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                                                                    Exhibit 10.2

                               SECURITY AGREEMENT

THIS SECURITY AGREEMENT ("AGREEMENT") is entered into as of September 2, 2005 by
and among PowerSecure, Inc., a Delaware corporation, with offices at 230 Capcom
Avenue, Suite 107, Wake Forest, North Carolina 27587 ("GRANTOR"), and First
National Bank of Colorado, with offices at 3033 Iris Avenue, Boulder, CO 80301
("LENDER").

                                    RECITALS

     A. Pursuant to that certain Credit Agreement among the Grantor, Southern
Flow Companies, Inc., a Delaware corporation ("Southern Flow"), Metretek
Incorporated, a Florida corporation ("Metretek"), Metretek Technologies, Inc., a
Delaware corporation ("Guarantor") and Lender of same date hereof (as amended
from time to time, "Credit Agreement"), Grantor and Southern Flow, have executed
two promissory notes: (1) a promissory note of even date herewith, payable to
the order of Lender in the original principal amount of $2,500,000.00 (the
"Facility A Note"), and (2) a promissory note, of even date herewith, payable to
the order of Lender, in the original principal amount of $2,000,000.00 (the
"Facility B Note") (collectively, the Facility A Note and the Facility B Note
referred to herein as the "Notes).

     B. As security for the Notes and any and all other Indebtedness which may
be outstanding from Grantor, Southern Flow, Metretek and Guarantor to Lender
from time to time, and as a condition precedent to the obligations of the Lender
to make the loan as provided in the Credit Agreement, the Grantor has agreed to
execute and deliver this Agreement to Lender.

     NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     1. Definitions. Capitalized terms not otherwise defined in this Agreement
shall have the meanings assigned to them under the Credit Agreement.

          "Control" means (i) in the case of each deposit account, "control" as
     such term is defined in Section 9-104 of the UCC, (ii) in the case of any
     Security Entitlement, "control" as such term is defined in Section 8-106 of
     the UCC, and (iii) in the case of any Commodity Contract, "control" as such
     term is defined in Section 9-106 of the UCC.

          "Documents": any documents (as such term is defined as of the date of
     this Agreement in Article 9 of the UCC for the State of Colorado) that
     relate to any of the Collateral.

          "Indebtedness": all outstanding amounts evidenced by Facility A Note
     and the Facility B Note, together with all other amounts due, or which may
     become due, including but not limited to interest, under this Agreement or
     any of the Loan Documents. Such Indebtedness shall include, without
     limitation, the following: (a) all Advances under the Facility A Note and
     the Facility B Note; (b) the principal amount of the Facility A Note; all
     interest which accrues on any such indebtedness, until payment of such
     indebtedness in full, including, without limitation, all interest provided
     for under this Agreement or any other Loan Documents; (c) all other monies
     payable by Grantor, and all obligations and agreements of Grantor to
     Lender; (d) all debts owed, or to be owed, by Grantor to others which
     Lender has obtained, or may obtain, by assignment or otherwise, including,
     without limitation, debts acquired by Lender from its affiliates that arise
     either (i) from negative balances which may

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     exist from time to time in any operating, deposit or other account
     maintained with such affiliate of Lender, or (ii) under any credit card
     line of credit established by such affiliate of Lender for Grantor; (e) all
     monies payable by any Third Party, and all obligations and agreements of
     any Third Party to Lender, pursuant to any of the Loan Documents; and (f)
     all monies due, and to become due, in any way under the Loan Documents.

          "Intellectual Property": all copyrights, copyright licenses, patents,
     patent licenses, trademarks, trademark licenses, and all other intellectual
     property of the Grantor.

     2. Grant of Security Interest in the Collateral. Grantor hereby grants to
the Lender, to secure the payment and performance in full of the Indebtedness of
the Grantor, a security interest in and pledges and assigns to the Lender the
following properties, assets and rights of the Grantor, consisting of all
corporate and business assets, properties and rights of the Grantor wherever
located, whether now owned or hereafter acquired or arising, and all proceeds,
products, and accessions thereof, including but not limited to, the following
(all of the same being hereinafter called the "Collateral"):

     (a) All Accounts, as extracted collateral, goods, general intangibles,
chattel paper, documents, and Instruments, whether or not specifically assigned
to Lender, including, without limitation, all Accounts, and all equipment
(whether or not affixed to realty), motor vehicles, furniture and fixtures;

     (b) All guaranties, collateral, Liens on, or security interests in, real or
personal property, leases, letter of credit rights and other rights, agreements,
and property securing or relating to payment of Accounts;

     (c) All trademarks, trademark rights, patents, patent rights, licenses,
permits, trade names, trade name rights, and approvals, including, without
limitation, those listed on Schedule 4.1(c) of the Credit Agreement, together
with all goodwill, income, royalties, damages and payments now and hereafter due
and payable thereunder and with respect thereto. Lender does not currently
intend to file financing statements on foreign trademarks or patents but
reserves the right to do so in the future at Lender's discretion;

     (d) All contracts and agreements (whether written or oral) between Grantor
and third parties (collectively, the "Assigned Agreements");

     (e) The entire goodwill and all product lines of Grantor's business and
other general intangibles of Grantor, including, without limitation, know-how,
trade secrets, customer lists, proprietary information, inventions, methods,
procedures and formulae in connection with the use of and symbolized by the
trademarks of Grantor.

     (f) All books, records, ledger cards, data processing records, computer
software, and other property at any time evidencing or relating to the
Collateral;

     (g) All monies, securities (including a pledge of all stock owned in any
Affiliate and other property now or hereafter held, or received by, or in
transit to, Lender from or for Grantor, and all of Grantor's investment property
and financial assets (as each is defined in the UCC)), deposit accounts,
credits, and balances with Lender or any third party existing at any time;

     (h) All parts, accessories, attachments, special tools, additions,
replacements, substitutions, and accessions to or for all of the foregoing;

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     (i) Any and all other personal property of Grantor; and

     (j) All proceeds and products of all of the foregoing in any form,
including, without limitation, amounts payable under any policies of insurance
insuring the foregoing against loss or damage, and all increases and profits
received from all of the foregoing.

     The Grantor and the Lender hereby acknowledge and agree that the security
interest created hereby in the Collateral (i) constitutes continuing collateral
security for all of the Indebtedness, whether now existing or hereafter arising
and (ii) is not to be construed as an assignment of any Intellectual Property.
Any of the foregoing to the contrary notwithstanding, the Collateral shall not
include, and the security interest granted herein shall not attach to, any asset
subject to a rule of law, statute or regulation or of a lease agreement or any
general intangible (including a contract, permit, license or franchise) or a
Permitted Lien, where the grant of such security interest would invalidate or
constitute a breach or violation of any such rule of law, statute, regulation,
lease agreement or general intangible or agreement or agreements creating or
giving rise to such Permitted Lien, provided that the limitation set forth in
this sentence shall (i) exist only for so long as such rule of law, statute,
regulation, lease agreement or general intangible or agreement and the Permitted
Lien created therein continue to be effective (and, upon the cessation,
termination, expiration of such rule of law, statute, regulation, lease
agreement or general intangible or Permitted Lien, or if any such rule of law,
statute or regulation is no longer applicable, the security interest granted
herein shall be deemed to have automatically attached to such asset) and (ii)
not apply with respect to any asset if and to the extent that the prohibition or
restriction on the security interest in and to such asset granted in this
Agreement is rendered ineffective under Sections 9-406, 9-407, 9-408, or 9-409
of the UCC.

     3. Provisions Relating to Accounts and Assigned Agreements.

     (a) Anything herein to the contrary notwithstanding, nothing contained
herein shall relieve Grantor under each of its Accounts and Assigned Agreements
to observe and perform all the conditions and obligations to be observed and
performed by it thereunder. Neither the Lender nor any Lender shall have any
obligation or liability under any Account (or any agreement giving rise thereto)
and Assigned Agreement by reason of or arising out of this Agreement or the
receipt by the Lender or any Lender of any payment relating to such Account or
Assigned Agreement pursuant hereto, nor shall the Lender or any Lender be
obligated in any manner to perform any of the obligations of Grantor under or
pursuant to any Account (or any agreement giving rise thereto) or Assigned
Agreements to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto) or Assigned Agreement, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.

     (b) Upon the Lender's request and at the expense of the Grantor, the
Grantor shall cause an independent party designated by Lender to furnish to the
Lender reports showing reconciliations, aging and test verifications of, and
trial balances for, the Accounts. Upon the occurrence and during the continuance
of an Event of Default, the Lender in its own name or in the name of others may
communicate with account debtors on the Accounts to verify with them to the
Lender's satisfaction the existence, amount and terms of any Accounts.

     4. Representations and Warranties. Grantor hereby represents and warrants
to the Lender that until all of the Indebtedness have been repaid in full:

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     (a) Ownership. Grantor is the legal and beneficial owner of its Collateral
and has the right to pledge, sell, assign or transfer the same.

     (b) Security Interest/Priority. This Agreement creates a valid security
interest in favor of Lender, in the Collateral of Grantor and, when properly
perfected by filing or upon the Lender's obtaining Control of such Collateral,
shall constitute a valid first priority, perfected security interest in such
Collateral, to the extent such security interest can be perfected by filing or
through Control under the UCC, free and clear of all Liens except for Permitted
Liens.

     (c) Consents. Except for the filing or recording of UCC termination
statements, UCC financing statements or obtaining Control to perfect the Liens
created by this Agreement that may be perfected through the filing of a UCC
financing statement or obtaining Control, no consent or authorization of, filing
with, or other act by or in respect of, any arbitrator or governmental authority
and no consent of any other Person (including, without limitation, any
stockholder, member or creditor of Grantor), is required (except as such have
been duly obtained, made or given and are in full force and effect) (i) for the
grant by Grantor of the security interest in the Collateral granted hereby or
for the execution, delivery or performance of this Agreement by Grantor or (ii)
for the perfection of such security interest or the exercise by the Lender of
the rights and remedies provided for in this Agreement.

     (d) Types of Collateral. None of the Collateral consists of, or is the
proceeds of, as-extracted collateral, consumer goods, farm products,
manufactured homes or standing timber (as each such term is used in the UCC).

     (e) Accounts. With respect to Grantor's Accounts: (i) the goods sold,
rented or leased, licensed, or assigned and/or services furnished giving rise to
each Account are not subject to any security interest or Lien except the first
priority, perfected security interest granted to the Lender herein and except
for Permitted Liens; (ii) each Account and the papers and documents of the
applicable Grantor relating thereto are genuine and in all material respects
what they purport to be; (iii) each Account arises out of a bona fide
transaction for goods sold and delivered (or in the process of being delivered),
leased, licensed, or assigned by Grantor or for services actually rendered by
Grantor, which transaction was conducted in the ordinary course of the Grantor's
business and was completed in all material respects in accordance with the terms
of any documents pertaining thereto; (iv) no Account of Grantor is evidenced by
any Instrument unless upon Lender's request, such Instrument has been endorsed
over and delivered to, or submitted to the control of, the Lender; (v) the
amount of each Account as shown on the applicable Grantor's books and records,
and on all invoices and statements which may be delivered to the Lender with
respect thereto, is due and payable to Grantor; (vi) to Grantor' knowledge, the
account debtor with respect to each Account has the capacity to contract; (vii)
to Grantor's knowledge, there are no proceedings or actions that are threatened
or pending against any account debtor whose business is material to the Obligors
and their Subsidiaries taken as a whole that are reasonably likely to have a
Material Adverse Effect and (viii) no surety bond was required or given in
connection with any Account of Grantor or the contracts or purchase orders out
of which they arose.

     (f) Intellectual Property.

               (i) As of the date of this Agreement, all of Grantor's
          Intellectual Property comprised of its registered patents, patent
          applications, registered trademarks, and its trademark applications is
          listed in the Schedules to the Credit Agreement. In the event Grantor
          creates or acquires any additional Intellectual Property which is, or
          application is made to have it, registered, it will notify the

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          Lender thereof and furnish to it a Schedule (an "Intellectual Property
          Schedule") showing all such Intellectual Property which is owned by or
          licensed (pursuant to a written license) by or to Grantor as of the
          date thereof. Such Intellectual Property Schedule shall show the
          place, if any, in which each such Intellectual Property is registered.
          Clauses (ii) through (vii) below shall apply only to any Intellectual
          Property that is required to be described in an Intellectual Property
          Schedule furnished pursuant to the foregoing.

               (ii) Except as set forth in the Schedules to the Credit
          Agreement, to Grantor's knowledge, all such registered Intellectual
          Property of Grantor is valid, subsisting, unexpired, enforceable and
          has not been abandoned, and to Grantor's knowledge, Grantor is legally
          entitled to use each of its registered Trademarks.

               (iii) Except as set forth in the Schedules to the Credit
          Agreement, none of Grantor's Intellectual Property is the subject of
          any licensing or franchise agreement.

               (iv) No holding, decision or judgment has been rendered by any
          governmental authority which would materially limit, cancel or
          question the validity of any Intellectual Property of Grantor.

               (v) No action or proceeding is pending seeking to limit, cancel
          or question the validity of any Intellectual Property of Grantor in
          any material respect, or which, if adversely determined, would have a
          Material Adverse Effect on the value of any such Intellectual
          Property.

               (vi) To Grantor's knowledge, all applications pertaining to any
          Intellectual Property of Grantor have been duly and properly filed,
          and all registrations or letters pertaining to such Intellectual
          Property have been duly and properly filed and issued, and Grantor is
          not aware of any challenges that would make any of such Intellectual
          Property invalid or unenforceable except as set forth in the Schedules
          to the Credit Agreement.

               (vii) Grantor has not made any assignment or agreement respecting
          any Intellectual Property which would conflict with the security
          interest of the Lender in such Intellectual Property granted
          hereunder.

     (g) Documents and Instruments. All Documents and Instruments are, to
Grantor's knowledge, complete, valid, and genuine.

     (h) Restrictions on Security Interest. Grantor is not party to any license
or other agreements that would materially limit the Lender's (or any of the
Lender's transferees) right to sell, lease, or otherwise use any Inventory upon
the Lender's proper exercise of its remedies hereunder.

     (i) Purchase of Collateral. Within the 12-month period preceding the
Closing Date, Grantor has not purchased any of the Collateral consisting of
goods in a transaction that to the Grantor' knowledge, was outside the ordinary
course of the business of Grantor's seller.

     5. Covenants. Grantor covenants that, until all of the Indebtedness have
been paid in full, Grantor shall:

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     (a) Other Liens. Use commercially reasonable efforts to defend the
Collateral against the claims and demands of all other parties claiming an
interest therein, and keep the Collateral free from all Liens, except for
Permitted Liens. Such Grantor shall not sell, exchange, transfer, assign, lease
or otherwise dispose of any of the Collateral or any interest therein, except as
permitted under the Credit Agreement or any of the other Loan Documents.

     (b) Preservation of Collateral. Use commercially reasonable efforts to keep
the Collateral in good order, condition and repair in all material respects; not
use the Collateral in any material respect in violation of the provisions of
this Agreement; not use the Collateral in any material respect in violation of
any other agreement relating to the Collateral or any policy insuring the
Collateral or any applicable statute, law, bylaw, rule, regulation or ordinance;
and not permit any Collateral to be or become a fixture to real property or an
accession to other personal property unless the Lender has a valid, perfected
and first priority security interest for the benefit of the Lender in such real
or personal property.

     (c) Possession or Control of Certain Collateral. If any Collateral shall
consist of deposit accounts, letter-of-credit rights or uncertificated
investment property, execute and deliver (and, with respect to any Collateral
consisting of uncertificated investment property, cause the securities
intermediary or commodities intermediary with respect to such investment
property to execute and deliver) to the Lender, upon the Lender's request, all
control agreements, assignments, Instruments or other documents as reasonably
requested by the Lender for the purposes of obtaining and maintaining Control of
such Collateral.

     (d) Changes in Corporate Structure or Location. Not, without providing 30
days prior written notice to the Lender and without filing (or confirming that
the Lender has filed) such amendments to any previously filed financing
statements as the Lender may require, (i) alter its corporate existence or, in
one transaction or a series of transactions, merge into or consolidate with any
other entity, or sell all or substantially all of its assets, (ii) change its
state of incorporation or formation, (iii) change its registered corporate name,
(iv) change the location of its chief executive office and chief place of
business (as well as its books and records) from the locations set forth on
Exhibit A hereto.

     (e) Inspection. Allow the Lender or its representatives, with reasonable
advance notice, to call at Grantor's places of business at any reasonable time
during regular business hours, and, without hindrance or delay, to inspect the
Collateral and to inspect, audit, check and make extracts from Grantor's books,
records, journals, orders, receipts, leases, and any correspondence and other
data relating to Grantor's business, the Collateral or any transactions between
the parties hereto, and shall have the right to make such verification
concerning Grantor's business as Lender may consider reasonable under the
circumstances. Grantor shall furnish to Lender such information relevant to
Lender's rights under this Agreement, as Lender shall at any time and from time
to time request. Grantor authorizes Lender to discuss the affairs, finances and
business of Grantor with any officers, directors and employees of Grantor
authorized by Grantor or with any Affiliate of Grantor or the officers,
directors and employees of any Affiliate of Grantor, and to discuss the
financial condition of Grantor with Grantor's independent public accountants.
Any such discussions shall be without liability to Lender or to Grantor's
independent public accountants. Grantor shall pay to Lender all customary fees
and out-of-pocket expenses incurred by Lender in the exercise of its rights
hereunder, and all of such fees and expenses shall be payable by Grantor on
demand; .

     (f) Perfection of Security Interest. Grantor hereby authorizes Lender to
prepare and file such financing statements and notices (including renewal
statements and in lieu statements) or amendments thereof or supplements thereto
or other instruments as the Lender may from time to time

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deem necessary or appropriate to perfect and maintain the security interests
granted hereunder in accordance with the UCC and the rules and regulations of
the United States Patent and Trademark Office and, subject to Permitted Liens,
to ensure the first priority of such security interests. Any financing statement
filed by the Lender may contain a general description of the collateral covered
thereby, as permitted by the UCC and the rules and regulations of the United
States Patent and Trademark Office, which states that the security interest
attaches to all personal property or to all assets of the Grantor. Grantor shall
from time to time upon request by the Lender also execute and deliver to the
Lender such agreements, assignments or instruments (including affidavits,
notices, reaffirmations and amendments and restatements of existing documents,
as the Lender may reasonably request) and do all such other things as the Lender
may reasonably deem necessary or appropriate (i) to assure the Lender that its
security interests hereunder are perfected and, subject to Permitted Liens, of
the first priority, including, without limitation, such financing statements
(including renewal statements and in lieu statements) or amendments thereof or
supplements thereto or other instruments as the Lender may from time to time
reasonably request in order to perfect and maintain the security interests
granted hereunder and to ensure the first priority (subject to Permitted Liens)
thereof in accordance with the UCC; (ii) to consummate the transactions
contemplated hereby and (iii) to otherwise protect and assure the Lender of its
rights and interests hereunder. Grantor hereby irrevocably authorizes and
appoints the Lender as Grantor's attorney-in-fact, at Grantor's cost and
expense, to file, record and register any and all of the Lender's security
interest in Intellectual Property of the Grantor with the United States Patent
and Trademark Office or the United States Copyright Office. In the event for any
reason the law of any jurisdiction other than Colorado becomes or is applicable
to the Collateral of Grantor or any part thereof, or to any of the Indebtedness,
Grantor agrees from time to time upon request of the Lender to execute and
deliver all such instruments and to do all such other things as the Lender in
its reasonable discretion deems necessary or appropriate to preserve, protect
and enforce the security interests of the Lender and the first priority thereof
(subject to Permitted Liens) under the law of such other jurisdiction (and, if
Grantor shall fail to do so promptly upon the request of the Lender, then the
Lender may execute any and all such requested documents on behalf of Grantor
pursuant to the power of attorney granted hereinabove). Such Grantor agrees to
mark its books and records to reflect the security interest of the Lender in the
Collateral.

     (g) Treatment of Accounts. (i) not grant or extend the time for payment of
any Account, or compromise or settle any Account for less than the full amount
thereof, or release any person or property, in whole or in part, from payment
thereof, or allow any credit or discount thereon, in each case other than as
normal and customary in the ordinary course of Grantor's business, (ii) maintain
at its principal place of business a record of Accounts consistent with its
customary business practices, (iii) upon the occurrence and during the
continuation of any Event of Default, set aside and hold as trustee for the
Lender any merchandise that is returned by a customer or account debtor or
otherwise recovered. Unless and until an Event of Default occurs and is
continuing, Grantor may settle and adjust disputes and claims with its customers
and account debtors, handle returns and recoveries and grant discounts, credits
and allowances in the ordinary course of its business as presently conducted and
otherwise for amounts and on terms which Grantor in good faith considers
advisable. However, upon the occurrence of any Event of Default and during the
continuation thereof, if so instructed by the Lender, Grantor shall settle and
adjust disputes and claims, at no expense to the Lender, but no discount, credit
or allowance other than on normal trade terms in the ordinary course of business
shall be granted to any customer or account debtor and no returns of merchandise
shall be accepted by Grantor without the Lender's consent. The Lender may (but
shall not be required to), at all times upon the occurrence of any Event of
Default and during the continuation thereof, settle or adjust disputes and
claims directly with customers or account debtors for amounts and upon terms
which the Lender considers advisable.

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     (h) Covenants Relating to Inventory.

               (i) Use commercially reasonable efforts to maintain, keep and
          preserve its Inventory in good salable condition at its own cost and
          expense.

               (ii) If any item of Inventory having a book value of greater than
          $25,000 is at any time evidenced by a Document, promptly upon request
          by the Lender, deliver such document of title to the Lender.

     (i) Bank Accounts/Investment Property. Upon the request of Lender, Grantor
shall obtain control agreements in a form acceptable to Lender, to establish
Control for Lender over securities accounts, security entitlements, and deposit
accounts held or placed with any securities intermediary or other third person.
Prior to an Event of Default, Grantor shall be entitled to provide trading
instructions to any securities intermediary and Lender shall not, prior to an
Event of Default, tender a notice of exclusive control over any such account.

     (j) Insurance. Insure the Collateral of Grantor in such amounts, and with
such insurance companies, as are customary for the industry and as may be
acceptable to the Lender hereunder. All insurance proceeds shall be subject to
the security interest of the Lender hereunder.

     6. Special Provisions Relating to Accounts. Anything herein to the contrary
notwithstanding, nothing contained herein shall relieve Grantor from any
obligation under each of the Accounts to observe and perform all the conditions
and obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account. The Lender
shall not have any obligation or liability under any Account (or any agreement
giving rise thereto) by reason of or arising out of this Agreement or the
receipt by the Lender of any payment relating to such Account pursuant hereto,
nor shall the Lender be obligated in any manner to perform any of the
obligations of Grantor under or pursuant to any Account (or any agreement giving
rise thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

     7. Special Provisions Regarding Inventory. Notwithstanding anything to the
contrary contained in this Agreement, Grantor may, unless and until an Event of
Default occurs and is continuing and the Lender instructs Grantor otherwise,
without further consent or approval of the Lender, use, consume, sell, rent,
lease and exchange the Inventory in the ordinary course of its business as
presently conducted, whereupon, in the case of such a sale or exchange, the
security interest created hereby in the Inventory so sold or exchanged (but not
in any proceeds arising from such sale or exchange) shall cease immediately
without any further action on the part of the Lender.

     8. Performance of Obligations; Advances by Lender. Upon the occurrence and
during the continuance of an Event of Default, upon the failure of any Grantor
to perform any of the covenants and agreements contained herein, the Lender may,
in its reasonable discretion, perform or cause to be performed the same and in
so doing may (but shall have no obligation to do so) expend such sums as the
Lender may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the payment of any
taxes, a payment to obtain a release of a Lien or potential lien (other than a
Permitted Lien), expenditures made in defending against any adverse claim (other
than a Permitted Lien) and all other expenditures which the Lender may make for
the protection of the security interest hereof or may be compelled to make

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by operation of law. All such sums and amounts so expended shall be repayable by
the Grantor upon demand, shall constitute additional Indebtedness and shall bear
interest from the date said amounts are expended at the Default Rate. No such
performance of any covenant or agreement by the Lender on behalf of any Grantor,
and no such advance or expenditure therefor, shall relieve the Grantor of any
default under the terms of this Agreement or any of the other Loan Documents.
The Lender may make any payment hereby authorized in accordance with any bill,
statement or estimate procured from the appropriate public office or holder of
the claim to be discharged without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such payment is being
contested in good faith by Grantor in appropriate proceedings and against which
adequate reserves are being maintained in accordance with GAAP.

     9. Events of Default. An Event of Default under the Credit Agreement shall
constitute an "Event of Default" hereunder.

     10. Remedies.

     (a) General Remedies. Upon the occurrence of an Event of Default and during
continuation thereof, the Lender shall have, in addition to the rights and
remedies provided herein, in the Documents, or by law (including, but not
limited to, levy of attachment, garnishment and the rights and remedies set
forth in the Uniform Commercial Code of the jurisdiction applicable to the
affected Collateral), the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where the rights
and remedies are asserted and regardless of whether the UCC applies to the
affected Collateral), and further, the Lender may, with or without judicial
process or the aid and assistance of others, (i) enter on any premises on which
any of the Collateral may be located and, without resistance or interference by
the Grantor, take possession of the Collateral, (ii) dispose of any Collateral
on any such premises, (iii) require the Grantor to assemble and make available
to the Lender at the expense of the Grantor any Collateral at any place and time
designated by the Lender which is reasonably convenient to both parties, (iv)
remove any Collateral from any such premises for the purpose of effecting sale
or other disposition thereof, and/or (v) at any place and time or times, sell
and deliver any or all Collateral held by or for it at public or private sale,
by one or more contracts, in one or more parcels, for cash, upon credit or
otherwise, at such prices and upon such terms as the Lender deems advisable, in
its sole discretion. The Grantor agrees that it shall not assert that any action
taken by the Lender in compliance with any applicable state or federal law in
the conduct of such sale, nor in disclaiming any warranties relating to the
Collateral, made such sale not commercially reasonable. In addition to all other
sums due the Lender with respect to the Indebtedness, the Grantor shall pay the
Lender all reasonable costs and expenses incurred by the Lender, including, but
not limited to, reasonable attorneys' fees and court costs, in obtaining or
liquidating the Collateral, in enforcing payment of the Indebtedness, or in the
prosecution or defense of any action or proceeding by or against the Lender or
the Grantor concerning any matter arising out of or connected with this
Agreement, any Collateral or the Indebtedness, including, without limitation,
any of the foregoing arising in, arising under or related to a case under any
bankruptcy, insolvency or similar law. To the extent the rights of notice cannot
be legally waived hereunder, each Grantor agrees that any requirement of
reasonable notice shall be met if such notice is personally served on or mailed,
postage prepaid, to the Grantor in accordance with the notice provisions of
Section 17 at least ten (10) days before the time of sale or other event giving
rise to the requirement of such notice. The Lender shall not be obligated to
make any sale or other disposition of the Collateral regardless of notice having
been given. To the extent permitted by law, the Lender may be a purchaser at any
such sale. To the extent permitted by applicable law, Grantor hereby waives all
of its rights of redemption with respect to any such sale. Subject to the
provisions of applicable law, the Lender may postpone or cause the postponement
of the sale of all or any portion

                                        9

<PAGE>

of the Collateral by announcement at the time and place of such sale, and such
sale may, without further notice, to the extent permitted by law, be made at the
time and place to which the sale was postponed, or the Lender may further
postpone such sale by announcement made at such time and place.

     (b) Remedies Relating to Accounts. Upon the occurrence of an Event of
Default and during the continuation thereof, whether or not the Lender has
exercised any or all of its rights and remedies hereunder, the Lender shall have
the right to (i) enforce any Grantor's rights against any account debtors and
Grantor's Accounts (ii) notify (or cause its designee to notify) any of
Grantor's customers and account debtors that the Accounts of Grantor have been
assigned to the Lender or of the Lender's security interest therein, (iii)
(either in its own name or in the name of an Grantor or both) demand, collect,
receive, take receipt for, sell, sue for, compound, settle, compromise and give
acquittance for any and all amounts due or to become due on any Account, and
(iv) in the Lender's discretion, file any claim or take any other action or
proceeding to protect and realize upon the security interest of the Lender in
the Accounts. Grantor acknowledges and agrees that, after the occurrence and
during the continuance of any Event of Default, the proceeds of its Accounts
remitted to or on behalf of the Lender in accordance with the provisions hereof
shall be solely for the Lender's own convenience and that Grantor shall not have
any right, title or interest in such proceeds or in any such other amounts
except as expressly provided herein. The Lender shall have no liability or
responsibility to any Grantor for acceptance of a check, draft or other order
for payment of money bearing the legend "payment in full" or words of similar
import or any other restrictive legend or endorsement or be responsible for
determining the correctness of any remittance. Grantor hereby agrees to
indemnify the Lender from and against all liabilities, damages, losses, actions,
claims, judgments, costs, expenses, charges and reasonable attorneys' fees
suffered or incurred by the Lender (each, an "Indemnified Party") because of the
maintenance of the foregoing arrangements except as relating to or arising out
of the gross negligence or willful misconduct of an Indemnified Party or its
officers, employees or agents. In the case of any investigation, litigation or
other proceeding, the foregoing indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by Grantor, its directors,
shareholders or creditors or an Indemnified Party or any other Person or any
other Indemnified Party is otherwise a party thereto. The Lender shall have no
liability or responsibility to any Grantor accepting any check, draft or other
order for payment of money bearing the legend "payment in full" or words of
similar import or any other restrictive legend or endorsement whatsoever or be
responsible for determining the correctness of any remittance.

     (c) Access. In addition to the rights and remedies hereunder, upon the
occurrence of an Event of Default and during the continuation thereof, (i) the
Lender shall have the right to enter and remain upon the various premises of the
Grantor without cost or charge to the Lender, and use the same, together with
materials, supplies, books and records of the Grantor for the purpose of
collecting and liquidating the Collateral, or for preparing for sale and
conducting the sale of the Collateral, whether by foreclosure, auction or
otherwise, (ii) the Lender may remove Collateral, or any part thereof, from such
premises and/or any records with respect thereto, in order to effectively
collect or liquidate such Collateral and (iii) if the Lender exercises its right
to take possession of the Collateral, Grantor shall also at its expense perform
any and all other steps reasonably requested by the Lender to preserve and
protect the security interest hereby granted in the Collateral, such as placing
and maintaining signs indicating the security interest of the Lender, appointing
overseers for the Collateral and maintaining inventory records.

     (d) Nonexclusive Nature of Remedies. Failure by the Lender to exercise any
right, remedy or option under this Agreement, any other Loan Document, or as
provided by law, or any delay by the Lender in exercising the same, shall not
operate as a waiver of any such right, remedy or option. No waiver hereunder
shall be effective unless it is in writing, signed by the party against

                                       10

<PAGE>

whom such waiver is sought to be enforced and then only to the extent
specifically stated, which in the case of the Lender shall only be granted as
provided herein. To the extent permitted by law, neither the Lender, nor any
party acting as attorney for the Lender, shall be liable hereunder for any acts
or omissions or for any error of judgment or mistake of fact or law other than
their gross negligence or willful misconduct hereunder. The rights and remedies
of the Lender under this Agreement shall be cumulative and not exclusive of any
other right or remedy which the Lender may have.

     (e) Retention of Collateral. The Lender may, after providing the notices
required by Section 9-620 of the UCC or otherwise complying with the
requirements of applicable law of the relevant jurisdiction, accept or retain
the Collateral in full or partial satisfaction of the Indebtedness. Unless and
until the Lender shall have provided such notices, however, the Lender shall not
be deemed to have retained any Collateral in satisfaction of any Indebtedness
for any reason.

     (f) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Lender is legally
entitled, the Grantor shall be jointly and severally liable for the deficiency,
together with interest thereon at the Default Rate, together with the costs of
collection and the reasonable fees of any attorneys employed by the Lender to
collect such deficiency. Any surplus remaining after the full payment and
satisfaction of the Indebtedness shall be returned to the Grantor or to
whomsoever a court of competent jurisdiction shall determine to be entitled
thereto.

     (g) Other Security. To the extent that any of the Indebtedness are now or
hereafter secured by property other than the Collateral (including, without
limitation, real and personal property owned by Grantor), or by a guarantee,
endorsement or property of any other Person, then the Lender shall have the
right to proceed against such other property, guarantee or endorsement upon the
occurrence of any Event of Default, and the Lender shall have the right, in its
sole discretion, to determine which rights, security, Liens, security interests
or remedies the Lender shall at any time pursue, relinquish, subordinate, modify
or take with respect thereto, without in any way modifying or affecting any of
them or any of the Lender's rights or the Indebtedness under this Agreement,
under any other of the Loan Documents.

     (h) Securities Accounts. Upon the occurrence of an Event of Default, Lender
may tender a notice of exclusive control to any securities intermediary for any
securities account.

     11. Rights of the Lender.

     (a) Power of Attorney. Grantor hereby designates and appoints the Lender,
on behalf of the Lender, and each of its designees or agents, as
attorney-in-fact of Grantor, irrevocably and with power of substitution, with
authority to take any or all of the following actions upon the occurrence and
during the continuation of an Event of Default:

               (i) to demand, collect, settle, compromise, adjust, give
          discharges and releases, all as the Lender may reasonably determine;

               (ii) to commence and prosecute any actions at any court for the
          purposes of collecting any Collateral and enforcing any other right in
          respect thereof;

                                       11

<PAGE>

               (iii) to defend, settle, adjust or compromise any action, suit or
          proceeding brought and, in connection therewith, give such discharge
          or release as the Lender may deem reasonably appropriate;

               (iv) to receive, open and dispose of mail addressed to Grantor
          and endorse checks, notes, drafts, acceptances, money orders, bills of
          lading, warehouse receipts or other instruments or documents
          evidencing payment, shipment or storage of the goods giving rise to
          the Collateral of Grantor, or securing or relating to such Collateral,
          on behalf of and in the name of Grantor;

               (v) to sell, assign, transfer, make any agreement in respect of,
          or otherwise deal with or exercise rights in respect of, any
          Collateral or the goods or services which have given rise thereto, as
          fully and completely as though the Lender were the absolute owner
          thereof for all purposes;

               (vi) to adjust and settle claims under any insurance policy
          relating thereto;

               (vii) to execute and deliver all assignments, conveyances,
          statements, financing statements, renewal financing statements,
          security agreements, affidavits, notices and other agreements,
          instruments and documents that the Lender may determine necessary in
          order to perfect and maintain the security interests and Liens granted
          in this Agreement and in order to fully consummate all of the
          transactions contemplated herein;

               (viii) to institute any foreclosure proceedings that the Lender
          may deem appropriate; and

               (ix) to do and perform all such other acts and things as the
          Lender may reasonably deem to be necessary, proper or convenient in
          connection with the Collateral.

     This power of attorney is a power coupled with an interest and shall be
irrevocable until all of the Indebtedness have been paid in full. The Lender
shall be under no duty to exercise or withhold the exercise of any of the
rights, powers, privileges and options expressly or implicitly granted to the
Lender in this Agreement, and shall not be liable for any failure to do so or
any delay in doing so. The Lender shall not be liable for any act or omission or
for any error of judgment or any mistake of fact or law in its individual
capacity or its capacity as attorney-in-fact except acts or omissions resulting
from its gross negligence or willful misconduct. This power of attorney is
conferred on the Lender solely to protect, preserve and realize upon its
security interest in the Collateral.

     (b) Assignment by the Lender. Subject to the terms of the Credit Agreement,
the Lender may from time to time assign the Indebtedness and any portion thereof
and/or the Collateral and any portion thereof, and the assignee shall be
entitled to all of the rights and remedies of the Lender under this Agreement in
relation thereto.

     (c) The Lender's Duty of Care. Other than the exercise of reasonable care
to assure the safe custody of the Collateral while being held by the Lender
hereunder, the Lender shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Grantor shall be
responsible for preservation of all rights in the Collateral, and the Lender
shall be relieved of

                                       12

<PAGE>

all responsibility for the Collateral upon surrendering it or tendering the
surrender of it to the Grantor. The Lender shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Lender accords its own property, which shall be no less than the
treatment employed by a reasonable and prudent agent in the industry, it being
understood that the Lender shall not have responsibility for taking any
necessary steps to preserve rights against any parties with respect to any of
the Collateral. In the event of a public or private sale of Collateral pursuant
to Section 11 hereof, the Lender shall have no obligation to clean up, repair or
otherwise prepare the Collateral for sale.

     12. Application of Proceeds. Upon the occurrence and during the
continuation of an Event of Default, any payments in respect of the Indebtedness
and any proceeds of the Collateral, when received by the Lender or Lender in
cash or its equivalent, will be applied in reduction of the Indebtedness, first
to the payment of costs and expenses, second to payment of interest, and third
to payment of principal and Grantor irrevocably waives the right to direct the
application of such payments and proceeds and acknowledges and agrees that the
Lender shall have the continuing and exclusive right to apply and reapply any
and all such payments and proceeds in the Lender's sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.

     13. Costs of Counsel. If at any time hereafter, whether upon the occurrence
of an Event of Default or not, the Lender employs counsel to prepare or consider
amendments, waivers or consents with respect to this Agreement, or to take
action or make a response in or with respect to any legal or arbitral proceeding
relating to this Agreement or relating to the Collateral, or to protect the
Collateral or exercise any rights or remedies under this Agreement or with
respect to the Collateral, then the Grantor agrees to promptly pay upon demand
any and all such reasonable costs and expenses of the Lender, all of which costs
and expenses shall constitute Indebtedness hereunder.

     14. Continuing Agreement.

     (a) This Agreement shall be a continuing agreement in every respect and
shall remain in full force and effect until all of the Indebtedness have been
paid in full. Upon the repayment of all Indebtedness, this Agreement shall be
automatically terminated and the Lender shall, upon the request and at the
expense of the Grantor, forthwith release all of its Liens and security
interests hereunder and shall execute, if necessary, and deliver all UCC
termination statements and/or other documents reasonably requested by the
Grantor evidencing such termination. Notwithstanding the foregoing all releases
and indemnities provided hereunder shall survive termination of this Agreement.

     (b) This Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the Indebtedness is rescinded or must otherwise be restored or returned
by the Lender or any Lender as a preference, fraudulent conveyance or otherwise
under any bankruptcy, insolvency or similar law, all as though such payment had
not been made; provided that in the event payment of all or any part of the
Indebtedness is rescinded or must be restored or returned, all reasonable costs
and expenses (including without limitation any reasonable legal fees and
disbursements) incurred by the Lender or any Lender in defending and enforcing
such reinstatement shall be deemed to be included as a part of the Indebtedness.

     15. Amendments; Waivers; Modifications. This Agreement and the provisions
hereof may not be amended and amended other than in writing by an agreement or
agreements entered into by Grantor and Lender, and Lender may waive compliance
by Grantor with any provision of this Agreement; provided, however, that no such
consent, waiver modification, or amendment shall

                                       13

<PAGE>

extend to or affect any obligation not expressly consented to, waived, modified,
or amended, or impair any right consequent on such obligation.

     16. Successors in Interest. This Agreement shall create a continuing
security interest in the Collateral and shall be binding upon each of the
parties hereto, and their respective successors and assigns, and shall inure,
together with all rights and remedies of each of the parties hereto and their
respective permitted successors and assigns.

     17. Notices. All notices and other communications hereunder, unless
otherwise expressly provided, shall be in writing and made by telecopy,
overnight air courier, or certified or registered mail, return receipt
requested, and shall be deemed to be received by the party to whom sent one (1)
Business Day after sending, if sent by telecopy or overnight air courier; and
three (3) Business Days after mailing, if sent by certified or registered mail.
All such notices and other communications to a party hereto shall be addressed
to such party at the address set forth below or to such other address as such
party may designate for itself in a notice to the other party given in
accordance with this Section:

         Lender:    First National Bank of Colorado
                    3033 Iris Avenue
                    Boulder, CO 80301-9032
                    Attn: Greg Atkinson
                    Facsimile: 303-443-0181

         copy to:

                    Deborah M. Kelly
                    Faegre & Benson, LLP
                    1900 Fifteenth Street
                    Boulder, CO 80302
                    Facsimile: 303-447-7800

         Grantor:   PowerSecure, Inc.
                    230 Capcom Avenue, Suite 107
                    Wake Forest, NC 27587
                    Attn: President
                    Facsimile: 919-556-3596

         copy to:   Metretek Technologies, Inc.
                    303 East Seventeenth Street, Suite 660
                    Denver, CO 80203
                    Attn: W. Phillip Marcum, President and CEO
                    Facsimile 303-785-8085

                    and

                    Paul R. Hess, Esq.
                    Kegler, Brown, Hill & Ritter Co., L.P.A.
                    65 East State Street, Suite 1800
                    Columbus, OH 43215
                    Facsimile 614-464-2634

                                       14

<PAGE>

     18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.

     19. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning,
construction or interpretation of any provision of this Agreement.

     20. Governing Law; Submission to Jurisdiction. The provisions of this
Agreement and the respective rights and duties of Grantor and Lender hereunder
shall be governed by and construed in accordance with Colorado law. Grantor
hereby irrevocably submits to the non-exclusive jurisdiction of any Colorado
state or federal court sitting in the State of Colorado, over any action or
proceeding arising out of or relating to this Agreement, or any document related
to the Indebtedness, and Grantor hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such
Colorado state or federal court. The Grantor hereby waives any objection that it
may now or hereafter have to the venue of any such suit or any such court or
that such suit is brought in an inconvenient court.

     21. Waiver of Jury Trial. GRANTOR AND LENDER EACH WAIVE ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE, BETWEEN LENDER AND GRANTOR ARISING OUT OF, IN CONNECTION WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO

     22. Severability. If any provision of any of the Agreement is determined to
be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

     23. Entirety. This Agreement and the other Loan Documents, represent the
entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Loan Documents or the transactions
contemplated herein and therein.

     24. Survival. All representations and warranties of the Grantor hereunder
shall survive the execution and delivery of this Agreement, the delivery of the
Note.

     25. Marshalling. Neither the Lender nor any Lender shall be under any
obligation to marshal any assets in favor of any Grantor or any other Person or
against or in payment of any or all of the Indebtedness.

               [Reminder of this Page is Left Intentionally Blank]

                                       15

<PAGE>

     Each of the parties hereto has caused a counterpart of this Agreement to be
duly executed and delivered as of the date first above written.

"Lender"                                FIRST NATIONAL BANK OF COLORADO

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

"Grantor"                               POWERSECURE, INC.

                                        By:
                                            ------------------------------------
                                            A. Bradley Gabbard,
                                            Executive Vice President and CFO

                                       16

<PAGE>

                                    EXHIBIT A

                             LOCATION OF COLLATERAL

                                       17<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                    EXHIBIT 10.3

                               FIRST NATIONAL BANK
                                   OF COLORADO

                               COMMERCIAL GUARANTY

<Table>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>             <C>           <C>           <C>             <C>           <C>           <C>
        PRINCIPAL            LOAN DATE       MATURITY      LOAN NO.      CALL/COLL       ACCOUNT       OFFICER       INITIALS
                                                                                                        00301
------------------------------------------------------------------------------------------------------------------------------------
 References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular
                                                         loan or item.
                        Any item above containing "****" has been omitted due to text length limitations
------------------------------------------------------------------------------------------------------------------------------------
</Table>

<TABLE>
<S>               <C>                                             <C>           <C>
BORROWER:         SOUTHERN FLOW COMPANIES, INC.                   LENDER:       FIRST NATIONAL BANK OF COLORADO
                  POWERSECURE, INC.                                             MAIN OFFICE
                  132 DEMANDE BOULEVARD                                         3033 IRIS AVENUE
                  LAFAYETTE, LA  70503                                          BOULDER, CO  80301-9032

GUARANTOR:        METRETEK TECHNOLOGIES, INC.
                  303 EAST 17TH AVENUE, SUITE 660
                  DENVER, CO  80203
</TABLE>

================================================================================

AMOUNT OF GUARANTY. The amount of this Guaranty is Unlimited.

CONTINUING UNLIMITED GUARANTY. For the good and valuable consideration, METRETEK
TECHNOLOGIES, INC. ("Guarantor") absolutely and unconditionally guarantees and
promises to pay to First National Bank of Colorado ("Lender") or its order, in
legal tender of the United States of America, the indebtedness (as that term is
defined below) of SOUTHERN FLOW COMPANIES, INC.; and POWERSECURE, INC.
("Borrower"), or either or any of them, to Lender on the terms and conditions
set forth in this Guaranty. Under this Guaranty, the liability of Guarantor is
unlimited and the obligations of Guarantor are continuing.

INDEBTEDNESS GUARANTEED. The Indebtedness guaranteed by this Guaranty includes
any and all of Borrower's indebtedness to Lender and is used in the most
comprehensive sense and means and includes any and all of Borrower's
liabilities, obligations and debts to Lender, now existing or hereinafter
incurred or created, including, without limitation, all loans, advances,
interest, costs, debts, overdraft indebtedness, credit card indebtedness, lease
obligations, other obligations, and liabilities of Borrower, or any of them, and
any present or future judgments against Borrower, or any of them; and whether
any such Indebtedness is voluntarily or involuntarily incurred, due or not due,
absolute or contingent, liquidated or unliquidated, determined or undetermined;
whether Borrower may be liable individually or jointly with others, or primarily
or secondarily, or as guarantor or surety; whether recovery on the Indebtedness
may be or may become barred or unenforceable against Borrower for any reason
whatsoever; and whether the Indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires, or otherwise.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor's other obligations
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at Lender's
address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation. For this purpose and without limitation, the term " new
Indebtedness" does not include Indebtedness which at the time of notice of
revocation is contingent, unliquidated, undetermined or not due and which later
becomes absolute, liquidated, determined or due. This Guaranty will continue to
bind Guarantor for all Indebtedness incurred by Borrower or committed by Lender
prior to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. This Guaranty shall
bind Guarantor's estate as to Indebtedness created both before and after
Guarantor's death or incapacity, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation Lender receives from any one or more Guarantors shall not
affect the liability of any remaining Guarantors under this Guaranty. IT IS
ANTICIPATED THAT FLUCTUATIONS MAY OCCUR IN THE AGGREGATE AMOUNT OF INDEBTEDNESS
COVERED BY THIS GUARANTY, AND GUARANTOR SPECIFICALLY ACKNOWLEDGES AND AGREES
THAT REDUCTIONS IN THE AMOUNT OF INDEBTEDNESS, EVEN TO ZERO DOLLARS ($0.00),
PRIOR TO GUARANTOR'S WRITTEN REVOCATION OF THIS GUARANTY SHALL NOT CONSTITUTE A
TERMINATION OF THIS GUARANTY. THIS GUARANTY IS BINDING UPON GUARANTOR AND
GUARANTOR'S HEIRS, SUCCESSORS AND ASSIGNS SO LONG AS ANY OF THE GUARANTEED
INDEBTEDNESS REMAINS UNPAID AND EVEN THOUGH THE INDEBTEDNESS GUARANTEED MAY FROM
TIME TO TIME BE ZERO DOLLARS ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, WITHOUT NOTICE OR DEMAND AND WITHOUT LESSENING
GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM TIME TO TIME: (A) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (B) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(C) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness; (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion

<PAGE>

                               COMMERCIAL GUARANTY
LOAN NO: 8626865-00               (CONTINUED)                         PAGE 2
================================================================================

may determine; (G) to sell, transfer, assign or grant participations in all or
any part of the Indebtedness; and (H) to assign or transfer this Guaranty in
whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower's request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty; (D) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (F) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor's financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor's financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor's financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (J) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue lending money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender; any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (C) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue any other
remedy within Lender's power; or (G) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses arising by reason of (A)
any "one action" or " anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (B) any
election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (C) any disability of other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (E) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced, there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (F) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower's
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the indebtedness shall be
considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any time
any deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or rights may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law . If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Guarantor's amounts with Lender (whether checking,
savings, or some other account). This includes all accounts Guarantor holds
jointly with someone else and all accounts Guarantor may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Guarantor authorizes Lender, to the
extent permitted by applicable law, to hold these funds if there is a default,
and Lender may apply the funds in these accounts to pay what Guarantor owes
under the term of this Guaranty.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter

<PAGE>

                               COMMERCIAL GUARANTY
LOAN NO: 8626865-00               (CONTINUED)                         PAGE 3
================================================================================

evidencing any debts or obligations of Borrower to Guarantor shall be marked
with a legend that the same are subject to this Guaranty and shall be delivered
to Lender. Guarantor agrees, and Lender is hereby authorized, in the name of
Guarantor, from time to time to file financing statements and continuation
statements and to execute documents and to take such other actions as Lender
deems necessary or appropriate to perfect, preserve and enforce its rights under
this Guaranty.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are part of
this Guaranty:

        AMENDMENTS. This Guaranty, together with any Related Documents,
        constitutes the entire understanding and agreement of the parties as to
        the matters set forth in this Guaranty. No alteration of or amendment to
        this Guaranty shall be effective unless given in writing and signed by
        the party or parties sought to be charged or bound by the alteration or
        amendment.

        ARBITRATION. Borrower and Guarantor and Lender agree that all disputes,
        claims and controversies between them whether individual, joint, or
        class in nature, arising from this Guaranty or otherwise, including
        without limitation contract and tort disputes, shall be arbitrated
        pursuant to the Rules of the American Arbitration Association in effect
        at the time the claim is filed, upon request of either party. No act to
        take or dispose of any Collateral shall constitute a waiver of this
        arbitration agreement or be prohibited by this arbitration agreement.
        This includes without limitation, obtaining injunctive relief or a
        temporary restraining order; invoking a power of sale under any deed of
        trust or mortgage; obtaining a writ of attachment or imposition of a
        receiver; or exercising any rights relating to personal property,
        including taking or disposing of such property with or without judicial
        process pursuant to Article 9 of the Uniform Commercial Code. Any
        disputes, claims, or controversies concerning the lawfulness or
        reasonableness of any act, or exercise of any right, concerning any
        Collateral, including any claim to rescind, reform, or otherwise modify
        any agreement relating to the Collateral, shall also be arbitrated,
        provided however that no arbitrator shall have the right or the power to
        enjoin or restrain any act of any party. Judgment upon any award
        rendered by any arbitrator may be entered in any court having
        jurisdiction. Nothing in this Guaranty shall preclude any party from
        seeking equitable relief from a court of competent jurisdiction. The
        statute of limitations, estoppel waiver, laches, and similar doctrines
        which would otherwise be applicable in an action brought by a party
        shall be applicable in any arbitration proceeding, and the commencement
        of an arbitration proceeding shall be deemed the commencement of an
        action for these purposes. The Federal Arbitration Act shall apply to
        the construction, interpretation, and enforcement of this arbitration
        provision.

        ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of
        Lender's reasonable costs and expenses, including Lender's attorney's
        fees and Lender's legal expenses, incurred in connection with the
        enforcement of this Guaranty. Lender may hire or pay someone else to
        help enforce this Guaranty, and Guarantor shall pay the reasonable costs
        and expenses of such enforcement. Costs and expenses include Lender's
        attorneys' fees and legal expenses whether or not there is a lawsuit,
        including attorneys' fees and legal expenses for bankruptcy proceedings
        (including efforts to modify or vacate any automatic stay or
        injunction), appeals, and any anticipated post-judgment collection
        services. Guarantor also shall pay all court costs and such additional
        fees as may be directed by the court.

        CAPTION HEADINGS. Caption headings in this Guaranty are for convenience
        purposes only and are not to be used to interpret or define the
        provisions of this Guaranty.

        GOVERNING LAW. This Guaranty will be governed by federal law applicable
        to Lender and, to the extent not preempted by federal law, the laws of
        the State of Colorado without regard to its conflicts of law provisions.
        This Guaranty has been accepted by Lender in the State of Colorado.

        CHOICE OF VENUE. If there is a lawsuit, Guarantor agrees upon Lender's
        request to submit to the jurisdiction of the courts of Boulder County,
        State of Colorado.

        INTEGRATION. Guarantor further agrees that Guarantor has read and fully
        understands the terms of this Guaranty; Guarantor has had the
        opportunity to be advised by Guarantor's attorney with respect to this
        Guaranty, the Guaranty fully reflects Guarantor's intentions and parole
        evidence is not required to interpret the terms of this Guaranty.
        Guarantor hereby indemnifies and holds Lender harmless from all losses,
        claims, damages, and costs (including Lender's attorneys' fees) suffered
        or incurred by Lender as a result of any breach by Guarantor of the
        warranties, representations and agreements of this paragraph.

        INTERPRETATION. In all cases where there is more than one Borrower or
        Guarantor, then all words used in this Guaranty in the singular shall be
        deemed to have been used in the plural where the context and
        construction so require; and when there is more than one Borrower named
        in this Guaranty or when this Guaranty is executed by more than one
        Guarantor, the words "Borrower" and "Guarantor" respectively shall mean
        all and any one or more of them. The words "Guarantor," "Borrower," and
        "Lender" include the heirs, successors, assigns, and transferees of each
        of them. If a court finds that any provision of this Guaranty is not
        valid or should not be enforced, that fact by itself will not mean that
        the rest of this Guaranty will not be valid or enforced. Therefore, a
        court will enforce the rest of the provisions of this Guaranty even if a
        provision of this Guaranty may be found to be invalid or unenforceable.
        If any one or more of Borrower or Guarantor are corporations,
        partnerships, limited liability companies, or similar entities, it is
        not necessary for Lender to inquire into the powers of Borrower or
        Guarantor or of the officers, directors, partners, managers, or other
        agents acting or purporting to act on their behalf, and any indebtedness
        made or created in reliance upon the professed exercise of such powers
        shall be guaranteed under this Guaranty.

        NOTICES. Any notice required to be given under this Guaranty shall be
        given in writing, and, except for revocation notices by Guarantor, shall
        be effective when actually delivered, when actually received by
        telefacsimile (unless otherwise required by law), when deposited with a
        nationally recognized overnight courier, or, if mailed, when deposited
        in the United States mail, as first class, certified or registered mail
        postage prepaid, directed to the addresses shown near the beginning of
        this Guaranty. All revocation notices by Guarantor shall be in writing
        and shall be effective upon delivery to Lender as provided in the action
        of this Guaranty entitled "DURATION OF GUARANTY." Any party may change
        its address for notices under this Guaranty by giving formal written
        notice to the other parties, specifying that the purpose of the notice
        is to change the party's address. For notice purposes, Guarantor agrees
        to keep Lender informed at all times of Guarantor's current address.
        Unless otherwise provided or required by law, if there is more than one
        Guarantor, any notice given by Lender to any Guarantor is deemed to be
        notice given to all Guarantors.

<PAGE>

                               COMMERCIAL GUARANTY
LOAN NO: 8626865-00               (CONTINUED)                         PAGE 4
================================================================================

        NO WAIVER BY LENDER. Lender shall not be deemed to have waived any
        rights under this Guaranty unless such waiver is given in writing and
        signed by Lender. No delay or omission on the part of Lender in
        exercising any right shall operate as a waiver of such right or any
        other right. A waiver by Lender of a provision of this Guaranty shall
        not prejudice or constitute a waiver of Lender's right otherwise to
        demand strict compliance with that provision or any other provision of
        this Guaranty. No prior waiver by Lender, nor any course of dealing
        between Lender and Guarantor, shall constitute a waiver of any of
        Lender's rights or of any of Guarantor's obligations as to any future
        transactions. Whenever the consent of Lender is required under this
        Guaranty, the granting of such consent by Lender in any instance shall
        not constitute continuing consent to subsequent instances where such
        consent is required and in all cases such consent may be granted or
        withheld in the sole discretion of Lender.

        SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this
        Guaranty on transfer of Guarantor's interest, this Guaranty shall be
        binding upon and inure to the benefit of the parties, their successors
        and assigns.

        WAIVE JURY. LENDER AND GUARANTOR HEREBY WAIVE THE RIGHT TO ANY JURY
        TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER
        LENDER OR BORROWER AGAINST THE OTHER.

MISCELLANEOUS PROVISION. IN THE EVENT OF ANY CONFLICT BETWEEN THE PROVISIONS OF
THIS COMMERCIAL GUARANTY AND THE CREDIT AGREEMENT OF EVEN DATE HEREWITH BETWEEN
GUARANTOR, POWERSECURE INC., SOUTHERN FLOW COMPANIES, INC., METRETEK
INCORPORATED AND LENDER DATED AS OF SEPTEMBER 2, 2005 (THE "CREDIT AGREEMENT"),
THE PROVISIONS OF THE CREDIT AGREEMENT SHALL CONTROL, INCLUDING, WITHOUT
LIMITATION, THAT ANY REPRESENTATIONS AND WARRANTIES BY THE GUARANTOR HEREIN
SHALL BE SUBJECT TO ANY LIMITATIONS OR QUALIFICATIONS APPLICABLE TO THE SAME OR
REASONABLY SIMILAR REPRESENTAT1ONS AND WARRANTIES BY THE GUARANTOR SET FORTH IN
THE CREDIT AGREEMENT.

THIS GUARANTY IS DATED AS OF SEPTEMBER 2, 2005.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Guaranty. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty shall have the meanings
attributed to such terms in the Uniform Commercial Code:

        BORROWER. The word "Borrower" means POWERSECURE, INC.; and SOUTHERN FLOW
        COMPANIES, INC. and includes all co-signers and co-makers signing the
        Note.

        GUARANTOR. The word "Guarantor" means each and every person or entity
        signing this Guaranty, including without limitation METRETEK
        TECHNOLOGIES, INC.

        GUARANTY. The word "Guaranty" means the guaranty from Guarantor to
        Lender, including without limitation a guaranty of all or part of the
        Note.

        INDEBTEDNESS. The word "Indebtedness" means Borrower's indebtedness to
        Lender as more particularly described in this Guaranty.

        LENDER. The word "Lender" means First National Bank of Colorado, its
        successors and assigns.

        NOTE. The word "Note" means and includes without limitation all of
        Borrower's promissory notes and/or credit agreements evidencing
        Borrower's loan obligations in favor of Lender, together with all
        renewals of, extensions of, modifications of, refinancings of,
        consolidations of and substitutions for promissory notes or credit
        agreements.

        RELATED DOCUMENTS. The words "Related Documents" mean all promissory
        notes, credit agreements, loan agreements, environmental agreements,
        guaranties, security agreements, mortgages, deeds of trust, security
        deeds, collateral mortgages, and all other instruments, agreements and
        documents, whether now or hereafter existing, executed in connection
        with the Indebtedness.

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY". NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED SEPTEMBER 2, 2005.

GUARANTOR:

METRETEK TECHNOLOGIES, INC.

BY:
    -------------------------------------------------
    A. BRADLEY GABBARD, EXECUTIVE V.P. & CFO OF
    METRETEK TECHNOLOGIES, INC.

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