Document:

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                            NONCOMPETITION AGREEMENT

         This Noncompetition Agreement (this "Agreement") is made and entered
into effective as of the date set forth on the signature page hereof (the
"Effective Date"), by and among ENRON CORP., an Oregon corporation ("Enron"),
ENRON ENERGY SERVICES, LLC, a Delaware limited liability company ("EES"), and
EMW ENERGY SERVICES CORP., a Delaware corporation ("EMW"). Enron, EES and EMW
are sometimes individually referred to herein as a "Party" and sometimes
collectively referred to herein as the "Parties".

                              W I T N E S S E T H:

         WHEREAS, as of the Effective Date and pursuant to that certain
Contribution and Subscription Agreement, dated as of December 23, 1999 (the
"Contribution Agreement"), among EES, EMW and certain other Persons (such
Persons other than EES and EMW are referred to herein collectively as the
"Investors"), EES has contributed certain assets and services to EMW and the
Investors have contributed cash to EMW, all on the terms and conditions set
forth in the Contribution Agreement;

         WHEREAS, as a condition of and as an inducement to the Investors to
enter into the Contribution Agreement, the Parties agreed to enter into this
Agreement; and

         WHEREAS, Enron and EES have indicated to the Investors, in order to
induce the Investors to enter into the Contribution Agreement, that it is their
intent and desire, from and after the Effective Date and until the date of
termination of this Agreement, to conduct any business that would constitute
Prohibited Business (as hereafter defined) through EMW, subject to the
exceptions referenced in Section 2.2 hereof;

         NOW, THEREFORE, for and in consideration of the terms and conditions
set forth in the Contribution Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:

                                    ARTICLE I
                               CERTAIN DEFINITIONS

         1.1      The following capitalized terms when used in this Agreement
shall have the meanings set forth below for such terms (with terms defined in
the singular having the corresponding meaning when used in the plural and
vice versa), while other terms are defined where used in this Agreement:

         "CHANGE OF CONTROL" means a transaction is consummated by which Enron
(or any successor of Enron) merges or consolidates with any other Person;
PROVIDED, HOWEVER, that any such merger or consolidation shall not constitute a
"Change of Control" in the event that (a) the stockholders of Enron on the date
immediately preceding the date of consummation of the merger or consolidation
(or if a tender or exchange offer was consummated in connection with such merger
or consolidation, then immediately preceding the date of consummation of such
tender or exchange offer) beneficially own, on the date immediately following
the consummation

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of such merger or consolidation, fifty-one percent (51%) or more of the
outstanding shares of common stock of the surviving Person (or if the
surviving Person is a subsidiary of another Person, then of such other
Person), or (b) the individuals who constitute the members of Enron's board
of directors on the date immediately preceding the date of consummation of
the merger or consolidation (or if a tender or exchange offer was consummated
in connection with such merger or consolidation, then immediately preceding
the date of consummation of such tender or exchange offer) constitute at
least a majority of the board of directors of the surviving Person (or if the
surviving Person is a subsidiary of another Person, then of such other
Person) on the date immediately following the consummation of such merger or
consolidation.

         "COMMON STOCK" means shares of common stock of EMW, $.01 par value per
share.

         "CONTROLLED AFFILIATE" means in the case of a Person, any other Person
in which the first Person (a) owns, directly or indirectly, more than fifty
percent (50%) of the outstanding voting securities of such other Person, or (b)
has, directly or indirectly, the power or authority, through the ownership of
voting securities, by contract or otherwise, to (i) designate or elect more than
fifty percent (50%) of the board of directors or governing body of such Person,
or (ii) direct or control the direction of the management of the other Person
(and not merely influence) in a manner comparable to that which would normally
be obtained by owning more than fifty percent (50%) of the outstanding voting
securities thereof, including by serving as a general partner in a general or
limited partnership or a managing member of a limited liability company. For
purposes of this Agreement only, Cortez shall be deemed to be a Controlled
Affiliate of Enron, and EMW and its Controlled Affiliates shall in no event be
deemed to be a Controlled Affiliate of Enron, EES or any of their Controlled
Affiliates.

         "CORTEZ" means Cortez Energy Services, LLC, a Delaware limited
liability company.

          "EQUITY SECURITIES" has the meaning set forth in Rule 3a11-1 under the
Securities Exchange Act.

         "GOVERNMENTAL AUTHORITY" means a federal, state, local or foreign
governmental or regulatory authority, including the United States of America; a
state, province, commonwealth, territory or district thereof; a county or
parish, a city, town, township, village or other municipality; a district, ward
or other subdivision of any of the foregoing; any executive, legislative or
other governing body of any of the foregoing; any agency, authority, board,
department, system, service, office, commission, committee, council or other
administrative body of any of the foregoing; any court or other judicial body;
and any officer or other representative of any of the foregoing.

         "HOLDER" means a holder of Initial Party Securities.

         "INITIAL PARTY SECURITIES" means the Common Stock and Common Stock
Equivalents (each as defined in the Stockholders Agreement) that are then held
by any Investor Group Holder (as defined in the Stockholders Agreement) who is
an Initial Party (as defined in the Stockholders Agreement) or a Permitted
Investor Transferee (as defined in the Stockholders Agreement) thereof.

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         "NONCOMPETITION PERIOD" means that period commencing on the Effective
Date and ending on the date which is the fifth (5th) year anniversary of the
Effective Date.

         "PERSON" means a natural person, a corporation, a limited liability
company, a joint stock company, a partnership, a limited partnership, a joint
venture, a trust, an estate, an unincorporated organization, association, agency
or any other entity.

         "RETAIL" means any marketing, sale or other business to or with a
Person who to the knowledge of Enron or EES or any of their respective
Controlled Affiliates is the ultimate recipient or ultimate customer of
commodities, products or services for final consumption or final use, and, to
the knowledge of Enron, EES or any of their respective Controlled Affiliates,
does not intend to resell, further distribute or disseminate such commodities,
products or services, or purchase them for the account of any other Person.

         "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         "STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated as of
this Agreement by and among EMW, EES, DLJMB Funding II, Inc., DLJ Merchant
Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ First ESC L.P., DLJ
Offshore Partners II, C.V., DLJ EAB Partners, L.P., DLJ ESC II, L.P., G.E.
Capital Equity Investments, Inc., the California Public Employees' Retirement
System, the Ontario Teachers' Pension Plan Board and Cortez Energy Services,
LLC.

          "UNITED STATES" means the fifty (50) states within the United States,
and the District of Columbia, but excluding any United States territories or
possessions, such as Puerto Rico.

         1.2      Unless otherwise provided or unless the context clearly
requires otherwise, all references to "Articles" and "Sections" are to
Articles and Sections of this Agreement; and all uses of "include" or
"including" mean "including, without limitation" or "including, but not
limited to".

                                   ARTICLE II
                             COVENANT OF NONCOMPETE

         2.1      Except as permitted by Section 2.2 hereof, during the
Noncompetition Period neither Enron, EES nor any of their respective Controlled
Affiliates will:

                  (a)      enter into a contract or agreement directly with any
         natural Person for the Retail sale of natural gas or electricity to
         such natural Person for his or her own account and not for commercial
         purposes in the United States (such natural Persons meeting the
         foregoing qualifications are referred to herein as "Residential Energy
         Customers"); or

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                  (b)      other than with respect to EMW and its Controlled
         Affiliates, acquire any interest, directly or indirectly, in any Equity
         Securities of any Person who has contracts or agreements directly with
         any natural Person for the Retail sale of natural gas or electricity to
         Residential Energy Customers; or

                  (c)      other than with respect to EMW and its Controlled
         Affiliates, operate, manage or otherwise conduct the business of
         selling natural gas or electricity at Retail directly to any
         Residential Energy Customers or provide consulting or advisory services
         in connection with the operation or management of any such business;
         provided that the foregoing shall not preclude the wholesale sale of
         natural gas and/or electricity (or any derivative products or services
         provided in connection therewith).

         Any business or activities of Enron, EES or their respective Controlled
Affiliates prohibited or restricted by the terms of this Section 2.1 are
referred to individually and collectively as the "Prohibited Business."

         2.2      Notwithstanding any provision in this Agreement to the
contrary, neither Enron, EES nor any of their respective Controlled
Affiliates shall be prohibited or restricted from any or all of the following
activities or businesses:

                  (a)      The acquisition, directly or indirectly (including by
         way of stock purchase, stock exchange or merger or consolidation), and
         thereafter the ownership, by Enron, EES or any of their respective
         Controlled Affiliates (the "Acquiring Person") of Equity Securities of
         any Person which has a class of Equity Securities registered under the
         Securities Exchange Act and is engaged in the Prohibited Business if,
         immediately following such acquisition, Enron, EES (so long as EES is a
         Controlled Affiliate of Enron) and their respective Controlled
         Affiliates will not beneficially own, in the aggregate, Equity
         Securities that represent more than five percent (5%) of the economic
         or voting interest of such Person.

                  (b)      The acquisition, directly or indirectly (including by
         way of stock purchase, stock exchange or merger or consolidation), and
         thereafter the ownership, by an Acquiring Person of less than all of
         the Equity Securities of any Person engaged in the Prohibited Business
         where the fair market value of the Prohibited Business of the Person
         whose Equity Securities are acquired on the date of the acquisition (or
         the date of the entering into of the agreement providing for such
         acquisition, if earlier) constitutes no more than Twenty Million
         Dollars (U.S.$20,000,000), as such fair market value is determined in
         good faith by the Acquiring Person. Following any acquisition of less
         than all of the Equity Securities of such a Person, if at any time the
         Acquiring Person still holds some or all of such Equity Securities and
         the fair market value of the Prohibited Business of the Person whose
         Equity Securities are held by the Acquiring Person then exceeds Twenty
         Million Dollars (U.S.$20,000,000), as determined in good faith by the
         Acquiring Person, then Enron and EES shall not, and shall cause their
         respective Controlled Affiliates not to, conduct business with the
         Prohibited Business activities of such Person except in transactions
         negotiated at arms-length and for fair value.

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                  (c)      The acquisition, directly or indirectly (including by
         way of stock purchase, stock exchange or merger or consolidation), and
         thereafter the ownership, operation and conduct of business, by an
         Acquiring Person of all of the Equity Securities of any Person engaged
         in the Prohibited Business or all or any portion of the assets of any
         Person engaged in the Prohibited Business where (i) in the case of an
         acquisition of Equity Securities, the fair market value of the
         Prohibited Business of the Person whose Equity Securities are acquired
         on the date of the acquisition (or the date of the entering into of the
         agreement providing for such acquisition, if earlier) constitutes no
         more than Twenty Million Dollars (U.S.$20,000,000), as such fair market
         value is determined in good faith by the Acquiring Person, and (ii) in
         the case of an acquisition of assets, the fair market value of the
         acquired assets constituting the Prohibited Business on the date of the
         acquisition (or the date of the entering into of the agreement
         providing for such acquisition, if earlier) constitutes no more than
         Twenty Million Dollars (U.S.$20,000,000), as such fair market value is
         determined in good faith by the Acquiring Person.

                  (d)       The acquisition, ownership, operation and/or conduct
         of business, directly or indirectly (including by way of stock purchase
         or merger or consolidation), by Enron, EES or any of their respective
         Controlled Affiliates of all or any portion of, or with, any Person (or
         any of its securities, businesses or assets) that is classified or
         commonly known as:

                           (i)      a "public utility company," as such term is
                  defined in the Public Utility Holding Company Act of 1935, as
                  amended and in effect on the Effective Date hereof ("PUHCA"),
                  and is regulated under state law as a "public utility" and
                  subject to the jurisdiction of the applicable state public
                  utility or public service commission for regulation of Persons
                  with customers within franchise service areas (this exception
                  covers both "gas utility companies" and "electric utility
                  companies," and includes any "public utility company" that is
                  included within a holding company system under PUHCA);

                           (ii)     a Governmental Authority or any Person
                  controlled, directly or indirectly, by a Governmental
                  Authority, including municipalities, municipal utility
                  districts, and public power authorities; or

                           (iii)    a cooperative.

         The activities permitted by this Section 2.2(d) shall apply whether or
         not any Person in clauses (i), (ii) and (iii) of this Section 2.2(d)
         engages in any Prohibited Business and whether or not Enron, EES or any
         of their respective Controlled Affiliates serves as "default provider"
         with respect to any Residential Energy Customers.

                  (e)      Any business or activities that are conducted
         directly or indirectly (including through Controlled Affiliates) by (i)
         Azurix Corp., a Delaware corporation ("Azurix"), (ii) Citrus
         Corporation, a Delaware corporation ("Citrus"), (iii) Enron Renewable
         Energy Corp., a Delaware corporation ("EREC"), (iv) EOTT Energy
         Partners, L.P., a Delaware limited partnership ("EOTT"), (v) Northern
         Border Partners, L.P., a

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         Delaware limited partnership ("NBP"), (vi) Portland General Electric
         Company, an Oregon corporation ("PGE"), or (vii) any Person
         (other than any Person referenced in clauses (i) through (vi) of this
         subparagraph (e)) in whom Enron, EES or any Controlled Affiliate of
         Enron or EES on the Effective Date owns fifty percent (50%) or less of
         the issued and outstanding voting securities, PROVIDED, HOWEVER, that
         clause (vii) shall not permit Enron, EES or any of their respective
         Controlled Affiliates to, directly or indirectly, use such Person to
         form or enter into a joint venture (of whatever structure or legal
         entity) that will enter into any Prohibited Business. Enron and EES
         agree that they and their respective Controlled Affiliates will not, in
         their capacity as a stockholder of any of the Persons referenced in
         clauses (i) through (vii) of this Section 2.2(e), unless otherwise
         required by fiduciary duties under applicable law, vote their stock
         held in such Persons in such a manner, or otherwise use their position
         as a stockholder, so as to cause any activity prohibited by this
         Agreement; PROVIDED, HOWEVER, that the foregoing agreement by Enron and
         EES shall not restrict in any manner whatsoever the ability of any
         officer, director or employee of any of the Persons referenced in
         clauses (i) through (vii) of this Section 2.2(e) from exercising any of
         their fiduciary duties under applicable law as an officer, director or
         employee of any such Persons, whether or not such officer, director or
         employee of such Person is also an officer, director or employee of
         Enron, EES or any of their respective Controlled Affiliates. Enron
         represents that as of the date hereof and to the actual knowledge of
         the executive officers listed on EXHIBIT A hereto, none of Azurix,
         Citrus, EREC, EOTT or NBP is currently engaged in or is planning to
         engage in, directly or indirectly, any Prohibited Business, except that
         EREC, through its Controlled Affiliates or other Persons, is or may be
         engaging in activities within the Prohibited Business from or relating
         to the sale of electric energy from wind turbines or projects developed
         by such Persons involving wind turbines to Residential Energy
         Customers.

                  (f)      The acquisition, directly or indirectly (including by
         way of stock purchase or merger or consolidation), by an Acquiring
         Person of Equity Securities or assets of any Person that is engaged in
         the Prohibited Business not permitted by the provisions of Section
         2.2(a), (b), (c), (d) or (e) hereof; PROVIDED, HOWEVER, that prior to
         or following such acquisition the Acquiring Person complies with the
         provisions described in Section 2.3 hereof.

         2.3      If an Acquiring Person acquires less than all of the Equity
Securities of a Person pursuant to Section 2.2(f) hereof, EMW shall have an
option to participate in the investment in the Equity Securities held by the
Acquiring Person (either directly or indirectly through the ownership of another
security or contract right with such Acquiring Person) in a manner that will
allow EMW to recognize the value of the Prohibited Business conducted by such
Person ("Investment Option") pursuant to the terms of this Section 2.3. If an
Acquiring Person acquires all of the Equity Securities of a Person engaged in
the Prohibited Business or all or any portion of the assets of a Person engaged
in the Prohibited Business pursuant to Section 2.2(f) hereof, EMW shall have an
option to either (at the election of the Acquiring Person) purchase the Equity
Securities of the Prohibited Business or the assets comprising the Prohibited
Business, including the capital stock of any subsidiary engaged in the
Prohibited Business (the "Offered Business"), as follows:

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                  (a)      Prior to or within sixty (60) days following the
         Acquiring Person's acquisition of Equity Securities or the Offered
         Business referred to above, the Acquiring Person shall deliver to EMW
         written notice of the Investment Option or the Offered Business, as the
         case may be ("Option Notice"), which Option Notice shall specify the
         terms and conditions by which EMW may participate in the investment of
         the Equity Securities or acquire the Offered Business, including the
         consideration to be paid by EMW and the projected closing date for such
         investment or acquisition. The Acquiring Person also shall provide to
         EMW (subject to the execution of a customary confidentiality agreement
         and the receipt of any necessary consents from other Persons) in
         conjunction with such Option Notice, any and all information concerning
         the Investment Option or the Offered Business within the Acquiring
         Person's possession as is requested by EMW.

                  (b)      Within thirty (30) days following the receipt of the
         Option Notice, EMW shall notify the Acquiring Person in writing of
         whether EMW desires to (i) participate in the investment with respect
         to the Investment Option or (ii) acquire the Offered Business. If EMW
         delivers written notice to the Acquiring Person within such thirty (30)
         day period that EMW desires to participate in the investment or acquire
         the Offered Business (the "Election Notice"), then EMW and the
         Acquiring Person shall thereafter negotiate in good faith for a period
         of thirty (30) days with respect to the terms and conditions (including
         the consideration to be paid by EMW) by which EMW will (A) participate
         in the Investment Option or (B) acquire the Offered Business, and in
         each case that will permit the Acquiring Person the ability to close
         such investment or acquisition by the projected closing date specified
         in the Option Notice.

                  (c)      If (i) EMW fails to deliver to the Acquiring Person
         an Election Notice within the thirty (30) day period afforded to EMW,
         or (ii) EMW otherwise indicates to the Acquiring Person that it does
         not wish to participate in the Investment Option or to acquire the
         Offered Business, or (iii) EMW and the Acquiring Person are not able,
         after negotiating in good faith, to mutually agree on the terms of the
         Investment Option or for the purchase of the Offered Business within
         the thirty (30) day period following the delivery of the Election
         Notice, then in any such case the Acquiring Person may acquire the
         Equity Securities or the Offered Business (if it has not already done
         so) but must thereafter divest the Equity Securities (or that portion
         of the value of the Equity Securities attributable to the Prohibited
         Business of the issuer of the Equity Securities, by a sale of tracking
         stock, derivatives or otherwise with respect to the Prohibited
         Business, so that the Acquiring Person has effectively divested the
         value of the Prohibited Business) or the Offered Business, as the case
         may be, within one (1) year following the consummation of the
         acquisition thereof, subject to the expiration of all waiting periods
         and the receipt of all necessary approvals of any Governmental
         Authority in connection therewith.

                  (d)      For a period of thirty (30) days following the date
         of the delivery of the Option Notice (or, if applicable, such earlier
         date as EMW has notified the Acquiring Person that it will not make an
         Election Notice), the Acquiring Person and EMW shall

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         negotiate exclusively with each other with respect to the transactions
         contemplated by the Option Notice.

                  (e)      The Acquiring Person and EMW agree that any
         participation by EMW in the Investment Option or an acquisition of the
         Offered Business shall be subject to compliance with all laws, rules
         and regulations of any applicable Governmental Authority.

                  (f)      The rights of EMW under this Section 2.3 with respect
         to EMW's option to participate in an Investment Option or to acquire
         the Offered Business may not be assigned or otherwise transferred by
         EMW to any Person in whole or in part without the prior written consent
         of the Acquiring Person, which may be granted or withheld in the sole
         and unfettered discretion of the Acquiring Person.

         2.4      This Agreement shall automatically terminate and be of no
force and effect, without further action by any Person, at any time following
the date which is the third (3rd) year anniversary of the Effective Date and
prior to the expiration of the Noncompetition Period in the event that both
of the following tests are satisfied:

                  (a)       Enron and its Controlled Affiliates cease to,
         individually or collectively, directly or indirectly, hold at any time
         the beneficial interest in and to at least fifteen percent (15%) of the
         aggregate number of shares of the then issued and outstanding Common
         Stock calculated on a fully-diluted basis (determined by dividing (i)
         the sum of the number of shares of Common Stock then owned by Enron and
         its Controlled Affiliates and the number of shares of Common Stock then
         issuable to Enron and its Controlled Affiliates pursuant to all
         outstanding rights, warrants, options, convertible securities or
         exchangeable securities, exercisable for or convertible or exchangeable
         into, directly or indirectly, Common Stock (whether or not such
         securities are then exercisable or convertible) by (ii) the sum of the
         number of shares of Common Stock then outstanding and the number of
         shares of Common Stock then issuable pursuant to all then outstanding
         rights, warrants, options, convertible securities or exchangeable
         securities, exercisable for or convertible or exchangeable into,
         directly or indirectly, Common Stock (whether or not such securities
         are then exercisable or convertible), with such quotient expressed as a
         percentage); and

                  (b)      fewer than fifteen percent (15%) of the directors of
         EMW are Persons who are employees, officers or directors of Enron or
         any of its Controlled Affiliates.

         2.5      (a)      In the event of a Change of Control that occurs after
         an Initial Public Offering (as defined in the Stockholders Agreement),
         this Agreement shall terminate and be of no force or effect immediately
         upon such Change of Control. In the event of a Change of Control that
         occurs prior to an Initial Public Offering, the surviving Person in any
         merger or consolidation that results in such Change of Control (the
         "Surviving Person"), whether or not such Surviving Person is Enron,
         will continue to be subject to this Agreement as if the Surviving
         Person were Enron, unless such Surviving Person makes an offer to
         purchase the Initial Party Securities in the manner and on the terms
         set

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         forth below in this Section 2.5, in which case this Agreement shall
         terminate and be of no force or effect as of such Change of Control,
         subject to the Surviving Person complying with the provisions of this
         Section 2.5, and regardless of whether or not any of the Initial Party
         Securities are tendered and purchased pursuant to the offer made
         pursuant hereto.

                  (b)      If the Surviving Person elects to comply with the
         provisions of this paragraph, it will by written notice to each of the
         Holders (given in the manner set forth in the Stockholders Agreement),
         make an offer (the "Change of Control Offer") to purchase from each
         such Holder all, but not less than all, of the Initial Party Securities
         held by such Holder at the fair market value thereof determined as set
         forth below (the "Change of Control Value"). The Surviving Person shall
         make the Change of Control Offer as promptly as practicable after the
         consummation of the transaction resulting in the Change of Control.
         Upon receipt of a Change of Control Offer, the Holders and the
         Surviving Person shall have fifteen (15) days to attempt to agree upon
         the Change of Control Value. If Holders of a majority of the Initial
         Party Securities and the Surviving Person agree within such fifteen
         (15)-day period on such Change of Control Value, then the Change of
         Control Value as so agreed shall be the Change of Control Value at
         which the Surviving Person will purchase all Initial Party Securities
         that are tendered pursuant to the Change of Control Offer. If Holders
         of a majority of the Initial Party Securities and the Surviving Person
         cannot agree on such value, EMW, as soon as practicable following such
         fifteen (15)-day period after receipt of the Change of Control Offer
         (or earlier upon notice of the Surviving Person and the Holders of a
         majority of the Initial Party Securities that they cannot agree on the
         Change of Control Value), will cause the Change of Control Value to be
         determined by an independent qualified appraiser (i.e., an appraiser
         that is unaffiliated with any of the holders of the Initial Party
         Securities, the Surviving Person or EMW and who has at least five years
         experience in appraising equity securities of privately held companies)
         selected by the Special Committee (as defined in the Stockholders
         Agreement) and reasonably acceptable to the Surviving Person and
         Holders of a majority of the Initial Party Securities (such appraisal
         being herein referred to as the "Change of Control Appraisal"). In
         conducting any Change of Control Appraisal, the appraiser shall, in
         accordance with customary investment banking practice, determine the
         Change of Control Value based on the proportionate value represented by
         the Initial Party Securities of the value of the entire Fully-Diluted
         Common Stock (as defined in the Stockholders Agreement) of EMW, without
         discount for the fact that the Initial Party Securities are subject to
         transfer restrictions or represent a minority interest in EMW, with any
         warrants included in such Initial Party Securities being valued on an
         as exercised basis net of exercise price whether or not they are then
         exercisable. EMW shall furnish a copy of the Change of Control
         Appraisal to the Surviving Person and the Holders of Initial Party
         Securities. EMW shall use commercially reasonable efforts to have the
         Change of Control Appraisal completed within thirty (30) days following
         its receipt of the Change of Control Offer. The Change of Control Value
         determined in the Change of Control Appraisal shall be the price used
         for purposes of the Change of Control Offer. The cost of any Change of
         Control Appraisal shall be borne by EMW.

                  (c)      Following its receipt of the Change of Control
         Appraisal or agreement as to the Change of Control Value as set forth
         above, each Holder of Initial Party Securities

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         shall have fifteen (15) days to give written notice to the Surviving
         Person that such holder wishes to sell all, but not less than all, of
         the Initial Party Securities then held by such Initial Party pursuant
         to the terms of the Change of Control Offer at the Change of Control
         Value, whereupon the Surviving Person shall purchase such Initial
         Party Securities at such Change of Control Value in accordance with
         Section 2.5(d), it being agreed for purposes of the foregoing that the
         DLJMB Investors (as defined in the Stockholders Agreement) shall be
         treated as a single Initial Party for purposes of this Section 2.5.

                  (d)      The closing of the purchase of any Initial Party
         Securities pursuant to a Change of Control Offer will take place at the
         offices of EMW in Houston, Texas on the fifth Business Day after
         expiration of the fifteen (15)-day period referred to in paragraph (b)
         above, unless otherwise agreed by the Holders and the Surviving Person;
         PROVIDED, HOWEVER, that any such closing shall be delayed, to the
         extent required, until two Business Days following the expiration of
         any required waiting periods under the HSR Act and FPA (each as defined
         in the Stockholders Agreement) and the obtaining of all other
         governmental approvals deemed reasonably necessary by any participating
         Holder or the Surviving Person. At the closing, the Surviving Person
         will pay the Change of Control Value for the Initial Party Securities
         tendered pursuant to the Change of Control Offer in cash (by wire
         transfer) solely upon each participating Holder's delivery to the
         Surviving Person of valid certificates or instruments evidencing all of
         the Initial Party Securities then being purchased from such Holder.
         Certificates or instruments representing such Initial Party Securities
         will be duly endorsed (with signature guaranteed) for delivery to the
         Surviving Person. In connection with the delivery of such certificates
         or instruments to the Surviving Person, the participating Holder will
         execute such written evidence as the Surviving Person may reasonably
         request to represent and warrant to the Surviving Person that the
         Initial Party Securities are owned by such Holder free and clear of all
         liens, adverse claims, and other encumbrances other than as provided in
         the Stockholders Agreement. The holders of Initial Party Securities
         will, as a condition to participating in the Change of Control Offer,
         agree to promptly perform, whether before or after any such closing,
         such additional acts (including, without limitation, executing and
         delivering additional documents) as are reasonably required by the
         Surviving Person to effect more fully the sale of any Initial Party
         Securities as provided by this Section 2.5.

                  (e)      The rights and obligations of the Surviving Person
         under this Section 2.5 with respect to the purchase of any Initial
         Party Securities may be transferred in whole but not in part by the
         Surviving Person to a Controlled Affiliate of the Surviving Person so
         long as the Surviving Person remains obligated hereunder in the event
         such Person does not perform its obligation hereunder.

         2.6      This Agreement shall be automatically terminated with respect
to EES (but not as to Enron), without further action by any Person, at such time
as EES ceases to be a Controlled Affiliate of Enron and PROVIDED that all Equity
Securities of EMW then held by EES, if any, are transferred to Enron or more or
more Controlled Affiliates of Enron at such time.

                                     10
<PAGE>

                                   ARTICLE III
                                  MISCELLANEOUS

         3.1      GOVERNING LAW; VENUE; SUBMISSION TO SERVICE OF PROCESS.

         (a)      THIS AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY
AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF DELAWARE, OTHER THAN THE CONFLICT OF LAWS RULES
THEREOF.

         (b)      THE PARTIES AGREE THAT THE STATE OF DELAWARE SHALL HAVE SOLE
AND EXCLUSIVE JURISDICTION OVER ANY ACTION BROUGHT TO ENFORCE THE TERMS OF THIS
AGREEMENT AND THAT THE PARTIES HEREBY CONSENT TO SUITS IN THE COURTS OF THE
STATE OF DELAWARE AND WAIVE THE DEFENSES OF PERSONAL JURISDICTION, SERVICE AND
VENUE.

         3.2      EXCLUSIVE REMEDY; LIMITATION ON DAMAGES. NOTWITHSTANDING
ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT AND
EXCEPT AS PROVIDED IN SECTION 3.3 OF THIS AGREEMENT, THE PARTIES AGREE THAT THE
RECOVERY BY ANY PARTY HERETO (THE "CLAIMANT") OF ANY DAMAGES SUFFERED OR
INCURRED BY IT AS A RESULT OF ANY BREACH BY ANY OTHER PARTY OR PARTIES (THE
"BREACHING PARTY") OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR
OBLIGATIONS OR ANY OTHER MATTER OR CLAIM UNDER THIS AGREEMENT SHALL BE LIMITED
TO THE ACTUAL DAMAGES SUFFERED OR INCURRED BY THE CLAIMANT AS A RESULT OF THE
BREACH BY THE BREACHING PARTY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR
OBLIGATIONS UNDER THIS AGREEMENT, AND IN NO EVENT SHALL THE BREACHING PARTY BE
LIABLE TO THE CLAIMANT FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR
PUNITIVE DAMAGES, EXCEPT TO THE EXTENT CONSTITUTING PART OF A THIRD PARTY CLAIM
SUFFERED OR INCURRED BY THE CLAIMANT AS A RESULT OF THE BREACH OR OTHER ACTION
OR MATTER BY THE BREACHING PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES,
COVENANTS OR OBLIGATIONS UNDER THIS AGREEMENT.

         3.3      SPECIFIC PERFORMANCE. The Parties agree that to the extent
permitted by applicable Law, the provisions of this Agreement may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

         3.4      NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally by
hand or by recognized overnight courier, telecopied or mailed (by registered
or certified mail, postage prepaid) as follows:

                                     11
<PAGE>

                  If to Enron, to:

                  Enron Corp.
                  1400 Smith Street
                  Houston, Texas  77002
                  Attention:  General Counsel
                  Facsimile:  713/853-3920

                  If to EES, to:

                  Enron Energy Services, LLC
                  1400 Smith Street
                  Houston, Texas  77002
                  Attention:  General Counsel
                  Facsimile:  713/646-2379

                  If to EMW, to:

                  EMW Energy Services Corp.
                  c/o Enron Energy Services, LLC
                  1400 Smith Street
                  Houston, Texas  77002
                  Attention:  General Counsel
                  Facsimile:  713/646-2379

         Each such notice or other communication shall be effective (a) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 3.4 (with confirmation of transmission), or (b) if
given by any other means, when delivered at the address specified in this
Section 3.4. Any Party by notice given in accordance with this Section 3.4 to
the other Party may designate another address (or telecopier number) or person
for receipt of notices hereunder. Notices by a party may be given by counsel to
such party.

         3.5      SEVERABILITY. In the event that any portion of this
Agreement or the application hereof to any circumstance shall be determined
to be unenforceable, the Parties expressly agree that the same shall not
affect, diminish or impair the other provisions of the Agreement or the
application of this Agreement to any other circumstances and that this
Agreement would be executed and delivered notwithstanding the
unenforceability of such portion of such Section or the application of this
Agreement to such circumstance. If the provisions of this Agreement should
ever be deemed to exceed the time, scope or geographic limitations permitted
by applicable law, then such provisions shall be reformed to the maximum
time, scope or geographic limitations permitted.

         3.6      ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes
the entire agreement among the Parties with respect to the matters set forth
herein and this Agreement shall not be modified, altered, amended or revoked
except by an instrument in writing executed by all of the Parties.

                                     12
<PAGE>

         3.7      BINDING EFFECT. This Agreement shall inure to the benefit of
and be binding upon the Parties and their respective successors and assigns.

         3.8      COUNTERPARTS. The Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.

         EXECUTED EFFECTIVE as of the 6th day of January, 2000.

                                 ENRON CORP.

                                 By:      /s/ J. MARK METTS
                                    ------------------------------------------
                                 Name:    J. Mark Metts
                                      ----------------------------------------
                                 Title:   Executive Vice President--Corp.
                                       ---------------------------------------
                                          Development
                                       ---------------------------------------

                                 ENRON ENERGY SERVICES, LLC

                                 By:      /s/ MARK S. MULLER
                                    ------------------------------------------
                                 Name:    Mark S. Muller
                                      ----------------------------------------
                                 Title:   Sr. Vice President
                                       ---------------------------------------

                                 EMW ENERGY SERVICES CORP.

                                 By:      /s/ JIMMIE L. WILLIAMS
                                    ------------------------------------------
                                 Name:    Jimmie L. Williams
                                      ----------------------------------------
                                 Title:   Vice President
                                       ---------------------------------------

                                      13
<PAGE>

                                    EXHIBIT A
                                       TO
                            NONCOMPETITION AGREEMENT

                            ENRON OFFICERS' KNOWLEDGE

1.       Kenneth L. Lay

2.       Jeffrey K. Skilling

3.       Joseph Sutton

4.       Lou Pai

5.       Mark S. Muller

6.       Jimmie Williams

7.       Robert D. Eickenroht<PAGE>

                          MASTER SERVICES AGREEMENT

         This Master Services Agreement (this "Agreement") is entered into
effective as of January 6, 2000 ("Effective Date"), among Enron Energy
Services, LLC, a Delaware limited liability company ("EES"), Enron Corp., an
Oregon corporation ("Enron"), and EMW Energy Services Corp., a Delaware
corporation (the "Company").

                                 WITNESSETH:

         WHEREAS, EES, the Company and certain other persons have entered
into that certain Contribution and Subscription Agreement, dated as of
December 23, 1999; and

         WHEREAS, in order to permit the Company an opportunity to develop
internally its own services capability, EES and Enron (collectively the
"Service Providers") have agreed to provide certain services to the Company
on the terms and conditions set forth herein;

         NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, and in consideration of the premises and mutual
covenants contained herein, EES, Enron and the Company agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

         1.1 DEFINITIONS. The following capitalized terms shall be used in
this Agreement with the meanings set forth in this Section 1.1:

         "ADMINISTRATIVE SERVICES" means those administrative services
performed by the Dedicated Personnel in support of the Company's business.

         "BASELINE REPORTING SERVICES" means those services that EGA, in its
normal course of business, provides in support of Enron's market
liberalization agenda, including monitoring and reporting on state-by-state
restructuring within the natural gas and electricity markets in the United
States, and providing EGA's "Question and Answer Service" to provide feedback
on the regulatory and political framework governing the natural gas and
electric markets within such states.

         "CORE ADVOCACY SERVICES" means those services that EGA, in its
normal course of business, provides in support of Enron's market
liberalization agenda, including: (a) state legislative restructuring
activity (electricity and natural gas); (b) generic public utility or public
service commission ("PUC") activities (e.g., licensing); (c) federal
legislative activities; (d) federal regulatory activities (e.g., Federal
Energy Regulatory Commission); (e) environmental (e.g., disclosure
requirements); (f) utility interface issues (e.g., Uniform Business Rules);
(g) state and local tax issues; (h) non-PUC administrative agency activity
(e.g., environmental and consumer protection); (i) utility specific PUC
processes (e.g., restructuring proceedings and general rate cases); and (j)
market specific federal regulatory activities (e.g., NEPOOL and DesertStar).

                                      1
<PAGE>

         "CUSTOMER CARE SERVICES" means those services consisting of (a)
switching the Company customers from their existing utilities or service
provider to the Company and account set-up; and (b) meter, bill, collect and
response functions, including applicable Internet services when available.

         "DEDICATED PERSONNEL" means those individuals listed on EXHIBIT C
who are employees of one of the Service Providers and who will be assigned on
a full time basis to provide Administrative Services to the Company.

         "EFFECTIVE DATE" has the meaning set forth in the introduction to
this Agreement.

         "EGA" means Enron's Government Affairs department.

         "GENERAL CORPORATE SERVICES" means those corporate staff and support
services referred to on EXHIBIT A; PROVIDED, HOWEVER, in no event shall the
General Corporate Services include any legal services.

         "INCREMENTAL COMPANY SUPPORT SERVICES" means those services that EGA
may agree to support with respect to a specific request from the Company for
governmental or regulatory services on matters that EGA is not currently
pursuing as part of EGA's Baseline Reporting Services or Core Advocacy
Services.

         "PRIME RATE" shall mean, as of any date of determination, the
interest rate published by The Wall Street Journal, Eastern Edition, on such
day in its Money Rates section as the "Prime Rate"; PROVIDED that if no such
rate is published on that day the interest rate published on the preceding
day shall apply.

         "RISK MANAGEMENT CONSULTING SERVICES" means risk management
consulting and hedging services, including quantifying price risks associated
with the Company's portfolio of natural gas and electricity and the analysis
of financial and derivative products with respect to such portfolio; the
administration of hedging and position management programs to facilitate
management and integration of physical and financial positions; and upon
request of the Company, the proposal by EES for and, upon mutually agreed
terms set forth in a written instrument, the provision of, financial products
to manage the price risks to the Company. The foregoing Services are separate
and distinct from the other risk management services being provided to the
Company pursuant to the Master Firm Purchase & Sales Agreements for gas and
electricity, respectively entered into as of the date hereof.

         "SERVICES" means the Risk Management Consulting Services, the
Baseline Reporting Services, the Core Advocacy Services, the Incremental
Company Support Services, the General Corporate Services, the Customer Care
Services, and the Administrative Services.

         "TERM" shall have the meaning set forth in Section 3.1.

                                      2
<PAGE>

                                   ARTICLE II
                               CONSULTING SERVICES

         2.1 SERVICES. Subject to the terms and conditions of this Agreement,
the Company hereby engages Service Providers as set forth below, on a
non-exclusive basis, to provide the following services:

                  (a)      RISK MANAGEMENT CONSULTING SERVICES.

                           (i) For a period of twelve (12) months from the
                  Effective Date and without any charge therefor (other than
                  with respect to the provision to the Company of any
                  financial products, such as swaps, hedges, etc.), EES shall
                  provide to the Company the Risk Management Consulting
                  Services. In the event that an initial firm commitment
                  underwritten public offering of shares of common stock of
                  the Company registered under the Securities Act of 1933, as
                  amended (an "IPO"), has not been consummated on or prior to
                  twelve (12) months following the Effective Date, EES shall,
                  at the option of the Company (as described below), continue
                  to provide to the Company the Risk Management Consulting
                  Services for an additional six (6) month period at EES'
                  actual cost of providing such Services (including, but not
                  limited to, an allocation of general and administrative
                  costs and expenses, employee and employee benefit costs and
                  expenses, and any out-of-pocket cost and expenses). The
                  Company shall have a one-time option, but not the
                  obligation, by providing written notice to EES at least
                  thirty (30) days prior to the end of the initial twelve
                  (12) month or eighteen (18) month period, as provided
                  above, to extend the Risk Management Consulting Services
                  provided by EES to the Company for up to an additional
                  three (3) year term on such terms and for such fees payable
                  to EES as shall be mutually agreed in writing between the
                  parties.

                           (ii) All Risk Management Consulting Services
                  provided by EES to the Company shall be provided on a
                  consulting basis only, and EES shall have no obligation for
                  the underlying position taken by the Company with respect
                  to the Services or otherwise, or from consequences from the
                  Company's implementation of any recommendations by EES.

                           (iii) EES shall not be required to register as a
                  commodities trading advisor or obtain any other
                  registrations or qualifications in order to provide any
                  Risk Management Consulting Services, and such Services may
                  be limited in that regard.

                  (b) BASELINE REPORTING SERVICES AND CORE ADVOCACY SERVICES.
         For a period of three (3) years from the Effective Date and without
         any charge therefor, Enron shall provide to the Company the Baseline
         Reporting Services and the Core Advocacy Services; PROVIDED,
         HOWEVER, that in no event shall Enron or any affiliate thereof be
         required to register or to become licensed as a lobbyist in order to
         provide such Services, and such Services may be limited or
         restricted in that regard; and, PROVIDED FURTHER, that with respect
         to Core Advocacy Services, Enron, after consultation with the
         Company, (i) will only be required to provide the Core Advocacy
         Services of the type and in the jurisdictions that it is also
         providing for

                                      3
<PAGE>

         Enron, (ii) will not be required to take any position on behalf of
         the Company that Enron believes may conflict with Enron's interests,
         and (iii) reserves the right to determine the positions Enron will
         take with respect to each of those Services.

                  (c) INCREMENTAL COMPANY SUPPORT SERVICES. For a period of
         three (3) years from the Effective Date, the Company may request
         that Enron provide to the Company any Incremental Company Support
         Services, whereupon Enron and the Company shall seek to agree in
         writing on the terms and conditions of any such Services (including
         the payment to Enron therefor); PROVIDED, HOWEVER, that Enron shall
         have no obligation to provide any such Services if the provision of
         such Services would create a conflict of interest between or among
         Enron (or any of its affiliates) and the Company, or otherwise be
         commercially impractical (as between Enron and the Company) for
         Enron to provide such Services.

                  (d) GENERAL CORPORATE SERVICES. For a period of nine (9)
         months following the Effective Date and without any charge therefor,
         Service Providers shall provide or cause to be provided to the
         Company the General Corporate Services. In the event that an IPO has
         not been consummated on or prior to nine (9) months following the
         Effective Date, Service Providers shall, at the option of the
         Company (as described below), continue to provide to the Company the
         General Corporate Services for an additional six (6) month period at
         Service Providers' actual cost of providing such Services including,
         but not limited to, an allocation of general and administrative
         costs and expenses, employee and employee benefit costs and
         expenses, and any out-of-pocket cost and expenses (representative
         rates for specific General Corporate Services are set forth in
         EXHIBIT A). The Company shall have the option, by providing at least
         thirty (30) days' prior written notice to Service Providers, from
         time to time during the term the General Corporate Services are
         provided, to reduce the types of General Corporate Services provided
         by or on behalf of Service Providers, with a corresponding reduction
         to the allocated costs paid by the Company for such Services;
         PROVIDED that the effective date for any such reduction in General
         Corporate Services shall be on the first day of the calendar month
         in the month following the expiration of such thirty (30) day notice
         period.

                  (e)      CUSTOMER CARE SERVICES.

                           (i) From and after the Effective Date, EES shall
                  cause to be provided to the Company the Customer Care
                  Services by subcontracting such Services to Computer
                  Sciences Corporation ("CSC"). The Company shall pay EES for
                  all Customer Care Services at EES' cost of providing such
                  Services, which would be charged to the Company based on a
                  pass-through basis.

                           (ii) Following the Effective Date, the Company
                  shall use commercially reasonable efforts to contract
                  directly with CSC or any other person for the provision of
                  Customer Care Services in lieu of the provision of such
                  Services by or through EES.

                           (iii) The Company shall have the option, by
                  providing at least thirty (30) days' prior written notice
                  to EES, to terminate the Customer Care Services provided

                                      4
<PAGE>

                  by or on behalf of EES; and in any event EES' obligation to
                  provide Customer Care Services shall terminate when the
                  Company begins to receive comparable services from the
                  provider selected pursuant to Section 2.1(e)(ii).

                  (f) ADMINISTRATIVE SERVICE. For a period of up to six (6)
         months following the Effective Date, Service Providers shall assign
         the Dedicated Personnel to provide Administrative Services to the
         Company, at Service Providers' actual cost of providing such
         Services including, but not limited to, an allocation of general and
         administrative costs and expenses, employee and employee benefit
         costs and expenses, and any out-of-pocket cost and expenses. If the
         Company hires any of the Dedicated Personnel, the Service Providers
         shall have no further obligation to provide the Administrative
         Services that were being performed by such Dedicated Personnel. The
         Company shall have the option, by providing at least thirty (30)
         days' prior written notice to Service Providers, to cease receiving
         Administrative Services from any Dedicated Personnel.

         2.2 CHANGE IN THE SCOPE OF SERVICES. The occurrence of (a) any event
or transaction (other than events or transactions that are contemplated under
the Contribution and Subscription Agreement or the Company's current business
plan) which significantly increases or decreases the size and/or nature of
the operations of the Company in a manner that affects the scope, manner,
nature or quantity of the Services, or (b) any change in any local, state and
federal laws, rules or regulations that affects the scope, manner, nature or
quantity of the Services, shall be considered a change in the scope of
services, and Service Providers and the Company shall promptly meet to
negotiate and execute an equitable adjustment to the terms of this Agreement.
Until the adjustment of the terms (including possibly payments) in connection
with such change is agreed upon by the parties in writing, Service Providers
shall have no obligation to provide any Services beyond the scope of services
that was in effect under this Agreement prior to any change of the type
described in either clause (a) or (b) of this Section 2.2.

         2.3 ACCESS TO INFORMATION. The Company shall provide Service
Providers with access to any information pertaining to the Company's business
which is necessary or appropriate to Service Providers' performance of its
obligations under this Agreement. The Company hereby grants to Service
Providers a non-transferable, royalty-free license to use the intellectual
property of the Company solely for the limited purposes of providing the
Services and the performance of Service Providers' obligations under this
Agreement; provided that such license shall terminate upon the termination of
all of the Services to be provided under this Agreement.

         2.4 SEPARATE BOOKS. Service Providers and the Company each agree to
maintain separate books and records with respect to the Risk Management
Consulting Services, Incremental Company Support Services, General Corporate
Services, and Customer Care Services provided by Service Providers to the
Company. Service Providers and the Company shall each have the right, during
normal business hours, to inspect any and all such books and records of the
other party to the extent necessary to substantiate the provision of such
Services and allocation of costs billed to or paid by the Company for such
Services.

         2.5 DISCONTINUANCE OF SERVICES. Except as otherwise provided
pursuant to the proviso of Section 2.1(d) hereof, any Service to be provided
hereunder may be discontinued upon at least

                                      5
<PAGE>

thirty (30) days' prior written notice from the Company to Service Providers
prior to the expiration of the applicable Term; PROVIDED, HOWEVER, that the
Company shall remain liable (a) for any out-of-pocket expenses incurred by
Service Providers or their affiliates in respect of such Services through the
last day of the calendar month for which the termination of Services is
effective, and (b) under any other written agreements entered into by the
Company or any of its affiliates as contemplated herein.

         2.6 SERVICES LIMITED TO THE COMPANY. The Company shall not
subcontract, sublicense or resell any Service provided hereunder to any other
person other than subsidiaries or affiliates controlled by the Company.
Except as provided in Non-competition Agreement of even date herewith among
Enron, EES and the Company, Enron and EES shall not be restricted in any
manner whatsoever from providing any services to other person's or entities
which are the same as, similar to or different from the Services provided to
the Company pursuant to this Agreement.

         2.7 PAYMENT FOR SERVICES. Commencing as of the month in which the
Services commence and continuing with each calendar month thereafter during
the Term (each, a "Billing Period"), with respect to those Services for which
payment or reimbursement by the Company is due under the terms of this
Agreement, Service Providers shall send to the Company an invoice for
Services rendered or expenses incurred during such Billing Period. The
Company shall pay the applicable Service Provider any amount payable not
later than thirty (30) days after the end of the Billing Period for which
such amount is due. Payments to be made to Service Providers under this
Agreement shall be made by electronic funds transfer. Payments to Service
Provider shall be made to the account designated by Service Provider or to
such other account as to which Service Provider may notify the Company. Any
amount payable under this Agreement which is not paid on or before the date
due shall bear interest from the date due until paid at the Prime Rate. If
the Company fails to pay the amount payable within the thirty (30) day
period, and Service Provider provides written notice of such failure to pay,
then if such failure to pay is not remedied within fifteen (15) days
following such written notice, Service Provider shall have the right to
discontinue providing such Services to the Company and shall be relieved of
any further obligation to provide such Services until such failure to pay is
cured; provided that if within such 15 day period, the Company (i) gives
Service Provider written notice of a good faith dispute with respect to any
amount due, (ii) describes the dispute in reasonable detail, and (iii) pays
all undisputed amounts then due, the Company will not be considered in
default of such disputed amount, but upon the resolution of such dispute the
Company shall pay the amount due plus interest on that amount from the
original due date until paid at the Prime Rate.

                                 ARTICLE III
                                     TERM

         3.1 TERM. The terms of the respective Services to be provided under
this Agreement ("Term") shall commence on the Effective Date and shall
automatically terminate without further action by any party (unless extended
or sooner terminated in writing) in accordance with the provisions of
Sections 2.1 and 2.5 of this Agreement.

                                      6
<PAGE>

                                 ARTICLE IV
                                  PERSONNEL

         4.1 SERVICE PROVIDER PERSONNEL. Service Providers shall provide all
personnel required and appropriate to render the Services in accordance with
the provisions of this Agreement. All personnel provided by Service Providers
pursuant to this Agreement shall be Service Providers' employees, contractors
or agents, and in no event shall such personnel be deemed employees of the
Company. Service Providers may provide Services using Service Providers'
permanent employees, contract employees or vendor employees as Service
Providers shall deem appropriate for the work being performed.

         4.2 POLICIES AND PROCEDURES REGARDING SERVICE PROVIDERS PERSONNEL.
Service Providers shall maintain such personnel policies, procedures and
other administrative functions for personnel required to render the Services
as are generally utilized by Service Providers in their respective
businesses. Service Providers shall have full control over and responsibility
for the assignment and performance of employees providing the Services to the
Company and for the terms and conditions of employment of such employees
including hiring, transferring, salary, wages, benefits, work, shift
scheduling, disciplining and all other matters related to terms and
conditions of employment. Service Providers shall comply with, and shall
cause their respective employees to comply with, the Company's policies and
procedures applicable to such personnel in connection with the performance of
the Services.

         4.3 STAFFING. Service Providers shall make all staffing decisions
necessary to perform the Services under this Agreement. Service Providers
reserve the right to assign all Service Providers' personnel to perform the
Services, and to replace or reassign such Service Providers personnel at any
time with reasonable prior notice to the Company; provided, however, a
Service Provider will not unilaterally reassign any of its personnel if such
reassignment would significantly impair its ability to perform the Services.
Service Providers' personnel may rotate between this engagement and other
engagements of Service Providers. The Company may request that a Service
Providers' employee assigned to perform under this Agreement be reassigned.
Such request shall be made confidentially in writing to Service Providers and
shall specify the reasons for the requested reassignment. Service Providers
will use commercially reasonable efforts to reassign such employee, if, in
Service Providers' reasonable discretion, such reassignment would not
materially hinder Service Providers' ability to provide the Services under
the terms of this Agreement.

         4.4 COMPANY AND SERVICE PROVIDERS REPRESENTATIVEs. The Company will,
at all times when Service Providers are providing the Services, designate a
representative or representatives of the Company available either by
telephone, pager or in person to receive communications from Service
Providers regarding the Services, as well as any other information. The
initial Company representative (the "Company Representative") is named in
EXHIBIT B. The Company will vest the Company Representative with sufficient
responsibility and authority for necessary decisions or expenditures to
facilitate the timely, responsible and effective rendering of the Services by
Service Providers in accordance with the provisions of this Agreement, and
Service Providers will rely on the Company Representative having such
responsibility and authority. Similarly, Service Providers will, at all times
when Service Providers are providing the Services, designate a representative
or representatives of Service Providers available either by telephone, pager
or in person to receive

                                      7
<PAGE>

communications from the Company regarding the Services, as well as any other
information. The initial Service Providers representatives (the "Service
Providers Representatives") are named in EXHIBIT B. Service Providers will
vest the Service Providers Representatives with sufficient responsibility and
authority for necessary decisions or expenditures to facilitate the timely,
responsible and effective rendering of the Services by Service Providers in
accordance with the provisions of this Agreement, and the Company will rely
on the Service Providers Representatives having such responsibility and
authority.

         4.5 RECRUITMENT OF SERVICE PROVIDERS PERSONNEL. Each of the Company
and the Service Providers acknowledge and agree that the Service Providers'
employees have been acquired and trained by Service Providers at considerable
expense to Service Providers and that the Service Providers employees are
highly skilled in the Services provided. During the term for which any
Services are provided under this Agreement and for a period of six (6) months
following the termination of the last Services provided under this Agreement,
the Company agrees that it shall not, without the advance written consent of
the relevant Service Provider (which consent may be withheld for any reason),
either directly or indirectly, or alone or in conjunction with any other
person or entity, solicit, induce, recruit, aid or suggest to any Service
Providers' employee to leave the employ of Service Providers, or terminate or
violate any contractual or fiduciary duty owing to Service Providers. The
foregoing restrictions shall not apply to (i) Dedicated Personnel, (ii) any
general solicitation of employment that is not targeted solely to the Service
Providers' employees, or (iii) any solicitation of a person who is no longer
employed by a Service Provider.

                                    ARTICLE V
                  CONFIDENTIAL INFORMATION AND CONFIDENTIALITY

         5.1 CONFIDENTIAL INFORMATION. As used in this Agreement, the term
"Confidential Information" shall mean the terms of this Agreement and all
trade secrets or confidential or proprietary information designated as such
in writing by either EES, Enron, or the Company (a "Disclosing Party") to the
other (the "Recipient"), whether by letter or by the use of an appropriate
proprietary stamp or legend, prior to or at the time any such trade secret or
confidential or proprietary information is disclosed by the Disclosing Party
to the Recipient. Notwithstanding the foregoing, information which is orally
or visually disclosed or is disclosed in writing without an appropriate
letter, proprietary stamp or legend shall constitute Confidential Information
if the Disclosing Party (i) so indicates at the time of disclosure and (ii)
within thirty (30) days after such disclosure, delivers to the Recipient a
written document or documents describing such Confidential information and
referencing the place and date of such oral, visual or written disclosure and
the names of the employees or officers of the Recipient to whom such
disclosure was made. The provisions of this Section 5.1 notwithstanding,
Confidential Information shall not include any information to the extent it:

                  (a)      is in the Recipient's possession at the time of
         disclosure otherwise than as a result of the Recipient's breach of
         any legal obligation;

                  (b)      becomes known to the Recipient through disclosure
         by sources other than the Disclosing Party who are not legally
         prohibited from disclosing such Confidential Information;

                                      8
<PAGE>

                  (c)      is independently developed by the Recipient without
         reference to or reliance upon the Disclosing Party's Confidential
         Information; or

                  (d)      is required to be disclosed by the Recipient in the
         opinion of its legal counsel to comply with applicable laws, rules or
         regulations (including the rules of any stock exchange on which the
         Recipient's or its affiliates' securities are listed), PROVIDED that
         the Recipient provides prior written notice of such disclosure to the
         Disclosing Party and takes reasonable and lawful actions, as specified
         by and at the expense of the Disclosing Party, to avoid and/or minimize
         the extent of such disclosure.

         5.2 CONFIDENTIALITY. Each of EES, Enron and the Company shall hold the
other party's Confidential Information in confidence and shall not disclose the
other party's Confidential Information to any person except such of the
Recipient's employees and agents who have a need to know such Confidential
Information in the course of the performance of their duties for the Recipient
and who are bound to preserve the confidentiality of the Confidential
Information. The Recipient shall use Confidential Information only for the
purpose for which it was disclosed and shall not otherwise use or exploit the
Confidential Information for its own benefit or the benefit of another person
without the prior written consent of the Disclosing Party. Each of EES, Enron
and the Company shall take appropriate action by instruction or agreement with
its employees and agents to satisfy its obligations under this Section 5.2.

         5.3 PUBLICITY. Neither EES, Enron nor the Company shall make or issue,
or cause to be made or issued, any announcement or written statement concerning
this Agreement or the terms hereof for dissemination to the general public
without the prior written consent of the other parties. This provision shall not
apply, however, to any announcement or written statement required to be made by
law or the regulations of any federal, state or local governmental authority or
any stock exchange, except that the party who is required to make such
announcement shall, whenever practicable, consult with the other parties
concerning the content and timing of such announcement before such announcement
is made.

                                   ARTICLE VI
                             COMPANY RESPONSIBILITIES

         6.1 DECISIONS OF THE COMPANY. The Company will be responsible to make
all decisions regarding any recommendations made by Service Providers in
providing the Services. In the event that the Company instructs Service
Providers that the Company desires to follow any recommendation made by Service
Providers, then Service Providers will use commercially reasonable efforts to
implement such decision in accordance with Service Providers' recommendation and
the Company's instruction.

         6.2 RESPONSIBILITIES OF THE COMPANY. The responsibilities and
obligations of the Company under and pursuant to this Agreement include, but are
not limited to, the following:

                  (a) LEGALITY AND LIABILITY OF TRANSACTIONS. The legality of
         all transactions with third parties will remain the responsibility of
         the Company, except for transactions entered

                                      9
<PAGE>

         into as a direct result of decisions made solely by Service Providers
         without the Company's knowledge. Service Providers and their
         affiliates assume no responsibility for performance either by third
         party suppliers of goods and services to the Company or by the Company
         under contracts or agreements, formal or informal, between the Company
         and third parties. Service Providers and their affiliates assume no
         liability for the performance or quality of any product or service
         purchased on behalf of the Company and the Company shall have no
         recourse against Service Providers or their affiliates with regard to
         such products or services. The Company shall retain all legal or
         equitable rights and remedies available to it as against any such
         third party.

                  (b) EQUIPMENT, HARDWARE AND SOFTWARE. To the extent that the
         Company requires Service Providers to provide the Services at the
         Company's facilities, the Company shall be responsible for obtaining,
         installing and maintaining all necessary equipment, hardware and
         software at the Company's facilities as reasonably notified and
         required by Service Providers to implement and execute the Services.

                  (c) MANAGEMENT ACTION. Upon reasonable request, the Company
         shall promptly make available to Service Providers copies of all
         management decisions, instructions, approvals, acceptances and such
         other information and assistance desired or required by Service
         Providers to perform their obligations under this Agreement.

                  (d) TAXES AND INTERESTS. The Company shall pay all taxes and
         interest related to or arising from Company transactions for which the
         Services are performed. In addition, the Company shall be solely
         responsible for the payment of any taxes and duties based upon the
         facilities, assets, Services and/or products provided by Service
         Providers or their affiliates arising from this Agreement.

                  (e) ACCOUNTING. The Company shall perform and control all
         accounting entries arising from Company transactions for which the
         Services are performed. Service Providers shall provide to the Company
         such reporting as reasonably necessary to create such accounting
         entries.

                  (f) INTERNAL CONTROLS AND POLICIES. The Company shall be
         solely responsible for establishing and maintaining effective internal
         control, accounting systems and policies with regard to all Company
         transactions executed in connection with or in performance of the
         Services. The Company shall timely communicate such internal controls
         and policies to Service Providers prior to performance of the Services
         by Service Providers.

         6.3 ACCESS. While the Services will be provided primarily from Service
Providers' place of business, from time to time Service Providers may require
access to and use of the Company's facilities, property and services in order to
provide the Services. Beginning on the Effective Date, the Company shall, at the
Company's sole expense, provide Service Providers with the use of, and with
reasonable access to, the Company's facilities as may be required by Service
Providers to perform the Services. The Company shall also provide to Service
Providers, at the Company's expense, all utilities and the use of sufficient
telephones, faxes, computers, copiers, office support services, and such other
comparable services and resources as may be reasonably necessary to render

                                      10
<PAGE>

the Services at the Company's facilities. Similarly, to the extent that the
Company needs access to any facilities of the Service Providers in order to
receive the Services, the Service Providers will provide the Company with
reasonable access to its facilities for such purpose.

         6.4 RISK OF LOSS. At all times during the Term of any Services, the
Company shall bear the risk of loss relating to the Services and the Company's
businesses, all parts thereof, all materials and other goods intended to be or
actually incorporated therein, and all other equipment, purchased for or in
connection with the Services and the Company's businesses.

                                   ARTICLE VII
                  SERVICES WARRANTY AND LIMITATION OF LIABILITY

         7.1 WARRANTIES AND DISCLAIMERS AS TO SERVICES. WITH RESPECT TO ANY
SERVICE PROVIDED HEREUNDER, SERVICE PROVIDERS EXPRESSLY DISCLAIM AND NEGATE ANY
GUARANTY OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTIES COVERING FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, OR
OTHERWISE.

         7.2 LIMITATION OF LIABILITY. NOTWITHSTANDING ANYTHING CONTAINED TO THE
CONTRARY IN ANY PROVISION OF THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN
CONNECTION HEREWITH, THE PARTIES AGREE THAT THE RECOVERY BY ANY PARTY HERETO OF
ANY DAMAGES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH BY THE OTHER
PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR OBLIGATIONS OR ANY
OTHER MATTER OR CLAIM UNDER THIS AGREEMENT OR ANY DOCUMENT EXECUTED IN
CONNECTION HEREWITH SHALL BE LIMITED TO THE ACTUAL DAMAGES SUFFERED OR INCURRED
BY SUCH PARTY, AND IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES EXCEPT
TO THE EXTENT SUCH EXCLUDED DAMAGES CONSTITUTE PART OF A THIRD PARTY CLAIM
SUFFERED OR INCURRED BY A PARTY FOR WHICH SUCH PARTY IS ENTITLED TO
INDEMNIFICATION HEREUNDER.

                                   ARTICLE VIII
                                     DEFAULT

         8.1 DEFAULT BY COMPANY. The following shall constitute an event of
default by the Company under this Agreement: (a) the Company continues to
default in the payment of any of its monetary obligations under this Agreement
for ten (10) business days after receiving written notice from Service Providers
of such default, or (b) the Company fails to perform or observe any of its
material non-monetary obligations contained herein within thirty (30) days after
written notice from Service Providers of such failure; PROVIDED, HOWEVER, that
if such performance or observance cannot reasonably be accomplished within such
thirty (30) day period, a default shall not be deemed to have occurred if the
Company begins to cure the breach within the thirty (30) day period and
thereafter diligently and in good faith continues to pursue the cure of such
breach until cured. Upon receiving written notice of any default, the Company
will promptly use its reasonable efforts to cure such default as soon as
practicable if it is capable of being cured.

                                      11
<PAGE>

         8.2 SERVICE PROVIDERS' REMEDIES. Subject to the terms of this Agreement
(including, but not limited to, Article XI), Service Providers shall have the
right, immediately after the occurrence of an event of default by the Company,
to take the following actions, which are not exclusive but are cumulative: (a)
seek monetary damages; (b) invoke any remedy allowed at law or in equity or
otherwise; or (c) terminate this Agreement. Service Providers hereby waive any
and all claims against the officers, directors, stockholders, employees, agents
and representatives of the Company for all claims arising from a default by the
Company under this Agreement.

         8.3 DEFAULT BY SERVICE PROVIDERS. The following shall constitute an
event of default by Service Providers under this Agreement: (a) Service
Providers continue to default in the payment of any of their monetary
obligations under this Agreement for ten (10) business days after receiving
written notice from the Company of such default; or (b) Service Providers fail
to perform or observe any of their material non-monetary obligations within
thirty (30) days after written notice from the Company of such failure;
PROVIDED, HOWEVER, that if such performance or observance cannot reasonably be
accomplished within such thirty (30) day period, a default shall not be deemed
to have occurred if Service Providers begin to cure the breach within the thirty
(30) day period and diligently and in good faith continue to pursue the cure of
the breach until cured. Upon receiving written notice of any default, the
Service Providers will promptly use reasonable efforts to cure such default as
soon as practicable if it is capable of being cured.

         8.4 COMPANY'S REMEDIES. Subject to the terms of this Agreement
(including, but not limited to, Article XI), the Company has the right,
immediately after the occurrence of an event of default by Service Providers, to
take the following actions, which are not exclusive but are cumulative: (a) seek
monetary damages; (b) invoke any remedy allowed at law or in equity or
otherwise; or (c) terminate this Agreement. The Company hereby waives any and
all claims against the officers, directors, stockholders, employees, agents and
representatives of Service Providers for all claims arising from a default by
Service Providers under this Agreement.

         8.5 SURVIVAL. The provisions of Section 2.7, Section 4.5, Sections
6.2(a) and (d), Section 6.4 and Articles V, VII, VIII, IX and XI hereof shall
survive the termination of this Agreement for any reason.

                                   ARTICLE IX
                                 INDEMNIFICATION

         9.1 SERVICE PROVIDERS' AGREEMENT TO INDEMNIFY. EES and Enron shall
defend, indemnify and hold harmless the Company and the Company's subsidiaries,
affiliates, officers, directors, employees, agents, successors and assigns from
and against any and all suits, actions, claims, losses, demands, damages,
liabilities, costs, and expenses of every kind, including costs and reasonable
attorneys' fees that relate to or result from: (a) any personal injury, death,
or damages to any person or property arising out of or related to the failure of
EES or Enron to perform its obligations hereunder; (b) EES' or Enron's breach of
or default under any provision of this Agreement; or (c) any unlawful acts of
the employees of the Service Providers, or any acts or omissions of the
employees of the Service Providers that are inconsistent with the policies of
the Service Providers or constitute gross negligence, willful misconduct or bad
faith.

                                      12
<PAGE>

         9.2 COMPANY'S AGREEMENT TO INDEMNIFY. The Company shall defend,
indemnify and hold harmless EES, Enron, and EES' and Enron's subsidiaries,
affiliates, officers, directors, employees, agents, successors and assigns from
and against any and all suits, actions, claims, losses, demands, damages,
liabilities, costs, and expenses of every kind, including costs and reasonable
attorneys' fees that relate to or result from: (a) any personal injury, death,
or damages to any person or property arising out of or related to the failure of
the Company to perform its obligations hereunder; or (b) the Company's breach of
or default under any provision of this Agreement; or (c) any unlawful acts of
the employees of the Company, or any acts or omissions of the employees of the
Company that are inconsistent with the policies of the Company or constitute
gross negligence, willful misconduct or bad faith.

         9.3 CONDUCT OF CLAIMS. The party entitled to indemnification under this
Article IX (the "Indemnified Party") shall reasonably promptly, after the
receipt of notice of any legal action or claim against such Indemnified Party in
respect of which indemnification may be sought pursuant to this Article IX,
notify the other Party (the "Indemnifying Party") of such action or claim. The
Indemnifying Party shall not be obligated to indemnify the Indemnified Party
with respect to any such action or claim if the Indemnified Party knowingly
fails to notify the Indemnifying Party thereof in accordance with the provisions
of this Article IX in sufficient time to permit the Indemnifying Party to defend
against such matter and to make a timely response thereto, including, without
limitation, any responsive motion or answer to a complaint, petition, notice or
other legal, equitable or administrative process relating to the action or
claim, but only in so far as such knowing failure to notify the Indemnifying
Party has actually resulted in prejudice or damage to the Indemnifying Party. In
case any such action or claim shall be made or brought against the Indemnified
Party, the Indemnifying Party may, or if so requested by the Indemnified Party
shall, assume the defense thereof with counsel of its selection reasonably
acceptable to the Indemnified Party and which shall be reasonably competent and
experienced to defend the Indemnified Party. In such circumstances, the
Indemnified Party shall (a) at no cost or expense to the Indemnified Party
cooperate with the Indemnifying Party and provide the Indemnifying Party with
such information and assistance as the Indemnifying Party shall reasonably
request in connection with such action or claim and (b) at its own expense, have
the right to participate and be represented by counsel of its own choice in any
such action or with respect to any such claim. If the Indemnifying Party assumes
the defense of the relevant claim or action, (i) the Indemnifying Party shall
not be liable for any settlement thereof which is made without its consent and
(ii) the Indemnifying Party shall control the settlement of such claim or
action; PROVIDED, HOWEVER, that the Indemnifying Party shall not conclude any
settlement which requires any action or forbearance from action or payment or
admission by the Indemnified Party or any of its affiliates without the prior
written approval of the Indemnified Party. The obligations of an Indemnifying
Party shall not extend to any loss, damage or expense of whatever kind and
nature (including all related costs and expenses) to the extent the same results
from the taking by the Indemnified Party of any action (unless required by law
or applicable legal process) that prejudices the successful defense of the
action or claim without, in any such case, the prior written consent of the
Indemnifying Party (such consent not to be required in a case where the
Indemnifying Party has not assumed the defense of the action or claim). The
Indemnified Party agrees to afford the Indemnifying Party and its counsel the
opportunity to be present at, and to participate in, conferences with all
persons, including governmental authorities,

                                      13
<PAGE>

asserting any claim or action against the Indemnified Party covered by the
indemnity contained in this Article IX or conferences with representatives of
or counsel for such person.

                                    ARTICLE X
                                     NOTICES

         10.1 Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally by hand or by recognized
overnight courier, telecopied or mailed (by registered or certified mail,
postage prepaid) as follows:

                           (i)      If to the Company, then to:

                                    EMW Energy Services Corp.
                                    c/o Enron Energy Services, LLC
                                    1400 Smith Street
                                    Houston, Texas  77002
                                    Attention:  General Counsel
                                    Facsimile:  (713) 646-2379

                           (ii)     If to EES, then to:

                                    Enron Energy Services, LLC
                                    1400 Smith Street
                                    Houston, Texas 77002
                                    Attention:  General Counsel
                                    Facsimile:  (713) 646-2379

                           (iii)    If to Enron, then to:

                                    Enron Corp.
                                    1400 Smith Street
                                    Houston, Texas 77002
                                    Attention:  General Counsel
                                    Facsimile:  (713) 853-3920

         10.2 Each such notice or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in Section 10.1 (with confirmation of transmission), or (ii) if given
by any other means, when delivered at the address specified in Section 10.1. Any
party by notice given in accordance with this Article X to the other parties may
designate another address (or telecopier number) or person for receipt of
notices hereunder. Notices by a party may be given by counsel to such party.

                                      14
<PAGE>

                                   ARTICLE XI
                           GOVERNING LAW; ARBITRATION

         11.1 THIS AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND
ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF DELAWARE, OTHER THAN THE CONFLICT OF LAWS RULES
THEREOF.

         11.2 Any and all claims, counterclaims, demands, cause of action,
disputes, controversies, and other matters in question arising under this
Agreement or the alleged breach of any provision hereof (all of which are
referred to herein as "Disputed Claims"), whether such Disputed Claims arise at
law or in equity, under state or federal law, for damages or any other relief,
shall be resolved by binding arbitration in the manner set forth on EXHIBIT D
hereto.

                                   ARTICLE XII
                                   ASSIGNMENT

         12.1 ASSIGNMENT. This Agreement and all of its provisions, rights and
obligations shall be binding upon and shall inure to the benefit of the parties
hereto and their respective permitted successors and assigns. This Agreement may
not be assigned (including by operation of law) by any party without the prior
written consent of the other parties, and any purported assignment, unless so
consented to, shall be void and without effect. Nothing herein express or
implied is intended or shall be construed to confer upon or to give anyone other
than the parties hereto and their respective permitted successors and assigns of
any rights or benefits under or by reason of this Agreement, and no other party
shall have any right to enforce any of the provisions of this Agreement.

                                  ARTICLE XIII
                                     GENERAL

         13.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between EES, Enron and the Company with respect to the subject matter hereof and
supersedes all prior agreements and understandings, whether oral or written,
among the parties with respect to the subject matter hereof. EES and Enron make
no representations to the Company except as expressly set forth herein.

         13.2 FORCE MAJEURE. No party shall be liable for a delay in the
performance of its obligations and responsibilities under this Agreement due to
causes beyond its control, including, but not limited to, failures or delays in
transportation or communication, failures or substitutions of equipment, labor
disputes, accidents, shortages of labor, fuel, raw materials or equipment or
technical failures, PROVIDED that the delayed party has taken reasonable
measures to notify the other party in writing of the delay. The time for
completion of any obligation to which this provision applies shall be extended
for a period equivalent to the delay, PROVIDED, HOWEVER, that no such extension
of performance shall require EES or Enron to provide the Services to the Company
beyond the respective Terms contemplated in Section 2.1 hereof.

                                      15
<PAGE>

         13.3 WAIVER. This Agreement may be amended, superseded, canceled,
renewed or extended only by a written instrument signed by the parties hereto.
The provisions hereof may only be waived in writing by the parties hereto. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, nor any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege. Except as
otherwise provided herein, the rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.

         13.4 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term,
provision, covenant or restriction is invalid, void or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.

         13.5 HEADINGS. Section headings are for reference purposes only and
shall not control or alter the meaning of this Agreement as set forth in the
text.

         13.6 RELATIONSHIP OF PARTIES. In the performance of the Services
hereunder, EES and Enron will at all times be independent contractors, and this
Agreement shall not constitute, nor be deemed to constitute, any party as an
employee, agent, partner or joint venturer of any other party.

         13.7 NO THIRD PARTY BENEFICIARIES. The Agreement has been entered into
for the sole benefit of the Company, EES, and Enron, and in no event shall any
third party beneficiaries be created thereby.

                            (SIGNATURE PAGE FOLLOWS)

                                    * * * * *

                                      16
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year indicated above.

ENRON ENERGY SERVICES, LLC                 EMW ENERGY SERVICES CORP.

By:      /s/ MARK S. MULLER                By:      /s/ JIMMIE L. WILLIAMS
   ---------------------------                -----------------------------

Print:   Mark S. Muller                    Print:   Jimmie L. Williams
      ------------------------                   --------------------------

Title:   Sr. Vice President                Title:   Vice President
      ------------------------                   --------------------------

ENRON CORP.

By:      /s/ J. MARK METTS
   ------------------------------------------------------

Print:   J. Mark Metts
      ---------------------------------------------------

Title:   Executive Vice President--Corp. Development
      ---------------------------------------------------

                                       17
<PAGE>

                                   EXHIBIT A

             CORPORATE STAFF AND SERVICE GROUP
             ANALYSIS
             SUMMARY
             2000 OPERATING BUDGETS
             In thousands of dollars,
             except headcount

<TABLE>
<CAPTION>
ENRON RC#    SAP COMPANY #901 ENRON              CHARGE BASES           2000 PLAN    TOTAL      METRIC
             PROPERTY CO.                                               ABSOLUTE $   ENRON
                                                                                     PLAN
-----------  -------------------------------     ---------------------- ------------------------------------------

<S>          <C>                                 <C>                    <C>
581          Facility Maintenance                Enron Building Space
629          Corporate Security                  Enron Building Space                 $2 sq. ft.
898          Building Services                   Enron Building Space
2234         Facilities Operations               Enron Building Space
746          Office Services                     Enron Building Space
2455         Rent                                Enron Building Space                 $25 sq. ft.

75           EPCO Administration                 Actual Usage
566          Construction                        Actual Usage                         Capital
                                                                                      Expenditure
580          Facility Planning                   Actual Usage                         $25 per hour
692          Churn/Relocation                    Actual Usage                         $220 per person
703          Audio Visual & Locks                Actual Usage                         $40. Audio/$162. Per LCD /$5 Locks
2334         Bus/Parking Subsidy                 Actual Usage                         $45.50 Bus/$36.81 Travel Agency
                                                                                     (TAP)/
                                                                                              $38.76 Kellogg/Met parking/$
                                                                                     parking/$83.87 Clay parking
2441         ABS Utility                         Actual Usage                         $40. per hour
103          Shipping/Receiving                  Actual Usage                         $9.80 Fed Ex/reg incoming 1.25
                                                                                     per item
228          Copy Center                         Actual Usage                         $.04 per copy/$.07 color copies/4.20
                                                                                     per other jobs
             Forms Management                    Actual Usage                         $.21 per business card/.08 per
                                                                                     notepads/
             Graphic Services                    Actual Usage                         $52 per hour

492          Mail Center                         Work place allocation                $16.52 per person
2255         Convenience Copiers                 Work place allocation                Copier leases, maintenance, paper charges
                                                                                     based on % of occupancy
586          Concierge Services                  Work place allocation                $5.83 per person
             Cafeteria                           Work place allocation                $16.52 per
                                                                                     person

             COMPANY #426 ENRON SHARED
             SERVICES
             -------------------------------
2320         Stock Option Plan                   Grant Elections                     10.05%
451          Finance & Treasury                  % of Transactions                    ECM - Not in 2000 Plan
1411         Community Affairs                   Usage of Services                    Not in 2000 Plan
564          Tax                                 Usage of Services                   6.46%
0071         Drug & Alcohol Testing              % of Headcount                      7.86%
2242         Fair Employment Practice            % of Headcount                      8.48%
246          HR Support Services                 Usage of Services                   8.48%
2411         Insurance                           Prop Val/Rev/HC                      ECM - Not in 2000 Plan

             COMPANY #001 ENRON MANAGEMENT
             CO.
             -------------------------------
0208         Compensation/Benefits               % of Benefits                       8.48%
0647         Health Center                       % of DT HC                          11.97%
2454         Bodyshop/Wellness                   % of Benefits                       11.97%
2460         Employee Recreation                 % of Benefits                       11.97%

                                       18
<PAGE>

             COMPANY #011 ENRON CORP
             -------------------------------
1140         Community Relations Program         % of Direct HC                      11.97%
1284         Community/Employee Events           % of Direct HC                      11.97%
658          Development & Training              % of Headcount                      9.22%
2397         Employee Communications             % of Total Employees                3.96%
319          VP-Compensation/Benefits Corporate  % of Headcount
             Support                             Allocation
1133         Marketing Affairs                   Usage of
                                                 Services/Allocation
</TABLE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Headcount Used for Allocations
<S>                                                                        <C>        <C>
           Downtown                                                           646       5,399
           US                                                                 970      11,265
           US & Expat                                                         970      11,444
           Total                                                            1,080      27,300

Headcount Percentages
           Downtown                                                        11.97%     100.00%
           US                                                               8.61%     100.00%
           US & Expat                                                       8.48%     100.00%
           Total                                                            3.96%     100.00%

----------------------------------------------------------------------------------------------
</TABLE>

             ----------------------------------------------------------
             Additional allocations not in
             original request
             Imputed Percentages
             ----------------------------------------------------------

                                      19
<PAGE>

                                    EXHIBIT B

                                 Representatives

The Initial Company Representative:
                                               Jim Badum
                                               Title: Managing Director
                                               Phone: 713-853-0462
                                               Pager: 800-651-1656

Initial Service Providers Representatives
                                               Rick Shapiro (Government Affairs)
                                               Title: Vice President
                                               Phone: 713-853-3407
                                               Pager: 888-740-9949

                                               John Echols  (Risk Management)
                                               Title: Sr. Vice President & CFO
                                               Phone: 713-853-3241
                                               Pager: 888-784-4814

                                               Lou Casari (G&A)
                                               Title: Vice President
                                               Phone:  713-843-4302
                                               Pager:  888-794-9735

                                       20
<PAGE>

                                    EXHIBIT C

                               DEDICATED PERSONNEL

<TABLE>
<CAPTION>
Name                                Position               Representative Cost
----                                --------               -------------------
<S>                                 <C>                    <C>
Li Doyle                            Marketing
Kristen Hand                        Marketing
Laurie Miller                       Marketing
John Henderson                      Risk Management
Susan Covino                        Regulatory
Lonnie Farr                         Technology / IT
Janette Smith                       Technology / IT
Les Wilson                          Technology / IT
Tim Vail                            Technology / IT
Melissa Barber                      Administration
Carmen Bernal                       Administration
Monica Butler                       Administration
Melissa Corley                      Administration
Tina Spiller                        Administration
</TABLE>

                                       21
<PAGE>

                                    EXHIBIT D

                             ARBITRATION PROCEDURES

        (a) The parties to this Agreement agree that any dispute, controversy
or claim that may arise between or among them in connection with or otherwise
relating to this Agreement or the application, implementation, validity or
breach of this Agreement or any provision of this Agreement (including, without
limitation, claims based on contract, tort or statute), shall be finally,
conclusively and exclusively settled by binding arbitration in Wilmington,
Delaware in accordance with the commercial arbitration rules (the "Rules") of
the American Arbitration Association or any successor thereto ("AAA") then in
effect. The parties to this Agreement hereby expressly waive their right to
seek remedies in court, including the right to trial by jury, with respect to
any matter subject to arbitration pursuant to this Agreement. Any party to this
Agreement may bring an action, including, without limitation, a summary or
expedited proceeding in any court having jurisdiction, to compel arbitration of
any dispute, controversy or claim to which the provisions hereof apply. Except
with respect to the following provisions (the "Special Provisions") which shall
apply with respect to any arbitration pursuant hereto, the initiation and
conduct of arbitration shall be as set forth in the rules, which rules are
incorporated in this Agreement by reference with the same effect as if they
were set forth in this Agreement.

        (b) In the event of any inconsistency between the Rules and the Special
Provisions, the Special Provisions shall control. Any references in the Rules
to a sole arbitrator shall be deemed to refer to the tribunal of arbitrators
provided for under paragraph (d) hereof.

        (c) The arbitration shall be administered by the AAA. If the AAA is
unable or legally precluded from administering the arbitration, then the
parties shall agree upon an alternative arbitration organization, provided
that, if the parties cannot agree, such organization shall be selected by the
Chief Judge of the United States District Court for the District which includes
Wilmington, Delaware.

        (d) The arbitration shall be conducted by a tribunal of three (3)
arbitrators. Within ten (10) days after arbitration is initiated pursuant to
the Rules, the initiating party or parties (the "Claimant") shall send written
notice to the other party or parties (the "Respondent"), with a copy to the
office of the AAA having responsibility for Wilmington, Delaware, designating
the first arbitrator (who shall not be a representative or agent of any party
(i.e., shall be impartial and independent) but may or may not be an AAA panel
member and, in any case, shall be reasonably believed by the Claimant to
possess the requisite experience, education and expertise in respect of the
matters to which the claim relates to enable such person to competently perform
arbitral duties). With ten (10) days after receipt of such notice, the
Respondent shall send written notice to the Claimant, with a copy to the office
of the AAA having responsibility for Wilmington, Delaware and to the first
arbitrator, designating the second arbitrator (who shall not be a
representative or agent of any party (i.e., shall be impartial and independent)
but may or may not be an AAA panel member and, in any case, shall be reasonably
believed by the Respondent to possess the requisite experience, education and
expertise in respect of the matters to which the claim relates to enable such
person to competently perform arbitral duties). Within ten (10) days after such
notice from the Respondent is received by the Claimant, the two designated
arbitrators shall select any mutually agreeable third

                                       22
<PAGE>

arbitrator. If the respective designated arbitrators of the Respondent and
the Claimant cannot so agree within said ten (10) day period, then the third
arbitrator will be determined pursuant to the Rules. Prior to commencement of
the arbitration proceeding, each arbitrator shall have provided the parties
with a resume outlining such arbitrator=s background and qualifications and
shall confirm that such arbitrator is not and has not been a representative
or agent of any of the parties. If any arbitrator shall die, fail to act,
resign, become disqualified or otherwise cease to act, then the arbitration
proceeding shall be delayed for fifteen (15) days and the party by or on
behalf of whom such arbitrator was appointed shall be entitled to appoint a
substitute arbitrator (meeting the qualifications set forth in this paragraph
(d) within such fifteen (15) day period; provided, however, that if the party
by or on behalf of whom such arbitrator was appointed shall fail to appoint a
substitute arbitrator within such fifteen (15) day period, the substitute
arbitrator shall be a neutral arbitrator appointed by the AAA arbitrator
within fifteen (15) days thereafter.

        (e) All arbitration hearings shall be commenced within ninety (90) days
after arbitration is initiated pursuant to the Rules, unless, upon a showing of
good cause by a party to the arbitration, the tribunal of arbitrators permits
the extension of the commencement of such hearing; provided, however, that any
such extension shall not be longer than sixty (60) days.

        (f) All claims presented for arbitration shall be particularly
identified and the parties to the arbitration shall each prepare a statement of
their position with recommended courses of action. These statements of position
and recommended courses of action shall be submitted to the tribunal of
arbitrators chosen as provided hereinabove for binding decision. The tribunal
of arbitrators shall not be empowered to make decisions beyond the scope of the
position papers.

        (g) The arbitration proceeding will be governed by the substantive laws
of the State of Delaware and will be conducted in accordance with such
procedures as shall be fixed for such purpose by the tribunal of arbitrators,
except that (i) discovery in connection with any arbitration proceeding shall
be conducted in accordance with the Federal Rules of Civil Procedure and
applicable case law, (ii) the tribunal of arbitrators shall have the power to
compel discovery, and (iii) unless the parties otherwise agree and except as
may be provided herein, the arbitration shall be governed by the Federal
Arbitration Act, 9 U.S. Sections 1-16, to the exclusion of any provision of
state law or other applicable law or procedure inconsistent therewith or which
would produce a different result. The parties shall preserve their right to
assert and to avail themselves of the attorney-client and attorney-work product
privileges, and any other privileges to which they may be entitled pursuant to
applicable law. No party to the arbitration or any arbitrator may compel or
require mediation and/or settlement conferences without the prior written
consent of all such parties.

        (h) The tribunal of arbitrators shall make an arbitration award as soon
as possible after the later of the close of evidence or the submission of final
briefs, and in all cases the award shall be made not later than thirty (30)
days following submission of the matter. The finding and decision of a majority
of the arbitrators shall be final and shall be binding upon the parties.
Judgment upon the arbitration award or decision may be entered in any court
having jurisdiction thereof or application may be made to any such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be. The tribunal of arbitrators shall have the authority to assess liability
for pre-award and post-award interest on the claims, attorneys= fees, expert
witness fees and all other expenses of arbitration as such arbitrators shall
deem appropriate. Unless

                                       23
<PAGE>

otherwise agreed by the parties, the arbitration award shall include findings
of fact and conclusions of law. IT IS EXPRESSLY AGREED THAT NOTWITHSTANDING
ANY OTHER PROVISION HEREIN TO THE CONTRARY, THE ARBITRATORS SHALL HAVE
ABSOLUTELY NO AUTHORITY TO AWARD CONSEQUENTIAL DAMAGES (SUCH AS LOSS OF
PROFIT), TREBLE, EXEMPLARY OR PUNITIVE DAMAGES OF ANY TYPE UNDER ANY
CIRCUMSTANCES REGARDLESS OF WHETHER SUCH DAMAGES MAY BE AVAILABLE UNDER
DELAWARE LAW, THE LAW OF ANY OTHER STATE, OR FEDERAL LAW OR UNDER ANY RULES
OF ARBITRATION.

        (i) Notwithstanding any provision herein to the contrary, nothing
herein shall be construed to require arbitration of a claim or dispute brought
by a person who is not a party to this Agreement, or affect the ability of any
party to interplead or otherwise join another party in a proceeding brought by
a person who is not a party to this Agreement.

        (j) EACH PARTY UNDERSTANDS THAT THIS AGREEMENT CONTAINS AN AGREEMENT TO
ARBITRATE WITH RESPECT TO ANY DISPUTE OR NEED OF INTERPRETATION OF THIS
AGREEMENT. AFTER SIGNING THIS AGREEMENT, EACH PARTY UNDERSTANDS THAT IT WILL
NOT BE ABLE TO BRING A LAWSUIT GOVERNING ANY DISPUTE THAT MAY ARISE WHICH IS
COVERED BY THE ARBITRATION PROVISION, EXCEPT TO COMPEL ARBITRATION OR SEEK
INJUNCTIVE RELIEF. INSTEAD, EACH PARTY AGREES TO SUBMIT ANY SUCH DISPUTE TO
ARBITRATION.

                                       24

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