Document:

<PAGE>

                                                                   Exhibit 10(C)

________________________________________________________________________________

                             ASSET SALE AGREEMENT

                                    ******

                             NEVADA POWER COMPANY

                                   As Seller

                                      AND

                              THE AES CORPORATION

                                   As Buyer

                             Dated:  May 10, 2000

________________________________________________________________________________
<PAGE>

                             ASSET SALE AGREEMENT

                               Table of Contents

<TABLE>
<S>                                                                                                                <C>
PREAMBLE.........................................................................................................   1

ARTICLE 1 DEFINITIONS............................................................................................   1
         1.1      Certain Defined Terms..........................................................................   1
         1.2      Index of Other Defined Terms...................................................................   4
         1.3      Certain Interpretive Matters...................................................................   6

ARTICLE 2 BASIC TRANSACTIONS.....................................................................................   6
         2.1      Purchased Assets...............................................................................   6
         2.2      Excluded Assets................................................................................   9
         2.3      Assumed Liabilities............................................................................  12
         2.4      Excluded Liabilities...........................................................................  14
         2.5      Related Agreements.............................................................................  16
         2.6      Purchase Price.................................................................................  16
         2.7      Buyer Group Transactions With Other Owners.....................................................  19
         2.8      No Assignment If Breach........................................................................  22
         2.9      Procedures for Certain Purchase Price Adjustments..............................................  23
         2.10     Intentionally Left Blank.......................................................................  24
         2.11     Intentionally Left Blank.......................................................................  24
         2.12     Intentionally Left Blank.......................................................................  24
         2.13     Assignment of Rights and Obligations to Buyer Subsidiaries.....................................  24

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER...............................................................  27
         3.1      Organization and Corporate Power...............................................................  27
         3.2      Authority and Enforceability...................................................................  27
         3.3      No Breach or Conflict..........................................................................  27
         3.4      Approvals......................................................................................  28
         3.5      Permits........................................................................................  28
         3.6      Compliance with Law............................................................................  28
         3.7      Hazardous Substances...........................................................................  29
         3.8      Title to Personal Property.....................................................................  29
         3.9      Contracts......................................................................................  30
         3.10     Litigation.....................................................................................  30
         3.11     Plant Data.....................................................................................  30
         3.12     Brokers........................................................................................  31

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER................................................................  32
         4.1      Organization and Corporate Power...............................................................  32
         4.2      Authority and Enforceability...................................................................  32
         4.3      No Breach or Conflict..........................................................................  32
         4.4      Approvals......................................................................................  33
         4.5      Litigation.....................................................................................  33
         4.6      Brokers........................................................................................  33
         4.7      Exculpation....................................................................................  33
         4.8      Financing......................................................................................  34
</TABLE>

                                      -i-
<PAGE>

<TABLE>
<S>                                                                         <C>
         4.9      No Knowledge of Seller's Breach.........................  34
         4.10     Qualified for Licenses..................................  34
         4.11     Buyer Subsidiaries......................................  34

ARTICLE 5 COVENANTS OF EACH PARTY.........................................  35
         5.1      Efforts to Close........................................  35
         5.2      Post-Closing Cooperation................................  36
         5.3      Expenses................................................  36
         5.4      Announcements; Confidentiality..........................  37
         5.5      Litigation Conduct and Settlement.......................  38

ARTICLE 6 ADDITIONAL COVENANTS OF SELLER..................................  38
         6.1      Access..................................................  38
         6.2      Updating................................................  39
         6.3      Conduct Pending Closing.................................  39
         6.4      Environmental Matters...................................  41

ARTICLE 7 ADDITIONAL COVENANTS OF BUYER...................................  43
         7.1      Waiver of Bulk Sales Law Compliance.....................  43
         7.2      Resale Certificate......................................  43
         7.3      Conduct Pending Closing.................................  43
         7.4      Securities Offerings....................................  43
         7.5      Release.................................................  43
         7.6      Additional Covenants of the Buyer.......................  44

ARTICLE 8 BUYER'S CONDITIONS TO CLOSING...................................  44
         8.1      Performance of Agreement................................  44
         8.2      Accuracy of Representations and Warranties..............  44
         8.3      Officers' Certificate...................................  45
         8.4      Approvals...............................................  45
         8.5      No Restraint............................................  46
         8.6      Title Insurance.........................................  47
         8.7      Related Agreements......................................  48
         8.8      Casualty; Condemnation..................................  48
         8.9      Opinion of Counsel......................................  49
         8.10     Receipt of Other Documents..............................  49
         8.11     Limitation on Adjustments...............................  50
         8.12     Independent Engineer's Letter...........................  50
         8.13     SCE Closing.............................................  50

ARTICLE 9 SELLER'S CONDITIONS TO CLOSING..................................  50
         9.1      Performance of Agreement................................  50
         9.2      Accuracy of Representations and Warranties..............  50
         9.3      Officers' Certificate...................................  50
         9.4      Approvals...............................................  50
         9.5      No Restraint............................................  51
         9.6      Related Agreements......................................  51
         9.7      Opinion of Counsel......................................  51
         9.8      Receipt of Other Documents..............................  51
         9.9      Limitation on Adjustments...............................  52

ARTICLE 10 CLOSING........................................................  52
</TABLE>

                                      -ii-
<PAGE>

<TABLE>
<S>                                                                         <C>
         10.1     Closing.................................................  52
         10.2     Escrow..................................................  53
         10.3     Power Purchase Agreement and Escrow Arrangements........  54
         10.4     Prorations..............................................  56

ARTICLE 11 TERMINATION....................................................  56
         11.1     Termination.............................................  56
         11.2     Effect of Termination...................................  58
         11.3     Modification of Terms...................................  58
         11.4     Breakup Fee.............................................  58

ARTICLE 12 SURVIVAL AND REMEDIES; INDEMNIFICATION.........................  59
         12.1     Survival................................................  59
         12.2     Exclusive Remedy........................................  59
         12.3     Indemnity by Seller.....................................  59
         12.4     Indemnity by Buyer......................................  60
         12.5     Further Qualifications Respecting Indemnification.......  61
         12.6     Procedures Respecting Third Party Claims................  62
         12.7     Pro Rata Limitation On Buyer Claims.....................  62

ARTICLE 13 GENERAL PROVISIONS.............................................  63
         13.1     Notices.................................................  63
         13.2     Attorneys' Fees.........................................  64
         13.3     Successors and Assigns..................................  64
         13.4     Counterparts............................................  64
         13.5     Captions and Paragraph Headings.........................  64
         13.6     Entirety of Agreement; Amendments.......................  64
         13.7     Construction............................................  65
         13.8     Waiver..................................................  65
         13.9     Arbitration.............................................  65
         13.10    Governing Law...........................................  68
         13.11    Severability............................................  68
         13.12    Consents Not Unreasonably Withheld......................  68
         13.13    Time Is of the Essence..................................  68
</TABLE>

                                     -iii-
<PAGE>

                               LIST OF SCHEDULES

A                 Sellers; Undivided Interests
1.1(k)            Intentionally Left Blank
2.1(a)            Owned Real Property
2.1(b)            Real Property Leases
2.1(c)            Easements
2.1(d)            Equipment
2.1(f)            Assigned Contracts
2.1(g)            Licenses
2.1(j)            Prepayments
2.1(k)            Emission Allowances and Emission Reduction Credits
2.1(l)            Jointly Owed Intangible Property
2.1(m)            Switchyard Assets
2.1(p)            Miscellaneous Assets
2.2(a)            Excluded Nevada Power and Edison Switchyard Assets
2.2(c)            Communications Equipment and Facilities
2.2(u)            Other Excluded Assets
2.3(a)            Guaranties
2.3(h)            Miscellaneous Excluded Liabilities
2.4(c)            Assumed Breaches
2.4(m)            Excluded Litigation
2.4(n)            Other Excluded Liabilities
2.5               Related Agreements
2.6(b)            Allocation Schedule
2.6(c)(i)         Scheduled Capital Expenditures
2.6(c)(ii)(A)     Inventory Control Data Report
2.6(c)(ii)(B)     Coal Inventory Report
3.4(a)            Seller's Private Party Consents
3.4(b)            Seller's Government Consents
3.5               Excluded Permits
3.6               Compliance with Law
3.7               Environmental Matters
3.8               Permitted Encumbrances
3.9               Contracts
3.10              Seller Litigation
3.11              Selected Historical Operating Data
3.12              Seller's Brokers
3.13              Assets Used in the Operation of the Plant
4.4(a)            Buyer's Private Party Consents
4.4(b)            Buyer's Government Consents
4.5               Buyer's Litigation
4.6               Buyer's Brokers
5.5               Settlement Terms
6.3               Exceptions to Conduct

                                      -iv-
<PAGE>

6.4(a)            Remediation Measures
8.6(b)            Disapproved Title Exceptions
8.9               Seller's Legal Opinion
8.12              Independent Engineer's Letter
9.7               Buyer's Legal Opinion
10.3(a)(3)        Permitted Investments

                                      -v-
<PAGE>

                           ASSET PURCHASE AGREEMENT

     This ASSET SALE AGREEMENT (the "Agreement") is made and entered into as of
the 10th day of May 2000 by and among the Seller named on Schedule A hereto
                                                          ----------
("Seller"), and The AES Corporation, a Delaware corporation ("Buyer"), with
reference to the following facts:

     A.   Seller is a public utility engaged in the business of generating,
transmitting and distributing electric energy and in connection therewith owns
as a tenant-in-common an undivided interest in the Mohave Generating Station,
located in Laughlin, Nevada (the "Plant").

     B.   Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, upon the terms and subject to the conditions of this Agreement, the
percentage shown on Schedule A of one hundred percent (100%) of the undivided
                    ----------
interests owned by all tenants-in-common that own the Plant (the "Undivided
Interests"), together with the same percentage of the Undivided Interests in the
assets and facilities related to the Plant (the "Transactions").

     NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, do hereby agree as follows:

                                   ARTICLE 1
                                  DEFINITIONS
                                  -----------

     1.1  Certain Defined Terms. For purposes of this Agreement, the following
          ---------------------
terms shall have the following meanings:

          (a)  "Affiliate" of a specified Person shall mean any corporation,
     partnership, sole proprietorship or other Person which directly or
     indirectly through one or more intermediaries controls, is controlled by or
     is under common control with the Person specified.  The term "control"
     means the possession, direct or indirect, of the power to direct or cause
     the direction of the management and policies of a Person.

          (b)  "Auction" means the procedures employed by Southern California
     Edison Company, a California corporation ("SCE"), through which Undivided
     Interests in the Plant were offered for sale to competing bidders.

          (c)  "Business Day" means a day that is not a Saturday, a Sunday or a
     day on which banking institutions in the State of Nevada are not required
     to be open.

          (d)  "Commercially Reasonable Efforts" means efforts which would be
     within the contemplation of a reasonable party at the time of executing
     this Agreement and which do not require the performing party to expend any
     funds other than expenditures which are customary and reasonable in
     transactions of the kind and nature contemplated by this Agreement in order
     for the performing party to satisfy its obligations hereunder.

                                      -1-
<PAGE>

          (e)  "Co-Tenancy Agreement" means the Mohave Project Plant Site
     Conveyance and Co-Tenancy Agreement dated May 29, 1967 to which the Owners
     are parties as of the date hereof, as the same may be amended to the
     Closing Date.

          (f)  "Emission Allowances" mean all present and future authorizations
     to emit or Release specified units of pollutants or Hazardous Materials
     from or in connection with the operation of the Plant, which units are
     established by a Governmental Body with jurisdiction over the Plant under
     (i) an air pollution control and emission reduction program designed to
     mitigate global warming or the transport of air pollutants; (ii) a program
     designed to mitigate impairment of surface waters, watersheds or
     groundwater; or (iii) any pollution reduction program with a similar
     purpose. The term "Allowances" includes emissions allowances, as described
     above, regardless of whether the Governmental Body establishing such
     allowances designates them by a name other than "allowances."

          (g)  "Emission Reduction Credits" mean credits, in such units as are
     established by a Governmental Body with jurisdiction over the Plant,
     resulting from reductions, if any, in emissions or Releases of pollutants
     or Hazardous Materials from or in connection with the operation of the
     Plant (including, without limitation, and to the extent allowable under
     applicable Law, reductions from shut-downs or control of emissions or
     Releases beyond that required by applicable Law) that have been identified
     or certified by the Governmental Body as complying with the Law governing
     the establishment of such credits.  The term "Emission Reduction Credits"
     includes credits, as described above, regardless of whether the
     Governmental Body establishing such credits designates them by a name other
     than "credits" or "emission reduction credits."

          (h)  "Environmental Law" shall mean, all Federal, state, local and
     foreign civil and criminal laws, regulations, rules, ordinances, codes,
     decrees, judgments, directives, or judicial or administrative orders
     relating to pollution or protection of the environment, natural resources
     or human health and safety, as the same may be amended or adopted,
     including, without limitation, laws relating to Releases or threatened
     Releases of Hazardous Materials (including, without limitation, Releases to
     ambient air, surface water, groundwater, land, surface and subsurface
     strata) or otherwise relating to the manufacture, processing, distribution,
     use, treatment, storage, Release, transport, disposal or handling of
     Hazardous Materials, including, but not limited to, the Comprehensive
     Environmental Response, Compensation and Liability Act, 42 U.S.C. (S) 9601
     et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901 et
     seq.; the Federal Water Pollution Control Act, 33 U.S.C. (S) 1251 et seq.;
     the Clean Air Act, 42 U.S.C. (S) 7401 et seq.; the Hazardous Materials
     Transportation Act, 49 U.S.C. (S) 1471 et seq.; the Toxic Substances
     Control Act, 15 U.S.C. (S)(S) 2601 through 2629; the Oil Pollution Act, 33
     U.S.C. (S) 2701 et seq.; the Emergency Planning and Community Right-to-Know
     Act, 42 U.S.C. (S) 11001 et seq.; the Safe Drinking Water Act, 42 U.S.C.
     (S)(S) 300f through 300j; the Occupational Safety and Health Act, 29 U.S.C.
     (S) 651 et seq.; the Surface Mining Control and Reclamation Act of 1977, 30
     U.S.C. (S) 1201 et seq.; and any similar laws of the States of Nevada,
     Arizona, California or of any other Governmental Body having jurisdiction

                                      -2-
<PAGE>

     over the site at which the Plant is located or otherwise applicable to the
     Plant or its owners or operators; and regulations implementing the
     foregoing.

          (i)  "Governmental Body" means any federal, state, local, municipal,
     foreign or other government; any governmental, regulatory or administrative
     agency, commission, body or other authority exercising or entitled to
     exercise any administrative, executive, judicial, legislative, police,
     regulatory or taxing authority or power; any court or governmental
     tribunal; and any Native American tribe or organization having
     governmental, regulatory, administrative, taxing or police powers; but does
     not include the Buyer, any Buyer Subsidiary, or any of their respective
     successors in interest or any owner or operator of the Assets (if otherwise
     a Governmental Body).

          (j)  "Hazardous Materials" means any chemicals, materials, substances,
     or items in any form, whether solid, liquid, gaseous, semisolid, or any
     combination thereof, whether waste materials, raw materials, chemicals,
     finished products, by-products, or any other materials or articles, which
     are listed as hazardous, toxic or dangerous under Environmental Law,
     including without limitation, petroleum products, asbestos, urea
     formaldehyde foam insulation, and lead-containing paints or coatings.

          (k)  "Knowledge" of a party shall mean the extent of the actual
     current knowledge of any Person who serves as of the date of this Agreement
     or as of the Closing as a duly elected officer of such party.

          (l)  "Laws" shall mean all statutes, rules, regulations, ordinances,
     orders, and codes of federal, state, local and foreign governmental and
     regulatory authorities.

          (m)  "Licenses" shall mean registrations, licenses, permits,
     authorizations and other consents or approvals of Governmental Bodies.

          (n)  "Operating Agent" means SCE, or any of its Affiliates, successors
     or assigns, in their capacities as operating agent acting on behalf of the
     Owners under the Operating Agreement.

          (o)  "Operating Agreement" small mean the Mohave Project Operating
     Agreement effective as of May 1, 1969, among the Owners, as amended to the
     Closing Date.

          (p)  "Owners" shall mean each of SCE, Nevada Power Company, a Nevada
     corporation ("NPC"), Salt River Project Agricultural Improvement and Power
     District, an agricultural improvement district organized and existing under
     the laws of Arizona, the Department of Water and Power of the City of Los
     Angeles, a department organized and existing under the Charter of the City
     of Los Angeles, a California municipal corporation, and, after the Closing,
     the Buyer and any pertinent Buyer Subsidiary, in their respective
     capacities as an owner of Undivided Interests in the Assets, as well as the
     successors and assigns of each of the foregoing with respect to such
     capacity.

                                      -3-
<PAGE>

          (q)  "Person" means any individual, corporation (including any non-
     profit corporation), general or limited partnership, limited liability
     company, joint venture, estate, trust, association, organization, labor
     union, or other entity or Governmental Body.

          (r)  "Related Facilities" shall mean all of the coal mines, including,
     without limitation, the Black Mesa Mine, that provide coal to the Plant,
     the coal slurry pipeline through which coal is transported to the Plant
     from such mines, and the real properties, rights and tangible and
     intangible properties comprising the same or appurtenant thereto.

          (s)  "Release" means any release, spill, emission, leaking, pumping,
     emptying, dumping, injection, abandonment, deposit, disposal, discharge,
     dispersal, leaching, or migration of Hazardous Materials (including,
     without limitation, the abandonment or discarding of Hazardous Materials in
     barrels, drums, or other containers) into or within the environment,
     including, without limitation, the migration of Hazardous Materials into,
     under, on, through, or in the air, soil, subsurface strata, surface water,
     groundwater, drinking water supply, any sediments associated with any water
     bodies, or any other environmental medium, regardless of where such
     migration originates.

          (t)  "Remediation Measures" means action of any kind to address a
     Release or the presence of Hazardous Substances at, on, in, upon, over,
     across, under and within the real property included in the Assets or at any
     off-site location related to the Plant (including the Related Facilities),
     including any (i) investigation, monitoring, clean-up, containment,
     remediation, mitigation, removal, disposal or treatment, including without
     limitation the preparation and implementation of any work plans and the
     obtaining of authorizations, approvals and permits from Governmental Bodies
     with respect thereto, and (ii) any response to, or preparation for, any
     inquiry, order, hearing or other proceeding by or before any Governmental
     Body with respect to such Release or presence of Hazardous Substances.

          (u)  "Taxes" shall mean (i) all sales, use, property, recordation and
     transfer taxes imposed by a Governmental Body, and (ii) any interest,
     penalties and additions to tax attributable to any of the foregoing, but
     shall not include income and other taxes described in Section 2.4(b).

     1.2  Index of Other Defined Terms. In addition to those terms defined
above, the following terms shall have the respective meanings given thereto in
the Sections indicated below:

<TABLE>
<CAPTION>
          Defined Term                                  Section
          ------------                                  -------
          <S>                                           <C>
          AAA                                           13.9(a)
          ADA                                           2.3(d)
          Additional Funds                              10.3(a)(iii)
          Adjustment Sections                           2.9
          Agreement                                     Preamble
          Allocation Schedule                           2.6(b)
          Approvals                                     8.4
</TABLE>

                                      -4-
<PAGE>

<TABLE>
          <S>                                           <C>
          Assets                                        2.1
          Assigned Contracts                            2.1(f)
          Assumed Contracts                             2.3(a)
          Assumed Liabilities                           2.3
          Buyer                                         Preamble
          Buyer Group                                   2.6(d)
          Buyer Subsidiary                              2.13
          Capital Expenditures                          2.6(c)(i)
          Charter Documents                             3.3
          Claim Notice                                  12.6
          Closing                                       10.1
          Closing Date                                  10.1
          Coal Inventory Report                         2.6(c)(ii)
          Consent Decree                                5.5
          Deductible Amount                             12.3(b)(i)(B)
          Deposited Funds                               10.3(a)(iii)
          Depreciation Amount                           10.3(c)
          Easements                                     2.1(c)
          Effective Date                                10.3(a)(i)
          Eldorado Transmission Agreements              2.1(m)
          Equipment                                     2.1(d)
          Escrow Agent                                  10.2
          Escrow Capital Amount                         10.3(d)
          Escrow Date                                   10.3(a)
          Escrow Funds                                  10.3(a)(iii)
          Escrow Period                                 10.3(b)
          EWG                                           5.1(b)
          Excluded Assets                               2.2
          Excluded Liabilities                          2.4
          Extended Price                                2.6(d)
          FERC                                          3.4(b)
          HSR Act                                       3.3
          Indemnitee                                    12.5
          Indemnitor                                    12.5(a)
          Intercompany Transactions                     2.2(m)(i)
          Inventory Control Data Reports                2.6(c)(ii)
          Leased Real Property                          2.1(b)
          Losses                                        12.3(a)
          Material Adverse Effect                       3.3
          Mohave Co-Tenancy Agreement Condition         8.4
          NPC                                           1.1(p)
          Operating Data                                3.11
          Operator's Report                             2.1(j)(ii)(C)
          Original Closing Date                         2.9
          Other Owner's Agreement                       2.7(a)
</TABLE>

                                      -5-
<PAGE>

<TABLE>
          <S>                                           <C>
          Other Transactions Date                       2.6(d)
          Owned Real Property                           2.1(a)
          Panel                                         2.9
          Pending Air Quality Lawsuit                   5.5
          Permitted Encumbrances                        3.8
          Plant                                         Recitals
          Power Purchase Agreement                      10.3(a)
          PPC                                           2.2(k)
          PPC Amount                                    2.6
          Prepayments                                   2.1(j)(ii)(C)
          PUCN                                          3.4(b)
          Purchase Price                                2.6(a)
          PURPA                                         8.4(b)
          Real Property Leases Related Agreements       2.5
          Rules                                         13.9(a)
          SCE                                           1.1(b)
          Seller                                        Preamble
          Seller's Reimbursable Costs                   2.7(c)(i)
          Supplies                                      2.1(e)
          Switchyard Assets                             2.1(m)
          Termination Date                              11.1(e)
          Third Party Claims                            12.5(a)
          Title Insurer                                 8.6
          Title Policies                                8.6
          Transactions                                  Recitals
          Undivided Interests                           Recitals
</TABLE>

     1.3  Certain Interpretive Matters.  In this Agreement, unless the context
          ----------------------------
otherwise requires, the singular shall include the plural, the masculine shall
include the feminine and neuter, and vice versa.  The terms "includes" or
"including" shall mean "including without limitation."  References to a Section,
Article, Exhibit or Schedule shall mean a Section, Article, Exhibit or Schedule
of this Agreement, and reference to a given agreement or instrument shall be a
reference to that agreement or instrument as modified, amended, supplemented and
restated through the date as of which such reference is made.

                                   ARTICLE 2
                              BASIC TRANSACTIONS
                              ------------------

     2.1  Purchased Assets.  On the terms and subject to the conditions
          ----------------
contained in this Agreement, and except as otherwise provided herein, at the
Closing Buyer shall, or shall cause the applicable Buyer Subsidiary to, purchase
from Seller, and Seller shall sell, convey, assign, transfer and deliver to
Buyer, or the applicable Buyer Subsidiary, all of Seller's right, title and
interest in and to the percentage of the Undivided Interests shown next to
Seller's name in Schedule A hereto and all of Seller's right, title and interest
                 ----------
in and to the same percentage of the

                                      -6-
<PAGE>

Plant and the other assets, properties and facilities used, or held for use,
principally in connection with the ownership and operation of the Plant, each as
in existence on the Closing Date, including, but not limited to, those assets
described below, but excluding all Excluded Assets as defined in Section 2.2
(the "Assets"):

          (a)  The parcels of real property owned in fee (the "Owned Real
     Property") that are identified in Schedule 2.1(a), together with all
                                       ---------------
     buildings, fixtures and improvements located thereon (including all
     construction work-in-progress, but excluding the buildings, fixtures and
     improvements located on the real property which is identified in Schedule
                                                                      --------
     2.1(a) as "Switchyard Property.").
     ------

          (b)  The leasehold estates and the related lease or sublease
     agreements (the "Real Property Leases") respecting land, buildings,
     fixtures and real property improvements (whether owned or leased) (the
     "Leased Real Property") identified in Schedule 2.1(b), if any, together
                                           ---------------
     with all construction work-in-progress in respect of same.

          (c)  Easements and privileges (including all water rights) appurtenant
     to the Owned Real Property or the Leased Real Property as well as the
     right, by way of license, easement or the like, to locate certain
     identified Equipment to be sold hereunder on real property not included in
     the Owned Real Property or the Leased Real Property, all as shown or
     described more specifically on Schedule 2.1(a), Schedule 2.1(b) or Schedule
                                    ---------------  ---------------    --------
     2.1(c) (the "Easements").
     ------

          (d)  Fixed or mobile machinery and equipment, as well as similar items
     of tangible personal property, including, without limitation, vehicle
     refueling tanks, pumps, pipelines, fittings, trucks, tractors, trailers and
     other vehicles, tools, furniture and revenue metering equipment (including
     revenue metering equipment, if any, installed in contemplation of the
     Transactions)  (collectively "Equipment") that (i) are not by their nature
     consumed in the ordinary course of business such that they constitute
     "Supplies" (as defined below), (ii) are used, owned or leased by the Owners
     as of the Closing Date, and (iii) in the ordinary course of business are
     permanently located at the Plant or otherwise on the Owned or Leased Real
     Property or on an Easement for use primarily in connection with the
     ownership or operation of the Plant (including Assets temporarily off-site
     for repair or other purposes).  All such items of Equipment (other than
     furnishings or office equipment) having a net book value of $10,000 or more
     (pro rated to 100% of the Undivided Interests) as of the close of the most
     recent fiscal quarter ended at least forty-five (45) days prior to the date
     of this Agreement are identified on Schedule 2.1(d).
                                         ---------------

          (e)  Inventories of spare parts intended to be consumed in the
     ordinary course of business, maintenance, shop and office supplies, and
     other similar items of tangible personal property on hand at, or in transit
     to, the Plant as of the Closing and intended to be consumed in the ordinary
     course of business, as well as fuel supplies, if any, on hand and stored
     at, or in transit to, the Plant as of the Closing and intended as feedstock
     from which to generate electrical power in the ordinary course of operation
     ("Supplies").

                                      -7-
<PAGE>

          (f)  Written contracts and agreements specifically and exclusively
     relating to the Plant to which Seller as one of the Owners, or the
     Operating Agent as agent for the Owners, is a party at the Closing (the
     "Assigned Contracts"), including, without limitation, the agreements
     identified on Schedule 2.1(f), which contains a list of the agreements (i)
                   ---------------
     pursuant to which the Owners, or the Operating Agent, as the case may be,
     paid or received Five Thousand Dollars ($5,000) or more during the calendar
     year preceding the date of this Agreement or expect to pay or receive Five
     Thousand Dollars ($5,000) or more during the current calendar year, and
     (ii) that have a binding remaining term of at least one year which cannot
     be canceled by the Owners or the Operating Agent without penalty on written
     notice of ninety (90) days or less.  The Assigned Contracts shall also
     include, without limitation, construction contracts relating to
     construction work-in-progress at the Plant; equipment leases (whether
     operating or capital leases) and installment purchase contracts; contracts
     or arrangements binding on the Plant which restrict the nature of the
     business activities in which the Plant may engage; leases as lessor or
     sublessor; and oral contracts if, but only if, the same are identified on
     Schedule 2.1(f).
     ---------------

          (g)  The Licenses in favor of the Owners, or the Operating Agent as
     agent for the Owners, as of Closing that relate to or are necessary for or
     used in connection with the operation of the Assets as heretofore operated
     by the Owners and the Operating Agent on their behalf, all of such Licenses
     being included on Schedule 2.1(g), except for and to the extent that such
                       ---------------
     Licenses relate to Excluded Assets; provided that such Licenses shall be
                                         --------
     included within the Assets only to the extent they relate exclusively to
     the Assets, are held in the names of the Owners or the Operating Agent on
     behalf of the Owners and are lawfully transferable to Buyer or the Buyer's
     applicable Buyer Subsidiary.

          (h)  The books, records, plans, drawings, instruction manuals and
     similar items located at the Plant and which relate exclusively to the
     Plant and the Assets, subject to the rights of Seller to make copies of and
     make non-exclusive use of the same and except to the extent such materials
     are subject to confidentiality or non-disclosure agreements in favor of
     third parties whose consent to transfer is not obtained.

          (i)  Unexpired warranties as of the Closing which the Owners have (or
     the Operating Agent on behalf of the Owners has) received from third
     parties, which relate specifically to any of the Assets and which are
     transferable to Buyer, including, without limitation, warranties set forth
     in any equipment purchase agreement, construction agreement, lease
     agreement, consulting agreement or agreement for architectural or
     engineering services, it being understood that nothing in this paragraph
     shall be construed as a representation by Seller that any such unexpired
     warranty remains enforceable.

          (j)  Advance payments, prepayments, prepaid expenses, deposits and the
     like (i) that are identified on Schedule 2.1(j), or (ii) (A) made by the
                                     ---------------
     Owners or the Operating Agent on their behalf in the ordinary course of
     business prior to the Closing specifically with respect to the Assets, (B)
     which exist as of such Closing, and (C) with respect to which Buyer will
     receive the benefit after the Closing (collectively, "Prepayments"), which
     Prepayments are included in the Operating Agent's regularly prepared
     statement to

                                      -8-
<PAGE>

     the Owners (the "Operator's Report"); the Operator's Report prepared as of
     the close of the most recent fiscal quarter ended at least forty-five (45)
     days prior to the date of this Agreement is attached hereto as Schedule
                                                                    --------
     2.1(j).
     ------

          (k)  The Emission Allowances and Emission Reduction Credits identified
     on Schedule 2.1(k) as included in the Assets.
        ---------------

          (l)  Patents and patent rights, trademarks and trademark rights,
     inventions, copyrights and copyright rights set forth on Schedule 2.1(l)
                                                              ---------------
     that are owned by the Owners as tenants-in-common and which relate
     exclusively to the Plant or the Assets, including without limitation
     pending applications therefor.

          (m)  The personal property underlying, comprising or constituting a
     part of the switchyard facilities located at or adjacent to the Plant and
     which connect the Plant to pertinent electrical transmission facilities
     (whether such property is regarded as "transmission" or "generation" assets
     for regulatory or accounting purposes), as well as such Licenses, contracts
     and warranties which relate to the same to the extent they are transferable
     to the Buyer, all as set forth on Schedule 2.1(m) (collectively, the
                                       ---------------
     "Switchyard Assets"), unless either prior to or after the date hereof and
     prior to the Closing, the Owners have entered into, and have consummated
     the transactions contemplated by, pertinent agreements that (i) separate
     the ownership of the Switchyard Assets from the ownership of the Plant, and
     (ii) make the Switchyard Assets subject to agreements among the Owners
     related to the transmission system commonly referred to as the Eldorado
     Transmission System (the "Eldorado Transmission Agreements").

          (n)  The name "Mohave Generating Station," it being understood that
     Buyer shall not acquire any right to use the name of any Owner or the
     Operating Agent or any related or similar trade names, trademarks, service
     marks, corporate names, logos or any part, derivative or combination
     thereof.

          (o)  The right to receive mail and other communications addressed to
     Seller or any of its Affiliates insofar as such mail or other communication
     is so addressed to the Seller in its capacity as an Owner and relates
     exclusively to the Assets or to the Assumed Liabilities after the Closing.

          (p)  Those miscellaneous and sundry assets identified by category on
     Schedule 2.1(p), if any, which assets are ancillary to the ownership of the
     ---------------
     Assets and the Plant and customarily utilized in connection therewith but
     not otherwise enumerated above.

     2.2  Excluded Assets.  The Assets shall not include any of the assets,
          ---------------
properties, rights, Licenses, or contracts which are not described in Section
2.1 above or which are set forth in this Section 2.2, all such other assets,
properties, rights, Licenses, and contracts collectively constituting "Excluded
Assets," including, without limitation, the following specifically enumerated
Excluded Assets:

          (a)  Whether or not the Eldorado Transmission Agreements have been
     executed and the transactions contemplated thereby consummated, the real
     and personal

                                      -9-
<PAGE>

     property underlying, comprising or constituting all or part of the
     transmission facilities identified on Schedule 2.2(a) that are not owned by
                                           ---------------
     the Owners as tenants-in-common or that are part of the transmission
     systems of either Nevada Power Company or SCE.

          (b)  The Switchyard Assets if the Eldorado Transmission Agreements
     have been executed and the transactions contemplated thereby consummated,
     subject to the further provisions of any facilities services agreement
     entered into in connection therewith between the Owners, as owners of the
     Plant, and participant owners of the Eldorado Transmission System (which
     may be the same Persons as the Owners).

          (c)  The fixtures, equipment and other personal property located at
     the Plant comprising or constituting a part of the proprietary or
     specialized communications systems used by SCE to communicate between and
     among its facilities and/or to transmit voltage and other control data and
     information utilized in SCE's transmission systems, including any portion
     of such assets or system leased or licensed to third parties, together with
     the right, by way of license, easement or otherwise to retain such property
     on the real property included in the Assets, all as shown and/or noted or
     described on Schedule 2.1(a), Schedule 2.1(b), Schedule 2.1(c), Schedule
                  ---------------  ---------------  ---------------  --------
     2.1(d) or Schedule 2.2(c).
     ------    ---------------

          (d)  Claims, choses in action, rights of recovery, rights of set-off,
     rights to refunds and similar rights in favor of an Owner of any kind
     relating to or arising out of the period prior to Closing, including, but
     not limited to, any refund related to real estate taxes paid prior to the
     Closing, whether such refund is received as a payment or as a credit
     against future real estate taxes, except where such claims, choses in
     action, rights of recovery, rights of set-off, rights to refund and similar
     rights arise from, as a result of or in connection with the Buyer's
     assumption, payment, discharge and performance of any Assumed Liability.

          (e)  All privileged or proprietary materials, documents, information,
     media, methods and processes not owned by the Owners as tenants-in-common
     and any and all rights to use same, including, without limitation,
     intangible assets of an intellectual property nature such as trademarks,
     service marks and trade names (whether or not registered), computer
     software that is proprietary to Seller, or the use of which under the
     pertinent license therefor is limited to operation by Seller or its
     Affiliates or on equipment owned by Seller or its Affiliates, and all
     promotional or marketing materials (including all marketing computer
     software).

          (f)  Any and all personnel and employment records of or related to the
     operation of the Plant or otherwise related to Seller's personnel, whether
     or not maintained at or by the Plant or the Operating Agent.

          (g)  Rights under any insurance policy, except to the extent such
     policy insures for occurrences that are included in the Assumed Liabilities
     (it being understood, however, that Seller will have no obligation to take
     any action under any such policy to seek any recovery except at the
     reasonable request, and at the sole expense, of Buyer or to continue any
     such policies in force except to the extent expressly set forth herein).

                                      -10-
<PAGE>

          (h)  The right to receive mail and other communications relating to
     any of the Excluded Assets or Excluded Liabilities; all of which mail and
     other communications shall be promptly forwarded by Buyer to Seller.

          (i)  Any computer and data processing hardware or firmware, whether or
     not located at the Plant, that is part of a computer system the central
     processing unit of which is located at a facility of an Owner or the
     Operating Agent that is not included in the Assets.

          (j)  Intentionally left blank.

          (k)  All tariffs, agreements and arrangements to which an Owner is a
     party for the purchase or sale of electric capacity and/or energy or for
     the purchase of transmission or ancillary services, including, but not
     limited to, the Transitional Power Purchase Agreement between Seller and
     Buyer attached hereto as part of Schedule 2.5 (the "PPC").
                                      ------------

          (l)  Except for the Supplies and items of petty cash that may be on
     hand at the Plant as of the time of Closing and the Prepayments, all assets
     constituting working capital, whether cash, cash equivalents, securities,
     rights to payment, rights to refunds, advance payments, prepayments,
     prepaid expenses, deposits, and other current assets and similar rights.

          (m)  Any and all of Seller's rights arising under:

               (i)    Any contract respecting an intercompany transaction
          between Seller, on the one hand, and Seller's Affiliate, on the other
          hand, whether or not such transaction relates to the provision of
          goods and services, tax sharing arrangements, payment arrangements,
          intercompany charges or balances, or the like ("Intercompany
          Transactions");

               (ii)   Employment contracts, if any; and

               (iii)  Collective bargaining agreements (it being understood,
          however, that nothing herein is intended to affect Buyer's
          obligations, if any, under the National Labor Relations Act).

          (n)  Any and all data and information pertaining to customers of
     Seller or its Affiliates, whether or not located at the Plant.

          (o)  Rights in, to and under all agreements and arrangements of any
     nature, the Seller's obligations under which are not assumed by the Buyer
     or a Buyer Subsidiary under the terms of this Agreement.

          (p)  All trade accounts receivable and all notes, bonds and other
     evidences of indebtedness of and rights to receive payments arising out of
     sales occurring in

                                      -11-
<PAGE>

     connection with the operations of the Plant prior to the Closing and the
     security arrangements, if any, related thereto, including any rights with
     respect to any third party collection procedures or any other actions or
     proceedings which have been commenced in connection therewith.

          (q)  Emission Allowances and Emission Reduction Credits not enumerated
     on Schedule 2.1(k).
        ---------------

          (r)  Rights of Seller arising under this Agreement or any instrument
     or document executed and delivered pursuant to the terms hereof.

          (s)  Any and all books and records not described in Section 2.1(h).

          (t)  Assets and properties of Seller or its Affiliates that are not
     used in the ownership or operation of the Assets.

          (u)  Miscellaneous and sundry assets, if any, identified by category
     on Schedule 2.2(u), which assets may have been utilized in the ownership
        ---------------
     and operation of the Plant but which are not intended to be included in the
     Assets and which are not otherwise enumerated above.

At any time or from time to time, up to ninety (90) days following the Closing,
any and all of the Excluded Assets may be removed from the Plant by Seller (at
no expense to the Buyer, but without charge by Buyer for storage), provided that
                                                                   --------
Seller shall do so in a manner that does not unduly or unnecessarily disrupt
normal business activities at the Plant, and provided further that Excluded
                                             -------- -------
Assets may be retained at the Plant pursuant to easements, licenses, agreements
(including the Operating Agreement) or similar arrangements in favor of Seller
and described above or otherwise in the Schedules to this Agreement.

     2.3  Assumed Liabilities.  Subject to the terms and conditions set forth in
          -------------------
this Agreement, including the provisions of Section 2.4, Buyer shall, and may
also cause a pertinent Buyer Subsidiary or Buyer Subsidiaries to, jointly and
severally with Buyer, assume and pay, discharge and perform as and when due,
only the following obligations and liabilities of Seller (the "Assumed
Liabilities"):

          (a)  All liabilities and obligations which pertain to or are to be
     paid or performed during the period following the Closing Date (except to
     the extent that, but for the breach of the Seller, such liabilities and
     obligations would have been paid or performed on or prior to the Closing
     Date), and which arise under any written contract, License, agreement,
     arrangement, understanding or undertaking included in the Assets, including
     the Real Property Leases and the Assigned Contracts, and any other
     obligation or liability, including those of any Affiliate of the Seller
     (including those related to letters of credit and performance bonds), which
     is in the nature of a guaranty of the foregoing to the extent the same are
     enumerated in Schedule 2.3(a) (together, the "Assumed Contracts").
                   ---------------

                                      -12-
<PAGE>

          (b)  All liabilities and obligations under open purchase orders
     pertaining to the Assets that were entered into by the Owners, or the
     Operating Agent on their behalf, in the ordinary course of business with
     respect to operation of the Plant on or prior to the Closing and which
     provide for the delivery of goods or services subsequent to the Closing
     Date, except to the extent such purchase orders are listed as Excluded
     Assets on Schedule 2.2(u).
               ---------------

          (c)  All liabilities and obligations associated with the Assets in
     respect of Taxes for which Buyer is liable pursuant to Section 5.3 or
     Section 10.3, and any Tax that may be imposed on the ownership, sale,
     operation or use of the Assets after the Closing.

          (d)  Without limiting the representations and warranties contained in
     Article 3 or Buyer's rights under Article 12 for a breach thereof, any and
     all liabilities and obligations respecting any changes or improvements
     needed to the Assets, if any, for them to be in material compliance with
     respect to safety, building, fire, land use, access (including, without
     limitation, the Americans With Disabilities Act ("ADA")) or similar Laws
     respecting the physical condition of the Assets.

          (e)  Without limiting Seller's representations and warranties
     contained in Article 3 or Buyer's rights under Article 12 for a breach
     thereof, any liability, obligation or responsibility under or related to
     Laws, Environmental Laws or the common law, whether such liability or
     obligation or responsibility is known or unknown, contingent or accrued,
     arising as a result of or in connection with (i) any violation or alleged
     violation of Environmental Laws or other Laws, whether prior to, on or
     after the Closing Date, with respect to the ownership or operation of any
     of the Assets; (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 on
     or after the Closing Date) caused (or allegedly caused) by the presence or
     Release of Hazardous Materials at, on, in, under, adjacent to or migrating
     from the Assets prior to, on or after the Closing Date, including but not
     limited to Hazardous Materials contained in building materials at or
     adjacent to the Assets or in the soil, surface water, sediments,
     groundwater, landfill cells, or in other environmental media at or near the
     Assets; and (iii) Remediation Measures (whether or not such Remediation
     Measures commenced before the Closing Date or commence on or after the
     Closing Date) in respect of Hazardous Materials that are present or have
     been Released prior to, on or after the Closing Date at, on, in, under,
     adjacent to or migrating from, the Assets or in the soil, surface water,
     sediments, groundwater, landfill cells, ash deposits or in other
     environmental media at or adjacent to the Assets.

          (f)  Without limiting the representations and warranties contained in
     Article 3 or Buyer's rights under Article 12 for a breach thereof, any and
     all liabilities, claims and expenses not otherwise enumerated above which
     in any way arise out of or are related to or associated with the ownership,
     possession, use or operation of the Assets or any business conducted
     therewith or therefrom before or after the Closing, including, but not
     limited to, any and all liabilities, claims and expenses associated with
     the decommissioning, dismantling or demolition of any portion of the
     Assets.

                                      -13-
<PAGE>

          (g)  Any and all liabilities of Seller for Remediation Measures under
     agreements entered into in accordance with Section 5.5.

          (h)  Such miscellaneous and sundry liabilities, identified by category
     on Schedule 2.3(h), if any, which liabilities are ancillary to the
        ---------------
     ownership and operation of the Assets and the Plant but are not otherwise
     enumerated above.

     2.4  Excluded Liabilities.  Buyer shall not assume or be obligated to pay,
          --------------------
perform or otherwise discharge any liabilities or obligations that are not
described in Section 2.3 as Assumed Liabilities or any of the following
liabilities or obligations (collectively, "Excluded Liabilities"), all of which
shall, as among the parties hereto, remain the sole responsibility of, and be
discharged and performed as and when due by, Seller:

          (a)  Liabilities or obligations associated with or arising from the
     Excluded Assets and the ownership, operation and conduct of any business in
     connection therewith or therefrom, and liabilities associated with or
     arising from Seller's obligations under this Agreement or any document or
     instrument executed in connection herewith.

          (b)  Except as set forth in Section 2.3(c), any of the liabilities or
     obligations of Seller or an Affiliate of Seller (including, without
     limitation, any liabilities or obligations under any tax sharing
     agreements) with respect to Taxes, or in respect of franchise taxes or
     taxes imposed upon or measured in whole or in part by income for any
     period, or with respect to interest, penalties or additions to any of the
     foregoing.

          (c)  Liabilities or obligations arising from the breach by the Owners
     prior to the Closing of any term, covenant, or provision of any of the
     Assumed Contracts except as set forth in Schedule 2.4(c).
                                              ---------------

          (d)  Liabilities or obligations under any Assigned Contract which
     would be included in the Assets but for the provisions of Section 2.8,
     unless Buyer is provided with the benefits thereunder as contemplated by
     such Section.

          (e)  Liabilities to third parties for personal injury or tort, or
     similar causes of action, arising solely out of the ownership or operation
     of the Assets prior to the Closing, other than liabilities or obligations
     assumed by Buyer pursuant to Section 2.3(d) or Section 2.3(e).

          (f)  Subject to Section 2.8, liabilities of Seller incurred in
     connection with its obtaining any consent, authorization or approval
     necessary for it to sell, convey, assign, transfer or deliver the Assets to
     Buyer hereunder.

          (g)  Any liability representing indebtedness for money borrowed or the
     deferred portion of the purchase price for any tangible Assets (and any
     refinancing thereof).  With respect to any such indebtedness or obligation
     not so assumed by Buyer that constitutes a lien or encumbrance upon any
     Asset, Seller agrees that on or prior to the Closing it will either pay or
     discharge its proportionate part (based on its percentage of

                                      -14-
<PAGE>

     the Undivided Interests) of such indebtedness or obligation in full or
     otherwise cause such lien or encumbrance to be removed from the Asset.

          (h)  Amounts due from Seller arising from Intercompany Transactions.

          (i)  Any liabilities to employees of Seller or its Affiliates or
     arising under any collective bargaining agreement, or pension, benefit or
     welfare plan of Seller or its Affiliates (it being understood, however,
     that nothing herein is intended to affect Buyer's obligations, if any,
     under the National Labor Relations Act).

          (j)  Intentionally left blank.

          (k)  Except for fines, penalties, costs, liabilities or obligations
     assumed by Buyer under Section 2.3(d) or 2.3(e), any fines, penalties or
     costs imposed by a Governmental Body resulting from (i) an investigation,
     proceeding, request for information or inspection before or by a
     Governmental Body pending or, to Seller's Knowledge, threatened prior to
     the Closing but only regarding acts which occurred prior to the Closing, or
     (ii) illegal acts of Seller occurring prior to the Closing.

          (l)  Any liability, obligation or responsibility under or related to
     Environmental Laws or the common law, whether such liability or obligation
     or responsibility is known or unknown, contingent or accrued, arising as a
     result of or in connection with the offsite transport prior to the Closing
     of Hazardous Materials from the real property included in the Assets, or
     the treatment, storage or disposal of Hazardous Materials at any site other
     than the real property included in the Assets, provided that for purposes
                                                    --------
     of this Section, if Hazardous Materials that are Released, disposed of,
     treated or stored at or on the real estate which is included in the Assets
     migrate to another location, then such location shall be deemed to be a
     site included in the real property that is included in the Assets.

          (m)  Any liability, obligation or responsibility in respect of the
     claims set forth in any of the pending lawsuits or other proceedings set
     forth in Schedule 2.4(m).
              ---------------

          (n)  Liabilities which would be Assumed Liabilities but for other
     express provisions of this Agreement providing for their retention by
     Seller and such other liabilities and obligations, if any, which would
     otherwise be Assumed Liabilities but which are identified on Schedule
                                                                  --------
     2.4(n).
     ------

The parties hereto agree and acknowledge that (x) with respect to Excluded
Liabilities for which Seller believes Owners other than, or in addition to,
Seller are, or are alleged to be, responsible to third parties, NPC shall, as
between Buyer and Seller, be entitled exclusively to control, defend and settle
any litigation, administrative or regulatory proceeding, and any investigation
or Remediation Measures (including without limitation any environmental
mitigation), arising out of or relating to any such Excluded Liabilities, (y)
with respect to other Excluded Liabilities (all of which being noted as such on
Schedule 2.4(m)), such exclusive right to control, defend and
---------------

                                      -15-
<PAGE>

settle shall remain with Seller, and (z) Buyer agrees to cooperate fully with
SCE or the Seller, as the case may be, in connection therewith.

     2.5  Related Agreements.  At the Closing, the parties (including any
          ------------------
pertinent Buyer Subsidiaries) will enter into the additional agreements, if any,
attached to and comprising Schedule 2.5 (the "Related Agreements").
                           ------------

     2.6  Purchase Price.
          --------------

          (a)  Consideration.  The purchase price for the Assets being sold by
               -------------
     Seller hereunder shall be One Hundred Thirty-Three Million Five Hundred
     Eleven Thousand One Hundred Eleven Dollars and 11/100 (U.S.
     $133,511,111.11) (the "Purchase Price"), subject to the further provisions
     of this Section 2.6.  The Purchase Price shall be subject to such
     adjustments, if any, as may occur pursuant to Sections 2.8, 2.9, 8.6, and
     8.8 or other provisions of this Agreement.  The amount to be paid by Seller
     to Buyer for the PPC being entered into by Buyer and Seller hereunder shall
     be Ten Million Five Hundred Thousand Dollars ($10,500,000) (the "PPC
     Amount").  At Closing, Buyer shall, or shall cause one or more Buyer
     Subsidiaries to, pay to Seller the Purchase Price less the PPC Amount, in
     cash by wire transfer of immediately available funds in U.S. dollars to an
     account specified in writing by Seller to Buyer not later than the second
     Business Day prior to the date payment is to be made.

          (b)  Purchase Price Allocation.  No later than twenty (20) Business
               -------------------------
     Days prior to the Closing, Seller and the Buyer shall agree upon an
     allocation of the Purchase Price among the Assets which shall be set forth
     in a schedule (the "Allocation Schedule") to be attached to this Agreement
     as Schedule 2.6(b).  The Purchase Price shall be allocated in accordance
        ---------------
     with the Allocation Schedule, and each party hereto shall be bound by such
     allocations for all purposes, shall account for and report the purchases
     and sales contemplated hereby for all purposes (including, without
     limitation, financial, accounting, and federal and state tax purposes) in
     accordance with such allocations, and shall not take any position (whether
     in financial statements, tax returns, or tax audits, or otherwise), which
     is inconsistent with such allocations without the prior written consent of
     all other parties, except to the extent, if any, required by applicable Law
     or generally accepted accounting principles.  In the event that Seller and
     the Buyer do not agree on an allocation of the Purchase Price pursuant to
     this Section, then the Purchase Price shall be allocated among the Assets
     in proportion to Seller's net book value therefor.

          (c)  Post-Closing Adjustments for Asset Changes.  The Purchase Price
               ------------------------------------------
     shall be subject to the following post-Closing adjustments, except to the
     extent such amounts have been charged to Buyer under the provisions of the
     Power Purchase Agreement entered into between the Buyer and Seller pursuant
     to Section 10.3 hereof:

               (i)  The Purchase Price shall be increased by the amount expended
          by Seller between the date hereof and the Closing Date for capital
          additions to or replacements of property, plant and equipment included
          in the Assets and other expenditures or repairs on property, plant and
          equipment included in the Assets that would be capitalized by NPC in
          accordance with its normal capitalization

                                      -16-
<PAGE>

          policies (together "Capital Expenditures"), which Capital Expenditures
          either appear on Schedule 2.6(c)(i) or, subject to the provisions of
                           ------------------
          Section 6.3(f), are otherwise deemed reasonably necessary by the
          Operating Agent or the Owners for the continued operation or
          maintenance of the Plant and the Assets or for compliance with Law,
          provided that such Capital Expenditures shall not include Supplies
          --------
          referred to in clause (ii) below.

               (ii)   The Purchase Price shall be further increased by Seller's
          allocated share of (A) the book value of the Supplies (other than
          fuel) included in the Operating Agent's regularly prepared reports
          (the "Inventory Control Data Reports") as of a recent date prior to
          the Closing that are prepared in accordance with the provisions set
          forth below (the Inventory Control Data Reports prepared as of a date
          within one hundred eighty (180) days of the date hereof being attached
          hereto as Schedule 2.6(c)(ii)(A)); (B) the book value of fuel included
                    ----------------------
          in the Operating Agent's report (the "Coal Inventory Report") as of a
          recent date prior to the Closing (net of the amount to be paid by the
          Buyer following the Closing for any fuel included in the Coal
          Inventory Report that has not been paid for prior to the Closing) that
          is prepared in accordance with the provisions set forth below (the
          Coal Inventory Report prepared as of a date within one hundred eighty
          (180) days of the date hereof being attached hereto as Schedule
                                                                 --------
          2.6(c)(ii)(B)); and (C) Prepayments that are included in the
          -------------
          Operator's Report as of a recent date prior to the Closing and
          Prepayments that are listed on Schedule 2.1(j), which shall be updated
                                         ---------------
          as of the Closing.

               (iii)  In order to implement the foregoing, the Operating Agent
          shall cause to be prepared and shall provide Buyer, as soon as
          possible after the Closing Date and in no event later than sixty (60)
          days thereafter, with a schedule setting forth Capital Expenditures
          between the date hereof and the Closing Date in reasonable detail so
          as to permit Buyer to be able to determine the extent to which such
          Capital Expenditures are or are not listed on Schedule 2.6(c)(i) and
                                                        ------------------
          shall further provide Buyer with a revised Schedule 2.6(c)(ii)(A),
                                                     ----------------------
          2.6(c)(ii)(B) and Schedule 2.1(j) calculated as of the Closing (or the
          -------------     ---------------
          nearest month-end preceding the Closing Date if a mid-month
          preparation of the Inventory Control Data Reports, the Coal Inventory
          Report or Operator's Report is impracticable or otherwise burdensome).
          Such Closing Date Inventory Control Data Reports, Coal Inventory
          Report or Operator's Report shall be prepared consistently with the
          method of preparation used by the Operating Agent and on the same
          basis as Schedule 2.6(c)(ii)(A), Schedule 2.6(c)(ii)(B) or Schedule
                   ----------------------  ----------------------    --------
          2.1(j) attached hereto, and as applicable, it being acknowledged that
          ------
          no physical inventory need be taken, that the measurement of the book
          value of the Supplies, including fuel, and of Prepayments, in
          accordance with the Operating Agent's customary accounting practices
          with respect thereto, is intended merely to provide a reasonable
          estimate of the fair market value thereof as of the Closing rather
          than a definitive listing of actual inventory levels or of prepayments
          as of the Closing, and that, absent manifest error or fraud, such
          Inventory Control Data Reports, Coal Inventory Report and Operator's
          Report shall be conclusive as between the parties for

                                      -17-
<PAGE>

          purposes of the adjustment to the Purchase Price contemplated by
          clause (ii) above.

               (iv)   Buyer shall have thirty (30) days to review and make
          inquiry concerning such schedules delivered by the Operating Agent
          after the Closing Date. If an adjustment to the amount of the Purchase
          Price is required by this Section 2.6(c), then the applicable payment
          or refund shall be made within ten (10) days following the expiration
          of such thirty (30) day period by wire transfer of immediately
          available funds, together with interest thereon for the number of days
          from and including the Closing Date to such settlement date (but
          excluding such settlement date) at the rate per annum equal to the
          prime rate of interest during such period as such rate is published in
          the Western Edition of the Wall Street Journal, computed on the basis
          of actual days elapsed over a 365-day year.

               (v)    Any dispute concerning the amount of the adjustment
          required by this Section 2.6(c) shall be resolved pursuant to Section
          2.9.

          (d)  Adjustments For Transactions By Other Owners.  In the event that,
     prior to the second anniversary of the Closing Date (the "Other
     Transactions Date"), the Buyer, or any Affiliate of Buyer or any group of
     which Buyer or an Affiliate of Buyer is a member, or any successor or
     assign of the foregoing ("Buyer Group") enters into an agreement or
     consummates a transaction to acquire, directly or indirectly, any
     additional portion of the Undivided Interests and related assets from an
     Owner, or any Affiliate or successor or assign thereof, at an Extended
     Price therefor that exceeds the Purchase Price that was paid, or that would
     be payable to Seller under this Agreement had the Closing occurred
     simultaneously with the consummation of the Buyer Group's transaction for
     such additional portion of the Undivided Interests, then the Purchase Price
     shall be increased by the amount of such excess.  The term "Extended Price"
     shall mean the amount derived by the following formula:

               Extended Price = C/OP   X    SP

          Where:

               C   =  The aggregate value of all consideration directly or
                      indirectly paid or payable by the purchaser to the seller
                      (including all contingent payments at the maximum
                      potential value thereof) for the assets sold, assigned,
                      transferred or conveyed in such transaction, including
                      cash, notes, securities, property, rights, and other
                      things of value, plus the aggregate value of liabilities
                      assumed by the purchaser in such transaction which are
                      Excluded Liabilities hereunder, minus the aggregate value
                      of liabilities not assumed by the purchaser in such
                      transaction which are Assumed Liabilities hereunder.

                                      -18-
<PAGE>

               OP  =  The percentage of the Undivided Interests acquired in such
                      transaction (without giving effect to Section 2.12(d) of
                      the Asset Sale Agreement between Buyer and SCE related to
                      the Plant).

               SP  =  The percentage of the Undivided Interests to be sold by
                      Seller hereunder.

     Any adjustment of the Purchase Price under the foregoing provisions that
     occurs simultaneously with or prior to the Closing shall (subject to the
     occurrence of the Closing) be paid to Seller by wire transfer of funds at
     the Closing in accordance with the payment provisions hereof.  Any
     adjustment of the Purchase Price under the foregoing provisions that occurs
     after the Closing shall be paid to Seller by wire transfer of funds upon
     consummation of the Buyer Group's transaction for such additional portion
     of the Undivided Interests.  The parties understand that for purposes of
     this Section 2.6(d), the two percent (2%) of the Undivided Interests that
     may be retained by SCE under Section 2.12(d) of the Asset Sale Agreement
     between Buyer and SCE shall be deemed to be included in the Undivided
     Interests to be sold by SCE thereunder.  In the event that any member of
     the Buyer Group gives any consideration to an existing Owner, or any
     Affiliate or successor or assign thereof, pursuant to Section 2.7(f), such
     consideration shall not be considered to be part of the aggregate value of
     consideration, C, as defined above, and shall not be part of the
     calculation of the Extended Price.

          (e)  Closing Adjustments.  The Purchase Price shall be subject to the
               -------------------
     following adjustments at Closing:

               (i)    The Purchase Price shall be increased by Four Million Six
          Hundred Sixty-Six Thousand Six Hundred Sixty-Six Dollars and 66/100
          ($4,666,666.66) in the event that the lawsuit entitled SCE, et al. v.
          Peabody Western Coal Co. (including Peabody's counterclaims filed with
          respect thereto) is dismissed with prejudice prior to the Closing.

               (ii)   The Purchase Price shall be increased by Four Hundred
          Sixty-Six Thousand Six Hundred Sixty-Six Dollars and 66/100
          ($466,666.66) in the event that, effective as of the Closing, Buyer or
          an Affiliate of Buyer becomes the Operating Agent under the Operating
          Agreement and such Operating Agent and SCE or an Affiliate of SCE
          enter into a mutually acceptable agreement whereby such Operating
          Agent and SCE or an Affiliate of SCE, agree that SCE or its Affiliate,
          will provide operations and maintenance services to the Plant on and
          after the Closing Date for a period of two (2) years in accordance
          with the requirements of California Assembly Bill 1890.

     2.7  Buyer Group Transactions With Other Owners.
          ------------------------------------------

          (a)  Until the Other Transactions Date, Buyer agrees that it will not,
     and it will cause each member of the Buyer Group not to, directly or
     indirectly enter into any agreement, or otherwise consummate a transaction,
     with an existing Owner, or any Affiliate or successor or assign thereof, to
     acquire, directly or indirectly, any additional

                                      -19-
<PAGE>

     portion of the Undivided Interests and related assets (an "Other Owner's
     Agreement"), unless no later than the earlier of the execution of such
     agreement or consummation of such transaction, the existing Owner and its
     successors and assigns shall have irrevocably and unconditionally:

               (i)    Waived in writing any and all rights or privileges which
          such Person may have (whether such rights or privileges arise under
          Section 12 of the Co-Tenancy Agreement or otherwise) to exercise any
          right of first or last refusal, consent, approval or similar right, or
          to enforce any notice or waiting period, in respect of the entry into
          or consummation of the Transactions contemplated hereby as the same
          may be amended or modified from time-to-time; and

               (ii)   Agreed in writing (which agreements shall be made
          expressly for the benefit of Seller, its Affiliates, successors and
          assigns) that:

                      (A)  Notwithstanding any provision to the contrary in the
               Co-Tenancy Agreement or otherwise, following the date of their
               assumption hereunder by the Buyer or a Buyer Subsidiary, neither
               Seller, nor any of its Affiliates, successors or assigns, shall
               have any liability or obligation for, and such existing Owner and
               its successors, assigns and Affiliates shall have no right of
               action or claim against, Seller or any of its Affiliates,
               successors or assigns, for any Assumed Liabilities; provided,
                                                                   --------
               however, nothing contained herein shall affect the obligations of
               the Owners under the Co-Tenancy Agreement or the Project
               Agreements (as such term is defined in the Co-Tenancy Agreement)
               for their proportionate share of any Excluded Liabilities; and

                      (B)  Prior to the entry into any Other Owner's Agreement,
               Seller shall have approved in form and substance such other
               Owner's Agreement, which approval shall not be unreasonably
               withheld.

          (b)  With respect to each Other Owner's Agreement entered into in
     compliance with this Agreement prior to the Other Transactions Date between
     a member of the Buyer Group and an existing Owner, or any Affiliate or
     successor or assign thereof, Seller hereby irrevocably and unconditionally:

               (i)    Waives any and all rights or privileges which Seller may
          have (whether such rights or privileges arise under Section 12 of the
          Co-Tenancy Agreement or otherwise) to exercise any right of first or
          last refusal, consent, approval or similar right, or to enforce any
          notice or waiting period, in respect of the entry into or consummation
          of the transactions contemplated by such Other Owner's Agreement; and

               (ii)   Agrees (which agreements shall be made expressly for the
          benefit of such other Owner, its Affiliates, successors and assigns)
          that notwithstanding any provision to the contrary in the Co-Tenancy
          Agreement or otherwise,

                                      -20-
<PAGE>

          following the date of their assumption under the Other Owner's
          Agreement by the Buyer or a Buyer Subsidiary (subject to Section
          2.12), neither such other Owner, nor any of its Affiliates, successors
          or assigns, shall have any liability or obligation for, and Seller and
          its successors, assigns and Affiliates shall have no right of action
          or claim against, such other Owner or any of its Affiliates,
          successors or assigns, for any obligations and liabilities which Buyer
          or a Buyer Subsidiary has agreed to assume under the terms of the
          Other Owner's Agreement; provided, however, nothing contained herein
                                   --------
          shall affect the obligations of the Owners under the Co-Tenancy
          Agreement or the Project Agreements (as such term is defined in the
          Co-Tenancy Agreement) for their proportionate share of any liabilities
          in the nature of Excluded Liabilities.

          (c)  In the event that a member of the Buyer Group enters into an
     Other Owner's Agreement prior to the Other Transactions Date, then at the
     closing of the purchase and sale of Undivided Interests contemplated
     therein, Buyer shall cause such member of the Buyer Group or such other
     Owner to pay a "pro rata share" of Seller's Reimbursable Costs in
     accordance with the provisions of this Section 2.7(c), unless such payment
     has been waived in writing by Seller on the basis of such other Owner's
     prior reimbursement of Seller's Reimbursable Costs outside the provisions
     of this Agreement.

               (i)    For purposes of this Section 2.7(c), "Seller's
          Reimbursable Costs" shall be equal to Seller's good faith itemized
          estimate, delivered to Buyer at the Closing, of Seller's portion of
          expenses set forth in Sections 5.3(a)-(g), plus any breakup fee paid
          in accordance with Section 11.4.

               (ii)   For purposes of this Section 2.7(c), "pro rata share"
          shall mean the percentage of the Undivided Interests owned, as of the
          date hereof, by the Owner that is the counterparty to the pertinent
          Other Owner's Agreement, divided by the sum of the percentage of the
          Undivided Interests owned, as of the date hereof, by: (A) such Owner;
          (B) Seller; and (C) any other Owner, if (1) it owns Undivided
          Interests as of the date hereof that are sold to a member of the Buyer
          Group prior to the closing under the Other Owner's Agreement in
          question, and (2) such sale was subject to the provisions of this
          Section 2.7(c) or was otherwise subject to a written waiver in
          accordance with the introductory paragraph of this Section 2.7(c).

               (iii)  The pro rata share of Seller's Reimbursable Transaction
          Costs payable hereunder shall be payable to Seller and to the other
          Owners described in clause (ii)(C) above, if any, in proportion to
          their relative ownership of Undivided Interests as of the date hereof.

          (d)  In order to protect Seller's legitimate interests arising under
     this Agreement, the Co-Tenancy Agreement and the Operating Agreement, Buyer
     agrees that, prior to the Closing, no member of a Buyer Group will, and it
     will exercise its best efforts so that no representative or other Person
     purporting to act on behalf of any member of a Buyer Group will, directly
     or indirectly, solicit, encourage or engage in  any substantive

                                      -21-
<PAGE>

     discussions with, or negotiate or otherwise deal with, or exchange any
     information with, any other Owner or any Affiliate thereof or any Person
     purporting to act on such Owner's behalf concerning any acquisition,
     transfer or other disposition of the Undivided Interests and related assets
     of such Owner, unless (i) Buyer provides Seller with at least one (1)
     Business Day's notice prior to any such discussions, negotiations, dealings
     or exchange, (ii) Buyer and its representatives remain free to, and do,
     consult with and inform Seller on a regular and current basis about the
     substance, progress and material developments in respect of any such
     discussions, negotiations, dealings or exchange, (iii) Buyer and its
     representatives provide Seller, on a regular and current basis, with copies
     of all material correspondence, written proposals and draft and final
     agreements related to such discussions, negotiations, dealings or exchange,
     and (iv) Seller is not limited in its freedom to engage in discussions and
     communications with any such Owner or other Owners or their respective
     representatives concerning such discussions, negotiations, dealings or
     exchange, subject to Seller advising Buyer, on a regular and current basis,
     of the substance of such discussions and communications.

          (e)  The parties hereto agree that any breach of the foregoing
     provisions of this Section 2.7 by a member of the Buyer Group shall be a
     material breach of this Agreement.

          (f)  Notwithstanding any other provision of this Section 2.7, if
     necessary or useful in the reasonable judgment of Buyer, any member of the
     Buyer Group may give valuable consideration to any third party to obtain
     such third party's consent to any aspect of this Agreement or the
     Transactions.  In such event, and notwithstanding that the Buyer Group may
     subsequently, and not in connection with obtaining such consent, enter into
     an Other Owner's Agreement, any such consideration paid to an other Owner
     in accordance with the preceding sentence shall not be considered as part
     of the consideration for such Owner's portion of the Undivided Interests
     and related assets.

     2.8  No Assignment If Breach.  Notwithstanding anything contained in this
          -----------------------
Agreement to the contrary, this Agreement shall not constitute an agreement to
assign any Asset, or assume any Assumed Liability, if the attempted assignment
or assumption of the same, as a result of the absence of the consent or
authorization of a third party or failure of a right of first refusal or notice
period to expire, would constitute a breach or default under any  agreement,
encumbrance or commitment, would violate any Law or would in any way adversely
affect the rights, or increase the obligations, of any party to this Agreement
with respect thereto.  If any such consent or authorization is not obtained, or
if an attempted assignment or assumption would be ineffective or would adversely
affect the rights or increase the obligations of  any party to this Agreement
with respect to any such agreement, encumbrance or commitment, so that Buyer or
the pertinent Buyer Subsidiary would not, in fact, receive the rights, or assume
the obligations with respect thereto as they exist prior to such attempted
assignment or assumption, then the parties to this Agreement shall enter into
such reasonable cooperative arrangements as may be reasonably acceptable to the
parties to this Agreement (including, without limitation, sublease, agency,
management, indemnity or payment arrangements and enforcement at the cost and
for the benefit of Buyer or the pertinent Buyer Subsidiary of any and all rights
against an involved third party) to provide for or impose upon Buyer or the
pertinent Buyer Subsidiary the benefits of

                                      -22-
<PAGE>

such Asset or the obligations of such Assumed Liability, as the case may be, and
any transfer or assignment to Buyer or the pertinent Buyer Subsidiary of any
such Asset, or any assumption by Buyer or a Buyer Subsidiary of any such Assumed
Liability, which shall require such consent or authorization of a third party
that is not obtained, shall be made subject to such consent or authorization
being obtained. If the parties cannot agree on any such arrangement, or any such
arrangement would not be reasonably practicable, to provide Buyer or a Buyer
Subsidiary with materially all the benefits of such Asset or materially all the
obligations of such Assumed Liability, then such Asset or Assumed Liability, as
the case may be, shall be excluded from the Transactions and shall be deemed to
be an Excluded Asset or an Excluded Liability, as the case may be, and the
parties hereto shall negotiate in good faith an equitable adjustment in the
Purchase Price, or resolve any disagreement respecting such adjustment in
accordance with the procedures of Section 2.9.

     2.9  Procedures for Certain Purchase Price Adjustments.  If circumstances
          -------------------------------------------------
exist that result in any disagreement in respect of adjustments to the Purchase
Price or that otherwise require the parties to negotiate in good faith equitable
adjustments to the Purchase Price pursuant to the provisions of Section 2.6(c)
(respecting certain post-Closing adjustments), Section 2.8 (respecting absence
of consents), Section 8.6 (respecting the condition of title to interests in
real property) or Section 8.8 (respecting casualty losses or condemnation)
(Sections 2.6(c), 2.8, 8.6, 8.8, and this Section 2.9 being collectively
referred to as the "Adjustment Sections"), then and in any of such events, such
negotiations, and the resolution of disagreements, shall be conducted in
accordance with the provisions of this Section 2.9. The parties shall negotiate
such equitable adjustments in the Purchase Price in good faith prior to the
Closing Date (as may be extended by mutual agreement of the parties), provided
                                                                      --------
that any adjustment in the Purchase Price shall be consistent with the
Allocation Schedule (if such schedule has been previously agreed upon). If the
parties are unable to agree upon an adjustment by the fifth Business Day prior
to the Closing Date, then such Closing Date (the "Original Closing Date") (and
the Termination Date, if necessary) shall be extended to the fifth Business Day
following completion of the procedure described in this Section 2.9 and the
determination of the pertinent adjustment or, if longer, the fifth Business Day
following any further regulatory approvals which may be necessary (but not more
than forty-five (45) Business Days in the aggregate), to provide for the
opportunity to resolve such disagreement pursuant to the provisions of this
Section 2.9. On the day the Closing would have occurred but for the absence of
agreement between the parties, each party shall designate an individual (who may
not be a present or former officer, director, partner or employee of either
party or any of their respective Affiliates, or of any present investment
banking firm, accounting firm, law firm or attorney of or for either party or
any of the party's Affiliates) to mediate such disagreement, and advise the
other party in writing of the identity of such individual, which advice shall be
accompanied by a list of up to ten (10) suggested neutral individuals to serve
as a third mediator. The mediators originally designated by each party shall
promptly confer about the selection of a third mediator from such lists, and
within five (5) Business Days following the Original Closing Date (or
Termination Date, as the case may be), the originally designated mediators shall
agree upon and (subject to availability) select the third mediator from the
lists submitted by the parties or otherwise, provided that if the originally
                                             --------
designated mediators cannot agree upon a third mediator by such date, the third
mediator shall be a retired judge designated by Judicial and Arbitration
Mediation Services, Inc., located in Los Angeles, California. The three
mediators so selected are herein referred to as the "Panel". Within seven (7)
Business Days following the Original Closing Date or, if later, within three (3)

                                      -23-
<PAGE>

Business Days following the designation of the third mediator, each party shall
submit to the Panel in writing, its proposed equitable adjustments in the
Purchase Price. Such proposals shall be materially in accordance with the last
proposals made by such party to the other party during the course of the
aforementioned good faith negotiations between the parties. The parties shall
additionally submit such memoranda, arguments, briefs and evidence in support of
their respective positions, and in accordance with such procedures, as a
majority of the Panel may determine. Within five (5) Business Days following the
due date of such submissions, as to each adjustment of the Purchase Price about
which there is disagreement, the Panel shall, by majority vote, select the
proposed adjustment of the Purchase Price proposed by one of the parties, it
being agreed that the Panel shall have no authority to alter any such proposal
in any way. Such determination by the Panel shall be final and binding between
the parties as to such adjustments of the Purchase Price and shall not be
subject to further challenge by the parties pursuant to Section 13.9 hereof or
otherwise. Thereafter, the parties shall, subject to the terms and conditions of
this Agreement and the receipt of any further regulatory approvals that may
become necessary as a result of such adjustments, consummate the Transactions on
the basis of such adjustments at a mutually agreeable time and place or places,
in accordance with and subject to the provisions of Article 10, which shall be
no later than the fifth Business Day following the determination of such
adjustments (and receipt of any necessary regulatory approvals therefor) or such
later date as the parties may agree upon. Subject to the foregoing, the Panel
may determine the issues in dispute following such procedures, consistent with
the language of this Agreement, as it deems appropriate to the circumstances and
with reference to the amounts in issue, but in any event consistent with the
Allocation Schedule to the extent applicable. No particular procedures are
intended to be imposed upon the Panel, it being the desire of the parties that
any such disagreement shall be resolved as expeditiously and inexpensively as
reasonably practicable. No member of the Panel shall have any liability to the
parties in connection with service on the Panel, and the parties shall provide
such indemnities to the members of the Panel as they shall reasonably request.

     2.10 Intentionally Left Blank.
          ------------------------

     2.11 Intentionally Left Blank.
          ------------------------

     2.12 Intentionally Left Blank.
          ------------------------

     2.13 Assignment of Rights and Obligations to Buyer Subsidiaries.  For
          ----------------------------------------------------------
purposes of this Agreement, the term "Buyer Subsidiary" shall refer to any
direct or indirect subsidiary of Buyer and any constituent partner or
participant in Buyer (if Buyer is a partnership, joint venture, consortium or
other association or organization) to whom any of Buyer's rights and obligations
hereunder are assigned in compliance with the requirements of this Section.
Notwithstanding any contrary provisions contained herein, the parties hereto
agree that, prior to and after the Closing, Buyer, in its sole discretion, may
assign any or all of its rights and obligations arising under this Agreement,
any Related Agreement or the Power Purchase Agreement to one or more Buyer
Subsidiaries, provided that, unless Seller shall agree to alternative
              --------
arrangements in writing, no such assignment shall relieve Buyer of any
obligation or liability (i) for the Purchase Price hereunder or (ii) arising on
or after the Closing Date (including under contracts existing at the Closing
Date), and provided further that, unless Seller shall agree to alternative
           -------- -------
arrangements in writing, the following shall apply:

                                      -24-
<PAGE>

          (a)  Buyer will provide Seller with prompt written notice of any such
     assignment.

          (b)  No such assignment shall be effected if the making of the
     assignment will result in Seller's or Buyer's inability to obtain any
     consent or authorization reasonably required to consummate the Transactions
     or to avoid economic detriment to the Seller arising from the consummation
     of the Transactions.

          (c)  Each such Buyer Subsidiary that is an assignee of Buyer shall
     irrevocably appoint Buyer as an authorized representative and agent
     authorized to act for, to bind and to receive notices and payments on
     behalf of the Buyer Subsidiaries in all matters arising from or related to
     this Agreement and the Transactions.

          (d)  Irrespective of any such assignment or the identity of the party
     or parties executing any Related Agreements:

               (i)    Unless subsection (h) applies, Buyer shall remain jointly
          and severally liable to Seller and to third parties with respect to
          any Assumed Liabilities transferred to or undertaken by a Buyer
          Subsidiary, and shall remain jointly and severally liable to Seller
          with respect to any other covenant, obligation or liability to Seller
          hereunder or under a Related Agreement or the Power Purchase Agreement
          that is transferred to, or undertaken by, a Buyer Subsidiary,
          including without limitation, the payment of all sums due to Seller
          hereunder or under a Related Agreement or the Power Purchase
          Agreement, it being understood that all such covenants, obligations
          and liabilities shall constitute the direct and primary obligation of
          Buyer to Seller (and to third parties in the case of the Assumed
          Liabilities); provided that Buyer's aggregate liability for Assumed
                        --------
          Liabilities, other than as set forth in the first proviso to the
          second sentence of this Section 2.13 with respect to which no limit
          shall apply, shall be limited to Twenty-Three Million Three Hundred
          Thirty-Three Thousand Three Hundred Thirty-Three Dollars
          ($23,333,333); and

               (ii)   Without limiting the generality of the foregoing, if and
          to the extent that the application of any principle of Law or of
          common law would construe the retention by Buyer of the direct and
          primary obligation to perform any and all obligations, liabilities or
          covenants assigned to or assumed or undertaken by a Buyer Subsidiary
          to be a guaranty by the Buyer of the Buyer Subsidiary's performance,
          then the Buyer hereby irrevocably, absolutely and unconditionally
          guarantees to Seller the full, prompt and faithful performance by such
          Buyer Subsidiary of all covenants and obligations to be performed by
          such Buyer Subsidiary under this Agreement and any Related Agreement
          assigned to such Buyer Subsidiary.

          (e)  Buyer further hereby agrees that a separate action or actions may
     be brought and prosecuted against Buyer for any such covenant, obligation
     or liability assigned to a Buyer Subsidiary, whether action is brought
     against the pertinent Buyer

                                      -25-
<PAGE>

     Subsidiary or whether such Buyer Subsidiary is joined in any such action or
     actions (Buyer hereby waiving any right to require Seller to proceed
     against a Buyer Subsidiary).

          (f)  Buyer hereby authorizes Seller, without notice and without
     affecting Buyer's liability hereunder, from time to time to (i) renew,
     compromise, extend, accelerate, or otherwise change the terms of any
     obligation of a Buyer Subsidiary hereunder or under any Related Agreement
     with the agreement of such Buyer Subsidiary, (ii) take and hold security
     for the obligations of any such Buyer Subsidiary and exchange, enforce,
     waive and release any such security, and (iii) apply such security and
     direct the order or manner of sale thereof as Seller in its discretion may
     determine.

          (g)  Buyer hereby further waives:

               (i)    Any defense that may arise by reason of the incapacity or
          lack of authority of any Buyer Subsidiary;

               (ii)   Any defense based upon a statute or rule of law which
          provides that the obligations of a surety must be neither larger in
          amount nor in other respects more burdensome than those of the
          principal;

               (iii)  Any duty on the part of Seller to disclose to Buyer any
          facts that Seller may now or hereafter know about a Buyer Subsidiary;

               (iv)   Any right to subrogation, reimbursement, exoneration or
          contribution or any other rights that would result in Buyer being
          deemed a creditor of a Buyer Subsidiary under the federal Bankruptcy
          Code or any other law, in each case arising from the existence or
          performance of obligations of a Buyer Subsidiary hereunder or under
          any Related Agreement; and

               (v)    Any and all other rights and defenses available to Buyer
          under the Law of any jurisdiction of a nature similar to those
          described in Sections 2787 to 2855, inclusive, of the California Civil
          Code, including, without limitation, (A) any and all defenses Buyer
          may have by reason of any election of remedies by Seller, and (B) any
          and all rights, defenses and other benefits under judicial decisions
          applying such statutes.

          (h)  At Buyer's election, Seller shall enter into a novation agreement
     in a mutually acceptable form under which one or more of the Buyer
     Subsidiaries shall be substituted for Buyer hereunder and shall assume and
     become liable for all obligations and liabilities of Buyer hereunder and
     under the Related Agreements; provided that  Buyer shall provide Seller
                                   --------
     with a guarantee of the following payments to the extent not otherwise made
     by a Buyer Subsidiary:  (x) the payment of the Purchase Price hereunder,
     (y) the payments as set forth in the first proviso to the second sentence
     of this Section 2.13; and (z) payments with respect to the Assumed
     Contracts, other than as set forth in the first proviso to the second
     sentence of this Section 2.13, subject to the aggregate limitation set
     forth in paragraph (d)(i) above.

                                      -26-
<PAGE>

                                   ARTICLE 3
                   REPRESENTATIONS AND WARRANTIES OF SELLER
                   ----------------------------------------

     Seller hereby represents and warrants to Buyer, as of the date hereof, as
follows, except as set forth in Schedules numbered in relation to the Sections
set forth below:

     3.1  Organization and Corporate Power.  Seller is a corporation duly
          --------------------------------
incorporated and validly existing under the laws of, and is authorized to
exercise its corporate powers, rights and privileges and is in good standing in,
the State of Nevada and has full corporate power to carry on its business as
presently conducted and to own or lease and operate its properties and assets
now owned or leased and operated by it and to perform the transactions on its
part contemplated by this Agreement, the Related Agreements and all other
agreements contemplated hereby.

     3.2  Authority and Enforceability.  The execution, delivery and performance
          ----------------------------
of this Agreement, the Related Agreements and all other agreements contemplated
hereby and the consummation of the transactions contemplated hereby and thereby
have been duly and effectively authorized by the board of directors of Seller;
no other corporate act or proceeding on the part of Seller, its board of
directors or its shareholders is necessary to authorize this Agreement, any
Related Agreement, any such other agreement or the transactions contemplated
hereby and thereby. This Agreement has been, and each of the Related Agreements
and the other agreements contemplated hereby will, as of the Closing, have been,
duly executed and delivered by Seller, and this Agreement constitutes, and each
Related Agreement and each such other agreement when executed and delivered will
constitute, a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms, except as it may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter in
effect relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding may be brought.

     3.3  No Breach or Conflict.  Subject to the provisions of Sections 3.4(a)
          ---------------------
and 3.4(b) below regarding private party and governmental consents, and except
for compliance with the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and any regulatory or
licensing Laws applicable to the businesses and assets represented by the
Assets, the execution, delivery and performance by Seller of this Agreement and
the Related Agreements do not: (a) conflict with or result in a breach of any of
the provisions of the Articles of Incorporation or Bylaws or similar charter
documents (the "Charter Documents") of Seller; (b) contravene any Law or cause
the suspension or revocation of any License presently in effect, which affects
or binds Seller or any of its properties, except where such contravention,
suspension or revocation will not have a Material Adverse Effect (as defined
below) on the Assets and will not affect the validity or enforceability of this
Agreement and the Related Agreements or the validity of the Transactions
contemplated hereby and thereby; or (c) conflict with or result in a breach of
or default (with or without notice or lapse of time or both) under any material
agreement or instrument to which Seller is a party or by which it or any of its
properties may be affected or bound, the effect of which conflict, breach, or
default, either individually or in the aggregate, would be a Material Adverse
Effect on the Assets. As used

                                      -27-
<PAGE>

herein, a "Material Adverse Effect": (x) when used with respect to the Assets,
means a material adverse effect on the Assets and on the operation thereof,
taken as a whole; (y) when used with respect to any portion of the Assets
(including, without limitation, the Plant), means a material adverse effect on
such portion of the Assets and on the operation thereof, taken as a whole; and
(z) when used with respect to an entity, such as Seller or Buyer, means a
material adverse effect on the business, condition (financial or otherwise) and
results of operations of such entity taken as a whole (including any
subsidiaries of such entity) or on the ability of such entity to consummate the
Transactions. Notwithstanding the foregoing, the term "Material Adverse Effect"
shall not include: (1) any change affecting the international, national,
regional or local electric industry as a whole; (2) any change or effect
resulting from changes in the international, national, regional or local
wholesale or retail markets for electric power; (3) any change or effect
resulting from changes in the international, national, regional or local markets
for any fuel used in connection with the Assets; (4) any change or effect
resulting from changes in the North American, national, regional or local
electric transmission systems or operations thereof; (5) any order of any court
or Governmental Body applicable to providers of generation, transmission or
distribution of electricity generally that imposes restrictions, regulations or
other requirements thereon; or (6) any change or effect resulting from action or
inaction by a Governmental Body with respect to an independent system operator
or retail access in California, Nevada or Arizona.

     3.4  Approvals.
          ---------

          (a)  Except as set forth in Schedule 3.4(a), the execution, delivery
                                      ---------------
     and performance by Seller of this Agreement and the Related Agreements do
     not require the authorization, consent or approval of any non-governmental
     third party of such a nature that the failure to obtain the same would have
     a Material Adverse Effect on the Assets or the Plant substantially as they
     have heretofore operated.

          (b)  Except as set forth in Schedule 3.4(b), the execution, delivery
                                      ---------------
     and performance by Seller of this Agreement and the Related Agreements do
     not require the authorization, consent, approval, certification, license or
     order of, or any filing with, any court or Governmental Body of such a
     nature that the failure to obtain the same would have a Material Adverse
     Effect on the Assets or the Plant, except for compliance with the HSR Act
     and approvals by the Public Utilities Commission of Nevada ("PUCN") and the
     Federal Energy Regulatory Commission ("FERC") necessary to consummate the
     Transactions and to permit Buyer to acquire the Assets and to generate
     electricity from the Plant for sale.

     3.5  Permits.  Except as set forth in Schedule 3.5, at the date hereof the
          -------                          ------------
Owners or the Operating Agent possess all Licenses necessary for operation of
the Plant in the manner presently operated, other than those the absence of
which would not have a Material Adverse Effect on the Assets or the Plant.  A
true and correct copy of each such License has previously been delivered to or
made available for inspection by Buyer.

     3.6  Compliance with Law.  Except as set forth in Schedule 3.6, and except
          -------------------                          ------------
for the matters that are the subject of Sections 3.5 and 3.7 and the Schedules,
if any, related thereto, to the best of Seller's Knowledge, the Plant is in
compliance in all material respects with all pertinent Laws and Licenses related
to operation thereof as presently operated, other than

                                      -28-
<PAGE>

violations as would not, individually or in the aggregate, have a Material
Adverse Effect on the ownership, use or operation of the Assets or on the
ability of Seller to execute and deliver the Agreement and the Related
Agreements and consummate the Transactions contemplated hereby and thereby.

     3.7  Hazardous Substances.  To the best of Seller's Knowledge, except as
          --------------------
disclosed by the "Phase I" and "Phase II" environmental site assessments
prepared by outside environmental consultants and made available for inspection
by Buyer, by the additional testing by Buyer, if any, or as otherwise disclosed
on Schedule 3.7:
   ------------

          (a)  There has not been a Release of Hazardous Material on or
     otherwise affecting the Assets (other than Releases involving de minimis
     quantities of Hazardous Materials) that: (i) constitutes an unremedied
     material violation of any Environmental Law if the effect of such violation
     imposes a current remediation obligation on the part of the Owners; (ii)
     currently imposes any material release-reporting obligations on the Owners
     under any Environmental Law that have not been or are not being complied
     with; or (iii) currently imposes any material clean-up or remediation
     obligations of the Owners under any Environmental Law;

          (b)  The Owners, during at least the last three years, have complied,
     and currently are in compliance, in all material respects, with all
     Environmental Laws that govern the Assets;

          (c)  The Owners have all material Licenses required under the
     Environmental Laws for operation of the Plant, are in compliance in all
     material respects with all such Licenses, and during the three-year period
     preceding the date of the Agreement have not received any notice that:  (i)
     any such existing License will be revoked; or (ii) any pending application
     for any new such License or renewal of any existing License will be denied;

          (d)  The Operating Agent has not received any currently outstanding
     written notice of any material proceedings, action, or other claim or
     liability arising under any Environmental Laws (including, without
     limitation, notice of potentially responsible party status under the
     Comprehensive Environmental Response, Compensation, and Liability Act, 42
     U.S.C. (S)(S)9601 et seq. or any state counterpart) from any Person or
     Governmental Body regarding the Plant; and

          (e)  No portion of the Assets contains or has ever contained any
     underground storage tank, surface impoundment or similar device used for
     the management of wastewater, or other waste management unit dedicated to
     the disposal, treatment, or long-term (greater than 90 days) storage of
     waste materials.

     3.8  Title to Personal Property.  Seller has good and defensible title, or
          --------------------------
valid and effective leasehold rights in the case of leased property, to all
tangible personal property included in the Assets to be sold, conveyed,
assigned, transferred and delivered to Buyer or a Buyer Subsidiary by Seller,
free and clear of all liens, charges, claims, pledges, security interests,
equities and encumbrances of any nature whatsoever, except for those created or
allowed to be

                                      -29-
<PAGE>

suffered by Buyer or such Buyer Subsidiary and except for the following
(individually and collectively, the "Permitted Encumbrances"): (i) the lien of
current taxes not delinquent, (ii) liens listed on Schedule 3.8, (iii) the
                                                   ------------
Assumed Liabilities, (iv) such consents, authorizations, approvals and licenses
referred to in Sections 3.4(a) and 3.4(b), and (v) liens, charges, claims,
pledges, security interests, equities and encumbrances arising under the Co-
Tenancy Agreement, the Operating Agreement and the Project Agreements referred
to therein, or which will be discharged or released either prior to, or
substantially simultaneously with, the Closing and other liens and possible
minor matters that in the aggregate are not substantial in amount and do not
materially detract from or interfere with the present or intended use of such
property.

     3.9  Contracts.  Except for such matters which individually and in the
          ---------
aggregate do not have a Material Adverse Effect on the Assets or as otherwise
disclosed on Schedule 3.9, to the best of Seller's Knowledge, (a) there is no
             ------------
liability to any third party by reason of the default by Seller or the Owners,
or the Operating Agent acting on their behalf, under any Assumed Contract, (b)
the Operating Agent has not received written or other notice that any Person
intends to cancel or terminate any Assumed Contract, (c) all of the Assumed
Contracts are in full force and effect, and (d) neither the Owners nor the
Operating Agent has granted any general power of attorney in respect of the
Assets; provided that Seller makes no separate representation or warranty under
        --------
this Section 3.9 respecting compliance with the provisions of any Assumed
Contract related to compliance with Laws generally, Hazardous Substances, title
to or condition of property, Licenses, environmental conditions, or
Environmental Laws, it being the intent of the parties that warranties
respecting such matters shall be made exclusively under the provisions of
Sections 3.5, 3.6, 3.7 and 3.8. Seller has previously made available for
inspection by Buyer true and complete copies of all written Assumed Contracts
except where the failure to so deliver a copy thereof will not have a Material
Adverse Effect on the Buyer.

     3.10 Litigation.  Except for (a) ordinary routine claims and litigation
          ----------
incidental to the businesses conducted from or through the Assets (including,
without limitation, actions for negligence, workers' compensation claims, so-
called "slip-and-fall" claims and the like), (b) governmental inspections and
reviews customarily made of businesses such as those conducted from or through
the Assets, (c) proceedings before regulatory authorities, and (d) matters as
set forth on Schedule 3.10, there are no actions, suits, claims or proceedings
             -------------
pending, or to the best of the Knowledge of Seller, threatened against or
affecting the Assets or relating to the operation of the Plant, at law or in
equity, or before or by any Governmental Body.  Except as disclosed on Schedule
                                                                       --------
3.10, there is no condemnation proceeding pending or, to the best of the
----
Knowledge of Seller, threatened against any of the Owned or Leased Real
Property.

     3.11 Plant Data.  Attached hereto as Schedule 3.11, is the following
          ----------                      -------------
selected historical operating or performance data of generating units included
in the Assets (the "Operating Data"): (i) the date of the Operating Agent's most
recent recorded measurement of the "dependable operating capacity" (as defined
in such Schedule) of each such unit for which the Operating Agent has historical
records of such measurements and the dependable operating capacity recorded by
the Operating Agent at such time in accordance with the procedures and
parameters described in such Schedule; (ii) the date of the Operating Agent's
most recent "turbine efficiency heat rate test" for each such unit included in
the Assets that has a dependable operating capacity of at least 790 megawatts
(other than units, if any, indicated in such Schedule, for which the Owners or
the Operating Agent do not currently have operating permits) and the outcomes of

                                      -30-
<PAGE>

such tests recorded by the Operating Agent, subject to the procedures,
parameters and assumptions that are further described in such Schedule; and (iv)
the date of the last major scheduled turbine overhaul recorded for each unit
included in the Assets that has a dependable operating capacity of at least 790
megawatts (other than units, if any, indicated in such Schedule, for which the
Owners or the Operating Agent do not currently have operating permits) and the
steam path audit results indicating the change in turbine efficiency heat rate
degradation as a result of the overhaul recorded by the Operating Agent, subject
to the procedures, parameters and assumptions that are further described in such
Schedule. To the best of the Knowledge of the Seller, the measurements and tests
referred to in clauses (i) through (iv) above were all conducted in accordance
with practices reasonably likely to result in information that was materially
accurate as of the dates on which it was recorded, subject to the accuracy of
the measurement devices used and the other assumptions and qualifications
contained in such Schedule. Since October 26, 1999, the Plant has been operated
only in the usual and ordinary course, except as identified in Schedule 3.11 or
                                                               -------------
in anticipation of the divestiture of the Assets, and there has not been:

          (a)  Any material casualty, physical damage, destruction or physical
     loss respecting, or, to the best of the Knowledge of the Seller, material
     adverse change in the physical condition of, the Plant, subject to ordinary
     wear and tear and to routine maintenance;

          (b)  Any sale or other disposition other than in the ordinary course
     of business of any fixed asset included in the Assets that has a net book
     value in excess of Five Hundred Thousand Dollars ($500,000);

          (c)  Any material mortgage, pledge or imposition of lien on any of
     such Assets, except for such as will be removed as of the Closing or for
     Permitted Encumbrances; or

          (d)  Any material amendment (other than general amendments which the
     insurance carrier makes for a category of policy) or termination or failure
     to renew any material insurance covering the Assets.

     3.12 Brokers.  Except as shown on Schedule 3.12, no broker, finder, or
          -------                      -------------
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement or the Transactions contemplated
hereby based upon any agreements or arrangements or commitments, written or
oral, made by or on behalf of Seller.  Seller shall be solely responsible for
the payment of any such fee or commission to any Person listed on Schedule 3.12
                                                                  -------------
as an exception to the foregoing.

     3.13 Assets Used in the Operation of the Plant.  Except as set forth on
          -----------------------------------------
Schedule 3.13, the Assets include all material assets and properties owned by
-------------
Seller that are necessary (with the Undivided Interest of the other Owners) for
the operation of the Plant as currently operated except as follows: (i)
Operating Agent's provision of materials and services pursuant to the

                                      -31-
<PAGE>

Operating Agreement, (ii) any contracts and agreements for services and
provision of materials that cover property of Operating Agent that are not being
assigned to Buyer and any contracts and agreements that by their own terms
expire prior to the Closing, (iii) non-transferable Licenses, (iv) the Excluded
Assets, and (v) the Related Facilities.

                                   ARTICLE 4
                    REPRESENTATIONS AND WARRANTIES OF BUYER
                    ---------------------------------------

     Buyer hereby represents and warrants to Seller, as of the date hereof, as
follows, except as set forth in Schedules numbered in relation to the Sections
set forth below:

     4.1  Organization and Corporate Power.  Buyer is a corporation duly
          --------------------------------
incorporated and validly existing under the laws of, and is authorized to
exercise its corporate powers, rights and privileges and is in good standing in,
the State of Delaware and has full corporate power to carry on its business as
presently conducted and to own or lease and operate its properties and assets
now owned or leased and operated by it and to perform the transactions on its
part contemplated by this Agreement and all other agreements contemplated
hereby.

     4.2  Authority and Enforceability. The execution, delivery and performance
          ----------------------------
of this Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and effectively
authorized by the board of directors of Buyer; no other corporate act or
proceeding on the part of Buyer, its board of directors or shareholders is
necessary to authorize this Agreement, any such Related Agreement or the
transactions contemplated hereby and thereby. This Agreement has been, and each
of the Related Agreements contemplated hereby will, as of the Closing, have
been, duly executed and delivered by Buyer, and this Agreement constitutes, and
each such Related Agreement when executed and delivered will constitute, a valid
and binding obligation of Buyer, enforceable against Buyer, in accordance with
its terms, except as it may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding may be brought.

     4.3  No Breach or Conflict.  Subject to the provisions of Sections 4.4(a)
          ---------------------
and 4.4(b) below regarding private party and governmental consents, and except
for compliance with the requirements of the HSR Act and any regulatory or
licensing Laws applicable to the businesses and assets represented by the
Assets, the execution, delivery and performance by Buyer and the Buyer
Subsidiaries of this Agreement and the Related Agreements do not: (a) conflict
with or result in a breach of any of the provisions of the Charter Documents of
Buyer or any Buyer Subsidiary; (b) contravene any Law or cause the suspension or
revocation of any License presently in effect, which affects or binds Buyer or
any Buyer Subsidiary or any of their material properties; or (c) conflict with
or result in a breach of or default under any material agreement or instrument
to which Buyer or any Buyer Subsidiary is a party or by which it or they or any
of their properties may be affected or bound.

                                      -32-
<PAGE>

     4.4  Approvals.
          ---------

          (a)  Except as set forth on Schedule 4.4(a), the execution, delivery
                                      ---------------
     and performance by Buyer and any Buyer Subsidiary of this Agreement and the
     Related Agreements do not require the authorization, consent or approval of
     any non-governmental third party.

          (b)  Except as set forth on Schedule 4.4(b), the execution, delivery
                                      ---------------
     and performance by Buyer and any Buyer Subsidiary of this Agreement and the
     Related Agreements do not require the authorization, consent, approval,
     certification, license or order of, or any filing with, any court or
     Governmental Body, except for compliance with the HSR Act and approvals by
     the PUCN and the FERC necessary to consummate the Transactions and to
     permit Buyer to acquire the Assets and to generate electricity from the
     Plant for sale.

     4.5  Litigation.  Except as set forth on Schedule 4.5, there are no
          ----------                          ------------
actions, suits, claims or proceedings pending, or to the best of Buyer's
Knowledge, threatened against Buyer or any Buyer Subsidiary likely to impair the
consummation of the Transactions contemplated by this Agreement or otherwise
material to the Transactions or to the Buyer or any Buyer Subsidiary, and Buyer
is not aware of facts likely to give rise to such litigation.

     4.6  Brokers.  Except as set forth on Schedule 4.6, no broker, finder, or
          -------                          ------------
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement or the Transactions contemplated
hereby based upon any agreements or arrangements or commitments, written or
oral, made by or on behalf of Buyer.  Buyer shall be solely responsible for the
payment of any such fee or commission to any Person listed on Schedule 4.6 as an
                                                              ------------
exception to the foregoing.

     4.7  Exculpation.  BUYER AGREES THAT EXCEPT FOR THE REPRESENTATIONS AND
          -----------
WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, THE ASSETS ARE BEING SOLD ON
AN "AS IS," "WHERE IS," BASIS AND IN "WITH ALL FAULTS" CONDITION, AND, SELLER
EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY REPRESENTATIONS OR
WARRANTIES AS TO LIABILITIES, OPERATIONS OF THE PLANT, THE TITLE, CONDITION,
VALUE OR QUALITY OF THE ASSETS OR THE PROSPECTS (FINANCIAL OR OTHERWISE), RISKS
AND OTHER INCIDENTS OF THE ASSETS; ANY REPRESENTATION OR WARRANTY OF
MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH
RESPECT TO THE ASSETS OR ANY PART THEREOF, INCLUDING OPERATION AS A POWER PLANT,
OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER
LATENT OR PATENT; ANY REPRESENTATION OR WARRANTY CONCERNING COMPLIANCE WITH
ENVIRONMENTAL REQUIREMENTS OR ENVIRONMENTAL LAWS, THE ABSENCE OF HAZARDOUS
MATERIALS, OR THE APPLICABILITY OF GOVERNMENTAL REQUIREMENTS; OR ANY
REPRESENTATION AND WARRANTY CONCERNING WHETHER THE ASSETS INCLUDE OR WHETHER ALL
OF THE UNDIVIDED INTERESTS TOGETHER INCLUDE SUFFICIENT PROPERTY

                                      -33-
<PAGE>

TO OPERATE THE PLANT. NO INFORMATION OR MATERIAL PROVIDED BY OR COMMUNICATION
MADE BY SELLER OR ANY REPRESENTATIVE OF SELLER, INCLUDING ANY INVESTMENT BANKER,
WILL CAUSE OR CREATE ANY REPRESENTATION OR WARRANTY DISCLAIMED BY THE FOREGOING.

     4.8  Financing. At the Closing, Buyer will have liquid capital or committed
          ---------
sources therefor sufficient to permit it and the pertinent Buyer Subsidiaries,
if any, to perform timely its or their obligations hereunder and under the other
Transaction Agreements.

     4.9  No Knowledge of Seller's Breach.  Neither Buyer nor any of its
          -------------------------------
Affiliates or representatives has Knowledge of any breach of any representation
or warranty by Seller or of any other condition or circumstance that would
excuse Buyer from its timely performance of its obligations hereunder. Buyer
shall notify Seller as promptly as practicable if any such information comes to
its attention prior to Closing.

     4.10 Qualified for Licenses.  To the best of the Buyer's Knowledge, Buyer
          ----------------------
and any pertinent Buyer Subsidiary are qualified to obtain any Licenses
necessary for the operation by Buyer or such Buyer Subsidiary of the Assets as
of the Closing in the same manner as the Assets are presently operated by
Seller.

     4.11 Buyer Subsidiaries.
          ------------------

          (a)  As of the Closing, each Buyer Subsidiary will be a corporation or
     other entity duly organized, validly existing and in good standing under
     the laws of its state of organization.  Each Buyer Subsidiary will at the
     Closing have all requisite power and authority to carry on its business as
     then conducted and to own or lease and operate its properties and assets
     then owned or leased and operated by it and to perform the transactions on
     its part contemplated by this Agreement and all other agreements
     contemplated hereby.

          (b)  The board of directors, managers or other governing entity of
     each Buyer Subsidiary and, if required, its shareholders, partners or
     members will have, by the date of the Closing, duly and effectively
     authorized (i) the purchase of the Assets to be purchased by such Buyer
     Subsidiary, and (ii) the execution, delivery and performance of this
     Agreement and the Related Agreements and all other agreements contemplated
     hereby and thereby to which such Buyer Subsidiary is a party. No other act
     or proceeding on the part of any Buyer Subsidiary, its board of directors,
     managers, or other governing entity or its shareholders, partners or
     members will be necessary to authorize this Agreement, any Related
     Agreement or other agreement contemplated hereby and thereby or the
     Transactions contemplated hereby and thereby.

          (c)  This Agreement, the Related Agreements and all other agreements
     contemplated hereby and thereby to which any Buyer Subsidiary is a party
     will, as of the Closing, have been duly executed and delivered by each such
     Buyer Subsidiary, and each such agreement, when executed and delivered will
     constitute, a valid and binding obligation of such Buyer Subsidiary,
     enforceable against such Buyer Subsidiary in accordance with its terms,
     except as it may be limited by bankruptcy, insolvency,

                                      -34-
<PAGE>

     reorganization, moratorium or other similar Laws now or hereafter in effect
     relating to creditors' rights generally and that the remedy of specific
     performance and injunctive and other forms of equitable relief may be
     subject to equitable defenses and to the discretion of the court before
     which any proceeding may be brought.

                                   ARTICLE 5
                            COVENANTS OF EACH PARTY
                            -----------------------

     5.1  Efforts to Close.
          ----------------

          (a)  Commercially Reasonable Efforts.  Subject to the terms and
     conditions herein provided including, without limitation, Articles 8 and 9
     hereof, each of the parties hereto agrees to use its Commercially
     Reasonable Efforts to consummate and make effective, as soon as reasonably
     practicable, the Transactions contemplated hereby, including the
     satisfaction of all conditions thereto set forth herein.  Such actions
     shall include, without limitation, exerting their Commercially Reasonable
     Efforts to obtain the consents, authorizations and approvals of all private
     parties and Governmental Bodies whose consent is reasonably necessary to
     effectuate the Transactions contemplated hereby, and effecting all other
     necessary registrations and filings, including, without limitation, giving
     all notices and providing all information required to be provided in
     connection with the Mohave Co-Tenancy Agreement Condition, filings under
     Laws relating to the transfer, reissuance or otherwise obtaining of
     necessary Licenses, under the HSR Act and all other necessary filings with
     the PUCN, FERC (including applications to transfer the Switchyard Assets to
     the extent contemplated herein, requesting Exempt Wholesale Generator
     status for Buyer or the pertinent Buyer Subsidiary and an application under
     Section 205 of the Federal Power Act to sell electric generating capacity
     and energy, including, without limitation, ancillary services, at wholesale
     at market based rates), and any other Governmental Bodies.  Seller shall
     cooperate with Buyer's efforts to obtain the requisite Licenses and
     regulatory consents, provided Seller shall not be obligated to incur any
                          --------
     liabilities or assume any obligations in connection therewith.  Other than
     Buyer's and Seller's obligations under Section 5.3, neither party shall
     have any liability to the other if, after using its Commercially Reasonable
     Efforts, it is unable to obtain any consents, authorizations or approvals
     necessary for such party to consummate the Transactions.

          (b)  Control Over Proceedings.  All analyses, appearances,
               ------------------------
     presentations, memoranda, briefs, arguments, opinions and proposals made or
     submitted by or on behalf of either party before any regulatory authority
     in connection with the approval of the Transactions shall be subject to the
     joint approval or disapproval in advance and the joint control of Buyer and
     Seller, acting with the advice of their respective counsel, it being the
     intent that the parties will consult and cooperate with one another, and
     consider in good faith the views of one another, in connection with any
     such analysis, appearance, presentation, memorandum, brief, argument,
     opinion and proposal; provided that in the event of a disagreement
                           --------
     concerning any such analysis, appearance, presentation, memorandum, brief,
     argument, opinion or proposal, other than those before the state or local
     public utilities commission (not including the PUCN) or other local
     Governmental

                                      -35-
<PAGE>

     Body with general regulatory authority over Buyer, the determinations of
     the Seller shall be controlling, except that the determinations of Buyer
     shall be controlling with respect to any application of Buyer to FERC for
     authority to sell electric generating capacity and energy at market-based
     rates and any filing of Buyer to the extent related to market power in
     connection with an application to FERC under Section 203 of the Federal
     Power Act or in connection with a filing at the PUCN; and provided further
                                                               -------- -------
     that nothing will prevent a party from responding to a subpoena or other
     legal process as required by law or submitting factual information in
     response to a request therefor, and provided further that the Seller, but
                                         -------- -------
     not the Buyer without the advance approval of the Seller, may engage in
     private meetings or in camera proceedings with members and/or
     representatives of the PUCN if it notifies Buyer of same. Each party will
     provide the other with copies of all written communications from
     Governmental Bodies relating to the approval or disapproval of the
     transactions contemplated by the Agreement and the Related Agreements. In
     any application to FERC for Exempt Wholesale Generator ("EWG") status,
     Buyer shall not request approval to charge or receive a fee or profit from
     any fee paid with respect to the Switchyard Assets if the exclusion of such
     request is necessary for Buyer or the pertinent Buyer Subsidiary to obtain
     EWG status.

     5.2  Post-Closing Cooperation.  After the Closing, upon prior reasonable
          ------------------------
written request, each party shall cooperate with the other, at the requesting
party's expense (but including only out-of-pocket expenses to third parties and
not the costs incurred by any party for the wages or other benefits paid to its
officers, directors or employees), in furnishing records, information, testimony
and other assistance in connection with any inquiries, actions, audits,
proceedings or disputes involving either of the parties hereto (other than in
connection with disputes between the parties hereto) and based upon contracts,
arrangements or acts of Seller, the Owners or the Operating Agent on behalf of
the Owners which were in effect or occurred on or prior to Closing and which
relate to the Assets, including, without limitation, arranging discussions with
(and the calling as witness of) officers, directors, employees, agents, and
representatives of Buyer; provided, however, under no circumstances shall such
                          --------
cooperation require the disclosure of the other bids received for any interest
in the Plant by Seller to any Person, including to any regulatory agency or to
the Buyer.

     5.3  Expenses.  Whether or not the Transactions contemplated hereby are
          --------
consummated, except as otherwise provided in this Agreement, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
Notwithstanding the foregoing:

          (a)  Costs associated with preliminary title reports and title
     policies shall be borne by Seller up to the costs that would have been
     incurred had the title policies been standard coverage policies of title
     insurance, and the remaining costs, if any, including costs for extended
     coverage and any endorsements shall be borne by Buyer (except that any
     survey costs shall be borne by Seller);

          (b)  All costs of the "Phase I" and "Phase II" environmental site
     assessments provided by Seller to Buyer shall be borne by Seller;

                                      -36-
<PAGE>

          (c)  All escrow charges, appraisal fees, and charges of any neutral
     mediator appointed pursuant to Section 2.9 hereof, and related costs, shall
     be borne one-half by Buyer and one-half by Seller (it being agreed that
     each party shall bear the costs of its own designated mediator under
     Section 2.9);

          (d)  Documentary transfer taxes, if any, will be borne by Seller, and
     recording costs and charges respecting real property will be borne one-half
     by Buyer and one-half by Seller;

          (e)  All fees and charges of Governmental Bodies shall be borne by the
     party incurring the fee or charge, except that all fees and charges of
     Governmental Bodies in connection with the transfer, issuance or
     authorization of any License shall be borne by Buyer;

          (f)  All liabilities or obligations for Taxes in the nature of sales
     taxes incurred as a result of the sale of the Assets hereunder to Buyer
     shall be borne one-half by Seller and one-half by Buyer; and

          (g)  All fees, charges and costs of economists and other experts, if
     any, jointly retained by Buyer and Seller in connection with submissions
     made to any Governmental Body and advice in connection therewith respecting
     approval of the Transactions will be borne one-half by Buyer and one-half
     by Seller.

All such charges and expenses shall be promptly settled between the parties at
the Closing or upon termination or expiration of further proceedings under this
Agreement, or with respect to such charges and expenses not determined as of
such time, as soon thereafter as is reasonably practicable.

     5.4  Announcements; Confidentiality.  Subject to Section 5.1, prior to the
          ------------------------------
Closing Date, no press or other public announcement, or public statement or
comment in response to any inquiry, relating to the transactions contemplated by
this Agreement shall be issued or made by Buyer or Seller without the joint
approval of Buyer and Seller; provided that a press release or other public
                              --------
announcement, regulatory filing, statement or comment made without such joint
approval shall not be in violation of this Section if it is made in order to
comply with applicable Laws or stock exchange policies and in the reasonable
judgment of the party making such release or announcement, based upon advice of
counsel, prior review and joint approval, despite reasonable efforts to obtain
the same, would prevent dissemination of such release or announcement in a
timely enough fashion to comply with such Laws or policies, provided that in all
                                                            --------
instances prompt notice from one party to the other shall be given with respect
to any such release, announcement, statement or comment.  Each party shall keep
all information (i) obtained from the other either before or after the date of
this Agreement, or (ii) related to Buyer's proposed purchase of the Assets,
Seller's proposed sale of the Assets, the contents of this Agreement or the
negotiation of this Agreement confidential, and neither party shall reveal such
information to, nor produce copies of any written information for, any Person
outside its management group or its professional advisors (including lenders and
prospective financing sources) without the prior written consent of the other
party, unless such party is compelled to

                                      -37-
<PAGE>

disclose such information by judicial or administrative process or by any other
requirements of Law or disclosure is reasonably necessary to obtain a License or
a consent. If the Transactions contemplated by this Agreement should fail to
close for any reason, each party shall return to the other as soon as
practicable all originals and copies of written or recorded information provided
to such party by or on behalf of the other party and none of such information
shall be used by such party, or its employees, agents or representatives, in the
business operations of any Person. Notwithstanding the foregoing, (i) each
party's obligations under this Section shall not apply to any information or
document which is or becomes the subject of a subpoena or other legal process or
otherwise is or becomes available to the public other than as a result of a
disclosure by the other party in violation of this Agreement or other obligation
of confidentiality under which such information may be held or becomes available
to the party on a non-confidential basis from a source other than the other
party or its officers, directors, employees, representatives or agents, and (ii)
except as may be required by Law, the parties shall seek appropriate protective
orders or confidential treatment for the schedules to this Agreement in
connection with any filing with or disclosure to any Governmental Body. The
parties' obligations under this Section shall survive the termination of this
Agreement. Nothing in this Section shall, or is intended to, impair or modify
any of the rights or obligations of Buyer or its Affiliates under the
confidentiality agreement dated as of November 17, 1999 entered into in
connection with the Auction, all of which remain in effect until termination of
such agreement in accordance with its terms.

     5.5  Litigation Conduct and Settlement.  Attached hereto as Schedule 5.5 is
          ---------------------------------                      ------------
the consent decree (the "Consent Decree") setting forth the terms of a
settlement in principle of the pending litigation entitled Grand Canyon Trust,
Inc., et al. v. Southern California Edison Company, et al., U.S.D.C. District of
Nevada, Case No. CV-S-98-0035-LDG(RJJ) (the "Pending Air Quality Lawsuit") and
concerning other matters related to the Plant. Buyer hereby acknowledges that
Seller has executed the Consent Decree and that the Consent Decree has been
approved by the court having jurisdiction over such action. Buyer hereby
authorizes Seller to execute any other documents or agreements necessary or
useful to effectuate the Consent Decree, whether before or after the Closing.
Buyer hereby agrees (i) to assume all liabilities of Seller under the Consent
Decree, (ii) to execute any documents necessary or useful to assuming such
liabilities, and (iii) that all liabilities of Seller under the Consent Decree
which require Remediation Measures after the Closing shall be Assumed
Liabilities hereunder.

                                   ARTICLE 6
                        ADDITIONAL COVENANTS OF SELLER
                        ------------------------------

     Seller hereby additionally covenants, promises and agrees as follows:

     6.1  Access.  Subject to the restrictions set forth in Section 5.4
          ------
respecting confidentiality and provided that Buyer has complied with each and
                               --------
every provision thereof, Seller shall afford Buyer, and the counsel, accountants
and other representatives of Buyer, reasonable access, throughout the period
from the date hereof to the Closing Date, to the Assets and the managerial
personnel associated therewith and all the properties, books, contracts,
commitments, and records included in the Assets which Seller has or to which it
has access in order to facilitate transition planning. Such access shall be
afforded to Buyer after no less than

                                      -38-
<PAGE>

24 hours' prior written notice, during normal business hours
and only in such manner so as not to disturb or interfere with the normal
operations of the Assets.  Seller's covenants under this Section are made with
the understanding that Buyer shall use all such information in compliance with
all Laws.  The foregoing notwithstanding, Buyer acknowledges and agrees that
Buyer's access to such books and records shall not include access to, and Seller
shall not have any obligation to deliver to Buyer, (a) any information
concerning any alleged dispute or any pending litigation, investigation or
proceeding involving Seller or its Affiliates that is protected by or subject to
the attorney-client privilege, or the disclosure of which is restricted by an
agreement entered into in connection with such dispute, litigation,
investigation or proceeding or an order entered by any court, provided that with
                                                              --------
respect to Assumed Liabilities only, if Buyer has delivered to Seller an opinion
of Buyer's regular outside counsel stating that the delivery of such information
to Buyer would not result in a waiver of, or otherwise affect, the attorney-
client privilege protecting such information, Seller shall deliver such
information (redacted with respect to any portion of such information that does
not pertain to any Assumed Liability) to Buyer, (b) information which would not
be available or to which access would not be provided to all Owners upon
request, or (c) information subject to confidentiality or nondisclosure
agreements that would be violated by Buyer's access.  With respect to
information described in clauses (a), (b) or (c) of the preceding sentence,
Buyer and Seller shall reasonably cooperate with one another in respect of
alternative arrangements, to the extent feasible, to provide Buyer with relevant
information without adversely affecting Seller or breaching third party
agreements.

     6.2  Updating.  Seller shall notify Buyer of any changes or additions to
          --------
any of Seller's Schedules to this Agreement with respect to the Assets or
Assumed Liabilities related thereto by the delivery of updates thereof, if any,
as of a reasonably current date prior to the Closing not later than three (3)
Business Days prior to the Closing. No such updates made pursuant to this
Section shall be deemed to cure any inaccuracy of any representation or warranty
made in this Agreement as of the date hereof, unless Buyer specifically agrees
thereto in writing, nor shall any such notification be considered to constitute
or give rise to a waiver by Buyer of any condition set forth in this Agreement.
Without limiting the generality of the foregoing, Seller shall notify Buyer
reasonably promptly of the occurrence of any material casualty, physical damage,
destruction or physical loss respecting, or, to the best of the Knowledge of the
Seller, material adverse change in the physical condition of, the Plant, subject
to ordinary wear and tear and to routine maintenance.

     6.3  Conduct Pending Closing.  Prior to consummation of the Transactions
          -----------------------
contemplated hereby or the termination or expiration of this Agreement pursuant
to its terms, unless Buyer shall otherwise consent in writing, which consent
shall not be unreasonably withheld or delayed, and except for actions taken by
the Operating Agent solely in its capacity as Operating Agent and not upon the
express authorization or discretion of the Owners, or taken pursuant to Assumed
Contracts, or which are required by law or arise from or are related to the
anticipated transfer of the Assets or the general restructuring of the electric
utility industry, or as otherwise contemplated by this Agreement or disclosed in
Schedule 6.3 or another Schedule to this Agreement, Seller shall, in its
------------
capacity as an Owner, endeavor to cause the Owners to:

          (a)  Operate and maintain the Assets only in the usual and ordinary
     course, materially consistent with practices followed prior to the
     execution of this Agreement;

                                      -39-
<PAGE>

          (b)  Except as approved by Buyer in its reasonable judgment, not
     approve, as an Owner, the settlement of any litigation that constitutes an
     Assumed Liability, other than on terms substantially conforming to the
     terms set forth in Schedule 6.3(b), or, except as required by their terms,
                        ---------------
     agree, as an Owner, to amend, terminate, renew, or renegotiate any existing
     material Assumed Contract or enter into any new Assumed Contract, except in
     the ordinary course of business and consistent with practices of the recent
     past, or default (or take or omit to take any action that, with or without
     the giving of notice or passage of time, would constitute a default) in any
     of their obligations under any such contracts, it being understood that (i)
     in connection with any vote of the Owners with respect to any such action
     proscribed by this Section 6.3(b), Seller agrees to endeavor, where
     practicable, to consult with Buyer prior to any meeting where matters which
     may be the subject of a vote are anticipated to be discussed and to vote in
     accordance with the written instructions, if any, delivered by Buyer to
     Seller prior to the vote, and, in the event that Seller does not vote in
     accordance with such instructions, Seller shall provide notice to Buyer of
     its vote within five (5) Business Days of such vote, and, Buyer may elect,
     by written notice delivered to Seller within ten (10) Business Days of such
     vote, to terminate this Agreement and if Buyer so elects, Seller shall pay
     to Buyer the breakup fee set forth in Section 11.4, and (ii) nothing
     contained in this Section 6.3(b) shall limit or restrict SCE's ability to
     carry out its duties and obligations to the other Owners, as Operating
     Agent;

          (c)  Not: (i) sell, lease, transfer or dispose of, or make any
     contract for the sale, lease, transfer or disposition of, any assets or
     properties which would be included in the Assets, other than sales in the
     ordinary course of business which would not individually, or in the
     aggregate, have a Material Adverse Effect upon the operations or value of
     the Plant; (ii) incur, assume, guaranty, or otherwise become liable in
     respect of any indebtedness for money borrowed which would result in Buyer
     assuming such liability hereunder after the Closing; (iii) delay the
     payment and discharge of any liability which, upon Closing, would be an
     Assumed Liability, because of the Transactions contemplated hereby; or (iv)
     encumber or voluntarily subject to any lien any Asset (except for Permitted
     Encumbrances);

          (d)  Maintain in force and effect the material property and liability
     insurance policies related to the Plant and the Assets;

          (e)  Not take any action which would cause any of Seller's
     representations and warranties set forth in Article 3 to be materially
     false as of the Closing;

          (f)  Not make Capital Expenditures, other than those contemplated on
     Schedule 2.6(c)(i), which would, pursuant to the provisions of Section
     ------------------
     2.6(c), result in an upward adjustment of the Purchase Price pursuant to
     Section 2.6(c)(i) in excess of $2,000,000 in the aggregate, except for
     purchases under agreements in existence as of the date hereof that would
     constitute Assumed Liabilities as of such date, Capital Expenditures set
     forth on Schedule 2.6(c)(i), Capital Expenditures otherwise approved in
              ------------------
     writing by Buyer or Capital Expenditures for which Seller does not adjust
     the Purchase Price pursuant to Section 2.6(c)(i);

                                      -40-
<PAGE>

          (g)  Negotiate in good faith with the other Owners and, subject to the
     other Owners' execution and delivery thereof, execute and deliver the
     Eldorado Transmission Agreements in substantially the form in which such
     agreements exist on the date hereof.

Provided that nothing in this Section shall (i) obligate Seller to make
--------
expenditures other than in the ordinary course of business and consistent with
practices of the recent past or to otherwise suffer any economic detriment, (ii)
preclude Seller from paying, prepaying or otherwise satisfying any liability
which, if outstanding as of the Closing Date, would be an Assumed Liability or
an Excluded Liability, (iii) preclude Seller from incurring any liabilities or
obligations to any third party in connection with obtaining such party's consent
to any transaction contemplated by this Agreement or the Related Agreements
provided such liabilities and obligations under this clause (iii) shall be
--------
Excluded Liabilities pursuant to Section 2.4(g) hereof if not approved in
advance by Buyer (which approval shall not be unreasonably withheld or delayed),
or (iv) preclude Seller from instituting or completing any program designed to
promote compliance or comply with Environmental Laws, other Laws or other good
business practices respecting the Plants or the Assets.  Buyer's election to
terminate this Agreement and to receive payment of the breakup fee set forth in
Section 11.4 shall be Buyer's sole and exclusive remedy against Seller with
respect to any breach by Seller of this Section 6.3(b).

     6.4  Environmental Matters.
          ---------------------

          (a)  Remediation of Existing Soils Contamination.  Seller (or those
               -------------------------------------------
     acting on its behalf) shall remain responsible for its share, as an Owner,
     of the cost and performance of Remediation Measures solely to the extent
     that such Remediation Measures are required under Environmental Law by any
     Governmental Body and are part of the Excluded Liabilities.  Buyer and
     Seller shall reasonably cooperate in connection with any such Remediation
     Measures that involve both Assumed Liabilities and Excluded Liabilities.
     In addition,  Seller may, together with the other Owners, undertake such
     Remediation Measures prior to the Closing as it and they reasonably
     determine are required under Environmental Law or which it and they
     otherwise reasonably believe are appropriate, but shall not be obligated to
     do so under the terms hereof (except to the extent set forth in Section
     6.3).  To the extent that any Remediation Measures are undertaken by or on
     behalf of Seller pursuant to the first sentence of this paragraph, such
     Remediation Measures will be done in accordance with Schedule 6.4(a).
                                                          ---------------

          (b)  Seller's Environmental Site Assessments.  Seller shall exercise
               ---------------------------------------
     its best efforts (without increased out-of-pocket costs to Seller) to cause
     the consultants which issued the environmental site assessments referenced
     in Section 3.7 to permit Buyer and any lender providing project financing
     to Buyer with respect to, and secured by, the Plant to rely on such reports
     to the full extent (but no further) that Seller may rely on such reports.

          (c)  Additional Buyer's Due Diligence.  During the period from the
               --------------------------------
     date hereof to the Closing Date, Seller shall, subject to the conditions of
     this paragraph (c), permit the Buyer, if it is required as a condition of
     its financing commitment, to enter upon any and all of the real property
     included in the Assets for the purposes of inspecting same, making

                                      -41-
<PAGE>

     tests, taking samples and soil borings, and/or conducting groundwater
     studies and such other investigations as are agreed upon between Buyer and
     Seller. All such activity and testing shall be at the Buyer's sole cost,
     and Buyer shall deliver to Seller promptly after it is prepared by or on
     behalf of Buyer, and in any event promptly upon Buyer's receipt, all drafts
     of any written report prepared by Buyer or its representatives or
     consultants regarding such activities and all reports of tests taken. Buyer
     agrees that such testing shall not under any circumstances delay the
     Closing. Notwithstanding the foregoing, Buyer's right to conduct such
     activities shall be subject to the following:

               (i)    Buyer shall retain a reputable environmental consulting
          firm for the purposes of conducting any such investigation, which firm
          shall be subject to Seller's prior written approval, which will not be
          unreasonably withheld or delayed;

               (ii)   The activities of the Buyer and its representatives and
          consultants under this paragraph (c) shall not interfere with normal
          operation of the Plant;

               (iii)  Buyer shall give Seller a sufficient opportunity to review
          the scope of the proposed activities at the Plant prior to the first
          such entry at the Plant;

               (iv)   Buyer shall notify Seller at least two (2) Business Days
          prior to each entry of the Plant to conduct such activities at the
          Plant;

               (v)    All activities undertaken in connection with such
          investigation shall fully comply with applicable Law, including Laws
          relating to worker safety and to proper disposal of samples taken and
          any soil or water generated in the process of taking the samples;

               (vi)   Seller shall be permitted to have one or more of its
          representatives present during all such investigations, and may take
          split samples, and copy the results of onsite testing and visual
          inspections, and shall have complete access to all samples taken, test
          results, and boring records;

               (vii)  In the event the Transactions are not consummated for any
          reason, Buyer shall, at its own cost, cause the property to be
          restored to substantially its condition prior to such investigative
          activities;

               (viii) Buyer shall take all actions and implement all protections
          necessary to ensure that actions taken under this paragraph (c), and
          equipment, materials and substances generated, used or brought onto
          the site of a Plant, pose no threat to the safety or health of
          individuals or the environment and cause no damage to the property of
          Seller or any other Person;

               (ix)   Buyer shall be responsible for, and shall indemnify Seller
          against, any property damage or personal injury incurred by Seller or
          any other Person as a result of Buyer's activities under this
          paragraph (c); and

                                      -42-
<PAGE>

               (x)    Any written or recorded materials or information generated
          as part of or in connection with such activities of Buyer shall be
          deemed to be confidential information of the Seller for purposes of
          Section 5.4.

                                   ARTICLE 7
                         ADDITIONAL COVENANTS OF BUYER
                         -----------------------------

     7.1  Waiver of Bulk Sales Law Compliance.  Subject to the indemnification
          -----------------------------------
provisions of Section 12.3(a)(iii) hereof, Buyer hereby waives compliance by
Seller with the requirements, if any, of Article 6 of the Uniform Commercial
Code as in force in any state in which Assets are located and all other similar
laws applicable to bulk sales and transfers.

     7.2  Resale Certificate.  Buyer agrees, and will cause each Buyer
          ------------------
Subsidiary, to furnish to Seller any resale certificate or certificates or other
similar documents reasonably requested by Seller to comply with pertinent sales
and use tax laws.

     7.3  Conduct Pending Closing.  Prior to consummation of the Transactions
          -----------------------
contemplated hereby or the termination or expiration of this Agreement pursuant
to its terms, unless Seller shall otherwise consent in writing, Buyer shall not
take any action which would cause any of Buyer's representations and warranties
set forth in Article 4 to be materially false as of the Closing.

     7.4  Securities Offerings.  Buyer hereby agrees to indemnify and hold
          --------------------
harmless Seller and each of its Affiliates, in accordance with the provisions of
Section 12.4(a)(ii), against any and all Losses, as incurred, arising out of the
offer or sale by Buyer or any Buyer Subsidiary of securities, except to the
extent that such Loss arises from any untrue statement or alleged untrue
statement of a material fact contained in any such securities offering materials
or prospectus used by Buyer or any Buyer Subsidiary or its or their
representatives, or from the omission or alleged omission therefrom of a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, which untrue or
alleged untrue statement or omission or alleged omission is made in reliance
upon and in conformity with written information furnished to Buyer by Seller
under a cover letter from Seller's counsel stating that such information is
expressly for use in such offering materials or prospectus.

     7.5  Release.  Except for the Excluded Liabilities and to the extent of
          -------
Seller's obligations hereunder or under any Related Agreement, including without
limitation its obligations under Article 12 (including without limitation
Seller's obligations under Article 12 as a result of the breach of any provision
hereof, including those of Article 3), Buyer on behalf of itself and each Buyer
Subsidiary, and each successor or assign thereof, hereby waives its right to
recover from Seller or from any Affiliate of Seller or any Person acting on
behalf of Seller or any such Affiliate, and forever releases and discharges
Seller, and any such Affiliate and any such other Person, from any and all
damages, claims, losses, liabilities, penalties, fines, liens, judgments, costs,
or expenses whatsoever (including, without limitation, attorneys' fees and
costs), whether direct or indirect, known or unknown, foreseen or unforeseen,
that may arise on account of or in any way be connected with the ownership,
possession, use or operation of the

                                      -43-
<PAGE>

Assets prior to or after the Closing, including, but not limited to, the
application of Environmental Law thereto. In this regard, Buyer on behalf of
itself and each Buyer Subsidiary, and each successor or assign thereof,
expressly waives any and all rights and benefits that it now has, or in the
future may have conferred upon it by virtue of any statute or common law
principle which provides that a general release does not extend to claims which
a party does not know or suspect to exist in its favor at the time of executing
the release, if knowledge of such claims would have materially affected such
party's settlement with the obligor. Buyer on behalf of itself and each Buyer
Subsidiary, and each successor or assign thereof, hereby further acknowledges
that it is aware that factual matters now unknown to it may have given or may
hereafter give rise to claims, losses and liabilities that are presently
unknown, unanticipated and unsuspected, that the release contained herein has
been negotiated and agreed upon in light of such awareness, and that it
nevertheless hereby intends to be bound to the release set forth above.

     7.6  Additional Covenants of the Buyer.  Notwithstanding any other
          ---------------------------------
provision hereof, Buyer covenants and agrees that, after the Closing Date, Buyer
will (i) provide written notice to the Seller sixty (60) days in advance of
making any modifications to the Assets or taking any action which would result
in a loss of the exclusion of interest on the pollution control bonds (including
any refunding bonds) issued or to be issued on behalf of Seller in connection
with the Plant from gross income for federal income tax purposes under Section
103 of the Code, and (ii) take any actions reasonably requested by Seller for
the purpose of maintaining such exclusion (including, without limitation,
inserting notification requirements in operating manuals and posting notices
within the Plant). Buyer further covenants and agrees that, in the event that
Buyer transfers any of the Assets, Buyer shall obtain from its transferee a
covenant and agreement that is analogous to Buyer's covenant and agreement
pursuant to the immediately preceding sentence, as well as a covenant and
agreement that is analogous to that of this sentence. This covenant shall
survive Closing and shall continue in effect so long as the pollution control
bonds or any refunding bonds remain outstanding.

                                   ARTICLE 8
                         BUYER'S CONDITIONS TO CLOSING
                         -----------------------------

     The obligations of Buyer to consummate the Transactions shall be subject to
fulfillment at or prior to the Closing of the following conditions, unless Buyer
waives in writing such fulfillment:

     8.1  Performance of Agreement.  Seller shall have performed in all material
          ------------------------
respects its agreements and obligations contained in this Agreement required to
be performed on or prior to the Closing.

     8.2  Accuracy of Representations and Warranties.  The representations and
          ------------------------------------------
warranties of Seller set forth in Article 3 of this Agreement shall be true in
all material respects as of the date of this Agreement (unless the inaccuracy or
inaccuracies which would otherwise result in a failure of this condition have
been cured as of the Closing) and as of the Closing (as updated by the revising
of Schedules contemplated by Section 6.2) as if made as of such time, provided
                                                                      --------
that

                                      -44-
<PAGE>

any such update shall not have disclosed any material adverse change in the
physical condition, ownership, or transferability of the Assets.

     8.3  Officers' Certificate.  Buyer shall have received from Seller an
          ---------------------
officers' certificate, executed on Seller's behalf by its chief executive
officer, president, chief financial officer or treasurer (in his or her capacity
as such) dated the Closing Date and stating that the conditions in Sections 8.1
and 8.2 above have been met.

     8.4  Approvals.
          ---------

          (a)  The waiting period under the HSR Act shall have expired or been
     terminated, and, subject to the provisions of Section 2.8, there shall have
     been obtained all approvals, consents, authorizations and waivers from
     Governmental Bodies and all approvals, consents, authorizations and waivers
     from other third parties, including without limitation the expiration
     without exercise of any right of first refusal or the waiver by such
     parties having such right of first refusal and the expiration of any
     applicable notification period or the waiver by such parties entitled to
     such notification period, all as set forth in Section 12 of the Co-Tenancy
     Agreement (the "Mohave Co-Tenancy Agreement Condition") (collectively
     "Approvals"), required for Buyer to acquire the Undivided Interests and the
     Assets and for the Plant to be operated thereafter materially in accordance
     with the manner in which it was operated prior to the Closing.  In the
     event that any such Approval requires any modification to this Agreement or
     the Transactions, imposes any condition to the effectuation of the
     Transactions, or places any restrictions upon Buyer's ownership of the
     Assets, then Buyer shall have approved such modifications, conditions and
     restrictions to the extent that such modifications, conditions and
     restrictions, if any, are not contemplated by this Agreement and the
     Related Agreements and that are not in effect on the date hereof, and
     would, individually or in the aggregate, result in a Material Adverse
     Effect upon the Buyer, its ownership of the Assets or the operation of the
     Plant after the Closing, it being agreed that the Buyer shall be deemed to
     have approved of any such modifications, conditions or restrictions that
     are not disapproved by Buyer in a written notice to Seller given no later
     than five (5) Business Days following either the public announcement of the
     decision of the Governmental Body involved or Buyer's actual Knowledge (or
     Seller's notice to Buyer) of any such modification, condition or
     restriction arising from the Approval of a Person that is not a
     Governmental Body.

          (b)  The Parties acknowledge that FERC's approval of EWG status for
     Buyer or any Buyer Subsidiary in respect of the Assets is not a condition
     to the Closing.  Notwithstanding the foregoing and without limiting the
     provisions of Section 5.1, in the event that (x) the Switchyard Assets have
     not become Excluded Assets under Section 2.2(b) and (y) FERC has denied or
     withheld approval of Buyer's (or the Buyer Subsidiary's) application
     requesting EWG status with respect to all the Assets solely because the
     Switchyard Assets are to be included in the Assets, then Buyer may, by
     written notice to Seller given prior to the date on which the Closing would
     have occurred, delay the Closing for a period of up to ninety (90) days.
     During this period, Buyer may elect, subject to Seller's approval, such
     approval not to be unreasonably withheld or delayed, one or more alternate
     structures that comply with the provisions of the Operating

                                      -45-
<PAGE>

     Agreement, the Co-Tenancy Agreement and California Assembly Bill 1890 for
     the purchase of the Assets and/or modifications to the provisions of this
     Agreement and the Transactions as will provide the Parties with the
     economic benefits intended to be realized by each of them under this
     Agreement, taking into account all costs involved in such modifications, so
     as to allow Buyer or Buyer Subsidiary to obtain EWG status with respect to
     all the Assets in order to preserve Buyer's or Buyer Subsidiary's non-
     electric utility company status under the Public Utility Holding Company
     Act of 1935 and avoid adversely affecting the qualifying facility status of
     facilities owned by any of Buyer's affiliates under the Public Utility
     Regulatory Policies Act of 1978 ("PURPA") as a consequence of the ownership
     test set forth in 18 C.F.R. (S)292.206(b) (1999) of the regulations
     implementing PURPA, it being recognized that such non-utility status is
     important to Buyer. Such alternate structures and/or modifications may
     include, without limitation, (i) treating the Switchyard Assets as Excluded
     Assets even if the draft Eldorado Transmission Agreements through the date
     hereof have not been executed and the transactions contemplated thereby
     consummated, it being understood that the Buyer and the pertinent Buyer
     Subsidiary would be required to provide such services to Seller as owner of
     the Switchyard Assets as are contemplated by such drafts of the Eldorado
     Transmission Agreements; (ii) Buyer and Seller entering into long-term
     power purchase arrangements on terms providing Buyer and Seller with the
     same economic benefits (taking into account all costs involved) as a
     purchase and sale of the Assets without the Switchyard Assets; (iii) Buyer
     or Buyer Subsidiary licensing or leasing the Switchyard Assets to Seller
     for Seller to operate, manage and receive the economic benefits therefrom;
     (iv) placing ownership of the Assets or the Switchyard Assets in a
     financial intermediary; and (v) other arrangements. The Parties shall use
     good faith and Commercially Reasonable Efforts to negotiate all terms of
     such alternate structure and/or modifications that comply with the
     provisions of the Operating Agreement, the Co-Tenancy Agreement and
     California Assembly Bill 1890, and Seller shall not unreasonably withhold
     or delay agreement to any structure and/or modifications proposed by Buyer
     or Buyer Subsidiary. If the Parties agree upon such alternate structure
     and/or modifications, then the Closing shall be delayed further for up to
     an additional 180 days to the extent necessary to obtain any regulatory
     approvals needed for such modifications, if any; the Parties agree to
     cooperate and use Commercially Reasonable Efforts to obtain such approvals,
     it being understood that Buyer or Buyer Subsidiary shall have control over
     all filings for such regulatory approvals, other than filings with the
     PUCN. If no such alternate structure and/or modifications are entered into,
     or if the required regulatory approvals are not obtained, then thirty (30)
     days after the failure (A) to agree on an alternate structure and/or
     modifications or (B) to obtain any required regulatory approval, the
     Closing shall proceed in accordance with the original terms hereof without
     modification.

     8.5  No Restraint.  There shall be no:
          ------------

          (a)  Injunction, restraining order or order of any nature issued by
     any court of competent jurisdiction or Governmental Body of competent
     jurisdiction over the parties which directs that the Transactions
     contemplated hereby shall not be consummated as herein provided or compels
     or would compel Buyer to dispose of or discontinue, or

                                      -46-
<PAGE>

     materially restrict the operations of, the Plant or any significant portion
     of the Assets as a result of the consummation of the Transactions
     contemplated hereby;

          (b)  Suit, action or other proceeding by any Governmental Body of
     competent jurisdiction over the parties pending or threatened (pursuant to
     a written notification), wherein such complainant seeks the restraint or
     prohibition of the consummation of the Transactions or seeks to compel, or
     such complainant's actions would compel, Buyer to dispose of or
     discontinue, or materially restrict the operations of, the Plant or any
     significant portion of the Assets as a result of the consummation of the
     Transactions contemplated hereby; or

          (c)  Action taken, or law enacted, promulgated or deemed applicable to
     the Transactions, by any Governmental Body of competent jurisdiction over
     the parties which would render the purchase and sale of the Assets illegal
     or which would threaten the imposition of any penalty or material economic
     detriment upon Buyer if such purchase and sale were consummated;

Provided that the parties will use their reasonable efforts to litigate against,
--------
and to obtain the lifting of, any such injunction, restraining or other order,
restraint, prohibition, action, suit, law or penalty.

     8.6  Title Insurance.  Title to Assets comprised of interests in real
          ---------------
property shall have been evidenced by the willingness of First American Title
Insurance Company (or an Affiliate thereof) (the "Title Insurer") to issue at
regular rates ALTA owner's, or lessee's, as the case may be, extended coverage
policies of title insurance (1990 Form B) (the "Title Policies"), with the
general survey and creditors' rights exceptions removed, in amounts equal to the
respective portions of the Purchase Price allocated to such interests, showing
title to such interests in such real property vested in Buyer or the pertinent
Buyer Subsidiary subject to transfer of such interest to Buyer or the pertinent
Buyer Subsidiary. Such Title Policies shall show title vested in Buyer or the
pertinent Buyer Subsidiary subject to:

          (a)  A lien or liens to secure payment of real estate taxes not
     delinquent;

          (b)  Exceptions, other than those listed on Schedule 8.6(b), disclosed
                                                      ---------------
     by the current standard ALTA Preliminary Title Reports, delivered to and
     approved (except as shown on Schedule 8.6(b)) by Buyer prior to the date
                                  ---------------
     hereof (as indicated by Buyer's signature of approval appended thereto);

          (c)  Matters created by, or with the consent of, Buyer; and

          (d)  Other possible minor matters that in the aggregate are not
     substantial in amount and do not materially detract from or interfere with
     the present or intended use of such real property, including such minor
     matters as may be disclosed by surveys taken after the date hereof.

The willingness of the Title Insurer to issue the Title Policies shall be
evidenced either by the issuance thereof at the Closing or by the Title
Insurer's delivery at the Closing of written

                                      -47-
<PAGE>

commitments or binders, dated as of the Closing (but insuring title as of the
date title conveyance documents are recorded), to issue such Title Policies
within a reasonable time after the Closing Date, subject to actual transfer of
the real property in question. If the Title Insurer is unwilling to issue any
such Title Policy, it shall be required to provide Buyer and Seller, in writing,
notice setting forth the reason(s) for such unwillingness as soon as
practicable. Seller shall have the right to seek to cure any defect which is the
reason for such unwillingness, and to extend the Closing and the Termination
Date, if necessary, for a period of up to ten (10) Business Days to provide to
Seller the opportunity to cure. In the event that, despite Seller's efforts to
cure, the Title Insurer remains unwilling to issue any such Title Policy on the
Closing Date (as may be extended as provided herein), then, at the election of
Buyer, and without affecting the other conditions of the parties to consummation
of the Transactions, such real property interests not covered by such a Title
Policy shall not be included in the Assets and shall be deemed to be Excluded
Assets, and liabilities associated therewith that would otherwise be Assumed
Liabilities shall be deemed to be Excluded Liabilities; and Buyer and Seller
shall negotiate in good faith prior to the Closing Date an adjustment in the
Purchase Price based on the Allocation Schedule. If the parties cannot agree
upon such adjustment, then the disagreement shall be resolved in accordance with
Section 2.9. Notwithstanding the foregoing, Buyer or the pertinent Buyer
Subsidiary may accept such title to any such property interests as the Seller
may be able to convey, and such title insurance with respect to the same as the
Title Insurer is willing to issue, in which case such interests shall be
conveyed as part of the Assets without reduction of the Purchase Price or any
credit or allowance against the same and without any other liability on the part
of Seller.

     8.7  Related Agreements.  Seller shall have executed and delivered, as of
          ------------------
the Closing, the PPC and each of the other Related Agreements, if any, to be
executed by Seller, and all required approvals and conditions relating to the
PPC shall have been obtained or satisfied.

     8.8  Casualty; Condemnation.
          ----------------------

          (a)  Casualty.  If any part of the Assets is damaged or destroyed
               --------
     (whether by fire, theft, vandalism or other casualty) in whole or in part
     prior to the Closing, and the fair market value of such damage or
     destruction or the cost of repair of the Assets that were damaged, lost or
     destroyed is less than ten percent (10%) of the aggregate Purchase Price,
     Seller shall, at its option, either (i) reduce the Purchase Price by the
     lesser of the fair market value of the Assets damaged or destroyed (such
     value to be determined as of the date immediately prior to such damage or
     destruction), or the estimated cost to repair or restore the same (any
     disagreement with respect thereto being resolved in accordance with Section
     2.9), (ii) upon the Closing, transfer the proceeds or the rights to the
     proceeds of applicable insurance to Buyer, provided that the proceeds are
                                                --------
     obtainable without delay and are sufficient to fully restore the damaged
     Assets, or (iii) bear the costs of repairing or restoring such damaged or
     destroyed Assets to substantially the same condition such assets were in
     before the casualty and, at Seller's election, delay the Closing and the
     Termination Date for a reasonable time necessary to accomplish the same.
     If any part of the Assets is damaged or destroyed (whether by fire, theft,
     vandalism or other cause or casualty) in whole or in part prior to the
     Closing and the lesser of the fair market value of such Assets or the cost
     of repair is equal to or greater than ten percent (10%) of the aggregate
     Purchase Price, then Buyer may elect to: (x) require Seller upon the
     Closing to

                                      -48-
<PAGE>

     transfer the proceeds (or the right to the proceeds) of applicable
     insurance to Buyer, (y) terminate this Agreement with respect to the
     damaged or destroyed Assets only, with a reduction in the Purchase Price
     determined in accordance with Section 2.9, or (z) if the damage or
     destruction would practically preclude or materially increase the cost of
     the operation of the balance of the Plant following the Closing, terminate
     this Agreement.

          (b)  Condemnation.  From the date hereof until the Closing, in the
               ------------
     event that any material portion of the Plant becomes subject to or is
     threatened with any condemnation or eminent domain proceedings, then Buyer,
     at its option, may, (i) elect to proceed with the Closing as to all the
     Assets and receive, either from Seller, if it has already received from the
     condemnor, or the condemnor, the just compensation awarded for the
     condemnation, (ii) if such condemnation, if successful, would not
     practically preclude or materially increase the cost of the operation of
     the balance of the Plant for the purposes and to the extent for which the
     Plant as a whole was intended, elect to terminate this Agreement with
     respect only to that part which is condemned or threatened to be condemned
     with a reduction in the Purchase Price determined as provided in Section
     8.8(a) above, or (iii) if such condemnation, if successful, would
     practically preclude or materially increase the cost of the operation of
     the balance of the Plant for the purposes for which it is intended, elect
     to terminate this Agreement.

     8.9  Opinion of Counsel.  Buyer shall have received, on and as of the
          ------------------
Closing Date, the opinion of either inside or outside counsel to Seller
substantially as to the matters contained in Schedule 8.9, subject to the
                                             ------------
conditions and limitations therein and to other customary conditions and
limitations.

     8.10 Receipt of Other Documents.  Buyer shall have received the following:
          --------------------------

          (a)  Certified copies of the resolutions of Seller's board of
     directors respecting this Agreement, the Related Agreements and the
     Transactions;

          (b)  Certified copies of Seller's Charter Documents, together with a
     certificate of the corporate secretary of Seller that none of such
     documents have been amended;

          (c)  One or more certificates as to the incumbency of each officer of
     Seller who has signed the Agreement, any Related Agreement or any
     certificate, document or instrument delivered pursuant to the Agreement or
     any Related Agreement;

          (d)  A good standing certificate for Seller from the Secretary of
     State of the state of its incorporation, dated as of a date not earlier
     than fifteen (15) Business Days prior to the Closing Date;

          (e)  Copies of all current Licenses relevant to operation of the Plant
     and all third party and governmental consents, permits and authorizations
     that Seller has received in connection with the Agreement, the Related
     Agreements and the Transactions to occur at the Closing; and

                                      -49-
<PAGE>

          (f)  Certificates of non-foreign status in the form required by
     Section 1445 of the Internal Revenue Code duly executed by Seller.

     8.11 Limitation on Adjustments.  There shall not have been adjustments to
          -------------------------
the Purchase Price arising under the Adjustment Sections (except for adjustments
under Section 2.6(c) or adjustments under Section 2.9 related to adjustments
required by such Section) exceeding in the aggregate thirty percent (30%) of the
aggregate Purchase Price.

     8.12 Independent Engineer's Letter.  Buyer shall have received from an
          -----------------------------
independent engineering firm a letter dated as of the Closing Date, in the form
attached hereto as Schedule 8.12, certifying certain matters related to the SCE
                   -------------
Technical Assessment of the Mohave Plant dated October 26, 1999.

     8.13 SCE Closing.  Buyer and SCE shall have consummated the transactions
          -----------
contemplated in the Asset Sale Agreement by and between Buyer and SCE dated May
10, 2000.

                                   ARTICLE 9
                        SELLER'S CONDITIONS TO CLOSING
                        ------------------------------

     The obligations of Seller to consummate the Transactions shall be subject
to the fulfillment at or prior to the Closing of the following conditions,
unless Seller waives in writing such fulfillment:

     9.1  Performance of Agreement.  Buyer shall have performed in all material
          ------------------------
respects its agreements and obligations contained in this Agreement required to
be performed on or prior to the Closing.

     9.2  Accuracy of Representations and Warranties.  The representations and
          ------------------------------------------
warranties of Buyer set forth in Article 4 of this Agreement shall be true in
all material respects as of the date of this Agreement (unless the inaccuracy or
inaccuracies which would otherwise result in a failure of this condition have
been cured by the Closing) and as of the Closing as if made as of such time.

     9.3  Officers' Certificate.  Seller shall have received from Buyer an
          ---------------------
officers' certificate, executed on Buyer's behalf by its chief executive
officer, president, chief financial officer or treasurer (in his or her capacity
as such) dated the Closing Date and stating that the conditions in Sections 9.1
and 9.2 above have been met.

     9.4  Approvals.  The waiting period under the HSR Act shall have expired or
          ---------
been terminated, and, subject to the provisions of Section 2.8, all Approvals
required for Seller to consummate the Transactions shall have been obtained.
Without limiting the generality of the foregoing, the Seller shall have approved
the ratemaking treatment of the Transactions and the effects of the Transactions
ordered by the PUCN as well as the calculation and recovery of transition costs
arising therefrom and related thereto. There shall additionally have been no
material change in the regulations, policies, principles or terms of the
restructuring of the

                                      -50-
<PAGE>

California electrical utilities industry set forth in Nevada Senate Bill 438 and
Nevada Assembly Bill 366. The Seller shall have additionally approved any
material modifications to this Agreement and to the Transactions made or ordered
by any Governmental Body, if any, including the PUCN, any material conditions to
the effectuation of the Transactions required by any Governmental Body, if any,
including the PUCN, and material restrictions, if any, upon Seller and its
operations after the Closing required by any Governmental Body, if any,
including the PUCN, it being agreed that the Seller shall be deemed to have
approved of any such modifications, conditions or restrictions, whether required
by any Governmental Body or any other Person as a condition of its Approval,
that are not disapproved by Seller in a written notice to Buyer given no later
than five (5) Business Days following the earlier of either the public
announcement of the decision of the Governmental Body involved or Seller's
actual Knowledge (or Buyer's notice to Seller) of any such modification,
condition or restriction arising from the Approval of a Person that is not a
Governmental Body.

     9.5  No Restraint.  There shall be no:
          ------------

          (a)  Injunction, restraining order or order of any nature issued by
     any court of competent jurisdiction or Governmental Body of competent
     jurisdiction over the parties which directs that the Transactions
     contemplated hereby shall not be consummated as herein provided;

          (b)  Suit, action or other proceeding by any Governmental Body of
     competent jurisdiction over the parties pending or threatened (pursuant to
     a written notification), wherein such complainant seeks the restraint or
     prohibition of the consummation of the Transactions or otherwise constrains
     consummation of the Transactions on the terms contemplated herein; or

          (c)  Action taken, or law enacted, promulgated or deemed applicable to
     the Transactions, by any Governmental Body of competent jurisdiction over
     the parties which would render the purchase and sale of the Assets illegal
     or which would threaten the imposition of any penalty or material economic
     detriment upon Seller if such Transactions were consummated;

Provided that the parties will use their reasonable efforts to litigate against,
--------
and to obtain the lifting of, any such injunction, restraining or other order,
restraint, prohibition, action, suit, law or penalty.

     9.6  Related Agreements.  Buyer and each pertinent Buyer Subsidiary shall
          ------------------
have executed and delivered, as of the Closing, each of the Related Agreements,
if any, to be executed by Buyer or a Buyer Subsidiary.

     9.7  Opinion of Counsel.  Seller shall have received, on and as of the
          ------------------
Closing Date, the opinion of either inside or outside counsel to Buyer
substantially as to the matters contained in Schedule 9.7, subject to the
                                             ------------
conditions and limitations therein and to other customary conditions and
limitations.

     9.8  Receipt of Other Documents.  Seller shall have received the following:
          --------------------------

                                      -51-
<PAGE>

          (a)  Certified copies of the resolutions of Buyer's and each pertinent
     Buyer Subsidiary's board of directors respecting this Agreement, the
     Related Agreements and the Transactions, together with certified copies of
     any shareholder resolutions which are necessary to approve the execution
     and delivery of this Agreement and the Related Agreements and/or the
     performance of the obligations of Buyer and each pertinent Buyer Subsidiary
     hereunder and thereunder;

          (b)  Certified copies of Buyer's and each pertinent Buyer Subsidiary's
     Charter Documents, together with a certificate of the corporate secretary
     of Buyer and each pertinent Buyer Subsidiary that none of such documents
     have been amended;

          (c)  One or more certificates as to the incumbency of each officer of
     Buyer and each pertinent Buyer Subsidiary who has signed the Agreement, any
     Related Agreement or any certificate, document or instrument delivered
     pursuant to the Agreement or any Related Agreement;

          (d)  A good standing certificate for Buyer and each pertinent Buyer
     Subsidiary from the Secretary of State of their respective states of
     incorporation, dated as of a date not earlier than fifteen (15) Business
     Days prior to the Closing Date; and

          (e)  Copies of all current Licenses of Buyer and each pertinent Buyer
     Subsidiary relevant to operation of the Plant and all third party and
     governmental consents, permits and authorizations that Buyer and each
     pertinent Buyer Subsidiary has received in connection with the Agreement,
     the Related Agreements and the Transactions to occur at the Closing.

     9.9  Limitation on Adjustments.  There shall not have been adjustments to
          -------------------------
the Purchase Price arising under the Adjustment Sections (except for adjustments
under Section 2.6(c) or adjustments under Section 2.9 related to adjustments
required by such Section) exceeding in the aggregate thirty percent (30%) of the
aggregate Purchase Price.

                                  ARTICLE 10
                                    CLOSING
                                    -------

     10.1 Closing.  Subject to the terms and conditions hereof, proceedings for
          -------
the consummation of the Transactions (the "Closing") shall occur at the offices
of the Seller or a mutually agreeable place or places within five (5) Business
Days after all of the conditions set forth in Article 8 and Article 9 hereof
have been satisfied or waived or at such other time as the parties may agree,
but in no event earlier than November 1, 2000, unless agreed to by Seller or
later than the Termination Date set forth in Section 11.1(e). The date on which
such proceedings actually occur is referred to herein as the "Closing Date." The
Closing shall be effective for all purposes immediately after 12 O'Clock
Midnight, Pacific time, on the day following the Closing Date. At the Closing
and subject to the terms and conditions hereof, the following will occur:

          (a)  Deliveries by Seller.  Seller shall deliver to Buyer such
               --------------------
     instruments of transfer and conveyance properly executed and acknowledged
     by Seller in customary

                                      -52-
<PAGE>

     form mutually agreed to by the Seller and Buyer necessary to transfer to
     and vest in Buyer and/or the pertinent Buyer Subsidiaries all of Seller's
     right, title and interest in and to the Assets or which may be required by
     the Title Insurer, including, without limitation:

               (i)   Bills of sale and assignment in respect of the Assets;

               (ii)  Grant deeds properly executed and acknowledged by Seller
          with respect to each of the Owned Real Properties included in the
          Assets (subject to easements or interests reserved in accordance with
          the terms hereof);

               (iii) Assignment and assumption agreements properly executed and
          acknowledged by Seller with respect to each Real Property Lease
          included in the Assets;

               (iv)  Instruments of transfer, sufficient to transfer personal
          property interests that are included in the Assets but not otherwise
          transferred by the bills of sale and assignment referred to in clause
          (i) above, properly executed and acknowledged in the form customarily
          used in commercial transactions in Nevada; and

               (v)   Possession of the Assets.

          (b)  Deliveries by Buyer.  Buyer shall, or shall cause the Buyer
               -------------------
     Subsidiaries to, deliver to Seller immediately available funds, by way of
     wire transfer to an account or accounts designated by Seller, in an amount
     equal to the Purchase Price less the PPC Amount and such instruments of
     assumption properly executed and acknowledged by Buyer and the pertinent
     Buyer Subsidiaries in customary form mutually agreed to by the Buyer and
     Seller necessary for Buyer to assume the Assumed Liabilities, including,
     without limitation:

               (i)  Assignment and assumption agreements properly executed and
          acknowledged by Buyer and the pertinent Buyer Subsidiaries with
          respect to each Real Property Lease included in the Assets; and

               (ii) An assumption agreement or assumption agreements in favor of
          Seller.

     10.2 Escrow.  If either of the parties desires to consummate the Closing
          ------
through an escrow, an escrow shall be opened with, and the escrow agent shall
be, Chase Manhattan Bank and Trust Company, National Association or an Affiliate
thereof (the "Escrow Agent"), by depositing a fully executed copy of this
Agreement with the Escrow Agent to serve as escrow instructions. This Agreement
shall be considered the primary escrow instructions between the parties, but the
parties shall execute such additional standard escrow instructions as Escrow
Agent shall require in order to clarify the duties and responsibilities of
Escrow Agent. In the event of any conflict between this Agreement and such
additional standard escrow instructions, this Agreement shall prevail. If the
Closing is to be consummated through the Escrow Agent, the

                                      -53-
<PAGE>

parties shall deliver the funds, instruments of sale, assignment, conveyance and
assumption called for by Section 10.1 to the Escrow Agent, and on the Closing
Date, the Escrow Agent shall close the escrow by:

          (a)  Causing the deeds for the Owned Real Properties, the assignments
     of the Real Property Leases, and any other documents which the parties may
     mutually designate to be recorded in the official records of the
     appropriate counties in which the pertinent Assets are located;

          (b)  Delivering to Seller by wire transfer of immediately available
     funds, to an account or accounts designated by Seller, the amounts called
     for by Section 10.1; and

          (c)  Delivering to Buyer or Seller, as the case may be, the other
     instruments referred to in Section 10.1.

     10.3 Power Purchase Agreement and Escrow Arrangements.
          ------------------------------------------------

          (a)  Creation of Escrow.  Upon (i) the satisfaction or waiver of each
               ------------------
     of the conditions set forth in Article 8 and Article 9 hereof, other than
     the Mohave Co-Tenancy Agreement Condition, and (ii) the later of FERC's
     acceptance of filing of the Power Purchase Agreement attached as Exhibit A
                                                                      ---------
     hereto (the "Power Purchase Agreement") and the date when an order no
     longer subject to judicial review has been issued by FERC determining this
     Agreement to be just and reasonable without changes or new conditions that
     are unacceptable to either Party, Buyer may, if such Mohave Co-Tenancy
     Condition is not satisfied prior to the first anniversary of the signing of
     this Agreement, upon no less than five (5) business days' notice, cause an
     escrow to be opened with the Escrow Agent by depositing a fully executed
     copy of this Agreement with the Escrow Agent to serve as escrow
     instructions.  The date of the opening of such escrow shall be the "Escrow
     Date".  The parties hereto agree to proceed as follows:

               (i)   Within five (5) business days after the Escrow Date (the
          "Effective Date"), each of the parties will deliver the funds, and
          instruments of sale, assignment, conveyance and assumption called for
          by Section 10.1 of this Agreement to the Escrow Agent.  The delivery
          of the documents required under Sections 8.3, 8.9, 8.12, 9.3, and 9.7,
          dated as of the Effective Date, shall be deemed to satisfy the
          condition contained in such sections as to the delivery of such
          documents as of the Closing Date.

               (ii)  On or before the Effective Date, each of the parties will
          execute the Power Purchase Agreement and the PPC attached to Schedule
                                                                       --------
          2.5 hereto.  The Power Purchase Agreement and the PPC attached to
          ---
          Schedule 2.5 hereto will each become effective on the Effective Date.
          ------------

               (iii) The funds deposited in escrow by Buyer on the Effective
          Date and on any date thereafter (collectively, the "Deposited Funds"),
          together with any and all income thereon and proceeds therefrom
          ("Additional Funds"), from time to time held by the Escrow Agent
          pursuant to the terms hereof, are referred to herein

                                      -54-
<PAGE>

          as the "Escrow Funds." The Escrow Agent shall invest, reinvest and/or
          deposit all Escrow Funds in investments as set forth on Schedule
                                                                  --------
          10.3(a)(iii) or as contained in a joint direction of the parties
          ------------
          hereto.

          (b)  The Escrow Period.  From the Effective Date until the Closing or
               -----------------
     the termination of this Agreement (the "Escrow Period"), the parties hereto
     hereby agree as follows:

               (i)   The Post-Closing Adjustments described in Section 2.6(c)
          hereof shall be made as if the Effective Date were the Closing Date
          for purposes of Section 2.6(c) hereof.  The amount to be paid pursuant
          to Section 2.6(c)(iv) hereof shall be paid to the Escrow Agent and
          deemed as part of the Deposited Funds.

               (ii)  Seller's Undivided Interest shall be held by Seller in
          accordance with the terms and provisions of the Co-Tenancy Agreement
          and the Project Agreements referred to therein, and any and all voting
          rights that Seller exercises under the auspices of the Co-Tenancy
          Agreement shall be exercised by Seller after consultation with Buyer.

          (c)  Closing Out of Escrow.  Within five days of the satisfaction of
               ---------------------
     the Mohave Co-Tenancy Agreement Condition, the parties shall deliver a
     joint instruction to the Escrow Agent that the condition has been satisfied
     or waived.  As part of such instruction, Seller and Buyer shall provide to
     the Escrow Agent an accounting of depreciation expense paid by Buyer to
     Seller with respect to capital expenditures made pursuant to the terms of
     Section 7 of the Power Purchase Agreement and an amount equal to a rate of
     return on such depreciation expense calculated from the date of the
     payments of such depreciation expense at the average rate of return
     received on the Deposited Funds from the Effective Date to the termination
     of Escrow (together, the "Depreciation Amount").  All conditions set forth
     in Article 8 and Article 9, other than the conditions set forth in Section
     8.5, Section 8.6, Section 8.8(b) and Section 9.5, hereof shall be deemed
     satisfied or waived, provided, that the conditions set forth in Sections
                          --------
     8.5, 8.6, 8.8(b) and 9.5 shall be subject to fulfillment at or prior to the
     Closing, unless waived in writing, and the Closing shall proceed upon such
     satisfaction or waiver, unless the Agreement is terminated, pursuant to its
     terms, prior to the date of such satisfaction or waiver.  The following
     instruments, documents and funds will be delivered out of the escrow
     created hereby to the persons and entities indicated:

               (i)   To Buyer, the instruments and documents referred to in
          Section 10.1(a).

               (ii)  To Seller, the instruments and documents referred to in
          Section 10.2 (b).

               (iii) To Buyer by wire transfer of immediately available funds,
          to an account or accounts designated by Buyer, the Depreciation
          Amount.

                                      -55-
<PAGE>

               (iv)  To Seller by wire transfer of immediately available funds,
          to an account or accounts designated by Seller, the balance of the
          Escrow Funds after payment of the Depreciation Amount.

               (v)   To Buyer or Seller, as the case may be, the other
          instruments referred to in Section 10.1.

          (d)  If the Agreement is terminated prior to the distribution of the
     funds and instruments out of the escrow, then the parties shall deliver a
     joint instruction to the Escrow Agent that the Agreement has been
     terminated.  As part of such instruction, Seller and Buyer shall provide to
     the Escrow Agent an accounting of the amounts paid by Buyer for capital
     expenditures pursuant to Section 7 of the Power Purchase Agreement (the
     "Escrow Capital Amount").  Upon delivery of such instructions and the
     deposit by Seller of the Escrow Capital Amount into the escrow, the escrow
     shall terminate and the following instruments, documents and funds will be
     delivered out of the escrow to the persons and entities indicated:

               (i)   To Buyer, the instruments and documents deposited into the
          Escrow by Buyer.

               (ii)  To Seller, the instruments and documents deposited into the
          Escrow by Seller.

               (iii) To Buyer, by wire transfer of immediately available funds,
          to an account or accounts designated by Buyer, the Deposited Funds and
          the Escrow Capital Amount.

               (iv)  To Seller, by wire transfer of immediately available funds,
          to an account or accounts designated by Seller, the Additional Funds.

     10.4 Prorations.  Items of expense and income (if any) affecting the Assets
          ----------
and the Assumed Liabilities that are customarily pro-rated, including, without
limitation, real and personal property taxes, utility charges, charges arising
under leases, insurance premiums, and the like, shall be pro-rated between
Seller and Buyer and the pertinent Buyer Subsidiaries as of the Closing Date or
the Escrow Date, as the case may be. Proration of property taxes shall be in
accordance with Schedule 10.4.
                -------------

                                  ARTICLE 11
                                  TERMINATION
                                  -----------

     11.1 Termination.  Any Transactions contemplated hereby that have not been
          -----------
consummated may be terminated:

          (a)  At any time, by mutual written consent of Seller and Buyer; or

                                      -56-
<PAGE>

          (b)  By either Buyer or Seller, as the case may be, upon thirty (30)
     days' written notice given any time after, if (i) consummation of the
     Transactions requires the Approval of a Governmental Body that has general
     regulatory jurisdiction over Buyer or Seller (including FERC), the issuance
     of an order by such Governmental Body disapproving this Agreement and the
     consummation of the Transactions or otherwise approving of this Agreement
     or the Transactions in a manner that fails to meet the conditions of the
     terminating party set forth in Sections 8.4 or 9.4, as the case may be, and
     (ii) two hundred ten (210) days have elapsed from the filing, if any, after
     the date hereof of the application for such Governmental Body's approval of
     this Agreement and the Transactions contemplated hereby if, prior to the
     date such notice is given, such Governmental Body (not including FERC) has
     not issued an order approving this Agreement and the Transactions on terms
     that meet the conditions of the terminating party set forth in Sections 8.4
     or 9.4, as the case may be, it being understood that such two hundred ten
     (210) day period shall not include any period after such order during which
     applications for rehearing or modification or judicial appeals or remedies
     are pending; or

          (c)  By one party upon written notice to the other if there has been a
     material default or breach under this Agreement by the other party which is
     not cured by the earlier of the Closing Date or the date thirty (30) days
     after receipt by the other party of written notice from the terminating
     party specifying with particularity such breach or default; or

          (d)  By Buyer upon written notice to Seller, if Buyer elects to
     terminate this Agreement pursuant to Section 6.3(b), Section 8.8(a)(z) or
     Section 8.8(b)(iii); or

          (e)  By either Buyer or Seller upon written notice to the other party,
     if (i) the Closing shall not have occurred by the Termination Date; (ii)
     one or more of the other Owners have properly exercised their right of
     first refusal as to all of the Assets and confirmed its or their commitment
     to purchase all of the Assets in accordance with Section 12 of the Co-
     Tenancy Agreement; or (iii) (A) in the case of termination by Seller, the
     conditions set forth in Article 9 for the Closing cannot reasonably be met
     by the Termination Date and (B) in the case of termination by Buyer, the
     conditions set forth in Article 8 for the Closing cannot reasonably be met
     by the Termination Date, unless in either of the cases described in clauses
     (A) or (B), the failure of the condition is the result of the material
     breach of this Agreement by the party seeking to terminate.  The
     Termination Date for the Closing shall be the earlier of (x) the last
     Business Day of the month which is thirty-seven months after the month in
     which Seller provides the other Owners with the notice required by Section
     12.3 of the Co-Tenancy Agreement or (y) if all Owners waive in writing the
     further running or application of, or confirm in writing the satisfaction
     or inapplicability of, the notice period set forth therein, then ninety
     (90) days following the effective date of the last such written waiver or
     confirmation of the Owners, but not earlier than 11:59 P.M., Pacific Time,
     November 1, 2000.  Such date, or such later date as may be specifically
     provided for in this Agreement (including any date arising under the
     operation of Sections 2.9, 8.6, and 8.8(a) hereof) or agreed upon by the
     parties, is herein referred to as the "Termination Date."  Except as set
     forth in Section

                                      -57-
<PAGE>

     11.2, each party's right of termination hereunder is in addition to any
     other rights it may have hereunder or otherwise.

     11.2 Effect of Termination.  If there has been a termination pursuant to
          ---------------------
Section 11.1, then this Agreement shall be deemed terminated, and all further
obligations of the parties hereunder shall terminate, except that the
obligations set forth in Sections 5.3, 5.4 and 7.4 and Article 12 and Article 13
shall survive; provided that in the event that Seller pays to Buyer the breakup
               --------
fee provided for in Section 11.4, Article 12 shall only survive with respect to
breaches of Sections 5.3, 5.4 and 7.4 and any and all Third-Party Claims.  In
the event of such termination of this Agreement, there shall be no liability for
damages on the part of a party to another under and by reason of this Agreement
or the transactions contemplated hereby except as set forth in Article 12 and
except for intentionally fraudulent acts by a party, the remedies for which
shall not be limited by the provisions of this Agreement.  The foregoing
provisions shall not, however, limit or restrict the availability of specific
performance or other injunctive or equitable relief to the extent that specific
performance or such other relief would otherwise be available to a party
hereunder.

     11.3 Modification of Terms.  Subject to Section 11.1(e), in the event a
          ---------------------
Governmental Body referred to in Section 11.1(b)(i) having general regulatory
jurisdiction over Seller entertains, as an alternative to approval of this
Agreement and the Transactions with the Buyer contemplated hereby, any proposal
of one or more third parties to acquire the Assets from the Seller on terms and
conditions that include a higher purchase price than the Purchase Price set
forth herein, and such terms and conditions are acceptable to Seller, then and
in that event, subject to such restrictions and requirements as such
Governmental Body may impose upon Seller, the Seller shall exercise its best
efforts to afford to the Buyer the right to enter into appropriate amendments
and modifications of this Agreement to match such proposed alternative terms and
conditions.  Such right shall be exercisable by Buyer within three (3) Business
Days after its receipt of written notice from the Seller that, in the Seller's
good faith belief, the proposal of such third party or parties makes it unlikely
that such Governmental Body will approve this Agreement and the Transactions
contemplated hereby in a timely fashion and that the alternative terms and
conditions are acceptable to Seller.

     11.4 Breakup Fee.  In the event the Transactions are terminated by either
          -----------
Buyer or Seller in accordance with the provisions of Section 11.1(e)(ii) as a
result of the proper exercise of the rights of first refusal as to all of the
Assets and the confirmation by one or more of the other Owners of its or their
commitment to purchase all of the Assets in accordance with Section 12 of the
Co-Tenancy Agreement, or by Buyer in accordance with the provisions of Section
6.3(b), then within thirty (30) days following such termination, Seller shall
pay to Buyer a cash amount equal to two (2) percent of the Purchase Price. Upon
Seller's payment to Buyer, this Agreement shall be terminated in accordance with
Section 11.2.

                                      -58-
<PAGE>

                                  ARTICLE 12
                    SURVIVAL AND REMEDIES; INDEMNIFICATION
                    --------------------------------------

     12.1 Survival.  Except as may be otherwise expressly set forth in this
          --------
Agreement, the representations, warranties, covenants and agreements of Buyer
and Seller set forth in this Agreement, or in any writing required to be
delivered in connection with this Agreement, shall survive the Closing Date.

     12.2 Exclusive Remedy.  Absent intentional fraud or unless otherwise
          ----------------
specifically provided herein, the sole exclusive remedy for damages of a party
hereto for any breach of the representations, warranties, covenants and
agreements of the other party contained in this Agreement shall be the remedies
contained in this Article 12.

     12.3 Indemnity by Seller.
          -------------------

          (a)  Seller shall indemnify Buyer, each Buyer Subsidiary and their
     respective Affiliates and hold them harmless from and against any and all
     claims, demands, suits, loss, liability, damage and expense, including
     reasonable attorneys' fees and costs of investigation, litigation,
     settlement and judgment, as well as the Indemnitee's obligations to itself
     indemnify its directors, officers, attorneys, employees, subcontractors,
     agents and assigns (collectively "Losses"), which they may sustain or
     suffer or to which they may become subject as a result of:

               (i)   The inaccuracy of any representation or the breach of any
          warranty made by Seller in this Agreement;

               (ii)  The nonperformance or breach of any covenant or agreement
          made or undertaken by Seller in this Agreement; and

               (iii) If the Closing occurs, the failure of Seller to pay,
          discharge or perform as and when due, any of the Excluded Liabilities
          and the failure of Seller to comply with any Bulk Sales Laws referred
          to in Section 7.1.

          (b)  The indemnification obligations of Seller provided above shall,
     in addition to the qualifications and conditions set forth in Sections 12.5
     and 12.6, be subject to the following qualifications:

               (i)   With respect to claims of indemnity for breaches of
          representations and warranties under clause (a)(i) above:

                     (A)  Written notice to Seller of such claim specifying the
               basis thereof must be made, or an action at law or in equity with
               respect to such claim must be served, before the expiration of
               twelve (12) months after the earlier to occur of the Closing Date
               or the date on which this Agreement is terminated, as the case
               may be, except that such time limitation shall not

                                      -59-
<PAGE>

               apply to breaches of the warranties contained in Sections 3.1,
               3.2, 3.3 and 3.4;

                     (B)  If the Closing occurs, Buyer, the Buyer Subsidiaries
               and their respective Affiliates shall be entitled only to recover
               the amount by which the aggregate Losses sustained or suffered by
               them as a result of circumstances described in such clause (a)(i)
               exceed one percent (1%) of the Purchase Price (the "Deductible
               Amount"), provided, however, that individual claims of Fifteen
                         --------
               Thousand Dollars ($15,000) or less shall not be aggregated for
               purposes of calculating either the Deductible Amount or the
               excess of Losses over the Deductible Amount; and

                    (C)  If the Closing occurs, in no event shall Seller be
               liable to Buyer, the Buyer Subsidiaries and their respective
               Affiliates under clause (a)(i) for Losses in the nature of
               consequential damages, punitive damages, lost profits, damage to
               reputation or the like, but such damages shall be limited to out-
               of-pocket Losses and diminution in value, and to an aggregate
               limit of one hundred percent (100%) of the Purchase Price.

               (ii)  If the Closing occurs, Buyer, the Buyer Subsidiaries and
          their respective Affiliates shall not be entitled to indemnity under
          clauses (a)(ii)-(iii) above except for out-of-pocket Losses actually
          suffered or sustained by them, and such indemnity shall not include
          Losses in the nature of consequential damages, punitive damages, lost
          profits, diminution in value, damage to reputation or the like; except
          that the provisions of this clause (b)(ii) shall not apply to a breach
          of Section 5.4.

     12.4 Indemnity by Buyer.
          ------------------

          (a)  Buyer shall indemnify Seller and its Affiliates and hold them
     harmless from and against any and all Losses which they may sustain or
     suffer or to which they may become subject as a result of:

               (i)   The inaccuracy of any representation or the breach of any
          warranty made by Buyer in this Agreement;

               (ii)  The nonperformance or breach of any covenant or agreement
          made or undertaken by Buyer in this Agreement;

               (iii) If the Closing occurs, the failure of Buyer to pay,
          discharge or perform as and when due, any of the Assumed Liabilities;
          and

               (iv)  If the Closing occurs, the ongoing operations of Buyer, the
          Buyer Subsidiaries and the Assets after the Closing Date, including,
          without limitation, the continuation or performance by the Owners
          (including the Buyer and Buyer Subsidiaries, if any) after the Closing
          Date of any agreement or practice of the Owners existing as of or
          prior to the Closing Date.

                                      -60-
<PAGE>

          (b)  The indemnification obligations of Buyer provided above shall, in
     addition to the qualifications and conditions set forth in Sections 12.5
     and 12.6, be subject to the following qualifications:

               (i)   Seller and its Affiliates shall not be entitled to
          indemnity for breaches of representations and warranties under clause
          (a)(i) unless written notice to Buyer of such claim specifying the
          basis thereof is made, or an action at law or in equity with respect
          to such claim is served, before the expiration of twelve (12) months
          after the earlier to occur of the Closing Date or the date on which
          this Agreement is terminated, as the case may be, except that such
          time limitation shall not apply to breaches of the representations and
          warranties contained in Sections 4.1, 4.2, 4.3, 4.4, and 4.11;

               (ii)  If the Closing occurs, Seller and its Affiliates shall be
          entitled only to recover the amount by which the aggregate Losses
          sustained as a result of circumstances described in clause (a)(i)
          above exceed the Deductible Amount, provided, however, that individual
                                              --------
          claims of Fifteen Thousand Dollars ($15,000) or less shall not be
          aggregated for purposes of calculating either the Deductible Amount of
          the excess of Losses over the Deductible Amounts; and

               (iii) If the Closing occurs, Seller and its Affiliates shall not
          be entitled to indemnity under clauses (a)(ii)-(iii) above except for
          out-of-pocket Losses actually suffered or sustained by them and such
          indemnity shall not include Losses in the nature of consequential
          damages, punitive damages, lost profits, diminution in value, damage
          to reputation or the like, except that the provisions of this clause
          (b)(ii) shall not apply to a breach of Section 5.4.

     12.5 Further Qualifications Respecting Indemnification.  The right of a
          -------------------------------------------------
party (an "Indemnitee") to indemnity hereunder shall be subject to the following
additional qualifications:

          (a)  The Indemnitee shall promptly upon its discovery of facts or
     circumstances giving rise to a claim for indemnification, including receipt
     by it of notice of any demand, assertion, claim, action or proceeding,
     judicial, governmental or otherwise, by any third party (such third party
     actions being collectively referred to herein as "Third Party Claims"),
     give notice thereof to the indemnifying party (the "Indemnitor"), such
     notice in any event to be given within sixty (60) days from the date the
     Indemnitee obtains actual knowledge of the basis or alleged basis for the
     right of indemnity or such shorter period as may be necessary to avoid
     material prejudice to the Indemnitor; and

          (b)  In computing Losses, such amounts shall be computed net of any
     related recoveries to which the Indemnitee is entitled under insurance
     policies, or other related payments received or receivable from third
     parties, and net of any tax benefits actually received by the Indemnitee or
     for which it is eligible, taking into account the income tax treatment of
     the receipt of indemnification.

                                      -61-
<PAGE>

          (c)  The Indemnitee shall use Commercially Reasonable Efforts to
     mitigate all Losses for which indemnification may be available hereunder,
     including availing itself of any defenses, limitations, rights of
     contribution, claims against third Persons and other rights at law or
     equity.  The Indemnitee's Commercially Reasonable Efforts shall include the
     reasonable expenditure of money to mitigate or otherwise reduce or
     eliminate any loss or expenses for which indemnification would otherwise be
     due, such expenditures being included in indemnified Losses hereunder.

     12.6 Procedures Respecting Third Party Claims.  In providing notice to the
          ----------------------------------------
Indemnitor of any Third Party Claim (the "Claim Notice"), the Indemnitee shall
provide the Indemnitor with a copy of such Third Party Claim or other documents
received and shall otherwise make available to the Indemnitor all relevant
information material to the defense of such claim and within the Indemnitee's
possession.  Subject to the rights of other Owners under the Co-Tenancy
Agreement, of the Operating Agent under the Operating Agreement, and of third
parties under any Assumed Contract, as among the parties hereto the Indemnitor
shall have the right, by notice given to the Indemnitee within fifteen (15) days
after the date of the Claim Notice, to assume and control the defense of the
Third Party Claim that is the subject of such Claim Notice, including the
employment of counsel selected by the Indemnitor after consultation with the
Indemnitee, and the Indemnitor shall pay all expenses of, and the Indemnitee
shall cooperate fully with the Indemnitor in connection with, the conduct of
such defense.  The Indemnitee shall have the right to employ separate counsel in
any such proceeding and to participate in (but not control) the defense of such
Third Party Claim, but the fees and expenses of such counsel shall be borne by
the Indemnitee unless the Indemnitor shall agree otherwise; provided, however,
                                                            --------
if the named parties to any such proceeding (including any impleaded parties)
include both the Indemnitee and the Indemnitor, the Indemnitor requires that the
same counsel represent both the Indemnitee and the Indemnitor, and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them, then the Indemnitee shall
have the right to retain its own counsel at the cost and expense of the
Indemnitor.  If the Indemnitor shall have failed to assume the defense of any
Third Party Claim in accordance with the provisions of this Section, then, as
among the parties hereto,  the Indemnitee shall have the absolute right to
control the defense of such Third Party Claim, and, if and when it is finally
determined that the Indemnitee is entitled to indemnification from the
Indemnitor hereunder, the fees and expenses of Indemnitee's counsel shall be
borne  by the Indemnitor, provided that the Indemnitor shall be entitled, at its
                          --------
expense, to participate in (but not control) such defense.  The Indemnitor shall
have the right to settle or compromise any such Third Party Claim for which it
is providing indemnity so long as such settlement does not impose any
obligations on the Indemnitee (except with respect to providing releases of the
third party).  The Indemnitor shall not be liable for any settlement effected by
the Indemnitee without the Indemnitor's consent except where the Indemnitee has
assumed the defense because Indemnitor has failed or refused to do so.  As among
the parties hereto, the Indemnitor may assume and control, or bear the costs, of
any such defense subject to its reservation of a right to contest the
Indemnitee's right to indemnification hereunder, provided that it gives the
                                                 --------
Indemnitee notice of such reservation within fifteen (15) days of the date of
the Claim Notice.

     12.7 Pro Rata Limitation On Buyer Claims.  Notwithstanding any other
          -----------------------------------
provision of this Agreement:

                                      -62-
<PAGE>

          (a) Following the execution by Buyer or any Affiliate of Buyer of an
     Other Owner's Agreement, Seller's liability to Buyer hereunder for any Loss
     shall be limited to the amount for which Seller would have been liable
     under the terms hereof if (i) all Undivided Interests that are the subject
     of this Agreement and such Other Owner's Agreements were included under
     this Agreement, (ii) the Purchase Price actually paid hereunder were
     adjusted proportionately, and (iii) Seller were liable to Buyer only for
     that percentage of the Loss as would be proportionate to its percentage of
     the Undivided Interests in relation to all other Undivided Interests that
     would, under such circumstances, be subject to this Agreement; and

          (b) In any and all events, nothing in this Agreement shall have the
     effect of increasing Seller's liability to a third party (including
     Governmental Bodies), or to Buyer on account of Third Party Claims
     (including those by Governmental Bodies), beyond the proportion of the
     Losses Seller would have incurred in connection with such liabilities or
     claims had the Transactions not occurred and Seller had remained an Owner
     of the Undivided Interests subject to the Co-Tenancy Agreement.

                                  ARTICLE 13
                              GENERAL PROVISIONS
                              ------------------

     13.1 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 or
their permitted assignees at the following addresses (or at such other address
as shall be given in writing by a party hereto):

          If to Seller, addressed to:

               Nevada Power Company
               6100 Neil Road
               Reno, Nevada 89511
               Attn: William E. Peterson
               Facsimile: (775) 834-5959

          with a copy to counsel for Seller:

               Skadden Arps Slate Meagher & Flom
               Four Times Square
               New York, NY 10036-6522
               Attn: Sheldon Adler
               Facsimile: (212) 735-2000

                                      -63-
<PAGE>

          If to Buyer or any Buyer Subsidiary, addressed to:

               AES Pacific, Inc.
               21469 Waterford Place
               West Linn, OR  97068
               Attn: Tom Kunde
               Facsimile: (503) 723-5530

          with a copy to counsel for Buyer:

               O'Melveny & Myers LLP
               275 Battery Street
               San Francisco, CA 94111-3305
               Attn: Joseph Malkin, Esq.
               Facsimile: (415) 984-8701

     13.2 Attorneys' Fees.  Subject to the provisions of Section 13.9, in any
          ---------------
litigation or other proceeding relating to this Agreement (but excluding any
proceedings under Section 2.9), the prevailing party shall be entitled to
recover its costs and reasonable attorneys' fees.

     13.3 Successors and Assigns.  Except as provided in Section 2.13, the
          ----------------------
rights under this Agreement shall not be assignable or transferable nor the
duties delegable by either party without the prior written consent of the other;
and nothing contained in this Agreement, express or implied, is intended to
confer upon any Person, other than the parties hereto, their permitted
successors-in-interest and permitted assignees and any Person benefitting from
the indemnities provided herein, any rights or remedies under or by reason of
this Agreement unless so stated to the contrary. Notwithstanding the foregoing,
Buyer may assign for security purposes and grant to its lenders (or security
trustee or agent) a security interest in its rights under this Agreement or
assign (after Closing) its rights hereunder to any Person or Persons acquiring
the Plant; provided that neither the grant of any such interest, nor the
foreclosure of any such interest, shall in any way release, reduce or diminish
the obligations of Buyer to Seller hereunder, or obtain for such security
trustee or agent or any other Person any of the rights of Buyer hereunder or any
of the rights of an Owner under any of the Project Agreements (as defined in the
Co-Tenancy Agreement), or operate directly or indirectly as an assignment under
any of the Project Agreements.

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

     13.5 Captions and Paragraph Headings.  Captions and paragraph headings used
          -------------------------------
herein are for convenience only and are not a part of this Agreement and shall
not be used in construing it.

     13.6 Entirety of Agreement; Amendments.  This Agreement (including the
          ---------------------------------
Schedules and Exhibits hereto), the Related Agreements and the other documents
and instruments specifically provided for in this Agreement and the Related
Agreements contain the entire

                                      -64-
<PAGE>

understanding between the parties concerning the subject matter of this
Agreement and such other documents and instruments and, except as expressly
provided for herein, supersede all prior understandings and agreements, whether
oral or written, between them with respect to the subject matter hereof and
thereof. There are no representations, warranties, agreements, arrangements or
understandings, oral or written, between the parties hereto relating to the
subject matter of this Agreement and such other documents and instruments which
are not fully expressed herein or therein. This Agreement may be amended or
modified only by an agreement in writing signed by each of the parties hereto.
All Exhibits and Schedules attached to or delivered in connection with this
Agreement are integral parts of this Agreement as if fully set forth herein.

     13.7 Construction.  This Agreement and any documents or instruments
          ------------
delivered pursuant hereto shall be construed without regard to the identity of
the Person who drafted the various provisions of the same. Each and every
provision of this Agreement and such other documents and instruments shall be
construed as though the parties participated equally in the drafting of the
same. Consequently, the parties acknowledge and agree that any rule of
construction that a document is to be construed against the drafting party shall
not be applicable either to this Agreement or such other documents and
instruments.

     13.8 Waiver.  The failure of a party to insist, in any one or more
          ------
instances, on performance of any of the terms, covenants and conditions of this
Agreement shall not be construed as a waiver or relinquishment of any rights
granted hereunder or of the future performance of any such term, covenant or
condition, but the obligations of the parties with respect thereto shall
continue in full force and effect. No waiver of any provision or condition of
this Agreement by a party shall be valid unless in writing signed by such party
or operational by the terms of this Agreement. A waiver by one party of the
performance of any covenant, condition, representation or warranty of the other
party shall not invalidate this Agreement, nor shall such waiver be construed as
a waiver of any other covenant, condition, representation or warranty. A waiver
by any party of the time for performing any act shall not constitute a waiver of
the time for performing any other act or the time for performing an identical
act required to be performed at a later time.

     13.9 Arbitration.
          -----------

          (a)  Agreement to Arbitrate.  Any controversy or claim arising out of
              ----------------------
     instances, on or relating to this Agreement, or the breach or alleged
     breach hereof, shall, upon demand of either Seller or Buyer, be submitted
     to arbitration in the manner hereinafter provided. Seller and Buyer will
     make every reasonable effort to resolve any such controversy or claim
     without resort to arbitration. But in the event the parties are unable to
     effect a satisfactory resolution between themselves, such controversy shall
     be submitted to arbitration in accordance with the terms and provisions of
     this Section 13.9 and in accordance with the then current Commercial
     Arbitration Rules (hereinafter the "Rules") of the American Arbitration
     Association (or any successor organization) (hereinafter the "AAA"). Any
     such arbitration shall take place in Los Angeles, California and shall be
     administered by the AAA. In the event of any conflict between the terms and
     provisions of this Section 13.9 and the Rules, the terms and provisions of
     this Section 13.9 shall prevail.

                                      -65-
<PAGE>

          (b) Submission to Arbitration.  A party desiring to submit to
              -------------------------
     arbitration any such controversy shall send a written arbitration demand to
     the AAA and to the opposing party.  The demand shall set forth a clear and
     complete statement of the nature of the claim, its basis, and the remedy
     sought, including the amount of damages, if any.  The opposing party may,
     within thirty days of receiving the arbitration demand, assert a
     counterclaim and/or set-off.  The counterclaim or set-off, which shall be
     sent to the AAA and the opposing party, shall include a clear and complete
     statement of the nature of the counterclaim or set-off, its basis, and the
     remedy sought, including the amount of damages, if any.

          (c) Selection of Arbitration Panel.  The dispute shall be decided by a
              ------------------------------
     panel of three neutral arbitrators selected as follows.  The AAA shall
     submit to the parties, within ten days after receipt of an arbitration
     demand, a list of eleven potential arbitrators consisting of retired
     federal or state court judges; provided that none of the potential
                                    --------
     arbitrators shall have (or have ever had) any material affiliation of any
     kind with either party or any of their respective Affiliates.  Each party
     shall, within five days, strike four, three, two, one or none of the
     arbitrators, rank the remaining arbitrators in order of preference (with
     "l" designating the most preferred, "2" the next most preferred and so
     forth) and so advise the AAA in writing.  The AAA shall appoint the
     arbitrators with the best combined preference ranking on both lists and
     designate the most preferred arbitrator as presiding officer (in each case,
     selecting by lot, if necessary, in the event of a tie).

          (d) Prehearing Discovery.  There shall be no prehearing discovery
              --------------------
     except as follows.  Subject to the authority of the presiding officer of
     the arbitration panel to modify the provisions of this paragraph before the
     arbitration hearing upon a showing of exceptional circumstances, each party
     (i) shall propound to the other no more than twenty (20) requests for
     production of documents, including subpart, and (ii) shall take no more
     than two (2) discovery depositions.  Such discovery shall be conducted in
     accordance with the provisions and procedures of the Federal Rules of Civil
     Procedure.  No interrogatories or requests for admission shall be
     permitted.  Disputes concerning discovery obligations or protection of
     discovery materials shall be determined by the presiding officer of the
     arbitration panel.  The foregoing limitations shall not be deemed to limit
     a party's right to subpoena witnesses or the production of documents at the
     arbitration hearing, nor to limit a party's right to depose witnesses that
     are not subject to subpoena to testify in person at the arbitration
     hearing; provided, however, that the presiding officer of the arbitration
              --------
     panel may, upon motion, place reasonable limits upon the number and length
     of such testimonial depositions.

          (e) Arbitration Hearing.  The presiding officer of the arbitration
              -------------------
     panel shall designate the place and time of the hearing.  The hearing shall
     be scheduled to begin within ninety (90) days after the filing of the
     arbitration demand (unless extended by the arbitration panel on a showing
     of exceptional circumstances) and shall be conducted as expeditiously as
     possible.  In all events, the issues being arbitrated, which shall be
     limited to those issues identified in the initial claim and counter-claim
     submitted to the arbitration panel pursuant to Subsection (d) above, shall
     be submitted for decision within

                                      -66-
<PAGE>

     thirty (30) days after the beginning of the arbitration hearing. At least
     thirty (30) days prior to the beginning of the arbitration hearing, each
     party shall provide the other party and the arbitration panel with written
     notice of the identity of each witness (other than rebuttal witnesses) it
     intends to call to testify at the hearing, together with a detailed written
     outline of the substance of the anticipated testimony of each such witness.
     The arbitration panel shall not permit any witness to testify that was not
     so identified prior to the hearing and shall limit the testimony of each
     such witness to the matters disclosed in such outline. Subject to the
     foregoing, the parties shall have the right to attend the hearing, to be
     represented by counsel, to present documentary evidence and witnesses, to
     cross-examine opposing witnesses and to subpoena witnesses. The Federal
     Rules of Evidence shall apply and the panel shall determine the competency,
     relevance, and materiality of evidence as appropriate. The panel shall
     recognize privileges available under applicable law. A stenographic record
     shall be made of the arbitration proceedings.

          (f) Award.  The panel's award shall be made by majority vote of the
              -----
     panel. An award in writing signed by at least two of the panel's
     arbitrators shall set forth the panel's findings of fact and conclusions of
     law. The award shall be filed with the AAA and mailed to the parties no
     later than thirty (30) days after the last day of testimony at the
     arbitration hearing. The panel shall have authority to issue any lawful
     relief that is just and equitable, except punitive damages. The award shall
     state that it dissolves and supersedes any provisional remedies entered
     pursuant to Subsection (g) below.

          (g) Provisional Remedies.  Pending the selection of the arbitration
              --------------------
     panel, upon request of a party, the AAA may appoint a retired judge to
     serve as a provisional arbitrator to rule on any motion for preliminary
     relief. Any preliminary relief ordered by the provisional arbitrator may be
     immediately entered in any federal or state court having jurisdiction
     thereof even though the decision on the underlying dispute may still be
     pending. Once constituted, the arbitration panel may, upon request of a
     party, issue a superseding order to modify or reverse such preliminary
     relief or may itself order preliminary relief pending a full hearing on the
     merits of the underlying dispute. Any such initial or superseding order of
     preliminary relief may be immediately entered in any federal or state court
     having jurisdiction thereof even though the decision on the underlying
     dispute may still be pending. Such relief may be granted by the appointed
     arbitrator or the arbitration panel only after notice to and opportunity to
     be heard by the opposing party. Such awards of preliminary relief shall be
     in writing and, if ordered by a panel of three arbitrators, must be signed
     by at least two of the panel members.

          (h) Entry of Award by Court.  The arbitration panel's arbitration
              -----------------------
     award shall be final. The parties agree and consent that judgment upon the
     arbitration award may be entered in any federal or state court having
     jurisdiction thereof.

          (i) Costs and Attorney's Fees.  The prevailing party shall be entitled
              -------------------------
     to recover its costs and reasonable attorneys' fees, and the party losing
     the arbitration shall pay all expenses and fees of the AAA, all costs of
     the stenographic record, all expenses of witnesses or proofs that may have
     been produced at the direction of the arbitrators, and

                                      -67-
<PAGE>

       the fees, costs, and expenses of the arbitrators. The arbitration panel
       shall designate the prevailing party for these purposes.

       13.10  Governing Law.  This Agreement shall be governed in all respects,
              -------------
including validity, interpretation and effect, by the laws of the State of
Nevada applicable to contracts made and to be performed wholly within the State
of Nevada by residents of the State of Nevada, provided that federal law,
                                               --------
including the Federal Arbitration Act, shall govern all issues concerning the
validity, enforceability and interpretation of the arbitration provision set
forth in Section 13.9 hereof. Any action or proceeding arising under this
Agreement shall be adjudicated in Los Angeles, California.

       13.11  Severability.  Whenever possible, each provision of this
              ------------
Agreement shall be interpreted in such manner as to be valid, binding and
enforceable under applicable law, but if any provision of this Agreement is held
to be invalid, void (or voidable) or unenforceable under applicable law, such
provision shall be ineffective only to the extent held to be invalid, void (or
voidable) or unenforceable, without affecting the remainder of such provision or
the remaining provisions of this Agreement.

       13.12  Consents Not Unreasonably Withheld.  Wherever the consent or
              ----------------------------------
approval of any party is required under this Agreement, such consent or approval
shall not be unreasonably withheld, unless such consent or approval is to be
given by such party at the sole or absolute discretion of such party or is
otherwise similarly qualified.

       13.13  Time Is of the Essence.  Time is hereby expressly made of the
              ----------------------
essence with respect to each and every term and provision of this Agreement. The
parties acknowledge that each will be relying upon the timely performance by the
other of its obligations hereunder as a material inducement to each party's
execution of this Agreement.

                                      -68-
<PAGE>

     IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.

                         Buyer:

                         THE AES CORPORATION

                         By:  ____________________________________
                         Name:
                         Title:

                         Seller:

                         NEVADA POWER COMPANY

                         By:  ____________________________________
                         Name:
                         Title:

                                      -69-<PAGE>

                                                                   Exhibit 10(D)

                     TRANSITIONAL POWER PURCHASE AGREEMENT

                                BY AND BETWEEN

                             NEVADA POWER COMPANY

                                      AND

                                AES MOHAVE, LLC

DATED:  May 10, 2000

ASSET BUNDLE:  MOHAVE
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

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

Exhibits                                                               Page
--------                                                               ----

EXHIBIT  A  ASSET BUNDLE CAPACITIES..................................   A-1
EXHIBIT  B  PRICE FLOOR OF ENERGY AND PRICE CEILING OF ENERGY,.......   B-1
EXHIBIT  C  EXAMPLE OF SUPPLIER'S MONTHLY INVOICE....................   C-1
EXHIBIT  D  EXAMPLE OF BUYER'S INVOICE OF REPLACEMENT COSTS..........   D-1
EXHIBIT  E  EXAMPLE OF 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  BUYER'S WHOLESALE SALES CONTRACTS AT THE EFFECTIVE DATE..   H-1

                                       i
<PAGE>

EXHIBIT  I  FORM OF GUARANTEE........................................   I-1

                                      ii
<PAGE>

                     TRANSITIONAL POWER PURCHASE AGREEMENT

This Agreement is made and entered into as of May 10, 2000 by and between Nevada
Power Company, a Nevada corporation ("Buyer"), and AES Mohave, LLC, a Delaware
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 undivided interest in the Mohave generating
station and other assets associated therewith to Supplier or an affiliate
thereof (the "Asset Sale");

WHEREAS, notwithstanding the Asset Sale, Buyer expects that it will be
designated by the Public Utility Commission of Nevada ("PUCN") 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
and specifically identified in Exhibit H, 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 Mohave 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 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.

     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
<PAGE>

1.2.2     "Asset Bundle" means a fourteen percent undivided interest in the
           ------------
          Mohave generating station and other assets associated therewith
          pursuant to the terms of the Asset Sale Agreement.

1.2.3     "Asset Bundle Capacity" means, with respect to each unit listed in
           ---------------------
          Exhibit A, fourteen percent of the net generating capacity (in
          megawatts ("MW")) of such unit (such net generating capacity currently
          being 790 MW per unit), as modified from time to time in accordance
          with Section 5.1 or Section 22, 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")) which the units would be capable of generating if they
          operated at the capacity level described in the first sentence of this
          Section 1.2.3.

1.2.4     "Asset Sale Agreement" means the Agreement between Buyer and Supplier
           --------------------
          or Supplier's affiliate dated as of May 10, 2000, to purchase Buyer's
          undivided interest in the Mohave generating station.

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

1.2.6     "Asset Sale Closing" means the transfer of Buyer's ownership of its
           ------------------
          undivided interest in the Mohave generating station and other assets
          associated therewith through the consummation of the Asset Sale
          pursuant to the terms of the Asset Sale Agreement.

1.2.7     "Availability Notice" means a notice delivered from time to time by
           -------------------
          Supplier to Buyer pursuant to Section 5.1 notifying Buyer of changes
          in the availability of the Asset Bundle.

1.2.8     "Business Day" means any day other than Saturday, Sunday, and any day
           ------------
          that is an observed holiday by Buyer.

1.2.9     "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 beginning at the end of the
          preceding Contract Year, and in each case ending on the earlier of the
          date which is 12 months thereafter or the termination date of this
          Agreement.

1.2.10    "Control Area" has the meaning set forth in the OATT.
           ------------

1.2.11    "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 Control
          Area.

1.2.12    "Credit Amount" means $50,000,000.
           -------------

1.2.13    "Delivered Amount" means, with respect to any Dispatch Hour, the
           ----------------
          Energy delivered by Supplier to Buyer at the designated Point(s) of

                                       2
<PAGE>

          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.

1.2.14    "Dispatch Hour" means the prescribed hour when Energy is to be
           -------------
          delivered by Supplier to Buyer at the designated Point(s) of Delivery.

1.2.15    "Effective Date" means the earlier to occur of (a) the date of the
           --------------
          Asset Sale Closing or (b) the Effective Date pursuant to Section
          10.3(a)(i) of the Asset Sale Agreement.

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

1.2.17    "Energy" means electricity (measured in MWh) to be provided by
           ------
          Supplier to Buyer pursuant to this Agreement

1.2.18    "Event of Default" has the meaning set forth in Section 18 hereof.
           ----------------

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

1.2.20    "Force Majeure" has the meaning set forth in Section 13 hereof.
           -------------

1.2.21    "GAAP" means United States generally accepted accounting principles.
           ----

1.2.22    "Good Utility Practice" means any of the applicable practices, methods
           ---------------------
          and acts required by any Governmental Authority having jurisdiction or
          applicable regional or national reliability council, including NERC,
          or WSCC, or any successor entity, whether or not the Party whose
          conduct is at issue is a member thereof, and 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 judgment 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 law, regulation,
          good business practices, reliability, 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 in the United States electric utility industry.

1.2.23    "Governmental Authority" means any foreign, federal, state, local 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 having jurisdiction over matters contained in
          this Agreement.

                                       3
<PAGE>

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

1.2.25    "ISA" means the Mountain West Independent System Administrator, 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. The
          ISA is also referred to as transmission administrator or transmission
          operator.

1.2.26    "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.

1.2.27    "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) Baa3 as determined by Moody's
          Investors Service, Inc., or (iii) a comparable rating by another
          nationally recognized rating service reasonably acceptable to Buyer.

1.2.28    "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).

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

1.2.30    "OATT" means Buyer's then-effective Open Access Transmission Tariff,
           ----
          or its successor, which has been accepted for filing by the FERC.

1.2.31    "Party" has the meaning set forth in the first paragraph of this
           -----
          Agreement.

1.2.32    "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 5.1.

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

1.2.34    "Point of Delivery" means the 500kV bus in the Mohave 500kV
           -----------------
          switchyard, as well as any alternative locations agreed upon pursuant
          to Section 4.1.4.

1.2.35    "Price Ceiling of Energy" means the ceiling price of Energy as shown
           -----------------------
          in Exhibit B.

                                       4
<PAGE>

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

          1.2.37    "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,
                    reasonably incurred by Buyer to replace any shortfall
                    between (1) the Asset Bundle Capacity and (2) the Delivered
                    Amounts during such period and (b) the payments the Supplier
                    would have been entitled to in respect of such shortfall in
                    delivery, taking into account the annual true-up mechanism
                    set forth in Section 7.5 and any other payment adjustments
                    provided for hereunder; provided, however, that to the
                    extent Buyer does not buy Energy to make up any shortfall
                    prior to real time, and relies on imbalance energy to make
                    up such a shortfall, Replacement Costs shall not be paid to
                    the extent Buyer's need to replace the shortfall was
                    mitigated by reductions in the TRR for such Dispatch Hour.

          1.2.38    "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 and specifically identified in Exhibit H.

          1.2.39    "Transmission System" means the facilities owned,
                     -------------------
                    controlled, or operated by Buyer that are used to provide
                    transmission service under the OATT.

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

2.   TERM

     2.1  Term.  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
          March 1, 2003.  Supplier shall provide service under this Agreement
          commencing on the first hour on the day after the Effective Date.

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

          2.2.1     Except pursuant to Section 2.2.2 or an uncured Event of
                    Default by Buyer, this Agreement may not be terminated
                    without the explicit prior written approval of Buyer.

                                       5
<PAGE>

          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 amendments to the Agreement to preserve the
                    bargain between the Parties. If the Parties fail to
                    negotiate mutually acceptable amendments to this Agreement
                    within sixty 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;
                    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.

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

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

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

                    2.3.1.2   Limitation of Liability provisions contained in
                              Section 11.

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

                    2.3.1.4   For a period of one year after the termination
                              date, the right to raise a payment dispute and the
                              resolution thereof pursuant to Section 14.

                    2.3.1.5   The resolution of any dispute submitted pursuant
                              to Section 14 prior to, or resulting from,
                              termination.

3.   SECURITY

     3.1  Supplier Certification; Guarantee.  As a condition of Buyer's
          ---------------------------------
          execution of this Agreement, Supplier shall at Supplier's option
          comply with at least one of the following provisions:

          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 a credit
                    rating of A2 or better from Moody's Investors Service, Inc.
                    and A or better from Standard & Poor's Corporation and a
                    Minimum Tangible Net Worth ("MTNW") of $1 billion.

                                       6
<PAGE>

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

                         (a)  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

                         (b)  has a MTNW of no less than $500 million, 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 $500 million; or

                         (c)  posts a letter of credit in a form reasonably
                              acceptable to Buyer in the amount of the Credit
                              Amount from a financial institution with a credit
                              rating of A2/A or better and a minimum tangible
                              net worth of $1 billion.

                    The aggregate liability of the Guarantor under the corporate
                    guarantee shall not exceed the Credit Amount.

     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 or the Guarantor, as applicable,
                    then Supplier shall provide Buyer with written notice of
                    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 18, the
                    requirements of this Section are in addition to, and not in
                    lieu of, the requirements of Section 18.

4.   SUPPLY SERVICE

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

          4.1.1     Asset Bundle Capacity. Subject to the terms of Section
                    ---------------------
                    4.1.3, Supplier shall be required to provide in any Dispatch
                    Hour the Asset Bundle Capacity.

                    4.1.1.1   Supplier shall be entitled to generate or
                              otherwise procure the Asset Bundle Capacity from
                              any source, including either or both of the units
                              of the Asset Bundle or from sources other than the
                              Asset Bundle.

                                       7
<PAGE>

                    4.1.1.2   Supplier shall deliver the Asset Bundle Capacity
                              to Buyer during the Dispatch Hour on a continuous
                              basis at the Point(s) of Delivery and shall
                              schedule the Delivered Amount in accordance with
                              the applicable transmission scheduling procedures.

          4.1.2     Buyer's Obligation to Take. If Buyer is unable or unwilling
                    --------------------------
                    to take the Asset Bundle Capacity in any Dispatch Hour, the
                    difference (in MWh) between the Asset Bundle Capacity and
                    Buyer's actual take in such Dispatch Hour shall be treated
                    as if it were a part of the Delivered Amount for such
                    Dispatch Hour. Buyer shall give notice to Supplier as soon
                    as reasonably practicable if it is unable or unwilling to
                    take delivery of the full Asset Bundle Capacity in any
                    Dispatch Hour.

          4.1.3     Supplier Rights to Output. Supplier may sell to others any
                    -------------------------
                    portion of the Asset Bundle Capacity which Buyer is
                    unwilling or unable to take.

          4.1.4     Point(s) of Delivery. Supplier shall deliver, and Buyer
                    --------------------
                    shall take delivery of, the Delivered Amount at the Point(s)
                    of Delivery. Subject to Section 4.1.5.2, Supplier shall be
                    responsible for all costs associated with delivery of the
                    Delivered Amount to the Point(s) of Delivery.

          4.1.5     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 approval, such
                    approval not to be unreasonably withheld or delayed.

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

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

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

          4.1.7     Resale.  Buyer shall not resell the Delivered Amount except
                    ------
                    as necessary to satisfy Buyer's TRR or to maintain
                    reliability.

          4.1.8     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 one Business Day to a subsequent Business Day.
                    Notice to request a review of other than the

                                       8
<PAGE>

                    previous month's records, shall be provided with a minimum
                    of seven (7) calendar days written notice by the requesting
                    Party, which 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 receiving Party shall take
                    reasonable steps to accommodate such requests.

          4.1.9     Transmission Outages.  Supplier shall not be obligated to
                    --------------------
                    deliver the Asset Bundle Capacity, and no liquidated damages
                    shall become due, if the Transmission System outages render
                    the Transmission System incapable of receiving the Asset
                    Bundle Capacity at the specified Point(s) of Delivery,
                    provided that in such event Supplier must deliver Energy up
                    to the capability of the Transmission System to receive such
                    Energy.

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

          4.2.1     The liquidated damages payment provisions are an integral
                    part of this Agreement and form a portion of the
                    consideration for the execution and for any breach of this
                    Agreement.

          4.2.2     If the Delivered Amount is less than the Asset Bundle
                    Capacity 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. An example of the methodology used
                    to calculate Replacement Costs is provided in Exhibit D.
                    Supplier's obligation to make payments under this section is
                    conditioned on Buyer's fulfillment of its obligation to take
                    reasonable steps to mitigate its Replacement Costs
                    consistent with Good Utility Practice.

          4.2.3     The Parties recognize and agree that the payment of such
                    amounts by Supplier 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 AND LOAD FORECASTING

     5.1  Availability Notification.
          -------------------------

          5.1.1     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.

                                       9
<PAGE>

               5.1.1.1   Availability Notices shall provide, for the 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.

     5.1.2     Each Availability Notice also shall contain, as applicable:

                    (a)  the units which are subject to the 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 5.1.5 below.

     5.1.3     Supplier may at any time verbally (with subsequent written
               confirmation) notify Buyer of any changes to an Availability
               Notice. Such changes shall be effective for the hours designated
               in such verbal notice, beginning upon issuance of the notice.

     5.1.4     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 22;
               (b)  Transmission System outages as described in Section 4.1.9;
               (c)  response to an emergency condition as described in Section
                    21.1;
               (d)  subject to the limitations expressed in Section 13.5, a
                    Force Majeure event;
               (e)  compliance with constraints on flue gas emissions applicable
                    to the Asset Bundle, provided, however, that to the extent
                    such constraints can be avoided or mitigated through
                    purchasing emission allowances on commercially reasonable
                    terms or other commercially reasonable economic measures
                    short of installing new equipment or retrofitting existing
                    equipment, these constraints shall not be Permitted
                    Deratings; and
               (f)  equipment limitations due to ambient conditions which differ
                    from ISO conditions.

     5.1.5     In respect of any 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.

                                       10
<PAGE>

               5.1.6     For the avoidance of doubt, the Asset Bundle Capacity
                         shall not be affected by Deratings which are not
                         Permitted Deratings.

               5.1.7     In determining whether to declare a Permitted Derating
                         that does not involve a planned outage, Supplier shall
                         take account of operational considerations regarding
                         the items listed in Section 5.1.4 and shall not vary
                         its considerations to reflect different market
                         conditions.

6.   PRICING OF ENERGY

     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
          and ceiling 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 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 unconstrained
                    hourly market-clearing price in the day-ahead market from
                    the California Power Exchange (CALPX) as published at the
                    following Web Site
                    http://www.calpx.com/prices/index_prices_dayahead_trading.
                    ---------------------------------------------------------
                    html, or its successor web site name. Should such 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  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.

7.   INVOICING AND PAYMENTS

     7.1  Invoicing and Payment. On or before the 10th day of each month,
          ---------------------
          Supplier shall send to Buyer an invoice setting forth the Asset Bundle
          Capacity, Delivered Amount and market price pursuant to Section 6.2.1
          for each Dispatch Hour in the previous month, 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.

                                       11
<PAGE>

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

          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; and

          7.2.4     For each Dispatch Hour of the billing period, the shortfall,
                    if any, between the Asset Bundle Capacity and the Delivered
                    Amount.

     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. 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, Buyer shall within 10 days of receipt of Supplier's invoice
          deliver to Supplier a Buyer's invoice detailing any Replacement Costs
          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.

     7.5  Annual True-Up Mechanism.
          ------------------------

          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, Buyer shall pay to
                         Supplier the greater of (A) zero; and (B) the
                         difference in the dollar amount between (x) the Price
                         Ceiling of Energy multiplied by the hourly Delivered
                         Amount of Energy summed over the Contract Year and (y)
                         the amounts invoiced by Supplier for Energy pursuant to
                         Section 7.3 summed over the Contract Year; or

                    (b)  If (i) the Price Ceiling of Energy multiplied by the
                         hourly Delivered Amount of Energy summed over the
                         Contract Year is

                                       12
<PAGE>

                         greater than (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, Buyer shall pay to Supplier the greater
                         of (A) zero; and (B) the difference in the dollar
                         amount between (x) the market price of Energy for each
                         hour multiplied by the hourly Delivered Amount of
                         Energy summed over the Contract Year and (y) the
                         amounts invoiced by Supplier for Energy pursuant to
                         Section 7.3 summed over the Contract Year.

          7.5.2     Supplier shall also perform the calculations set forth in
                    Section 7.5.1 using the hourly Asset Bundle Capacity in
                    place of the hourly Delivered Amount of Energy. Supplier
                    shall include in the true-up invoice an amount equal to the
                    lesser of (a) the difference between the amount calculated
                    pursuant to the first sentence of this Section 7.5.2. and
                    the amount calculated pursuant to Section 7.5.1.and (b) the
                    sum of all Replacement Costs incurred during the Contract
                    Year.

          7.5.3     True-up adjustments will be calculated by Supplier within
                    twenty 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 twenty (20) days from receipt of the true-up invoice.
                    invoice.

     7.6  Invoice Disagreements.  Should there be a good faith dispute over any
          ---------------------
          invoice, the Parties shall promptly seek resolution pursuant to
          Section 14.  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 CFR Section 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 7.6 and 7.7, Buyer shall remit
          ------------------
          all amounts due by wire or electronic fund transfer, pursuant to
          Supplier's invoice instructions, no later than twenty 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 CFR Section 35.19a.

     7.10 Buyer Right to Offset.  Buyer shall have the right to offset any
          ----------------------
          amounts Supplier owes to Buyer, including Replacement Costs (except
          for such amounts disputed in good faith by Supplier), against the
          amounts owed by Buyer to Supplier.

                                       13
<PAGE>

     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 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

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.

10.  INDEMNIFICATION

     10.1 Supplier shall indemnify Buyer for failure to maintain insurance
          requirements pursuant to Section 12.

     10.2 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.

          10.2.1    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

                                       14
<PAGE>

                    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.

          10.2.2    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 Section 10.2.1
                    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.

          10.2.3    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.

          10.2.4.   Such indemnity obligations 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
                    of the statute of limitations period applicable to any third
                    party claim.

     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 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;

                                       15
<PAGE>

                    (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
                           Indemnified 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 To the fullest extent permitted by law and notwithstanding other
          provisions of this Agreement, in no event shall a Party, or any of
          their respective successors or assigns be liable to the other Party,
          whether in contract, warranty, tort, negligence, strict liability, or
          otherwise, for special, indirect, incidental, multiple, consequential
          (excluding replacement power costs and other costs pursuant to Section
          4.2, but including lost profits and 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.  However, this
          Limitation of Liability shall not apply with respect to claims
          pursuant to Section 10, or for personal injury, death or property
          damage asserted by third parties as to which a Party is liable
          pursuant to the indemnification provisions hereof or otherwise
          hereunder.

     11.2 The provisions of this Section 11 shall survive any termination,
          cancellation, or suspension of this Agreement.

12.  INSURANCE

     12.1 Supplier shall maintain at its cost and expense, fire, liability,
          business interruption, worker's compensation and other forms of
          insurance relating to the damage, destruction and loss of Supplier's
          Asset Bundle and facilities.  Buyer agrees that it is acceptable for
          Supplier to self-insure in whole or in part against such risks.

     12.2 If the Asset Bundle is damaged or destroyed in whole or in part by a
          casualty, whether insured or not, this Agreement shall continue in
          full force and effect and Supplier shall take all commercially
          reasonable steps to repair and restore the Asset Bundle and
          facilities.

     12.3 Every third-party contract of insurance shall be with an insurer
          qualified to do business in the State of Nevada and with the
          equivalent of a "Best Rating" of "A" or better and shall include
          provisions or endorsements

                                       16
<PAGE>

          (i)   stating that such insurance is primary insurance with respect to
                the interest of Buyer and that any insurance maintained by Buyer
                is excess and not contributory insurance required hereunder;

          (ii)  providing that no reduction, cancellation or expiration of the
                policy shall be effective until ninety (90) days from the date
                written notice thereof is actually received by Buyer. Upon
                Supplier's receipt of any notice of reduction, cancellation or
                expiration, Supplier shall immediately provide written notice
                thereof to Buyer; and

          (iii) naming Buyer as an additional insured on the general liability
                insurance policies as its interests may appear with respect to
                this Agreement.

     12.4 On or before the Effective Date, Supplier shall provide to Buyer, and
          shall continue to provide to Buyer at least fifteen (15) days prior to
          the end of each Contract Year, upon any change in coverage, or at the
          request of Buyer not to exceed once each year, properly executed and
          current certificates of insurance with respect to all insurance
          policies required to be maintained by Suppler under this Agreement.
          Certificates of insurance shall provide the following information:

          (i)   the name of insurance company, policy number and expiration
                date;

          (ii)  The coverage required and the limits on each, including the
                amount of deductibles or self-insured retentions;

          (iii) A statement indicating that Buyer shall receive at least thirty
                (30) days prior written notice of cancellation or expiration of
                a policy, or reduction of liability limits with respect to a
                policy; and

          (iv)  A statement indicating that Buyer has been named as an
                additional insured.

          At Buyer's request, not to exceed once each Contract Year, in addition
          to the foregoing certifications, Supplier shall deliver to Buyer a
          copy of each insurance policy, certified as a true copy by an
          authorized representative of the issuing insurance company.

     12.5 Buyer shall have the right to inspect the original policies of
          insurance applicable to this Agreement at Supplier's place of business
          during regular business hours.

13.  FORCE MAJEURE

     13.1 Each Party shall have the obligation to operate in accordance with
          Good Utility Practice at all times.

     13.2 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 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 without
          limitation:

                                       17
<PAGE>

          (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 (excluding
                 such caused by normal wear and tear or manufacturing defects),
                 and including unscheduled transmission and distribution
                 outages,

          (iii)  sabotage of facilities and equipment,

          (iv)   civil disturbance,

          (v)    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.

     13.3 Economic hardship of either Party shall not constitute Force Majeure
          under this Agreement. Nor shall anything contained in this Section or
          elsewhere in this Agreement excuse a Party from strict compliance with
          the obligation of the Parties to comply with the terms of this
          Agreement relating to timely payments.

     13.4 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.

     13.5 Notwithstanding the above provisions, a Force Majeure event shall
          excuse Supplier from its obligation to deliver the Asset Bundle
          Capacity  pursuant to Section 4 of this Agreement only for the first
          seven (7) days of the Force Majeure event.  After such seven day
          period, Supplier must either deliver the Asset Bundle

                                       18
<PAGE>

          Capacity at the Point(s) of Delivery or pay liquidated damages
          pursuant to Section 4.2 of this Agreement.

14.  DISPUTES

     14.1 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 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.

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

     14.3 The Parties shall first attempt in good faith to resolve any Dispute.
          In the event that representatives of the Parties are unable to
          satisfactorily resolve the Dispute within 30 (thirty) days from the
          receipt of notice of the Dispute, either Party may by written notice
          to the other refer the Dispute to their respective senior management
          or may demand in writing the submission of the Dispute to binding
          arbitration.  In the event a Party refers a Dispute to its senior
          management, that Party does not waive its right subsequently to demand
          the submission of the Dispute to binding arbitration.  Once a Party
          demands in writing that a Dispute be submitted to binding arbitration,
          the Parties expressly select arbitration as the means to resolve
          Disputes and thereby irrevocably waives their right to a jury trial
          with respect to any Dispute, subject to the following:

          14.3.1    The request 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
                    County of the principal office of Buyer.

     14.4 Subject to the restrictions of Section 6.3, 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 claim over which said agency has jurisdiction.  In such
          case, the other Party may request FERC or the PUCN, as applicable, to
          reject or to waive jurisdiction.  If jurisdiction is rejected or
          waived with respect to all or a portion of the claim, the portion of
          the claim not so accepted by FERC or the PUCN, as applicable, shall be
          resolved through arbitration, as provided in this Agreement.  To the
          extent that FERC or the PUCN, as applicable, asserts or accepts
          jurisdiction over the claim, the decision, finding of fact or order of
          FERC or the PUCN, as applicable, shall be final and binding, subject
          to judicial review under the Federal Power Act or Nevada Revised
          Statutes and subject to the provisions of Section 2.2.2, and any
          arbitration proceedings that may have commenced with respect to the
          claim prior to the assertion or acceptance of jurisdiction by FERC or
          the PUCN, as applicable, shall be terminated.

                                       19
<PAGE>

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

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

          14.5.2    Arbitrations shall be conducted in accordance with the
                    "Commercial Arbitration Rules" of the American Arbitration
                    Association ("AAA") then in effect.

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

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

                    14.5.3.2  The Parties also agree that each will 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 American Arbitration Association.

                    14.5.3.3  The arbitrator shall not have any current or past
                              substantial business or financial relationships
                              with any party to the arbitration (or their
                              affiliates) and shall not be a vendor, supplier,
                              customer, employee, consultant, or competitor to
                              any of the Parties including their affiliates.

                    14.5.3.4  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 of the above in any manner.
                              The arbitrator shall have no authority to award
                              punitive or multiple damages or any damages
                              inconsistent with this Agreement. The arbitrator
                              shall within 30 days of the conclusion of the
                              hearing, unless such time is extended by agreement
                              of all 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. The
                              decision of the arbitrator rendered in such a
                              proceeding shall be final and binding on the
                              Parties. Judgment on the award may be entered upon
                              it in any court having jurisdiction.

     14.6 The Parties shall proceed with the arbitration expeditiously and the
          arbitration shall, if possible be concluded, in order that the
          decision may be rendered within six (6) months after the filing of the
          demand for arbitration.

                                       20
<PAGE>

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

     14.8   The award 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.

     14.9   Expect as otherwise stated herein, each Party shall bear its own
            expenses, including but not limited to legal fees, except that all
            expenses associated with the arbitration shall be apportioned in the
            award of the arbitrator based upon the respective merit of the
            claims of the Parties.

     14.10  This Agreement shall be interpreted pursuant to the laws of the
            State of Nevada, as if executed and performed wholly within that
            state, and the Federal Power Act.

15.  NATURE OF OBLIGATIONS

     15.1   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.

     15.2   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.

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

16.  SUCCESSORS AND ASSIGNS

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

            16.1.1  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.

            16.1.2  Subject to the requirement that Supplier's assignee fulfills
                    the requirements of this Agreement, including without
                    limitation obligations under Section 3, Supplier may assign
                    this Agreement to an affiliate that directly or indirectly
                    owns at least a fifty percent interest in the Asset Bundle.

     16.2   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

                                       21
<PAGE>

               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.

     16.3      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.

     16.4      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.

     16.5      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.

     16.6      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.

17.  REPRESENTATIONS

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

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

               17.1.2    Authority.  The Party has full corporate 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

                                       22
<PAGE>

                         Agreement. The execution and delivery of this Agreement
                         and the transactions contemplated hereby have been duly
                         and validly authorized by all necessary corporate
                         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.

               17.1.3    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.

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

18.  DEFAULT AND REMEDIES

     18.1      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;

               (ii)  Failure to deliver the Asset Bundle Capacity for a period
                     of thirty 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 being in compliance with neither Section 3.1.1 nor
                     Section 3.1.2; and

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

     18.2      An Event of Default shall be excused:

               18.2.1    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 13;
                         and

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

                                       23
<PAGE>

     18.3      Unless excused, in an Event of Default the Non-Defaulting Party
               shall be entitled to provide written notice (or verbal 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.

     18.4      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.

     18.5      Notwithstanding this Section 18, liquidated damages shall be paid
               to Buyer pursuant to Sections 4.2 and 13.

19.  FACILITY ADDITIONS AND MODIFICATIONS

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

               19.1.1    To the extent additions and modifications interfere
                         with the operation of the Asset Bundle in providing
                         Energy to Buyer beyond the limits for planned outages
                         set forth in Section 22, liquidated damages shall be
                         paid to Buyer pursuant to Section 4.2.

               19.1.2    Supplier shall use reasonable efforts to minimize any
                         adverse impact on Buyer during the course of making
                         such additions and modifications.

               19.1.3    Such additions and modifications shall be conducted in
                         accordance with Good Utility Practice, and all
                         applicable Laws, regulations and Reliability Criteria.

     19.2      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 a material adverse effect
               upon Buyer with respect to operations or performance under this
               Agreement.

20.  COORDINATION

     20.1      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.

21.  EMERGENCY CONDITION RESPONSE

     21.1      Buyer and Supplier shall comply with any applicable requirement
               of any Governmental Authority, NERC, WSCC, ISA, RTO, 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

                                       24
<PAGE>

               condition. Supplier shall not be obligated to deliver the Asset
               Bundle Capacity, and no liquidated damages shall become due, if
               generation is reduced in the event of an emergency condition.

     21.2      Each Party shall provide prompt verbal notice to the other Party
               of any emergency condition.

     21.3      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.

22.  OUTAGE SCHEDULING

     22.1      Buyer acknowledges that Supplier may not be the operator of the
               Asset Bundle and may not have direct control over the operation
               of the Asset Bundle.

     22.2      Supplier shall request that the Operator coordinate with Buyer
               any inspections, non-forced outages and maintenance of Supplier's
               Asset Bundle so as to minimize the impact on Buyer under this
               Agreement.

     22.3      Planned Outages.
               ---------------

               22.3.1    Within sixty (60) days following the Effective Date,
                         Supplier shall provide Buyer with a proposed schedule
                         of planned outages for the period beginning on the date
                         of such proposal through March 1, 2003 ("Contract
                         Period"). The proposed planned outage schedule will
                         designate days for each unit in which the Asset Bundle
                         Capacity will be reduced to zero for such unit.
                         Supplier shall be entitled to designate up to 100 unit-
                         days during the Contract Period. Unit-days may be
                         applied to either unit without limitation. Only whole
                         days, being the 24-hour period commencing at 06:00:00,
                         may be designated for planned outages.

               22.3.2    If all unit-days in Supplier's proposed planned outage
                         schedule fall within the months of February, March and
                         November, then it shall not require Buyer's approval
                         and shall become the final planned outage schedule. To
                         the extent Supplier's proposed planned outage schedule
                         designates unit-days which fall outside such months,
                         the inclusion of such unit-days in the final planned
                         outage schedule shall be subject to Buyer's approval.

               22.3.3    Supplier shall be entitled to amend the final planned
                         outage schedule with either (a) six months prior
                         written notice to Buyer or (b) Buyer's approval,
                         provided however, that to the extent such amendments
                         contemplate planned outage unit-days outside of the
                         months February, March and November, Buyer's approval
                         shall be required in respect of such unit-days.

               23.3.4    In considering whether to grant approval under this
                         Section 22.3, Buyer shall take account of the
                         restrictions and constraints imposed on Supplier under
                         the Co-Tenancy Agreement and the Operating Agreement
                         (both as

                                       25
<PAGE>

                         defined in the Asset Sale Agreement), and Buyer shall
                         not unreasonably withhold or delay its approval.

23.  REPORTS

     23.1      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 a material adverse effect on Buyer. Supplier shall
               use reasonable efforts to keep Buyer apprised of the status of
               any such matters.

24.  COMMUNICATIONS

     24.1      Supplier's Operating Representatives shall be available 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.

     24.2      Supplier shall, at its expense, maintain and, if reasonably
               necessary, install real-time communications 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.

     24.3      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:

               24.3.1    A description of the "Abnormal Condition" and the
                         actions to be taken to alleviate the "Abnormal
                         Condition".

               24.3.2    The expected duration including the beginning and
                         ending time of the "Abnormal Condition".

               25.3.3    The amount of any adjustment to the current (real time)
                         level of Energy.

     24.4      Cause of the condition.
               ----------------------

               24.4.1    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 to Buyer.

                         (ii) Cause an unplanned reduction in the rate of
                              delivery of Energy to Buyer.

                                       26
<PAGE>

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

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

25.  NOTICES

     25.1      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.

     25.2      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 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 Business Day following deposit with the U.S. mail if sent
               regular first class U.S. mail.

     25.3      Notices of an Event of Default pursuant to Section 18 and or
               Force Majeure pursuant to Section 13 may not be sent by regular
               first class U.S. mail.

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

     25.5      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.

26.  MERGER

     26.1      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.

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

27.  HEADINGS

     27.1      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.

28.  COUNTERPARTS AND INTERPRETATION

                                       27
<PAGE>

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

     28.2      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.

     28.3      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.

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

29.  SEVERABILITY

     29.1      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.

     29.2      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.

30.  WAIVERS

     30.1      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.

31.  AMENDMENTS

     31.1      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

                                       28
<PAGE>

               is reasonably expected to materially affect Buyer's PLR service
               under this Agreement.

     31.2      The Parties shall meet to discuss the impact of any changes in
               Buyer's OATT, 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.

     31.3      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.

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

32.  TIME IS OF THE ESSENCE

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

33   APPROVALS

     33.1      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.

     33.2      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.

     33.3      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.

34.  PLR SERVICE

     34.1      The Agreement is premised on Buyer providing PLR service.
               Notwithstanding anything to the contrary contained herein, if
               Nevada retail electricity restructuring (including 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 load shall be considered as the TRR. In no event shall
               the term of the Agreement be extended beyond March 1, 2003.

                                       29
<PAGE>

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

NEVADA POWER COMPANY                     AES MOHAVE, LLC

By:_________________________                By:_________________________

Title:______________________                Title:______________________

Date:_______________________                Date:_______________________

                                       30
<PAGE>

                                   EXHIBITS

EXHIBIT NO.                 DESCRIPTION                               PAGE NO.
-----------                 -----------                               --------

EXHIBIT A     ASSET BUNDLE CAPACITIES                                      A-1

EXHIBIT B     PRICE FLOOR OF ENERGY AND PRICE CEILING                      B-1
              OF ENERGY

EXHIBIT C     EXAMPLE OF SUPPLIER'S MONTHLY INVOICE                        C-1

EXHIBIT D     EXAMPLE OF BUYER'S INVOICE OF REPLACEMENT COSTS              D-1

EXHIBIT E     EXAMPLES OF YEAR END TRUE-UP INVOICE                         E-1

EXHIBIT F     NOTICES, BILLING AND PAYMENT                                 F-1
              INSTRUCTIONS

EXHIBIT G     FORM OF AVAILABILITY NOTICE                                  G-1

EXHIBIT H     BUYER'S WHOLESALE SALES CONTRACTS
              AT THE EFFECTIVE DATE                                        H-1

EXHIBIT I     FORM OF GUARANTEE                                            I-1

<PAGE>

                                   EXHIBIT A

                            ASSET BUNDLE CAPACITIES

ASSET BUNDLE:    MOHAVE UNITS

                                 Capacity/1/ (MW-net)
                                 --------------------
Plant & Unit                  Winter              Summer              Fuel
------------                  ------              ------              ----

Mohave/1/ 1                   111.0                111.0              Coal
Mohave/1/ 2                   111.0                111.0              Coal
                              -----                -----
  Total Capacity              222.0                222.0

/1/ The values listed in this Exhibit are the maximum values for Asset Bundle
    Capacities. Asset Bundle Capacities may be adjusted from time to time in
    accordance with the Agreement.

                                      A-1
<PAGE>

                                   EXHIBIT B

                                 MOHAVE BUNDLE

               PRICE FLOOR OF ENERGY AND PRICE CEILING OF ENERGY

Energy Prices
-------------

  Price Floor of Energy:        $ 22.65  per MWh

  Price Ceiling of Energy:      $ 33.49  per MWh

                                      B-1
<PAGE>

                                   EXHIBIT C

                     EXAMPLE OF SUPPLIER'S MONTHLY INVOICE

                       [See attached Excel spreadsheet]

                                    D-1C-1
<PAGE>

                                   EXHIBIT D

                EXAMPLE OF BUYER'S INVOICE OF REPLACEMENT COSTS

                       [See attached Excel spreadsheet]

                                      D-1
<PAGE>

                                  EXHIBIT  E

                      EXAMPLE OF YEAR END TRUE-UP INVOICE

                       [See attached Excel spreadsheet]

                                      E-1
<PAGE>

                                   EXHIBIT F

                   NOTICES, BILLING AND PAYMENT INSTRUCTIONS

Supplier:
--------

a) Agreement Notices:                   Address: _______________________________
   ------------------
                                                 _______________________________

                                                 _______________________________

                                        Phone:   _______________________________

                                        Fax:     _______________________________

b) Payment Check:                       Address: _______________________________
   --------------
                                                 _______________________________

                                                 _______________________________

c) Payment Wire Transfer:               Bank:    _______________________________
   ----------------------

                                        ABA #:   _______________________________

                                        For: Supplier's Name ___________________

                                        Account No:

                                        For: ___________________________________

d)  Operating Notifications:
    -----------------------

    i)    (Management, if required)

    ii)   Pre-Schedule:  (Phone and Fax Nos.)

          Telephone Number: ____________________________________________________

          Fax Number: __________________________________________________________

    iii)  Real Time  (Phone and Fax Nos.)

          Telephone Number: ____________________________________________________

          Fax Number: __________________________________________________________

                                      F-1
<PAGE>

   iv)  Monthly Checkout Person:  (Phone and Fax Nos.)

          Telephone Number: ____________________________________________________

          Fax Number: __________________________________________________________

Buyer:
------

a)   Agreement Notices:
     ------------------

     Address ________________________________

     ________________________________________

     ________________________________________

     ________________________________________

     ________________________________________

     Phone __________________________________

     Fax ____________________________________

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

     US Post Office:  (Via Certified Mail)        Overnight Delivery
     ---------------                              ------------------

     Address ________________________________     Address ____________________

     ________________________________________     ____________________________

     ________________________________________     ____________________________

     ________________________________________     ____________________________

     ________________________________________     ____________________________

c)   Schedules:
     ----------

     i)   Pre-Schedule:     Primary Name _____________   Phone ______________

                            Alternate Name ___________   Phone ______________

     ii)  Real Time         Phone:

                            Fax: ____________________________________________

     iii) Monthly Checkout: Phone:

                            Fax: ____________________________________________

                                      F-2
<PAGE>

                                   EXHIBIT G

                          FORM OF AVAILABILITY NOTICE

                       [See attached Excel Spreadsheet]
                                       )

                                     F-1
<PAGE>

                                   EXHIBIT H

            BUYER'S WHOLESALE SALES CONTRACTS AT THE EFFECTIVE DATE

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Historical Amounts (kWh)
  No.       Party               Contract                   Expiration         Estimated Amounts          1998          1999
=================================================================================================================================
<S>    <C>              <S>                        <C>                      <C>                       <C>            <C>
   1.  Lincoln County   Supplemental Power         11/1/2019                 LCPD has not taken         None           None
       Power District   Requirements Contract                                power for the last
                                                                             several years
----------------------------------------------------------------------------------------------------------------------------------
   2.  Boulder City     Supplemental Power         11/1/2019                 5 to 10 MW (summer       8,076,942       2,082,456
                        Requirements Contracts                               only)
----------------------------------------------------------------------------------------------------------------------------------
   3.  Overton Power    Coordination Tariff        Replaces Supplemental     26 MW summer             49,198,105     71,700,473
       District                                    Power Requirements        20 MW winter
                                                   Contract on 6/1/2000.     15 MW spring/fall
                                                   Tariff can be cancelled
                                                   upon 30 days notice.
----------------------------------------------------------------------------------------------------------------------------------
   4.  Needles, CA      Requirements Contract      1/2/2017                  16 MW summer             26,412,967     33,276,159
                                                                             4 MW spring/fall
---------------------------------------------------------------------------------------------------------------------------------
   5.  CRC (BMI)        Coordination Tariff        30 days notice to cancel  9 MW                                    65,586,419*
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     *  Ten months 1999-2000.

                                      F-2
<PAGE>

                                   EXHIBIT I

                               FORM OF GUARANTEE

                                   [TO COME]

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"}]]