantor. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.

                                      H-6
<PAGE>

     12. Miscellaneous. It is not necessary for Beneficiary to inquire into the
capacity or powers of Guarantor or Supplier or the officers, directors or any
agents acting or purporting to act on behalf of any of them.

     The rights, powers and remedies given to Beneficiary by this Guaranty are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to Beneficiary by virtue of any statute or rule of law or in the
TPPA. Any forbearance or failure to exercise, and any delay by Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.

     In case any provision in or obligation under this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

     This Guaranty shall inure to the benefit of Beneficiary and its respective
successors and assigns.

     13. Notices. All notices, requests, demands, waivers, consents and other
communications hereunder shall be in writing, shall be delivered either in
person, by telegraphic, facsimile or other electronic means, by overnight air
courier or by mail, and shall be deemed to have been duly given and to have
become effective (a) upon receipt if delivered in person or by telegraphic,
facsimile or other electronic means, (b) one (1) business day after having been
delivered to an air courier for overnight delivery or (c) three (3) business
days after having been deposited in the U.S. mails as certified or registered
mail, return receipt requested, all fees prepaid, directed to the parties at the
following addresses:

     If to Guarantor, addressed to:           Ralph G. Baeten
                                              WPS Resources Corporation
                                              700 North Adams Street
                                              Green Bay, WI  54307
                                              Facsimile: (920) 433-7653

     If to SPPC, addressed to:                William E. Peterson
                                              Sierra Pacific Power Company
                                              6100 Neil Road
                                              Reno, Nevada 89511
                                              Facsimile:  (775) 834-5959

     IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
and delivered by its officers thereunto duly authorized as of the date first
written above.

                               By:
                                              ---------------------------
                                              Ralph G. Baeten
                               Title:         Treasurer
                               Address:       WPS Resources Corporation
                                              700 North Adams Street
                                              Green Bay, WI  54307

                                      H-7
<PAGE>

                                    EXHIBIT I
                            COMPANY OBSERVED HOLIDAYS

                  New Year's Day                 January 1st
                  President's Day                Third Monday in February
                  Memorial Day (observed)        Last Monday in May
                  Independence Day               July 4th
                  Labor Day                      First Monday in September
                  Nevada Day                     Last Friday in October
                  Thanksgiving Day               Fourth Thursday in November
                  Thanksgiving Friday            Friday after Thanksgiving
                  Christmas Day                  December 25th

Holidays falling on Saturday will be observed on the preceding Friday and those
falling on Sunday will be observed on the following Monday.

                                      I-1
<PAGE>

                                    EXHIBIT J
                                  TRACY BUNDLE
                  ADJUSTMENTS TO TPPA AMOUNT AND CREDIT AMOUNT

<TABLE>
<CAPTION>
                               Monthly                                          Monthly
               Month         Adjustment                          Month         Adjustment
           --------------------------------                  -------------------------------
           <S>               <C>                                 <C>           <C>
           Mar-01                      4.6%                          Mar-02             3.7%
           Apr-01                      3.0%                          Apr-02             2.5%
           May-01                      3.3%                          May-02             2.6%
           Jun-01                      5.6%                          Jun-02             4.3%
           Jul-01                      5.7%                          Jul-02             4.5%
           Aug-01                      5.6%                          Aug-02             4.4%
           Sep-01                      4.3%                          Sep-02             3.4%
           Oct-01                      5.3%                          Oct-02             4.2%
           Nov-01                      5.3%                          Nov-02             4.2%
           Dec-01                      6.5%                          Dec-02             5.2%
           Jan-02                      7.0%                          Jan-03             5.5%
           Feb-02                      5.7%                          Feb-03             4.5%
</TABLE>

                          ADJUSTMENTS TO TPPA AMOUNT

           Example 1 - Effective Date of Agreement is April 15, 2001
           --------------------------------------------------------------------

           A.    TPPA Amount:               $     15,000,000

                                       B                C               D
                                   Monthly          Applicable      Applicable
                    Month         Adjustment        Portion *       Adjustment
           --------------------------------------------------------------------
                                                                     (B x C)

           Apr-01                      3.0%            50.0%           1.5%
           May-01                      3.3%           100.0%           3.3%
           --------------------------------------------------------------------
                    Total                                              4.8%

<TABLE>
<CAPTION>

               <S>                                                                      <C>
           E.    Total of Monthly Applicable Adjustments                                4.8%

           F.    Adjusted TPPA Amount                         (A x (1+D))   $     15,720,000
           =================================================================================

           Example 2 - Effective Date of Agreement is September 15, 2001
           ---------------------------------------------------------------------------------
</TABLE>
           G.    TPPA Amount:               $     15,000,000

                                       H                I               J

                                   Monthly         Applicable       Applicable
                    Month         Adjustment        Portion *       Adjustment
           ---------------------------------------------------------------------
                                                                     (H x I)
           Jun-01                      5.6%           100.0%           5.6%
           Jul-01                      5.7%           100.0%           5.7%
           Aug-01                      5.6%           100.0%           5.6%

                                      J-1
<PAGE>

                                    EXHIBIT J
                                  TRACY BUNDLE
                  ADJUSTMENTS TO TPPA AMOUNT AND CREDIT AMOUNT

Sep-01                      4.3%            50.0%           2.2%
----------------------------------------------------------------
    Total                                                  19.1%

K.  Total of Monthly Applicable Adjustments                                19.1%

L   Adjusted TPPA Amount                           (G x (1-K))   $    12,135,000
================================================================================

Example 3 - Termination Date of October 31, 2002
--------------------------------------------------------------------------------

M.  TPPA Amount:                 $     15,000,000

                       N                O               P
                   Monthly        Applicable        Applicable
    Month         Adjustment        Portion **      Adjustment
----------------------------------------------------------------
                                                     (N x O)
Nov-02                      4.2%           100.0%           4.2%
Dec-02                      5.2%           100.0%           5.2%
Jan-03***                   5.5%           100.0%           5.5%
Feb-03***                   4.5%           100.0%           4.5%
----------------------------------------------------------------
    Total                                                  19.4%

Q.  Total of Monthly Applicable Adjustments                                19.4%

R   Payment Amount                                   (M x Q)     $     2,910,000
================================================================================

* The applicable portion of the month is the number of days in the month during
which deliveries of energy from Supplier to Buyer were made divided by the
number of days in the month.

** The applicable portion of the month is the number of days in the month during
which deliveries of energy from Supplier to Buyer would have been made divided
by the number of days in the month.

*** In the event the Agreement is terminated on or before December 31, 2002, the
refund of the TPPA Amount shall be calculated as if Buyer had not exercised its
rights pursuant to Section 2.1.2. That is, the monthly adjustments of the TPPA
Amount for the months of January 2003 and February 2003 shall be payable to
Buyer in the event of termination prior to December 31, 2002.

                       ADJUSTMENTS TO CREDIT AMOUNT ***

A.  Credit Amount*:              $    200,000,000

                       B                C               D
               Beginning                            Adjusted
    Month        Credit Amount      Adjustment    Credit Amount
---------------------------------------------------------------
                                      ( ** )         (B - C)

Mar-01         $     200,000,000                0 $  200,000,000

                                      J-2
<PAGE>

                                   EXHIBIT J
                                 TRACY BUNDLE
                 ADJUSTMENTS TO TPPA AMOUNT AND CREDIT AMOUNT

 Apr-01         $     200,000,000                0    $  200,000,000
 May-01         $     200,000,000                0    $  200,000,000
 Jun-01         $     200,000,000                0    $  200,000,000
 Jul-01         $     200,000,000       11,200,000    $  188,800,000
 Aug-01         $     188,800,000       11,400,000    $  177,400,000
 Sep-01         $     177,400,000       11,200,000    $  166,200,000
 Oct-01         $     166,200,000        8,600,000    $  157,600,000
 Nov-01         $     157,600,000       10,600,000    $  147,000,000
 Dec-01         $     147,000,000       10,600,000    $  136,400,000
 Jan-02         $     136,400,000       13,000,000    $  123,400,000
 Feb-02         $     123,400,000       14,000,000    $  109,400,000
 Mar-02         $     109,400,000       11,400,000    $   98,000,000
 Apr-02         $      98,000,000        7,400,000    $   90,600,000
 May-02         $      90,600,000        5,000,000    $   85,600,000
 Jun-02         $      85,600,000        5,200,000    $   80,400,000
 Jul-02         $      80,400,000        8,600,000    $   71,800,000
 Aug-02         $      71,800,000        9,000,000    $   62,800,000
 Sep-02         $      62,800,000        8,800,000    $   54,000,000
 Oct-02         $      54,000,000        6,800,000    $   47,200,000
 Nov-02         $      47,200,000        8,400,000    $   38,800,000
 Dec-02         $      38,800,000        8,400,000    $   30,400,000
 Jan-03****     $      30,400,000       10,400,000    $   20,000,000
 Feb-03****     $      20,000,000       11,000,000    $    9,000,000

* As defined in Section 1.2.18 of the Agreement.
** Monthly Adjustment for prior month times Credit Amount.
*** The adjusted Credit Amounts, as shown above, are the amounts applicable to
the first day of each month. A prorata share of the monthly adjustments will be
subtracted from the previous daily adjusted Credit Amount to establish the daily
adjusted Credit Amount for the current day. For example: the adjusted Credit
Amount for June 2, 2001 will be $200,000,000 less one thirtieth of the monthly
adjustment for July 2001 ($11,200,000 / 30) or $199,626,666.67. Thus, the Credit
Amount at February 28, 2003, will equal zero.
**** Provided the Buyer exercises its rights pursuant to Section 2.1.2.

                                      J-3
<PAGE>

                                    EXHIBIT K
                                  TRACY BUNDLE
                       ADJUSTMENTS TO MINIMUM ANNUAL TAKE

<TABLE>
<CAPTION>

         A                     B                  C                D                  E                  F
                          Base Number        Base Energy       Sales per        Current Number    Adjusted Energy
      Class *            of Customers        Sales (MWh)     Customer (MWh)      of Customers       Sales (MWh)
---------------------------------------------------------------------------------------------------------------------
<S>                      <C>                 <C>            <C>                 <C>              <C>
                                                                (C / B)                              (D x E) **
Residential                        475,000       5,800,000                 12            470,000          5,738,947
Commercial                          65,000       2,800,000                 43             60,000          2,584,615
Industrial                           1,000       4,900,000                                   800          3,600,000
Street Lighting                          5         130,000                                     5            130,000
Other Retail                            50         600,000                                    50            600,000
Wholesale                                5         850,000                                     5            850,000
---------------------------------------------------------------------------------------------------------------------
                                   541,060      15,080,000                               530,860         13,503,563

G.  Adjustment to Minimum Annual Take                                              (F / C)                   89.55%
H.  Minimum Annual Take from Exhibit A (MWh)                                                              2,200,000
I.   Revised Minimum Annual Take (MWh)                                             (G x H)                1,970,100
</TABLE>

         J                       K
    Month During          Applicable Min.
   Contract Year         Annual Take (MWh)
-------------------------------------------
         1                       2,200,000
         2                       2,200,000
         3                       2,200,000
         4                       2,200,000
         5                       1,970,100
         6                       1,970,100
         7                       1,970,100
         8                       1,870,000
         9                       1,870,000
         10                      1,760,000
         11                      1,760,000
         12                      1,760,000
-------------------------------------------
       Total                    23,730,300

L. Minimum Take for Contract Year (MWh)            (Total of K / 12)   1,977,525

*  As reported on Buyer's FERC Form 1

** Adjusted Energy Sales for the remaining  Industrial,  Street Lighting,  Other
Retail, and Wholesale  customers will be based upon actual sales during the base
period.

                                      K-1
<PAGE>

                                    EXHIBIT L
                                  TRACY BUNDLE
                    ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE

<TABLE>
<CAPTION>

       A             B                C               D               E *               F                G **
   Dispatch        Supply         Delivered       Permitted          Force         Replacement        Applicable
     Hour       Amount (MWh)    Energy (MWh)    Derating(MWh)     Majeure(MWh)     Energy(MWh)       Energy (MWh)
---------------------------------------------------------------------------------------------------------------------
  <S>           <C>             <C>             <C>               <C>              <C>               <C>
                                                                                                      (C+D+E+F)
            1              507             507                                                                   507
            2              507             507                                                                     0
            3              507             507                                                                   507
            4              507             507                                                                   507
            5              507             507                                                                   507
            6              507             487               20                                                  507
            7              507             487               20                                                  507
            8              507             487                                                 20                507
            9              507             507                                                                   507
           10              507             507                                                                   507
           11              507             507                                                                   507
           12              507             507                                                                   507
           13              507               0                               507                                 507
           14              507               0                               507                                 507
           15              507               0                               507                                 507
           16              507               0                               507                                 507
           17              507             457                                                 30                487
           18              507             507                                                                   507
           19              507             507                                                                   507
           20              507             507                                                                   507
           21              507             507                                                                   507
           22              507             507                                                                   507
           23              507             507                                                                   507
           24              477             477                                                                   477
           25              457             457                                                                   457
           26              427             427                                                                   427
           27              457             427               30                                                  457
           28              477             477                                                                   477
           29              507             507                                                                   507
           30              507             507                                                                   507
           31              507             507                                                                   507
           32              507             507                                                                   507
           33              507             507                                                                   507
           34              507             507                                                                   507
           35              507             507                                                                   507
           36              507             507                                                                   507
---------------------------------------------------------------------------------------------------------------------
        total           18,012          15,844               70            2,028               50             17,992
</TABLE>

                                      L-1
<PAGE>

                                   EXHIBIT L
                                  TRACY BUNDLE
                    ENERGY APPLICABLE TO MINIMUM ANNUAL TAKE

 * Includes  energy  excused  because of Supplier's and Buyer's events of Force
   Majeure
** G cannot be greater than B

                                    EXHIBIT M
               ASSET BUNDLE CONTRACTUAL AND OPERATING CONSTRAINTS

1.      For the purposes of this Exhibit M, "Constrained Capacity" shall mean
        that portion of the Asset Bundle Capacity that has been designated as
        being subject to contractual and operational constraints in accordance
        with the provisions of this Exhibit M.

2.      Section 4.1.4 of the Agreement, which addresses Supplier's right to
        Asset Bundle Capacity in excess of the Supply Amount, shall not be
        applicable to Constrained Capacity.

3.      Asset Bundle Capacity scheduled in accordance with Section 5.1 of the
        Agreement, which addresses Buyer's notifications to Supplier, shall not
        be deemed to include Constrained Capacity unless Buyer's schedules
        specifically designate Constrained Capacity as being applicable to the
        schedules.

4.      The Asset Bundle Capacity described in the following table shall be
        deemed Constrained Capacity.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Asset Bundle            Source of Capacity           Annual Limit        Monthly Limit       Daily Limit
---------------------------------------------------------------------------------------------------------
<S>                   <C>                          <C>                   <C>                 <C>
                                                   72 hours at max.
                          Clark Mt. 3-4              capacity for
   Tracy              (7 MW per unit summer)          each unit*             None                None
---------------------------------------------------------------------------------------------------------
   Tracy                  Valley Rd 1-3              200 hours at
                          (6 MW summer)              max. capacity
                                                    for each unit*           None                None
---------------------------------------------------------------------------------------------------------
   Tracy          Clark Mt. 1-2, Brunswick 1-3,      100 hours at
                          and Gabbs 1-2              max. capacity
                          (30 MW summer)            for each unit*           None                None
---------------------------------------------------------------------------------------------------------
</TABLE>

* Buyer is attempting to raise the operating limits on these generating units.
If Buyer is successful, the higher limits will be applicable to this Exhibit M.<PAGE>

                                                                   Exhibit 10(Z)

                                                                [EXECUTION COPY]

                           ASSET PURCHASE AGREEMENT

                                    between

                         SIERRA PACIFIC POWER COMPANY,

                                   as Seller

                                      and

                        TRUCKEE MEADOWS WATER AUTHORITY

                                 as Purchaser

                         Dated as of January 15, 2001
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                                                       Page
                                                                                                       ----
<S>                                                                                                    <C>
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION..................................................         1
         1.1      Definitions and Rules of Construction..........................................         1

ARTICLE II SALE OF ASSETS AND ASSUMPTION OF LIABILITIES..........................................         1
         2.1      Asset Purchase.................................................................         1
         2.2      Assumption of Liabilities; Excluded Liabilities................................         2
         2.3      Transfer of Purchased Assets and Assumed Liabilities...........................         3
         2.4      Governmental Approvals and Consents............................................         3
         2.5      Farad Insurance Claim..........................................................         5
         2.6      Novation.......................................................................         5

ARTICLE III PURCHASE PRICE AND ADJUSTMENTS.......................................................         6
         3.1      Purchase Price.................................................................         6
         3.2      Payment of Purchase Price......................................................         6
         3.3      Allocation of Purchase Price...................................................         6
         3.4      Purchase Price Adjustments.....................................................         6

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER..............................................         8
         4.1      Corporate Existence............................................................         8
         4.2      Corporate Authority............................................................         8
         4.3      Conflicts; Required Consents...................................................         8
         4.4      Financial Statements...........................................................         9
         4.5      Absence of Certain Changes.....................................................         9
         4.6      Properties.....................................................................         9
         4.7      Contracts......................................................................        11
         4.8      Litigation.....................................................................        12
         4.9      Intellectual Property Rights...................................................        12
         4.10     Insurance......................................................................        12
         4.11     Tax Matters....................................................................        13
         4.12     Employment and Benefits........................................................        13
         4.13     Compliance with Laws...........................................................        13
         4.14     Environmental Matters..........................................................        14
         4.15     Undisclosed Liabilities........................................................        15
         4.16     Finders; Brokers...............................................................        15

ARTICLE V REPRESENTATIONS OF PURCHASER...........................................................        16
         5.1      Corporate Existence............................................................        16
         5.2      Corporate Authority............................................................        16
         5.3      Governmental Approvals and Consents............................................        17
         5.4      Funding of Expenses Prior to Closing and Break-Up Fee..........................        17
         5.5      Financial Capacity.............................................................        17
         5.6      Finders; Brokers...............................................................        17
</TABLE>

                                      -i-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                        Page
                                                                                                        ----
<S>                                                                                                     <C>
ARTICLE VI AGREEMENTS OF PURCHASER AND SELLER.....................................................        18
         6.1      Operation of the Water Business.................................................        18
         6.2      Investigation of Business.......................................................        19
         6.3      Commercially Reasonable Efforts; Cooperation; No Inconsistent Action............        20
         6.4      Public Disclosures..............................................................        21
         6.5      Access to Records and Personnel.................................................        21
         6.6      Employee Relations and Benefits.................................................        22
         6.7      Post-Closing Arrangements.......................................................        24
         6.8      Non-Competition.................................................................        24
         6.9      Jointly Developed Intellectual Property.........................................        24
         6.10     No Other Representations or Warranties..........................................        24
         6.11     Insurance Matters...............................................................        25
         6.12     Use of Seller's Names...........................................................        25
         6.13     Purchaser Financings............................................................        25
         6.14     Post-Closing Cooperation........................................................        26
         6.15     Risk of Loss....................................................................        27
         6.16     Condemnation....................................................................        27
         6.17     Real Property Investigation.....................................................        27
         6.18     Approval of Fees and Expenses...................................................        28
         6.19     Tax-Exempt Bonds................................................................        28
         6.20     Environmental Insurance.........................................................        29

ARTICLE VII PRELIMINARY SETTLEMENT AGREEMENT and DRAFT TRUCKEE RIVER OPERATING AGREEMENT..........        29
         7.1      Assumption of Obligations.......................................................        29
         7.2      Seller's Responsibility Until Closing...........................................        29

ARTICLE VIII CONDITIONS TO CLOSING................................................................        29
         8.1      Conditions Precedent to Obligations of Purchaser and Seller.....................        29
         8.2      Conditions Precedent to Obligation of Seller....................................        30
         8.3      Conditions Precedent to Obligation of Purchaser.................................        30

ARTICLE IX CLOSING................................................................................        31
         9.1      Closing Dates...................................................................        31
         9.2      Purchaser Obligations...........................................................        31
         9.3      Seller Obligations..............................................................        32

ARTICLE X INDEMNIFICATION.........................................................................        32
         10.1     Indemnification.................................................................        32
         10.2     Certain Limitations.............................................................        33
         10.3     Procedures for Third-Party Claims...............................................        34
         10.4     Certain Claims Procedures.......................................................        35
         10.5     Remedies Exclusive..............................................................        35
         10.6     Mitigation......................................................................        35

ARTICLE XI TERMINATION............................................................................        36
         11.1     Termination Events..............................................................        36
         11.2     Effect of Termination...........................................................        37
</TABLE>

                                     -ii-
<PAGE>

<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                 ----
<S>                                                                                              <C>
ARTICLE XII MISCELLANEOUS AGREEMENTS OF THE PARTIES........................................        37
         12.1     Notices..................................................................        37
         12.2     Bulk Transfers...........................................................        38
         12.3     Severability.............................................................        38
         12.4     Further Assurances; Further Cooperation..................................        38
         12.5     Counterparts.............................................................        38
         12.6     Expenses.................................................................        39
         12.7     Non-Assignability........................................................        39
         12.8     Amendment; Waiver........................................................        39
         12.9     Specific Performance.....................................................        39
         12.10    Third Parties............................................................        39
         12.11    Governing Law............................................................        40
         12.12    Consent to Jurisdiction; Waiver of Jury Trial............................        40
         12.13    Interpretation; Absence of Presumption...................................        40
         12.14    Entire Agreement.........................................................        40
         12.15    Section Headings; Table of Contents......................................        41
         12.16    Schedules................................................................        41

WATER COMPANY VEHICLES.....................................................................         1

Annex A  Definitions

Schedule 3.3         Allocation of Purchase Price
Schedule 4.3         Conflicts;  Required Consents
Schedule 4.4         Financial Statements
Schedule 4.5         Absence of Certain Changes
Schedule 4.6(b)      Owned and Leased Properties
Schedule 4.6(c)      Water Rights
Schedule 4.7         Contracts
Schedule 4.8         Litigation
Schedule 4.9         Intellectual Property Rights
Schedule 4.12(a)     Employment & Benefits
Schedule 4.12(c)     Employment & Benefits
Schedule 4.13        Compliance with Laws
Schedule 4.14        Environmental Matters
Schedule 4.15        Undisclosed Liabilities
Schedule 6.1         Operation of Water Business
Schedule 6.7         Post Closing Arrangements
Schedule 7.1         TROA Agreement Draft
Schedule 8.1         Regulatory Authorizations
Schedule 9.3         Instruments of Conveyance

Exhibit A            Purchased Assets
Exhibit B            Knowledge Persons
Exhibit C            Certain Excluded Assets
</TABLE>

                                     -iii-
<PAGE>

                           ASSET PURCHASE AGREEMENT

         This Asset Purchase Agreement, dated as of January 15, 2001
(hereinafter, this "Agreement"), between Sierra Pacific Power Company, a Nevada
                    ---------
corporation ("Seller"), and TRUCKEE MEADOWS WATER AUTHORITY, a joint powers
              ------
authority ("Purchaser").
            ---------

                             W I T N E S S E T H:

         WHEREAS, Seller owns the Purchased Assets (as defined herein) and uses
the Purchased Assets in the operation of a water sale and delivery business in
the Reno-Sparks, Nevada area (the "Water Business"); and
                                   --------------

         WHEREAS, Purchaser desires to purchase, and Seller desires to sell and
transfer to Purchaser, the Purchased Assets, and Purchaser agrees to assume
certain liabilities as specified herein;

         NOW, THEREFORE, upon the terms and subject to the conditions set forth
herein, the parties hereto agree as follows:

                                   ARTICLE I

                     DEFINITIONS AND RULES OF CONSTRUCTION
                     -------------------------------------

     1.1      Definitions and Rules of Construction
     ----------------------------------------------

              (a) Defined terms used in this Agreement have the meanings
ascribed to them by definition in this Agreement, including in Annex A.

              (b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.

              (c) Whenever the words "include", "including", or "includes"
appear in this Agreement, they shall be read to be followed by the words
"without limitation" or words having similar import.

                                  ARTICLE II

                 SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
                 --------------------------------------------

     2.1      Asset Purchase
     -----------------------

              Upon the terms and subject to the satisfaction or waiver of the
conditions set forth in this Agreement, at the Closing (subject to Sections
2.4(e) and 2.5), Seller shall sell, assign, transfer, convey and deliver to
Purchaser and Purchaser shall purchase, acquire and accept from Seller all of
Seller's right, title and interest in and to the Purchased Assets. Purchaser and
Seller acknowledge and agree that Seller is not transferring to Purchaser, and
Purchaser is not acquiring, any of the Excluded Assets.
<PAGE>

                                                                               2

     2.2  Assumption of Liabilities; Excluded Liabilities
     ----------------------------------------------------

          Upon the terms and subject to the satisfaction or waiver of the
conditions set forth in this Agreement, at the Closing from and after the
Closing Date, Purchaser shall assume and faithfully pay, perform, fulfill and
discharge when due all Assumed Liabilities. The parties acknowledge and agree
that Purchaser is not assuming any of the Excluded Liabilities, nor is Purchaser
assuming liability for obligations to the extent Seller is obligated to
indemnify Purchaser pursuant to Article X. "Assumed Liabilities" mean the
                                            -------------------
following:

          (a) Except as provided below and for those liabilities set forth in
the definition of Excluded Liabilities, any past, existing and future liability
arising from the pre-Closing or post-Closing ownership or operation of the
Purchased Assets;

          (b) all liabilities and obligations under the Contracts assigned
pursuant to Section 2.1 to the extent such Contracts are assigned, and including
to the extent such liabilities and obligations are unpaid, undelivered or
unperformed on the Closing Date, and any leases, contracts and other agreements
entered into by Seller in respect of the Purchased Assets after the date hereof
consistent with the terms of this Agreement including, without limitation,
agreements with respect to liabilities for real or personal property Taxes,
other than Excluded Liabilities, in accordance with their terms;

          (c) all liabilities for obligations in respect of which Purchaser has
indemnified Seller pursuant to Section 10.1 of this Agreement;

          (d) all liabilities in respect of employees of Seller that Purchaser
agrees to assume pursuant to Section 6.6 hereof, including, without limitation,
the liabilities described in the New IBEW Contract, and the Guide to the Water
Business Divestiture Severance Program for MPAT Employees; provided, however,
                                                           --------  -------
that the parties acknowledge and agree that Purchaser is not assuming any
compensation expenses related to stay bonuses or any pre-closing employee-
related liabilities except as set forth in Section 6.6.

          (e) all prorated real estate Taxes incurred in connection with the
transactions contemplated by this Agreement that Purchaser has agreed to pay
pursuant to Section 2.3;

          (f) any past, existing and future liability arising from the pre-
Closing or post-Closing ownership or operation of the Purchased Assets
including, without limitation, all liability, obligation or responsibility under
or related to former, current or future Environmental Laws or the common law,
whether such liability or obligation or responsibility is known or unknown,
contingent or accrued, or arising as a result of or in connection with (i) any
violation or alleged violation of Environmental Law, prior to the Closing Date,
with respect to the ownership or operation of the Purchased Assets, including,
without limitation, any fines or penalties that arise in connection with the
ownership or operation of the Purchased Assets prior to the Closing Date or the
costs associated with correcting such violations; (ii) loss of life, injury to
persons or property or damage to natural resources (whether or not such loss,
injury or damage arose or was made manifest before the Closing Date or arises or
becomes manifest after the Closing Date), caused (or allegedly caused) by the
presence or Release of Hazardous Materials at, on, in, under, adjacent to,
discharged from, emitted from or migrating from the Purchased
<PAGE>

                                                                               3

Assets prior to the Closing Date, including, without limitation, Hazardous
Materials contained in building materials or in the soil, surface water,
sediments, groundwater, landfill cells, or in other environmental media at or
adjacent to the Purchased Assets; and (iii) the investigation and/or Remediation
(whether or not such investigation or Remediation commenced before the Closing
Date or commences after the Closing Date) of Hazardous Materials that are
present or have been Released prior to the Closing Date at, on, in, under,
adjacent to, discharged from, emitted from or migrating from the Purchased
Assets; provided as to all of the above that nothing set forth in this Section
2.2(e) shall require the Purchaser to assume any Excluded Liabilities;

          (g) all liabilities incurred after the date of this Agreement and
prior to the Closing in the normal course of operation of the Water Business
pursuant to Section 6.1 (except Excluded Liabilities); and

          (h) any liabilities specified on Schedule 4.15.
                                           -------------

     2.3  Transfer of Purchased Assets and Assumed Liabilities
     ---------------------------------------------------------

          The Purchased Assets shall be sold, conveyed, transferred, assigned
and delivered, and the Assumed Liabilities shall be assumed, pursuant to
transfer and assumption agreements or other instruments in such form as is
necessary and appropriate to effect a conveyance of the Purchased Assets and an
assumption of the Assumed Liabilities in the jurisdictions in which such
transfers are to be made. Such transfer and assumption agreements or other
instruments shall be in a form reasonably satisfactory to Seller and Purchaser,
and shall be executed no later than on the Closing Date by Seller and/or one or
more of its Subsidiaries, as appropriate, and Purchaser. Purchaser and Seller
will agree to identify the required transfer and assumption documents in each
jurisdiction as promptly as practicable. Any transfer, filing, recordation or
similar fees or Taxes shall be borne by Seller. Real estate Taxes and
assessments (both general and special) shall be prorated to the Closing Date
using the most recent assessment and levy, and such Taxes and assessments shall
be reflected on the Closing Date Statement. Such prorations will be deemed to be
final absent manifest error. Security deposits given by Seller as tenant with
respect to leases for Leased Real Property and not refunded to Seller should be
assigned to Purchaser and Seller given credit on the Closing Date Statement.

     2.4  Governmental Approvals and Consents
     ----------------------------------------

          (a) Seller and Purchaser shall cooperate with each other and promptly
(but in any event not later than ten days after the date of this Agreement with
respect to filings with the Public Utility Commission of Nevada) prepare and
file all necessary documentation and use commercially reasonable efforts to
obtain all necessary permits, consents approvals and authorizations of all
Governmental Authorities and all other parties necessary or advisable to
consummate the transactions contemplated by this Agreement or required by the
terms of any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, concession, contract, lease or other instrument to which Seller or
Purchaser or any of their respective subsidiaries is a party or by which any of
them or their assets is bound.

          (b) Purchaser shall, no later than ten Business Days after the
effective date of this Agreement, in cooperation with Seller, file an
application with the United States
<PAGE>

                                                                               4

Government seeking assignment of Seller's Interim Storage Agreement, and shall
thereafter use commercially reasonable efforts to secure such assignment of the
Interim Storage Agreement at the earliest practicable date.

          (c) Seller and Purchaser each shall have the right to review, and to
the extent not inconsistent with any legal obligation, approve in advance all
characterizations of the information relating to the transactions contemplated
by this Agreement made to, and which appear in any filings with, any
Governmental Authority made in connection with the transactions contemplated
hereby. The parties hereto agree that they shall consult with each other with
respect to the transferring to Purchaser or the obtaining by Purchaser of all
such necessary permits, consents, approvals and authorizations of all third
parties and Governmental Authorities. Seller and Purchaser shall designate
separate counsel with respect to all applications, notices, petitions and
filings (joint or otherwise) relating to this Agreement and the transactions
contemplated hereby on the behalf of Seller on the one hand and Purchaser on the
other hand, with all Governmental Authorities.

          (d) If each condition to closing set forth in Article VIII has been
satisfied other than the receipt of any authorization in respect of the Hydro
Assets, the Closing shall occur notwithstanding the foregoing with the
adjustment to the Purchase Price set forth in Section 3.2. Following the
Closing, the parties shall use their commercially reasonable efforts, and shall
cooperate with each other, to effect the prompt issuance of any authorizations,
approvals, consents or waivers related thereto. Pending or in the absence of
such authorization, approval, consent or waiver, subject to applicable law
Purchaser and its employees (including any employees of Seller who are
transferred to the Purchaser along with the Water Business) shall, and Seller
shall permit Purchaser and such employees to, operate the Hydro Assets and
Seller shall hold such Hydro Assets for the use and benefit, insofar as
reasonably practicable, of Purchaser and its Designees (at the expense of
Purchaser). In addition, Seller shall and shall cause its Subsidiaries to, take
such other actions as may be reasonably requested by Purchaser in order to place
Purchaser and its Designees, insofar as reasonably practicable, in the same
position as if title to such Hydro Assets had been transferred at the Closing
and so that all the benefits and burdens relating to such Hydro Assets,
including possession, use, risk of loss, potential for gain, and dominion,
control and command over such Hydro Assets, is to inure from and after the
Closing Date to Purchaser and its Designees. From the Closing Date, Purchaser
agrees to assume all liabilities in connection with the ownership or operation
of the Hydro Assets as if such Hydro Assets had been transferred at the Closing,
including, without limitation, liability for any diminution in the value of the
Hydro Assets, any other Purchased Assets or any assets or interests of Seller.
If and when any required authorization, approval, consent or waiver, the absence
of which caused the deferral of transfer of any Hydro Assets pursuant to this
Section 2.4, is obtained, Seller shall provide Purchaser with documentation of
such approval and the transfer of such Hydro Assets shall be promptly effected
in accordance with the terms of this Agreement in respect of the Closing, the
payment contemplated in Section 3.2 shall be made and such Hydro Assets shall
thenceforth be Purchased Assets for all purposes under this Agreement.

          (e) Notwithstanding anything to the contrary contained in this
Agreement:

              (i)   To the extent that the sale, conveyance, transfer,
     assignment or delivery or attempted sale, conveyance, transfer, assignment
     or delivery to Purchaser of
<PAGE>

                                                                               5

     any Purchased Asset (including any Contract) would be a violation of any
     applicable law or would require any authorizations, approvals, consents or
     waivers of Governmental Authorities or other third parties and such
     authorizations, approvals, consents or waivers shall not have been obtained
     prior to the Closing, this Agreement shall not constitute a sale,
     conveyance, transfer, assignment or delivery, or an attempted sale,
     conveyance, transfer, assignment or delivery thereof if any of the
     foregoing would constitute a breach of applicable law or the rights of any
     third party until such authorization, approval, consent or waiver is
     obtained. To Seller's knowledge, there are no restrictions or requirements
     such as are described in this Section 2.4(e)(i) except as disclosed herein.

              (ii)  In the event the Federal Trade Commission, the Department of
     Justice or any other government or Governmental Authority shall (x) seek an
     injunction or the enactment, entry, enforcement or promulgation of any
     statute, rule, order or decree restraining or prohibiting the transactions
     contemplated by this Agreement or (y) withhold or threaten to withhold any
     consent, certification or other approval required to complete the
     transactions contemplated by this Agreement, Purchaser and Seller shall use
     commercially reasonable efforts to effect the Purchase notwithstanding any
     such action by such government or Governmental Authority.

     2.5  Farad Insurance Claim
     ---------------------------

          With respect to Seller's insurance claim relating to the loss,
reconstruction and replacement of the Farad dam and its associated
appurtenances, the Farad hydroelectric facility together with Hydro Water Rights
established in Claim #5 of the Orr Ditch Decree (the "Farad Facility")
                                                      --------------
identified on Exhibit A shall not be transferred, and the portion of the
              ---------
Purchase Price in the amount of $2,000,000 attributable to the Farad Facility
shall not be payable, until either (x) Seller has reconstructed the Farad
Facility in a manner reasonably acceptable to Purchaser or (y) Seller's insurer
in respect of such claim has consented to the assignment of such claim by Seller
to Purchaser and Purchaser is reasonably satisfied regarding the rights relating
to such claim, at which time the transfer of the Farad Facility and assignment
of such claim to Purchaser shall be promptly effected.

     2.6  Novation
     -------------

          Each party hereto, at the request of the other, shall, and shall cause
their respective Subsidiaries to use commercially reasonable efforts to obtain,
or to cause to be obtained, any consent, substitution, approval or amendment
required to novate (including with respect to any federal governmental contract)
or assign all rights and obligations under agreements, leases, licenses and
other obligations or liabilities of any nature whatsoever that constitute
Assumed Liabilities or to obtain in writing the unconditional release of all
parties to such arrangements, so that, in any case, Purchaser will be solely
responsible for such Assumed Liabilities, provided, however, that neither party
                                          --------  -------
nor their respective Subsidiaries shall be obligated to pay any consideration
therefor to any third party from whom such consents, approvals, substitutions
and amendments are requested.
<PAGE>

                                                                               6

                                  ARTICLE III

                        PURCHASE PRICE AND ADJUSTMENTS
                        ------------------------------

     3.1  Purchase Price
     -------------------

          The purchase price for the Purchased Assets shall be an amount in cash
equal to the sum of (i) $350,000,000 (subject to the provisions of Section 2.5)
and (ii) the Purchase Price Adjustment Amount (subject to reduction by the
amount of the Hydro Assets Purchase Price (as defined below)) (the "Purchase
                                                                    -------
Price").
-----

     3.2  Payment of Purchase Price
     ------------------------------

     On the Closing Date, Purchaser shall pay to Seller the Purchase Price. Such
amount shall be payable in United States dollars in immediately available
federal funds to such bank account or accounts as shall be designated by Seller
no later than the second Business Day prior to the Closing. If, however, Seller
is unable to deliver the Hydro Assets to Purchaser on the Closing Date because
any authorization has not been received, the Purchase Price shall be
$342,000,000. The remaining $8,000,000 (subject to the provisions of Section
2.5) (the "Hydro Assets Purchase Price") shall be paid at the earliest
           ---------------------------
practicable date upon which the Hydro Assets can be transferred following the
receipt of such authorization but in no event later than five Business Days
after the receipt of the authorization.

     3.3  Allocation of Purchase Price
     ---------------------------------

          Seller shall reasonably allocate the Purchase Price (and all other
capitalizable costs) for all Tax purposes as shown on an allocation schedule
attached hereto as Schedule 3.3 and as prepared in accordance with Section 1060
                   ------------
of the Code and the Treasury Regulations promulgated thereunder. Seller and
Purchaser shall file Internal Revenue Service Form 8594 and any comparable
state, local or foreign forms (including any successor forms) (collectively the
"1060 Forms") and any required attachments thereto required to be filed pursuant
 ----------
to Section 1060 of the Code, the Treasury Regulations promulgated thereunder or
any provisions of state, local or foreign law, together with all Federal, state
and local Tax returns, in accordance with the allocation schedule. Seller and
Purchaser shall cooperate in the preparation of any 1060 Forms and in the filing
of such 1060 Forms in the manner required by law. Each of Seller and Purchaser
shall notify and provide the other with reasonable assistance in the event of an
examination, audit or other proceeding regarding the agreed upon allocation of
the Purchase Price. Any Purchase Price Adjustment pursuant to Section 3.4 shall
also be allocated in accordance with the allocation schedule.

     3.4  Purchase Price Adjustments
     -------------------------------

          (a) No later than 60 days after the Closing Date, Seller shall deliver
to Purchaser the Closing Date Statement setting forth the Net Worth Amount as of
the Closing Date. The Closing Date Statement shall be prepared using the same
accounting principles, policies and methods as Seller used in preparing the
September 30, 2000 financial statements referred to in Section 4.4(a). Purchaser
shall cooperate with Seller in connection with the
<PAGE>

                                                                               7

preparation of the Closing Date Statement. Purchaser shall have 30 days from its
receipt of such statement to notify Seller of any objections to any item or
items on the Closing Date Statement. Any such notice shall specify the item or
items in dispute (a "Disputed Item" or "Disputed Items"). Any Disputed Item
                     -------------      --------------
shall be resolved in the manner set forth in Section 3.4(b) below. If (A)
Purchaser does not deliver to Seller its objections to the Closing Date
Statement in writing within 30 days of its receipt of such statement, (B)
Purchaser acknowledges in writing that the Closing Date Statement is accurate or
(C) Purchaser and Seller resolve all Disputed Items in accordance with Section
3.4(b) below, then the Closing Date Statement shall be final, binding and
conclusive on all parties.

          (b) If Purchaser and Seller shall be unable to resolve any Disputed
Items within 30 days after notice from Seller to Purchaser that a dispute
exists, then Seller's independent accounting representative, Deloitte & Touche
LLC ("D&T") and Purchaser's independent accounting representative ("PR") (which
      ---                                                           --
shall be a "big five" accounting firm other than D&T) shall endeavor in good
faith to resolve any Disputed Item(s). In the event that D&T and PR are unable
to resolve the Disputed Item(s) within 30 days, D&T and PR shall together,
within ten days thereafter, appoint a representative from a "big five"
accounting firm (other than D&T or PR) to arbitrate the dispute (the
"Arbitrator"). Seller and Purchaser shall, within the next 20 days thereafter,
 ----------
present their positions with respect to the Disputed Item(s) to the Arbitrator
together with such other materials as the Arbitrator deems appropriate. The
Arbitrator shall, after the submission of evidentiary materials, submit its
written decision on each Disputed Item to Seller and Purchaser. Any
determination by the Arbitrator with respect to any Disputed Item shall be
final, binding and conclusive on each party to this Agreement. Except as
specifically set forth to the contrary in this Section 3.4(b) or specifically
agreed to by the parties in writing, the Arbitrator shall comply with, and the
arbitration shall be conducted in Nevada in accordance with, the commercial
arbitration rules of the American Arbitration Association ("AAA") as in effect
                                                            ---
for commercial arbitrations conducted in Nevada by the AAA. Seller and Purchaser
agree that the cost of the Arbitrator shall be borne by the parties in
proportion to the outcome of the arbitration in respect of the amount at issue.

          (c) If it is finally determined pursuant to the provisions of this
Section 3.4 that there is a Deficiency, then within ten days after all Disputed
Items with respect thereto have been resolved, Seller shall pay to Purchaser the
amount of the Deficiency, and if it is finally determined pursuant to the
provisions of this Section 3.4 that there is an Excess, then within ten days
after all Disputed Items with respect thereto have been resolved, Purchaser
shall pay to Seller the amount of the Excess (any such Deficiency or Excess, the
"Purchase Price Adjustment Amount"); provided, however, that no adjustment shall
 --------------------------------    --------  -------
be made to the Purchase Price unless the amount of such Deficiency or Excess
exceeds $250,000.

          (d) In addition to the adjustment to the Purchase Price for any
Deficiency or Excess described in paragraph (c) above, the Purchase Price shall
be reduced by $1,000,000 if Purchaser purchases insurance in respect of
environmental exposures for events occurring prior to Closing on terms
reasonably acceptable to Seller.
<PAGE>

                                                                               8

                                  ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF SELLER
                   ----------------------------------------

     Seller represents and warrants to Purchaser as follows:

     4.1  Corporate Existence
     ------------------------

          Seller is duly organized and validly existing and in good standing
under the laws of the State of Nevada. Seller has the requisite corporate power
and authority to own, lease and operate its properties and assets, including the
properties and assets included in the Purchased Assets, and to carry on the
Water Business as the same is now being conducted, and is duly authorized,
qualified or licensed to do business in every jurisdiction wherein, by reason of
the nature of the Water Business, the same is required.

     4.2  Corporate Authority
     ------------------------

          This Agreement and the other agreements, instruments and documents to
be executed, delivered and/or filed in connection herewith (collectively with
this Agreement, the "Transaction Documents") to which Seller is a party and the
                     ---------------------
consummation of the transactions contemplated hereby and thereby involving such
persons have been or, in the case of the other Transaction Documents will be
prior to the Closing, duly authorized by the Board of Directors (or a duly
authorized committee or representative thereof) of Seller by all requisite
corporate, shareholder, partnership or other action prior to the Closing, and
Seller has full power and authority to execute, deliver and/or file the
Transaction Documents to which it is a party and to perform its obligations
hereunder or thereunder. This Agreement has been duly executed and delivered by
Seller, and the other Transaction Documents will be duly executed, delivered
and/or filed by Seller, and this Agreement constitutes, and the other
Transaction Documents when so executed, delivered and/or filed will constitute,
valid and legally binding obligations of Seller, enforceable against it or them,
as the case may be, in accordance with its terms except as enforceability may be
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.

     4.3  Conflicts; Required Consents
     ---------------------------------

          Except (a) for any applicable laws or regulations relating to
antitrust or competition (collectively, "Antitrust Regulations"), (b) Laws,
                                         ---------------------
practices and Orders of any state public utility control or public service
commissions or similar state regulatory bodies ("PUCs"), each of which is
                                                 ----
identified in Schedule 4.3, (c) Laws, practices and Orders of any state
              ------------
departments of public health or departments of health or similar state
regulatory bodies or of any federal or state regulatory body having jurisdiction
over environmental protection or environmental conservation or similar matters
("Health Agencies"), each of which is identified in Schedule 4.3, (d) as
  ---------------                                   ------------
otherwise set forth in Schedule 4.3 and (e) any approvals or consents of
                       ------------
Purchaser or its Affiliates required pursuant to its Joint Powers Agreement, the
execution, delivery and/or filing of this Agreement and the other Transaction
Documents by Seller and the
<PAGE>

                                                                               9

consummation by Seller of the transactions contemplated hereby and thereby will
not (A) violate or conflict with any provision of the respective certificate of
incorporation or by-laws or similar organizational documents of Seller or any of
its Subsidiaries, (B) result in any breach or constitute any material default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or a loss
of a material benefit under, or result in the creation of any Lien (including
any Lien for unpaid Taxes) under, any Contract or any license or permit to which
Seller is subject or is a party and which is a part of the Purchased Assets or
necessary or useful in the operation of the Water Business, (C) violate,
conflict with or result in any breach under any provision of any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Seller,
the Purchased Assets or the Water Business, or (D) require any consent,
approval, order or authorization of, license or permit from, notice to or
registration, declaration or filing with, (each of the foregoing, a "Consent")
                                                                     -------
any United States or foreign, federal, state, provincial, county, municipal or
local government agency, board, bureau, department, court of competent
jurisdiction, administrative agency or commission or other governmental or
regulatory authority or instrumentality (other than Purchaser or its Affiliates)
("Governmental Authority") or any third party.
  ----------------------

     4.4  Financial Statements
     -------------------------

          (a) Schedule 4.4 presents an accounting of the Purchased Assets and
Assumed Liabilities as of December 31, 1999 and September 30, 2000 (the "Balance
                                                                         -------
Sheet Date"), and the related pro forma and pretax consolidated statements of
----------
income for the fiscal year and the nine-month period, respectively, ended on
such respective date (collectively, the "Financial Statements"). The Financial
                                         --------------------
Statements present fairly in all material respects the financial condition and
the results of operations of Seller or the Water Business, as the case may be,
as of such date and for such period in accordance with GAAP, except that the
statements do not include all of the information required to be included in the
footnotes required by GAAP and, in the case of the financial statements as at
and for the period ended September 30, 2000, are subject to year-end adjustments
which adjustments to the knowledge of the Seller will not be material.

          (b) Seller makes no representation with respect to any financial
information delivered to Purchaser other than as contained in or pursuant to
this Agreement.

     4.5  Absence of Certain Changes
     -------------------------------

          Since September 30, 2000, the Water Business has been conducted in all
material respects in the ordinary course and in substantially the same manner as
previously conducted, except as set forth on Schedule 4.5.

     4.6  Properties
     ---------------

          (a) Seller has, or at the Closing will have, good title to the
personal property owned by Seller in respect of the Water Business, free and
clear of all Liens, except Permitted Liens.
<PAGE>

                                                                              10

          (b) Schedule 4.6(b) contains a list of all fee interests in real
              ---------------
property owned by Seller and used in connection with the Water Business ("Owned
                                                                          -----
Real Property") and all material easements, rights-of-way and other interests in
-------------
real property owned or held by Seller and used or held for use in connection
with the Water Business other than Water Rights ("Other Real Property
                                                  -------------------
Interests") or leased by Seller in respect of the Water Business as lessee or
---------
lessor ("Leased Real Property" and, together with Owned Real Property and Other
         --------------------
Real Property Interests, the "Real Property"), including all buildings,
                              -------------
structures and other improvements situated thereon. Except as set forth in
Schedule 4.6(b), Seller holds good and marketable title to the Owned Real
---------------
Property free and clear of all Liens except (i) Permitted Liens, and (ii) Liens
described on Schedule 4.6(b), all of which will be terminated or released, at or
             ---------------
prior to Closing. Except as disclosed on Schedule 4.6(b) and Schedule 4.7,
                                         ---------------     ------------
Seller has valid and enforceable leasehold interests in all Leased Real Property
and, with respect to Other Real Property Interests, has valid and enforceable
rights to use such Other Real Property Interests, subject only to Permitted
Liens. Except as disclosed on Schedule 4.6(b), Seller has a valid and
enforceable right to assign each Leased Real Property and Other Real Property
Interest to Purchaser without obtaining the approval or consent of any third
party, including any Governmental Authority. Each parcel of Owned Real Property
and each parcel of Leased Real Property and any improvements thereon (x) has
access to and over public streets or private streets for which Seller has a
valid right of ingress and egress, (y) conforms in its current use and occupancy
to all material zoning requirements, and (z) conforms in its current use to all
restrictive covenants, if any, or other Liens affecting all or part of such
parcel. There are no pending condemnation, expropriation, eminent domain or
similar proceedings of which Seller has received notice, or, to Seller's
knowledge, affecting all or any portion of the Real Property. Except as
disclosed on Schedule 4.6(b), each parcel of Owned Real Property and Leased Real
             ---------------
Property, including any improvements located thereon, complies in all material
respects with all building codes, fire codes and other Laws concerning the use,
occupancy and physical condition of the Real Property, including the Americans
with Disabilities Act. The Real Property represents all interests in real
property necessary to operate the Water Business as it is currently being
operated. Seller has not disposed of, or taken any steps to dispose of, the Real
Property and is not under any commitment to dispose of it in whole or in part.
There are no pending actions, suits or proceedings of which Seller has received
written notice, or, to Seller's knowledge, affecting or relating to the Owned
Real Property, Leased Real Property or material Other Real Property Interests,
in any court or before any federal, state, county or municipal department,
commission, board, bureau or agency or other Governmental Authority.

          (c) Schedule 4.6(c) contains a list of all material interests in water
              ---------------
owned by Seller in respect of the Water Business including those Water Rights
associated with the Hydro Assets (the "Owned Water Rights") or material water
                                       ------------------
rights leased, licensed or otherwise available to Seller in respect of the Water
Business (the "Leased Water Rights" and, together with the Owned Water Rights,
               -------------------
the "Water Rights"). Seller will deliver to Purchaser on the Closing Date in the
     ------------
form of a quitclaim deed all of its right, title and interest in the Owned Water
Rights (other than the Water Rights associated with the Hydro Assets which shall
be transferred in accordance with the provisions of Section 2.5) and as soon as
practicable thereafter all of its right, title and interest in the Leased Water
Rights by means of assignment of the Water Sale Agreements and Treatment and
Distribution Agreements in respect of such Leased Water Rights as set forth on
Schedule 4.7. Seller warrants that the Water Rights listed in Schedule 4.6(c),
------------                                                  ---------------
<PAGE>

                                                                              11

together with the Leased Water Rights and the Hydro Assets Water Rights, all of
which are to be conveyed as is pursuant to this Agreement, are adequate to
support the current operation of the Water Business. Seller agrees to indemnify
Purchaser for 50% of the entire amount, up to a maximum of $2,500,000, of
Purchaser Losses resulting from any defect in title with respect to the 1700
acre feet of Water Rights referred to in Schedule 4.8, and such indemnification
shall not be subject to the Deductible or the Minimum Claim Threshold.

          (d) Seller shall deliver to Purchaser a deed by which Seller conveys
to Purchaser the dam, outlet channel, spillway channel, flashboard structure and
controlling works at Independence Lake and related easements (the "Conveyed
                                                                   --------
Property") which shall include a covenant, for the benefit of the Conveyed
--------
Property and which burdens the Independence Lake Real Property listed on Exhibit
C, providing that (i) neither Seller, as owner of the Independence Lake Real
Property, nor its successors in ownership may use such property in any manner
that unreasonably causes harm to the operation of the Water Business and (ii)
Seller as the owner of the Independence Lake Real Property for itself and its
successors in ownership waives all present and future rights to object to
Purchaser's operation of the Conveyed Property pursuant to the Independence Lake
appropriative water rights that are conveyed to Purchaser and any resulting
water levels of Independence Lake, including, without limitation, any drawdown
of the lake level below the sill of the dam.

     4.7  Contracts
     --------------

          (a) Except as otherwise disclosed in Schedule 4.6(b) (Owned and Leased
                                               ---------------
Real Properties), Schedule 4.9 (Intellectual Property Rights) and Schedule
                  ------------                                    --------
4.12(a) (Employment & Benefits) (collectively, the "Covered Schedules") and
-------                                             -----------------
Schedule 4.7, and except for Liens that will be released prior to Closing, as of
-------------
the date hereof there are, no commitments, contracts or groups of related
contracts, indentures and agreements, or any notes, bonds, mortgages,
indentures, deeds of trust, licenses, franchises, permits, concessions, leases
or other instruments evidenced in writing, to which Seller is a party or by
which Seller is bound that relates to the Water Business (hereinafter
"Contracts") that (i) involve commitments by Seller for terms of one year or
 ---------
longer and that involve or are reasonably likely to involve payment by Seller or
to Seller in each case of more than $100,000 in the aggregate, (ii) involve
obligations of Seller for borrowed money or to maintain deposits or advances of
any kind as evidenced by bonds, debentures, notes or similar instruments or
guarantees or capital lease obligations or any other obligations upon which
interest charges are customarily paid, other than those entered into in the
ordinary course of business, (iii) involve any non-compete agreement that will
be applicable to the Purchased Assets or Purchaser following the Closing or (iv)
constitute joint venture or partnership agreements. Contracts disclosed or
required to be disclosed in the Covered Schedules or in Schedule 4.7 are
                                                        ------------
hereafter referred to as the "Disclosed Contracts".
                              -------------------

          (b) Seller has furnished or made available to Purchaser a copy or
summary of the material terms of each Disclosed Contract. Each Disclosed
Contract is valid and in full force and effect according to its terms and Seller
is not in default or breach under any such Disclosed Contract, except as set
forth on Schedule 4.7.
         ------------
<PAGE>

                                                                              12

     4.8  Litigation
     ---------------

          As of the date of this Agreement, Seller is not subject to any Order
relating to the Purchased Assets except as set forth on Schedule 4.8. Except as
set forth in Schedule 4.8, no claim, legal action, suit, arbitration,
             ------------
governmental investigation, action or other legal or administrative proceeding
is pending or, to the knowledge of Seller, threatened in law or in equity, or
before any Governmental Authority, against Seller or any of its Subsidiaries (a)
which is reasonably expected to enjoin or materially delay the consummation of
the Purchase, (b) involving alleged violations of laws or regulations for the
health or safety of employees or others, (c) involving equal employment
opportunity, discrimination, ADA or similar claim or litigation, (d) involving
antitrust claims or litigation, (e) involving claims or litigation seeking
injunctive relief, or (f) involving the Water Business, Purchased Assets, or
employees involved in the Water Business or which could otherwise materially
affect the transactions contemplated by this Agreement.

     4.9  Intellectual Property Rights
     ---------------------------------

          All of the registrations and applications for patents, trademarks and
copyrights owned by Seller and necessary for the operation of the Water Business
and/or all licenses or other agreements concerning Intellectual Property (as
defined below) material to the operation of the Water Business to which Seller
is a party are set forth on Schedule 4.9. Except as set forth on Schedule 4.9,
                            ------------                         ------------
(i) Seller owns or has the right to use all patents, inventions, discoveries,
technology, copyrights, software, trademarks, service marks, trade names,
corporate names, trade dress, trade secrets and all other intellectual property
rights ("Intellectual Property") material to the operation of the Water Business
         ---------------------
as currently conducted (such Intellectual Property, the "Water Business
                                                         --------------
Intellectual Property"); (ii) Seller has taken all reasonably necessary actions
---------------------
to preserve and maintain its Water Business Intellectual Property; (iii) Seller
has not received any written notices nor does Seller have other knowledge of any
claim of infringement, misappropriation, challenge, violation, or conflict
("Infringement") with respect to the Water Business Intellectual Property; (iv)
  ------------
to Seller's knowledge, the Water Business Intellectual Property does not
infringe the Intellectual Property of any third parties; and (v) Seller has the
right, subject to any consents and approvals in respect thereof, to transfer to
Purchaser all of the Water Business Intellectual Property included as Purchased
Assets under this Agreement.

     4.10 Insurance
     --------------

          Seller is, and at all times during the past two years has been,
insured with reputable insurers (or self-insured) against all risks normally
insured against by companies in similar lines of business, and all material
policies of fire, liability, workers' compensation and other forms of insurance
purchased or held by and insuring the Purchased Assets are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the date as of which this representation is being made have been paid,
and no notice of cancellation or termination has been received with respect to
any such policy which was not replaced on substantially similar terms prior to
the date of such cancellation.
<PAGE>

                                                                              13

     4.11 Tax Matters
     ----------------

          There is no liability for Taxes in respect of the Purchased Assets
except as provided for in Section 2.3.

     4.12 Employment and Benefits
     ----------------------------

          (a)  Seller has previously delivered to the Purchaser copies of all
labor union and collective bargaining agreements relating to the Purchased
Assets to which the Seller is a party or is subject. With respect to its
employees associated with the Purchased Assets, Schedule 4.12(a) sets forth a
                                                ----------------
list of each material "employee benefit plan" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
                                                                     -----
and all severance, change in control or employment plans, programs or
agreements, and vacation, incentive, bonus, stock option, stock purchase, and
restricted stock plans, programs or policies under which any employee or former
employee of the Water Business has any present or future right to benefits and
under which Seller has had or has any present or future liability (collectively,
the "Seller Plans"), to Seller's knowledge: (i) Seller is in compliance, in all
     ------------
material respects, with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours; (ii) Seller
has not received written notice of any unfair labor practice complaint against
Seller pending before the National Labor Relations Board; (iii) there is no
labor strike, slowdown or stoppage actually pending or threatened against or
affecting Seller; (iv) Seller has not received notice that any representation
petition respecting the employees of Seller has been filed with the National
Labor Relations Board; (v) no arbitration proceeding arising out of or under
collective bargaining agreements is pending against Seller; and (vi) Seller has
never experienced any primary work stoppage.

          (b)  With respect to each Seller Plan, Seller has made available to
Purchaser a current, accurate and complete copy thereof and, to the extent
applicable: (i) the most recent determination letter, if applicable; (ii) any
summary plan description; and (iii) for the two most recent years (A) the Form
5500 and attached schedules, (B) audited financial statements and (C) actuarial
valuation reports, if applicable.

          (c)  Except as set forth in Schedule 4.12(c), with respect to its
                                      ----------------
employees associated with the Purchased Assets, the Seller Plans are in
compliance in all material respects with all applicable requirements of ERISA,
the Code, and other applicable laws and have been administered in accordance
with their terms and such laws. Each Seller Plan which is intended to be
qualified within the meaning of Section 401 of the Code has received a favorable
determination letter as to its qualification, and, to the knowledge of Seller,
nothing has occurred that could reasonably be expected to affect such
qualification.

     4.13 Compliance with Laws
          --------------------

          Except as set forth on Schedule 4.13, (a) the Water Business is
                                 -------------
conducted by Seller in compliance in all material respects with all statutes,
laws, regulations, ordinances, rules, judgments, orders or decrees applicable
thereto, and (b) all filings required to be made by Seller in respect of the
Water Business under any applicable Laws or Orders relating to the regulation of
public utilities, have been filed with the appropriate PUC or Health Agency or
any other
<PAGE>

                                                                              14

appropriate Governmental Authority, as the case may be, including all forms,
statements, reports, agreements (oral or written) and all documents, exhibits,
amendments and supplements appertaining thereto, including but not limited to
all rates, tariffs franchises, service agreements and related documents and all
such filings complied, as of their respective dates, in all material respects
with all applicable requirements of the appropriate Laws or Orders.

     4.14     Environmental Matters
     ------------------------------

              Seller has made available to Purchaser (and Purchaser may provide
to its environmental insurance provider(s)) copies of Phase I environmental site
assessments in Seller's possession or control for certain of the real property
included in the Purchased Assets. Except as provided therein or in Schedule
                                                                   --------
4.14, to the knowledge of Seller:
----

              (a) Seller holds and is in compliance in all material respects
with all permits, licenses and governmental authorizations required for Seller
to construct and to operate the Purchased Assets under Environmental Laws, and
all such permits, licenses and governmental authorizations are in good standing
or, where applicable, a renewal application has been timely filed and is pending
agency approval, and Seller is otherwise in compliance with all Environmental
Laws with respect to the Purchased Assets, including, without limitation, the
possession of and compliance with all permits required under Environmental Laws;

              (b) Seller has not received any written request for information,
or been notified in writing that it is a potentially responsible party under
CERCLA or any similar state law with respect to any of the Purchased Assets, and
Seller has not received any written communication that alleges that Seller,
solely with respect to the Purchased Assets, is not in compliance with
applicable Environmental Laws;

              (c) Seller has no knowledge of any Environmental Claim pending (i)
against Seller in respect to the Purchased Assets, or (ii) against any of the
Purchased Assets that the Seller owns or operates.

              (d) There are no Releases of any Hazardous Material that would
reasonably be expected to form the basis of any Environmental Claims against the
Seller in respect to the Purchased Assets;

              (e) with respect to the Purchased Assets, Seller has not entered
into or agreed to any consent decree or order, and is not subject to any
judgment, decree or judicial order relating to compliance with any Environmental
Law or to the investigation or cleanup of Hazardous Materials under any
Environmental Law; and

              (f) the representations and warranties made in this Section are
Seller's exclusive representations and warranties relating to environmental
matters.

              "Environmental Claims" means any and all written
               --------------------
administrative, regulatory or judicial actions, suits, demand, demand letters,
claims, liens, proceedings or notices of noncompliance or violation by any
person or entity (including any Governmental Authority) alleging potential
liability (including, without limitation, potential liability for enforcement,
<PAGE>

                                                                              15

damages, contribution, indemnification, cost recovery, compensation, injunctive
relief, cleanup costs, governmental resource costs, removal costs, remedial
costs, natural resources damages, property damages, personal injuries or
penalties) arising out of, based on or resulting from (A) the presence, or
Release or threatened Release into the environment, of any Hazardous Materials
relating to ownership or operation of the Purchased Assets; or (B) any violation
of any Environmental Law related to the ownership or operation of the Purchased
Assets; or (C) any and all claims by any third party resulting from the presence
or release of any Hazardous Materials related to the Purchased Assets.

              "Environmental Law" means any currently applicable federal, state
               -----------------
or local laws, statutes, regulations, codes, or ordinances relating to, or
imposing standards regarding, pollution or the protection of human health (as
relating to the environment) or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws and regulations relating to Releases or
threatened Releases of Hazardous Materials, or otherwise relating to the
treatment, storage or disposal of Hazardous Materials.

              "Hazardous Materials" means any hazardous or toxic substance,
               -------------------
material or waste defined, listed, or classified as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous substances," "toxic
substances," "contaminants" or "pollutants" or words of similar meaning and
regulatory effect, by any Environmental Laws, including, without limitation,
friable asbestos, petroleum or petroleum products, and transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls,
and including any other chemical material, substances or waste, exposure to
which is now prohibited, limited or regulated under Environmental Law.

              "Release" shall be defined as that term is defined in 42
               -------
U.S.C. (S) 9601 (22).

     4.15     Undisclosed Liabilities
     --------------------------------

              Seller has no liabilities or obligations relating to the Water
Business or operation of the Purchased Assets (whether absolute, accrued,
contingent or otherwise) of a nature required by GAAP to be reflected in a
balance sheet or disclosed in the notes thereto, except (i) as are set forth or
reflected in the Financial Statements (or described in the notes thereto), (ii)
liabilities incurred in the ordinary course of business since the Balance Sheet
Date, (iii) liabilities disclosed in Schedule 4.15 or any other Schedule hereto,
(iv) liabilities under Contracts disclosed in the Schedules to this Agreement
and (v) liabilities under Contracts not required to be disclosed in the
Schedules to this Agreement.

     4.16     Finders; Brokers
     -------------------------

              With the exception of fees and expenses payable to Lehman Brothers
Inc., which shall be Seller's sole responsibility and with respect to which
Seller will indemnify and hold Purchaser harmless, Seller has not employed any
finder or broker in connection with the Purchase who would have a valid claim
for a fee or commission from Purchaser in connection with the Purchase.
<PAGE>

                                                                              16

                                   ARTICLE V

                         REPRESENTATIONS OF PURCHASER
                         ----------------------------

     Purchaser represents and warrants to Seller as follows:

     5.1  Corporate Existence
     ------------------------

          Purchaser is a duly organized political subdivision of the State of
Nevada and is validly existing and in good standing under the laws of the
jurisdiction of its organization and has the requisite power and authority to
execute and deliver this Agreement and the other Transaction Documents to which
it is a party and to perform its obligations hereunder and thereunder. Other
than as would not reasonably be expected to have a Purchaser Material Adverse
Effect (as defined in Section 5.3), as of the Closing Date and, with respect to
the Hydro Assets, as of the actual date of transfer of such Hydro Assets,
Purchaser will have the requisite corporate, partnership or similar power and
authority to own, lease and operate the Purchased Assets, and to carry on the
Water Business in substantially the same manner as the same is now being
conducted by Seller and its Subsidiaries.

     5.2  Corporate Authority
     ------------------------

          This Agreement and the other Transaction Documents to which Purchaser
is a party and the consummation of the transactions contemplated hereby and
thereby involving such persons have been or, in the case of the other
Transaction Documents, will be prior to the Closing, duly authorized by
Purchaser, and Purchaser, will have at or prior to the Closing full power and
authority to execute, deliver and/or file the Transaction Documents to which it
is a party and to perform its obligations hereunder or thereunder. This
Agreement has been duly executed and delivered by Purchaser, and the other
Transaction Documents will be duly executed, delivered and/or filed by
Purchaser, and this Agreement constitutes, and the other Transaction Documents
when so executed, delivered and/or filed will constitute, a valid and legally
binding obligation of Purchaser, enforceable against it or them, as the case may
be, in accordance with its terms except as enforceability may be affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing. The execution, delivery
and/or filing of this Agreement and the other Transaction Documents by Purchaser
and the consummation by Purchaser of the transactions contemplated hereby and
thereby will not (A) violate or conflict with any provision of the respective
certificate of incorporation or by-laws or similar organizational documents of
Purchaser, (B) result in any breach or constitute any material default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any Lien under any
contract, indenture, mortgage, lease, note or other agreement or instrument to
which Purchaser is subject or is a party, or (C) violate, conflict with or
result in any breach under any provision of any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Purchaser or any of
its respective properties or assets.
<PAGE>

                                                                              17

     5.3  Governmental Approvals and Consents
     ----------------------------------------

          Purchaser is not subject to any order, judgment or decree which would
prevent the consummation of the Purchase. No claim, legal action, suit,
arbitration, governmental investigation, action or other legal or administrative
proceeding is pending or, to the knowledge of Purchaser, threatened against
Purchaser which would enjoin or delay the consummation of the Purchase or
prevent Purchaser from entering into the TROA. Except for any consents required
under any applicable Antitrust Regulations, any consents required for Seller to
transfer the assets, and approval of the issuance of bonds and filings
associated with the issuance of those bonds of Purchaser's Board of Directors,
no consent, approval, order or authorization of, license or permit from, notice
to or registration, declaration or filing with, any Governmental Authority, is
required on the part of Purchaser in connection with the execution, delivery
and/or filing of this Agreement or any of the other Transaction Documents or the
consummation of the transactions contemplated hereby and thereby except for such
consents, approvals, orders or authorizations of, licenses or permits, filings
or notices which have been obtained and remain in full force and effect, and
those with respect to which the failure to have obtained or to remain in full
force and effect would not, individually or in the aggregate, have a material
adverse effect on the ability of Purchaser to consummate the transactions
contemplated hereby and thereby (a "Purchaser Material Adverse Effect").
                                    ---------------------------------

     5.4  Funding of Expenses Prior to Closing and Break-Up Fee
     ----------------------------------------------------------

          Purchaser has made arrangements to pay for the expenses of its
financial, tax, accounting, legal, environmental, engineering and any other
advisors necessary to consummate this transaction (collectively, "Purchaser
                                                                  ---------
Expenses") with respect to the period from the date of execution hereof through
--------
February 15, 2002, and Purchaser agrees to recommend to its members ("Members")
                                                                      -------
to approve, within the three day period referred to in Section 6.18(a),
arrangements for the payment of all Purchaser Expenses incurred through and
including the Closing Date and the fee referred to in Section 11.1(b).

     5.5  Financial Capacity
     -----------------------

          Subject to the provisions of Section 6.13, Purchaser will have
available on the Closing Date sufficient funds to enable it to consummate the
transactions contemplated hereby. The City of Reno has delivered a resolution to
the effect that it will act as a conduit financing vehicle. Purchaser has the
authority to issue revenue bonds for the purpose of purchasing the Purchased
Assets and such bonds could be structured as bonds whose interest is excluded
from gross income for federal income tax purposes.

     5.6  Finders; Brokers
     ---------------------

          Purchaser has not employed any finder or broker in connection with the
Purchase who would have a valid claim for a fee or commission from Seller in
connection with the Purchase.
<PAGE>

                                                                              18

                                  ARTICLE VI

                      AGREEMENTS OF PURCHASER AND SELLER
                      ----------------------------------

     6.1  Operation of the Water Business
     ------------------------------------

          Except as otherwise contemplated by this Agreement or as disclosed in
Schedule 6.1, Seller covenants that, in respect of the Water Business, until the
Closing and, with respect to the Hydro Assets, until the date of transfer
thereof, it shall use commercially reasonable efforts to operate and maintain
the Purchased Assets according to the ordinary and usual course of business
consistent with past practice, including, without limitation, continuing its
efforts to complete the TROA, the most recent draft of which is contained in
Schedule 7.1. Seller shall not, without the prior written approval of Purchaser
------------
(which approval shall not be unreasonably withheld) or as otherwise contemplated
by this Agreement and the Schedules hereto, take any of the following actions
with regard to the Purchased Assets or the Water Business:

          (a) sell, lease (as lessor or lessee) transfer or otherwise dispose of
any of the Purchased Assets, other than assets used, consumed or replaced in the
ordinary course of business consistent with good industry practice or mortgage
or pledge, impose or suffer to be imposed any encumbrance on any Purchased
Assets;

          (b) except in the ordinary course of business consistent with past
practice or as required by law or contractual obligations (i) create, incur or
assume any material long-term indebtedness for borrowed money (including
obligations in respect of capital leases), (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for any obligations of any person other than Seller or (iii) make any
loans, advances or capital contributions to or investments in any person (except
for customary loans or advances to employees not exceeding $500,000 in the
aggregate), in each case that would be a liability or asset of the Water
Business and reflected on the Closing Date Statement; provided, however, that no
                                                      --------  -------
obligations described in clauses (i) or (ii) shall become Assumed Liabilities.

          (c) (i) grant any increase in the compensation of employees of the
Water Business in excess of $500,000 in the aggregate, except for increases in
the compensation of employees (A) scheduled as of the date hereof that are
consistent with past practice, (B) as a result of existing collective bargaining
agreements or collective bargaining or (C) as required by applicable law from
time to time in effect or by any Benefit Plan as in effect on the date hereof,
(ii) increase the number of employment positions, (iii) enter into any new
material employment, severance or other compensation agreement with any existing
employee or (iv) commit to any additional pension, profit-sharing, deferred
compensation, group insurance, severance pay, retirement or other employee
benefit plan, fund or similar arrangement or amend, or commit itself to amend
any of such plans, funds or similar arrangements;

          (d) cancel any material third party indebtedness owed to Seller in
respect of the Water Business;

          (e) acquire any assets (other than inventory) of the type used in the
Water Business which are material, individually or in the aggregate, to the
Water Business taken as a
<PAGE>

                                                                              19

whole; provided, however, that the foregoing shall not prohibit any merger,
acquisition or other business combination by or involving Seller which
combination would not affect the obligations of Seller under this Agreement or
the ability of Seller (or any successor entity) to perform such obligations;

          (f) enter into any contract, agreement or other commitment relating
exclusively to the Water Business which is not terminable by the parties upon 30
days' notice or less or which involves aggregate consideration in excess of
$25,000 except as set forth on Schedule 6.1;
                               ------------

          (g) make, agree to or arrange for any individual capital expenditure
in respect of the Water Business in excess of $500,000 in the aggregate, except
that Seller shall make any capital expenditures (i) that it has agreed to or
arranged for prior to the date of this Agreement and set forth on Schedule 6.1,
                                                                  ------------
(ii) pursuant to any customer annexation agreements or for line extensions set
forth on Schedule 6.1, or contributions in aid of construction of new facilities
         ------------
consented to by Purchaser, whose consent shall not be unreasonably withheld;
(iii) requested by Purchaser that Purchaser agrees to reimburse or (iv) deemed
necessary by Seller and consented to in writing by Purchaser, whose consent
shall not be unreasonably withheld; provided however, that if Purchaser requests
that Seller make enhancements with a cost in excess of the cost of any necessary
capital expenditure, Purchaser shall reimburse Seller for the cost of such
enhancement;

          (h) make any change in its accounting standards or methods; or

          (i) agree, whether in writing or otherwise, to do any of the above.

     6.2  Investigation of Business
     ------------------------------

          (a) Seller shall, and shall cause its Subsidiaries to, permit
Purchaser and its authorized agents or representatives, including its
independent accountants, to have reasonable access to the properties, books and
records of the Water Business at reasonable hours to review information and
documentation relative to the properties, books, contracts, commitments and
other records of the Water Business; provided that such investigation shall only
                                     --------
be upon reasonable notice and shall not unreasonably disrupt personnel and
operations of Seller and its Subsidiaries; and provided, further, that Seller
                                               --------  -------
and Purchaser shall each designate a single contact person to manage the
transition from Seller to Purchaser, and Purchaser shall be allowed to contact
such designated contact person without providing any notice. All notices and
requests for access to the offices, properties, books and records of Seller and
its Subsidiaries shall be made to the designated contact person or such other
representatives of Seller as Seller shall designate in writing after the date of
this Agreement, who shall be solely responsible for coordinating all such
requests and all access permitted hereunder. It is further agreed that neither
Purchaser nor its Affiliates or representatives shall contact any of the
employees, customers, suppliers, joint venture partners or other Subsidiaries or
Affiliates of Seller in connection with the transactions contemplated hereby,
whether in person or by telephone, mail or other means of communication, without
the specific prior authorization of such representatives of Seller, which
authorization will not be unreasonably withheld.
<PAGE>

                                                                              20

          (b) Within seven days following the date of this Agreement and
throughout the due diligence period (which shall last from the date hereof
through the Closing and shall be referred to herein as the "Due Diligence
                                                            -------------
Period"), Seller shall use commercially reasonable efforts to make available to
------
Purchaser and Purchaser's agents and consultants for inspection at Seller's
Virtual Data Room (or at such other location mutually agreed to by the parties)
the following documents and information to the extent they are in the possession
and control of Seller or Seller's agents and representatives: all Contracts
pertaining to Real Property including leases; all insurance policies pertaining
to the Real Property; all records pertaining to maintenance and repair of the
Real Property; any tax protests, notices of assessment or levy of Taxes, and tax
bills, concerning Real Property, prepared or received since January 1997; any
appraisals of Real Property; any architectural, construction, engineering, "as-
built" or other plans and specifications concerning improvements on Real
Property; any notices of condemnation proceedings or exercise of eminent domain
power; any architectural, engineering, soils, environmental or other
professional reports concerning Real Property; documents concerning any
potential zoning, building or fire code or other violation of Law pertaining to
any improvements on Real Property; any title commitments, title reports, title
policies and surveys concerning any Real Property; a legal description and, if
available, address, for each parcel of Owned Real Property and Leased Real
Property. Seller agrees to provide Purchaser with copies of any of the documents
or information identified in this Section at Purchaser's request, within five
business days following Seller's receipt of a request for copies from Purchaser.

          (c) Purchaser and its representatives will hold in confidence all
confidential information obtained from Seller and its Subsidiaries or their
respective officers, agents, representatives or employees whether or not
relating to the Water Business, in accordance with the provisions of the non-
disclosure letters between the Members and Seller (the "Confidentiality
                                                        ---------------
Agreements"); provided however that Purchaser may reasonably disclose such
----------    -------- -------
information as is required in order to comply with applicable law or to finance
the transaction as required by Section 6.13. Purchaser shall consult with Seller
prior to any such disclosure. The Confidentiality Agreement and all its
provisions shall remain in full force and effect following the execution of this
Agreement. The parties hereto agree to negotiate the extent to which the
Confidentiality Agreements shall stay in effect after the Closing Date.

     6.3  Commercially Reasonable Efforts; Cooperation; No Inconsistent Action
     -------------------------------------------------------------------------

          Subject to the terms and conditions hereof, Seller and Purchaser agree
to use commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement and the Transaction Documents and to cause the conditions to each
party's obligation to close the transactions contemplated hereby as set forth in
Article VIII to be satisfied, including, without limitation, obtaining all
Consents, including licenses, certificates, permits, approvals, clearances,
expirations or terminations of applicable waiting periods, authorizations,
qualifications and orders, and compliance with any Law or Order of any PUC,
Health Agency or other Governmental Authority listed on Schedule 8.1 and to
                                                        ------------
obtain all other Consents described and defined in Section 4.3 or listed on
Schedule 4.3 (it being understood that the failure to obtain any such Consents
------------
shall not cause the condition set forth in Section 8.3(b) to be deemed not to be
satisfied but may form the basis for indemnification rights
<PAGE>

                                                                              21

under this Agreement). From time to time after the date hereof, without further
consideration, Seller shall, at its own expense, execute and deliver such
documents to Purchaser as Purchaser may reasonably request in order more
effectively to vest in Purchaser good title to the Purchased Assets. From time
to time after the date hereof, Purchaser shall, at its own expense, execute and
deliver such documents to Seller as Seller may reasonably request in order to
more effectively consummate the sale of the Purchased Assets pursuant to this
Agreement.

     6.4  Public Disclosures
     -----------------------

          Except to the extent otherwise required by applicable law and except
as permitted under Section 6.2, regulation or legal process or by obligations
pursuant to any listing agreement with or rules of any securities exchange,
prior to the Closing Date and, with respect to the Hydro Assets, the date of
transfer thereof, neither party to this Agreement nor any of their respective
Affiliates will issue any press release or make any other public disclosures
concerning the transactions contemplated hereby or the contents of this
Agreement without consulting with the other party.

     6.5  Access to Records and Personnel
     ------------------------------------

          (a) The parties shall retain the books, records, documents,
instruments, accounts, correspondence, writings, evidences of title and other
papers relating to the Water Business and the Purchased Assets in their
possession (the "Books and Records") for at least seven years following the
                 -----------------
Closing Date or for such longer period as may be required by law or any
applicable court order or until the expiration of the relevant representation or
warranty under any of the Transaction Documents.

          (b) The parties will allow each other reasonable access to such Books
and Records, or copies thereof, and to personnel having knowledge of the
whereabouts and/or contents of such Books and Records and other relevant
information, for legitimate business reasons, such as the preparation of Tax
Returns or the defense of litigation. The disclosing party shall be entitled to
recover from the requesting party its out-of-pocket costs (including copying
costs) incurred in providing such Books and Records and/or personnel to the
other party. The requesting party will hold in confidence all confidential
information identified as such by, and obtained from, the disclosing party, any
of its officers, agents, representatives or employees, provided, however, that
                                                       --------  -------
information of the type which would be excluded from the confidentiality
provisions of the Confidentiality Agreement in accordance with such agreement
shall not be deemed to be confidential information for purposes of this Section
6.5.

          (c) Nothing in this Section 6.5 shall require either party to violate
any agreement with any third parties regarding the confidentiality of
confidential and proprietary information; provided, however, that in the event
                                          --------  ------
that either party is required under this Section 6.5 to disclose any such
information, that party shall use all commercially reasonable efforts to seek to
obtain such third party's consent to the disclosure of such information.
<PAGE>

                                                                              22

     6.6  Employee Relations and Benefits
     ------------------------------------

          (a) Seller has made available to Purchaser a summary of all employees
related to the Water Business, including data on salaries and years of service,
organized according to MPAT and bargaining unit.

          (b) Purchaser shall make a Qualifying Offer of Employment (as defined
herein) commencing on the Closing Date to all Assigned MPAT Employees, including
those on personal time off, or leave of absence who were employed by Seller on
the day immediately preceding such Closing Date. Purchaser shall make a
Qualifying Offer of Employment (as defined herein) commencing on the date of
recovery from disability to any Assigned MPAT Employee on disability on the
Closing Date provided such Employee recovers from disability and is medically
determined to be fit to return to work within 18 months after the Closing Date.
Those Assigned MPAT Employees who accept such offer of employment from Purchaser
and who commence working with Purchaser on such Closing Date shall be referred
to herein as "Transferred Management Employees." An offer of employment shall be
              --------------------------------
deemed a "Qualifying Offer of Employment" if (A) the proposed salary
          ------------------------------
compensation is at least 90% of the employee's base salary plus incentive
compensation immediately prior to the Closing Date and (B) the proposed
principal place of employment is within one hundred (100) miles of the
employee's principal place of employment immediately prior to the Closing Date.

          (c) Purchaser shall maintain for a period of at least one year after
the Closing Date, without interruption, such employee compensation, welfare and
benefit plans, programs, policies and fringe benefits covering Transferred
Management Employees that will be of substantially similar value, in the
aggregate, as those provided pursuant to those employee compensation, welfare
and benefit plans, programs, policies and fringe benefits of the Seller for
employees related to the Water Business as in effect immediately prior to the
Closing Date. To the extent permissible under the terms of the Benefit Plans of
Purchaser and as required by applicable law, the Purchaser shall waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Transferred
Management Employees under any Benefit Plans of Purchaser that are welfare
benefit plans that such employees may be eligible to participate in after the
Closing Date, other than limitations or waiting periods that are already in
effect with respect to such employees and that have not been satisfied as of the
Closing Date under any welfare benefit plan maintained for the Transferred
Management Employees immediately prior to the Closing Date.

          (d) Purchaser and Seller agree to negotiate benefits plans for
Transferred Management Employees that, to the extent permitted under Nevada law
given Purchaser's status as a public employer and its participation in the
Public Employees Retirement System in Nevada, provide in the aggregate for
benefits, vesting, service credits, and eligibility that recognizes those
Transferred Management Employees' past service with Seller; provided, however
that such service with Seller shall not be recognized for purposes of benefit
accrual in any Purchaser defined benefit pension plan or of any retiree medical
plan. Purchaser shall maintain for a period of at least eighteen (18) months
following the Closing Date, the Program Benefits of the Guide to the Water
Business Divestiture Severance Program for MPAT Employees.
<PAGE>

                                                                              23

          (e) Purchaser shall offer employment to begin as of the Closing Date
to the Seller's employees ("IBEW 1245 Employees") who are covered by Seller's
                            -------------------
new collective bargaining agreement with Local Union 1245 of the International
Brotherhood of Electrical Workers (the "New IBEW Contract"). Purchaser shall
                                        -----------------
assume (as co-signator) Seller's obligations under the New IBEW Contract to the
extent permitted under Nevada law given Purchaser's status as a public employer
and its participation in the Public Employees Retirement System in Nevada, and
in any event shall provide IBEW 1245 employees with compensation, welfare and
benefit plans, programs, policies and fringe benefits that will be of
substantially similar value in the aggregate to those provided by Seller under
the New IBEW Contract. Benefits accrued under such Benefits Plans of Seller and
all benefits currently payable as of the Closing Date shall be and shall remain
the obligation of the Seller. Any individual covered under any such Benefit Plan
of Seller that is a Group Health Plan (as defined in Section 49080B(g)(2) of the
Code and Section 607(1) of ERISA) and who is eligible for continued coverage
under such Group health Plan as of the Closing Date, shall continue to be
covered under Seller's Group Health Plan after Closing pursuant to the
provisions of COBRA.

          (f) Purchaser shall not, at any time prior to 60 days after the
Closing Date, effectuate a "Plant Closing" or "mass layoff", as those terms are
defined in the Worker Adjustment and Retraining Notification Act of 1988
("WARN"), affecting in whole or in part any site of employment, facility,
  ----
operating unit or employee of Seller, without notifying Seller in advance and
without complying with the notice requirements and other provisions of WARN. In
addition, Purchaser shall provide a full defense to, and indemnify Seller for
any loss, liability, claim, damage or expense (including attorney's fees and
other costs of defense) which Seller may incur in connection with, any suit or
claim of violation brought against Seller under WARN for any actions taken by
Purchaser with regard to any site of employment, facility, operating unit or
employee affected by this Agreement.

          (g) Purchaser agrees to provide any required notice under the
Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, ("COBRA")
                                                                      -----
and any other applicable law on or after Closing. Purchaser shall indemnify and
hold harmless Seller and its affiliates with respect to any liability under
COBRA or other applicable law arising from the actions (or inactions) of
Purchaser or its affiliates on or after the Closing Date and arising as a result
of the transactions contemplated hereby.

          (h) Seller and all of its relevant Subsidiaries will comply with all
duties to inform, consult and notify labor organizations prior to Closing and
shall indemnify and keep indemnified Purchaser and its Affiliates from and
against any costs, claims, charges, liabilities, demands, fines, penalties,
compensation awards or expenses incurred by Purchaser or any of its Affiliates
which are directly or indirectly attributable to any failure by Seller or any of
its Subsidiaries to comply with such duties.

          (i) Purchaser shall indemnify, defend and hold Seller harmless from
and against any and all claims, actions, suits, demands, proceedings, losses,
expenses, damages, obligations and liabilities (including costs of collection,
attorney's fees and other costs of defense) ("Damages") arising out of or
                                              -------
otherwise in respect of the failure of Purchaser to comply with its obligations
under this Section 6.6, including any statutory obligations directly related to
Purchaser's obligations under this Section 6.6; any suit or claim of violation
brought against
<PAGE>

                                                                              24

Seller under WARN with regard to any site of employment, facility, operating
unit or employee affected by this Agreement.

     6.7   Post-Closing Arrangements
           -------------------------

           On the Closing Date, Purchaser shall execute and deliver, and Seller
or one or more Affiliates of Seller shall execute and deliver, transition
services and shared service agreements (the "Interim Services Agreements")
                                             ---------------------------
pursuant to which Seller or such Affiliates of Seller shall make available to
Purchaser the support and administrative services set forth on Schedule 6.7.

     6.8   Non-Competition
     ---------------------

           In order that Purchaser may have and enjoy the full benefit of the
Water Business, Seller agrees that for a period of five years from the date
hereof, Seller and its Subsidiaries will not, without the express written
approval of Purchaser, engage in or otherwise have a material direct or indirect
interest in any Competing Business (other than the Retained Businesses). For
purposes of this Section 6.8, a business shall be deemed to be a "Competing
                                                                  ---------
Business" if it is principally engaged in supplying or distributing water in the
--------
Reno-Sparks metropolitan area. Notwithstanding the foregoing, neither Seller nor
its Subsidiaries shall be precluded from (i) having a passive investment
representing less than 25% of the equity of any entity that is engaged in a
Competing Business or (ii) acquiring, merging with or entering into any other
business combination with a company the primary business of which is not a
Competing Business.

     6.9   Jointly Developed Intellectual Property
           ---------------------------------------

           It is understood that with respect to Intellectual Property based on
inventions, discoveries, designs or writings made jointly by an employee or
employees of the Water Business and an employee or employees of another business
owned by Seller, Seller has determined, in the ordinary course of business,
whether or not such Intellectual Property relates primarily to the Water
Business or to another business owned by Seller. Schedule 4.9 includes all such
                                                 ------------
jointly developed Intellectual Property relating primarily to the Water
Business. It is agreed that such determinations are final and binding on
Purchaser, and that Purchaser shall have no rights to any other jointly
developed Intellectual Property.

     6.10  No Other Representations or Warranties
     --------------------------------------------

           Except for the representations and warranties contained in this
Agreement or any document delivered pursuant to this Agreement, Purchaser
acknowledges that neither Seller, the other Subsidiaries and Affiliates of
Seller nor any other person makes any other express or implied representation or
warranty with respect to the Purchased Assets, the Assumed Liabilities or
otherwise or with respect to any other information provided to Purchaser,
whether on behalf of Seller or such other persons, including as to (a)
merchantability or fitness for any particular use or purpose, (b) the use of the
Purchased Assets and the operation of the Water Business by Purchaser after the
Closing in any manner other than as used and operated by Seller or (c) the
probable success or profitability of the ownership, use or operation of the
Water Business by
<PAGE>

                                                                              25

Purchaser after such Closing. Except for the representations and warranties
contained in this Agreement or any document delivered pursuant to this
Agreement, neither Seller nor any other person will have or be subject to any
liability or indemnification obligation to Purchaser or any other person
resulting from the distribution to Purchaser, or Purchaser's use of, any such
information, including the Information Memorandum prepared by Lehman Brothers
Inc. related to the Water Business and any information, document, or material
made available to Purchaser in certain "data rooms," management presentations or
in any other form in expectation of the transactions contemplated by this
Agreement.

     6.11  Insurance Matters
           -----------------

           Purchaser acknowledges that the policies and insurance coverage
maintained on behalf of the entities comprising the Water Business are part of
the corporate insurance program maintained by Seller (the "Seller Corporate
                                                           ----------------
Policies"), and such coverage will not be available or transferred to Purchaser.
--------
In furtherance and not in limitation of the foregoing, Purchaser agrees not to
bring any claim for recovery under any of the Seller Corporate Policies, whether
or not such person may be so entitled in accordance with the terms of such
Seller Corporate Policies. Notwithstanding the foregoing, to the extent
practicable Seller will cooperate with Purchaser to enforce any rights against
environmental consultants and assist in obtaining any insurance recoveries under
insurance policies of Purchaser relating to Environmental Claims.

     6.12  Use of Seller's Names
           ---------------------

           After the Closing, neither Purchaser nor any of its Affiliates shall
use "Sierra Pacific" or "Sierra" or any name or term confusingly similar to
"Sierra Pacific" or "Sierra" in any corporate name or in connection with the
operation of any business. Notwithstanding the foregoing, Purchaser shall have a
period of time (which in no event is to exceed 60 days following the Closing
Date) in which to remove or cover names including the words "Sierra Pacific" or
"Sierra" and any trademarks, trade names, servicemarks, trade dress or logos
relating to such names from all signs, billboards, advertising materials,
telephone listings, labels, stationery, office forms and mastheads acquired in
the Purchase; provided, however, that during such period of time such names,
              --------  -------
trademarks, trade names, servicemarks, trade dress and logos shall be used (i)
only to the extent necessary to avoid financial hardship and (ii) only to the
extent and in the manner that such names, trademarks, trade names, servicemarks,
trade dress and logos were used by Seller as of immediately prior to the Closing
Date. This Section 6.12 shall not be construed to prohibit Purchaser from using
the words "Sierra Pacific" or "Sierra" in connection with the filing of any
documents required by any Governmental Authority or to require Purchaser to
remove "Sierra", "Sierra Pacific", "SPCo" or any similar name from any manhole
cover, meter box or similar metal or plastic piece of property used in the Water
Business, except for any transferred inventory of such items. Purchaser shall
not install any new items with such a name.

     6.13  Purchaser Financings
           --------------------

           (a) Seller will provide such assistance as Purchaser may reasonably
require in connection with the sale by Purchaser of any debt, whether public or
private ("Purchaser Debt"), including, without limitation, at the request of
          --------------
Purchaser's managing underwriters, making
<PAGE>

                                                                              26

available in connection with any sale of Purchaser Debt at least one of its
senior personnel who is familiar with the operations, finance and legal affairs
of Seller and Seller's systems and at least one of its senior personnel who is
familiar with the facilities and other property comprising the Water Business to
assist Purchaser and its underwriters (i) in their preparation of any official
statements, (ii) at the due diligence meetings with the underwriters or their
representatives and (iii) at information meetings with potential investors. Such
assistance shall be provided at such time and from time to time, and at such
places, as shall be reasonably requested by Purchaser's managing underwriters
and Purchaser. Purchaser shall use commercially reasonable efforts to market
such Purchaser Debt.

          (b) Purchaser shall reimburse Seller for (i) the reasonable out-of
pocket expenses of Seller's representatives, in the event the attendance of
Seller's representatives at meetings pursuant to this Article shall become
extensive, (ii) the reasonable out-of pocket expenses and fees of certified
public accountants and experts employed pursuant to paragraph (a) above, which
would not otherwise be incurred by Seller and (iii) any other out-of pocket
expenses incurred by Seller in performing the duties set forth in paragraph (a)
above.

          (c) Seller shall have the right to nominate three potential co-
managers, all of whom shall be investment banks with national reputations, and
if Seller nominates a slate of co-managers, Purchaser will hire one of such
nominees as a co-manager to participate in the financing related to the Purchase
and will provide such co-manager with an appropriate level of access to
information and a market level of compensation.

          (d) Purchaser shall make every reasonable commercial effort to obtain
financing through the issuance of tax-exempt bonds such that Purchaser shall
have sufficient funds to pay the Purchase Price in full on and as of the Closing
Date, including by approving the financing as and when procedurally required
pursuant to the JPA Agreement after the execution of this Agreement and by
making every commercially reasonable effort to market such bonds. Purchaser
agrees to use the City of Reno as a conduit financing vehicle if Purchaser is
unable to finance the transactions contemplated hereby without such support. In
the event that Purchaser (or the City of Reno as a financing conduit) has not
obtained financing at a weighted average rate not to exceed 7.2% (after giving
effect to the cost of any bond insurance) on and as of the Closing Date,
Purchaser shall have the right to terminate this Agreement by written notice to
Seller and, upon such termination, shall have no further obligations or
liabilities hereunder, except those set forth in Section 11.1(b).

          (e) Purchaser shall not permit its Members to exercise their options
to become Purveyor Members (as defined in the JPA Agreement) as part of the
financing of this transaction.

    6.14  Post-Closing Cooperation
          ------------------------

          (a) After the Closing, Purchaser will use commercially reasonable
efforts to perform or effect all filings, notices or other documentary
submissions of any kind required by any Governmental Authority in respect of the
transactions contemplated by this Agreement, and Seller will provide Purchaser
with any assistance reasonably requested by Purchaser in connection therewith.
<PAGE>

                                                                              27

           (b) At or after the Closing, each of Purchaser and Seller shall grant
such easements and rights of way to the other as requested by the other and are
reasonably necessary for the operation in a manner consistent with such
operations on the date hereof of (i) in the case of Purchaser, the Water
Business and (ii) in the case of Seller, Seller's and its Affiliates' businesses
other than the Water Business as of the date of this Agreement; provided
                                                                --------
however, in the case of Purchaser, such easements and rights of way shall be
-------
limited to easements and rights of way across the Purchased Assets.

     6.15  Risk of Loss. Seller shall bear the risk of loss to the Purchased
     ------------------
Assets until the Closing. After the Closing Purchaser shall bear the risk of
loss. If any material casualty or damage occurs prior to the Closing to the
Chalk Bluff or Glendale water treatment plants which renders either of them
inoperable for a period in excess of seven (7) days, Purchaser shall have a
right to terminate this Agreement. If (i) other damage occurs to the Purchased
Assets as a result of a casualty occurring prior to Closing or (ii) a casualty
resulting in either of such treatment plants being inoperable as stated above
occurs but Purchaser elects not to exercise its right to terminate this
Agreement, then Purchaser shall be entitled to a credit against the Purchase
Price in the amount of the damage if the amount of the damage is not used to
reduce the Net Worth calculation under Section 3.4.

     6.16  Condemnation. If, subsequent to the date of this Agreement but prior
     ------------------
to Closing, Seller is served with a summons or other evidence of an action by a
Governmental Authority (other than Purchaser or any of its Affiliates) to
condemn any of the Real Property, if such condemnation results in a Seller
Material Adverse Effect, Seller shall notify Purchaser immediately and Purchaser
shall have the right, at its option, to terminate this Agreement by written
notice to Seller. If Purchaser does not elect to terminate this Agreement, then
(i) Purchaser shall have the right to defend such action or negotiate for,
claim, contest and receive all damages with respect to the condemnation or
taking, and (ii) at Closing, Purchaser shall be assigned all of Seller's rights
to any damages or awards payable with respect to the condemnation or taking.

     6.17  Real Property Investigation.
     ---------------------------------

           (a) At least 45 days prior to the Closing, Seller shall deliver to
Purchaser an ALTA owner's title insurance policy (1992 form) for the Chalk Bluff
and Glendale Water Treatment Plants, and at the closing with respect to the
Hydro Assets Seller shall deliver to Purchaser an ALTA owner's title insurance
policy (1992 form) for the Owned Real Property included in the Hydro Assets with
respect to the Farad, Fleish, Verdi and Washoe Hydro Facilities and (ii) at the
Closing with respect to each other parcel of Owned Real Property, a CLTA owner's
title insurance policy (1992 form) (collectively, the "Title Commitments") by
                                                       -----------------
First American Title of Nevada or its local agent or such other national title
insurance company which is mutually acceptable to the parties (the "Title
                                                                    -----
Company"), together with legible copies of the vesting deed and all documents
-------
identified on the schedules of exceptions. Seller shall pay the cost of the
premiums at Closing for ALTA or CLTA, as the case may be, extended coverage
title insurance policies insuring Purchaser, or its designee, as owner of each
parcel of Owned Real Property, in an amount equal to the fair market value of
such parcel. As soon as practicable following the date of this Agreement Seller,
at its expense, shall deliver to Purchaser, for each of the Chalk Bluff and
Glendale Water Treatment Plants and the Farad, Fleish, Verdi and Washoe
<PAGE>

                                                                              28

Hydro Facilities a current ALTA survey sufficient to delete the standard survey
exceptions in the Title Commitments. For those properties requiring specific
easements pursuant to Section 6.14, Seller shall, at Seller's expense, provide
additional surveys to describe such easements. The Surveys shall be certified to
Purchaser and, if applicable, its designee.

          (b) Throughout the Due Diligence Period, Purchaser and Purchaser's
agents and consultants shall have the right to enter into the Real Property to
conduct any environmental, soils, mechanical, structural, and other tests,
inspections and evaluations of the Real Property, including asbestos sampling,
as Purchaser deems necessary to investigate the physical condition of the Real
Property, provided that no Phase II or other invasive studies may be done
without the prior written consent of Seller. Purchaser agrees to indemnify
Seller and to hold Seller and Seller's agents and employees harmless from an
against any and all losses, costs, damages, claims, or liabilities, including
mechanic's and materialmen's liens and attorneys' fees, to the extent arising
out of or in connection with Purchaser's inspection and investigation of the
Real Property. Pursuant to this Section 6.17(b) and Section 6.2, Purchaser shall
give Seller at least 24 hours' notice by telephone prior to each entry upon Real
Property and Seller shall have a right to have a representative present during
such entry.

          (c) If Purchaser notifies Seller at any time during the Due Diligence
Period of any Lien (other than a Permitted Lien or a Lien set forth in Schedule
4.6(b)) or other matter affecting title to Owned Real Property which prevents
access to or which could prevent or materially impede in any way the use or
operation of any parcel of Owned Real Property for the purposes for which it
currently is used or operated (each a "Title Defect"), Seller will use
                                       ------------
commercially reasonable efforts to (i) remove such Title Defect or (ii) with the
consent of Purchaser in its reasonable discretion, cause the Title Company to
irrevocably commit to insure over such Title Defect prior to Closing. If Seller
is unable to remove a Title Defect that materially and adversely affects the
operation of the Water Business, Purchaser and Seller shall enter into a written
agreement at Closing obligating Seller to use commercially reasonable efforts to
remedy the Title Defect following Closing, on terms satisfactory to Purchaser in
its reasonable discretion, and obligating Seller to indemnify Purchaser for such
Title Defect subject to the limitations set forth in Sections 10.1(a) and 10.2.
The foregoing provisions shall not affect Purchaser's rights under this
Agreement if such Title Defect constitutes a Seller Material Adverse Effect.

     6.18  Approval of Fees and Expenses
     -----------------------------------

           Purchaser agrees to use its best efforts to obtain from its Members,
within three days after execution of this Agreement, (i) approval of the fees
described in Section 11.1(b) and (ii) approval of and agreement to implement
reasonable arrangements, including assessments against the Members of Purchaser
if necessary, for payment of the Purchaser Expenses incurred through and
including the Closing.

     6.19  Tax-Exempt Bonds.
     ----------------------

           Purchaser shall not substantially alter the use of the Purchased
Assets so as to cause (a) interest on any of Seller's existing tax-exempt bonds
to become includible in the gross income of the Seller for purposes of federal
income taxation or (b) the disallowance of any
<PAGE>

                                                                              29

deductions for interest expense payable by Seller to which to which the Seller
would otherwise be entitled. Purchaser shall fully cooperate with issuers of
Seller's tax-exempt bonds and Seller and its counsel in connection with any
audit, investigation or proceeding with respect to the tax-exempt bonds by the
Internal Revenue Service or the SEC.

     6.20  Environmental Insurance.
     -----------------------------

           Purchaser shall obtain prior to the Closing, and shall maintain for a
period of three years following the Closing, insurance coverage with respect to
the Purchased Assets for exposures in respect of Environmental Claims arising
from conditions existing or events occurring prior to the Closing, on terms
reasonably satisfactory to Seller.

                                  ARTICLE VII

                     PRELIMINARY SETTLEMENT AGREEMENT and
                    DRAFT TRUCKEE RIVER OPERATING AGREEMENT
                    ---------------------------------------

     7.1   Assumption of Obligations
     -------------------------------

           Purchaser shall assume, perform, fulfill and discharge all
obligations of Seller under the Preliminary Settlement Agreement, including,
without limitation, to enter into negotiations with respect to, and to become a
party to, an operating agreement provided for in Section 205 of the Settlement
Act which is in substantial conformity with the draft contained in Schedule 7.1.
                                                                   ------------
If such an operating agreement is executed by at least the United States,
California, Nevada, the Pyramid Lake Paiute Tribe of Indians and Purchaser,
Purchaser shall use its commercially reasonable efforts to satisfy or cause to
be satisfied all conditions to the effectiveness of such an operating agreement.

     7.2   Seller's Responsibility Until Closing
           -------------------------------------

           Until the Closing, Seller shall use commercially reasonable efforts
to complete a draft operating agreement which is consistent in all material
respects with the TROA, shall inform Purchaser of all material developments with
respect to negotiation of such agreement and such other information relating
thereto as Purchaser may request from time to time, and shall not approve or
execute any agreements relating thereto without the prior written consent of
Purchaser, which shall not be unreasonably withheld.

                                 ARTICLE VIII

                             CONDITIONS TO CLOSING
                             ---------------------

     8.1   Conditions Precedent to Obligations of Purchaser and Seller
     -----------------------------------------------------------------

           The respective obligations of Purchaser and Seller to consummate and
cause the consummation of the transactions contemplated by this Agreement shall
be subject to the satisfaction (or waiver by the party for whose benefit such
condition exists) at or prior to the Closing Date of each of the following
conditions:
<PAGE>

                                                                              30

          (a) No Injunction, etc. No court or governmental authority in the
              ------------------
United States or any state of the United States shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, non-appealable
judgment, decree, injunction or other order which is in effect on the Closing
Date which has the effect of prohibiting the Purchase or making the Purchase
illegal.

          (b) Regulatory Authorizations and Third Party Consents. All consents
              --------------------------------------------------
or statutorily required indications of no objection of any Governmental
Authorities set forth on Schedule 8.1 shall have been obtained on terms
reasonably acceptable to Seller or Purchaser, as the case may be.

     8.2   Conditions Precedent to Obligation of Seller
     --------------------------------------------------

           The obligation of Seller to consummate and cause the consummation of
the transactions contemplated by this Agreement shall be subject to the
satisfaction (or waiver by Seller) at or prior to the Closing Date of each of
the following conditions:

           (a) Accuracy of Purchaser's Representations and Warranties. The
               ------------------------------------------------------
representations and warranties of Purchaser contained in this Agreement shall be
true and correct on the date of this Agreement and on the Closing Date as though
made on such Closing Date, except to the extent such representations and
warranties by their terms speak as of an earlier date, in which case they shall
be true and correct as of such date, except to the extent that the failure of
such representations and warranties to be true and correct would not,
individually or in the aggregate, have a Purchaser Material Adverse Effect; and
Seller shall have received a certificate signed by an officer of Purchaser to
such effect.

          (b) Covenants of Purchaser. Purchaser shall have complied in all
              ----------------------
material respects with all covenants contained in this Agreement to be performed
by it prior to the Closing; and Seller shall have received a certificate signed
by an officer of Purchaser to such effect.

     8.3  Conditions Precedent to Obligation of Purchaser
     ----------------------------------------------------

          The obligation of Purchaser to consummate and cause the consummation
of the transactions contemplated by this Agreement shall be subject to the
satisfaction (or waiver by Purchaser) at or prior to the Closing Date of each of
the following conditions:

          (a) Accuracy of Seller's Representations and Warranties. The
              ---------------------------------------------------
representations and warranties of Seller contained in this Agreement shall be
true and correct on the date of this Agreement and on the Closing Date as though
made on such Closing Date, except to the extent such representations and
warranties by their terms speak as of an earlier date, in which case they shall
be true and correct as of such date, except to the extent that the failure of
such representations and warranties to be true and correct would not,
individually or in the aggregate, have a Seller Material Adverse Effect; and
Purchaser shall have received a certificate signed by an officer of Seller to
such effect.
<PAGE>

                                                                              31

          (b) Covenants of Seller. Seller shall have complied in all material
              -------------------
respects with all covenants contained in this Agreement to be performed by it
prior to the Closing including, without limitation, transferring to Purchaser
its rights under the Truckee River Agreement; and Purchaser shall have received
a certificate signed by an officer of Seller to such effect.

                                  ARTICLE IX

                                    CLOSING

     9.1   Closing Dates
     -------------------

           Unless this Agreement shall have been terminated and the transactions
herein shall have been abandoned pursuant to Article XI hereof, the closing of
the transactions contemplated by this Agreement (the "Closing") shall take place
                                                      -------
at the offices of Simpson Thacher & Bartlett in New York at 10:00 a.m., New York
City time, and in such other places as are necessary to effect the transactions
to be consummated at the Closing, on the third Business Day after all of the
conditions to the Closing set forth in Article VIII hereof are satisfied or
waived, provided that the Closing will be delayed, if necessary to provide
Purchaser the opportunity to finalize its financing; provided, that the Closing
shall not be delayed for more than 45 days after the conditions set forth in
Section 8.1(b), with respect to the approval of Governmental Authorities, are
satisfied, or such other date, time and place as shall be agreed upon by Seller
and Purchaser (the actual date and time being herein called the "Closing Date").
                                                                 ------------
Notwithstanding the foregoing, the duty of each party to close the transactions
contemplated hereby shall be unconditional upon satisfaction of all the
conditions set forth in Article VIII, even if the Closing is postponed as set
forth above. In the event that the conditions set forth in Section 8.1(b) have
been satisfied except for the consent or approvals in respect of the Hydro
Assets, the Closing shall occur with respect to the Non-Hydro Assets only and
Seller shall transfer the Hydro Assets on the third Business Day after such
consent or approval shall have been obtained.

           Notwithstanding the foregoing, each Closing shall for all purposes be
deemed to occur at the close of business in New York City on the Closing Date.

     9.2   Purchaser Obligations
     ---------------------------

           At the Closing, Purchaser shall execute, deliver to Seller and/or
file the following in such form and substance (except for clause (a)) as may be
indicated in any applicable schedule hereto, or as are reasonably acceptable to
Seller:

           (a)  the Purchase Price as provided in Section 3.2 hereof;

           (b)  the certificate described in Section 8.2(b) hereof;

           (c)  the assignment and conveyance instruments referred to Section
2.3 and such other assignment and conveyance documents as shall be necessary to
convey the Purchased Assets and consummate the other transactions contemplated
hereby in each jurisdiction; and
<PAGE>

                                                                              32

           (d) such other documents and instruments as counsel for Purchaser and
Seller mutually agree to be reasonably necessary to consummate the transactions
described herein.

     9.3   Seller Obligations
     ------------------------

           At the Closing, Seller shall execute, deliver to Purchaser and/or
file the following in such form and substance as may be indicated in any
applicable schedule hereto, or as are reasonably acceptable to Purchaser:

           (a) the certificate described in Section 8.3(b) hereof;

           (b) such instruments of conveyance with respect to the Purchased
Assets and Assumed Liabilities referred to Section 2.3 or as are set forth in
Schedule 9.3 hereto and such other assignment and conveyance documents as shall
------------
be necessary to convey the Purchased Assets and consummate the other
transactions contemplated hereby in each jurisdiction; and

           (c) such other documents and instruments as counsel for Purchaser and
Seller mutually agree to be reasonably necessary to consummate the transactions
described herein.

                                   ARTICLE X

                                INDEMNIFICATION
                                ---------------

     10.1  Indemnification
     ---------------------

           (a) Following the Closing and subject to the terms and conditions of
this Article X, Seller shall indemnify, defend and hold harmless Purchaser and
its Affiliates and their respective officers, directors, employees,
stockholders, assigns and successors (each, a "Purchaser Indemnified Party")
                                               ---------------------------
from and against, and shall reimburse each Purchaser Indemnified Party for, all
actual losses (but not lost profits or consequential, punitive, special or
indirect damages, except to the extent awarded by a court of competent
jurisdiction in respect of a third party claim), damages, liabilities, costs and
expenses, including interest, penalties, court costs and reasonable attorneys'
fees and expenses, imposed upon or incurred by such Purchaser Indemnified Party
("Purchaser Losses"), with respect to (i) any misrepresentation or breach of
  ----------------
warranty by Seller, (ii) any breach by Seller of any covenant or agreement made
by Seller herein, (iii) any Excluded Liabilities or (iv) any failure of Seller
to obtain third party consents related to the transfer of the Purchased Assets,
it being understood that such Purchaser Losses shall be calculated net of (x)
any Tax benefit realized by such Purchaser Indemnified Party as set forth more
fully in Section 10.3(b), and (y) any recovery available from any third party,
including insurance proceeds (including proceeds from the insurance policy
related to environmental exposures that Purchaser has agreed to purchase and
maintain pursuant to Section 6.20), and shall not include, (z) any liability
reflected on the Closing Date Statement (as adjusted for any Disputed Item(s)).
Notwithstanding the inclusion of any liability in the definition of Assumed
Liabilities, the Purchaser shall be entitled to enforce its indemnification
rights hereunder in respect of any misrepresentation or breach of warranty by
Seller regarding such liability, subject to the provisions set forth in this
Article X.
<PAGE>

                                                                              33

          (b)  Following the Closing and subject to the terms and conditions
provided in this Article X, Purchaser shall indemnify, defend and hold harmless
Seller and its Affiliates and their respective officers, directors, employees,
stockholders, assigns and successors (each, a "Seller Indemnified Party") from
                                               ------------------------
and against, and shall reimburse each Seller Indemnified Party for, all actual
losses (but not lost profits or consequential, punitive, special or indirect
damages, except to the extent awarded by a court of competent jurisdiction in
respect of a third party claim), damages, liabilities, costs and expenses,
including interest, penalties, court costs and reasonable attorneys' fees and
expenses, imposed upon or incurred by such Seller Indemnified Party ("Seller
                                                                      ------
Losses"), with respect to (i) any misrepresentation or breach of warranty by
------
Purchaser, (ii) any breach of any covenant or agreement made by Purchaser
herein, (iii) any of the Assumed Liabilities or (iv) the operation of the Water
Business following the Closing, it being understood that such Seller Losses
shall be calculated net of (x) any Tax benefit realized by any Seller
Indemnified Party and (y) any recovery available from any third party, including
insurance proceeds.

     10.2  Certain Limitations
     -------------------------

           (a) Notwithstanding anything contained herein to the contrary, the
maximum aggregate liability of Seller to all Purchaser Indemnified Parties taken
together for all Purchaser Losses under Section 10.1(a) by Purchaser Indemnified
Parties shall be limited to a maximum of 33?% of the Purchase Price.

           (b) Notwithstanding anything contained herein to the contrary, Seller
shall not be obligated to make any indemnification payment under Sections
10.1(a)(i) or 10.1(a)(iv) unless and until the aggregate Purchaser Losses
sustained by Purchaser Indemnified Parties (calculated as specified in Section
10.2(a)) for all claims that meet or exceed $100,000 (the "Minimum Claim
                                                           -------------
Threshold") exceed $5,000,000 (the "Deductible"), and then any indemnification
---------                           ----------
with respect to Purchaser Losses shall be made by Seller only to the extent that
such Purchaser Losses meeting the Minimum Claim Threshold exceed the Deductible;
provided that once the Deductible is satisfied, indemnification claims meeting
the Minimum Claim Threshold shall be made by Seller for the full amount of each
such claim.

           (c) Notwithstanding anything contained herein to the contrary,
Purchaser shall not be obligated to make any indemnification payment under
Section 10.1(b)(i) unless and until the aggregate Seller Losses sustained by
Seller Indemnified Parties (calculated as specified in Section 10.2(a)) for all
claims that meet or exceed $100,000 (the "Minimum Claim Threshold") exceed
                                          -----------------------
$5,000,000 (the "Deductible"), and then any indemnification with respect to
                 ----------
Seller Losses shall be made by Purchaser only to the extent that such Seller
Losses meeting the Minimum Claim Threshold exceed the Deductible; provided that
once the Deductible is satisfied, indemnification claims meeting the Minimum
Claim Threshold shall be made by Purchaser for the full amount of each such
claim.

           (d) The representations and warranties of Seller contained in this
Agreement shall survive for 18 months following the Closing Date or, in the case
of the Hydro Assets, for 18 months following the date of transfer of such Hydro
Assets; provided, however, that the representations and warranties set forth in
Sections 4.6(a), 4.6(c) and 4.11 and the representations and warranties with
respect to title contained in 4.6(b) shall survive until the
<PAGE>

                                                                              34

expiration of the statute of limitations relating to the subject matter of such
representations and warranties and that the representations and warranties set
forth in Section 4.14 shall survive until the third anniversary of the Closing
Date.

           (e) The remedies provided for in this Article X constitute the sole
and exclusive remedy for claims for Purchaser Losses or Seller Losses caused by
or arising out of breach of warranty or inaccurate or erroneous representation.
Such claims may be made only pursuant to Article X and only by written notice
within the survival period of such representation and warranty provided for in
Section 10.2(d).

           (f) The obligations to indemnify and hold harmless a party hereto
pursuant to this Article X shall terminate when the applicable representation
and warranty terminates pursuant to Section 10.2(d); provided, however, that
                                                     --------  -------
such obligations to indemnify and hold harmless shall not terminate with respect
to any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis of such claim) to the
indemnifying person.

     10.3  Procedures for Third-Party Claims
     ---------------------------------------

           (a) Promptly after the receipt by any Indemnified Party of a notice
of any claim, action, suit or proceeding by any third party that may be subject
to indemnification hereunder, such Indemnified Party shall give written notice
of such claim to the indemnifying party hereunder (the "Indemnifying Party"),
                                                        ------------------
stating the nature and basis of the claim and the amount thereof, to the extent
known, along with copies of the relevant documents evidencing the claim and the
basis for indemnification sought. Failure of the Indemnified Party to give such
notice shall not relieve the Indemnifying Party from liability on account of
this indemnification, except if and to the extent that the Indemnifying Party is
actually prejudiced thereby. The Indemnifying Party shall have the right to
assume the defense of the Indemnified Party against the third party claim. So
long as the Indemnifying Party has assumed the defense of the third party claim
in accordance herewith and notified the Indemnified Party in writing thereof,
(i) the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the third party claim, it being
understood the Indemnifying Party shall pay all costs and expenses of counsel
for the Indemnified Party for all periods prior to such time as the Indemnifying
Party has notified the Indemnified Party that it has assumed the defense of such
third party claim, (ii) the Indemnified Party shall not file any papers or
consent to the entry of any judgment or enter into any settlement with respect
to the third party claim without prior written consent of the Indemnifying Party
(not to be unreasonably withheld or delayed) and (iii) the Indemnifying Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the third party claim without the prior written consent of the
Indemnified Party (not to be unreasonably withheld or delayed). The parties
shall use commercially reasonable efforts to minimize Losses from claims by
third parties and shall act in good faith in responding to, defending against,
settling or otherwise dealing with such claims. The parties shall also cooperate
in any such defense and give each other reasonable access to all information
relevant thereto. Whether or not the Indemnifying Party shall have assumed the
defense, such party shall not be obligated to indemnify the Indemnified Party
hereunder for any settlement entered into without the Indemnifying Party's prior
written consent, which consent shall not be unreasonably withheld or delayed.
<PAGE>

                                                                              35

          (b) Treatment of Indemnification Payments. Any payment made pursuant
to the indemnification obligations arising under this Agreement shall be treated
as an adjustment to the Purchase Price. Any indemnity payment under this
Agreement shall be decreased by any amounts actually recovered by the
Indemnified Party under insurance policies with respect to such Loss. If the
amount of any Loss for which indemnification is provided under this Agreement
(an "Indemnity Claim") gives rise to a currently realizable Tax Benefit (as
     ---------------
defined below) to the party making the claim, the indemnity payment shall be
reduced by the amount of the Tax Benefit available to the party making the
claim. To the extent such Indemnity Claim does not give rise to a currently
realizable Tax Benefit to the party making the claim, if the amount with respect
to which any Indemnity Claim is made gives rise to a subsequently realized Tax
Benefit to the party that made the claim, such party shall refund to the
Indemnifying Party the amount of such Tax Benefit when, as and if realized. For
purposes of this Section 10.3(b), a "Tax Benefit" means an amount by which the
                                     -----------
Tax liability of the party (or group of corporations including the party) is
reduced (including, without limitation, by deduction, reduction of income by
virtue of increased tax basis or otherwise, entitlement to refund, credit or
otherwise) plus any related interest received from the relevant taxing
authority. Where a party has other losses, deductions, credits or items
available to it ("Other Tax Items"), the determination of any Tax Benefit shall
                  ---------------
be calculated by utilizing proportionately the Tax Benefits arising from an
Indemnity Claim and any Other Tax Items. In the event that there should be a
determination disallowing the Tax Benefit, the indemnifying party shall be
liable to refund to the Indemnified Party the amount of any related reduction
previously allowed or payments previously made to the Indemnifying Party
pursuant to this Section 10.3(b).

     10.4  Certain Claims Procedures
     -------------------------------

           The Indemnified Party shall notify the Indemnifying Party promptly of
its discovery of any matter giving rise to a claim of indemnity pursuant hereto.
The Indemnified Party shall cooperate and assist the Indemnifying Party in
determining the validity of any claim for indemnity by the Indemnified Party and
in otherwise resolving such matters. Such assistance and cooperation will
include providing access to and copies of information, records and documents
relating to such matters, furnishing employees to assist in the investigation,
defense and resolution of such matters and providing legal and business
assistance with respect to such matters.

     10.5  Remedies Exclusive
     ------------------------

           The remedies set forth in this Article X shall be exclusive and in
lieu of any other remedies that may be available to the Indemnified Parties
under any other agreement or pursuant to any statutory or common law with
respect to any Losses of any kind or nature incurred directly or indirectly
resulting from or arising out of any of this Agreement, the transactions
contemplated hereby, the Water Business, the Purchased Assets, or the Assumed
Liabilities.

     10.6  Mitigation
     ----------------

           Purchaser and Seller shall cooperate with each other with respect to
resolving any claim or liability with respect to which one party is obligated to
indemnify the other party hereunder, including by making commercially reasonable
efforts to mitigate or resolve any such
<PAGE>

                                                                              36

claim or liability. In the event that Purchaser and Seller shall fail to make
such commercially reasonable efforts to mitigate or resolve any claim or
liability, then notwithstanding anything else to the contrary contained herein,
the other party shall not be required to indemnify any person for any loss,
liability, claim, damage or expense that could reasonably be expected to have
been avoided if Purchaser or Seller, as the case may be, had made such efforts.

                                  ARTICLE XI

                                  TERMINATION
                                  -----------

     11.1  Termination Events
     ------------------------

           (a) Without prejudice to other remedies which may be available to the
parties by law or under this Agreement, this Agreement may be terminated and the
transactions contemplated herein may be abandoned:

               (i)   by mutual consent of the parties hereto;

               (ii)  by any party by notice to the other party if the
     Closing shall not have been consummated by June 30, 2001 (or such later
     date in order to provide the 45 day financing period referred to in Section
     9.1), provided (A) that if all conditions to the Closing other than those
     set forth in Section 8.1(b) shall have been satisfied, such termination
     date shall be automatically extended until December 31, 2001 (or such later
     date in order to provide the 45 day financing period referred to in Section
     9.1) and (B) that the right to terminate this Agreement under this clause
     (ii) shall not be available (x) to any party whose failure to fulfill any
     obligation under this Agreement has been the cause of, or resulted in, the
     failure of the Closing to occur on or before such date or (y) in the event
     that the Closing shall not have occurred as a result of a failure of any
     representation to be true and correct, the terminating party shall not have
     the right to terminate this Agreement if such party knew of such breach
     prior to the date of this Agreement; and

               (iii) by either party, if a final order, decree or ruling
     enjoining or otherwise prohibiting any of the transactions contemplated by
     this Agreement has been issued by any federal or state court in the United
     States (unless such order, decree or ruling has been withdrawn, reversed or
     otherwise made inapplicable) if the failure to consummate such prohibited
     transaction (i) could not be remedied in accordance with Section 2.4 and
     (ii) would have a material adverse effect on the business, operations,
     assets or financial condition of the Water Business taken as a whole,
     following the Closing Date, provided that the party seeking to terminate
     this Agreement under this clause (iii) is not then in material breach of
     this Agreement and provided, further, that the right to terminate this
     Agreement under this clause (iii) shall not be available to any party who
     shall not have used commercially reasonable efforts (including in
     connection with the obligations specified in Section 6.3) to avoid the
     issuance of such order, decree or ruling.
<PAGE>

                                                                              37

           (b) If the Closing does not occur due to Purchaser's failure to
satisfy the conditions set forth in Sections 8.2(a) or 8.2(b), Purchaser shall
pay Seller $7,500,000.

           (c) If the approvals set forth in Section 6.18 is not received within
the period set forth in Section 6.18, Seller shall have the right to terminate
this Agreement.

     11.2  Effect of Termination
     ---------------------------

           In the event of any termination of this Agreement as provided in
Section 6.13(d) or Section 11.1 above, this Agreement shall forthwith become
wholly void and of no further force and effect and there shall be no liability
on the part of Purchaser or Seller, except that (a) the obligations of Purchaser
and Seller under Sections 6.2(c) (including the survival of the Confidentiality
Agreements) and 6.4, Article XI and Section 12.6 of this Agreement shall remain
in full force and effect and (ii) such termination shall not relieve either
party of any liability for any breach of any representation, warranty, covenant
or agreement contained in this Agreement.

                                  ARTICLE XII

                    MISCELLANEOUS AGREEMENTS OF THE PARTIES
                    ---------------------------------------

     12.1  Notices
     -------------

           All communications provided for hereunder shall be in writing and
shall be deemed to be given when delivered in person or by private courier with
receipt, when telefaxed and received, or seven days after being deposited in the
United States mail, first-class, registered or certified, return receipt
requested, with postage paid and,

           If to Purchaser:        Truckee Meadows Water Authority
                                   c/o City of Sparks
                                   431 Prater Way
                                   Sparks, Nevada 89432
                                   Attention:  Mr. Bill Isaeff
                                   Fax:  (775) 353-2489

           with a copy to:         Swendseid & Stern
                                   Bank of America Building
                                   50 West Liberty Street, Suite 660
                                   Reno, Nevada 89501
                                   Attention:  John O. Swendseid, Esq.
                                   Fax:  (775) 323-2339
<PAGE>

                                                                              38

           If to Seller:           Sierra Pacific Power Company
                                   P.O. Box 30150
                                   6100 Neil Road
                                   Reno, Nevada 89511
                                   Attention:  General Counsel
                                   Fax:  (775) 834-4098

           with a copy to:         Simpson Thacher & Bartlett
                                   425 Lexington Avenue
                                   New York, NY  10017
                                   Attention: Alan G. Schwartz
                                   Fax: (212) 455-2502

or to such other address as any such party shall designate by written notice to
the other parties hereto.

     12.2  Bulk Transfers
     --------------------

           Purchaser waives compliance with the provisions of all applicable
laws relating to bulk transfers in connection with the transfer of the Purchased
Assets.

     12.3  Severability
     ------------------

           If any provision of this Agreement shall be declared by any court of
competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement shall not be affected and shall remain in full
force and effect, and Seller and Purchaser shall negotiate in good faith to
replace such illegal, void or unenforceable provision with a provision that
corresponds as closely as possible to the intentions of the parties as expressed
by such illegal, void or unenforceable provision.

     12.4  Further Assurances; Further Cooperation
     ---------------------------------------------

           Subject to the terms and conditions hereof, each of the parties
hereto agrees to use commercially reasonable efforts to execute and deliver, or
cause to be executed and delivered, all documents and to take, or cause to be
taken, all actions that may be reasonably necessary or appropriate, in the
reasonable opinion of counsel for Seller and Purchaser, to effectuate the
provisions of this Agreement.

     12.5  Counterparts
     ------------------

           This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section 12.5,
provided that receipt of copies of such counterparts is confirmed.
--------
<PAGE>

                                                                              39

     12.6  Expenses
     --------------

           Whether or not the Closing occurs, Seller and Purchaser shall each
pay their respective expenses (such as legal, investment banker and accounting
fees) incurred in connection with this Agreement and the transactions
contemplated hereby; provided, however, that if the Seller terminates this
Agreement as a result of any term or condition imposed by the PUC relating to
the use of proceeds from the transactions contemplated by this Agreement, Seller
gshall pay upon demand by Purchaser all of Purchaser's reasonable, documented
out-of-pocket expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement up to an aggregate of $5,000,000
(including 50% of staff salaries allocable to the transactions contemplated by
this Agreement up to a maximum of $500,000); provided, further, however, that
Seller shall not be obligated to pay Purchaser such out-of-pocket expenses
unless Purchaser has obtained the approvals described in Section 6.18.

     12.7  Non-Assignability
     -----------------------

           This Agreement shall not be assigned by either party hereto without
the prior written consent of the other party, and any attempted assignment,
without such consent, shall be null and void; provided, however, that no such
                                              --------  -------
assignment shall release Purchaser from any of its liabilities or obligations
hereunder.

     12.8  Amendment; Waiver
     -----------------------

           This Agreement may be amended, supplemented or otherwise modified
only by a written instrument executed by the parties hereto. No waiver by either
party of any of the provisions hereof shall be effective unless explicitly set
forth in writing and executed by the party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants, or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement and in
connection with each Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.

     12.9  Specific Performance
     --------------------------

           The parties hereto agree that irreparable damage would occur in the
event any provision of this Agreement and the Exhibits hereto was not performed
in accordance with the terms hereof and that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in addition to any other
remedy to which they are entitled at law or in equity.

     12.10 Third Parties
     -------------------

           This Agreement does not create any rights, claims or benefits inuring
to any person that is not a party hereto nor create or establish any third party
beneficiary hereto.
<PAGE>

                                                                              40

     12.11 Governing Law
     -------------------

           This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Nevada, except for the internal matters of any
corporation, partnership or similar entity which shall be governed by the laws
of the jurisdictions of incorporation of such corporation, partnership or
similar entity.

     12.12 Consent to Jurisdiction; Waiver of Jury Trial
     ---------------------------------------------------

           Each party hereto irrevocably submits to the exclusive jurisdiction
of the United States District Court for the District of Nevada, or if such court
does not have jurisdiction, the trial courts of the State of Nevada, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of the parties hereto, further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth in Section 12.1
shall be effective service of process for any action, suit or proceeding in
Nevada with respect to any matters to which it has submitted to jurisdiction as
set forth above in the immediately preceding sentence. Each of the parties
hereto, irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (a) the United States District Court for the
District of Nevada or (b) the trial courts of the State of Nevada, and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum. The parties hereto hereby
irrevocably and unconditionally waive trial by jury in any legal action or
proceeding relating to this Agreement or any other agreement entered into in
connection therewith and for any counterclaim with respect thereto.

     12.13 Interpretation; Absence of Presumption
     --------------------------------------------

           (a) This agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.

           (b) Whenever the words "include", "including" or "includes" appear in
this Agreement, they shall be read to be followed by the words "without
limitation" or words having similar import.

     12.14 Entire Agreement
     ----------------------

           This Agreement, Annex A, the Schedules, the Exhibits hereto and the
Confidentiality Agreement set forth the entire understanding of the parties
hereto with respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties or their
respective Subsidiaries other than those set forth or referred to herein.
<PAGE>

                                                                              41

     12.15 Section Headings; Table of Contents
           -----------------------------------

           The section headings contained in this Agreement and the Table of
Contents to this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.

     12.16 Schedules
     ---------------

           Disclosures included in any schedule to this Agreement shall be
considered to be made for purposes of all other schedules to this Agreement
referred to in such schedule. Inclusion of any matter or item in any schedule to
this Agreement does not imply that such matter or item would, under the
provisions of this Agreement, have to be included in any schedule to this
Agreement or that such matter or term is otherwise material. For purposes of
determining any liability of Seller following Closing for misrepresentation or
breach of warranty under this Agreement, unless Purchaser objects as provided in
the next succeeding sentence the schedules delivered by Seller on the date of
this Agreement shall be deemed to include such other information as may be set
forth in any written amendment or supplement to such schedules delivered by
Seller to Purchaser and its counsel prior to the Closing (including any
supplement to such schedules which adds an additional schedule to, and a
corresponding reference thereto in, this Agreement) and identified in writing as
an amendment or supplement to the schedules. The Purchaser shall have ten days
to object to the amendment or supplement and if Purchaser submits an objection
in writing to Sellers, then the amendment or supplement shall not affect
Purchaser's rights under Section 8.3(a) or Purchaser's indemnification rights
under this Agreement.
<PAGE>

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

                                        SIERRA PACIFIC POWER COMPANY

                                        By:___________________________
                                           Name:
                                           Title:

                                        TRUCKEE MEADOWS WATER AUTHORITY

                                        By:___________________________
                                           Name:
                                           Title:
<PAGE>

                                    ANNEX A

         "AAA" has the meaning set forth in Section 3.4(b).
          ---

         "Affiliate" of a person means a person that directly or indirectly,
          ---------
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person.

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

         "Antitrust Regulations" has the meaning set forth in Section 4.3.
          ---------------------

         "Arbitrator" has the meaning set forth in Section 3.4(b).
          ----------

         "Assigned MPAT Employees" means management, professional,
          -----------------------
administrative and technical employees of Seller who elected to be assigned to
the Water Business.

         "Assumed Liabilities" has the meaning set forth in Section 2.2.
          -------------------

         "Balance Sheet Date" has the meaning set forth in Section 4.4.
          ------------------

         "Benefit Plans of Purchaser" has the meaning set forth in Section
          --------------------------
6.6(c).

         "Books and Records" has the meaning set forth in Section 6.5(a).
          -----------------

         "Business Day" means any day other than a Saturday, a Sunday or a day
          ------------
on which banks in New York City are permitted or required by law to close.

         "CERCLA" shall mean the Comprehensive Environmental Response,
          ------
Compensation and Liability Act, 42 U.S.C. ss.ss.9601 et seq., as amended, and
all regulations promulgated thereunder, as in effect on the date of this
Agreement.

         "Closing" has the meaning set forth in Section 9.1.
          -------

         "Closing Date" has the meaning set forth in Section 9.1.
          ------------

         "Closing Date Assets" means the Purchased Assets on the Closing Date as
          -------------------
determined in a manner consistent with the accounting practices as set forth on
the Financial Statements.

         "Closing Date Liabilities" means the Assumed Liabilities as determined
          ------------------------
in a manner consistent with the accounting practices as set forth on the
Financial Statements.

         "Closing Date Statement" means the final statement of Closing Date
          ----------------------
Assets and Closing Date Liabilities.

         "COBRA" has the meaning set forth in Section 6.6(g).
          -----

         "Code" means the Internal Revenue Code of 1986, as amended.
          ----
<PAGE>

                                                                             A-2

         "commercially reasonable efforts" when used in connection with this
          -------------------------------
Agreement with regard to either party shall mean the reasonable undertakings of
a corporate entity engaged in a business similar to the Water Business.

         "Competing Business" has the meaning set forth in Section 6.8.
          ------------------

         "Confidentiality Agreements" has the meaning set forth in Section
          --------------------------
6.2(c).

         "Consent" has the meaning set forth in Section 4.3.
          -------

         "Contracts" has the meaning set forth in Section 4.7(a).
          ---------

         "Conveyed Property" has the meaning set forth in Section 4.6(d).
          -----------------

         "Covered Schedules" has the meaning set forth in Section 4.7(a).
          -----------------

         "D&T" has the meaning set forth in Section 3.4(b).
          ---

         "Damages" has the meaning set forth in Section 6.6(i).
          -------

         "Deductible" has the meaning set forth in Section 10.2(b).
          ----------

         "Deficiency" means the amount, if any, by which the Net Worth Amount is
          ----------
less than the Signing Net Worth Amount.

         "Disclosed Contracts" has the meaning set forth in Section 4.7(a).
          -------------------

         "Disputed Item(s)" has the meaning set forth in Section 3.4(a).
          ----------------

         "dollars" or "$", when used in this Agreement or any other Transaction
          -------      -
Document, means United States dollars unless otherwise stated.

         "Due Diligence Period" has the meaning set forth in Section 6.2(b).
          --------------------

         "Environmental Claims" has the meaning set forth in Section 4.14.
          --------------------

         "Environmental Laws" has the meaning set forth in Section 4.14.
          ------------------

         "ERISA" has the meaning set forth in Section 4.12(a).
          -----

         "Excess" means the amount, if any, by which the Net Worth Amount is
          ------
more than the Signing Net Worth Amount.

         "Excluded Assets" means (a) Seller's corporate books and records of
          ---------------
internal corporate proceedings, tax records, work papers and books and records
relating to the Water Business and the Purchased Assets that Seller is required
by law to retain as described on Exhibit C, provided, however, that Seller shall
provide Purchaser with a copy of all such materials which relate primarily to
the Water Business; (b) all cash and cash equivalents, bank deposits and
accounts
<PAGE>

                                                                             A-3

receivable except in the meter installment fund (including receivables relating
to earned but unbilled revenues, but excluding amounts due from developers for
distribution facilities); (c) all accounting records and internal reports
relating to the business activities of Seller, provided, however, that Seller
shall provide Purchaser with a copy of all such records and reports which relate
primarily to the Water Business and provided, further, however, that any
accounting records or internal reports which solely relate to the Water Business
and accounting information including customer names, addresses, size of service,
etc., needed for billing Water Business Customers shall constitute Purchased
Assets; (d) other than the Water Business Intellectual Property, all software,
software systems, databases and database systems, to the extent they exist,
whether owned, leased or licensed by Seller, which are not used primarily with
respect to the Water Business; (e) any prepaid property and casualty or
liability insurance policies relating to the Water Business or the Purchased
Assets and any rights, claims or chooses in action under such insurance
policies; (f) any prepaid income, sales, payroll or other Taxes and any rights
to refunds of any Tax payments in respect of the Water Business or the Purchased
Assets relating to any period ending on or prior to the Closing Date; provided,
                                                                      --------
that any credit or refund resulting from an overpayment of Taxes shall be
prorated based upon the method employed in the definition of Excluded
Liabilities; (g) the names "Sierra Pacific Resources," "Sierra Pacific Power
Company," "Westpac" and "Sierra Pacific" or any related or similar trade names,
trademarks, service marks or logos; (h) electric distribution, substation and
communication facilities and related support equipment except as described in
Schedule 4.6; (i) except to the extent specifically required by law, the
------------
personnel records relating to any employees of Seller provided, however, that
Seller shall provide Purchaser with a copy of all such records and (j) the items
set forth on Exhibit C.

     "Excluded Liabilities" means (a) any liability of Seller for legal,
      --------------------
accounting or broker's fees incurred in connection with the negotiation of this
Agreement or the consummation of the transactions contemplated hereby; (b)
liabilities in respect of any Taxes for periods or portions thereof ending on or
prior to the Closing Date arising out of the Purchased Assets; provided, that
                                                               --------
with respect to any Tax that is imposed on a periodic basis and is payable for a
taxable period that begins before and ends after the Closing Date, the portion
of such Taxes which is payable for the portion of such taxable period ending on
such Closing Date shall be the amount of such Tax for the entire period (or, in
the case of such Taxes determined on an arrears basis, the amount of such Tax
for the preceding period) multiplied by a fraction, the numerator of which is
the number of days in the portion of such taxable period ending on such Closing
Date and the denominator of which is the number of days in the entire taxable
period; (c) liabilities for accounts payable; (d) compensation expenses related
to stay bonuses or any pre-closing employee-related liabilities except as set
forth in Section 6.6; or (e) indebtedness for borrowed money or guarantees or
other obligations in respect of any other Person.

     "Farad Facility" has the meaning set forth in Section 2.5.
      --------------

     "Financial Statements" has the meaning set forth in Section 4.4(a).
      --------------------

     "GAAP" means generally accepted accounting principles as in effect from
      ----
time to time in the United States, consistently applied.
<PAGE>

                                                                             A-4

     "Governmental Authority" has the meaning set forth in Section 4.3.
      ----------------------

     "Hazardous Materials" has the meaning set forth in Section 4.14.
      -------------------

     "Health Agency" has the meaning set forth in Section 4.3.
      -------------

     "Hydro Assets" means the assets comprising the hydroelectric power
      ------------
generating business of Seller including diversion structures, flumes, canals,
penstocks, turbine-generators, buildings and land associated with these
facilities, and Seller's Water Rights under the 1915 Truckee River General
Electric Decree as recognized and confirmed under Claim number 4 of the Orr
Ditch Decree and as affected by the Truckee River Agreement and Water Rights
Claims, numbers 5 through 9, under the Orr Ditch Decree and Water Rights for
hydroelectric generation associated with Donner and Independence Lakes.

     "Hydro Assets Purchase Price" has the meaning set forth in Section 3.2.
      ---------------------------

     "IBEW 1245 Employees" has the meaning set forth in Section 6.6(e).
      -------------------

     "Indemnified Party" means a Purchaser Indemnified Party or a Seller
      -----------------
Indemnified Party, as the case may be.

     "Indemnifying Party" has the meaning set forth in Section 10.3(a).
      ------------------

     "Indemnity Claim" has the meaning set forth in Section 10.3(b).
      ---------------

     "Infringement" has the meaning set forth in Section 4.9.
      ------------

     "Intellectual Property" has the meaning set forth in Section 4.9.
      ---------------------

     "Interim Services Agreement" has the meaning set forth in Section 6.7.
      --------------------------

     "Interim Storage Agreement" means the Interim Water Storage Agreement,
      -------------------------
dated June 29, 1994, among Seller, the Bureau of Reclamation of the Department
of the Interior, WCWCD and the Pyramid Lake Tribe.

     "IRS" means the United States Internal Revenue Service.
      ---

     "JPA Agreement" means the Cooperative Agreement, entered into on or
      -------------
about December 15, 2000, among the City of Reno, the City of Sparks and the
County of Washoe.

     "the knowledge of" or "the best knowledge of" a party hereto means,
      ----------------      ---------------------
with respect to Seller, the actual knowledge of the individuals listed on Part 1
of Exhibit B hereto, and with respect to Purchaser, the actual knowledge of the
individuals listed on Part 2 of Exhibit B hereto.

     "Law" means any. applicable common law and any statute, ordinance, code or
      ---
other law, rule, regulation, order, technical or other written standard,
requirement, policy or procedure enacted, adopted, promulgated, applied or
followed by any Governmental Authority, including
<PAGE>

                                                                             A-5

any judgment, writ, order, injunction, award and decree and all judicial
decisions applying common law or interpreting any other Law, in each case, as
amended.

         "Leased Real Property" has the meaning set forth in Section 4.6(c).
          --------------------

         "Leased Water Rights" has the meaning set forth in Section 4.6(d).
          -------------------

         "Lien" any security interest, security agreement, financing statement
          ----
filed with any Governmental Authority, conditional sale or other title retention
agreement, any lease, consignment or bailment given for purposes of security,
any mortgage, lien, indenture, pledge, option, claim, charge, encumbrance,
adverse interest, constructive trust or other trust, claim, attachment,
exception to, defect in or other condition affecting title or other ownership
interest (including, but not limited to, reservations, rights of entry,
possibilities of reverter, encroachments, protrusions, easements, rights-of-way,
rights of first refusal, restrictive covenants, leases and licenses) of any
kind, which constitutes an interest in or claim against property, whether
arising pursuant to any Law, Contract or otherwise.

         "Losses" means Purchaser Losses or Seller Losses, as the case may be.
          ------

         "Members" has the meaning set forth in Section 5.4.
          -------

         "Minimum Claim Threshold" has the meaning set forth in Section 10.2(b).
          -----------------------

         "NDEP" has the meaning set forth in Schedule 4.14(a).
          ----

         "Net Worth Amount" means the Closing Date Assets less the Closing Date
          ----------------
Liabilities as set forth on the Closing Date Statement.

         "New IBEW Contract" has the meaning set forth in Section 6.6(e).
          -----------------

         "Non-Hydro Assets" means the Purchased Assets other than the Hydro
          ----------------
Assets.

         "Off-Site Location" means any real property other than the Real
          -----------------
Property.

         "Order" means any judgment, rule, writ, injunction, order or decree,
          -----
whether federal, state, local or foreign.

         "Orr Ditch Decree" means the decree, dated January 1, 1944, concerning
          ----------------
certain Water Rights of the Seller as set forth on Schedule 4.6(d).

         "Other Real Property Interests" has the meaning set forth in Section
          -----------------------------
4.6(b).

         "Other Tax Items" has the meaning set forth in 10.3(b).
          ---------------

         "Owned Real Property" has the meaning set forth in Section 4.6(b).
          -------------------

         "Owned Water Rights" has the meaning set forth in Section 4.6(c).
          ------------------
<PAGE>

                                                                             A-6

         "Permitted Lien" means any (a) Lien securing Taxes, assessments and
          --------------
governmental charges not yet due and payable, (b) zoning law or ordinance or any
similar Law, (c) right reserved to any Governmental Authority to regulate the
affected property, (d) as to Owned Real Property and Other Real Property
Interests, any Lien not securing indebtedness or arising out of the obligation
to pay money that does not individually or in the aggregate interfere with the
right or ability to own, use or operate the Owned Real Property or Other Real
Property Interests as they are being used or operated or materially diminish the
value of such Owned Real Property or Other Real Property Interests, (e) in the
case of Owned Real Property and Leased Real Property, any lease or sublease by
Seller in favor of a third party that is disclosed in the Schedules to this
Agreement, and (f) in the case of Leased Real Property, (i) the rights of any
lessor and (ii) any Lien granted by any lessor of Leased Real Property; provided
that "Permitted Lien" will not include any Lien securing a debt or claim (other
than inchoate materialmen's, mechanics', workmen's, repairmen's or other like
Liens arising in the ordinary course of business or any Lien described in clause
(c) or (e) above) or any Lien which could prevent or materially impair the
conduct of the Water Business as it is currently being conducted.

         "Person" means an individual, corporation, partnership, association,
          ------
trust, incorporated organization, other entity or group (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934).

         "PR" has the meaning set forth in Section 3.4(b).
          --

         "Preliminary Settlement Agreement" means an agreement entered into
          --------------------------------
between Seller and the Pyramid Lake Paiute Tribe of Indians, May 29, 1989, and
ratified by the United States.

         "PUC" has the meaning set forth in Section 4.3.
          ---

         "PUHCA" has the meaning set forth in Schedule 4.3.
          -----

         "Purchase" means the purchase by Purchaser of the Purchased Assets upon
          --------
the terms and subject to the conditions of this Agreement.

         "Purchase Price" has the meaning set forth in Section 3.1.
          --------------

         "Purchase Price Adjustment Amount" has the meaning set forth in Section
          --------------------------------
3.4(c).

         "Purchased Assets" means the assets set forth on Exhibit A and all
          ----------------
other rights and assets owned, leased or used by Seller in the operation of the
Water Business, other than the Excluded Assets.

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

         "Purchaser Debt" has the meaning set forth in Section 6.13(a).
          --------------

         "Purchaser Expenses" has the meaning set forth in Section 5.4.
          ------------------

         "Purchaser Indemnified Party" has the meaning set forth in Section
          ---------------------------
10.1(a).
<PAGE>

                                                                             A-7

         "Purchaser Losses" has the meaning set forth in Section 10.1(a).
          ----------------

         "Purchaser Material Adverse Effect" has the meaning set forth in
          ---------------------------------
Section 5.3.

         "Purchaser Plans" has the meaning set forth in Section 6.6(e).
          ---------------

         "Pyramid Lake Tribe" means the Pyramid Lake Paiute Tribe of Indians.
          ------------------

         "Qualifying Offer of Employment" has the meaning set forth in Section
          ------------------------------
6.6(b).

         "Real Property" has the meaning set forth in Section 4.6(b).
          -------------

         "Release" has the meaning set forth in Section 4.14.
          -------

         "Remediation" means an action of any kind to address the Release of
          -----------
Hazardous Materials or the presence of Hazardous Materials at the Purchased
Assets or an Off-Site Location, including any or all of the following activities
to the extent they relate to or arise from the presence of a Hazardous Material
at the Purchased Assets or an Off-Site Location: (i) monitoring, investigation,
assessment, treatment, cleanup, containment, removal, mitigation, response or
restoration work; (ii) obtaining any permits, consents, approvals or
authorizations of any Governmental Authority necessary to conduct any such
activity; (iii) preparing and implementing any plans or studies for any such
activity; (iv) obtaining written notice from a Governmental Authority with
jurisdiction over the Purchased Assets or an Off-Site Location under
Environmental Laws that no material additional work is required by such
Governmental Authority; (v) the use, implementation, application, installation,
operation or maintenance of removal actions on the Purchased Assets or an
Off-Site Location, remedial technologies applied to the surface or subsurface
soils, excavation and treatment or disposal of soils at an Off-Site Location,
systems for long-term treatment of surface water or ground water, engineering
controls or institutional controls; and (vi) any other activities reasonably
determined by a party to be necessary or appropriate or required under
Environmental Laws to address the presence or Release of Hazardous Materials at
the Purchased Assets or an Off-Site Location.

         "SEC" means the Securities and Exchange Commission.
          ---

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

         "Seller Corporate Policies" has the meaning set forth in Section 6.11.
          -------------------------

         "Seller Indemnified Party" has the meaning set forth in Section
          ------------------------
10.1(b).

         "Seller Losses" has the meaning set forth in Section 10.1(b).
          -------------

         "Seller Material Adverse Effect" means any effect on the financial
          ------------------------------
condition or results of operations of the Water Business, taken as a whole, that
is so severe as to substantially frustrate the benefits of the Purchase to
Purchaser, including, without limitation, (a) any material damage to the Chalk
Bluff or Glendale water treatment plants which render either plant inoperable
for a period in excess of seven (7) days (other than as a result of changes in
general economic
<PAGE>

                                                                             A-8

conditions, or of changes affecting industries in which the Water Business
operates) and (b) an uninsurable Title Defect sufficiently material as to deny
Purchaser the use of, or an inability to transfer, the Chalk Bluff or Glendale
water treatment plants or the Fleish, Verdi or Washoe Hydro Facilities.

         "Seller Plans" has the meaning set forth in Section 4.12(a).
          ------------

         "Settlement Act" means Public Law 101-618.
          --------------

         "Signing Net Worth Amount" means the difference as of September 30,
          ------------------------
2000 between Purchased Assets and Assumed Liabilities (each as determined using
GAAP as set forth on Schedule 4.4). Signing Net Worth is approximately $264
million.

         "SPPC" means Sierra Pacific Power Company.
          ----

         "Subsidiary" or "Subsidiaries" of Purchaser, Seller or any other person
          ----------      ------------
means any corporation, partnership or other legal entity of which Purchaser,
Seller or such other person, as the case may be (either alone or through or
together with any other Subsidiary), owns, directly or indirectly, more than 50%
of the stock or other equity interests the holder of which is generally entitled
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity.

         "Tax" or "Taxes" means all federal, state, local and foreign income,
          ---      -----
profits, franchise, sales, use, occupation, property, ad valorem, transfer,
excise, payroll, withholding, employment, estimated and other taxes of any
nature, including interest, penalties and other additions to such taxes.

         "Tax Benefit" has the meaning set forth in 10.3(b).
          -----------

         "Tax Return" means any return, declaration, report and information
          ----------
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.

         "1060 Forms" has the meaning set forth in Section 3.3.
          ----------

         "Title Commitments" has the meaning set forth in Section 6.17(a).
          -----------------

         "Title Company" has the meaning set forth in Section 6.17(a).
          -------------

         "Title Defect" has the meaning set forth in Section 6.17(c).
          ------------

         "Transaction Documents" has the meaning set forth in Section 4.2.
          ---------------------

         "Transferred Management Employees" has the meaning set forth in Section
          --------------------------------
6.6(b).

         "TROA" is a proposed agreement among the States of Nevada and
          ----
California, the Pyramid Lake Paiute Tribe of Indians, the United States, Seller
and other parties, the current draft of which is in Schedule 7.1.
                                                    ------------
<PAGE>

                                                                             A-9

         "Truckee River Agreement" means the agreement, dated June 13, 1935,
          -----------------------
among Seller, the United States, WCWCD, the Truckee Carson Irrigation District
et al.

         "Truckee River Corridor" means Seller's real property described under
          ----------------------
such title in Exhibit C hereto.

         "Vacation Policy" has the meaning set forth in Section 6.6(g).
          ---------------

         "WARN" has the meaning set forth in Section 6.6(f).
          ----

         "Water Business" has the meaning set forth in the Recitals hereto.
          --------------

         "Water Business Intellectual Property" has the meaning set forth in
          ------------------------------------
Section 4.9.

         "Water Rights" has the meaning set forth in Section 4.6(c).
          ------------
<PAGE>

                                   EXHIBIT A
                                   ---------
                               Purchased Assets
                               ----------------
I.   Fee Owned Properties

-------------------------------------------------------------------------------
  Property                                      APN       -     Area
  --------                                      ---             ----
-------------------------------------------------------------------------------
  Army Air Guard Well                           086-240-07 - 1.0 acres
-------------------------------------------------------------------------------
  Chalk Bluff Treatment Plant                   039-161-18 - 114.37 acres
                                                039-161-29 - 17.76 acres
                                                039-161-30 - 5.77 acres
-------------------------------------------------------------------------------
  Coleman Booster Pump                          002-233-01 - 1.52 acres
-------------------------------------------------------------------------------
  Comstock Drive Water Tank                     003-362-07 - 3.60 acres
-------------------------------------------------------------------------------
  Corbett School Well                           013-333-31 - .098 acres
-------------------------------------------------------------------------------
  Delucchi Lane Well                            025-460-03 - .37 acres
-------------------------------------------------------------------------------
  East 4th Street Well                          008-372-03 - .20 acres
-------------------------------------------------------------------------------
  East Peckham Lane Well                        025-261-34 - 1.19 acres
-------------------------------------------------------------------------------
  Farad Hydro                                   048-030-14 - 28.43 acres
                                                048-060-07 - .5 acres
-------------------------------------------------------------------------------
  Fleish Hydro                                  038-260-16 - 84.44 acres
-------------------------------------------------------------------------------
  Glen Hare Well                                010-051-36 - .18 acres
-------------------------------------------------------------------------------
  Glendale Water Treatment Plant                034-010-27 - .67 acres
  21st Street Well                              034-010-56 - 1.53 acres
  Galletti Well                                 034-010-61 - 30.82 acres
-------------------------------------------------------------------------------
  Greg Street Well                              034-403-05 - .91 acres
-------------------------------------------------------------------------------
  Highland Canal                                [survey in progress]
-------------------------------------------------------------------------------
  Highland Res./Stead Pump House                002-040-09 - .37 acres
-------------------------------------------------------------------------------
  Highland Reservoir                            002-040-11 - 20.55 acres
-------------------------------------------------------------------------------
  Holcomb Lane Well                             044-291-15 - .186 acres
-------------------------------------------------------------------------------
<PAGE>

-------------------------------------------------------------------------------
  Property                                      APN       -    Area
  --------                                      ---            ----
-------------------------------------------------------------------------------
  Hunter Creek Reservoir                        009-030-05 - 34.30 acres
-------------------------------------------------------------------------------
  Kietzke Lane Well                             012-391-02 - .82 acres
                                                012-391-13 - .40 acres
-------------------------------------------------------------------------------
  Kings Row Tank                                001-510-03 - 2.41 acres
-------------------------------------------------------------------------------
  Lakeridge Tank                                042-313-63 - 1.44 acres
-------------------------------------------------------------------------------
  Lakeside Well                                 042-222-09 - .086 acres
-------------------------------------------------------------------------------
  Longley Lane Pump Station                     164-131-01 - .20 7 acres
-------------------------------------------------------------------------------
  Mogul Water Plant                             038-730-36 - 2.964 acres
-------------------------------------------------------------------------------
  Mogul Water Tanks 1 & 2                       038-720-01 - 3.204 acres
-------------------------------------------------------------------------------
  Moraine Way Pump                              003-272-04 - .189 acres
-------------------------------------------------------------------------------
  Morrill Avenue Well                           008-360-25 - .14 acres
-------------------------------------------------------------------------------
  Northgate Tank #1                             204-010-12 - 1.5 acres
                                                204-171-04 - .066 acres
-------------------------------------------------------------------------------
  Northgate Tank #1 Pump Station                204-173-28 - .791 acres
  (aka Tappan Pump)
-------------------------------------------------------------------------------
  Northgate Tank #2                             038-800-06 - 3.903 acres
-------------------------------------------------------------------------------
  Patriot Well                                  043-020-33 - .49 acres
-------------------------------------------------------------------------------
  Poplar Street Well #1 & #2                    032-275-13 - .32 acres
-------------------------------------------------------------------------------
  Pyramid Highway Water Tank                    028-012-01 - .80 acres
                                                028-012-07 - .70 acres
                                                028-012-09 - .013 acres
-------------------------------------------------------------------------------
  Raleigh Heights Booster Pump                  082-353-17 - .67 acres
-------------------------------------------------------------------------------
  Rattlesnake Mountain -                        022-172-01 - 11.08 acres
  Water Tank
-------------------------------------------------------------------------------
  Reno Highlands Tank                           082-631-04 - 4.591 acres
-------------------------------------------------------------------------------
  Skyline Tank No. 1                            023-061-02 - .94 acres
-------------------------------------------------------------------------------
  Skyline Tank No. 2                            041-241-01 - 2.61 acres
-------------------------------------------------------------------------------
<PAGE>

-------------------------------------------------------------------------------
  Property                                      APN       -    Area
  --------                                      ---            ----
-------------------------------------------------------------------------------
  Silver Lake Tank                              560-020-03 - 3.77 acres
-------------------------------------------------------------------------------
  Silver Lake North Well                        090-050-47 - 1.0 acres
-------------------------------------------------------------------------------
  Socrates Tank                                 003-620-12 - .94 acres
-------------------------------------------------------------------------------
  South Hills Booster Pump                      044-300-06 - .08 acres
-------------------------------------------------------------------------------
  South Hills Tank (aka Zollezzi Tank)          162-121-03 - 1.538 acres
-------------------------------------------------------------------------------
  South Virginia Street Well                    025-330-09 - .16 acres
-------------------------------------------------------------------------------
  Southwest Terrace Tank                        041-241-04 - 2.0 acres
-------------------------------------------------------------------------------
  Sparks Avenue Well                            032-166-03 - .16 acres
-------------------------------------------------------------------------------
  Stead 1 & 2 Tank                              090-150-02 - 13.523 acres
                                                554-102-20 - .095 acres
                                                554-102-15 - .266 acres
-------------------------------------------------------------------------------
  Stead Well                                    016-045-14 -  .15 acres
-------------------------------------------------------------------------------
  Sullivan Lane Tank                            026-021-41 - 2.70 acres
-------------------------------------------------------------------------------
  Swope Middle School Well                      009-170-93 - .25 acres
-------------------------------------------------------------------------------
  Terminal Way Well                             013-332-15 - .18 acres
-------------------------------------------------------------------------------
  Valley Road Booster Pump                      008-013-25 - .014 acres
-------------------------------------------------------------------------------
  Valley Road Complex/                          004-081-27 - .28 acres
  Vaughn Mill Tank
-------------------------------------------------------------------------------
  Verdi Hydro                                   038-030-08 - 10.70 acres
                                                038-060-29 - 14.64 acres
                                                038-200-03 - 25.14 acres
                                                038-250-03 - 10.92 acres
                                                038-250-04 - 3.76 acres
                                                038-260-09 - 19.22 acres
                                                038-394-07 - 0.23 acres
-------------------------------------------------------------------------------
  View Street Well                              031-302-36 - .24 acres
-------------------------------------------------------------------------------
  Vista Water Tank                              512-010-05 - 6.205 acres
-------------------------------------------------------------------------------
<PAGE>

-------------------------------------------------------------------------------
  Property                                      APN       -    Area
  --------                                      ---            ----
-------------------------------------------------------------------------------
  Washoe Highland Diversion                     038-112-07 - 3.00 acres
                                                038-112-08 - 1.15 acres
                                                038-111-01 - 18.15 acres
                                                038-112-10 - 0.78 acres
                                                038-430-10 - 13.50 acres
                                                038-430-07 - 0.27 acres
                                                038-430-14 - 0.44 acres
                                                038-430-05 - 3.52 acres
-------------------------------------------------------------------------------
  Washoe Hydro                                  038-182-03 - 6.16 acres
                                                038-140-10 - 11.68 acres
-------------------------------------------------------------------------------
  Water Main in Fee                             027-172-23 - .024 acres
-------------------------------------------------------------------------------
  West 7/th/ Street Tank                        001-271-06 - 2.5 acres
-------------------------------------------------------------------------------

II.  Glendale Water Treatment Facility

All structures and facilities located at the Glendale Water Treatment Plant, and
all furniture, telemetry and laboratory equipment and office equipment contained
within the facility as well as all PCs and related peripheral equipment for the
employees who work at the plant and use the facility as their offices.

III. Water Production Groundwater Facilities

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
       Groundwater Facilities            Number of Facilities (in service)             Maximum Capacity (mgd)
       ----------------------            ---------------------------------             ----------------------
<S>                                      <C>                                           <C>
   Normal Production wells                               20                                     36.4
   PCE wells                                             5                                      13.6
   Blended wells                                         3                                       7.2
   Other                                                 1                                       1.0
     Total Ground Wells                                  29                                     57.2
-------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

IV.   Run of the River Hydroelectric Facilities

------------------ --------- ----------------------- -----------------
                                     Date of
    Facility         Size     Commercial/Operations       Status
------------------ --------- ----------------------- -----------------
                                                       Re-design and
     Farad          2.60 MW           1900             construction
     Fleish         2.25 MW           1905               Operating
     Verdi          2.15 MW           1912               Operating
     Washoe         2.15 MW           1908               Operating
----------------------------------------------------------------------

For each plant included are the weir, flumes, structural forebay and penstocks

V.    Chalk Bluff Water Treatment Facility

All structures and facilities located at the Chalk Bluff Treatment Plant. Also
included are all furniture and office equipment contained within the facility as
well as all PCs and related peripheral equipment for the employees who work at
the plant.

VI.   Water Distribution and Storage Assets

----------------------------------------------------------------------------
Type of Facility                 Number of Facilities       Capacity (Mgal)
----------------                 --------------------       ---------------
Water Storage Tanks                      30                      53.2
Water Storage Reservoirs                  2                      50.0
Booster Pumps                            94                       -
Distribution Mains                   1000 miles                   -
----------------------------------------------------------------------------
Together with all associated water meters, valves, regulators, telemeters,
automated control systems and service lines.

VII.  Backflow Prevention Project PCs

All PCs and related peripheral equipment for the Backflow Prevention Project
work group

VIII. Intellectual Property

Bailey Control System/Software for Chalk Bluff Operating System SCADA system
software (includes Dynac software) - historical data and control routines for
Time of Use Pumping, Pump Logic and Meters
<PAGE>

H2O-Net Distribution Modeling Software and distribution system models (includes
gravity models and pump zone models)

Ground Water Model
Surface Water Transport Model
Water Rights Data Base
Met-one Particle Counting System

Intellution Control Software for Glendale
Truckee River Operations Model

IX.   Water Rights

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
                                                                                       Face Value of
                       Type of Water Right                                              Water Right
                                                                                           (AF)
------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>
The "40 cfs right" allocated to the Water Business in the Orr Ditch Decree as
the first 28,959 right on the River except for the Pyramid Lake Tribe's rights
which are always made up by Truckee Meadows return flows.
------------------------------------------------------------------------------------------------------
Hunter Creek 13.6 cfs right                                                                9,847
------------------------------------------------------------------------------------------------------
Irrigation Rights deeded to the Company.  Included are the so called "excess water        37,164
rights" which are required to be stored for drought supplies under TROA
------------------------------------------------------------------------------------------------------
Irrigation Rights deeded to local governments for use by the Company for its new          18,601
service commitments
------------------------------------------------------------------------------------------------------
Banked Irrigation Rights deeded to the Company by developers for their future needs.       2,976
------------------------------------------------------------------------------------------------------
Effluent makeup rights                                                                       267
------------------------------------------------------------------------------------------------------
Tributary Creek rights                                                                       366
------------------------------------------------------------------------------------------------------
Independence Lake water rights including 3,000 acre feet of very high priority vested     17,500
water rights. These rights are restored under the interim water storage agreement to
augment drought supplies.
------------------------------------------------------------------------------------------------------
Donner Lake undivided one half interest with TCID in 9,500 acre feet of very high          4,750
priority drought supplies.  These rights have certain restrictions which limit the
timing of their withdrawal and are restored under the interim water storage agreement
to augment drought supplies.
------------------------------------------------------------------------------------------------------
Groundwater permits in the Truckee Meadows are in excess of the amount of water the       47,757
State Engineer presently allows to be pumped.  Recent orders by the State Engineer
allow the capped amount of 14,440 to be pumped on a long term average so that 22,000 AF
of water can be pumped in a drought year if pumping is cut back during normal years.
-------------------------------------------------------------------------------------------------------
                                       Total Water Rights
-------------------------------------------------------------------------------------------------------
</TABLE>

Hydro Assets Water Rights:

Seller's water rights under the 1915 Truckee River General Electric Decree as
recognized and confirmed under Claim number 4 of the Orr Ditch Decree and as
affected by the Truckee River Agreement and water rights Claims, numbers 5
through 9, under the Orr Ditch Decree and water rights for hydroelectric
generation associated with Donner and Independence Lakes.
<PAGE>

X.   Other Assets

All cash in meter installment fund in the approximate amount of $1.6 million
  (which is collected and held in escrow for the benefit of the Water Meter
  Retrofit Program).
All Contracts set forth on Schedule 4.3 and Schedule 4.7.
                           ------------     ------------
All Leases, Licenses and Permits set forth on Schedule 4.6(b).
                                              --------------
All Railroad Permits set forth on Schedule 4.6(b).
                                  --------------
GIS data with respect to the location of all Purchased Assets
All vehicles and equipment with an original cost of $1.8 million on the attached
  list.
Water Meter Testing Equipment.
<PAGE>

                             WATER COMPANY VEHICLES

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          SPPC
Dept.  Equipment                                                        MJR.                Original   Lease   Monthly  End
  No.     No.            Description         Make   Model      Year     IMP.  4x4   Mileage  Cost     Company   Rate    Date Comment
------------------------------------------------------------------------------------------------------------------------------------
<S>   <C>         <C>                       <C>     <C>        <C>      <C>   <C>   <C>    <C>        <C>      <C>      <C>  <C>
D335  10-2420     1990 DODGE SHADOW 4 DR     Dodge   Shadow     1990           No   93,493 $10,254.00
                  Sedan
------------------------------------------------------------------------------------------------------------------------------------
                  110 GMC Truck w/Welder 85          1 Ton
D335  20-1728     2WD                        GMC     Truck      1985           No  139,119 $28,423.00
------------------------------------------------------------------------------------------------------------------------------------
D335  20-1853     1985 Ford 1 Ton Van        Ford    1 Ton Van  1985           No   93,157 $18,737.00
------------------------------------------------------------------------------------------------------------------------------------

D335  20-2025     1986 1 Ton Van SB DRW 4x4  Ford    1 Ton      1986  Service  Yes  99,672  25,470.00
                                                     Van              Body
------------------------------------------------------------------------------------------------------------------------------------
D367  20-2029     1987 Dodge 1 Ton Van 4x4   Dodge   3/4 Ton    1984           No   72,733 $17,264.00
                                                     Van
------------------------------------------------------------------------------------------------------------------------------------
                  1987 Jeep Cherokee 4 DR            1/2 Ton
D335  20-2065     SUV 4x4                    Jeep    truck 4x4  1987           Yes 177,833 $16,396.00
------------------------------------------------------------------------------------------------------------------------------------
                                                     1 Ton
D335  20-2095     1987 Dodge 1 Ton SB        Dodge   Truck 4x4  1987           No   72,584 $17,449.00
------------------------------------------------------------------------------------------------------------------------------------
                  1987 Jeep Cherokee 4 SUV           1/2 Ton
D335  20-2120     4x4                        Jeep    Truck 4x4  1987           Yes 160,906 $15,802.00
------------------------------------------------------------------------------------------------------------------------------------
D335  20-2216     1988 Jeep Cherokee SUV 4x4 Jeep    Cherokee   1988           Yes 118,992 $16,902.00
------------------------------------------------------------------------------------------------------------------------------------
                  1990 GMC 1 Ton SB 4x4              1 Ton            Service
D336  20-2352     Tommy Liftgate             GMC     Truck      1990  Body     Yes 192,555 $21,490.00
------------------------------------------------------------------------------------------------------------------------------------
                                                     1 Ton            Service
D335  20-2395     1990 GMC 1 Ton S/B 4x4     Dodge   Truck 4x4  1990  Body     Yes  42,183 $21,034.00
------------------------------------------------------------------------------------------------------------------------------------
                  1990 GMC 1 Ton Weld                1 Ton
D335  20-2400     Truck, DRW 4x4             Dodge   Truck 4x4  1990           Yes  57,476 $41,470.00
------------------------------------------------------------------------------------------------------------------------------------
                                                     1/2 Ton
D335  20-2401     1990 Ford1/2Ton P/U        Ford    Truck      1990           No   49,435 $15,207.00
------------------------------------------------------------------------------------------------------------------------------------
                  1991 Jeep Cherokee 4 DR
D335  20-2483     SUV 4x4                    Jeep    Cherokee   1991           Yes 128,152 $20,786.00
------------------------------------------------------------------------------------------------------------------------------------
                                                     3/4 Ton
D335  20-2488     1991 GMC3/4Ton CLB CB 4x4  GMC     Truck 4x4  1991           Yes 136,096 $19,500.00
------------------------------------------------------------------------------------------------------------------------------------
                                                     1 Ton            Service
D335  20-2569     1992 GMC 1 Ton S/B 4x4     GMC     Truck 4x4  1992  Body     Yes  29,823 $17,408.00
------------------------------------------------------------------------------------------------------------------------------------
                                                     1/2 Ton
D335  20-2570     1992 Ford1/2Ton P/U 4x4    Ford    Truck 4x4  1992           Yes  88,895 $20,705.00
------------------------------------------------------------------------------------------------------------------------------------
                  1992 Jeep Cherokee 4 DR
D335  20-2571     SUV 4x4                    Jeep    Cherokee   1992           Yes 102,700 $25,752.00
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                                       2

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          SPPC
Dept.  Equipment                                                MJR.                    Original    Lease   Monthly  End
  No.     No.       Description        Make    Model      Year  IMP.     4x4  Mileage  Cost       Company   Rate    Date
-----------------------------------------------------------------------------------------------------------------------------------
<S>   <C>       <C>                    <C>     <C>        <C>   <C>      <C>  <C>      <C>        <C>      <C>      <C>
                                               1 Ton            Service
D367 20-2572    1992 GMC 1 Ton S/B     GMC     Truck      1992  Body     No   145,748  $25,083.00
-----------------------------------------------------------------------------------------------------------------------------------
D335 20-2616    1992 Dodge 1/2 Ton P/U Dodge   Dakota     1992           Yes   59,772  $17,155.00
                4x4
-----------------------------------------------------------------------------------------------------------------------------------
                1993 GMC 3/r Ton               3/4 Ton
D336 20-2647L   EXTCABP/U 4x4          GMC     Truck      1993           Yes  106,579  $22,905.66 BLC      190.88   12/31/03
-----------------------------------------------------------------------------------------------------------------------------------
D335 20-2666:   1993 Dodge 1/2 Ton P/U Dodge   Dakota     1993           Yes   88,599  $16,788.20 BLC      139.9    12/31/03
                4x4
-----------------------------------------------------------------------------------------------------------------------------------
D335 20-2667L   1994 Dodge 1/2 Ton P/U Dodge   Dakota     1994           Yes   83,841  $17,016.91 BLC      141.81   12/31/03
                4x4
-----------------------------------------------------------------------------------------------------------------------------------
                1993 Jeep Cherokee 4
D335 20-2677LD  DR SB 4x4              Jeep    Cherokee   1993           Yes   31,324   $19,137.00 BLC     0        12/31/99
-----------------------------------------------------------------------------------------------------------------------------------
                1996 Ford 1 Ton S/B            1 Ton            Service
D336 20-2751    4x4                    Ford    Truck      1996  Body     Yes   99,228   $46,648.00

-----------------------------------------------------------------------------------------------------------------------------------
                                               1 Ton            Service
D367 20-2757    1995 GMC 1 Ton S/B     GMC     Truck      1995  Body     No    89,182   $41,618.00
-----------------------------------------------------------------------------------------------------------------------------------
                1996 Ford 1 T 4x4 SB           1 Ton            Service
D336 20-2785    SRW                    Ford    Truck      1996  Body     Yes  106,632   $40,210.00
-----------------------------------------------------------------------------------------------------------------------------------
                1996 Ford 3/4 Ton              3/4 Ton          Service
D335 20-2818    EXTCAB S/B 4x4         Ford    Truck 4x4  1996  Body     Yes   26,800   $35,000.00
-----------------------------------------------------------------------------------------------------------------------------------
                1996 Ford 3/4 Ton              3/4 Ton          Service
D335 20-2819    EXTCAB S/B 4x4         Ford    Truck 4x4  1996  Body     Yes   21,000   $35,000.00
-----------------------------------------------------------------------------------------------------------------------------------
                1996 Ford 3/4 Ton              3/4 Ton          Service
D335 20-2820    EXTCAB S/B 4x4         Ford    Truck 4x4  1996  Body     Yes   24,920   $35,000.00
-----------------------------------------------------------------------------------------------------------------------------------
                1996 Ford 3/4 Ton              3/4 Ton          Service
D335 20-2821    EXTCAB S/B 4x4         Ford    Truck 4x4  1996  Body     Yes   28,238   $35,000.00
-----------------------------------------------------------------------------------------------------------------------------------
                                               1/2 Ton
D335 20-2824    1997 Ranger 4x4        Ford    Truck      1997           Yes   49,221   $43,507.00
------------------------------------------------------------------------------------------------------------------------------------
                P1999 Ford 1 Ton
                S/B Bw/LFTGTE,                 1 Ton            Service
D336 20-2869L   SNWPLW 4x4             Ford    Truck      1999  Body     Yes   30,455   $42,000.00 Mellon  433.8    5/31/03
------------------------------------------------------------------------------------------------------------------------------------
                P1999 Ford 1 Ton               1 Ton            Service
D336 20-2870L   S/B DRW Bw/LFTGTE 4x4  Ford    Truck      1999  Body     Yes   40,410   $40,000.00 Mellon  439.09   5/30/03
------------------------------------------------------------------------------------------------------------------------------------
                B1999 Ford 1 Ton               1 Ton            Service
D335 20-2928L   S/B 4x4                Ford    Truck 4x4  1999  body     Yes   15,224   $40,000    Mellon  434.73   6/30/03
------------------------------------------------------------------------------------------------------------------------------------
                1998 Ford Explorer 4
D335 20-2929L   DR SUV 4x4             Ford    Explorer   2000           Yes   21,667   $23,973.11 Mellon  415.47   4/30/03
------------------------------------------------------------------------------------------------------------------------------------
                2000 Ford 1                    1 Ton
D335 20-2972L   Ton P/U                GMC     Truck      2000           No    20,359   $25,319.00 Mellon  440.34   8/31/04
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>

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

Dept.
  No.        Comment
----------------------------
<S>
D335
----------------------------
D335
----------------------------
D335
----------------------------
D367
----------------------------
             Sierra needs to
D335         purchase
----------------------------
D335
----------------------------
D335
----------------------------
D335
----------------------------
D336
----------------------------
D335
----------------------------
D335
----------------------------
D335
----------------------------
             Plus Service
D335         Body cost
----------------------------
             Plus Service
D335         Body cost
----------------------------
             Plus Service
D335         Body cost
----------------------------
D335
----------------------------
D335
----------------------------

</TABLE>
<PAGE>

                                       3

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          SPPC
Dept.  Equipment                                                     MJR.                Original   Lease   Monthly  End
  No.     No.     Description             Make     Model      Year   IMP.  4x4   Mileage  Cost     Company   Rate    Date    Comment
------------------------------------------------------------------------------------------------------------------------------------
<S>    <C>        <C>                     <C>      <C>        <C>    <C>   <C>   <C>     <C>        <C>      <C>     <C>     <C>
                  2000 Ford 1/2                    1/2 Ton
D335   20-3012L   Ton P/U 4x4             Ford     Truck 4x4  1999          Yes  18,478  $20,420.00 Mellon   395.98   9/30/04
-----------------------------------------------------------------------------------------------------------------------------------
D335   20-3070    1999 Cherokee 4x4  4DR  Jeep     Cherokee   1999          Yes  N/A     $19,964.00
-----------------------------------------------------------------------------------------------------------------------------------
                  1/2 T 4x4 2 DR Full Size         1/2 Ton
D336   21-1733    Utility Vehicle         Ford     Truck      1984          Yes  204,000 $10,895.00
-----------------------------------------------------------------------------------------------------------------------------------
                  1/2 T Intermediate 4x4           1/2T
D335   21-2077    Pickup                  Dodge    Dakota     1987          Yes  N/A     $15,208.00
-----------------------------------------------------------------------------------------------------------------------------------
                                                                    Service
                  1999 Ford FB DRW 4x4             1 Ton            Body
D335   30-2927L   w/Liftmoore Crane       Ford     Truck      1999  w/crane Yes  9,964   $55,488.64 Mellon   516.82   6/30/03
-----------------------------------------------------------------------------------------------------------------------------------
                  2000 Ford 1 Ton WLD TRK          1 Ton            Service
D335   30-3011L   4x4                     Ford     Truck 4x4  2000  Body    Yes  8,930   $58,172.00 Mellon   518.72   8/31/04
-----------------------------------------------------------------------------------------------------------------------------------
                  2000 Ford 1 ton WLD TRK          1 Ton            Service
D335   30-3013L   4x4                     Ford     Truck 4x4  2000  Body    Yes  5,538   $58,483.00 Mellon   518.72   8/31/04
-----------------------------------------------------------------------------------------------------------------------------------
                  2000 Ford F450 4x4 DRW                            Service
D335   30-3076    w/SB w/Crane            Ford     F450 Truck 2000  Body    Yes  1449    $65,742.00
-----------------------------------------------------------------------------------------------------------------------------------
                                                   5 Yd Dump
D335   40-1722    1985 INTL 1654 4x2      INTL     Truck      1985          No   114,170 $38,169.00
-----------------------------------------------------------------------------------------------------------------------------------
                  1990 INTL 4900 4x2 SB                             Service
D336   50-2284    w/CRANE                 INTL     Truck      1990  Body    No   209,816 $55,104.00
-----------------------------------------------------------------------------------------------------------------------------------
                  1990 INTL 2574 6x4 10/YD         10 YD
D335   60-2385    Dump                    INTL     Dump Truck 1990          No   71,851  $88,578.00
-----------------------------------------------------------------------------------------------------------------------------------
                                                                    Boom
D335   60-2693    93 INTL 4x4 Boom Truck  INTL     $4,854     1993  TC4600  Yes  48,920  $141,990.00
-----------------------------------------------------------------------------------------------------------------------------------
D335   70-1843    WATER PUMP TRAILER      Trailer  Pump       1985          N/A  N/A     Unavail.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                 1821
D335   70-2244    FORKLIFT                Clark    Forklift   1988          N/A  HRS     $21,781.00
-----------------------------------------------------------------------------------------------------------------------------------
                                                   250
D335   70-2325    Generator TRLR          Cummings Generator  N/A           N/A  N/A     $21,377.00
-----------------------------------------------------------------------------------------------------------------------------------
                                                   4 Wheel
D335   70-2730    MULE 4x4                Kawasaki ATV        1994          Yes  1202    $9,469.00
-----------------------------------------------------------------------------------------------------------------------------------
                                                   4 Wheel
D335   70-2731    MULE 4x4                Kawasaki ATV        1993          Yes  336     $9,469.00
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                 331
D335   70-2732    7000LB Forklift         Clark    Forklift   1987          N/A  HRS     $17,490.00
-----------------------------------------------------------------------------------------------------------------------------------
D336   70-2847    6x6 ATV                 Polaris  ATV        Unk           Yes  266     $7,000.00
-----------------------------------------------------------------------------------------------------------------------------------
D336   71-1863    Welder Trailer          Trailer  Welding    1990          No   115     $9,355.00
-----------------------------------------------------------------------------------------------------------------------------------
                                                   250                           110
D335   71-2324    Generator TRLR          Cummings Generator  1968          N/A  HRS     $11,247.00
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                                       4

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
          SPPC
Dept.  Equipment                                                         MJR.                  Original   Lease   Monthly  End
  No.     No.     Description                Make       Model     Year   IMP.  4x4    Mileage   Cost     Company   Rate    Date
-----------------------------------------------------------------------------------------------------------------------------------
<S>    <C>        <C>                        <C>        <C>       <C>    <C>   <C>    <C>      <C>       <C>      <C>      <C>
-----------------------------------------------------------------------------------------------------------------------------------
D335   80-0990    Trailer, Cargo             Trailer    Utility   1969         N/A    N/A      $337.00
-----------------------------------------------------------------------------------------------------------------------------------
D335   80-1040    Trailer, Tank              Trailer    Tank      1976         N/A    N/A      $893.00
-----------------------------------------------------------------------------------------------------------------------------------
D335   80-2093    Chemical Tank Trailer      Trailer    Chemical  1987         N/A    N/A      $15,649.00
-----------------------------------------------------------------------------------------------------------------------------------
                  Trailer, Utility Service
D335   80-2152    Body                       Trailer    Sign      1987         N/A    N/A      Unavail.
-----------------------------------------------------------------------------------------------------------------------------------
                  900KW Trailer Mounted
D336   80-2252    Generator                  Trailer    Generator 1990         No     N/A      Unavail.
-----------------------------------------------------------------------------------------------------------------------------------
D367   80-2262    Water Meter Test Trailer   Trailer    Trailer   1987         N/A    N/A      $3,724.00
-----------------------------------------------------------------------------------------------------------------------------------
                  Cargo Trailer, Water
D335   80-2789    Meter Project              Trailer    Utility   1996         N/A    N/A      Unavail.
-----------------------------------------------------------------------------------------------------------------------------------
                  Cargo Trailer, Water
D335   80-2798    Meter Project              Trailer    Utility   1996         N/A    N/A      Unavail.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                        Monthly                $851.00 per
D335   92-0002`   98 GMC Jimmy Leased        GMC        SUV       1998  Lease         N/A        mo.
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                               $850.00 per
D366   70-2140    FRONT END LOADER           John Deere Loader    1987                           mo.
-----------------------------------------------------------------------------------------------------------------------------------
                  Dodge Extended Cab Dakota                             Monthly                $850.00 per
D335   92-2002    4x4                        Dodge      Truck     2001  Lease  Yes               mo.
-----------------------------------------------------------------------------------------------------------------------------------
                  Dodge Extended Cab Dakota                             Monthly                $850.00 per
D335   92-2003    4x4                        Dodge      Truck     2001  Lease  Yes               mo.
-----------------------------------------------------------------------------------------------------------------------------------
                  Dodge Extended Cab Dakota                             Monthly                850.00 per
D335   92-2004    4x4                        Dodge      Truck     2001  Lease  Yes               mo.
-----------------------------------------------------------------------------------------------------------------------------------
                  Dodge Extended Cab Dakota                             Monthly                850.00 per
D335   92-2005    4x4                        Dodge      Truck     2001  Lease  Yes               mo.
-----------------------------------------------------------------------------------------------------------------------------------
                  Dodge Extended Cab Dakota                             Monthly                850.00 per
D335   92-2006    4x4                        Dodge      Truck     2001  Lease  Yes               mo.
-----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>

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

Dept.    Comment
 No.
-----------------
<S>
-----------------
D335
-----------------
D335
-----------------
D335
-----------------

D335
-----------------

D336
-----------------
D367
-----------------

D335
-----------------

D335
-----------------

D335
-----------------

D366
-----------------

D335
-----------------

D335
-----------------

D335
-----------------

D335
-----------------

D335
-----------------
</TABLE>
<PAGE>

                                   EXHIBIT B
                                   ----------

Part 1: Knowledge Persons of Seller
        ---------------------------

Jeff Ceccarelli                             President

William Peterson                            Sr. Vice President, General Counsel

Steve Oldman                                Sr. Vice President, Corporate
                                            Development and Strategic Planning

Lori Williams                               Director, Water Production and
                                            Policy

Janet Carson                                Director, Water Policy

Elizabeth Elliot                            Associate General Counsel

Don Rhoden                                  Project Manager, Water Divestiture

Tony Karr                                   Strategic Specialist

Tony Garcia                                 Environmental Engineer

John Erwin                                  Manager, Water Policy, Resources &
                                            Programs

Debbie Kaye                                 Manager, Water Treatment

Paul Miller                                 Manager, Water Quality

Mark Foree                                  Manager, Water System Planning &
                                            Engineering

Peter McAllester                            Manager, Gas & Water Distribution

Jim Neill                                   Manager, Water Distribution,
                                            Hydro/Generation

Marie Stuersel                              HR Partner

Bruce Bullock                               Director, Gas & Water Distribution,
                                            Operation & Maintenance

Kim Mazeres                                 Director, Customer Care

Part 2: Knowledge Persons of Purchaser
        ------------------------------

Jeff Griffin                                Director

David Aiazzi                                Director

Jessica Sferrazza-Hogan                     Director

Tony Armstrong                              Director

Mike Carrigan                               Director

Geno Martini                                Director

Jim Shaw                                    Director
<PAGE>

EXHIBIT C
---------
Certain Excluded Assets
-----------------------

Real Property. (The references below reflect the sites of the excluded Real
Property.)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
LOCATION                               A.P.N.              AREA*          DESCRIPTION
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                 <C>            <C>
BARRY M. CIRCLE                        005-082-39          0.664 ac       REGULATOR STATION ON WEST SEVENTH STREET
                                                                          SUBSTATION.
----------------------------------------------------------------------------------------------------------------------
CAUGHLIN TANK                          041-243-04          14.85 ac       TANK ON MT. ROSE SUBSTATION.
----------------------------------------------------------------------------------------------------------------------
EL RANCHO WELL                         031-021-02          0.08 ac        WELL ON EL RANCHO SUBSTATION.
----------------------------------------------------------------------------------------------------------------------
HIGH STREET WELL                       012-015-07          11,167 SF      WELL ON HIGH STREET SUBSTATION.
----------------------------------------------------------------------------------------------------------------------
HOLCOMB OBSERVATION WELL               014-134-01          0.42 ac        OBSERVATION WELL ON HOLCOMB SUBSTATION.
----------------------------------------------------------------------------------------------------------------------
PEZZI WELL                             012-317-01          14.31 ac       WELL ON OHM ST. PROPERTY
----------------------------------------------------------------------------------------------------------------------
SUTRO BOOSTER #1                       004-130-52          39,916 S.F.    BOOSTER PUMP ON ALAMEDA SUBSTATION
----------------------------------------------------------------------------------------------------------------------
G.O.B. WELL                            025-460-22          41.66 ac       PROPOSED WELL AT SIERRA PLAZA
----------------------------------------------------------------------------------------------------------------------
MILL ST.                               013-083-18          35,532 SF      WELL ON MILL ST. SUBSTATION
----------------------------------------------------------------------------------------------------------------------
IDLEWILD                               010-051-26          9.41 ac        PUMP ON IDLEWILD FACILITY
----------------------------------------------------------------------------------------------------------------------
WASHOE HYDRO                           038-182-01          5.77 ac.       WASHOE SUBSTATION
----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE                      016-020-01          439.9          NEVADA COUNTY
----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE                      016-010-04          Lake           NEVADA COUNTY
----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE                      016-010-03          40             NEVADA COUNTY
----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE                      016-020-09          Lake           NEVADA COUNTY
----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE                      016-010-07          65.85          NEVADA COUNTY
----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE                      016-010-05          135.33         NEVADA COUNTY
----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE                      016-010-02          241.73         NEVADA COUNTY
----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE                      019-050-007         178.5          SIERRA COUNTY
----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE                      019-060-08          682.36         SIERRA COUNTY
----------------------------------------------------------------------------------------------------------------------
INDEPENDENCE LAKE                      019-060-10          Lake           SIERRA COUNTY
----------------------------------------------------------------------------------------------------------------------
WASHOE HIGHLAND DIVERSION              038-430-11          40.05          DIVERSION FOR HIGHLAND CANAL
----------------------------------------------------------------------------------------------------------------------
</TABLE>
*Acreage listed is for the servient estate; easement acreage will be available
in the legal description.
<PAGE>

Other Real Property:  Truckee River Corridor

-------------------------------------------------------------------------
NAME                      COUNTY            A.P.N.           ACRES
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-030-06            641.28
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-030-12            224.46
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-040-01            276.36
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-040-02             38.68
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-040-09              3.64
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-050-01              3.97
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-050-09             51.49
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-050-10             37.63
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-050-11              5.96
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-050-13             57.42
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-060-06               353
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-130-13             33.32
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-130-02               146
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-060-08               640
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-060-11              70.3
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-110-08              19.5
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-110-09            161.21
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-120-05             135.8
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-120-06             12.89
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-120-07            131.11
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-120-08              52.6
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-120-11               4.5
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-120-15                 5
-------------------------------------------------------------------------
TRUCKEE CANYON            SIERRA            023-120-01             326.1
-------------------------------------------------------------------------
TRUCKEE CANYON            WASHOE            038-270-10               120
-------------------------------------------------------------------------
TRUCKEE CANYON            WASHOE            038-270-11             93.83
-------------------------------------------------------------------------
TRUCKEE CANYON            WASHOE            038-190-18                40
-------------------------------------------------------------------------
TRUCKEE CANYON            WASHOE            048-010-06             27.22
-------------------------------------------------------------------------
TRUCKEE CANYON            NEVADA            048-030-13             55.21
-------------------------------------------------------------------------
                                                                3,768.48
-------------------------------------------------------------------------

Customer Information System (CIS)

Proprietary Facility Design and Mapping Software

Hi Band 800 MHZ frequency and Radio Equipment

Telephone System Leased Centrex Lines and Equipment
<PAGE>

Office Space at 6100 Niel Road, Reno, NV 89511

Office Space at 1 Ohm Place, Reno, NV 89502

Office Space at 11 Ohm Place, Reno, NV 89502

Warehouse/Material Storage Space at 11 Ohm, Reno, NV 89502

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}]]