Document:

<PAGE>

                                                                    EXHIBIT 10.2

                                AMENDMENT 1 TO
                  AMENDED AND RESTATED POWER SALES AGREEMENT

         THIS AMENDMENT, made and entered into as of the 10th day of November,
1999, by and between ENGAGE ENERGY US, L.P., a Delaware limited partnership
("Buyer"), and ELWOOD ENERGY LLC, a Delaware limited liability company
("Seller"), who may hereinafter be referred to collectively as "Parties" or
individually as "Party".

                                   WITNESSETH:

         WHEREAS, the Parties entered into an Amended and Restated Power Sales
Agreement dated as of April 5, 1999 (hereinafter referred to as the "Contract");
and

         NOW THEREFORE, in consideration of the mutual convenants and agreements
set forth herein, Buyer and Seller do hereby agree to amend the Contract as
follows:

                                       I.

         1.    Section 1(a). Definitions is hereby amended by adding the
                             -----------
following:

         "Commercially Reasonable" (regardless of whether such term has initial
capitalization) means, with respect to any action required to be made, attempted
or taken by a Party under this Agreement, the level of effort required to be
made in light of the facts known to a Party at the time a decision is made that:
(i) can reasonably be expected to accomplish the desired action; (ii) is
consistent with Prudent Utility Practices; (iii) takes into consideration, among
other things, the amount of notice of the need to take such action, the duration
and type of the action and the competitive environment in which such action
occurs, and (iv) with respect to Dispatch notices made for hours other than
On-Peak Hours during the Summer Period, notwithstanding the applicability of
Section 20(a)(vii), takes into consideration the availability of fuel, the
availability of transportation necessary to obtain fuel, the delivered cost of
fuel, and other variable costs.

         "Minimum Notification Period" (regardless of whether such term has
initial capitalization) means the minimum advance notice time for Start Up of a
Committed Unit for the applicable time period which shall be three (3) hours for
the Non-Summer Period and Off-Peak Hours in the Summer Period and one (1) hour
for On-Peak Hours in the Summer Period.

                                       1
<PAGE>

         2.    Section 5(a)(i) of the Contract shall be deleted in its entirety
and replaced as follows:

         "(i)  All Electric Energy delivered by Seller to Buyer from each
Committed Unit under this Agreement shall be metered by the Revenue Meter.
Readings from the Revenue Meter shall be reduced for transformer and
transmission line losses between the Revenue Meter and the Point of Delivery in
accordance with Prudent Utility Practice. If technically feasible (as determined
by the Parties) Buyer shall be permitted to install its own back-up metering
system at Buyer's sole expense. The amount of megawatt-hours for which Buyer
will be billed also will be adjusted by the amount of electricity that had been
both generated by the applicable Committed Unit and consumed by other units at
the Facility during the billing period to yield the "billable generation" for
the billing period calculated as described below. To establish the
kilowatt-hours of electricity provided by a Committed Unit and consumed by other
units for a billing period, the total for each billing period of electricity
consumed by each unit at the Facility will be determined from the individual
unit meter readings using the revenue meter located at the generator leads which
will then be summed for all four units. From this sum, the total monthly
electricity purchased from the Interconnected Utility (as determined from the
Interconnected Utility's revenue meter in the ComEd/Elwood Switchyard) will be
subtracted, yielding an aggregate total of the electricity consumed by all the
units that had been generated by one or more other units at the Facility. This
amount will then be multiplied by the ratio of the total operating hours of a
given Committed Unit to the total operating hours of all units. This product
will represent the electricity generated by a given Committed Unit and consumed
by other units. This value will be subtracted from the reading of the Revenue
Meter for a particular Committed Unit for billing purposes for the billing
period. The following example demonstrates the calculation methodology:

Total Electricity generated Unit 1 - 30,000 MWh

Total Electricity generated Unit 2 - 22,500 MWh

Total Electricity generated Unit 3 - 15,000 MWh

Total Electricity generated Unit 4 -      0 MWh

Total electricity consumed Unit 1 - 20,000 kWh

Total electricity consumed Unit 2 - 30,000 kWh

Total electricity consumed Unit 3 - 15,000 kWh

Total electricity consumed Unit 4 - 2,000 kWh

Total electricity consumed All Units = 20,000 + 30,000 + 15,000 + 2,000 = 67,000
kWh

Total electricity purchased from the Interconnected Utility- 30,000 kWh

                                       2
<PAGE>

Total electricity consumed at the Facility generated by the Facility = 67,000 -
30,000 = 37,000 kWh

Unit 1 Monthly Operating Hours - 200

Unit 2 Monthly Operating Hours - 150

Unit 3 Monthly Operating Hours - 100

Unit 4 Monthly Operating Hours - 0

Total Operating Hours = 200 + 150 + 100 + 0 = 450 hours

CALCULATION:

Electricity Furnished by Unit 1 and consumed at the Facility = (200/450)
(37,000) = 16,444 kWh (16.444 MWh)

Electricity Furnished by Unit 2 and consumed at the Facility = (150/450)
(37,000) = 12,333 kWh (12.333 MWh)

Electricity Furnished by Unit 3 and consumed by the Facility = (100/450)
(37,000) = 8,222 kWh (8.222 MWh)

Electricity Furnished by Unit 4 and consumed by the Facility = (0/450) (37,000)
= 0 kWh

Billable Generation Unit 1 = 30,000 - 16.444 = 29,983 MWh

Billable Generation Unit 2 = 22,500 - 12.333 = 22,488 MWh

Billable Generation Unit 3 = 15,000 - 8.222 = 14,992 MWh

Billable Generation Unit 4 = 0-0 = 0 MWh"

         3.    Section 6(c)(iv) of the Contract shall be deleted in its entirety
and replaced as follows:

         "Non-Summer Period and Off-Peak Hours During the Summer Period.
          -------------------------------------------------------------
Notwithstanding there is no Target FOAF during the Non-Summer Period or during
Off-Peak Hours during the Summer Period, Seller shall use Commercially
Reasonable efforts to achieve a high level of availability for the Committed
Units during such periods.

                                       3
<PAGE>

         If Seller determines in its sole discretion that operation of a
Committed Unit(s) in response to a Dispatch notification from Buyer for such
periods is not Commercially Reasonable, then Seller shall notify Buyer that
Seller does not intend to Start Up the applicable Committed Unit(s) (such notice
a "Refusal Notice"). Seller shall provide such Refusal Notice by telephone
within thirty (30) minutes of receipt of Buyer's Dispatch notification. In such
Refusal Notice, Seller shall propose a rate at which it will be willing to
operate such Committed Unit(s) in accordance with the schedule for Start Up and
run time in the Buyer's Dispatch notification. If Seller does not provide such
Refusal Notice within such thirty (30) minute period, Seller shall be deemed to
have found such Dispatch order Commercially Reasonable.

         If Buyer accepts the rate proposed in the Refusal Notice during the
telephone conference in which such Refusal Notice is given, then Seller shall
Start Up and operate the applicable Committed Unit(s) in accordance with the
applicable Dispatch notification. If Buyer does not so accept such rate, Buyer
may accept such rate for a period of one hour from Seller's provision of the
applicable Refusal Notice proposing such rate by providing Seller with a new
Dispatch order with notice at least equal to the Minimum Notification Period
provided such new Dispatch order is for run time comparable to the original
Dispatch order. If Buyer does not accept Seller's proposed rate within such one
hour period, Buyer's Dispatch notification shall be void. In such event, Seller
shall not be obligated to Start Up or operate any Committed Unit in accordance
with such void Dispatch notification and Buyer shall not be obligated to pay
charges associated with cancellation of Start Ups as set forth in Section
7(a)(ii).

         With respect to the Non-Summer Period and Off-Peak Hours during the
Summer Period, any request by Buyer (x) to Start Up a Committed Unit(s) after
such a Dispatch order becomes void, or (y) to expand the run time in a currently
valid Dispatch order shall constitute a new Dispatch order, subject to the
Minimum Notification Period and subject to Seller's right to find such a
Dispatch order to be not Commercially Reasonable in its sole discretion in
accordance with the provisions of this Section 6(c)(iv). The preceding
Subsection (y) shall not apply to situations where Buyer requests an extension
of the run time of an operating Committed Unit(s) from On-Peak Hours during the
Summer Period into Off-Peak Hours in the Summer Period in accordance with the
third sentence of Section (d) of Appendix A."

         4.    Section 7(a)(ii) is hereby amended by adding the following new
sentence to the end of such section:

         "If Buyer issues a Dispatch notification requesting Start Up of a
Committed Unit(s) and (x) subsequently cancels such Start Up at any time after
the Minimum Notification Period has begun and before the requested time for such
Start Up, or (y) issues a Dispatch notification to cease operation before the
Committed Unit has operated for the minimum run time identified in Appendix A,
Section (g), Buyer shall pay Seller the Start Up Charge and the Electric Energy
Charge in accordance with this Section as if Seller had generated Electric
Energy for the first four (4) hours after the requested Start Up time pursuant
to the generation schedule in the original Dispatch notification; provided,
however, such hours shall not count toward the maximum take hours applicable to
each Committed Unit as set forth in Section (a) of Appendix A."

                                       4
<PAGE>

         5.    Appendix A of the Contract shall be deleted in its entirety and
replaced with the attached Revised Appendix A.

         6.    Appendix C attached hereto is hereby incorporated into and made a
part of the Contract.

          7.   Appendix D attached hereto is hereby incorporated into and made a
part of the Contract.

         8.    Appendix E of the Contract shall be deleted in its entirety and
replaced with the attached Revised Appendix E.

                                       II.

         Except as herein provided, the Contract shall remain in full force and
effect.

         IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed in duplicate originals as of the date first written above. ENGAGE

ENERGY US, L.P.

By:    /s/ James Dyer, IV
    ----------------------------------
Name:     James Dyer, IV
      --------------------------------
Title:    Executive Vice President and
      --------------------------------
           Chief Operating Officer
       -------------------------------

ELWOOD ENERGY LLC

By:    /s/ William E. Morrow
    ------------------------------
Name:     William E. Morrow
      ----------------------------
Title:    Vice President
       ---------------------------

                                       5
<PAGE>

                              REVISED APPENDIX A
                        DESIGN LIMITS PER COMMITTED UNIT

     Buyer shall have the right to Dispatch a Committed Unit up to its Net
Dependable Capacity with the following restrictions:

          (a)  Maximum takes. 1500 hours per Committed Unit per Contract Year
               -------------
     maximum (or 3000 hours cumulative for 2 Committed Units). As set forth in
     Section 6(b)(iii), during 1999, Seller may take up to 100 hours per unit
     during the Start Up and testing phase prior to the Commercial Operations
     Date. These hours will count towards the 1500-hour/year limitation per
     Committed Unit in calendar year 1999. For purposes of this Agreement, the
     Committed Units shall be considered "operating" from the first moment of
     firing, and all time during firing shall count towards the 1500 hour
     limitation.

          (b)  Minimum/maximum loads. Buyer may Dispatch each Committed Unit
               ---------------------
     from 60% of Net Dependable Capacity up to its Net Dependable Capacity. Each
     hour that a Committed Unit is operating, regardless of the output, will
     count towards the 1500-hour/year limitation per Committed Unit.

          (c)  Start Up Notification.
               ---------------------

               (i)   Dispatch For On-Peak Hours in the Summer Period. With
                     -----------------------------------------------
                     respect to Start Up notifications for generation during On-
                     Peak Hours in the Summer Period, Seller shall cause a
                     Committed Unit to be started not later than the later of
                     (A) one (1) hour after receipt of Dispatch notification
                     from Buyer, or (B) the requested Start Up time stipulated
                     in such Dispatch notification. If such notification
                     requests Start Up of both Committed Units at the same time,
                     the first Committed Unit will be Started Up by the time
                     specified in the Dispatch notification, and the second
                     Committed Unit will be Started Up within ten (10) minutes
                     of the first Committed Unit.

               (ii)  Dispatch For All Other Times. With respect to Start Up
                     ----------------------------
                     notifications for generation during all hours other than
                     On-Peak Hours in the Summer Period, Seller shall cause a
                     Committed Unit to be started not later than the later of
                     (A) three (3) hours after receipt of Dispatch notification
                     from Buyer, or (B) the requested Start Up time stipulated
                     in such Dispatch notification. If such notification
                     requests Start Up of both Committed Units at the same time,
                     the first Committed Unit will be Started Up by the time
                     specified in the Dispatch notification, and the second
                     Committed Unit will be Started Up within ten (10) minutes
                     of the first Committed Unit.

          (d)  Modification. Buyer may only extend the operation of a Committed
               ------------
               Unit(s) for not less than one (1) hour increments. Notice of such
               an extension during On-Peak Hours in the Summer Period must be
               provided

                                       6
<PAGE>

                           to Seller at least one (1) hour prior to the stop
                           time specified in the then current Dispatch
                           notification (as extended). If a Committed Unit is
                           operating during On-Peak Hours during the Summer
                           Period, Buyer may extend such operation into Off-Peak
                           Hours for up to two (2) hours as if such extensions
                           were during On-Peak Hours in the Summer Period. For
                           all other extensions, Buyer must provide a three (3)
                           hour notice. Buyer may issue a notification to cease
                           firing a Committed Unit at any time, subject to
                           Section 7(a)(ii).

                   (e)     Cancellation Notification. Notwithstanding Paragraph
                           -------------------------
         (c) herein above,

                           (i)     On-Peak Summer Hours. With respect to On-Peak
                                   --------------------
                                   Hours in the Summer Period, but subject to
                                   Section 7(a)(ii), Buyer may cancel a Start Up
                                   notification for a Committed Unit by
                                   providing Seller with a cancellation
                                   notification not less than one (1) hour prior
                                   to the Start Up time for such Committed Unit
                                   as set forth in such Dispatch notification.

                           (ii)    All other hours. With respect to all hours
                                   ---------------
                                   other than On-Peak Hours in the Summer
                                   Period, but subject to Section 7(a)(ii),
                                   Buyer may cancel Start Up notification for a
                                   Committed Unit by providing Seller with a
                                   cancellation notification not less than three
                                   (3) hours prior to the Start Up time for such
                                   Committed Unit as set forth in such Dispatch
                                   notification.

                   (f)     Load Range and Ramp Times. Once a Committed Unit
                           --------------------------
         starts, the Committed Unit will ramp to base load of 60% of Net
         Dependable Capacity within 20 minutes. From base load, Buyer can choose
         to ramp between base load and Net Dependable Capacity. The Committed
         Units can ramp from base load to Net Dependable Capacity within 10
         minutes. The units can be loaded approximately twice as fast due to a
         feature purchased from GE by Seller, but this operation is at the
         expense of the machine's life. If Buyer requests this fast load ramp
         option, and Seller agrees to such operation, this will be priced at
         $500 per Start Up.

                   (g)     Minimum on-line and off-line times. 4-hour minimum
                           ----------------------------------
         run-time per start and 2-hour minimum off-time between Start Ups.

                   (h)     Estimated Reactive Capability Curves. The provision
                           ------------------------------------
         of Ancillary Services pursuant to this Agreement (including terms of
         Article 9 hereof) shall be consistent with the curve attached hereto as
         Schedule A-1.

                                       7
<PAGE>

                                   APPENDIX C
                         COMMUNICATIONS AND GUIDELINES

                  1. Purposes. The purposes of this Appendix are (i) to describe
the nature of the communications link that will be maintained between Seller and
Buyer, (ii) to establish the nature and content of communications relating to
availability of the Committed Units and their dispatch, and (iii) to establish
certain operating procedures. The Parties recognize that it is important that
such communication channels be established so that only responsible and
authorized personnel can issue requests and/or orders that may impact unit
reliability and availability. For dispatch purposes, Buyer may designate a
representative other than a Buyer employee to act on its behalf by providing
written notice to Seller of such designation and the data required by section
2(b) below.

                  2. Communications Link. (a) For the dispatch of the Committed
Units, Buyer shall first attempt to contact Seller by telephone. If such attempt
fails, Buyer shall contact Seller on Seller's pager system, which shall be used
as a primary source for communication for dispatch as contemplated by this
Agreement. Seller shall contact Buyer by telephone immediately (within 10
minutes) upon receipt of page to obtain specific dispatch instructions. If
Seller has not responded within 10 minutes, Buyer shall contact Seller using
Seller's cellular phone system. Seller will notify Buyer as soon as possible of
any disruption or unavailability of the pager or cellular phone system. The
Parties shall also establish and maintain standard phone lines for
communications, which systems shall be used in the event that the aforementioned
pager system is unavailable. Seller shall notify Buyer promptly of any problems
with said standard phone lines. Buyer shall verify such dispatch by facsimile
transmission.

                  (b) Telephone numbers will be exchanged between Buyer and
Seller for the indicated persons:

                         Buyer Generation Dispatcher
                         Buyer facsimile number
                         Seller pager number
                         Seller cellular phone numbers
                         Seller control room phone number
                         Seller facsimile number

                  3. Content of Communications. (a) To the extent that events
are known or anticipated, Seller shall provide to Buyer information regarding
the availability of the Committed Units, including information regarding the
following matters:

                  (i)    conditions, issues or events which may affect the
          output or reliability of the Committed Units;

                  (ii)   time of day (based on a twenty-four hour clock) when a
          Committed Unit is placed on the line and taken off the line;

                                       8

<PAGE>

                  (iii)  changes of rated capacity of a Committed Unit, when it
          is known that such changes have taken place or will take place;

                  (iv)   Committed Unit de-ratings, including the amount of any
          derate, the estimated or known start time and date of the derate, the
          estimated or known ending time and date of the derate, and the cause
          of the derate;

                  (v)    conditions at the Facility or a Committed Unit that
          could affect the present or anticipated load following capability of a
          Committed Unit;

                  (vi)   when required testing or other operational work could
          limit the availability or maneuverability of a Committed Unit; and

                  (vii)  when the Interconnected Utility issues an emergency and
          requests a dispatch level different from that level given by Buyer.

As it becomes available or anticipated, such information shall be made available
to the Buyer. To the extent that such information reflects anticipated events
over which Seller has some control, Seller shall undertake to coordinate the
occurrence of such event with Buyer.

                  (b) Seller shall use the Operations Reporting Form (via
facsimile) attached in Appendix D for the purpose of reporting Committed Unit
capability, outages and deratings as soon as possible after any information
about a Committed Unit changes.

         Buyer shall acknowledge receipt of any such facsimile transmissions by
signing the form and transmitting such signed page by facsimile transmission to
Seller at the return facsimile transmission number indicated thereon. Copies of
the transmissions described in this Section 3(b) shall be retained by Seller and
Buyer for at least 36 months, after which they may be destroyed.

                  (c) Seller shall provide information regarding Committed Unit
availability by telephone on a daily basis by 1200 CPT each Day for the Day
commencing thirty-six (36) hours later to Buyer at the number given for the
Buyer.

                  (d) Seller shall provide notification regarding any
information outlined in Section 3(a) that is not included in the Operations
Reporting Form by telephone to Buyer at the number given for the Buyer as soon
as practicable after such information is known to Seller.

                                       9
<PAGE>

                                   APPENDIX D
                            OPERATIONS REPORTING FORM

          9.     DATA APPLICABLE FOR ELWOOD AVAILABILITY DECLARATION

Availability Declaration Period Commencing

0001 PM/AM, ____/____/____ to 2400 PM/AM, ____/____/____
----                          ----

TO:      Engage Energy                      FAX Nr:           (713) 297-1050

--------------------------------------------------------------------------------
                                             This FAX is a submission of
--------------------------------------------------------------------------------
Generator's Offer Data
--------------------------------------------------------------------------------
A REVISION to the previously submitted offer of ____/____/____
  --------
--------------------------------------------------------------------------------
This document is a hardcopy back-up to the offer of ____/____/____
--------------------------------------------------------------------------------

Unit 1 Available to meet Net Dependable Capacity (NDC-150 MW) ____ Yes ____ No
     -
Unit 2 Available to meet Net Dependable Capacity (NDC-150 MW) ____ Yes ____ No
     -

<TABLE>

DERATINGS:          Derated
                     Amount      Time                      Time
                     ------      ----                      ----
<S>                  <C>         <C>                       <C>
Unit 1 Cause Code: ___ MW ____ Start _____ Date ___/___/___ Stop _____ Date ___/___/___
     -
Unit 2 Cause Code: ___ MW ____ Start _____ Date ___/___/___ Stop _____ Date ___/___/___
     -

MINIMUM:

                                 Time                      Time
                                 ----                      ----
Unit 1 Cause Code: ___ MW ____ Start _____ Date ___/___/___ Stop _____ Date ___/___/___
     -
Unit 2 Cause Code: ___ MW ____ Start _____ Date ___/___/___ Stop _____ Date ___/___/___
     -
</TABLE>

REMARKS: _______________________________________________________________________
         _______________________________________________________________________
         _______________________________________________________________________

Submitted By:     ____________________________________________

Date:             ____________________________________________

If you do not receive all the pages, or if the clarification or retransmission
is required, call (815) 423-5192.

Return acknowledgement of the FAX to the attention of: _________________________
FAX Number:       (815) 423-5058

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

Acknowledgement by Engage Energy:   ________________________________ (Signature)
                                    ________________________________ (Title)

Acknowledgement date and time:      ________________________________

                                       10
<PAGE>

                                  APPENDIX E

                               FOAF CALCULATIONS

I.       Formula
         --------

                  FOAF = FOH  +  EFDH
                         ------------
                              PH

Where:

"FOAF" is "Forced Outage Adjustment Factor"

"FOH" is "Forced Outage Hours" in the Summer Period

"EFDH" is "Equivalent Forced Derated Hours" in the Summer Period

"PH" is "Period Hours" in the Summer Period

II.      Definitions

              A.  Operation and Outage States

Forced Derating
An unplanned component failure (immediate, delayed, postponed) or other
condition (including a Force Majeure Event after the Commercial Operations Date)
that requires the load on a Committed Unit be reduced immediately, within six
hours, or before the end of the next weekend, other than during time periods
when (a) Seller delivers Substitute Electric Energy (and to the extent of such
delivery) or (b) a Committed Unit is curtailed, interrupted, reduced or
increased by the Interconnected Utility pursuant to Sections 6(d)(ii) or (iii).
The existence of a Forced Derating is not in any way dependent on the applicable
Committed Unit being under a Buyer Dispatch order at the time or during the
Forced Derating.

Forced Outage
An unplanned component failure (immediate, delayed, postponed, startup failure)
or other condition (including a Force Majeure Event after the Commercial
Operations Date) that requires a Committed Unit be removed from service
immediately, within six hours, or before the end of the next weekend, other than
during time periods when (a) Seller delivers Substitute Electric Energy (and to
the extent of such delivery) or (b) a Committed Unit is curtailed, interrupted,
reduced or increased by the Interconnected Utility pursuant to Sections 6(d)(ii)
or (iii). The existence of a Forced Outage is not in any way dependent on the
applicable Committed Unit being under a Buyer Dispatch order at the time of the
Forced Outage.

                                       11
<PAGE>

For the avoidance of doubt, in the event that the Interconnecting Utility has
suspended, terminated or otherwise interrupted transmission of the Electric
Energy of a Committed Unit due to a breach of or default under the
Interconnection Agreement by Seller alleged by the Interconnected Utility by
written notice of breach or default by Seller pursuant to the terms of the
Interconnection Agreement to have occurred, the Committed Unit will be
considered under a Forced Outage or Forced Derating for the purpose of
calculating the FOAF, whether or not such claim by the Interconnecting Utility
is ultimately resolved in Seller's favor.

B.  Time (Calculated during Summer Period On-Peak Hours Only)

Equivalent Forced Derated Hours
(EFDH) *
The product of Forced Derated Hours (FDH) and Size of Reduction during Summer
Period On-Peak Hours, divided by Net Dependable Capacity (NDC).

Forced Derated Hours (FDH)
Sum of all On-Peak Hours during which there is a Forced Derating in the Summer
Period.

Forced Outage Hours (FOH)
Sum of all On-Peak Hours during which there is a Forced Outage in the Summer
Period.

Period Hours (PH)
The sum of all On-Peak Hours during the Summer Period.

*Equivalent hours are computed for each derating and then summed.
Size of Reduction is determined by subtracting the Net Available Capacity (NAC)
from the Net Dependable Capacity (NDC). In cases of multiple deratings, the Size
of Reduction of each derating is the difference in the Net Available Capacity of
the unit prior to the initiation of the derating and the reported Net Available
Capacity as a result of the derating.

C.  Capacity and Energy

Gross Available Capacity (GAC)
Greatest capacity (MW) at which a unit can operate with a reduction imposed by a
derating.

Net Available Capacity (NAC)
GAC less the unit capacity (MW) utilized for that unit's station service or
auxiliaries.

                                       12
<PAGE>

D.  FOAF SAMPLE CALCULATIONS

1.       First Incident is a Forced Derating at Committed Unit 1:
         -------------------------------------------------------

         Assume for a period of 48 hours between 6:00 a.m. on a Tuesday and 6:00
a.m. on the following Thursday in July, Committed Unit 1 can only operate at 100
MW (as adjusted for temperature and relative humidity). Net Dependable Capacity
(as adjusted for temperature and relative humidity) is 150 MW.

         The Committed Unit Forced Derating occurred for 32 On-Peak hours, (16
Hours Tuesday and 16 hours Wednesday). As such

                       EFDH = FDH x Size of Reduction, or
                              -----------------------
                                       NDC

               EFDH = 32 hours x 50 MW = 1600 MWH = 10.67 hours
                      ----------------   --------
                          150 MW          150 MW

2.       Second Incident is a Forced Outage at Committed Unit 1:
         -------------------------------------------------------

         Assume Committed Unit 1 is totally unavailable for a period from 6:00
a.m. Friday through 2:00 a.m. the following Tuesday in August.

         The Forced Outage occurred for 32 On-Peak hours (i.e., 16 Friday, zero
Saturday and Sunday, 16 Monday and zero Tuesday)

3.       Third Incident is a Forced Outage at Committed Unit 2:
         ------------------------------------------------------

         Assume Committed Unit 2 has a 7 hour Forced Outage from 8:00 p.m. until
3:00 a.m. on a Thursday in August. The Forced Outage then lasted for 2 On-Peak
Hours.

4.       Fourth Incident is a Forced Outage on Committed Unit 2:
         ------------------------------------------------------

         Assume Committed Unit 2 has a 36 hour Forced Outage from 8:00 a.m. on a
Thursday in November until 8:00 p.m. the following Friday. The Forced Outage was
not in the Summer Period and as such is not part of FOAF calculation.

5.       Aggregate FOAF (for both Committed Units) for the Year
         ------------------------------------------------------

         If these are the only four incidents in a contract year (assuming the
number of weekdays in Summer Period is the same as in 1999 and assuming two NERC
holidays), then,
Incident 1 is 10.67 hours.
Incident 2 is 32 hours.
Incident 3 is 2 hours.

                                       13
<PAGE>

Incident 4 is zero hours.

               FOAF = 10.67 hours + 32 hours + 2 hours = .01623
                      --------------------------------
                             2(1376) On Peak Hours

or, 1.62%

5% - 1.62% = 3.38%, and

Seller gets a bonus of 3.38% times the applicable Contract Year's Capacity
Payment.

                                       14<PAGE>

                                                                    EXHIBIT 10.3
                                                                  Execution Copy

                          SECOND AMENDED AND RESTATED

                             POWER SALES AGREEMENT

                           Dated as of March 1, 2001

                                    Between

                        Exelon Generation Company, LLC
                 (as Assignee of Commonwealth Edison Company)

                                      and

                               Elwood Energy LLC
<PAGE>

                               Table of Contents

<TABLE>
<S>                                                                                                            <C>
1.   Definitions and Interpretation..........................................................................     2
         (a)   Definitions...................................................................................     2
         (b)   Interpretation................................................................................    11
         (c)   Legal Representation of Parties...............................................................    12
         (d)   Titles and Headings...........................................................................    12
         (e)   Sample Calculations...........................................................................    12
         (f)   Appendices....................................................................................    12
         (g)   Conflicts in Documentation....................................................................    13
2.   Term....................................................................................................    13
3.   Generating Capacity.....................................................................................    13
4.   Electric Energy Supply..................................................................................    13
         (a)   Supply........................................................................................    13
         (b)   Dispatch......................................................................................    14
         (c)   Operating Notifications.......................................................................    14
         (d)   Point of Sale.................................................................................    14
         (e)  Communications.................................................................................    15
5.   Metering; Billing; Payment..............................................................................    15
         (a)   Metering......................................................................................    15
         (b)   Billing.......................................................................................    18
         (c)   Billing Disputes..............................................................................    18
6.   Operation of Committed Units............................................................................    19
         (a)   Standard of Operation.........................................................................    19
         (b)   Electric Energy Generation....................................................................    19
         (c)   Outages.......................................................................................    19
         (d)   Operating Characteristics.....................................................................    21
         (e)   Substitute Electric Energy....................................................................    22
         (f)   Fuel and Emissions............................................................................    22
         (g)   Records.......................................................................................    25
7.   Compensation............................................................................................    25
         (a)   Capacity Charge...............................................................................    25
         (b)   Energy Payments...............................................................................    25
         (c)   Start-Up Charge...............................................................................    26
         (d)   Dispatch Cancellation Charges.................................................................    26
         (e)   Fuel Adjustment Charges.......................................................................    27
         (f)   Equivalent Availability Adjustment............................................................    28
         (g)   Reliability Bonus.............................................................................    29
         (h)   Imbalance Charges.............................................................................    29
         (i)   2001 Special Bonus............................................................................    29
         (j)   Rates Not Subject to Review...................................................................    30
         (k)   Unit 1 and 2 True Up..........................................................................    30
         (l)   Placement on Turning Gear.....................................................................    30
8.   Commissioning of Unit 9 and Testing of All Committed Units..............................................    30
         (a)   Delayed Unit 9 Commercial Operations Date.....................................................    30
         (b)   Capacity Tests................................................................................    30
         (c)   Start-Up and Test Power from Unit 9...........................................................    31
</TABLE>
                                       i
<PAGE>

<TABLE>
<S>                                                                                                             <C>
9.   Ancillary Services......................................................................................    31
10.  Limitation of Liability and Exclusive Remedies..........................................................    32
11.  Disagreements...........................................................................................    33
         (a)   Negotiations..................................................................................    33
         (b)   Arbitration...................................................................................    33
         (c)   Settlement Discussions........................................................................    34
         (d)   Preliminary Injunctive Relief.................................................................    35
         (e)   Obligations to Pay Charges and Perform........................................................    35
12.  Assignment; Transfer of Committed Units.................................................................    35
         (a)   Assignment....................................................................................    35
         (b)   Consent to Assignment to Lender...............................................................    35
13.  Default, Termination and Remedies.......................................................................    36
         (a)   Seller Default................................................................................    36
         (b)   Buyer Default.................................................................................    37
         (c)   Remedies......................................................................................    37
         (d)   Extended Outage...............................................................................    37
         (e)   Unit 9 Termination............................................................................    38
14   Representations and Warranties..........................................................................    38
         (a)   Representations and Warranties of Seller......................................................    38
         (b)   Representations and Warranties of Buyer.......................................................    39
15.  Indemnification.........................................................................................    40
16.  Notices.................................................................................................    40
17.  Confidentiality.........................................................................................    41
18.  Governing Law...........................................................................................    42
19.  Force Majeure...........................................................................................    42
         (a)   Definition....................................................................................    42
         (b)   Events not a Force Majeure Event..............................................................    42
         (c)   Obligations Under Force Majeure...............................................................    43
         (d)   Force Majeure Not Forced Outage...............................................................    44
         (e)   Continued Payment Obligation..................................................................    44
         (f)   Payment of Monthly Capacity Charges...........................................................    44
20.  Intentionally Omitted...................................................................................    44
21.  Taxes...................................................................................................    44
         (a)   Applicable Taxes..............................................................................    44
         (b)   Contested Taxes...............................................................................    45
         (c)   Other Charges.................................................................................    45
22.  Miscellaneous Provisions................................................................................    45
         (a)   Non-Waiver....................................................................................    45
         (b)   Third Party Beneficiaries.....................................................................    45
         (c)   Relationship of Parties.......................................................................    45
         (d)   Successors and Assigns........................................................................    45
23.  Entire Agreement and Amendments.........................................................................    45
</TABLE>

APPENDICES

Appendix A  Design Limits per Committed Unit (including Schedule A-1)
Appendix B  Guide Number 3

                                      ii
<PAGE>

Appendix C  Communications
Appendix D  Operations Reporting Forms
Appendix E  Equivalent Availability (including Schedules E-1, E-2, E-3, and E-4)
Appendix F  Output Adjustment Curve
Appendix G  Unit 9 Test Power Agreement
Appendix H  Form of Opinion
Appendix I  Delay Liquidated Damages for Unit 9
Appendix J  Reliability Bonus
Appendix K  Planned Outages
Appendix L  Unit One-Line Diagram
Appendix M  Unit 1 and 2 True Up (including Schedule M-1)

                                      iii
<PAGE>

               SECOND AMENDED AND RESTATED POWER SALES AGREEMENT

     THIS SECOND AMENDED AND RESTATED POWER SALES AGREEMENT (including
Appendices and Schedules, this "Agreement") dated as of March 1, 2001, is
entered into between EXELON GENERATION COMPANY, LLC (d.b.a. "Power Team"), a
Pennsylvania limited liability company, as assignee of COMMONWEALTH EDISON
COMPANY, an Illinois corporation ("Buyer"), and ELWOOD ENERGY LLC, a Delaware
limited liability company ("Seller") to amend and restate that certain Amended
and Restated Power Sales Agreement between the Parties previously executed as of
March 24, 1999 (the "Amended and Restated Agreement"); Buyer and Seller are
sometimes referred to herein individually as a "Party" and collectively as the
"Parties");

                             W I T N E S S E T H:

     WHEREAS, Seller owns and operates an electric generating facility (the
"Elwood Energy Station") and is engaged in the generation and sale of Electric
Energy, Capacity and associated Ancillary Services (each as defined herein); and

     WHEREAS, Seller is adding an additional unit ("Unit 9") to the Elwood
Energy Station and anticipates the Unit 9 Commercial Operations Date of such
unit will occur on or prior to June 1, 2001 for Buyer; and

     WHEREAS, Buyer receives and purchases, and Seller delivers and sells the
Electric Energy, Capacity and associated Ancillary Services from units three and
four ("Units 3 and 4") of the Elwood Energy Station pursuant to the Amended and
Restated Agreement; and

     WHEREAS, Seller and Engage Energy America, LLC ("Engage") are parties to an
Amended and Restated Power Sales Agreement dated as of November 10, 1999 (the
"Engage PSA"); and

     WHEREAS, Buyer and Engage are parties to a contract whereby the Ancillary
Services, energy and capacity sold under the Engage PSA are resold by Engage to
Buyer (the "Engage Resale PSA") (the Engage PSA and the Engage Resale PSA are
hereafter referred to collectively as the "Engage Agreements"); and

     WHEREAS, the Parties desire to amend and restate the Amended and Restated
Agreement as provided hereunder with regard to certain terms in connection with
the (i) true up of pricing between this Agreement and the Engage Agreements and
(ii) the further amendment and restatement of the Amended and Restated Agreement
to revise certain terms and conditions permanently and to reflect the addition
of a new unit (such new unit, Unit 9); and

     WHEREAS, the Parties desire that this Agreement shall supersede the Amended
and Restated Agreement in its entirety.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, the Parties hereto agree as follows:
<PAGE>

1.   Definitions and Interpretation
     ------------------------------

     (a)  Definitions. As used in this Agreement, (i) the terms set forth below
          -----------
in this Section 1(a) shall have the respective meanings so set forth, and (ii)
the terms defined elsewhere in this Agreement shall have the meanings therein so
specified irrespective of whether identified in this Section 1(a).

     "Affected Party" has the meaning set forth in Section 19(a) (Definition).

     "Affiliate" means, when used with respect to any Person, any Person
controlling, controlled by or under common control with such Person. For the
purposes of this definition, the term "controlling" (and, with correlative
meanings, the terms "controlled by" and "under common control with") shall mean
the possession of the legal right to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or agency or otherwise.

     "Allowances" shall mean any allowances, credits, trading units ("ATUs"),
allocations, or other comparable terms used to express and quantify regulated
air pollutants.

     "Ancillary Services" has the meaning set forth in Section 9 (Ancillary
Services).

     "Available" means a state in which the Facility has been Dispatched by
Buyer and delivers all or a portion of the Electric Energy (or Seller provides
an equivalent amount of Substitute Electric Energy) Dispatched by Buyer. If the
Facility only delivers a portion of the Electric Energy Dispatched by Buyer for
a given time period, the Facility shall be considered Available only to the
extent of: (i) such delivery of Electric Energy from the Facility, or (ii)
delivery of Substitute Electric Energy.

     "Balancing Gas Cost" shall mean the two (2) days later than the day of burn
published price in Gas Daily, Daily Price Survey, Midpoint for Chicago-LDCs,
large end users, flow days. In the event the price ceases to be published, a
substitute index for spot gas prices shall be used.

     "Bankruptcy" means any case, action or proceeding under any bankruptcy,
reorganization, debt arrangement, insolvency or receivership law or any
dissolution or liquidation proceeding commenced by or against a Person and, if
such case, action or proceeding is not commenced by such Person, such case or
proceeding shall be consented to or acquiesced in by such Person or shall result
in an order for relief or shall remain undismissed for ninety (90) days.

     "Business Day" means each weekday (Monday through Friday) except NERC
Holidays.

     "Buyer Event of Default" has the meaning specified in Section 13(b) (Buyer
Default).

                                       2
<PAGE>

         "Capacity" means the level of power output capability that is declared
by Seller for the Committed Units and as may be tested from time to time and the
capability to provide Substitute Electric Energy and to provide reliability in
accordance with MAIN requirements.

         "Capacity Charge" means the rates per kW to be paid as listed in
Section 7(a) (Capacity Charge).

         "Capacity Payment" means, with respect to each Committed Unit for each
month the product of (i) the Net Dependable Capacity of such Committed Unit,
multiplied by (ii) the Capacity Charge for the applicable Month, except with
regard to Units 1 and 2 during the True Up Period as provided in Appendix M
(Unit 1 and 2 True Up).

         "ComEd" means Commonwealth Edison Company and its Affiliates and their
successors and assigns.

         "ComEd System" means the electric transmission and distribution system
owned by ComEd and its Affiliates, or their successors and assigns.

         "ComEd/Elwood Switchyard" means that switchyard that will be owned by
ComEd that provides interconnection services to the Facility.

         "Committed Unit" means each of the combustion turbines of the Facility
dedicated to this Agreement, i.e., numbers one (1), two (2), three (3), four
(4), and nine (9). Prior to the Engage Termination Date, Units 1 and 2 are
Committed Units in the sense that they are subject to the Unit 1 and 2 True Up
as set forth in Appendix M (Unit 1 and 2 True Up). After such date, Units 1 and
2 will be fully subject to this Agreement as Committed Units in the same manner
as are Units 3, 4 and 9.

         "Compressor Wash" shall mean the period during which, pursuant to
Section 6(c)(iii) (Compressor Wash), a Committed Unit is shut down for a
compressor wash. Such offline compressor washes shall be conducted after each
period of approximately three hundred (300) hours of operation of a Committed
Unit in accordance with Prudent Industry Practice.

         "Confidential Information" has the meaning specified in Section 17
(Confidentiality).

         "Contract Year" means, in the case of the first Contract Year, the
period beginning on March 1, 2001 and ending on December 31, 2001, and for each
Contract Year thereafter, the calendar year. For Unit 9, the first Contract Year
shall begin on June 1, 2001 and end on December 31, 2001.

         "Critical Day" shall be defined per the tariff of the applicable
utility or natural gas interstate pipeline.

         "Day Ahead Schedule" has the meaning set forth in Section 4(c)(i).

                                       3
<PAGE>

         "Default Rate" means (a) the "Prime Rate" as published from time to
time in the "Money Rates" section of The Wall Street Journal, plus (b) 2.5% (250
basis points) per annum.

         "Design Limits" means, with respect to a Committed Unit, the items
listed in Appendix A (Design Limits per Committed Unit).

         "Dispatch" means Buyer's rights to control the generating level of the
Committed Unit(s) within and subject to the Design Limits and consistent with
Prudent Utility Practice. Seller shall have the sole discretion as to (i) which
Committed Units are operated to meet the Dispatch order or (ii) whether to meet
such Dispatch order with delivery of Substitute Electric Energy.

         "Dispatch Cancellation Charges" shall mean the charges applicable for
cancellation of a Dispatch order in accordance with Section 7(d) (Dispatch
Cancellation Charges).

         "EO" means ComEd's Electric Operations Department.

         "Effective Date" means the date of this Agreement as shown in the
preamble.

         "Electric Energy" means all electric energy output from the Committed
Units (net of station service and auxiliaries) which, except as expressly
provided in this Agreement, Seller shall sell and deliver to Buyer at the Point
of Delivery pursuant to this Agreement, or sell and deliver to Engage for resale
to Buyer at the Point of Delivery pursuant to the Engage Agreements for Units 1
and 2 during the True Up Period.

         "Elwood Energy Station" means the entire generating station owned by
Seller (and its Affiliates) including all nine units.

         "Emergency Condition" means a condition or situation which (i) in the
sole judgment of the Interconnected Utility presents an imminent physical threat
of danger to life, or significant threat to health or property (including in the
ComEd/Elwood Switchyard), (ii) in the sole judgment of the Interconnected
Utility could cause a significant disruption on or significant damage to the
Interconnected Utility's System (or any material portion thereof) or the
transmission system of a third party (or any material portion thereof), (iii) in
the sole judgment of Seller presents an imminent physical threat of danger to
life, or significant threat to health or property (including in the ComEd/Elwood
Switchyard) or (iv) in the sole judgment of Seller could cause significant
damage to a Committed Unit (or any material portion thereof).

         "Energy Charge" means an amount determined under Section 7(b) (Energy
Payments).

         "Energy Payment" means the product of the Energy Charge times the MWh
of Electric Energy (or Substitute Electric Energy) as provided in Section 7(b)
(Energy Payments), except with respect to Units 1 and 2 during the True Up
Period as provided in Appendix M (Unit 1 and 2 True Up).

         "Engage" means Engage Energy America, LLC or its successors and
assigns.

                                       4
<PAGE>

         "Engage PSA" means the Amended and Restated Power Sales Agreement
between Seller and Engage dated as of November 10, 1999 governing Units 1 and 2.

         "Engage Agreements" means the Engage PSA and the Engage Resale PSA.

         "Engage Resale PSA" means the Amended and Restated Power Sales
Agreement between Buyer and Engage, dated as of June 1, 1999 applicable to Units
1 and 2.

         "Engage Termination Date" means the earlier of January 1, 2005 or the
termination of the Engage Agreements.

         "Equivalent Availability" or "EA" has the meaning set forth in Appendix
E (Equivalent Availability).

         "Equivalent Availability Adjustment" or "EA Adjustment" has the meaning
set forth in Section 7(f) (Equivalent Availability Adjustment) and Appendix E
(Equivalent Availability).

         "Equivalent Forced Derated Hours" or "EFDH" is the product of Forced
Derated Hours (FDH) and Size of Reduction divided by the Net Dependable Capacity
(NDC). EFDH are computed for each Forced Derating and then summed for the
applicable period.

         "Escalation" means the adjustment of certain dollar figures in this
Agreement effective each January 1, beginning January 1, 2002, by a factor equal
to the percentage change in the Gross Domestic Product Implicit Price Deflator
("GDP-IPD") as published by the U.S. Department of Commerce. The change in GDP-
IPD shall be calculated using "final" estimates, which are typically published
in the GDP news release near the end of March, by dividing the 4th quarter index
of the latest year by the fourth (4th) quarter index of the prior year, rounded
to the nearest tenth of a percent. Because the publication is not available at
January 1, true up adjustments shall be invoiced by Seller as soon as practical
after publication to make the escalation effective January 1.

         "Excess Capacity" has the meaning set forth in Section 6(b)(ii)
(Electric Energy Generation).

         "Facility" means the portion of Elwood Energy Station that is made up
of the Committed Units 1, 2, 3, 4 and 9.

         "FERC" means the Federal Energy Regulatory Commission.

         "Force Majeure Event" has the meaning set forth in Section 19(a)
(Definition).

         "Forced Derated Hours" ("FDH") and "Forced Outage Hours" ("FOH") are
calculated over all applicable hours of a specific period, during which a Unit
experiences a Forced Derating or Forced Outage, as applicable. They are
calculated monthly in the Summer Months for each of

                                       5
<PAGE>

the Summer Super Peak Hours, Summer Partial Peak Hours, Summer Non-Peak Hours,
and seasonally for Non-Summer On-Peak Hours (as applicable).

         "Forced Derating" means an unplanned component failure (immediate,
delayed, postponed) or other condition that prevents a Committed Unit from
delivering a portion of Electric Energy as Dispatched by Buyer for a given time
period, other than during time periods when (a) a Committed Unit is shut down
for Compressor Washes, (b) Seller delivers Substitute Electric Energy (and to
the extent of such delivery), (c) a Committed Unit is curtailed, interrupted,
reduced or increased by the Interconnected Utility pursuant to Sections 6(d)(ii)
or (iii) (Operating Characteristics), and (d) a Committed Unit is not Available
as a result of a Force Majeure Event.

         "Forced Outage" means an unplanned component failure (immediate,
delayed, postponed, Start-Up failure) or other condition that prevents a
Committed Unit from delivering any Electric Energy as Dispatched by Buyer for a
given time period, other than during time periods when (a) a Committed Unit is
shut down for Compressor Washes, (b) Seller delivers Substitute Electric Energy
(and to the extent of such delivery), (c) a Committed Unit is curtailed,
interrupted, reduced or increased by the Interconnected Utility pursuant to
Sections 6(d)(ii) or (iii) (Operating Characteristics), and (d) a Committed Unit
is not Available as a result of a Force Majeure Event.

         "Fuel Adjustment Charges" has the meaning set forth in Section
7(e)(iii) (Increases to Non-Summer On-Peak Hours and Summer Non-Peak Hours).

         "Fuel Change Fee" has the meaning set forth in Section 7(e)(iv)
(Decreases to Non-Summer On-Peak Hours and Summer Non-Peak Hours).

         "Fuel Charge" has the meaning set forth in Section 7(b) (Energy
Payments).

         "Gas Cost" shall mean the Next Day Gas Cost, Balancing Gas Cost or the
Intra-Day Gas Cost, whichever is applicable.

         "ISO" means any Person, other than ComEd, that becomes responsible as
system operator for the Interconnected Utility System.

         "Imbalance Charge" means a charge for over-supply or under-supply
generator imbalances of Electric Energy incurred pursuant to Schedule 4 of
ComEd's (or any ISO's) Open Access Transmission Tariff or the Interconnection
Agreement.

         "Integrated Hourly MWh" means the quotient of:

         (a)    the sum during the hour of (i) the amount of MW delivered in
                accordance with this Agreement as recorded by the Revenue Meter
                during each recording period within the hour, multiplied by (ii)
                the length of time of the recording period in minutes, divided
                by

                                       6
<PAGE>

         (b)    sixty (60) minutes.

         "Interconnected Utility" means ComEd or its successors and assigns;
such assigns may include an ISO operating a control area that includes the ComEd
System.

         "Interconnected Utility System" means the electric transmission and
distribution system owned by ComEd and its Affiliates, or their successors and
assigns; such assigns may include assignment of operations to an ISO which shall
then mean that Interconnected Utility System shall refer to the entire control
area operated by such ISO, including what had been the ComEd System.

         "Interconnection Agreement" means the interconnection agreement agreed
to and executed between the Interconnected Utility and Seller with respect to
the Facility

         "Intra-Day Gas Cost" shall mean the Gas Cost that is the higher of the
day of burn or next day after burn published price in Gas Daily, Daily Price
Survey, Midpoint for Chicago-LDCs, large end users, flow day. In the event the
price ceases to be published, a substitute index for next day scheduled spot gas
prices shall be used.

         "Lenders" means with respect to any Person (i) any person or entity
that, from time to time, has made loans to such Person, its permitted successors
or permitted assigns for the financing or refinancing of the Facility or the
marketing of the Electric Energy, Capacity or Ancillary Services of the Facility
or which are secured by the Facility, (ii) any holder of indebtedness of such
Person, (iii) any person or entity acting on behalf of such holder(s) to which
any holders' rights under financing documents have been transferred, any trustee
or agent on behalf of any such holders, or (iv) any Person who purchases the
Facility in connection with a sale-leaseback or other lease arrangement in which
the Seller is the lessee of the Facility pursuant to a net lease.

         "Liabilities" has the meaning set forth in Section 15
(Indemnification).

         "MAIN" means the Mid-America Interconnected Network.

         "Maintenance Outage" means the removal of a Committed Unit from service
to perform work (other than a Compressor Wash) on specific components that can
be deferred beyond the end of the next weekend, but requires the Committed Unit
be removed from service before the next Planned Outage. Typically, Maintenance
Outages may occur any time during the year, have flexible start dates, and may
or may not have predetermined durations.

         "NERC" means the North American Electric Reliability Council.

         "NERC Holidays" means the days on which the following holidays are
observed by NERC: New Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

                                       7
<PAGE>

         "Net Dependable Capacity" means the level of MW per Committed Unit,
based upon demonstrated output (net of station service and auxiliaries) achieved
during Capacity testing of such Committed Unit pursuant to Section 8(b)
(Capacity Tests), adjusted by reference to the curves in Appendix F (Output
Adjustment Curve) to conditions of 85(Degree) F and 60% relative humidity, at
610 feet above sea level, provided, however, that prior to the Unit 9 Commercial
Operations Date, the Net Dependable Capacity of Unit 9 shall be deemed to be one
hundred fifty-five (155) MW.

         "Next Day Gas Cost" shall mean the day of burn published price in Gas
Daily, Daily Price Survey, Midpoint for Chicago-LDCs, large end users, flow
days. In the event the price ceases to be published, a substitute index for spot
gas prices shall be used.

         "Non-Summer Months" shall mean January through May and October through
December of each Contract Year, with the following exceptions. For Contract Year
2001, Non-Summer Months shall mean March through May and October through
December. For Unit 9 in Contract Year 2001, Non-Summer Months shall mean October
through December.

         "Non-Summer Months Target EA" means ninety-three percent (93%) per
season.

         "Non-Summer On-Peak Hours" means during the Non-Summer Months, the hour
ending 0700 through the hour ending 2200, Monday through Friday, excluding
Saturdays, Sundays, and NERC holidays.

         "Other Contract" has the meaning set forth in Section 23 (Entire
Agreement and Amendments).

         "Period Hours" or "PH" means the total number of Summer Super Peak,
Summer Partial Peak, Summer Non-Peak, or Non-Summer On-Peak Hours (as
applicable) in each period.

         "Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint stock company, trust,
unincorporated organization, entity, government or other political subdivision.

         "Planned Outage" means the removal of a Committed Unit from service to
perform work on specific components that is scheduled well in advance and has a
predetermined start date and duration (e.g., annual overhaul, inspections or
testing) as provided in Section 6(c)(i) (Planned Outages) and Appendix K
(Planned Outages).

         "Point of Delivery" for Electric Energy and Substitute Electric Energy
generated by a source within the Elwood Energy Station is the point of
interconnection (as identified in Appendix L (Unit One-Line Diagram)) between
the Facility and the Interconnected Utility System at the meter in the
ComEd/Elwood Switchyard or at a mutually agreeable location for Substitute
Electric Energy generated by a source other than the Elwood Energy Station.

                                       8
<PAGE>

     "Prudent Utility Practice" means any of the practices, methods and acts
required or approved by any ISO or engaged in or approved by a significant
portion of the electric utility industry in the geographic region covered by
MAIN during the relevant time period, or any of the practices, methods and acts
which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. "Prudent Utility Practice" is not intended
to be limited to the optimum practice, method or act to the exclusion of all
others, but rather to be acceptable practices, methods or acts generally
accepted in the geographic region covered by MAIN.

     "Reliability Bonus" shall have the meaning provided for such term in
Appendix J (Reliability Bonus).

     "Reliability Bonus Period" has the meaning set forth in Appendix J
(Reliability Bonus).

     "Requirement of Law" means any federal, state and local laws, statutes,
regulations, rules, codes or ordinances enacted, adopted, issued or promulgated
by any federal, state, local or other governmental authority or regulatory body
(including those pertaining to electrical, building, zoning, environmental and
occupational safety and health requirements).

     "Revenue Meter" means the meter which measures power flow into the main
step up transformer of each Committed Unit at a point after auxiliary loads are
withdrawn from the bus.

     "Seller Event of Default" has the meaning specified in Section 13(a)
(Seller Default).

     "Site" means the real property on which the Committed Units are located.

     "Size of Reduction" shall have the following meaning. The "Size of
Reduction" for a Forced Derating shall be determined by Seller and shall be
based upon observed output of a typical unit having the same equipment problems
under similar operating and environmental conditions. Buyer may request Seller
to justify the size of the reduction through provision of reasonably available
historical operating records in support of Seller's selection of the Size of
Reduction

     "Start-Up" means the normal sequence of events, beginning with the cranking
process, in order to initiate the generation of Electric Energy by a Committed
Unit pursuant to a Dispatch Order from Buyer (not including a restart during the
current Dispatch schedule after a Committed Unit's trip after a Successful
Start-Up).

     "Start-Up Charge" has the meaning set forth in Section 7(c) (Start-Up
Charge).

     "Substitute Electric Energy" means electric energy sold and delivered by
Seller to Buyer under this Agreement from sources other than a Committed Unit.

                                       9
<PAGE>

     "Successful Start-Up" means a Start-Up after which the applicable Committed
Unit achieves the Dispatched generation level for a minimum of four (4) hours
during any day's Dispatch period, provided such hours do not have to be
consecutive.

     "Summer Months" shall mean June through September.

     "Summer Months Target EA" means ninety-seven percent (97%) per month for
Summer On-Peak Hours and ninety-seven percent (97%) per month for Summer Non-
Peak Hours.

     "Summer Non-Peak Hours" shall mean all hours during the Summer Months that
are not Summer On-Peak Hours, excluding Saturdays, Sundays, and NERC Holidays.

     "Summer On-Peak Days" shall mean Monday through Friday, excluding
Saturdays, Sundays and NERC holidays in the Summer Months.

     "Summer On-Peak Hours" shall mean the hour ending 0700 through the hour
ending 2200 Monday through Friday, excluding NERC Holidays.

     "Summer Partial Peak Hours" means, during the Summer Months, the hour
ending 0700 through the hour ending 1100 and the hour ending 2000 through the
hour ending 2200 Monday through Friday, excluding NERC Holidays.

     "Summer Super Peak Hours" means, during the Summer Months, the hour ending
1200 through the hour ending 1900 Monday through Friday, excluding NERC
Holidays.

     "Target EA" means the Summer Months Target EA or the Non-Summer Months
Target EA, or both, as applicable.

     "Term" has the meaning specified in Section 2 (Term).

     "Termination Date" means the earlier of (i) December 31, 2012, or (ii) the
date on which this Agreement is terminated by a Party, pursuant to its terms.

     "Transmission Easement" means the easement granting the Interconnected
Utility rights to install transmission facilities on the property of Seller.

     "True Up Period" means, as to Units 1 and 2, the period prior to the Engage
Termination Date during which such Units are subject to the Unit 1 and 2 True
Up.

     "Units 1 and 2" shall mean the units of the Facility under contract under
the Engage Agreements which are subject to the Unit 1 and 2 True Up and are
under the control of Buyer.

     "Units 1 and 2 True Up" has the meaning set forth in Appendix M (Unit 1 and
2 True Up).

                                      10
<PAGE>

     "Unit 9 Commercial Operations Date" means the date on which Seller achieves
the conditions of the commercial operations date as set forth in Section 8(a)
(Delayed Unit 9 Commercial Operations Date).

     "Unit 9 Test Power Agreement" means the agreement attached hereto as
Appendix G (Unit 9 Test Power Agreement).

     "Variable O&M Charge" shall have the meaning set forth in Section 7(b)
(Energy Payments).

     (b)  Interpretation. In this Agreement, unless a clear contrary intention
          --------------
appears:

          (i)     the singular number includes the plural number and vice versa;

          (ii)    reference to any Person includes such Person's successors and
     assigns but, in the case of a Party, only if such successors and assigns
     are permitted by this Agreement, and reference to a Person in a particular
     capacity excludes such Person in any other capacity or individually;

          (iii)   reference to any gender includes the other;

          (iv)    reference to any agreement (including this Agreement),
     document, instrument or tariff means such agreement, document, instrument
     or tariff as amended or modified and in effect from time to time in
     accordance with the terms thereof and, if applicable, the terms hereof;

          (v)     reference to any Requirement of Law means such Requirement of
     Law as amended, modified, codified or reenacted, in whole or in part, and
     in effect from time to time, including, if applicable, rules and
     regulations promulgated thereunder;

          (vi)    reference to any Section, Schedule or Appendix means such
     Section of this Agreement, such Schedule of this Agreement, or such
     Appendix to this Agreement, as the case may be, and references in any
     Section or definition to any clause means such clause of such Section or
     definition;

          (vii)   "hereunder", "hereof", "hereto" and words of similar import
     shall be deemed references to this Agreement as a whole and not to any
     particular Section or other provision hereof or thereof;

          (viii)  "including" (and with correlative meaning "include") means
     including without limiting the generality of any description preceding such
     term;

          (ix)    relative to the determination of any period of time, "from"
     means "from and including", "to" means "to but excluding" and "through"
     means "through and including"; and

                                      11
<PAGE>

          (x)     reference to time shall always refer to Central Prevailing
     Time as in effect in Elwood, Illinois.

     (c)  Legal Representation of Parties. This Agreement was negotiated by the
          -------------------------------
Parties with the benefit of legal representation and any rule of construction or
interpretation otherwise requiring this Agreement to be construed or interpreted
against any Party shall not apply to any construction or interpretation hereof
or thereof.

     (d)  Titles and Headings. Section, Schedule, and Appendix titles and
          -------------------
headings in this Agreement are inserted for convenience of reference only and
are not intended to be a part of, or to affect the meaning or interpretation of,
this Agreement.

     (e)  Sample Calculations. Examples of calculations of various items under
          -------------------
this Agreement are contained in the Schedules.

     (f)  Appendices. This Agreement includes the following Appendices annexed
          ----------
hereto and any reference in this Agreement to an "Appendix" by letter
designation or title shall mean the one of the following so indicated and such
reference shall incorporate such Appendix into this Agreement.

     Appendix A - Design Limits per Committed Unit (including Schedule A-1)

     Appendix B - MAIN Guide Number 3

     Appendix C - Communications

     Appendix D - Operations Reporting Forms

     Appendix E - Equivalent Availability (including Schedules E-1, E-2, E-3 and
E-4)

     Appendix F - Output Adjustment Curve

     Appendix G - Unit 9 Test Power Agreement

     Appendix H - Form of Opinion

     Appendix I - Delay Liquidated Damages for Unit 9

     Appendix J - Reliability Bonus

     Appendix K - Planned Outages

     Appendix L - Unit One-Line Diagram

                                      12
<PAGE>

     Appendix M - Unit 1 and 2 True Up (Including Schedule M-1)

     (g)  Conflicts in Documentation. Each Party acknowledges that it has
          --------------------------
reviewed this Agreement and all of the Appendices to this Agreement and to the
best of its knowledge, there is no conflict between Sections 1-23 of this
Agreement and the Appendices or among the Appendices. Each Party acknowledges
that it is relying on the other Party's determination that there is no such
conflict. Each Party shall promptly notify the other Party in writing of any
apparent conflict or inconsistency among any of the Appendices to this
Agreement. If there is any conflict between Sections 1-23 of this Agreement and
the Appendices, Sections 1-23 of this Agreement shall be deemed controlling, and
any conflict between the Appendices shall be resolved in the following priority:
A (Design Limits per Committed Unit), E (Equivalent Availability), F (Output
Adjustment Curve), M (Unit 1 and 2 True Up) and the remaining Appendices in the
order in which they appear.

2.   Term
     ----

     This Agreement shall have a term (the "Term") commencing on the Effective
Date and ending on the Termination Date. The provisions of Section 1
(Definitions and Interpretation), Section 6(f) (Fuel and Emissions), Section
6(g) (Records), Section 10 (Limitation of Liability and Exclusive Remedies),
Section 11 (Disagreements), Section 13 (Default, Termination and Remedies),
Section 15 (Indemnification), Section 17 (Confidentiality), Section 18
(Governing Law), Section 22 (Miscellaneous Provisions), and Section 23 (Entire
Agreement and Amendments) shall survive the Termination Date of this Agreement.

3.   Generating Capacity
     -------------------

     Subject to the terms and conditions of this Agreement, Seller shall,
consistent with Prudent Utility Practice, cause the aggregate peak Capacity of
all Committed Units during a Contract Year to be not less than the sum of the
Net Dependable Capacities for such Committed Units for such Contract Year.

4.   Electric Energy Supply
     ----------------------

     (a)  Supply. Subject to the terms and conditions of this Agreement, Seller
          ------
shall make available at the Point of Delivery to Buyer for delivery and sale (or
during the True Up Period, delivery and sale to Engage for resale to Buyer of
Electric Energy Dispatched by Buyer), and Buyer shall receive and purchase from
Seller (or during the True Up Period, from Engage, Energy Dispatched by Buyer)
at the Point of Delivery, Electric Energy as Dispatched by Buyer. Buyer shall
not be obligated to receive or purchase any Electric Energy from Seller except
such Electric Energy as is Dispatched by Buyer pursuant to Section 4(b)
(Dispatch). Seller shall not operate a Committed Unit (including Units 1 and 2
during the True Up Period) except in response to a Dispatch order from Buyer
other than (i) for testing purposes prior to the Unit 9 Commercial Operations
Date pursuant to Section 8(c) (Start-Up, Test and Pre-COD Power from Unit 9) and
other testing pursuant to Section 8(b) (Capacity Tests), (ii) for Seller's
rights to sell to third parties pursuant to Section 13(c)(ii) (Remedies), and
(iii) as a result of instructions from

                                      13
<PAGE>

the Interconnected Utility pursuant to Section 6(d)(ii) (Operating
Characteristics) and the Interconnection Agreement. Notwithstanding the above,
if a Committed Unit is operating as expressly permitted hereunder, Seller may
consume electric energy from that Committed Unit for station service and
auxiliaries (including Start-Up of other units at the Facility). Seller shall
have the sole discretion as to (i) which Committed Units are operated to meet
the Dispatch order or (ii) whether to meet such Dispatch order with delivery of
Substitute Electric Energy. Buyer must accept all Substitute Electric Energy
delivered from within the Elwood Energy Station. Buyer shall only be obligated
to accept Substitute Electric Energy from outside the Elwood Energy Station if
it is delivered in accordance with Section 6(e) (Substitute Electric Energy).

     (b)  Dispatch. Buyer may Dispatch the delivery of Electric Energy from the
          --------
Committed Units in accordance with the provisions set forth in Appendices A
(Design Limits per Committed Unit), C (Communications) and E (Equivalent
Availability) at a rate up to the aggregate Net Dependable Capacity of the
Committed Units. Buyer's Dispatch order shall specify the number of Committed
Units to be operated and the operating level for each Committed Unit, but shall
not specify particular Committed Units. Notwithstanding the above, except to the
extent Seller has notified Buyer that Seller has arranged for delivery of
Substitute Electric Energy and Capacity consistent with the terms of this
Agreement, Buyer shall not Dispatch a Committed Unit (1) during any Planned
Outage, Maintenance Outage, period during which the circumstances of Sections
6(d)(ii) or (iii) (Operating Characteristics) apply, or period of a Force
Majeure Event (to the extent the Planned Outage, Maintenance Outage,
circumstances of Sections 6(d)(ii) or (iii) or Force Majeure Event causes the
level at which a Committed Unit is Available to be less than the Net Dependable
Capacity) or (2) during any other period when Buyer is expressly prohibited from
doing so under the provisions of this Agreement.

     (c)  Operating Notifications
          -----------------------

          (i)     Day Ahead Schedule. Not later than 0830 each day Buyer shall
                  ------------------
     provide to Seller estimates of its requirements, on an hour by hour basis,
     for Electric Energy and Start-Ups for the following day. In the event the
     estimates accurately reflect the actual Dispatches and Start-Ups for the
     following day, the Gas Cost for such day will be the Next Day Gas Cost.

          (ii)    Availability Notification. Seller shall, by noon each day,
                  -------------------------
     inform Buyer of the estimated Capacity (taking into account the effect of
     any expected deratings) that will be available to Buyer for the following
     three (3) days. These estimates shall not be binding upon Seller and Seller
     may subsequently alter its estimates. Seller shall advise Buyer of any
     changes in its estimated Capacity as soon as practicable.

          (iii)   Mandatory Notification Obligation. Mandatory minimum
                  ---------------------------------
     notification periods for the Dispatch of each Committed Unit are set forth
     in Appendix A (Design Limits per Committed Unit).

     (d)  Point of Sale. The point where sale of Electric Energy and Substitute
          -------------
Electric Energy will take place and where title to and risk of loss with respect
to, such Electric Energy

                                      14
<PAGE>

and Substitute Electric Energy shall transfer to Buyer is at the Point of
Delivery. Buyer shall be responsible for any transmission costs beyond the Point
of Delivery.

     (e)  Communications. The Parties have developed mutually acceptable
          --------------
procedures for communications between Seller's control room and the EO Dispatch
center included herewith as Appendix C (Communications) to this Agreement. The
Parties have also developed several mutually acceptable day-to-day operational
reporting forms, (i.e., Dispatch Order, Availability, and Change in Unit Status
Reports) included herewith as Appendix D (Operations Reporting Forms). The
actual language in these forms may change over time to reflect both
technological and communicational improvements; all such changes will be agreed
to by both Parties prior to inclusion and will in no way contradict or
compromise the current economic parameters set forth in this Agreement. Buyer
has also expressed interest in a "Ring Down" telecommunications arrangement
between Seller's control room, the EO Dispatch center, and Buyer's trading
floor. Should such an arrangement be feasible Buyer has agreed to bear any and
all costs associated with the implementation and operations of such
communication.

5.   Metering; Billing; Payment
     --------------------------

     (a)  Metering.
          --------

          (i)     All Electric Energy delivered by Seller to Buyer from the
     Committed Units under this Agreement shall be metered by the Revenue Meters
     and the readings therefrom shall be adjusted for calculated transformer and
     transmission line losses between the Revenue Meters and the Point of
     Delivery in accordance with industry standards consistently applied. The
     Energy Charge for which Buyer will be billed also will be net of an
     adjustment for the value of the amount of electricity consumed by other
     non-operating units at the Facility during the billing period to yield the
     "billable generation" for the billing period calculated as described below.
     To establish the value of kilowatt hours of electricity provided by a
     Committed Unit and consumed by other non-operating units for a billing
     period, the total for each billing period of electricity consumed by each
     unit at the Facility will be determined from the individual unit meter
     readings using each Committed Unit's Revenue Meter which will then be
     summed for all Committed Units as applicable. From this sum, the total
     monthly electricity delivered by the Interconnected Utility (as determined
     from the Interconnected Utility's revenue meter in the ComEd/Elwood
     Switchyard) will be subtracted yielding an aggregate total of the
     electricity consumed by all the units that had been generated by one or
     more other units at the Facility. This amount will then be multiplied by
     the ratio of the total operating hours of a given Committed Unit and the
     total operating hours of all units. This product will represent the
     electricity generated by a given Committed Unit and consumed by other non-
     operating units, and will represent the "non-billable generation" per unit.
     The non-billable generation for a Committed Unit will be multiplied by the
     weighted average $/MWh rate for all generation from such Committed Unit in
     the applicable month pursuant to Section 7(b) (Energy Payments). This value
     for non-billable generation will be subtracted from the Energy Charge
     calculated from the reading of the Revenue Meter

                                      15
<PAGE>

     for a particular Committed Unit for billing purposes for the billing
     period. Nothing contained herein shall affect the existence or
     effectiveness of the Engage Agreements.

     THE FOLLOWING DEMONSTRATES THE CALCULATION METHODOLOGY AND IS FOR EXAMPLE
     PURPOSES ONLY:

     Total Electricity generated Unit 1 = 30,000 MWh

     Total Electricity generated Unit 2 = 22,500 MWh

     Total Electricity generated Unit 3 = 15,000 MWh

     Total Electricity generated Unit 4 =      0 MWh

     Total electricity consumed Unit 1 = 20,000 kWh

     Total electricity consumed Unit 2 = 30,000 kWh

     Total electricity consumed Unit 3 = 15,000 kWh

     Total electricity consumed Unit 4 =  1,000 kWh

     Total electricity consumed All Units = 20,000 + 30,000 + 15,000 + 1,000 =
     66,000 kWh

     Total electricity delivered by the Interconnected Utility = 30,000 kWh

     Total electricity consumed at the Facility generated by the Facility =
     66,000 - 30,000 = 36,000 kWh

     Unit 1 Monthly Operating Hours = 200

     Unit 2 Monthly Operating Hours = 150

     Unit 3 Monthly Operating Hours = 100

     Unit 4 Monthly Operating Hours =   0

     Total Operating Hours = 200 + 150 + 100 + 0 = 450 hours

CALCULATION:    (PRICING USED BELOW FOR EXAMPLE PURPOSES ONLY)

     Unit 1 non-billable generation = (200/450) (36,000) = 16,000 kWh  (16 MWh)

     Unit 2 non-billable generation = (150/450) (36,000) = 12,000 kWh  (12 MWh)

                                      16
<PAGE>

     Unit 3 non-billable generation = (100/450) (36,000) = 8,000 kWh    (8 MWh)

     Unit 4 non-billable generation = (0/450) (36,000) = 0 kWh

     Average $/MWh for Unit 1  =   $32/MWh
     Therefore the Energy Charge for Unit 1 = [(30,000) (32) - (16) (32)] =
     $959,488

     Average $/MWh for Unit 2   =       $30/MWh
     Therefore the Energy Charge for Unit 2 = [(22,500) (30) - (12) (30)] =
     $674,640

     Average $/MWh for Unit 3   =       $31/MWh
     Therefore the Energy Charge for Unit 3 = [(15,000) (31) - (8) (31)] =
     $464,752

     Average $/MWh for Unit 4   =       $0
     Therefore the Energy Charge for Unit 4 = (0)

          (ii)    The Revenue Meters shall be tested by the Parties at least
     once each year at Seller's expense and at any other reasonable time upon
     request by either Party, at the requesting Party's expense. Seller shall
     give Buyer at least fourteen (14) days notice of any testing of the Revenue
     Meters and Buyer shall have the right to be present during all testing and
     shall be furnished all testing results on a timely basis.

          (iii)   If testing of the Revenue Meters indicates that an inaccuracy
     of more than +/-0.5% in measurement of Electric Energy has occurred, the
     affected Revenue Meter shall be recalibrated promptly to register
     accurately within the Revenue Meter manufacturer stated tolerances. Each
     Party shall comply with any reasonable request of the other concerning the
     sealing of meters, the presence of a representative of the other Party when
     the seals are broken and the tests are made, and other matters affecting
     the accuracy of the measurement of Electric Energy delivered from the
     Committed Units. If either Party believes that there has been a meter
     failure or stoppage, it shall immediately notify the other Party.

          (iv)    If, for any reason, any Revenue Meter is out of service or out
     of repair so that the amount of Electric Energy delivered cannot be
     ascertained or computed from the readings thereof, the Electric Energy
     delivered during the period of such outage shall be estimated and agreed
     upon by the Parties hereto upon the basis of the best data available, and
     any failure to agree shall be subject to resolution in accordance with
     Section 11 (Disagreements).

          (v)     Each Party (and its representative(s)) has the right, at its
     sole expense, upon reasonable notice and during normal working hours, to
     examine the records of the other Party to the extent reasonably necessary
     to verify the accuracy of any statement, charge or computation relating to
     the output of Electric Energy. If requested, a Party shall

                                      17
<PAGE>

     provide to the other Party statements evidencing the amounts of Electric
     Energy delivered at the Point of Delivery.

     (b)  Billing. As soon as practicable after the end of each calendar month
          -------
during the Term and after the Termination Date, Seller shall render a statement
to Buyer for the amounts due in respect of such month or such period of time
through the Termination Date under Section 7 (Compensation), which statement
shall contain reasonable detail showing the manner in which the applicable
charges were determined.

     Billings for Electric Energy shall be based on Revenue Meter
information or, in the event Section 5(a)(iv) (Metering) is applicable, the best
available data. The amount due to Seller as shown on any such monthly statement
rendered by Seller shall be paid by Buyer by electronic wire transfer to an
account specified by Seller within fifteen (15) Business Days after the date
such statement is received by Buyer. Any amount not paid by Buyer when due shall
bear interest at the Default Rate from the date that the payment was due until
the date payment by Buyer is made.

     Amounts due to Buyer as a result of Unit 9 not achieving the Unit 9
Commercial Operations Date until after June 1, 2001 pursuant to Section 8(a)
(Delayed Unit 9 Commercial Operations Date) shall be offset against other
payments due from Buyer on a monthly basis. Any amounts due to Buyer as a result
of the Equivalent Availability Adjustment pursuant to Section 7(f) (Equivalent
Availability Adjustment) shall be offset against other payments due from Buyer
as provided in Section 7(f). If Buyer has made Capacity Payments for a period
during which its obligation to make Capacity Payments has been relieved pursuant
to Section 19(f)(ii) (Payment of Monthly Capacity Charge), Buyer shall be
entitled to set off any such amounts against future payments. If, at the end of
the Term, there is any outstanding balance due to Buyer, Seller will pay Buyer
within thirty (30) days of invoice up to the limits of liability set forth in
Appendix E (Equivalent Availability) and Section 8(a) (Delayed Unit 9 Commercial
Operations Date).

     (c)  Billing Disputes.
          ----------------

          (i)     If Buyer questions or contests any amount claimed by Seller to
     be due under Section 7 (Compensation) of this Agreement, Buyer shall make
     such payment under protest and thereafter shall be reimbursed by Seller for
     any amount in error after resolution of the dispute in accordance with
     Section 5(c)(ii) (Billing Disputes).

          (ii)    In the event that Buyer, by timely notice to Seller, questions
     or contests the correctness of any charge or payment claimed to be due by
     Seller, Seller shall promptly review the questioned charge or payment and
     shall notify Buyer, within fifteen (15) Business Days following receipt by
     Seller of such notice from Buyer, of the amount of any error and the amount
     of any reimbursement that Buyer is entitled to receive in respect of such
     alleged error. Any disputes not resolved within fifteen (15) Business Days
     after Seller's receipt of notice from Buyer shall be resolved in accordance
     with

                                      18
<PAGE>

     Section 11 (Disagreements). Upon determination of the correct amount of any
     reimbursement, such amount shall be promptly paid by Seller.

          (iii)   Reimbursements made by Seller to Buyer under this Section 5(c)
     (Billing Disputes) shall include interest from the date the original
     payment was made until the date such reimbursement together with interest
     is made, which interest shall accrue at the Default Rate.

6.   Operation of Committed Units
     ----------------------------

     (a)  Standard of Operation. Consistent with Prudent Utility Practice,
          ---------------------
Seller shall operate each Committed Unit in accordance with (i) the practices,
methods, acts, guidelines, standards and criteria of MAIN, NERC, any ISO and any
successors to the functions thereof; (ii) the requirements of the
Interconnection Agreement; and (iii) all applicable Requirements of Law. Seller
will obtain all certifications, permits, licenses and approvals necessary to
operate and maintain each Committed Unit and to perform its obligations under
this Agreement during the Term.

     (b)  Electric Energy Generation.
          --------------------------

          (i)     Except as otherwise provided in Section 13(c)(ii) (Remedies),
     during a Contract Year, Buyer shall have the exclusive right to receive and
     purchase all electricity (net of station service and auxiliaries) and
     Ancillary Services generated by each Committed Unit in such Contract Year,
     provided that if Unit 9 achieves the Unit 9 Commercial Operations Date
     prior to June 1, 2001, Seller shall be entitled to sell energy and capacity
     from Unit 9 to third parties until June 1, 2001.

          (ii)    Buyer acknowledges that each Committed Unit may have a load
     capability that is higher than its Net Dependable Capacity but that Seller
     will not operate the Committed Units at such levels under normal
     conditions. If Buyer desires to operate a Committed Unit such that it shall
     have Capacity in excess of its Net Dependable Capacity ("Excess Capacity"),
     Buyer shall request such Excess Capacity and associated Electric Energy and
     Ancillary Services from Seller at mutually agreeable prices.
     Notwithstanding the above, Seller shall be under no obligation to generate
     or sell Excess Capacity.

          (iii)   Testing and commissioning of Unit 9 in its first Contract Year
     may require Seller to operate Unit 9 up to one hundred (100) hours prior to
     the anticipated Unit 9 Commercial Operations Date of June 1, 2001. These
     operation hours will count towards the one thousand five hundred (1500)
     hours per year operating limit set forth in Appendix A (Design Limits per
     Committed Unit) for the first Contract Year for Unit 9. Regardless of the
     quantity of hours of testing prior to the Unit 9 Commercial Operations Date
     performed by Seller for Unit 9, Buyer shall be entitled to one thousand
     four hundred (1400) Dispatched hours for Unit 9 in the first Contract Year.

     (c)  Outages.
          -------

                                      19
<PAGE>

          (i)     Planned Outages. No later than September 30 of each Contract
                  ---------------
     Year (commencing with 2001), Seller shall submit to Buyer a proposed
     schedule of Planned Outages scheduled by Seller for the following Contract
     Year for the Committed Units, which schedule shall be updated by Seller by
     each March 30 and September 30 thereafter to cover the twelve (12) month
     period following each such update; provided, however, that no Planned
     Outage may be scheduled to cover any portion of the month of May or a
     Summer Month. Such schedule, and each supplement thereto, shall indicate
     the planned start and completion dates for each Planned Outage during the
     period covered thereby and the amount of the Net Dependable Capacity of a
     Committed Unit that will be affected. Within thirty (30) days of receipt of
     such schedule or any supplement thereto, Buyer may request reasonable
     modifications in the Planned Outage schedule contained therein. Both
     parties agree to use reasonable efforts to develop a mutually acceptable
     final schedule for such Planned Outages. No change shall be made by Seller
     to any Planned Outage schedule less than six (6) months prior to the start
     of such Planned Outage without the agreement of Buyer, such agreement not
     to be unreasonably withheld or delayed. If within six (6) months prior to
     the scheduled start of a Planned Outage, Buyer desires to change the
     scheduled start or duration of such Planned Outage, Buyer shall notify
     Seller of Buyer's requested change and Seller shall use reasonable efforts
     to accommodate Buyer's requested change. Seller may propose compensation
     from Buyer to Seller for such change. Buyer shall then have the right to
     either direct such change and pay Seller such compensation, or withdraw the
     request for such change. At least one (1) week prior to any Planned Outage,
     Seller shall orally notify Buyer of the expected start date of such Planned
     Outage, the amount of Capacity at the Committed Units which will not be
     available to Buyer during such Planned Outage, and the expected completion
     date of such Planned Outage. Seller shall orally notify Buyer of any
     subsequent changes in such Capacity not available or any subsequent changes
     in the Planned Outage completion date. As soon as practicable, all such
     oral notifications shall be confirmed in writing.

          (ii)    Maintenance Outages. To the extent that during any Contract
                  -------------------
     Year Seller needs to schedule a Maintenance Outage of a Committed Unit,
     Seller shall notify Buyer of such proposed Maintenance Outage and the
     Parties shall plan such outage of Capacity to mutually accommodate the
     reasonable requirements of Seller and service obligations of Buyer. Notice
     of a proposed Maintenance Outage shall include the expected start date of
     the outage, the amount of Net Dependable Capacity of a Committed Unit that
     will not be Available and the expected completion date of the outage, and
     shall be given to Buyer at the time the need for the Maintenance Outage is
     determined by Seller. Buyer shall promptly respond to such notice and may
     request reasonable modifications in the schedule for the outage. Seller
     shall use all reasonable efforts to comply with such a request to
     reschedule a Maintenance Outage, provided that it may do so in accordance
     with the Design Limits and Prudent Utility Practice as such practice
     relates solely to Seller's operation of the Facility. Seller shall notify
     Buyer of any subsequent changes in such generating capacity not Available
     to Buyer or any subsequent changes in such Maintenance Outage completion
     date. As soon as practicable, any such notifications given orally shall be
     confirmed in writing.

                                      20
<PAGE>

               (iii)  Compressor Wash. Buyer shall permit Seller to shut down
                      ---------------
         each Committed Unit (either at the same time or at different times) for
         a Compressor Wash at a mutually agreeable time, approximately once per
         month in the Summer Months. Seller shall provide Buyer with notice of
         an anticipated time for a Compressor Wash. Buyer acknowledges that
         Seller expects generally to perform a Compressor Wash once per month
         per Committed Unit, and in the event that Buyer's Dispatch does not so
         permit, Buyer agrees that Buyer must permit Seller to perform a
         Compressor Wash on a Committed Unit not later than six (6) weeks from
         the last Compressor Wash performed on such Committed Unit during the
         Summer Months. Such Compressor Wash requires that the Committed Unit be
         off-line for an eighteen (18) hour cool down period prior to the start
         of such Compressor Wash. Seller agrees that at any time during such
         cool down period, Buyer may interrupt such cool down, Dispatch the
         Committed Unit on-line and reschedule the cool down and Compressor Wash
         at a mutually agreeable time. Buyer agrees that once the actual
         Compressor Wash begins, the Compressor Wash must be completed without
         interruption and that Buyer cannot Dispatch the Committed Unit on-line
         until such Compressor Wash is completed. The lesser of five (5) hours
         or actual Compressor Wash time per such shut down per Committed Unit
         will not count as Forced Outage or Maintenance Outage time for
         calculation of the EA. Unless interrupted by Seller, no cool down time
         will count as Forced Outage or Maintenance Outage time for calculation
         of EA, regardless of the number of hours or times that such cool down
         time has been interrupted and restarted.

               (iv)   Forced Outages. Seller shall promptly provide to Buyer an
                      --------------
         oral report of any Forced Outage or Forced Deratings of the Committed
         Units, which report shall include the amount of the Net Dependable
         Capacity of the Committed Units that will not be Available because of
         such Forced Outage or Forced Derating and the expected return date of
         such Capacity, and shall update such report as necessary to advise
         Buyer of changed circumstances. As soon as practicable, all such oral
         reports shall be confirmed in writing.

               (v)    Information Related to Outages. In addition to the
                      ------------------------------
         foregoing, Seller shall provide to Buyer information relating to
         outages of Capacity at the Committed Units which could affect Seller's
         ability to deliver Electric Energy from such Units.

         (d)   Operating Characteristics.
               -------------------------

               (i)    The operating characteristics of each Committed Unit shall
         be consistent with the Design Limits for such Committed Unit set forth
         in Appendix A (Design Limits per Committed Unit) unless otherwise
         mutually agreed by the Parties. Any changes to such operating
         characteristics, which may affect the delivery of Electric Energy
         pursuant to this Agreement, must be agreed upon by the Parties.

               (ii)   Buyer understands that Seller may be required to increase,
         reduce, curtail or interrupt electrical generation at the Committed
         Units in accordance with Prudent

                                      21
<PAGE>

     Utility Practice or take other appropriate action in accordance with the
     applicable provisions of the Interconnection Agreement which in the
     reasonable judgment of the Interconnected Utility may be necessary to
     operate, maintain and protect the Interconnected Utility System or the
     transmission system of another Person during an Emergency Condition or in
     the reasonable judgment of Seller may be necessary to operate, maintain and
     protect the Committed Units during an Emergency Condition. For purposes of
     calculating the EA, the Committed Units shall be considered Available
     during any such increase, reduction, curtailment, or interruption, unless
     the order to increase, reduce, curtail or interrupt generation at the
     Committed Units or the Emergency Condition is caused by an action taken by
     Seller or a condition on Seller's side of the Point of Delivery,

          (iii)  Buyer acknowledges that other conditions on the Interconnected
     Utility System (for example, transmission outages or interruptions) may
     impact Seller's ability to deliver Electric Energy into the Interconnected
     Utility System, other than a condition caused by Seller, at the Point of
     Delivery. For purposes of calculating the EA, the Committed Units shall be
     considered Available during any time that the Committed Units would have
     been actually Available but for conditions (including, for example,
     transmission outages or interruptions) on the Interconnected Utility
     System.

     (e)  Substitute Electric Energy. At any time, subject to mutual agreement
          --------------------------
on a Point of Delivery if generated by a source outside the Elwood Energy
Station, Seller may, at no additional cost to Buyer, make Substitute Electric
Energy and the corresponding level of Capacity available to Buyer at the Point
of Delivery. Seller may make Substitute Electric Energy available for the same
scheduled period only if Seller also provides firm transmission from source to
the applicable Point of Delivery at no additional cost to Buyer if such
Substitute Electric Energy is generated by a source outside the Elwood Energy
Station. To the extent Seller provides Substitute Electric Energy, the Committed
Units shall be considered Available for purposes of calculation of the EA.
Notwithstanding the above, Seller is not obligated to provide Substitute
Electric Energy to Buyer at any time. In addition, Seller's delivery of
Substitute Electric Energy shall be included in any determination as to whether
Seller is entitled to a bonus (or the amount thereof) to be earned pursuant to
the calculations in Appendices E (Equivalent Availability) and J (Reliability
Bonus).

     (f)  Fuel and Emissions.
          ------------------

          (i)  Any emission allowances, credits or authorizations of any kind
("Allowances") allocated from time to time to the Seller by any state or federal
governmental entity for the Committed Units pursuant to any state, regional or
national program for the reduction of emissions of air pollutants of any kind
that applies to the Committed Units and similarly situated units that are like
the Committed Units ("Allowance Budget Program"), including NOx, SO2, mercury,
carbon or other greenhouse gases, whether such program now exists or is
hereafter established, and including, without limitation, the NOx Budget program
being developed for the State of Illinois and commonly referred to as "Subpart
W," to respond to Illinois' obligations under what is commonly called the U.S.
EPA's "NOx SIP Call," will be used

                                      22
<PAGE>

by Seller to support generation under this Agreement (and generation of Electric
Energy by Units 1 and 2 under the Engage Agreements during the True-Up Period)

          (ii)   To the extent that the number of Allowances necessary to meet
Buyer's Dispatch orders with regard to the Committed Units under any Allowance
Budget Program exceeds the amount of NO\\x\\ and/or SO\\2\\ allowances (the
"NO\\x\\-SO\\2\\ Allowances") allocated to the Seller for such Committed Units,
Buyer shall provide the NO\\x\\-SO\\2\\ Allowances at such time and in such
manner and form as are required for Seller to meet its compliance obligations
with respect to such allowances under the applicable Allowance Budget Program
and at no cost to Seller .

          (iii)  In the event that Buyer fails to supply the NO\\x\\-SO\\2\\
Allowances in accordance with this Section 6(f), Buyer shall indemnify and hold
harmless the Seller, its officers and directors, employees and agents against
all losses, claims, damages, liabilities, penalties, fines, forfeitures,
obligations, payments, costs and expenses incurred by it resulting from or
arising out of Buyer's failure to provide the NO\\x\\-SO\\2\\ Allowances to
Seller as required under this Agreement.

          (iv)   If taxes, fees, assessments or charges are assessed by any
governmental entity against emissions of air pollutants or the consumption of
fossil fuels for electric generation pursuant to any state, regional or national
program that applies to the Committed Units and similarly situated units that
are like the Committed Units, or if obligations are imposed upon the Committed
Units pursuant to any state, regional or national program for the reduction in
the emissions of air pollutants of any kind that applies to the Committed Units
and similarly situated units that are like the Committed Units pursuant to the
Allowances Budget Program other than the NO\\x\\-SO\\2\\ Allowances, or which
are not an Allowance Budget Program ("New Air Emission Programs"), Buyer shall
be responsible, subject to the limitations in Section 6(f)(v) below, for
compliance with the New Air Emission Programs to the extent incurred by Seller
in meeting is generation obligations under this Agreement (and generation of
Electric Energy by Units 1 and 2 under the Engage Agreements during the True Up
Period), provided that Seller meets its obligations to develop and implement a
"Compliance Plan," as provided below.

          (v)    Once any New Air Emissions Program takes effect, the Parties
shall use reasonable efforts to develop and implement a mutually acceptable
compliance plan consistent with the terms of this subparagraph to minimize the
costs associated with the implementation of such New Air Emissions Programs (the
"Compliance Plan"). Buyer agrees that it shall pay for all costs incurred by
Seller to comply with each such Compliance Plan up to an annual, aggregate cost
to buyer for all Compliance Plans of five hundred sixty-two thousand dollars
($562,000) in 2001 dollars, adjusted for Escalation after 2001 (the "Pass
Through Cap Amount"). If the Compliance Plan would result in annual costs to
Buyer in excess of the Pass Through Cap Amount, Seller may elect to absorb such
costs or ask that Buyer pay such costs. If Seller elects to ask Buyer to pay
such costs, Buyer shall have the option to (i) pay such costs above the Pass
Through Cap Amount, (ii) terminate this Agreement without any further liability
or (iii) reopen the pricing under this Agreement subject to Section 11
(Disagreements). Such Compliance Plan shall be based on the following
principles:

                                      23
<PAGE>

               (A)  the Compliance Plan shall be implemented upon passage of
final regulations, and the Parties shall agree as to when costs should be
incurred in order to meet a compliance deadline;

               (B)  the emission benefits and costs related to any such
Compliance Plan shall be allocated pro-rata among the Elwood Energy Station
(including the Committed Units and uncommitted units), regardless of the nature
of the implementation plan; thus, for example, the Parties may agree to have one
(1) Committed Unit modified in order for all units to be environmentally
compliant, and the costs related thereto shall be allocated proportionately
among all the units. Buyer's payment would have the components of capital, fixed
O&M, and variable O&M. Buyer's capital payment portion would be equal to:

          ICC = ICRP + IF + IV
          where:
          ICC = Increased Compliance Cost

          ICRP = (I\\c\\ *PF)/12

          where:
          I\\c\\ = Total capital cost includes equipment, installation, overhead
          and interest during construction (IDC), IDC will be calculated at
          LIBOR, the London Interbank Offered Rates as reported from time to
          time in the Money Rates section of the Wall Street Journal, at the "In
          service date" plus .5%
          PF = Payment Factor - [(1+wacc)/n/ * wacc]/[(1+wacc)/n/ - 1]

          where:
          wacc = 30 year Treasury Bond rate at the "in service date" + 250 basis
          points /n/ = Number of years(or partial years, as the case may be)
          between in-service date and the date which is 25 years after the
          Effective Date

          IF - Incremental Fixed O&M using Prudent Utility Practices paid as a
          function of the availability levels as defined in the Agreement
          IV - Incremental Variable O&M using Prudent Utility Practices paid as
          a function of the availability levels as defined in the Agreement

               (C)  To the extent that there are any benefits related to over-
compliance, e.g. credits, such benefits shall also be apportioned pro rata to
            ---
the Facility.

               (D)  The Compliance Plan shall be based on the most efficient,
least cost compliance plan that meets the requirements and is consistent with
Prudent Utility Practices, considering the total costs associated with the
Compliance Plan, including but not limited to, capital costs, variable operating
costs, reporting requirements, etc.

                                      24
<PAGE>

               (E)  Upon agreement of such Compliance Plan, Buyer shall pay for
compliance for the Committed Units up to the Pass Through Cap Amount and receive
its allocated share of benefits, if any, for the Committed Units.

     (g)  Records. Each Party shall keep and maintain all records as may be
          -------
necessary or useful in performing or verifying any calculations made pursuant to
this Agreement, or in verifying such Party's performance hereunder. All such
records shall be retained by each Party for at least three (3) calendar years
following the calendar year in which such records are created. Each Party shall
make such records available to the independent auditors representing the other
Party for inspection and copying at the other Party's expense, upon reasonable
notice during such Party's regular business hours. Each Party shall have the
right, upon thirty (30) days written notice prior to the end of an applicable
three (3) calendar year period to request copies of such records. Each Party
shall provide such copies, at the other Party's expense, within thirty (30) days
of receipt of such notice or shall make such records available to the other
Party in accordance with the foregoing provisions of this Section.

7.   Compensation
     ------------

     (a)  Capacity Charge. Except (i) to the extent of reductions in Buyer's
          ---------------
obligations pursuant to Section 19(f)(ii) (Payment of Monthly Capacity Charges),
and (ii) with regard to Units 1 and 2 during the True-Up Period as described in
Appendix M (Unit 1 and 2 True Up), commencing on the Effective Date Buyer shall
pay the Capacity Payment for each month until the end of the Term as shown
below, as adjusted by the EA Adjustment. The monthly Capacity Charges per kW for
Unit 9 shall become effective June 1, 2001 and are payable in accordance with
this Agreement regardless of the Unit 9 Commercial Operations Date.

                                            Units 1-4, 9
           Month                           Years 2001-2012
           -----                           ---------------
          January                              $2.71875
          February                             $2.71875
          March                                $2.71875
          April                                $2.71875
          May                                  $2.71875
          June                                 $6.525
          July                                 $9.7875
          August                               $9.7875
          September                            $4.35
          October                              $2.71875
          November                             $2.71875
          December                             $2.71875
                                               --------
               Average                         $4.35

     (b)  Energy Payments. Except during the True Up Period as described in
          ---------------
Appendix M (Unit 1 and 2 True Up), each month beginning on the Effective Date
and continuing throughout the Term, Buyer shall pay Seller Energy Payments equal
to the product of the Energy Charge

                                      25
<PAGE>

times the MWh of Electric Energy or Substitute Electric Energy. The Energy
Charge has two components and shall be equal to the sum of the Variable O&M
Charge plus the Fuel Charge. The Variable O&M Charge on the Effective Date shall
be $1.50/MWh, adjusted for Escalation. The Fuel Charge shall be equal to the sum
of the Electric Energy (expressed in Integrated Hourly MWh) and Substitute
Electric Energy (expressed in MWh) sold to Buyer under this Agreement during
each hour of such month, multiplied by the following prices at various Dispatch
levels as shown in the table below.

          MW Level Dispatched in the hour        Fuel Charge/MWh
          -------------------------------        ---------------
          60% of Net Dependable Capacity         Gas Cost + $0.32
                                                  * 12.9 MMBtu/MWh

          100% of Net Dependable Capacity        Gas Cost + $0.32
                                                  * 10.9 MMBtu/MWh

          To the extent a Committed Unit operates at levels between the above
percentages, the heat rate will be prorated to the proportionate level between
the points in the table.

          (c)  Start-Up Charge. Except with regard to Units 1 and 2 during the
               ---------------
True Up Period, Buyer shall pay to Seller three thousand two hundred fifty
dollars ($3,250) adjusted for Escalation for each Successful Start-Up of a
Committed Unit. The Start-Up Charge will be paid for each Successful Start-Up
and for any cancelled Start-Up in accordance with Section 7(d) (Cancellation of
or Change in Dispatch).

          (d)  Dispatch  Cancellation  Charges.  Buyer may cancel  Start-Up of
               -------------------------------
a Committed Unit anytime prior to the initiation of the Start-Up sequence and
ignition of a Committed Unit. For such cancellation, the following Dispatch
Cancellation Charges and Fuel Adjustment Charges shall apply:

               (i)   Dispatch Cancellation during Summer On-Peak Hours. No
                     -------------------------------------------------
Dispatch Cancellation Charges or Fuel Adjustment Charges shall apply if Buyer
cancels a Dispatch order more than one (1) hour before the time requested for
the initiation of Start-Up. If Buyer cancels a Dispatch order (other than as a
result of a Force Majeure Event) less than one (1) hour prior to the time
requested for the initiation of Start-Up, Buyer shall be liable to Seller for a
Dispatch Cancellation Charge of three thousand two hundred fifty dollars
($3,250), adjusted for Escalation, per Committed Unit, but no Fuel Adjustment
Charges shall apply.

               (ii)  Dispatch Cancellation during Non-Summer On-Peak Hours and
                     ---------------------------------------------------------
Summer Non-Peak Hours. If Buyer cancels a Dispatch order (other than as a result
---------------------
of a Force Majeure Event) more than four (4) hours prior to the time requested
for the initiation of Start-Up, no Dispatch Cancellation Charges shall apply but
Buyer shall be responsible for Fuel Adjustment Charges pursuant to Section 7(e)
(Fuel Adjustment Charges). If Buyer cancels a Dispatch order (other than as a
result of a Force Majeure Event) less than four (4) hours but more than two (2)
hours prior to the time requested for the initiation of Start-Up, Buyer shall be
liable to Seller for a Dispatch Cancellation Charge of one thousand dollars
($1,000), adjusted for Escalation, per

                                      26
<PAGE>

Committed Unit and Buyer shall be responsible for Fuel Adjustment Charges
pursuant to Section 7(e). If Buyer cancels a Dispatch order less than two (2)
hours prior to the time requested for the initiation of Start-Up, Buyer shall be
liable to Seller for a Dispatch Cancellation Charge of four thousand dollars
($4,000), adjusted for Escalation, per Committed Unit and Buyer shall be
responsible for Fuel Adjustment Charges pursuant to Section 7(e).

          (iii)   Forced Outage During Start-Up. If Seller experiences a Forced
                  -----------------------------
Outage prior to the achievement of a Successful Start-Up of a Committed Unit,
Buyer shall have the right to cancel the remainder of the current Dispatch order
of such Committed Unit without incurring a Dispatch Cancellation Charge or any
Fuel Charges for such Committed Unit. However, Seller shall not accumulate any
further Forced Outage Hours after notice of cancellation of Dispatch. If Buyer
does not cancel such Dispatch order following a Forced Outage prior to
initiation of Start-Up, Seller shall resume operation pursuant to such Dispatch
order. If Successful Start-Up is achieved, Buyer shall be liable for the Start-
Up Charge. Any cancellation by Buyer thereafter shall be subject to this Section
7(d). In both of these cases the Next Day Gas costs will apply to Electric
Energy generated by the Committed Unit.

(e)  Fuel Adjustment Charges..
     -----------------------

          (i)     Increases to Summer On-Peak Hours Day Ahead Schedule. If Buyer
                  ----------------------------------------------------
increases the amount of Electric Energy to be delivered pursuant to the Day
Ahead Schedule, for that amount of Electric Energy delivered that is greater
than the nominated amount of Electric Energy (the "Incremental Energy") the Gas
Cost shall be the Intra-Day Gas Cost. The Next Day Gas Cost will apply to the
original amount of Electric Energy delivered according to the Day Ahead
Schedule.

          (ii)    Decreases to Summer On-Peak Hours Day Ahead Schedule. If Buyer
                  ----------------------------------------------------
decreases the amount of Electric Energy to be delivered pursuant to the Day
Ahead Schedule, for all Electric Energy delivered to Seller the Gas Cost shall
be the Next Day Gas Cost. No other charges are applicable.

          (iii)   Increases to Non-Summer On-Peak Hours and Summer Non-Peak
                  ---------------------------------------------------------
Hours. If Seller increases the amount of Electric Energy to be delivered
-----
pursuant to the Day Ahead Schedule, the Fuel Adjustment Charge for the
Incremental Energy resulting from an increase of twenty-eight (28) unit hours or
less shall equal the Balancing Gas Cost plus a volumetric balancing cost of
twelve and one-half cents ($.125) per MMBtu/MWh. If Seller increases the amount
of Electric Energy to be delivered pursuant to the Day Ahead Schedule, the Fuel
Adjustment Charge for the Incremental Energy resulting from an increase of
greater than twenty-eight (28) unit hours but no greater than forty-three (43)
unit hours shall equal the Balancing Gas Cost plus a volumetric balancing cost
of sixty-two and one-half cents ($.625) per MMBtu/MWh. If Seller increases the
amount of Electric Energy to be delivered pursuant to the Day Ahead Schedule,
the Fuel Adjustment Charge for the Incremental Energy resulting from an increase
of more than forty-three (43) unit hours shall equal the Balancing Gas Cost plus
the amount of Seller's volumetric cost of authorized or unauthorized balancing
charges per MMBtu. The Next Day Gas Cost will apply to the original amount of
Electric Energy delivered according to the

                                      27
<PAGE>

Day Ahead Schedule.

          (iv)    Decreases to Non-Summer On-Peak Hours and Summer Non-Peak
                  ---------------------------------------------------------
Hours. If Buyer decreases the amount of Electric Energy to be delivered pursuant
-----
to the Day Ahead Schedule, for all Electric Energy delivered to Seller the Gas
Cost shall be the Next Day Gas Cost. In addition, a Fuel Change Fee for the
excess gas resulting from the decrease in the amount of Electric Energy
nominated but not delivered shall be paid by Buyer (the "Excess Gas"). The Fuel
Change Fee shall consist of the net of the Next Day Gas Cost and the Balancing
Gas Cost (possibly a gain or loss) resulting from the liquidation of the Excess
Gas plus the volumetric balancing costs per MMBtu of the Excess Gas. The
volumetric balancing costs shall equal:

                  (A)    $.125 per MMBtu up to 28 unit hours of decrease
                  (B)    $.625 per MMBtu greater than 28 unit hours and less
                         than 44 hours of decrease
                  (C)    Seller's volumetric cost of authorized or unauthorized
                         balancing costs per MMBtu for any decrease in excess of
                         44 unit hours.

          (v)     Forced Outage or Forced Derating. Buyer shall not be
                  --------------------------------
responsible for Fuel Adjustment Charges resulting from changes to the Day Ahead
Schedule which occur as a result of Forced Outage, Forced Derating or Force
Majeure Event where the Seller is the Affected Party.

     (f)  Equivalent Availability Adjustment. Seller or Buyer, as applicable,
          ----------------------------------
shall be liable to the other Party for an amount based upon the Equivalent
Availability Adjustments as applied to (1) each individual Summer Month when
such Summer Month's Capacity Payment is due and (2) the previous Contract Year's
aggregate Non-Summer Months Capacity Payments due no later than January 31 of
each year, including the Bonus/Penalties calculated pursuant to this Section and
to the Equivalent Availability in Appendix E (Equivalent Availability). Recovery
of such amounts (if any) by Buyer from Seller shall be offset against current or
future payments only. Any amounts due pursuant to calculations under this
Section 7(f) shall be combined and the sum shall be that Contract Year's
Equivalent Availability Adjustment. Any offset to Buyer for the Equivalent
Availability Adjustment shall in no event exceed the applicable Contract Year's
aggregate Capacity Payments actually paid to Seller. For the calendar year 2001,
the Period Hours for the Non-Summer period will be calculated from March 1,
2001.

          (i)    Summer Months Bonus. Each Summer Month the Equivalent
                 -------------------
Availability for both the Summer Super Peak Hours and Partial Peak Hours across
all five (5) Committed Units will be calculated and compared with a ninety-seven
percent (97%) Target EA. In the event that the aggregate (across all five (5)
Committed Units) Equivalent Availability for a Summer Month's Period exceeds
this ninety-seven percent (97%) threshold Seller will be entitled to a bonus as
shown in Appendix E (Equivalent Availability).

          (ii)   Summer Months Penalty. Each Summer Month the Equivalent
                 ---------------------
Availability for the Summer Super Peak Hours, the Summer Partial Peak Hours, and
the Summer

                                      28
<PAGE>

Non-Peak Hours will be calculated (each of these will again be done on an
aggregate basis across all five (5) Committed Units) and each one will be
compared with a ninety-seven percent (97%) Target EA. In the event that the
aggregate (across all five (5) Committed Units) Equivalent Availability for
either the Summer Super Peak Hours, the Summer Partial Peak Hours, or the Summer
Non-Peak Hours is below this ninety-seven percent (97%) threshold, Seller will
be subject to penalties as shown in Appendix E (Equivalent Availability).

          (iii)  Non-Summer Months Bonus. In the event that the aggregate
                 -----------------------
(across all five (5) Committed Units) Equivalent Availability for the Non-Summer
Period exceeds ninety-three percent (93%), Seller will be entitled to a bonus as
shown in Appendix E (Equivalent Availability).

          (iv)   Non-Summer Months Penalty.In the event that the aggregate
                 -------------------------
(across all five (5) Committed Units) Equivalent Availability for the Non-Summer
Period is below ninety-three percent (93%), Seller will be liable for penalties
as shown in Appendix E (Equivalent Availability).

     (g)  Reliability Bonus.  For each Summer Month the Reliability Bonus will
          -----------------
be calculated in accordance with Appendix J (Reliability Bonus).

     (h)  Imbalance Charges. Buyer shall hold Seller harmless from any Imbalance
          -----------------
Charges that result from Buyer's Dispatch orders under this Agreement. After
December 31, 2004, Seller shall hold Buyer harmless from any Imbalance Charges
under the Interconnection Agreement that result from Seller's deviation from
Buyer's Dispatch orders under this Agreement caused by any reason whatsoever,
including, but not limited to a failure to comply with operating parameters in
the Interconnection Agreement.

     (i)  2001 Special Bonus. Seller has paid to Buyer the sum of two hundred
          ------------------
fifty thousand dollars ($250,000) and upon such payment, Seller was released
from any liability to Buyer for Equivalent Availability Adjustment and any other
liability associated with operations or failures to operate (including
liabilities under Section 10(d) of the Amended and Restated Agreement or any
liability under this Agreement for the Seller's operations in January and
February 2001). If the Equivalent Availability for each Summer Month's Period
Hours for Units 3 and 4 averaged together exceed 97% for each Summer Month of
2001, Buyer shall refund all or a portion of such two hundred fifty thousand
dollars ($250,000) as calculated below.

          The amounts below will be linearly prorated to a hundredth of a
percent between 97% and 100%.

  June 2001       Maximum $53,600 ($17,866 per one percent (1%) above Target EA)
  July 2001       Maximum $80,400 ($26,800 per one percent (1%) above Target EA)
  August 2001     Maximum $80,400 ($26,800 per one percent (1%) above Target EA)
  September 2001  Maximum $35,700 ($11,900 per one percent (1%) above Target EA)

                                      29
<PAGE>

     (j)  Rates Not Subject to Review.  The rates for service specified herein
          ---------------------------
(i.e., delivery of Electric Energy, Substitute Electric Energy, Capacity and
Ancillary Services) shall remain in effect for the Term, and shall not be
subject to change through application to the FERC pursuant to provisions of
Section 205 et seq. of the Federal Power Act, absent agreement of the Parties.

     (k)  Unit 1 and 2 True Up. During the True Up Period, all payments for
          --------------------
Start-Up Charges, Energy Payments and Capacity Payments with regard to Units 1
and 2 shall be subject to the Unit 1 and 2 True Up as described in Appendix M.

     (l)  Placement on Turning Gear.  If Buyer requests this option in the
          -------------------------
future, it will be at a mutually agreed upon price.

8.   Commissioning of Unit 9 and Testing of All Committed Units
     ----------------------------------------------------------

     (a)  Delayed Unit 9 Commercial Operations Date. Seller anticipates that
          -----------------------------------------
the Unit 9 Commercial Operations Date will occur on or prior to June 1, 2001. If
Unit 9 has not achieved the Unit 9 Commercial Operations Date on or prior to
June 1, 2001, Seller shall be liable to Buyer for delay liquidated damages for
every Summer On-Peak Day in the months of June, July and August that the Unit 9
Commercial Operations Date has not occurred. These damages are to be offset
against Capacity Charges as they become due beginning on June 1, 2001 in
accordance with Appendix I (Delay Liquidated Damages for Unit 9). Should the
Unit 9 Commercial Operations Date be later than June 1, 2001, then the presumed
Net Dependable Capacity (and the Net Dependable Capacity used in calculating the
Capacity Payments) of Unit 9 will be one hundred fifty-five (155) MW.

          In no event shall the maximum amount of delay liquidated damages for
which Seller shall be liable exceed the total twelve-month Capacity Payment
amount Seller would have earned through May 31, 2002 for Unit 9 had Unit 9 not
been so delayed. No delay liquidated damages shall be assessed for the day the
Unit 9 Commercial Operations Date is declared to have occurred if declared
before the hour 1200.

          The occurrence of the Unit 9 Commercial Operations Date is contingent
upon Seller's performance of a heat rate and capacity test in accordance with
Appendix B. In conjunction with such test, Unit 9 shall operate continuously for
a minimum of four (4) consecutive hours synchronized to the ComEd System at a
level equal to at least 144 MW. Upon declaration of the Unit 9 Commercial
Operations Date, Seller shall provide Buyer with a copy of its notice of
Provisional Acceptance (as defined in the contract with General Electric Company
("GE") to construct Unit 9), with an acknowledgment from GE of its receipt of
such notice.

     (b)  Capacity Tests.
          --------------

          (i)  Any test to determine the Net Dependable Capacity of a Committed
     Unit shall include a period of two (2) hours during which the Net
     Dependable Capacity of the Committed Unit is generated and the Electric
     Energy delivered to the Point of Delivery. Once a test period has been
     initiated, it must last for two (2) hours unless Buyer's and

                                      30
<PAGE>

     Seller's authorized representatives mutually agree to a shorter duration.
     Any such test shall be conducted as specified in Guide No. 3 of MAIN (a
     copy of which is attached as Appendix B). No tests will be conducted or
     continued which, in the opinion of Seller, should not be conducted or
     continued in accordance with Prudent Utility Practice. If Seller prevents
     or discontinues a test in accordance with Prudent Utility Practice, Buyer
     shall have the right to require a retest of the affected Committed Unit
     upon prior notice to Seller, if the test was conducted pursuant to Buyer's
     request.

          (ii)   Seller will report the magnitude and duration of any known
     Forced Derating immediately upon becoming aware of such condition. Seller
     will also report the magnitude and duration of any known derating condition
     (equipment failure, operating limitation, etc.) immediately upon becoming
     aware of such condition. Buyer shall have the right to require Seller to
     reestablish by capacity test the Net Dependable Capacity of each Committed
     Unit at a mutually agreeable time once before the start of both the Summer
     Months and the Non-Summer Months. If the results of such tests produce a 4
     MW or greater decline in the Net Dependable Capacity for such Committed
     Unit, then a Forced Derating equal to the decline in the Net Dependable
     Capacity for such Committed Unit shall be assumed for purposes of
     calculating EA under Appendix E (Equivalent Availability) based upon the
     actual number of hours that the Committed Units were operated. This Forced
     Derating adjustment shall be additive to the amount of any Forced Derating
     declared during the same period. In the interval between seasonal capacity
     demonstration tests, Buyer shall have the right, with twenty-four (24)
     hours notice, to Dispatch the Committed Units and require Seller to conduct
     a capacity demonstration test.

          (iii)  Seller shall have the right to reestablish Net Dependable
     Capacity of each Committed Unit pursuant to a capacity test at mutually
     agreeable time(s).

          (iv)   Notwithstanding the provisions of Section 4(b) (Dispatch),
     during any capacity testing Seller shall designate a maximum level for
     Buyer's Dispatch during such capacity testing, which may be above the then
     current Net Dependable Capacity.

          (v)    For Electric Energy generated during any testing of any
     Committed Unit requested by Buyer (except with regard to Unit 9 prior to
     the Unit 9 Commercial Operation Date), the rate to be paid to Seller shall
     be the rates set forth in Section 7(b) (Energy Payments). If the test was
     requested by Seller, the Buyer shall pay Seller a price equal to the price
     set forth in the Unit 9 Test Power Agreement attached hereto as Appendix G
     (Unit 9 Test Power Agreement).

     (c)  Start-Up and Test Power from Unit 9. Seller anticipates that prior
          -----------------------------------
to the Unit 9 Commercial Operations Date, Unit 9 will require between fifty (50)
and one hundred (100) hours for testing and Start-Up purposes and it shall be
sold pursuant to the Unit 9 Test Power Agreement in Appendix G (Unit 9 Test
Power Agreement).

9.   Ancillary Services
     ------------------

                                      31
<PAGE>

     Buyer shall be entitled, at no additional cost, to all Ancillary Services
with respect to the Net Dependable Capacity at the Delivery Point as such
services are described in the Interconnecting Utility's Open Access Transmission
Tariff as filed with FERC, and as Seller is permitted to provide (including
reactive supply and voltage control from generation sources, regulation and
frequency response, operating spinning reserve and supplemental operating
reserve) consistent with any requirements of MAIN, NERC, the Interconnection
Agreement, any ISO and any successors to the functions thereof, provided that
Seller can provide such Ancillary Services without adverse operational impact on
Seller's operations in accordance with the Design Limits in Appendix A (Design
Limits per Committed Unit).

10.  Limitation of Liability and Exclusive Remedies
     ----------------------------------------------

     (a)  In no event or under any circumstances shall either Party (including
such Party's Affiliates and such Party's and such Affiliates' respective
directors, officers, employees and agents) be liable to the other Party
(including such Party's Affiliates and such Party's and such Affiliate's
respective directors, officers, employees and agents) for any special,
incidental, exemplary, indirect, punitive or consequential damages or damages in
the nature of lost profits, whether such loss is based on contract, warranty,
tort or otherwise. A Party's liability under this Agreement shall be limited to
direct, actual damages, and all other damages at law or in equity are waived.

     (b)  Except as provided in Section 10(d) below, Buyer's sole remedies and
Seller's sole liabilities for Seller's failure to meet the Target EA and for
failure to deliver Electric Energy as Dispatched by Buyer shall be the
adjustment to Capacity Payments based upon the Equivalent Availability
Adjustment subject to the limit on Seller's liability for such adjustment set
forth in Section 7(f) (Equivalent Availability Adjustment), Appendix E
(Equivalent Availability), reductions of Buyer's obligation pursuant to Section
19(f)(ii) (Payment of Monthly Capacity Charges) and eventual termination for
extended Forced Outages pursuant to Section 13(d) (Extended Outage).

     (c)  Buyer's sole remedy and Seller's sole liability for monetary damages
due to a delayed Unit 9 Commercial Operations Date shall be the Capacity Payment
reduction set forth in Section 8(a) (Delayed Unit 9 Commercial Operations Date)
and Appendix I (Delay Liquidated Damages for Unit 9), subject to the limitation
on Seller's liability set forth in such Section and Appendix; in addition Buyer
shall have the remedy to terminate as provided in Section 13(e) (Unit 9
Termination).

     (d)  If Seller's failure to comply with a Dispatch order from Buyer is not
caused by (i) Forced Outage or Forced Derating, (ii) Force Majeure Event, or
(iii) Seller negligence or error that in the case of items (i), (ii) or (iii)
causes the level at which a Committed Unit is Available to be less than the Net
Dependable Capacity, Buyer shall be entitled to:

          (A)  to recover from Seller the cost of cover for replacement energy
               obtained by Buyer, and

                                      32
<PAGE>

          (B)  to seek specific performance of this Agreement by Seller by a
               court of competent jurisdiction. Seller agrees not to defend such
               action by pleading that Buyer has an adequate remedy at law, or
               that specific performance is otherwise not available.

11.  Disagreements
     -------------

     (a)  Negotiations. The Parties shall attempt in good faith to resolve all
          ------------
disputes promptly by negotiation, as follows. Any Party may give the other Party
written notice of any dispute not resolved in the normal course of business.
Executives of both Parties at levels one level above the personnel who have
previously been involved in the dispute shall meet at a mutually acceptable time
and place within ten (10) days after delivery of such notice, and thereafter as
often as they reasonably deem necessary, to exchange relevant information and to
attempt to resolve the dispute. If the matter has not been resolved within
thirty (30) days from the referral of the dispute to senior executives, or if no
meeting of senior executives has taken place within fifteen (15) days after such
referral, either Party may initiate arbitration as provided hereinafter. If a
Party intends to be accompanied at a meeting by an attorney, the other Party
shall be given at least three (3) Business Days' notice of such intention and
may also be accompanied by an attorney. All negotiations pursuant to this clause
are confidential.

     (b)  Arbitration.
          -----------

          (i)  If the negotiation process provided for in Section 11(a)
     (Negotiations) has not resolved the dispute, the dispute shall be decided
     by arbitration at Chicago, Illinois in accordance with the Commercial
     Arbitration Rules of the American Arbitration Association. The arbitration
     shall be governed by the United States Arbitration Act (9 U.S.C. (S). 1 et
     seq.), and judgment entered upon the award rendered by the arbitrator(s)
     may be entered in any court having jurisdiction thereof. This agreement to
     arbitrate and any other agreement or consent to arbitrate entered into in
     accordance herewith will be specifically enforceable under the prevailing
     arbitration law of any court having jurisdiction. Notice of demand for
     arbitration must be filed in writing with the other Party to this
     Agreement. The demand must be made within a reasonable time after the
     controversy has arisen. In no event may the demand for arbitration be made
     if the institution of legal or equitable proceedings based on such
     controversy is barred by the applicable statute of limitations. Any
     arbitration may be consolidated with any other arbitration proceedings.
     Either party may join any other interested parties. The award of the
     arbitrator shall be specifically enforceable in a court of competent
     jurisdiction.

          (ii) Either Party shall give to the other written notice in sufficient
     detail of the existence and nature of any dispute proposed to be
     arbitrated. The Parties shall attempt to agree on a person with special
     knowledge and expertise with respect to the matter at issue to serve as
     arbitrator. If the Parties cannot agree on an arbitrator within ten (10)
     days, each shall then appoint one individual to serve as an arbitrator and
     the two (2) arbitrators thus appointed shall select a third arbitrator with
     such special knowledge and expertise to

                                      33
<PAGE>

     serve as chairman of the panel of arbitrators; and such three (3)
     arbitrators shall determine all matters by majority vote; provided however,
     if the two (2) arbitrators appointed by the Parties are unable to agree
     upon the appointment of the third arbitrator within five (5) days after
     their appointment, both shall give written notice of such failure to agree
     to the Parties, and, if the Parties fail to agree upon the selection of
     such third arbitrator within five (5) days thereafter, then either of the
     Parties upon written notice to the other may require such appointment from,
     and pursuant to the rules of, the Chicago office of the American
     Arbitration Association for commercial arbitration. Prior to appointment,
     each arbitrator shall agree to conduct such arbitration in accordance with
     the terms of this Agreement. The arbitration panel may choose legal counsel
     to advise it on the remedies it may grant, procedure, and such other legal
     issues as the panel deems appropriate.

          (iii) The Parties shall have sixty (60) calendar days to perform
     discovery and present evidence and argument to the arbitrators. During that
     period, the arbitrators shall be available to receive and consider all such
     evidence as is relevant and, within reasonable limits due to the restricted
     time period, to hear as much argument as is feasible, giving a fair
     allocation of time to each Party to the arbitration. The arbitrators shall
     use all reasonable means to expedite discovery and to sanction
     noncompliance with reasonable discovery requests or any discovery order.
     The arbitrators shall not consider any evidence or argument not presented
     during such period and shall not extend such period except by the written
     consent of both Parties. At the conclusion of such period, the arbitrators
     shall have forty-five (45) calendar days to reach a determination. To the
     extent not in conflict with the procedures set forth herein, which shall
     govern, such arbitration shall be held in accordance with the prevailing
     rules of the Chicago office of the American Arbitration Association for
     commercial arbitration.

          (iv)  The arbitrators shall have the right only to interpret and apply
     the terms and conditions of this Agreement and to order any remedy allowed
     by this Agreement, but may not change any term or condition of this
     Agreement, deprive either Party of any right or remedy expressly provided
     hereunder, or provide any right or remedy that has been excluded hereunder.

          (v)   The arbitrators shall give a written decision to the Parties
     stating their findings of fact, conclusions of law and order, and shall
     furnish to each Party a copy thereof signed by them within five (5)
     calendar days from the date of their determination.

     Each Party shall pay the cost of the arbitrator or arbitrators, and any
legal counsel appointed pursuant to subparagraph (a) above, with respect to
those issues as to which they do not prevail, as determined by the arbitrator or
arbitrators.

     (c)  Settlement Discussions. The Parties agree that no statements of
          ----------------------
position or offers of settlement made in the course of the dispute process
described in this Section 11 above will be offered into evidence for any purpose
in any litigation or arbitration between the Parties, nor will any such
statements or offers of settlement be used in any manner against either Party in
any

                                      34
<PAGE>

such litigation or arbitration. Further, no such statements or offers of
settlement shall constitute an admission or waiver of rights by either Party in
connection with any such litigation or arbitration. At the request of either
Party, any such statements and offers of settlement, and all copies thereof,
shall be promptly returned to the Party providing the same.

     (d)  Preliminary Injunctive Relief. Nothing in this Section 11 shall
          -----------------------------
preclude, or be construed to preclude, the resort by either Party to a court of
competent jurisdiction solely for the purposes of securing a temporary or
preliminary injunction to preserve the status quo or avoid irreparable harm
pending arbitration pursuant to this Section 11.

     (e)  Obligations to Pay Charges and Perform. If a disagreement should
          --------------------------------------
arise on any matter which is not resolved as provided in Section 11(a)
(Negotiations), then, pending the resolution of the disagreement by arbitration,
Seller shall continue to operate the Committed Units in a manner consistent with
the applicable provisions of this Agreement and Buyer shall continue to pay all
charges and perform all other obligations required in accordance with the
applicable provisions of this Agreement.

12.  Assignment; Transfer of Committed Units
     ---------------------------------------

     (a)  Assignment. Except as set forth in this Section 12, neither Party may
          ----------
assign its rights or obligations under this Agreement without the prior written
consent of the other Party. Either Party may assign this Agreement, without the
consent of the other Party to an Affiliate or the parent company of an
Affiliate, but no such assignment shall release such assignor from any
obligations hereunder whether arising before or after such assignment. For the
purposes of this Section 12(a), any direct transfer or series of direct
transfers (whether voluntary or by operation of law) of a majority of the
outstanding voting equity interests of a Party (or any entity or entities
directly or indirectly holding a majority of the outstanding voting equity
interests of such Party) to any party other than an Affiliate controlled by, or
under common control with, such Party shall be deemed an assignment of this
Agreement.

     (b)  Consent to Assignment to Lender. Buyer consents to Seller's collateral
          -------------------------------
assignment of this Agreement to any Lenders or the granting to any Lenders of a
lien or security interest in any right, title or interest in part or all of the
Committed Units or any or all of Seller's rights under this Agreement for the
purpose of the financing or refinancing of the Committed Units and the Seller's
interconnection facilities; provided, however, that such assignment shall
recognize Buyer's rights under this Agreement. Buyer further agrees to execute
documentation to evidence such consent as reasonably required by Lenders,
provided it shall have no obligation to waive any of its rights under this
Agreement except as expressly provided in this Section 12(b). Buyer recognizes
that such consent may grant certain rights to such Lenders, which shall be fully
developed and described in the consent documents, including (i) this Agreement
shall not be amended or terminated (except for termination pursuant to the terms
of this Agreement) in any material respect without the consent of Lenders, which
consent is not to be unreasonably withheld or delayed, (ii) without extending
the cure period set forth in this Agreement, Lenders shall be given notice of,
and the same opportunity to cure, any Seller breach or default of this
Agreement, provided that notwithstanding the foregoing Lender(s) may have in
addition to the

                                      35
<PAGE>

cure periods set forth herein an additional sixty (60) days from the expiration
of such cure period to cure any breach or default of this Agreement, (iii) if a
Lender forecloses, takes a deed in lieu or otherwise exercises its remedies
pursuant to any security documents, that Buyer shall, at Lender's request,
continue to perform all of its obligations hereunder (subject to Buyer's rights
under Section 13 (Default, Termination and Remedies)), and Lender or its nominee
may perform in the place of Seller, and may assign this Agreement to another
party in place of Seller (provided either (A) such proposed assignee is
creditworthy and possesses experience and skill in the operation of electric
generation plants similar in nature to the Committed Units or (B) Buyer consents
to the assignment to such proposed assignee, which consent shall not be
unreasonably withheld (it being understood that Buyer may, in deciding whether
to grant such consent, take into account the creditworthiness and the electric
generation plant experience and skill of the proposed assignee)), and enforce
all of Seller's rights hereunder, (iv) that Lender(s) shall have no liability
under this Agreement except during the period of such Lender(s)' ownership
and/or operation of the Committed Units, (v) that Buyer shall accept performance
in accordance with this Agreement by Lender(s) or its (their) nominee and (vi)
that Buyer shall make representations and warranties to Lender(s) as Lender(s)
may reasonably request with regard to (A) Buyer's corporate existence, (B)
Buyer's corporate authority to execute, deliver, and perform this Agreement, (C)
the binding nature of (y) the document evidencing Buyer's consent to assignment
to Lenders and (z) this Agreement on Buyer, (D) receipt of regulatory approvals
by Buyer with respect to its execution and performance under this Agreement, and
(E) whether any defaults by Seller are known by Buyer then to exist under this
Agreement. The documentation that Lenders may require under this Section 12(b)
may include an opinion of counsel substantially in the form of Appendix H (Form
of Opinion). Seller agrees to reimburse Buyer for fees and expenses incurred by
Buyer in connection with such opinion.

13.  Default, Termination and Remedies
     ---------------------------------

     (a)  Seller Default. The occurrence and continuation of any of the
          --------------
following events or circumstances at any time during the Term, except to the
extent caused by, or resulting from, an act or omission of Buyer in breach of
this Agreement, shall constitute an event of default by Seller ("Seller Event of
Default"):

          (i)    Seller fails to pay any sum due from it hereunder on the
     due date thereof and such failure is not remedied within fifteen (15)
     days after receipt of written notice from Buyer of such failure
     requiring its remedy;

          (ii)   Seller shall fail to have qualified operators either on
     site or on call at remote locations for operation of the Facility for
     a period of seven (7) consecutive days.

          (iii)  Bankruptcy of Seller; or

          (iv)   Seller fails in any material respect to perform or comply
     with any other obligation in this Agreement on its part to be observed
     or performed (other than Seller's obligations to meet Target EA or to
     comply with Buyer's Dispatch

                                      36
<PAGE>

     orders, the exclusive remedies for which are enumerated in Section
     10(b) (Limitations of Liability and Exclusive Remedies) which failure
     adversely affects Buyer, and if reasonably capable of remedy, is not
     remedied within sixty (60) days after Buyer has given written notice
     to Seller of such failure and requiring its remedy; provided, however,
     that if such failure cannot reasonably be cured within such period of
     sixty (60) days, such failure shall not constitute a Seller Event of
     Default if Seller has promptly commenced and is diligently proceeding
     to cure such default.

     (b)  Buyer Default. The occurrence and continuation of any of the following
          -------------
events or circumstances at any time during the Term, except to the extent caused
by, or resulting from, an act or omission of Seller in breach of this Agreement,
shall constitute an event of default by Buyer ("Buyer Event of Default"):

          (i)    Buyer fails to pay any sum due from it hereunder on the
     due date thereof and such failure is not remedied within fifteen (15)
     days after receipt of written notice from Seller of such failure
     requiring its remedy;

          (ii)   Buyer's Bankruptcy; or

          (iii)  Buyer fails in any material respect to perform or comply
     with any other obligation in this Agreement on its part to be observed
     or performed which failure adversely affects Seller, and if reasonably
     capable of remedy, is not remedied within sixty (60) days after Seller
     has given written notice to Buyer of such failure and requiring its
     remedy; provided, however, that if such failure cannot reasonably be
     cured within such period of sixty (60) days, such failure shall not
     constitute a Buyer Event of Default if Buyer has promptly commenced
     and is diligently proceeding to cure such default.

     (c)  Remedies.
          --------

          (i)    Upon the occurrence and during the continuance of a Buyer Event
     of Default or a Seller Event of Default, the non-defaulting Party may at
     its discretion terminate this Agreement upon thirty (30) days prior written
     notice to the Party in default.

          (ii)   If a Buyer Event of Default under Section 13(b) (Buyer Default)
     has occurred and is continuing, Seller shall have the right to sell
     Electric Energy represented by the Net Dependable Capacity on a daily basis
     to third parties during the continuance of such Buyer Event of Default.

     (d)  Extended Outage. Buyer may terminate this Agreement with regard to a
          ---------------
Committed Unit (other than Unit 9) upon thirty (30) days prior written notice to
Seller if a (i) Forced Outage, Planned Outage or Maintenance Outage of such
Committed Unit that is not excused by Force Majeure Event prevents Seller from
substantially performing its obligations hereunder for a consecutive period of
one hundred twenty (120) days, provided that if Seller

                                      37
<PAGE>

demonstrates that it has taken significant steps toward remediating the
circumstances which led to such Forced Outage, Planned Outage or Maintenance
Outage and certifies in writing to Buyer that such outage will end within three
hundred sixty five (365) days of its commencement (and such outage in fact ends
within such three hundred sixty five (365) days), then Buyer may not so
terminate this Agreement with regard to such Committed Unit. To the extent
Seller provides Substitute Electric Energy and Capacity in accordance with the
terms of this Agreement, the one hundred twenty (120) or three hundred sixty-
five (365) day periods specified in this Section 13(d) shall be extended on a
day for day basis.

     (e)  Unit 9 Termination. Except to the extent the delay results from a
          ------------------
Force Majeure Event, if Unit 9 has not achieved the Unit 9 Commercial Operations
Date by midnight, May 31, 2002, Buyer may terminate its obligations under this
Agreement with regard to Unit 9. In the event of such a termination of the Unit
9 obligation, neither Party shall have any further liability to the other with
regard to Unit 9.

14.  Representations and Warranties
     ------------------------------

     (a)  Representations and Warranties of Seller.  Seller hereby makes the
          ------------------------------------------
following representations and warranties to Buyer:

          (i)    Seller is a limited liability company duly organized,
     validly existing and in good standing under the laws of the State of
     Delaware, is qualified to do business in the State of Illinois and has
     the legal power and authority to own its properties, to carry on its
     business as now being conducted and to enter into this Agreement and,
     subject to the receipt of the regulatory approvals set forth in
     Section 6(a) (Standard of Operation), carry out the transactions
     contemplated hereby and perform and carry out all covenants and
     obligations on its part to be performed under and pursuant to this
     Agreement (except with regard to Seller's rights in Unit 9 which shall
     be transferred from an Affiliate of Seller to Seller prior to the Unit
     9 Commercial Operations Date).

          (ii)   The execution, delivery and performance by Seller of this
     Agreement have been duly authorized by all necessary action, and do
     not and will not require any consent or approval of Seller's
     Management Committee or equity holders other than that which has been
     obtained.

          (iii)  The execution and delivery of this Agreement, the
     consummation of the transactions contemplated hereby and the
     fulfillment of and compliance with the provisions of this Agreement,
     do not and will not conflict with or constitute a breach of or a
     default under, any of the terms, conditions or provisions of any legal
     requirements, or any organizational documents, agreement, deed of
     trust, mortgage, loan agreement, other evidence of indebtedness or any
     other agreement or instrument to which Seller is a party or by which
     it or any of its property is bound, or result in a breach of or a
     default under any of the foregoing, and Seller has obtained all
     permits, licenses, approvals and

                                    38
<PAGE>

     consents of governmental authorities required for the lawful
     performance of its obligations hereunder.

          (iv)   This Agreement constitutes the legal, valid and binding
     obligation of Seller enforceable in accordance with its terms, except
     as such enforceability may be limited by bankruptcy, insolvency,
     reorganization or similar laws relating to or affecting the
     enforcement of creditors' rights generally or by general equitable
     principles, regardless of whether such enforceability is considered in
     a proceeding in equity or at law.

          (v)    There is no pending, or to the knowledge of Seller,
     threatened action or proceeding affecting Seller before any
     governmental authority which purports to affect the legality, validity
     or enforceability of this Agreement.

     (b)  Representations and Warranties of Buyer.  Buyer hereby makes the
          ---------------------------------------
following representations and warranties to Seller:

          (i)    Buyer is a limited liability company duly organized,
      validly existing and in good standing under the laws of the State of
      Pennsylvania, is qualified to do business in the State of Illinois
      and has the legal power and authority to own its properties, to carry
      on its business as now being conducted and to enter into this
      Agreement and carry out the transactions contemplated hereby and
      perform and carry out all covenants and obligations on its part to be
      performed under and pursuant to this Agreement.

          (ii)   The execution, delivery and performance by Buyer of this
      Agreement have been duly authorized by all necessary action, and do
      not and will not require any consent or approval of Buyer's
      Management Committee or equity holders other than that which has been
      obtained.

          (iii)  The execution and delivery of this Agreement, the
      consummation of the transactions contemplated hereby and the
      fulfillment of and compliance with the provisions of this Agreement
      do not and will not conflict with or constitute a breach of or a
      default under, any of the terms, conditions or provisions of any
      legal requirements, or its articles of incorporation or bylaws, or
      any deed of trust, mortgage, loan agreement, other evidence of
      indebtedness or any other agreement or instrument to which Buyer is a
      party or by which it or any of its property is bound, or result in a
      breach of or a default under any of the foregoing.

          (iv)   This Agreement constitutes the legal, valid and binding
      obligation of Buyer enforceable in accordance with its terms, except
      as such enforceability may be limited by bankruptcy, insolvency,
      reorganization or similar laws relating to or affecting the
      enforcement of creditors' rights generally or by general

                                    39
<PAGE>

     equitable principles, regardless of whether such enforceability is
     considered in a proceeding in equity or at law.

         (v)    There is no pending, or to the knowledge of Buyer, threatened
     action or proceeding affecting Buyer before any governmental authority
     which purports to affect the legality, validity or enforceability of this
     Agreement.

15.  Indemnification
     ---------------

     Each Party shall indemnify and hold harmless the other Party, and its
officers, directors, agents and employees from and against any and all claims,
demands, actions, losses, liabilities, expenses (including reasonable legal fees
and expenses), suits and proceedings of any nature whatsoever for personal
injury, death or property damage to each other's property or facilities or
personal injury, death or property damage to third parties (collectively
"Liabilities") caused by the gross negligence or willful misconduct of the
indemnifying Party that arise out of or are in any manner connected with the
performance of this Agreement, except to the extent such injury or damage is
attributable to the gross negligence or willful misconduct of, or breach of this
Agreement by, the Party seeking indemnification hereunder. Title, and all risk
relating to, all Electric Energy purchased by Buyer under this Agreement shall
pass to Buyer at the Point of Delivery, and Buyer shall indemnify Seller from
all Liabilities related to Electric Energy (or Substitute Electric Energy) once
sold and delivered at the Point of Delivery; and Seller shall indemnify Buyer
for all Liabilities related to Electric Energy (or Substitute Electric Energy)
prior to its delivery at the Point of Delivery.

16.  Notices
     -------

     Unless otherwise provided in this Agreement, any notice, consent or other
communication required to be made under this Agreement shall be in writing and
shall be delivered to the address set forth below or such other address or
persons as the receiving Party may from time to time designate by written
notice:

          If to Buyer, to:

               For Billing:

               Exelon Generation Company
               Attention:  Accounting
               300 Exelon Way
               Kennett Square, PA  19348
               Telephone: (610) 765-6648
               Fax: (610) 765-6555

               For Operations:

               Exelon Generation Company

                                      40
<PAGE>

               Attention: Trading Floor
               300 Exelon Way
               Kennett Square, PA  19348
               Telephone: (610) 765-6500
               Fax: (610) 765-6583

               For Legal:

               Exelon Generation Company
               Attention: Marjorie P. Philips, Esq.
               300 Exelon Way
               Kennett Square, PA  19348
               Telephone: (610) 765-6610
               Fax: (610) 767-7610

          If to Seller, to:

               Elwood Energy LLC
               c/o  Dominion Energy, Inc.
               5000 Dominion Blvd
               Glen Allen, VA 23060
               Attention: General Manager
               Fax: (804) 273-2303

          With a copy to:

               Elwood Energy LLC
               c/o McGuireWoods LLP
               901 E. Cary Street
               Richmond, VA 23219
               Attention: Mark J. La Fratta, Esq.
               Telephone:(804) 775-1106
               Fax: (804) 698-2096

All notices shall be effective when received.

17.  Confidentiality
     ---------------

     Each Party agrees that it will treat in confidence all documents, materials
and other information marked "Confidential" or "Proprietary" by the disclosing
Party ("Confidential Information") which it shall have obtained during the
course of the negotiations leading to, and its performance of, this Agreement
(whether obtained before or after the date of this Agreement). Confidential
Information shall not be communicated to any third party (other than, in the
case of Seller, to its Affiliates, to its counsel, accountants, financial or tax
advisors, or insurance consultants, to prospective partners and other investors
in Seller and their counsel, accountants,

                                      41
<PAGE>

or financial or tax advisors, or in connection with its financing or
refinancing; and in the case of Buyer, to its Affiliates, or to its counsel,
accountants, financial advisors, tax advisors or insurance consultants). As used
herein, the term "Confidential Information" shall not include any information
which (i) is or becomes available to a Party from a source other than the other
Party, (ii) is or becomes available to the public other than as a result of
disclosure by the receiving Party or its agents or (iii) is required to be
disclosed under applicable law or judicial, administrative or regulatory
process, but only to the extent it must be disclosed.

18.  Governing Law
     -------------

     This Agreement shall be construed in accordance with and governed by the
laws of the State of Illinois without regard to its conflicts of laws
provisions.

19.  Force Majeure
     -------------

     (a)  Definition. For the purposes of this Agreement, "Force Majeure Event"
          ----------
means an event, condition or circumstance beyond the reasonable control of the
Party affected (the "Affected Party") which, despite all reasonable efforts of
the Affected Party to prevent it or mitigate its effects, prevents the
performance by such Affected Party of its obligations hereunder. Subject to the
foregoing, "Force Majeure Event" as to either Party, shall include:

          (i)    explosion and fire (in either case to the extent not
     attributable to the negligence of the Affected Party);

          (ii)   flood, earthquake, storm, or other natural calamity or act of
     God;

          (iii)  strike or other labor dispute not directed at Seller relative
to its labor agreements;

          (iv)   war, insurrection or riot;

          (v)    actions or failure to act by governmental entities or
     officials, failure to obtain governmental permits or approvals despite
     timely application therefor and due diligence on the part of Seller in the
     pursuit thereof;

          (vi)   changes in Requirements of Law affecting operation of a
     Committed Unit (for the purposes of this subsection, the change must affect
     the operation in a manner other than a solely economic affect); and

          (vii)  lack of fuel caused by a Force Majeure Event (as defined in
     this Agreement) experienced by a Committed Unit's fuel supplier or
     transporter (as if for purposes of this Section 19(a)(vii) such fuel
     supplier or transporter is the Affected Party).

     (b)  Events not a Force Majeure Event.  For the purposes of this Agreements
          --------------------------------
the term "Force Majeure Event" shall not include:

                                      42
<PAGE>

          (i)    a Planned Outage;

          (ii)   a Maintenance Outage;

          (iii)  loss of Buyer's markets;

          (iv)   Buyer's inability to economically use or resell the Electrical
Energy or Capacity purchased hereunder;

          (v)    Economic hardship for Seller, which shall include but not be
limited to:

                 (A)   Seller's ability to sell the Capacity or Electrical
                       Energy to be sold hereunder at a price greater than the
                       price set forth herein; or

                 (B)   Seller's ability to reduce its costs by not operating the
                       Committed Units as Dispatched by Buyer; or

          (vi)   Causes or events affecting the performance of third-party
                 suppliers of goods or services, including, but not limited to,
                 natural gas, suppliers and providers of natural gas
                 transportation service, except to the extent caused by an event
                 that fits the definition of Force Majeure Event under this
                 Agreement.

     (c)  Obligations Under Force Majeure.
          -------------------------------

          (i)    If either Party is rendered unable, wholly or in part, by a
     Force Majeure Event, to carry out some or all of its obligations under this
     Agreement (other than obligations to pay money) despite all reasonable
     efforts of such Affected Party to prevent or mitigate its effects, then,
     during the continuance of such inability, the obligation of such Affected
     Party to perform the obligations so affected shall be suspended.

          (ii)   An Affected Party relying on a Force Majeure Event shall give
     written notice of such Force Majeure Event to the other Party as soon as
     practicable after such event occurs, which notice shall include information
     with respect to the nature, cause and date of commencement of the
     occurrence(s), and the anticipated scope and duration of the delay. Upon
     the conclusion of the Force Majeure Event, the Affected Party heretofore
     relying on such Force Majeure Event shall, with all reasonable dispatch,
     take all steps reasonably necessary to resume the obligation(s) previously
     suspended.

          (iii)  Notwithstanding the foregoing, a Party shall not be excused
     under this Section 20, (y) for any non-performance of its obligations under
     this Agreement having a greater scope or longer period than is justified by
     the Force Majeure Event, or (z) for the performance of obligations that
     arose prior to the Force Majeure Event.

                                      43
<PAGE>

     (d)  Force Majeure Not Forced Outage. Any periods of Forced Outage or
          -------------------------------
Forced Derating caused by Force Majeure Events shall not be included as Forced
Outage Hours, or Equivalent Forced Derated Hours for calculation of EA.

     (e)  Continued  Payment  Obligation. Except as provided in Section 19(f)
          ------------------------------
(Payment of Monthly Capacity Charges), a Party's obligation to make payments
shall not be suspended by a Force Majeure Event.

     (f)  Payment of Monthly Capacity Charges.
          -----------------------------------

          (i)    Buyer shall not be relieved of its obligation to pay the
     Monthly Capacity Charges as a result of the occurrence, and the
     continuance, of a Force Majeure Event listed in Sections 19(a)(ii) or (iv)
     (Definition), and

          (ii)   Except to the extent that Seller provides Substitute Electric
     Energy, during any period of a Force Majeure Event (other than those listed
     in Sections 19 (a)(ii) and (iv)) Buyer shall be relieved from its
     obligation to pay monthly Capacity Charges (prorated daily) solely to the
     extent (y) the level at which a Committed Unit is Available is less than
     the Net Dependable Capacity, and (z) the Committed Unit is Available at a
     level that is less than Net Dependable Capacity as a result of a Force
     Majeure Event (other than as listed in Sections 19(a)(ii) or (iv)).

20.  Intentionally Omitted
     ---------------------

21.  Taxes
     -----

     (a)  Applicable Taxes. Each Party shall be responsible for the payment of
          ----------------
all taxes imposed on its income or net worth. Except as provided in Section
6(f)(v) (Fuel and Emissions) and this Section 21, Seller shall be responsible
for the payment of all present or future federal, state, municipal or other
lawful taxes applicable by reason of the operation of the Facility or assessable
on Seller's property or operations. Buyer shall pay all existing and any new
sales, use, excise, and any other similar taxes, if any, imposed or levied by a
governmental agency on the sale or use of or payments for the Electric Energy,
Substitute Electric Energy, Ancillary Services, and Net Dependable Capacity sold
and delivered under this Agreement arising at or after the Point of Delivery.

     Buyer shall indemnify, defend, and hold Seller harmless from any liability
for all such taxes for which Buyer is responsible. Seller shall indemnify,
defend, and hold Buyer harmless from any liability from all such taxes for which
Seller is responsible. Buyer shall reimburse Seller promptly on demand for the
amount of any such tax that is Buyer's responsibility hereunder that Seller
remits, plus any penalties and interest incurred and remitted, except such
penalties as result from Seller's conduct. Likewise, Seller shall reimburse
Buyer promptly on demand for the amount of any such tax that is Seller's
responsibility hereunder that Buyer remits, plus any penalties, interest
incurred and remitted, except such penalties as a result from Buyer's conduct.

                                      44
<PAGE>

     (b)  Contested Taxes. Neither Party shall be required to pay any such tax,
          ---------------
assessment, charge, levy, account payable or claim if the validity,
applicability or amount thereof is being contested in good faith by appropriate
actions or proceedings which will prevent the forfeiture or sale of any property
utilized under this Agreement or any material interference with the use thereof.

     (c)  Other Charges. Seller and Buyer will pay and discharge all lawful
          -------------
assessments and governmental charges or levies imposed upon it or in respect to
all or any part of its property or business, all trade accounts payable in
accordance with usual and customary business terms, and all claims for work,
labor, or materials which, if unpaid might become a lien or charge upon any of
its property.

22.  Miscellaneous Provisions
     ------------------------

     (a)  Non-Waiver. The failure of either Party to insist in any one or more
          ----------
instances upon strict performance of any provisions of this Agreement, or to
take advantage of any of its rights hereunder, shall not be construed as a
waiver of any such provisions or the relinquishment of any such right or any
other right hereunder, which shall remain in full force and effect.

     (b)  Third Party Beneficiaries. This Agreement is intended solely for
          -------------------------
the benefit of the Parties hereto. Nothing in this Agreement shall be construed
to create any duty to, or standard of care with reference to, or any liability
to, any person not a Party to this Agreement, other than the Lenders.

     (c)  Relationship of Parties. This Agreement shall not be interpreted or
          -----------------------
construed to create an association, joint venture, or partnership between the
Parties or to impose any partnership obligation or liability upon either Party.
Seller is an independent contractor and neither Party shall have any right,
power or authority to enter into any agreement or undertaking for, or to act on
behalf of, or to act as or be an agent or representative of, or to otherwise
bind, the other Party.

     (d)  Successors and Assigns. This Agreement shall inure to the benefit of
          ----------------------
and be binding upon the successors and permitted assigns of the Parties.

23.  Entire Agreement and Amendments
     -------------------------------

     This Agreement (together with the Transmission Easement) supersedes all
previous representations, understandings, negotiations and agreements either
written or oral between the Parties hereto or their representatives with respect
to the subject matter hereof (including the Power Purchase Agreement Term Sheet
between Buyer and Seller dated February 15, 1999 and the Amended and Restated
Agreement) and constitutes the entire agreement of the Parties with respect to
the subject matter hereof. No amendments or changes to this Agreement shall be
binding unless made in writing and duly executed by both Parties. Except to the
extent expressly provided otherwise herein with respect to the Interconnection
Agreement, this Agreement shall

                                      45
<PAGE>

be deemed to have been negotiated without reference to any other arrangement to
which the Parties (or their respective Affiliates) are party (any such
arrangement and the Interconnection Agreement being referred to herein as an
"Other Contract"). Nothing contained herein is intended to reflect the Parties'
interpretation of any Other Contract, and nothing contained in any Other
Contract shall be used as an aid in interpreting this Agreement. Without
limiting the generality of the foregoing, any similarity of, or difference
between, any provision hereof and any provision of an Other Contract is
irrelevant to the meaning of the provisions hereof or thereof.

                                      46
<PAGE>

          IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date set forth at the beginning of this Agreement.

                                       Exelon Generation Company, LLC

                                       By   /s/ Ian P. McLean
                                          --------------------------------------
                                          Name:   Ian P. McLean
                                          Title: Senior Vice-President

                                       Elwood Energy LLC

                                       By   /s/ Tony W. Belcher
                                          --------------------------------------
                                          Name:   Tony W. Belcher
                                          Title: General Manager
<PAGE>

                                  APPENDIX A

                       DESIGN LIMITS PER COMMITTED UNIT

Buyer shall have the right to Dispatch the Facility up to the Net Dependable
Capacity with the following restrictions:

     (a)  Maximum takes. Buyer may not Dispatch more than one thousand five
          -------------
hundred (1500) hours per Committed Unit (or seven thousand five hundred (7500)
hours for all five (5) Committed Units, limited to no more than one thousand
five hundred (1500) hours per Committed Unit) per Contract Year (except with
regard to Unit 9 in the first Contract Year as provided in Section 6(b)(iii)
(Electric Energy Generation)). As set forth in Section 8(b) (Capacity Tests),
during 2001, Seller may take up to one hundred (100) hours for Unit 9 during the
Start-Up and testing of Unit 9 in accordance with Section 8(c) prior to the Unit
9 Commercial Operations Date. These hours will count towards the one thousand
five hundred (1500) hour/year limitation of Unit 9. Seller will consider
requests by Buyer for Seller to seek the authorization to increase the one
thousand five hundred (1500) hour limitation. Seller shall make reasonable
efforts to allocate Buyer's Dispatch orders equally across all five (5)
Committed Units over the course of a Contract Year. Once operating hours on
individual Committed Units reach one thousand five hundred (1500) hours, Seller
shall notify Buyer and Seller shall not be obligated to respond to Dispatch
orders for Committed Units that have reached such one thousand five hundred
(1500) hour limit.

     (b)  Minimum/maximum loads. Buyer may Dispatch Committed Unit(s) at any
          ---------------------
level per Committed Unit between sixty percent (60%) of Net Dependable Capacity
and one hundred percent (100%) of its Net Dependable Capacity. Seller shall have
the sole discretion as to (i) which Committed Units are operated to meet the
Dispatch order or (ii) whether to meet such Dispatch order with delivery of
Substitute Electric Energy from the Elwood Energy Station and subject to mutual
agreement if delivered from a source outside the Elwood Energy Station. Each
hour that a Committed Unit is operating, regardless of the output, will count
towards the one thousand five hundred (1500) hour/year limitation per Committed
Unit.

     (c)  Start-Up and Dispatch Notification.
          ----------------------------------

          (1)  Start-Up: During Summer On-Peak Hours, except for a simultaneous
               --------
request of four (4) or more of Committed Units 1, 2, 3, 4 or 9, Seller will
initiate the Start-Up for a Committed Unit(s) within one hour after being
notified of Buyer's Dispatch order. For a Dispatch request of four (4) units
simultaneously, Seller requires a minimum of one (1) hour and fifteen (15)
minutes. For a Dispatch request of all five (5) units simultaneously, Seller
requires a minimum of one (1) hour and twenty-five (25) minutes. The exact
limits of the Committed Units' Start-Up capabilities will be verified or
adjusted by Seller with the Buyer prior to June 1, 2001. This will include
maximum load definitions, ramp times, times required to synchronize to the power
grid, etc. During all other hours, that being Summer Non-Peak and Non-Summer On-
Peak Hours, a four (4) hour notification will apply.

                                      A-1
<PAGE>

          (2)  During the Non-Summer Months only, in the event that a Critical
Day has been declared for the next calendar day, Seller will notify Buyer by
0800 of this fact on the day of declaration. Consequently, Buyer shall provide
Seller with a Dispatch schedule, if any, by 0830 of that same day of
declaration. After receipt of this initial schedule, if any should occur, it
shall be at Seller's sole discretion whether to accept Buyer's subsequent
request for changes to this Dispatch schedule.

          (3)  During the Non-Summer Months, Buyer shall be limited to an
equivalent of sixty (60) units-hours/day; for example, five (5) units operating
for twelve (12) hours/day, or four (4) units operating for fifteen (15)
hours/day, etc. If Buyer requires greater than sixty (60) units-hours/day,
Seller will quote Buyer its reasonable operating cost to extend the schedule.
During the Summer Months, Buyer shall be limited to an equivalent of eighty (80)
units-hours/day, i.e., five (5) units operating for sixteen (16) hours/day or
four (4) units operating twenty (20) hours/day, etc. If Buyer requires greater
than eighty (80) units-hours/day during the Summer Months, Seller will quote
Buyer its reasonable operating cost to extend the schedule.

     (d)  Load Range and Ramp Times. Buyer may Dispatch Committed Unit(s) at any
          -------------------------
level per Committed Unit between sixty percent (60%) of Net Dependable Capacity
and one hundred percent (100%) of its Net Dependable Capacity. Once a Committed
Unit Starts-Up, the Committed Unit will ramp to base load of sixty percent (60%)
of Net Dependable Capacity within twenty (20) minutes. The ramp up or ramp down
rate of each Committed Unit is approximately 8.3% of Net Dependable Capacity per
minute.

     (e)  Minimum on-line and off-line times. Four (4) hour minimum run-time
          ----------------------------------
per Start-Up and two (2) hour minimum off-time between Start-Ups.

     (f)  Starting Power Requirements. The power requirements for Start-Up of
          ---------------------------
all five (5) Committed Units of the Facility are 750 kWh per Committed Unit,
with a maximum demand of 7.5 MW per Committed Unit for a three (3) minute
duration (15 MW demand when starting two (2) Committed Units simultaneously).

     (g)  Estimated Reactive Capability Curve. The provision of Ancillary
          -----------------------------------
Services pursuant to this Agreement (including the terms of Section 9 (Ancillary
Services) hereof) shall be consistent with the curve attached hereto as Schedule
A-1.

                                      A-2
<PAGE>

                                  APPENDIX B

                               MAIN GUIDE NO. 3

                               MAIN Guide No. 3A
                            (Formerly Guide No. 3)
                               (Revision No. 3)
                                 June 8, 1995
                           Approved November 9, 1995

                        PROCEDURE FOR THE UNIFORM RATING
                             OF GENERATING EQUIPMENT
                             -----------------------

          The Mid-America Interconnected Network, Inc. bylaws provide for the
coordination of planning, construction and utilization of generation and
transmission facilities on a regional basis for reliability of electric bulk
power supply. This MAIN Guide presents the criteria for uniform rating of
generating equipment on the systems of MAIN members.

I.   General

          Generating capability to meet the system load and provide the required
amount of reserves is necessary to assure the maximum degree of service
reliability. This generating capability must be accounted for in a uniform
manner which assures the use of consistently attainable values for planning and
operating the system.

          Procedures are herein established for rating generating units in
service or which will be brought into service in the future. These procedures
define the framework under which the ratings are to be established while
recognizing the necessity of exercising judgement in their determination. The
tests required are functional and do not require special instrumentation. They
are designed to demonstrate that the ratings can be obtained for the time
periods required under normal operating conditions for the equipment being
tested.

          It is intended that the terms defined and the ratings established
pursuant to this MAIN Guide shall be used for all MAIN purposes, including
determining generation reserves for both planning and operating purposes,
scheduling maintenance, and preparation of reports or other information for
industry organizations, news media, and governmental agencies.

II.  Uniform Ratings

          Each MAIN member shall establish Monthly Net Capability ratings for
each generating unit and station on the member's system. The Monthly Net
Capability is the net power output which can be obtained for the period
specified on a monthly

                                      B-1
<PAGE>

adjusted basis with all equipment in service under average conditions of
operation and with equipment in an average state of maintenance. The Monthly Net
Capability should include generating capability which is temporarily out of
service for maintenance or repair.

          The monthly adjustments required to develop Monthly Net Capability are
intended to include such seasonal variations as ambient temperature, condensing
water temperature and availability, fuels, steam heating loads, reservoir
levels, and scheduled reservoir discharge.

          Generating capability shall be tested annually to demonstrate and
verify that the Monthly Net Capability can be achieved in the month of the test.
It is intended that frequent changes in Monthly Net Capability be avoided. The
reported capability is, therefore, a figure which should not be altered until
the accumulated evidence of tests and analyses or operating experience indicate
that a long-term change has taken place. The Monthly Net Capability shall be
confirmed annually and revised at other times when necessary. Confirmations and
revisions will be submitted to the MAIN Coordination Center.

III. General Guides for Establishing Capability Ratings

          The following general guides shall be applied in establishing Monthly
Net Capability:

          A.   The total Monthly Net Capability rating shall be that available
     regularly to satisfy the daily load patterns of the member and shall be
     available for four continuous hours or more. The rating established must
     not require a period of operation at a reduced level during a system's
     remainder of the peak period to recover the Monthly Net Capability.

          B.   The Monthly Net Capability will be determined separately for each
     generating unit in a power plant where the input to the prime mover of the
     unit is independent of the others. The Monthly Net Capability will be
     determined as a group for commonheader steam plants or multiple-unit hydro
     plants and each unit assigned a rating by apportioning the combined
     capability among the units.

          C.   Monthly Net Capability, as reported, will not be reduced to
     provide regulating margin or spinning reserve. It will reflect operation at
     the power factor level at which the generating equipment is normally
     expected to be operated over the daily peak load period. It will exclude
     the temporary higher output attainable immediately after a new unit goes
     into service or immediately after an overhaul.

          D.   Extended capability of a unit or plant obtained through bypassing
     of feedwater heaters, by utilizing other than normal steam conditions, or
     by abnormal operation of auxiliaries in steam plants; or by abnormal
     utilization of reservoir storage in hydro plants; or by abnormal operation
     of combustion

                                      B-2
<PAGE>

     turbines or diesel units; may be included in the Monthly Net Capability if
     the following conditions are met:

               1.   The extended capability based on such conditions will be
          available for a period of not less than four continuous hours when
          needed and meets the restrictions of Section III-A.

               2.   Normal procedures have been established so that this
          capability will be made available promptly when requested by the
          dispatcher.

          E.   The Monthly Net Capability established for nuclear units will be
     determined taking into consideration the fuel management program and any
     restrictions imposed by governmental agencies.

          F.   The Monthly Net Capability established for hydro-electric plants,
     including pumped-hydro, will be determined taking into consideration the
     reservoir storage program and any restrictions imposed by governmental
     agencies and will be based on median hydro conditions.

IV.  Testing Procedures to Demonstrate Capability

          A.   General Procedure for Testing

               1.   Ratings will be confirmed annually or more frequently if
          appropriate to demonstrate the Monthly Net Capability. If adequate
                                                                 -----------
          data are available to demonstrate the capability during normal peak
          -------------------------------------------------------------------
          load period operation, no special test is required. Peaking units and
          --------------------------------------------------
          cold reserve units which are not operated frequently shall be tested
          at such intervals as necessary to assure that capability is available
          to meet operating reserve requirements.

               2.   If the total capability of a plant is materially affected by
          the interaction of its parts, a test of the entire plant will be
          performed to demonstrate Monthly Net Capability.

               3.   All equipment when tested will be in normal operating
          condition with all auxiliary equipment needed for normal operation in
          service and with provision for extended capability if this capability
          is to be included in Monthly Net Capability. Energy consumption by
          auxiliary facilities common to the entire plant (for example, coal-
          handling or lighting) will be distributed over the appropriate units
          in the plant, and will represent the consumption normally experienced
          during the high-load period of the day.

                                      B-3
<PAGE>

               4.   It is intended that the test loadings should be maintained
          at a constant level. The reported test results will be no greater than
          the MWh/hr integrated output for the test period.

     B.   Steam Turbo-Generation Unit Tests, Excluding Steam Turbines with Gas
          or Oil Fired Boilers

               1.   The test period for steam turbo-generator units, including
          both fossil fuel and nuclear reactor steam generators, will be not
          less than four continuous hours.

               2.   Generating unit net capability as affected by the turbine
          exhaust pressure will be corrected to the average for the past five
          years of the monthly averages of the daily maximum circulating water
          temperatures for the month of the test. Steam conditions will
          correspond to the operating standard established by the member for the
          unit or plant. The steam generator will be operated with the regularly
          available type and quality of fuel.

     C.   Tests of Combustion Turbine and Diesel Units and Steam Turbines with
          Gas or Oil Fired Boilers

               1.   The test period for combustion turbine and diesel units and
          steam turbines with gas or oil fired boilers will be of sufficient
          duration to permit stabilized operating conditions to be attained.

               2.   Ambient temperature conditions will be corrected to the
          average for the past five years of the monthly maximum temperatures
          for the month of the test. Where evaporative coolers are used, the
          temperature at the discharge of the evaporative coolers shall be the
          basis for ambient temperature corrections.

               3.   Generating unit net capability as affected by the turbine
          exhaust pressure will be corrected to the average for the past five
          years of the monthly averages of the daily maximum circulating water
          temperatures for the month of the test. Steam conditions will
          correspond to the operating standard established by the member for the
          unit or plant. The steam generator will be operated with the regularly
          available type and quality of fuel.

     D.   Hydro-Electric Unit Tests

               1.   The test period for hydro-electric units, including pumped-
          hydro units, will be not less than one hour.

                                      B-4
<PAGE>

               2.   Water conditions will be corrected to the median conditions
          for the month of the test.

     E.   Reactivated Unit Tests

          Deactivated generating equipment which is not being reported and is
being returned to active status shall be tested within thirty days to
demonstrate its Monthly Net Capability.

V.   Reporting Procedures

          Each member shall submit the required data on the included Uniform
Rating Forms to the MAIN Coordination Center annually on or before November 1
for the following calendar year. Each annual report shall cover all existing
units, planned Start-Up of new units, and planned retirements of units and shall
consist of the following:

               1.   A letter identifying those units whose rating has not
          changed, showing the dates of latest tests confirming capabilities.

               2.   Completely revised forms (Form A and B-1, B-2, or B-3) for
          units on which a change has occurred.

               3.   Completely revised form (Form A) showing planned additions
          or retirements beginning with the month of commercial operation or
          month of retirement.

Between annual reporting, revised forms shall be submitted as necessary for new
units placed in commercial operation, units retired, and for units where tests
show the rating has changed. Any change in additions, retirements, or ratings
shall be submitted within 30 days of the addition, retirement, or test. In this
manner, by each November 1, all test data should be current. However, the letter
should be submitted confirming the dates of tests.

          The MAIN Coordination Center will analyze and review the annual
reporting for completeness and correctness and report the need for clarification
to the member concerned. The MAIN Coordination Center will maintain the updated
set of reports, including current changes as they occur, from the MAIN members,
and will provide complete reports and/or revisions to the members requesting
them.

     A.   Uniform Rating Form A

          This form is used to report the Monthly Net Capability of each unit in
each station. Where required by the number of units in a station, additional
sheets should be used.

                                      B-5
<PAGE>

     B.   Uniform Rating Forms B-1, B-2, and B-3

          These forms are used to report test results, certain actual and five-
year average variables where pertinent, and to show relationship of actual net
generation to stated capability during the month of the test. It is the intent
that test data equal or exceed stated Monthly Net Capability to demonstrate that
this level of generation can be achieved. Where simultaneous tests of several
units are conducted, as in common steam header plants, data should be reported
for each unit and total of the group.

          Test results should be reported as follows:

          Form B-1 --steam turbo-generator units
          Form B-2-hydro-electric units
          Form B-3 --Combustion turbine units and diesel units

Note: In submitting revised forms, each form shall be submitted in such a manner
that it completely replaces the sheet on which data are being revised.

                                      B-6
<PAGE>

                                  APPENDIX C

                                COMMUNICATIONS

1.   Purpose

     The purpose of this Appendix is:

          (i)    To describe the nature of, and the requirements for the
                 communication link that will be maintained between Seller and
                 Buyer;

          (ii)   To identify and establish a communications procedure that
                 defines the responsibilities for, and the frequency, content,
                 and logistics of communication between personnel responsible
                 for operating the Facility ("Seller's Operator(s)") and EO
                 concerning the availability and Dispatch of the Committed
                 Units. The Parties desire that such a procedure be established
                 so that only responsible and authorized personnel can issue
                 requests and/or orders that may impact reliability and
                 availability of the Committed Units.

2.   Communication Link.

          (i)    Buyer shall establish and maintain dedicated phone lines for
                 all communications concerning the availability and Dispatch of
                 the Committed Units. These dedicated systems shall be used as
                 the primary communications link between Seller's Operators and
                 Buyer's EO personnel responsible for Dispatching Buyer's System
                 ("Generation Dispatcher"). In addition to the dedicated phone
                 lines, Seller and Buyer shall establish standard phone line(s)
                 as a back-up system. Seller's dedicated and standard phone
                 lines are to be located at the control facilities of the
                 Committed Units.

          (ii)   At any time a Committed Unit at the Facility is synchronized to
                 the system, Seller must ensure that an operator is available at
                 the dedicated phone line (or back-up phone line if the
                 dedicated line is unavailable) to respond to the Dispatch
                 orders from the EO Generation Dispatcher. Both Seller and Buyer
                 recognize that there may be operational conditions or events
                 that will require Seller's Operator to leave the control room
                 in order to resolve the condition or event. Both Seller and
                 Buyer also recognize that these conditions or events will be
                 infrequent. During such times, Seller's Operator must first
                 notify the EO Generation Dispatcher, and provide information
                 regarding how the Seller's Operator can be reached (i.e. a
                 standard, back-up phone line and/or a cellular phone).

                                      C-1
<PAGE>

         (iii)    Seller shall establish and maintain a paging system for the
                  Seller's Operators. Such paging system shall constitute the
                  secondary communications link between Seller's Operators and
                  the EO Generation Dispatcher. During those times when no
                  generator at the Facility is synchronized to the transmission
                  system, or during power operation when Seller's Operator has
                  left the control room to resolve an operational condition or
                  event, this paging system will become the primary
                  communications link between Seller's Operator and the EO
                  Generation Dispatcher. Whenever the paging system is the
                  primary communications link, Seller will ensure at least one
                  operator will be available at all times, via the paging
                  system. Should the EO Generation Dispatcher initiate the
                  paging system, Seller's Operator(s) shall immediately contact
                  the EO Generation Dispatcher via telephone for specific
                  Dispatch orders. Seller will notify Buyer as soon as possible
                  of any disruption or unavailability of the dedicated or
                  standard phone lines, or the pager system, as soon as
                  practicable. Seller shall also provide a list of back-up
                  contacts to the paging system (i.e. the names and home phone
                  numbers for the operators) to be used should the paging system
                  fail, be inadvertently turned off, lost, unavailable due to
                  satellite communication problems, or if the operator fails to
                  respond. This list of back-up contacts shall be incorporated
                  into the Communications Procedure.

3. Communications Procedure

         (i)      Prior to the Commercial Operations Date of the Committed
                  Units, Seller and Buyer shall establish a mutually approved
                  Communication Procedure that defines the responsibilities for,
                  and the frequency, content, and logistics of, all
                  communications between Seller's Operator(s) and the EO
                  Generation Dispatcher concerning the availability and dispatch
                  of the Committed Units.

                  Seller and Buyer shall ensure that the most current mutually
                  approved revision of this Communication Procedure is available
                  to the Seller's Operator(s) and the EO Generation Dispatcher.
                  Both Seller and Buyer shall mutually review and revise the
                  communications procedure, as necessary.

         (ii)     The Communications Procedure shall provide telephone numbers
                  for all dedicated and standard phone lines of both Seller and
                  Buyer (including telephone numbers for facsimile machines) and
                  pager numbers for all of Seller's Operators.

                  The Communications Procedure shall also provide back-up
                  contacts to the paging system (i.e. the names and home phone
                  numbers for the operators) to be used should the paging system
                  fail, be inadvertently turned off, lost,

                                      C-2
<PAGE>

                  unavailable due to satellite communication problems, or if the
                  operator fails to respond.

                  In addition, the communications procedure shall provide
                  instructions and requirements to both the Seller's Operator(s)
                  and the EO Generation Dispatcher describing the process(es)
                  for communicating unit availability and Dispatch orders for
                  the Committed Units.

                  At a minimum, the Communication Procedure shall provide
                  communication instructions for the following items:

                     a)  Routine notifications (by both Seller's Operator(s) and
                         the EO Generation Dispatcher) of expected hourly
                         capability and demand, as required by Section 4(c)
                         (Operating Notifications) of this Agreement.

                     b)  Start-Up and Dispatch orders for Committed Units;

                     c)  Conditions, issues or events that could affect the
                         output or reliability of the Committed Units;

                     d)  The time of day (based on a twenty-four (24) hour
                         clock) when a Committed Unit is placed on the line and
                         taken off the line;

                     e)  Changes of rated capacity of a Committed Unit, when it
                         is known that such changes have taken place or will
                         take place;

                     f)  Committed Unit deratings, including the amount of any
                         derate, the estimated or known start time and date of
                         the derate, the estimated or known ending time and date
                         of the derate, and the cause of the derate;

                     g)  Conditions at the Facility or a Committed Unit that
                         could affect the present or anticipated load following
                         capability of a Committed Unit;

                     h)  Planned and emergency testing requirements, or other
                         operational work that could limit the availability or
                         maneuverability of a Committed Unit; and

                     i)  The use of operations reporting forms that are provided
                         in Appendix D (Operations Reporting Forms).

                                      C-3
<PAGE>

4.  Revisions

     Each Party shall appoint a representative having power and authority to act
     on its behalf (the "Representative"). Each Party may change its
     Representative from time-to-time, effective upon notice given to the other
     Party. A Representative may change addresses, telephone numbers, facsimile
     numbers and other similar data to be used in directing communications under
     this Appendix C or Appendix D (Operations Reporting Forms) to the Party
     represented by that Representative. Each Representative shall be authorized
     to agree on behalf of the Party that appointed that Representative to any
     change in the forms or procedures provided under this Appendix C or
     Appendix D.

                                      C-4
<PAGE>

                                   APPENDIX D

                           OPERATIONS REPORTING FORMS

Exelon Operations Reporting Form
--------------------------------
    Elwood Energy Availability Declaration Units 1, 2, 3, 4, and 9
    --------------------------------------------------------------

        To: ComEd Electric Operations                From:  Elwood Energy
            Lombard, Illinois                               Elwood, Illinois
            Fax: (  ) ###-####                              Fax: (  ) ###-####
            Phone: (  ) ###-####                            Phone: (  ) ###-####

Covering the Availability Declaration Period     Beginning: 0000 Hours,3/24/2001
                                                  Ending:   0000 Hours,3/27/2001

  Unit 1 is Available to Meet Net Dependable Capacity:  _____ Yes  _____ No

  Unit 2 is Available to Meet Net Dependable Capacity:  _____ Yes  _____ No

  Unit 3 is Available to Meet Net Dependable Capacity:  _____ Yes  _____ No

  Unit 4 is Available to Meet Net Dependable Capacity:  _____ Yes  _____ No

  Unit 9 is Available to Meet Net Dependable Capacity:  _____ Yes  _____ No

  Derating/Outage Details
  -----------------------

  Submitted By:

  Prepared:  3/28/2001 5:08:06 PM                               Page 1 of 1

                                      D-1
<PAGE>

                                   APPENDIX E

                             EQUIVALENT AVAILABILITY

                          Calculations and Adjustments

In order to promote Seller to operate the Committed Units in the most optimal
manner possible a defined bonus and penalty structure (as explained and detailed
below) has been created with regards to the overall availability level of Elwood
Units 1, 2, 3, 4, and 9 for the various different Period Hours. All of the
following descriptions and calculations are intended to be on an aggregate
(average) basis; i.e. an Equivalent Availability (as defined below) will be
calculated across all five (5) Committed Units during a respective time period.
All calculations of Equivalent Availability are therefore calculated as an
average for the entire Facility during the time period in question (as opposed
to calculating a separate Equivalent Availability for each Committed Unit). Any
number derived as a calculation will be limited to that whole number and
hundredths of a whole number, represented by two places to the right of the
decimal point. For the purposes of this Agreement, a thousandth of a whole
number great than or equal to five (5) shall be cause for the existing hundredth
number to be rounded up to the next hundredth number.

1)       Equivalent Availability Calculation

         Seller shall calculate an Equivalent Availability ("EA") for the Summer
Super Peak Hours, the Summer Partial Peak Hours, and the Summer Non-Peak Hours
for each of the Summer Months as well as a seasonal EA for the Non-Summer Peak
Months in accordance with the following formula

                  EA    = {1 - [FOH  + EFDH]}
                                -----------
                                    PH

         Where:

         EA = Equivalent Availability
         FOH = Forced Outage Hours
         EFDH = Equivalent Forced Derated Hours
         PH = Period Hours

         A total of thirteen EA calculations will be performed each Contract
Year using the above formula, one (1) for the Non-Summer On-Peak Hours
(calculated in January for the previous Contract Year) and three (3) for each of
the four (4) Summer Months (covering the Summer Super Peak Hours, the Summer
Partial Peak Hours, and the Summer Non-Peak Hours ) Such calculations for the
Summer Months will be done in the month immediately following the applicable
month).

         A Forced Outage or Forced Derating event shall only be included in the
calculation of the Equivalent Availability when Seller fails to meet, in whole
or part,

                                      E-1
<PAGE>

Buyer's Dispatch and fails to deliver or cause to be delivered Substitute
Electric Energy.

         If Substitute Electric Energy is provided, the Seller will be credited
as being Available for those hours that the Substitute Electric Energy is
accepted. Buyer will not be obligated to take partial schedules.

         The "Size of Reduction" for a Forced Derating shall be determined by
Seller and shall be based upon observed output of a typical unit having the same
equipment problems under similar operating and environmental conditions. Buyer
may request Seller to justify the size of the reduction through provision of
reasonably available historical operating records in support of Seller's
selection of the Size of Reduction.

         The following shall not be deemed a Forced Outage or Forced Derating
for purposes of calculating the Equivalent Availability: (a) a Committed Unit is
shut down for Planned Outages, Maintenance Outages, or for a Compressor Wash,
(b) a Committed Unit is down or derated, but Seller meets Buyer's Dispatch
request through Substitute Electric Energy, (c) a Committed Unit is curtailed,
interrupted, reduced or increased by the Interconnected Utility, or (d) to the
extent a Committed Unit is not Available as a result of a Force Majeure Event.

2)       Adjustments (Applicable Bonuses and Penalties)

The Equivalent Availability Adjustments shall be calculated in accordance with
the schedules (Schedule E-1, Schedule E-2 and Schedule E-3) attached to this
Appendix E. All dollar figures shown below (for both Summer and Non-Summer
periods) are on a percentage basis per MW of Net Dependable Capacity, i.e. the
dollar impact per MW of Net Dependable Capacity of either surpassing or being
below an Availability Target by each percentage point, or portion thereof
carried to two (2) decimal places.

                                  Summer Months
                                  -------------

Bonus

-------------------------------------------------------------------------
MONTH                  Super-Peak       Partial-Peak        Off-Peak
-------------------------------------------------------------------------
June                    $ 71.43            $23.81              $0
-------------------------------------------------------------------------
July                    $107.14            $35.71              $0
-------------------------------------------------------------------------
August                  $107.14            $35.71              $0
-------------------------------------------------------------------------
September               $ 47.62            $15.87              $0
-------------------------------------------------------------------------

Penalties

The penalties associated with being below an Equivalent Availability Target for
the Summer Months are divided into two groups. The first deals with EA
percentages below

                                      E-2
<PAGE>

97% and above or equal to 70% while the second covers EA percentages below 70%
and above or equal to 44%. Below a 44% EA no further penalties will apply (other
than those already levied). At no time may the aggregate penalties associated
with the three EA penalty calculations for such Summer Month exceed that
respective month's Capacity Payment. Sample calculations are shown in Schedule
E-4 to this Appendix E. The penalties listed below are meant to be a cumulative
calculation across the two EA blocks.

For EA below target but greater than or equal to 70%
--------------------------------------------------------------------------------
Month                Super-Peak          Partial-Peak            Off-Peak
--------------------------------------------------------------------------------
June                  $ 74.95               $24.98                $14.27
--------------------------------------------------------------------------------
July                  $113.75               $37.91                $21.67
--------------------------------------------------------------------------------
August                $113.75               $37.91                $21.67
--------------------------------------------------------------------------------
September             $ 47.44               $15.81                $ 9.03
--------------------------------------------------------------------------------

For EA below 70% but greater than or equal to 44%
--------------------------------------------------------------------------------
Month                Super-Peak          Partial-Peak            Off-Peak
--------------------------------------------------------------------------------
June                  $ 80.79               $26.93                $15.39
--------------------------------------------------------------------------------
July                  $121.19               $40.39                $23.08
--------------------------------------------------------------------------------
August                $121.19               $40.39                $23.08
--------------------------------------------------------------------------------
September             $ 53.86               $17.95                $10.25
--------------------------------------------------------------------------------

                                Non-Summer Months
                                -----------------

Bonus

$47.62

Penalties

The penalties associated with being below an Equivalent Availability Target for
the Non-Summer Months are divided into three groups. The first deals with EA
percentages below 93% and above or equal to 86%, the second covers the EA
percentages below 86% and above or equal to 80%, and the third covers the EA
percentages below 80% and above or equal to 44%. Below a 44% EA no further
penalties will apply (other than those already levied). At no time may the
aggregate penalties associated with the Non-Summer Months' EA penalty
calculations exceed the Capacity Payments for such Non-Summer Months. Sample
calculations are shown in Schedule E-4 to this Appendix E. The penalties listed
below are meant to be a cumulative calculation across all three blocks.

--------------------------------------------------------------------------------
            Actual EA                                  Penalty
--------------------------------------------------------------------------------
        Target > EA => 86%       $     95.24
--------------------------------------------------------------------------------

                                      E-3
<PAGE>

--------------------------------------------------------------------------------
           86%>EA=>80%           $2,811.11
--------------------------------------------------------------------------------
           80%>EA=>44%           $   117.13
--------------------------------------------------------------------------------

                                      E-4
<PAGE>

         ------------------------------------------------------------
                                  APPENDIX F
                            OUTPUT ADJUSTMENT CURVE
         ------------------------------------------------------------

                General Electric Model PG7231 (FA) Gas Turbine
                                Elwood Project

       Estimated Performance - Configuration: DLN Combustor
       Design Values Referenced on 544HA232 Rev 0
       Fuel: Natural Gas

                             [GRAPH APPEARS HERE]

                                      F-1
<PAGE>

                                  APPENDIX G

                          UNIT 9 TEST POWER AGREEMENT

             [THIS AGREEMENT WILL BE EXECUTED PRIOR TO THE UNIT 9
            COMMERCIAL OPERATIONS DATE AND UPON EXECUTION WILL BE
                       INCORPORATED INTO THIS APPENDIX]

                                      G-1
<PAGE>

                                  APPENDIX H

                                FORM OF OPINION

                                    [Date]

[To lenders]
Ladies and Gentlemen:

          We refer to the Power Sales Agreement (the "Agreement") among Exelon
Generation LLC a Pennsylvania limited liability company ("Exgen") as assignee of
Commonwealth Edison Company, an Illinois corporation ("ComEd") and Elwood Energy
LLC, a Delaware limited liability company (the "Company") dated as of
_____________ and the Consent to Assignment (the "Consent to Assignment") among
ComEd, Company, and [Lenders or Agent, in its capacity as collateral agent],
dated as of the date hereof. We have acted as counsel to ComEd in connection
with the Agreement and the Consent to Assignment. Capitalized terms not defined
herein have the respective meanings given to such terms in the Agreement and the
Consent to Assignment.

          Pursuant to Section 12(b) (Consent to Assignment to Lender) of the
Agreement and Section ___ of the Consent to Assignment, this will advise you
that in the opinion of the undersigned:

          1.   Exgen is a limited liability company duly organized, validly
     existing and in good standing under the laws of the State of Pennsylvania
     and licensed to do business in the State of Illinois and has the power and
     authority to own, lease and operate its properties and assets and to
     conduct its business as now being conducted.

          2.   Exgen has the power and authority to execute and deliver the
     Agreement and the Consent to Assignment, to consummate the transactions
     contemplated thereby and to comply with and fulfill its obligations under
     the Agreement and the Consent to Assignment. All proceedings have been
     taken and all authorizations have been obtained by Exgen which are
     necessary to authorize the execution and delivery of the Agreement and the
     Consent to Assignment and the consummation of the transactions contemplated
     thereby.

          3.   The Agreement and the Consent to Assignment have been duly
     authorized, executed and delivered by Exgen. The Agreement and the Consent
     to Assignment constitute the legal, valid and binding obligations of Exgen
     enforceable against Exgen in accordance with their terms, except to the
     extent enforceability may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws affecting the enforcement
     of creditors' rights generally and by the effect of general principles of
     equity

                                      H-1
<PAGE>

     (regardless of whether such enforceability is considered in a proceeding in
     equity or at law).

          4.   Neither the execution and delivery by Exgen of the Agreement or
     the Consent to Assignment or the consummation by Exgen of the transactions
     contemplated thereby, nor compliance by Exgen with the terms and provisions
     thereof, does or will result in any breach of the terms, conditions or
     provisions of, or constitute a default, an event of default or an event
     creating rights of acceleration or termination under, (i) the Operating
     Agreement of Exgen or (ii) to our knowledge, any material agreement,
     instrument, judgment, decree, order, law, statute, rule or regulation which
     is applicable to Exgen or its properties, which breach or default could
     reasonably be expected to have a material adverse effect on Exgen or its
     ability to perform its obligations under the Agreement or the Consent to
     Assignment.

          5.   No consent, approval or authorization of, or registration, filing
     or declaration with, any federal or state governmental authority or other
     regulatory agency, which has not been received, waived or satisfied as of
     the date hereof, as the case may be, is required for the valid execution
     and delivery by Exgen of the Agreement or the Consent to Assignment, the
     consummation by Exgen of the transactions contemplated thereby or
     compliance by Exgen with the terms and provisions thereof.

          For the purpose of rendering the foregoing opinions, we have relied,
as to various questions of fact material to such opinions, upon the
representations made in the Consent to Assignment and upon certificates of
officers of Exgen. We also have examined originals, or copies of originals
certified to our satisfaction, of such agreements, documents, certificates and
other statements of government officials and other instruments, have examined
such questions of law and have satisfied ourselves as to such matters of fact as
we have considered relevant and necessary as a basis for this opinion. We have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the legal capacity of all natural persons and the
conformity with the original documents of any copies thereof submitted to us for
examination. We have also assumed that agreements and instruments we have
reviewed which purport to have been executed by parties other than Exgen or its
affiliates have been duly executed and delivered by such parties and that such
parties have all requisite power and authority to execute and deliver such
agreements and instruments and comply with the terms and provisions thereof and
that such agreements and instruments are legal, valid and binding agreements and
instruments of such parties.

          Any opinion or statement herein which is expressed to be "to our
knowledge" or is otherwise qualified by words of like import means that the
lawyers in this Firm who have had an involvement in drafting and negotiating the
Agreement and the Consent to Assignment have no current awareness of any facts
or information contrary to such opinion or statement.

                                      H-2
<PAGE>

          The foregoing opinions are limited to the federal laws of the United
States of America and the laws of the State of Pennsylvania and Illinois.

          This opinion letter is being delivered solely for the benefit of the
persons to whom it is addressed; accordingly, it may not be quoted, filed with
any governmental authority or other regulatory agency or otherwise circulated or
utilized for any other purpose without our prior written consent. We assume no
obligation to update or supplement the opinions expressed herein to reflect any
facts or circumstances which may hereafter come to our attention with respect to
such opinions, including any changes in applicable law which may hereafter
occur.

                                             Very truly yours,

                                      H-3
<PAGE>

                                  APPENDIX I

                   DELAYED DAMAGES AND METHODS OF OFFSETTING

The total maximum dollar amount for which Seller will be liable for a late Unit
9 Commercial Operations Date is the yearly aggregate Capacity Payments that
would be owed to Seller by the Buyer for Unit 9 for a full year (twelve month)
period beginning June 1, 2001. This is:

                            $4.35 * NDC * 12 months

As an approximation (using 150,000 kW) this is $7,830,000.

For every partial or full month that Unit 9 has not achieved the Commercial
Operations Date after June 1, 2001 the following delay damages apply:

                   June (21 days)          $75,000 per On-Peak Day
                   July (21 days)          $142,000 per On-Peak Day
                   August (23 days)        $142,000 per On-Peak Day

Any delay damages owed to the Buyer by Seller will be offset against the next
month's Unit 9 Capacity Payments. If, for example, in all of June Unit 9 has not
achieved the Unit 9 Commercial Operations Date, then ($75,000) * (21 On-Peak
Days) = $1,575,000 will be offset against July's Capacity Payments. This will
result in no Capacity Payment being made to Seller for the month of July
($1,575,000 delay damages versus $1,468,125 Capacity Payment) and a reduced
Capacity Payment in August (the $1,468,125 capacity payment less the ongoing
existing offset amount of $106,875). This method of adjusting future Capacity
Payments for Unit 9 will occur (if necessary) only through the Capacity Payments
for August 2001. If any delay damages are still owed to Buyer as of September 1,
2001 (for Unit 9) then commencing with the September 2001, Capacity Payments for
Units 3 and 4 will also be decreased (to the extent necessary) for the months
September, October, November, and December until all delay damages are paid off
in full. The purpose of this is to guarantee that the full delay damages amount
(which has a maximum of $7,830,000) is paid to Buyer by December 31, 2001. The
Capacity Payments for Unit 9 will continue to be paid in January 1, 2002 (and
going forward through May 31, 2002) whether or not Unit 9 is in operation.

                                      I-1
<PAGE>

                                  APPENDIX J

                               RELIABILITY BONUS

During each of the Summer Months, in addition to the potential Equivalent
Availability bonuses detailed in Appendix E (Equivalent Availability), a
separate "Reliability Bonus" will also be available to Seller should the
Reliability Target of the Facility be surpassed by the actual Reliability of the
Facility. The dollar figures associated with each Summer Month are listed below
and are on a per Committed Unit basis:

         June:             $25,000 per Committed Unit         ($1,250 per 1%)
         July:             $100,000 per Committed Unit        ($5,000 per 1%)
         August:           $100,000 per Committed Unit        ($5,000 per 1%)
         September:        $25,000 per Committed Unit         ($1,250 per 1%)

         Total of          $250,000 per Committed Unit

A specific Reliability will be determined for each of the five (5) Committed
Units for each Summer Month. An average Reliability shall then be calculated for
the month in question (across all five (5) units) and this will become the Bonus
Reliability achieved during that respective month. This will then be compared
with a Threshold Reliability of eighty percent (80%).

The Reliability Bonus Period shall consist of the period from hour ending 0700
to hour ending 2200 on the four (4) highest priced On-Peak Days of each month
(as defined by Power Markets Week or other mutually agreed daily index into
               ------------------
ComEd) for a total of sixty-four (64) hours each in June, July, August and
September. The percentage calculation shall consist of a calculation of the
Equivalent Availability (EA), but only for these hours (the denominator will
always be sixty-four (64) hours).

The calculation for the Facility will be as follows:

         [Monthly Reliability Bonus (per %)] x [(Bonus Reliability - 80%
Threshold)] x 100

If the EA for the Reliability Bonus is less than eighty percent (80%), no bonus
applies. The EA associated with each bonus hour is not dependent upon the
Committed Unit(s) being Dispatched on-line during those hours.

Example:
-------

For the month of July (2001), the highest priced On-Peak Days are the 17th,
18th, 19th, and the 31st

Unit 1 No Forced Outage Hours, No Equivalent Forced Derated Hours
       Reliability = [1 -((0 + 0)/64)] = 100%
Unit 2 2 Forced Outage Hours, 3 Equivalent Forced Derated Hours

                                      J-1
<PAGE>

        Reliability = [1 - ((2 + 3)/64)] = 92.19%
Unit 3  4 Forced Outage Hours, No Equivalent Forced Derated Hours
        Reliability = [1 - ((4 + 0)/64)] = 93.75%
Unit 4  No Forced Outage Hours, 1 Equivalent Forced Derated Hour
        Reliability = [1 - ((0 + 1)/64)] = 98.44%
Unit 9  No Forced Outage Hours, No Equivalent Forced Derated Hours
        Reliability = [1 - (0 + 0)/64)] = 100%

Facility Reliability for the month of July (2001) is:

                        (100% + 92.19% + 93.75% + 98.44% + 100%)/5 = 96.88%

Bonus is therefore:
                        ($5,000) * (96.88% - 80%) * 100 * 5 units  =  $422,000

                                      J-2
<PAGE>

                                  APPENDIX K

                                PLANNED OUTAGES

<TABLE>
<CAPTION>
Expected

                                                                 Frequency of                        Duration of
---------------------------------------------------------------------------------------------------------
     <S>             <C>                            <C>                                              <C>
       Type            Scheduled Maintenance                      Inspection                         Inspection

       Major           Combustion Inspection        Every 400 starts or 8,000 equivalent hours       4-5 days **

       Major          Hot Gas Path Inspection       Every 800 starts or 24,000 equivalent hours     10-12 days **

       Major             Major CT Overhaul         Every 1,600 starts or 48,000 equivalent hours     20 days **

     Routine*             BOP Inspections                      Each Spring and Fall                    4 days
---------------------------------------------------------------------------------------------------------
</TABLE>

-----------

* Routine Balance of Plant inspections will be scheduled during a Major
Inspection outage.

** Assumes all parts are in stock at site. If required parts are not on site,
Planned Outage time could be lengthened by as much as four times that indicated.

                                      K-1
<PAGE>

                                  APPENDIX L
                             UNIT ONE-LINE DIAGRAM

                                   (DIAGRAM)

                                      L-1
<PAGE>

                                  APPENDIX M

                             UNIT 1 AND 2 TRUE UP

      (Covering the Period 3/1/2001 through the Engage Termination Date)

Seller's Units 1 and 2 are currently under contract both between Seller and
Engage Energy America, LLC ("Engage") as well as between Engage and Buyer
(ostensibly Engage has purchased the exclusive rights for the off-take of these
units from Seller and has in turn sold these rights to Buyer). Engage has
appointed Buyer as its agent for Dispatch purposes under the Engage PSA.
Commencing March 1, 2001 and until the Engage Termination Date, a pricing true
up shall occur as described below (the "Unit 1 and 2 True Up") to provide Buyer
with the same financial and operational arrangements for Units 1 and 2 that
exist in this Agreement with regards to Units 3, 4, and 9. This Unit 1 and 2
True Up shall be made for each sequential month for the period commencing on
March 1, 2001 and lasting until the Engage Termination Date. This True-Up will
consist of comparing the pricing and operational parameters (taken primarily
from the Engage PSA) listed below under "Base Case", with those outlined in this
Agreement. Seller shall net the monthly billing for the below listed items
(other than the Summer Availability Bonus/Penalty which will be netted prior to
January 31 of the following year - see below) against the terms and conditions
detailed in this Agreement and will then sum the aggregates. Buyer will be
billed any obligations that might be owed to Seller upon completion of this
summation and will be offset against any money owed to Seller. Beginning with
the Engage Termination Date, Buyer's Units 1 and 2 will be fully subject to the
terms of this Agreement as are the other Committed Units for all purposes. This
Unit 1 and 2 True Up does not apply to nor will it affect any Reliability Bonus
pursuant to Section 7(g) (Reliability Bonus) or the 2001 Special Bonus pursuant
to Section 7(i) (2001 Special Bonus).

"Base Case":
 ---------

Non-Summer Period (October- May):
---------------------------------

 . Net Dependable Capacity based on 90(degrees) F and 60% Relative Humidity
 . No FOAF target (No Equivalent Availability Calculation necessary)
 . No Equivalent Availability Adjustment Possible
 . $5.25/kw-month Capacity Charge
 . No Variable O&M Charge
 . Start-Up Charge of $2500.00 per Start-Up
 . $30 fixed strike price (assumes
  no energy surcharge)

Summer Period (June-September):
-------------------------------

 . Net Dependable Capacity based on 90(degrees) F and 60% Relative Humidity
 . 95% Summer availability target (calculated as 1-FOAF under the Engage PSA)

                                      M-1
<PAGE>

 . FOAF calculated on a 5 x 16-hour seasonal basis (no Off-Peak hours)
 . Forced Outages and Forced Deratings occur when a Committed Unit is not
  Available under the Engage PSA
 . Availability penalties are based on (Summer Capacity Payments) * (% under
  95%)
 . Availability bonuses are based upon (Summer Capacity Payments) * (% over 95%)
 . $5.25/kw-month Capacity Charge
 . No Variable O&M Charges
 . Start-Up Charge of $2500.00 per Start-Up
 . Energy Charge, consisting of the product of Electric Energy sold to purchaser
  multiplied by $/MWh applicable to the Dispatch level of a Committed Unit set
  forth below:

                                 $/MWh        Dispatch Level
                                 -----        --------------
                                 $30.00            100%
                                 $35.00             60%

Summer Availability Bonus/Penalty Adjustment
--------------------------------------------

There will be an additional true up prior to January 31 after the end of each
Contract Year to reconcile the difference in values between the Base Case Summer
Period Equivalent Availability (which covers ostensibly the aggregate of the
Summer Super Peak Hours and Summer Partial Peak Hours encompassing all four (4)
Summer Months and incorporates Forced Outage Hours and Equivalent Forced Derated
Hours (as each such term is defined in the Engage PSA) as opposed to Forced
Outage Hours and Forced Derated Hours during a Dispatch under this Agreement)
and the various Summer Month Equivalent Availability calculations detailed under
this Agreement. New Equivalent Availability calculations must be done
specifically across only Units 1 and 2 for both the Summer Super Peak Hours and
Summer Partial Peak Hours for all the Summer Months (as opposed to the usual EA
calculations that cover all five (5) Committed Units) for this additional true
up. The resulting eight (8) Equivalent Availability numbers must then be
multiplied by their respective bonus or penalty percentages (as applicable).
Once summed, it will be this final aggregate number that will be netted against
the Base Case Summer Period Equivalent Availability.

                                      M-2

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