Document:

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                                                                  EXHIBIT 10.6.5

Niagara Mohawk Power Corporation                 Substitute Original Sheet No. 1
Rate Schedule FERC No. 189                      Superceding Original Sheet No. 1

                              AMENDED AND RESTATED
                            INTERCONNECTION AGREEMENT

            This AMENDED AND RESTATED INTERCONNECTION AGREEMENT (hereinafter
referred to as the "AGREEMENT") is made as of June 29, 2001, between NIAGARA
MOHAWK POWER CORPORATION (hereinafter referred to as "NIAGARA MOHAWK") and
SITHE/INDEPENDENCE POWER PARTNERS, L.P., (hereinafter referred to as the
"PRODUCER").

      WHEREAS, NIAGARA MOHAWK and PRODUCER have previously entered into the
INTERCONNECTION AGREEMENT dated March 9, 1992, as amended on July 20, 1992 and
November 17, 1992, which provides for the interconnection of the PRODUCTION
FACILITY (as defined below) with NIAGARA MOHAWK's electric transmission system;
and

      WHEREAS NIAGARA MOHAWK and PRODUCER desire to amend the INTERCONNECTION
AGREEMENT further in certain respects and to restate the AGREEMENT as set
forth herein, in compliance with the Federal Energy Regulatory Commission's
(hereinafter referred to as "FERC") Order No. 614, 90 FERC [Paragraph] 61,352
(2000); and

      WHEREAS, PRODUCER owns the PRODUCTION FACILITY (as defined in Section 1.1
of the Amended and Restated Transmission Services Agreement between the parties,
dated June 29, 2001 (as amended, supplemented or modified and in effect from
time to time, "Transmission Services Agreement")), which is interconnected with
NIAGARA MOHAWK's bulk power transmission system at the POINT OF RECEIPT (as
defined in Section 1.2 below); and

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<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

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Niagara Mohawk Power Corporation                 Substitute Original Sheet No. 2
Rate Schedule FERC No. 189                      Superceding Original Sheet No. 2

      WHEREAS, the New York State electricity market has been restructured: (a)
to give the New York Independent System Operator, Inc. (hereinafter referred to
as "NYISO") operational control over certain transmission facilities owned by
the Members of the Transmission Owners Committee of the Energy Association of
New York State (hereinafter referred to as the "MEMBER SYSTEMS"); and (b) to
establish the ISO ADMINISTERED MARKETS (as defined in the New York Independent
System Operator Market Administration and Control Area Services Tariff (as
amended, supplemented or modified and in effect from time to time, the "NYISO
SERVICES TARIFF")); and

      WHEREAS, the NYISO also provides transmission services to customers in New
York State pursuant to the provisions of its Open Access Transmission Tariff, as
amended, supplemented, or modified and in effect from time to time (the "NYISO
OATT"); and

      WHEREAS, PRODUCER may, in PRODUCER's sole discretion, subject to the
provisions of the NYISO OATT and the NYISO SERVICES TARIFF, as applicable, sell
electric energy, capacity or other services into the ISO ADMINISTERED MARKETS
and/or may enter into any number of BILATERAL TRANSACTIONS (as that term is
defined in the NYISO SERVICES TARIFF); and

      WHEREAS, PRODUCER and NIAGARA MOHAWK have entered into the Transmission
Services Agreement, which provides that NIAGARA MOHAWK will provide transmission
services to deliver electric energy and capacity from the PRODUCTION FACILITY to
the Pleasant Valley Substation; and

      WHEREAS, PRODUCER desires to receive, and NIAGARA desires to furnish, the
interconnection services provided in this AGREEMENT.

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<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                 Substitute Original Sheet No. 3
Rate Schedule FERC No. 189                      Superceding Original Sheet No. 3

      NOW THEREFORE, in consideration of the mutual obligations and undertakings
set forth herein, the parties to this AGREEMENT covenant and agree as follows:

      1.    AGREEMENT TO INTERCONNECT; DESCRIPTION OF INTERCONNECTION FACILITY

            1.1    NIAGARA MOHAWK and PRODUCER agree to retain the existing
interconnection between the PRODUCTION FACILITY and NIAGARA MOHAWK's existing
transmission system (hereinafter "TRANSMISSION SYSTEM") in accordance with the
terms and conditions contained herein.

            1.2    The TRANSMISSION SYSTEM and PRODUCTION FACILITY are
interconnected within the Independence Switchyard owned by NIAGARA MOHAWK at the
motor-operated switches commonly referred to as Switch Number 273 and Switch
Number 283 (collectively, the "POINT OF RECEIPT"). For purposes of this
AGREEMENT, the term "INTERCONNECTION FACILITY" includes, as detailed in Schedule
A and Schedule B, the Independence 345kV Switchyard, the 345kV line from
Independence to Scriba, the new two breaker bay at Scriba, the new 345kV line
from Independence to Clay and the new two breaker bay at Clay. PRODUCER and
NIAGARA MOHAWK stipulate and agree that the facilities on NIAGARA MOHAWK's side
of the POINT OF RECEIPT are operated and controlled by the NYISO and that
PRODUCER's delivery of electricity to the POINT OF RECEIPT constitutes delivery
of such electricity to the NYISO for purposes of service under the NYISO OATT,
or for any sales by PRODUCER of electricity, capacity, ancillary services or any
other services under the NYISO SERVICES TARIFF. The parties further stipulate
and agree that PRODUCER shall not be required to purchase any additional
services from NIAGARA MOHAWK in connection with transmission service under the
NYISO OATT, or for any sales by PRODUCER of electricity, capacity, ancillary
services or any other services under the NYISO SERVICES

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                 Substitute Original Sheet No. 4
Rate Schedule FERC No. 189                      Superceding Original Sheet No. 4

TARIFF, so long as the NYISO continues to operate and control the transmission
facilities on NIAGARA MOHAWK's side of the POINT OF RECEIPT. In accordance with
Article 11, PRODUCER shall be responsible for all of the reasonable
out-of-pocket costs and expenses of NIAGARA MOHAWK in connection with the
operation and maintenance of the INTERCONNECTION FACILITY.

            1.3    Electricity transferred to the TRANSMISSION SYSTEM shall be
measured by electric watt-hour meters of a type approved by the Public Service
Commission of the State of New York. If the meters are located at a point other
than the POINT OF RECEIPT, the readings will be adjusted for losses between the
metering location and the POINT OF RECEIPT. These metering facilities will be
installed, owned and maintained by NIAGARA MOHAWK and shall be sealed by NIAGARA
MOHAWK, with the seal broken only upon occasion when the meters are to be
inspected, tested or adjusted and representatives of both NIAGARA MOHAWK and
PRODUCER are present. The meter and installation costs shall be borne by
PRODUCER. The meters shall be maintained in accordance with the rules set forth
in 16 NYCRR Part 92 and in conformance with ESB #756-B, both of which are
incorporated herein by reference. NIAGARA MOHAWK will guarantee the installation
of any meter and its accuracy for a period of one year from the date that said
meter is installed. Any maintenance, repair or replacement required during the
initial year for any such meter will be at the expense of NIAGARA MOHAWK. In the
event that any meter is found to be inaccurate after the initial year, NIAGARA
MOHAWK will repair or replace the same as soon as possible at the expense of
PRODUCER. Each party shall have the right at all reasonable times, upon giving
not less than five (5) days notice to the other party for the purpose of
permitting the other party to be present at the inspection, to inspect, and test
said meters and, if found defective, NIAGARA MOHAWK

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                 Substitute Original Sheet No. 5
Rate Schedule FERC No. 189                      Superceding Original Sheet No. 5

shall adjust, repair or replace the same at the expense (after the initial year)
of PRODUCER. Any test or inspection requested by a party shall be at the expense
of the requesting party.

      If a meter fails to register, or if the measurement made by a meter is
found to be inaccurate by more than the limits defined in 16 NYCRR Part 92, then
an adjustment shall be made correcting all measurements made by the inaccurate
or defective meter for (a) the actual period during which inaccurate
measurements were made, if that period can be determined to the satisfaction of
the parties; or (b) if the actual period cannot be determined to the mutual
satisfaction of the parties, one-half of the period from the date of the last
previous test of the meter. PRODUCER may elect to install its own metering
equipment in addition to NIAGARA MOHAWK's metering equipment. Such metering
equipment shall meet the requirements of 16 NYCRR Part 92. Should any metering
equipment installed by NIAGARA MOHAWK fail to register during the term of this
AGREEMENT, the parties shall use PRODUCER's metering equipment, if installed, to
determine the amount of electricity delivered to the TRANSMISSION SYSTEM. On a
day on which neither NIAGARA MOHAWK's nor PRODUCER's metering equipment is in
service, the quantity of electricity delivered shall be determined in such
manner as the parties shall agree.

      The duly authorized agent or agents of NIAGARA MOHAWK shall, at all
reasonable business hours, upon three (3) days written notice, have free access
to the premises of PRODUCER for the purpose of inspecting the records of
electricity generated by PRODUCER and delivered to the POINT OF RECEIPT.

            1.4    PRODUCER agrees that the installation of the electrical
connections and the operation of the PRODUCTION FACILITY must meet or exceed the
requirements of NIAGARA MOHAWK's Electric System Bulletin No. 756-B, as well as
any

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

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Niagara Mohawk Power Corporation                 Substitute Original Sheet No. 6
Rate Schedule FERC No. 189                      Superceding Original Sheet No. 6

other pertinent NIAGARA MOHAWK bulletins. The voltage control requirements for
the PRODUCTION FACILITY are detailed in Schedule B.

      2.    REPRESENTATIONS AND WARRANTIES OF PARTIES

            2.1    The Representations and Warranties of the Parties in Sections
2.2 through 2.6 are made as of March 3, 1992 for PRODUCER and March 9, 1992 for
NIAGARA MOHAWK.

            2.2    PRODUCER is a limited partnership duly organized and validly
existing under the laws of the State of Delaware. PRODUCER is qualified to do
business under the laws of the State of New York, is in good standing under the
laws of the State of New York, has the power and authority to own its
properties, to carry on its business as now being conducted, and to enter into
this AGREEMENT and the transactions contemplated herein and perform and carry
out all covenants and obligations on its part to be performed under and pursuant
to this AGREEMENT, and is duly authorized to execute and deliver this AGREEMENT
and consummate the transactions contemplated herein.

            2.3    PRODUCER is not prohibited from entering into this AGREEMENT
and discharging and performing all covenants and obligations on its part to be
performed under and pursuant to this AGREEMENT. The execution and delivery of
this AGREEMENT, the consummation of the transactions contemplated herein and the
fulfillment of and compliance with the provisions of this AGREEMENT will not
conflict with or constitute a breach of or a default under any of the terms,
conditions or provisions of any law, rule or regulation, any order, judgment,
writ, injunction, decree, determination, award or other instrument or legal
requirement of any court or other agency of government, the partnership
agreement of PRODUCER or any contractual limitation, corporate restriction or
outstanding trust

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                 Substitute Original Sheet No. 7
Rate Schedule FERC No. 189                      Superceding Original Sheet No. 7

indenture, deed of trust, mortgage, loan agreement, lease, other evidence of
indebtedness or any other agreement or instrument to which PRODUCER is a party
or by which it or any of its property is bound and will not result in a breach
of or a default under any of the foregoing. This AGREEMENT is the legal, valid
and binding obligation of PRODUCER enforceable in accordance with its terms.

            2.4    With respect to the PRODUCTION FACILITY, PRODUCER is a
"qualifying cogenerator" as defined in Section 3 of the Federal Power Act, as
amended by Section 201 of the Public Utilities Regulatory Policies Act of 1978,
and, the Production Facility is considered a "Qualifying Facility" within the
meaning of Internal Revenue Service ("IRS") Notice 88-129, 1988-2 C.B. 541.
PRODUCER reasonably projects that during the first ten taxable years, beginning
with the year the INTERCONNECTION FACILITY is placed in service, no more than 5%
of the projected total power flows over the INTERCONNECTION FACILITY will flow
to the PRODUCTION FACILITY ("the 5% test"); provided, that if the power flows in
the taxable year during which the INTERCONNECTION FACILITY is placed in service
cause the PRODUCER to violate the "5% test" NIAGARA MOHAWK shall ignore the
power flows in the taxable year in which the INTERCONNECTION FACILITY is placed
in service as provided in Notice 88-129. PRODUCER will promptly notify NIAGARA
MOHAWK of any change in its circumstances affecting the accuracy of the
statements set forth in this Section 2.4 or any failure to otherwise meet the
"5% test" during the term of this AGREEMENT.

            2.5    NIAGARA MOHAWK is a corporation duly organized, validly
existing and qualified to do business under the laws of the State of New York,
is in good standing under its certificate of incorporation and the laws of the
State of New York, has the corporate authority to own its properties, to carry
on its business as now being conducted, and to

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                 Substitute Original Sheet No. 8
Rate Schedule FERC No. 189                      Superceding Original Sheet No. 8

enter into this AGREEMENT and the transactions contemplated herein and perform
and carry under the pursuant to this AGREEMENT, and is duly authorized to
execute and deliver this AGREEMENT and consummate the transactions contemplated
herein.

            2.6    NIAGARA MOHAWK is not prohibited from entering into this
AGREEMENT and discharging and performing all covenants and obligations on its
part to be performed under and pursuant to this AGREEMENT. The execution and
delivery of this AGREEMENT, the consummation of the transactions contemplated
herein and the fulfillment of and compliance with the provisions of this
AGREEMENT will not conflict with or constitute a breach of or a default under
any of the terms, conditions on provisions of any law, rule or regulation, any
order, judgment, writ, injunction, decree, determination, award or other
instrument or legal requirement of any court or other agency of government, the
certificate of incorporate or bylaws of NIAGARA MOHAWK or any contractual
limitation, corporate restriction or outstanding trust indenture, deed of trust,
mortgage, loan agreement, lease, other evidence of indebtedness or any other
agreement or instrument to which NIAGARA MOHAWK is a party or by which it or any
of its property is bound and will not result in a breach of or a default under
any of the foregoing. This AGREEMENT is the legal, valid and binding obligation
of NIAGARA MOHAWK enforceable in accordance with its terms.

      3.    INTERCONNECTION STUDY

            3.1    NIAGARA MOHAWK has performed the interconnection study
(hereinafter referred to as the "INTERCONNECTION STUDY") which is attached
hereto as Schedule B. PRODUCER understands, as stated in Schedule B, that
additional power system stabilizers may be required on other generating units in
the Oswego area pending the design of a power system stabilizer on the
PRODUCTION FACILITY.

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                 Substitute Original Sheet No. 9
Rate Schedule FERC No. 189                      Superceding Original Sheet No. 9

      4.    OBTAINING RIGHTS-OF-WAY

            4.1    PRODUCER will acquire all rights of way needed for placement,
construction, and maintenance of all equipment and facilities reasonably
required including, but not limited to electric transmission and substation
facilities, access roads, system enhancements and improvements or equipment
incidental thereto. The quantum of land, including width of transmission
corridor and size and configuration of substation sites shall be as reasonably
required by NIAGARA MOHAWK. The interest in land acquired by PRODUCER, whether
in fee or by easement, or other means, must be adequate for the purposes for
which such land is being acquired hereunder. The format and content of the legal
instruments conveying such rights in land shall be approved by NIAGARA MOHAWK,
which approval shall not be unreasonably withheld or delayed. PRODUCER
understands and agrees that all right-of-way acquisition must conform to NIAGARA
MOHAWK standards for location and siting of transmission facilities, including
without limitation, transmission line structures and appurtenances, substation
equipment and improvements, clearings, access roads and various system
enhancements and equipment incidental thereto. Prior to initiating such efforts
and during the course of such efforts, PRODUCER shall regularly consult with
NIAGARA MOHAWK. In the event PRODUCER elects to hire a consulting firm to
acquire the said lands, NIAGARA MOHAWK reserves the right to approve said firm
and its land and right of way acquisition methods and practices, which approval
shall not be unreasonably withheld or delayed. Details regarding he use of
NIAGARA MOHAWK's existing rights-of-way are detailed in Schedule B except that
PRODUCER will not be required to provide NIAGARA MOHAWK with monetary
compensation for the use of NIAGARA MOHAWK's existing rights-of-way between
Volney and Clay substations.

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 10
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 10

            4.2    PRODUCER agrees that prior to the acquisition of any property
interest or rights-of-way, or the acquisition of any property to be used or
developed in connection with the INTERCONNECTION FACILITY, it will conduct
sampling, soil testing, and any other methods of investigation which would
disclose the presence of any hazardous substance as waste which has been
released on the property or which is present upon the property by migration from
an external source on the property. PRODUCER agrees to indemnify and save
NIAGARA MOHAWK harmless from all liability cost and expense (including
reasonable attorney's fees), civil and criminal, for the removal of any
hazardous substance or management methods. If the presence of any such hazardous
substance is discovered prior to acquisition of the property, PRODUCER agrees to
provide NIAGARA MOHAWK with prompt written notice thereof, and the parties will
thereafter determine whether said property should be acquired and used.

            4.3    INTERCONNECTION FACILITY construction activities will be
developed and carried out in accordance with standard NIAGARA MOHAWK
environmental, construction, forestry, and right-of-way management practices and
procedures, including but not limited to, "NMPC EMCP Protection Measures", and
NIAGARA MOHAWK's "Transmission Right-of-Way Management Plan - October 1989", and
NIAGARA MOHAWK's specification for right of way clearing, access roads, and
right-of-way restoration. Copies of these and other relevant procedures will be
provided on a timely basis by NIAGARA MOHAWK to PRODUCER. PRODUCER agrees it
will not deviate from NIAGARA MOHAWK's practices or procedures without prior
written NIAGARA MOHAWK approval, which approval shall not be unreasonably
withheld or delayed.

            4.4    In the event PRODUCER is unable to acquire any of the
applicable permits, authorizations, or rights-of-way after using its best
efforts to do so, NIAGARA

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 11
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 11

MOHAWK agrees to accept and cooperate with PRODUCER in seeking approval for the
transfer of so much of the appropriate documents as authorizes construction of
the transmission and interconnection facilities and upon the effectiveness of
such transfer, to assert its eminent domain authority for the prosecution of
said eminent domain proceedings. NIAGARA MOHAWK shall retain counsel to conduct
eminent domain proceedings. PRODUCER agrees to reimburse NIAGARA MOHAWK for all
reasonable legal fees and costs therefore, and, except to the extent arising out
of the gross negligence or intentional acts or omissions of NIAGARA MOHAWK, for
all reasonable legal fees, costs, liabilities, judgements, fines, and other
sanctions against NIAGARA MOHAWK arising out of its exercise of eminent domain
powers. NIAGARA MOHAWK agrees to take such reasonable steps prior to the
commencement of eminent domain proceedings as are necessary to facilitate said
proceedings. The parties understand and agree that their execution of this
AGREEMENT setting forth terms and conditions relating to the engineering,
construction and ownership of the transmission line and interconnection is a
condition precedent to the actual exercise by NIAGARA MOHAWK of its eminent
domain authority. NIAGARA MOHAWK does not warrant or guarantee that assertion of
its eminent domain powers will result in successful acquisition of real property
interests for the INTERCONNECTION FACILITY. If NIAGARA MOHAWK is unable to
acquire real property for the INTERCONNECTION FACILITY using its eminent domain
authority, PRODUCER shall have the option of modifying the INTERCONNECTION STUDY
subject to the prior written approval of NIAGARA MOHAWK, which approval shall
not be unreasonably withheld or delayed or terminate this AGREEMENT.

            4.5    All expenditures by PRODUCER, and all reasonable
out-of-pocket expenditures by NIAGARA MOHAWK, incurred in acquiring the
necessary rights-of-way and

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 12
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 12

associated permits and authorizations shall be borne by PRODUCER. PRODUCER shall
reimburse NIAGARA MOHAWK for such expenditures as provided in Article 11 of this
AGREEMENT.

            4.6   After completion of construction of the INTERCONNECTION
FACILITIES, and thirty (30) days prior to the anticipated date of initial
operation of the PRODUCTION FACILITY, PRODUCER shall convey and transfer to
NIAGARA MOHAWK by warranty deed, by assignment of easement or other means, as
appropriate for the conveyance and transfer of such interest, all of its right,
title and interest in the INTERCONNECTION FACILITY free and clear of all liens
and encumbrances other than easements, rights-of-way, restrictions, minor
defects and other similar encumbrances and exceptions to title (whether or not
identified as an exception to title in any title search or title insurance
policy furnished in accordance with this Section 4.6) which could not,
individually or in the aggregate, reasonably be expected to have a material and
adverse effect on the ability of the parties to operate and maintain the
INTERCONNECTION FACILITY. PRODUCER further agrees to provide to NIAGARA MOHAWK
an instrument survey of the lands conveyed by and/or described in the documents
of title transfer, which said survey shall be prepared in accordance with the
Code of Practice for land title surveys adopted by the New York State
Association of Professional Land Surveyors. In addition to such a survey
prepared as aforesaid, PRODUCER shall, in a format and size designated by
NIAGARA MOHAWK, also furnish maps and drawings of the transmission corridor
which shall constitute a plan and profile of said electric line depicting the
transmission corridor, location of electric transmission structures, survey and
title data, and a profile setting forth grade elevations and structure and
conductor locations. A reasonable time prior to completion of construction, and
in no event less than sixty (60) days, PRODUCER shall

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 13
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 13

provide to NIAGARA MOHAWK copies of the proposed deeds and other title documents
together with either fully guaranteed tax and title searches made by an
incorporated abstract company which shall cover the premises constituting the
transmission corridor and substation site together with tax searches, federal
code searches and local tax certificates or a fee title insurance policy,
containing only standard exceptions and such other exceptions which could not,
individually or in the aggregate, reasonably be expected to have a material and
adverse effect on the ability of the parties to operate and maintain the
INTERCONNECTION FACILITY, insuring marketability of the lands and interest in
lands to be transferred to NIAGARA MOHAWK. For purposes of this Agreement,
"Completion of Construction" shall mean the acquisition of all required rights
in land, design and construction in the field of electric transmission and
substation facilities, acquisition of licenses and permits in accordance with
Article 10 and completion of all other matters reasonably necessary to effect
successful transfer of property interests, including the transfer of ownership.
NIAGARA MOHAWK shall be given the opportunity to inspect the INTERCONNECTION
FACILITY and review all appropriate approvals, certificates, permits and
authorizations and PRODUCER shall be responsible for correcting any situations
which NIAGARA MOHAWK reasonably deems unacceptable or any deficiencies which
could reasonably be expected to impede the transfer of title pursuant to this
AGREEMENT. The provisions and requirements of this Section 4.6 shall apply to
any STEP DOWN FACILITIES which Producer may transfer ownership of to NIAGARA
MOHAWK; provided, however, that PRODUCER may retain ownership in the STEP DOWN
FACILITIES should PRODUCER provide NIAGARA MOHAWK with written notice prior to
the transfer of the INTERCONNECTION FACILITY as provided herein of its intention
to retain ownership in the STEP DOWN FACILITIES for the purposes of supplying
the electrical requirements of its steam

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 14
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 14

host(s) (steam hosts shall be defined as other businesses or entities to which
PRODUCER may sell steam for said businesses' or entities' own use). For purposes
of this Agreement, STEP DOWN FACILITIES shall be defined as those facilities (as
depicted in Schedule C), including the 345-115 KV transformer, 115 KV tap,
115-13.2 KV transformer, 13.2 KV tap and all associated equipment.

            4.7    PRODUCER shall grant to NIAGARA MOHAWK rights of access to
PRODUCER's property interests acquired hereunder, prior to and upon transfer of
title to NIAGARA MOHAWK. 4.8 PRODUCER and NIAGARA MOHAWK agree that in the event
PRODUCER abandons going forward with its PRODUCTION FACILITY, for whatever
reason, NIAGARA MOHAWK shall have the option and right of first refusal to
acquire any rights-of-way obtained by PRODUCER pursuant to this AGREEMENT.

      5.    CONSTRUCTION OF INTERCONNECTION FACILITY

            5.1    The INTERCONNECTION FACILITY shall be designed and
constructed in accordance with NIAGARA MOHAWK standards and in accordance with
Schedules A and B. Upon NIAGARA'S MOHAWK'S completion and/or acceptance of the
INTERCONNECTION STUDY, the INTERCONNECTION FACILITY shall be designed and
constructed by either NIAGARA MOHAWK, the PRODUCER, or by a third-party
contractor to be selected by PRODUCER or by a combination of the parties and
subject to NIAGARA MOHAWK's and PRODUCER'S prior written approval, which
approval shall not be unreasonably withheld or delayed. PRODUCER shall be
responsible for all of the reasonable out-of-pocket costs and expenses of
NIAGARA MOHAWK in connection with the design and construction of the
INTERCONNECTION FACILITY and the correction of any situations which

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 15
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 15

NIAGARA MOHAWK reasonably deems unacceptable. PRODUCER shall be responsible for
all of its costs and expenses and all of the costs and expenses of any
third-party contractor. The INTERCONNECTION FACILITY shall be designed and
constructed in accordance with prudent electrical practices and good engineering
practices in the same first class and workmanlike manner and using materials and
equipment of a quality and type customarily used by NIAGARA MOHAWK in designing
and constructing its transmission systems. Prior to transfer of ownership of
INTERCONNECTION FACILITY pursuant to Article 4 herein, NIAGARA MOHAWK shall be
given the opportunity to inspect the INTERCONNECTION FACILITY. PRODUCER shall be
responsible for correcting any situations which NIAGARA MOHAWK reasonably deems
unacceptable. Prior to the COMMERCIAL OPERATION DATE and line energization,
PRODUCER shall be responsible for the costs associated with making such
corrections. For the purposes of the AGREEMENT, "COMMERCIAL OPERATION DATE"
shall be as defined in the Transmission Services Agreement.

            5.2    Upon completion of construction of the INTERCONNECTION
FACILITY, PRODUCER shall convey to NIAGARA MOHAWK copies of all documents,
reasonably required by NIAGARA MOHAWK'S Engineering Department, including but
not limited to as-built drawings, in both hard copy as well as in the form of
computer readable data that will generate the drawings.

            5.3    PRODUCER will be deemed to be in exclusive control of and be
responsible for any loss or damage to the INTERCONNECTION FACILITY until the
transfer thereof to NIAGARA MOHAWK in accordance with Section 4.6. Subject to
Section 1.2, NIAGARA MOHAWK will be deemed to be in exclusive control of and be
responsible for any

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 16
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 16

loss or damage to the INTERCONNECTION FACILITY from and after the transfer
thereof to NIAGARA MOHAWK in accordance with Section 4.6.

            5.4    PRODUCER shall grant to NIAGARA MOHAWK rights of access to
the INTERCONNECTION FACILITY prior to and upon transfer of title to NIAGARA
MOHAWK. NIAGARA MOHAWK shall grant to PRODUCER rights of access to the
INTERCONNECTION FACILITY prior to transfer of title to NIAGARA MOHAWK.

            5.5    NIAGARA MOHAWK shall perform an environmental inspection of
the INTERCONNECTION FACILITIES which includes but is not limited to NIAGARA
MOHAWK'S Right-of-Way Restoration Specification compliance, access road
stability, erosion control, successful revegetation, vegetative visual screening
and Right-of-Way access security within the first growing season after
Construction Restoration has been completed. The PRODUCER shall be responsible
for correcting any situations which NIAGARA MOHAWK reasonably deems
unacceptable.

            5.6    PRODUCER and NIAGARA MOHAWK shall provide the other with all
documentation reasonably necessary to verify the cost of the INTERCONNECTION
FACILITY. PRODUCER and NIAGARA MOHAWK shall have the right to any supporting
documents or evidence which PRODUCER or NIAGARA MOHAWK reasonably deems
necessary to further substantiate such costs.

      6.    CONSTRUCTION OF SYSTEM FACILITIES

            6.1    NIAGARA MOHAWK shall be responsible for the construction of
any reinforcements to or additions of new facilities to NIAGARA MOHAWK's
transmission system (other than the INTERCONNECTION FACILITY) reasonably
required in order for NIAGARA MOHAWK to provide PRODUCER with the transmission
services agreed to

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 17
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 17

pursuant to the Transmission Services Agreement (the "SYSTEM FACILITIES") as
detailed in Schedule B. PRODUCER shall be responsible for all of the reasonable
out-of-pocket costs and expenses of NIAGARA MOHAWK in connection with the
construction of such reinforcements and additions. Prior to approval of the
Article VII License or within a reasonable time period thereafter agreed to by
both parties, the parties shall exchange schedules for the construction of the
SYSTEM FACILITIES and INTERCONNECTION FACILITY respectively, such schedules
shall not be inconsistent with each other or the Power Purchase Agreement.
PRODUCER shall provide NIAGARA MOHAWK with monthly status reports on the
progress of the INTERCONNECTION FACILITY construction and NIAGARA MOHAWK may
revise its construction schedule based upon PRODUCER'S status reports. NIAGARA
MOHAWK will provide PRODUCER with monthly status reports on the progress of the
SYSTEM FACILITIES construction. If NIAGARA MOHAWK completes construction of the
SYSTEM FACILITIES after the scheduled completion date or any revised or adjusted
scheduled completion dates of the INTERCONNECTION FACILITY, the date of
Commercial Operation shall be extended by the same length of time by which the
scheduled completion date of the SYSTEM FACILITIES is delayed without liability
of any kind to NIAGARA MOHAWK. NIAGARA MOHAWK will use its best efforts to
complete the construction of the SYSTEM FACILITIES by the scheduled completion
date or any revised or adjusted scheduled completion dates of the
INTERCONNECTION FACILITY, provided that NIAGARA MOHAWK shall not be responsible
for delays in Completion of Construction of the INTERCONNECTION FACILITY or
SYSTEM FACILITIES arising from or attributable to any cause including but not
limited to the application for necessary governmental licenses, permits,
authorizations, and approvals

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 18
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 18

except to the extent that any such delays are the result of the gross negligence
or intentional acts or omissions of NIAGARA MOHAWK.

            6.2    NIAGARA MOHAWK shall bill PRODUCER for its costs of
constructing the SYSTEM FACILITIES in accordance with Articles 11 and 12 herein.

      7.    MODIFICATION TO INTERCONNECTION FACILITY DUE TO TRANSMISSION SYSTEM

            7.1    If, during the term of this AGREEMENT, NIAGARA MOHAWK
reasonably determines that it is necessary to relocate or rearrange its
transmission system in order to maintain reliable electric service in accordance
with GOOD UTILITY PRACTICE (as defined in the Transmission Services Agreement),
so that a change is required to a portion of the INTERCONNECTION FACILITY and/or
a new INTERCONNECTION FACILITY is required, NIAGARA MOHAWK shall give the
PRODUCER no less than one year's written notice of such relocation or
rearrangement and shall defer such relocation or rearrangement until the new
INTERCONNECTION FACILITY can be reconfigured so that PRODUCER's sales of energy,
capacity, ancillary or other services, or any combination thereof, into the ISO
ADMINISTERED MARKETS and/or through any BILATERAL TRANSACTIONS (as that term is
defined in the NYISO SERVICES TARIFF) may continue without interruption,
provided that such notice period or deferral may be reduced to the extent
reasonably required in order to maintain reliable electric service in accordance
with GOOD UTILITY PRACTICE (as defined in the Transmission Services Agreement).

            7.2    If NIAGARA MOHAWK is required or ordered by governmental
authority to relocate or rearrange its transmission system so that a new POINT
OF RECEIPT is required, NIAGARA MOHAWK shall promptly so notify PRODUCER.

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 19
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 19

            7.3    If NIAGARA MOHAWK reasonably determines that it is necessary
to relocate or rearrange its transmission system in accordance with Section 7.1
or if NIAGARA MOHAWK is required or ordered by governmental authority to
relocate or rearrange its transmission system, NIAGARA MOHAWK shall perform or
have performed a new INTERCONNECTION STUDY in accordance with the terms of this
AGREEMENT. NIAGARA MOHAWK shall be responsible for all of the costs and expenses
in connection with such INTERCONNECTION STUDY, in connection with obtaining
rights-of-way and in connection with the construction of any new INTERCONNECTION
FACILITIES unless such relocation or rearrangement is required in order to
maintain reliable electric service in accordance with GOOD UTILITY PRACTICE (as
defined in the Transmission Services Agreement), in which case PRODUCER shall be
responsible for such costs and expenses in accordance with the terms of Articles
3, 4 and 5. In its sole discretion, if, in accordance with the preceding
sentence, PRODUCER is responsible for the costs and expenses of any new
INTERCONNECTION STUDY or the construction of any new INTERCONNECTION FACILITIES,
PRODUCER shall have the option to (a) reimburse NIAGARA MOHAWK for the actual
out-of-pocket costs of such construction promptly upon completion thereof; (b)
construct, at its own expense, a new INTERCONNECTION FACILITY in accordance with
the terms of this AGREEMENT; or (c) terminate this AGREEMENT upon at least
thirty (30) days written notice to NIAGARA MOHAWK.

            7.4    If the relocation or rearrangement is ordered or required by
governmental authority, NIAGARA MOHAWK shall cooperate with PRODUCER in
PRODUCER's efforts to be reimbursed by the governmental authority for its
mutually agreed upon share of the costs of such relocation or rearrangement, but
in no event shall NIAGARA

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 20
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 20

MOHAWK be responsible for reimbursing PRODUCER for any costs associated with
such relocation or rearrangement for which PRODUCER is responsible hereunder.

            7.5    If the PRODUCER elects to construct a new INTERCONNECTION
FACILITY, construction, title, and payment shall be in accordance with the terms
and conditions of this AGREEMENT.

      8.    ABANDONMENT OR RETIREMENT OF INTERCONNECTION FACILITY

            8.1    If NIAGARA MOHAWK reasonably determines that it is necessary
to abandon or to retire the entire INTERCONNECTION FACILITY so that it can
relocate or rearrange its transmission system in order to maintain reliable
electric service in accordance with GOOD UTILITY PRACTICE (as defined in the
Transmission Services Agreement), NIAGARA MOHAWK shall give the PRODUCER no less
than (1) year's written notice of such abandonment or retirement and shall defer
such abandonment or retirement until a new INTERCONNECTION FACILITY has been
constructed, so that PRODUCER's sales of energy, capacity, ancillary or other
services, or any combination thereof, into the ISO ADMINISTERED MARKETS and/or
through any BILATERAL TRANSACTIONS may continue without interruption, provided
that such notice period or deferral may be reduced to the extent reasonably
required in order to maintain reliable electric service in accordance with GOOD
UTILITY PRACTICE (as defined in the Transmission Services Agreement).

            8.2    If NIAGARA MOHAWK is required to abandon or retire its
transmission system as a result of an order of government authority, and such
relocation or rearrangement requires the construction of a new INTERCONNECTION
FACILITY, NIAGARA MOHAWK shall so notify PRODUCER.

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 21
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 21

            8.3    If NIAGARA MOHAWK reasonably determines that it is necessary
to abandon or retire its transmission system in accordance with Section 8.1 or
if NIAGARA MOHAWK is required or ordered by governmental authority to abandon or
retire its transmission system, NIAGARA MOHAWK shall perform or have performed a
new INTERCONNECTION STUDY in accordance with the terms of this AGREEMENT.
NIAGARA MOHAWK shall be responsible for all of the costs and expenses in
connection with such INTERCONNECTION STUDY, in connection with obtaining
rights-of-way and in connection with the construction of any new INTERCONNECTION
FACILITIES unless such abandonment or retirement is required in order to
maintain reliable electric service in accordance with GOOD UTILITY PRACTICE (as
defined in the Transmission Services Agreement), in which case PRODUCER shall be
responsible for such costs and expenses in accordance with the terms of Articles
3, 4 and 5. In its sole discretion, if, in accordance with the preceding
sentence, PRODUCER is responsible for the costs and expenses of any new
INTERCONNECTION STUDY or the construction of any new INTERCONNECTION FACILITIES,
PRODUCER shall have the option to (a) reimburse NIAGARA MOHAWK for the actual
out-of-pocket costs of such construction promptly upon completion thereof; (b)
construct at its own expense, a new INTERCONNECTION FACILITY subject to the
terms of this AGREEMENT; or (c) terminate this AGREEMENT, upon no less than
thirty (30) days written notice to NIAGARA MOHAWK.

            8.4    If the abandonment or retirement of the entire
INTERCONNECTION FACILITY is ordered or required by governmental authority,
NIAGARA MOHAWK will cooperate with PRODUCER in PRODUCER's efforts to be
reimbursed by such governmental authority for its mutually agreed upon share of
the costs of such abandonment or retirement, but in no event shall NIAGARA
MOHAWK be responsible for reimbursing

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 22
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 22

PRODUCER for any costs associated with such abandonment or retirement for which
PRODUCER is responsible hereunder.

            8.5    If the PRODUCER elects to construct a new INTERCONNECTION
FACILITY, construction, title and payment shall be in accordance with the terms
and conditions of this AGREEMENT.

      9.    [INTENTIONALLY LEFT BLANK]

      10.   COMPLIANCE WITH LAWS AND OBTAINING PERMITS AND LICENSES

            10.1    PRODUCER and NIAGARA MOHAWK agree to comply with all
applicable federal, state and local, ordinances, rules, regulations, permits,
licenses, approvals, certificates, and requirements thereunder in connection
with all activities performed pursuant to this AGREEMENT, including, but not
limited to all design, environmental, regulatory, engineering, construction, and
property acquisition activities.

            10.2    PRODUCER further agrees to obtain all necessary
environmental, regulatory, licenses, certificates, permits and approvals, in
connection with all activities performed pursuant to this Agreement, at its sole
expense, and to obtain NIAGARA MOHAWK's review and approval of all applications
with respect thereto, which approval shall not be unreasonably withheld or
delayed, prior to their submittal to any of the appropriate agencies or
governmental authorities. To the extent permitted by law, prior to the Initial
Synchronization Date, PRODUCER shall convey to NIAGARA MOHAWK said licenses,
certificates, permits and approvals.

            10.3    Each of PRODUCER and NIAGARA MOHAWK agrees to indemnify and
save the other harmless and defend the other from all liability, civil and
criminal, costs and expenses (including reasonable attorney's fees) arising from
violations by it of all

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 23
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 23

applicable laws, ordinances, rules, regulations, permits, licenses, approvals,
certificates and requirements thereunder. Each of PRODUCER and NIAGARA MOHAWK
agrees to bear fully all civil and criminal penalties that may arise from its
activities or from its violations of or its failure to comply with the
aforementioned laws and requirements, whether such penalties are assessed
against PRODUCER or NIAGARA MOHAWK.

            10.4    If PRODUCER observes that any requirement specified in this
AGREEMENT is at variance with any governing laws, ordinances, rules,
regulations, permits, licenses, approvals, certificates and requirements
thereunder, PRODUCER shall promptly notify NIAGARA MOHAWK in writing before
incurring any further liability, expense or obligation. NIAGARA MOHAWK and
PRODUCER shall in good faith attempt to reform this Agreement to comply with the
aforementioned laws, ordinances, rules, regulations, permits, licenses,
approvals, or certificates at PRODUCER's sole cost and expense. If NIAGARA
MOHAWK and PRODUCER are unable to do so, either party may terminate this
AGREEMENT.

      11.   COST PAYMENTS

            11.1    Prior to the start of construction of the INTERCONNECTION
FACILITY and the SYSTEM FACILITIES, PRODUCER shall pay to NIAGARA MOHAWK from
time to time an amount equal to the reimbursable costs incurred by NIAGARA
MOHAWK in connection with the design of such INTERCONNECTION FACILITY and SYSTEM
FACILITIES as set forth in itemized invoices provided by NIAGARA MOHAWK
detailing such reimbursable costs. Prior to the start of construction of the
INTERCONNECTION FACILITY and the SYSTEM FACILITIES and as soon as reasonably
practicable, PRODUCER and NIAGARA MOHAWK shall agree upon a schedule of payments
by PRODUCER to NIAGARA MOHAWK for reimbursable costs to be incurred by NIAGARA
MOHAWK in connection with

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 24
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 24

the construction of the INTERCONNECTION FACILITY and the SYSTEM FACILITIES,
which schedule of payments shall be based upon the current estimate of such
costs included in Schedule B hereto less reimbursable costs actually paid by
PRODUCER to NIAGARA MOHAWK in connection with the design of the INTERCONNECTION
FACILITY and the SYSTEM FACILITIES. Such schedule of payments may be modified
upon the agreement of each of the parties to reflect the actual costs incurred
by NIAGARA MOHAWK. NIAGARA MOHAWK shall review actual charges on a regular basis
and invoice PRODUCER accordingly if additional funds are required to pay
reimbursable costs (as defined in Section 11.2). At the completion of
construction, should the actual out-of-pocket costs incurred by NIAGARA MOHAWK
be less than the amount paid to NIAGARA MOHAWK by PRODUCER, NIAGARA MOHAWK shall
reimburse PRODUCER accordingly. NIAGARA MOHAWK shall provide itemized invoices
detailing all reimbursable costs against PRODUCER'S payments at the time of
final billing. PRODUCER agrees to pay all invoices within thirty (30) days from
date of the invoice. In accordance with NIAGARA MOHAWK POWER CORPORATION'S
P.S.C. 207. Electricity, if any invoice remains unpaid thirty (30) days from the
invoice date, NIAGARA MOHAWK shall apply to the unpaid balance, and PRODUCER
shall pay, a finance charge at the rate of one and one-half percent (1.5%) per
month, but in no event more than the maximum allowed by law. If any invoice
remains unpaid for sixty (60) days, NIAGARA MOHAWK shall have no further
obligation to perform under this AGREEMENT until all outstanding sums, including
interest, have been paid in full.

            11.2    Reimbursable costs shall mean the following:

            (A)     All reasonable NIAGARA MOHAWK out-of-pocket costs and
                    expenses associated with the acquisition, inspection, design
                    review, engineering, survey, project management and
                    coordination,

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 25
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 25

                      testing of electrical equipment and installation and
                      testing of EMS-RTU and metering equipment, development
                      of energization procedure, construction, environmental
                      and regulatory permitting and licensing of, taxes as
                      provided for in Article 12 and transfer of title and
                      interest to, the INTERCONNECTION FACILITY, and any new
                      or replaced facility as provided under Articles 7 and 8
                      for which PRODUCER is responsible hereunder, upon
                      transfer of title and interest to NIAGARA MOHAWK.

            (B)       All reasonable NIAGARA MOHAWK out-of-pocket costs in
                      connection with any INTERCONNECTION STUDIES for which
                      PRODUCER is responsible hereunder.

            (C)       All reasonable NIAGARA MOHAWK out-of-pocket costs and
                      expenses of acquiring, designing, engineering,
                      constructing, financing, taxes as provided for in
                      Article 12, environmental permitting, and licensing any
                      SYSTEM FACILITIES, or any new or replaced facilities for
                      which PRODUCER is responsible hereunder.

            (D)       All reasonable out-of-pocket legal fees, costs,
                      liabilities, judgments, fines and other sanctions or
                      penalties arising out of NIAGARA MOHAWK's exercise of
                      its eminent domain authority, except to the extent
                      arising out of the gross negligence or intentional acts
                      or omissions of NIAGARA MOHAWK.

            (E)       Any transmission related out-of-pocket cost or expense
                      determined by a regulatory body having jurisdiction to
                      be properly allocable to PRODUCER, in whole or in part.

            (F)       All other reasonable out-of-pocket costs NIAGARA MOHAWK
                      incurs in carrying out any responsibilities under this
                      AGREEMENT, including the following services: engineering
                      services, legal services, contract administration,
                      rights-of-way acquisition, and environmental service and
                      studies except for costs for which NIAGARA MOHAWK is
                      responsible in accordance with the provisions of this
                      AGREEMENT.

            11.3    NIAGARA MOHAWK shall not be responsible or liable for any
losses or damages resulting from any delays in PRODUCER's completion of
construction according to schedule, or PRODUCER's failure to meet the COMMERCIAL
OPERATION DATE, or PRODUCER's failure to pay or delay in paying NIAGARA MOHAWK
all costs

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 26
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 26

invoiced hereunder except to the extent that any such delays are the result of
the gross negligence or intentional acts or omissions of NIAGARA MOHAWK.

            11.4    Payment of amounts due for the operation, maintenance,
reconstruction or relocation of the INTERCONNECTION FACILITY during the term of
this AGREEMENT shall be made in accordance with the provisions of this Article.

            11.5    NIAGARA MOHAWK shall be solely responsible for the
operation, maintenance and repair of the INTERCONNECTION FACILITY and the SYSTEM
FACILITIES. The INTERCONNECTION FACILITY and the SYSTEM FACILITIES shall at all
times be operated, maintained and repaired in accordance with GOOD UTILITY
PRACTICES (as defined in the Transmission Services Agreement) and NIAGARA
MOHAWK'S own standards and procedures. Except as provided in Section 12.1(b), as
full compensation to NIAGARA MOHAWK for its ownership, operation, maintenance
and repair of the INTERCONNECTION FACILITY and the SYSTEM FACILITIES for the
entire term of this AGREEMENT, PRODUCER hereby agrees to pay to NIAGARA MOHAWK
an aggregate amount equal to $8,950,000 (hereinafter, the "OPERATION AND
MAINTENANCE FEE"). The OPERATION AND MAINTENANCE FEE shall be in lieu of any
other payments or compensation to NIAGARA MOHAWK in respect of its ownership,
operation, maintenance or repair of the INTERCONNECTION FACILITY and the SYSTEM
FACILITIES (other than payments for electric transmission service to be rendered
in accordance with Article 5 of the Transmission Services Agreement). The
OPERATION AND MAINTENANCE FEE shall be payable in three installments. The first
installment shall be in an amount equal to $4,300,000 and shall be payable by
PRODUCER to NIAGARA MOHAWK within thirty days of receipt of written confirmation
from NIAGARA MOHAWK that the construction of the

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 27
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 27

INTERCONNECTION FACILITY and the SYSTEM FACILITIES is complete. The second
installment shall also be in an amount equal to $1,550,000 and shall be payable
by PRODUCER to NIAGARA MOHAWK within thirty days of receipt of written
acknowledgment from NIAGARA MOHAWK that the PLANT has been synchronized with the
NIAGARA MOHAWK transmission system. The third installment shall be in an amount
equal to $3,100,000 and shall be payable by PRODUCER to NIAGARA MOHAWK within
thirty days of the COMMERCIAL OPERATION DATE. Furthermore, PRODUCER shall
indemnify, defend and hold harmless NIAGARA MOHAWK for any and all claims,
suits, liabilities or damages (including reasonable attorney's fees) arising
from NIAGARA MOHAWK's obligations under this Agreement, except to the extent
said claims, suits, liabilities or damages are caused in whole or in part by the
gross negligence or intentional acts or omissions of NIAGARA MOHAWK.

      12.   TAXES

            12.1    PRODUCER shall reimburse, indemnify, and hold harmless
NIAGARA MOHAWK for the following taxes levied or assessed on NIAGARA MOHAWK, as
a result of this AGREEMENT:

            (a)     Transfer Tax. PRODUCER shall be responsible for any
                    transfer taxes associated with the transfer of the
                    INTERCONNECTION FACILITY.

            (b)     Property Tax. PRODUCER shall be responsible for one-half of
                    any property taxes levied or assessed against NIAGARA MOHAWK
                    attributable to the transfer of title to NIAGARA MOHAWK in
                    the INTERCONNECTION FACILITY.

            (c)     Federal Income Tax. PRODUCER shall be responsible for
                    any federal income taxes imposed on NIAGARA MOHAWK, or
                    any increased federal income tax liability incurred by
                    NIAGARA MOHAWK arising from (i) the reimbursement by
                    PRODUCER of any cost incurred by NIAGARA MOHAWK to
                    design, construct, install, obtain rights-of-way,
                    licenses, certificates, permits or approvals for,
                    operate, or maintain the INTERCONNECTION

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 28
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 28

                    FACILITY or SYSTEM FACILITIES, (ii) the transfer of any
                    property, rights-of-way, licenses, certificates, permits
                    or approvals from PRODUCER to NIAGARA MOHAWK, or any
                    other provision of services by PRODUCER relating to this
                    AGREEMENT, and (iii) the termination of the Power
                    Purchase Agreement or the occurrence of any other
                    "disqualification event" within the meaning of IRS
                    Notice 88-129 and IRS Notice 90-60 as they may be
                    amended; provided, the "disqualification event" is not
                    caused by NIAGARA MOHAWK.

            (d)     New York Taxes. Consistent with Section 12.1(c),
                    PRODUCER shall be responsible for any New York State
                    taxes imposed on NIAGARA MOHAWK that are based on or
                    measured by net or gross income or receipts as a result
                    of payments made by PRODUCER for (i) the reimbursement
                    by PRODUCER of any cost incurred by NIAGARA MOHAWK to
                    design, construct, install, obtain rights-of-way,
                    licenses, certificates, permits or approvals for,
                    operate, or maintain the INTERCONNECTION FACILITY or
                    SYSTEM FACILITIES, (ii) the transfer of any property,
                    rights-of-way, licenses, certificates, permits or
                    approvals from PRODUCER to NIAGARA MOHAWK, or any other
                    provision of services by PRODUCER relating to this
                    AGREEMENT, and (iii) the termination of the Power
                    Purchase Agreement or the occurrence of any other
                    "disqualification event" within the meaning of IRS
                    Notice 88-128 and ITS Notice 90-60 as they may be
                    amended; provided, the "disqualification event" is not
                    caused by NIAGARA MOHAWK.

            (e)     Adjustments Arising from the Payment or Reimbursement of
                    Tax under the Preceding Provisions. The amounts payable
                    pursuant to clauses (a) through (d) of this Section 12.1
                    shall be reduced by (i) any net actual tax savings
                    resulting from the payment or accrual by NIAGARA MOHAWK
                    of the taxes described in said clauses (a) through (d)
                    and (ii) the present value of the tax benefits, if any,
                    that NIAGARA MOHAWK can expect to realize through
                    depreciation, amortization and other deduction available
                    to it with respect to expenses reimbursed hereunder or
                    the acquisition of depreciable or amortizable assets in
                    connection with the transaction which causes NIAGARA
                    MOHAWK to be entitled to reimbursement of tax from
                    PRODUCER (collectively (i) and (ii) are the "Tax
                    Benefits"). PRODUCER shall fully reimburse NIAGARA
                    MOHAWK for any net actual federal income tax, New York
                    tax or transfer tax ("Tax"), if any, arising out of any
                    payment or reimbursement of any tax by PRODUCER under
                    this Section such that the net amount received by
                    NIAGARA MOHAWK, after reduction by such net actual Taxes
                    on the amounts payable pursuant to this

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 29
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 29

                    Article 12 (including this Section 12.1(e)) shall equal
                    the amount payable pursuant to clauses (a) through (d)
                    of this Section 12.1 less any Tax Benefits. NIAGARA
                    MOHAWK shall calculate and advise PRODUCER of its
                    liability for Tax under this paragraph. NIAGARA MOHAWK
                    shall perform this calculation utilizing (i) its
                    effective rate of Tax (the "Rate") for the year(s) of
                    income inclusion and (ii) with respect to any Tax
                    Benefits, the depreciation or amortization rates,
                    methodology, bases and periods of time that it would
                    normally use for similar property, the Rate or Rates of
                    Tax expected to be applicable for the year or years in
                    which the deductions will be utilized and a discount
                    factor equal to it "Composite Cost of Capital" as
                    approved by the COMMISSION for the year to which the
                    calculation relates. At PRODUCER's request, the amount
                    of any indemnity payment by PRODUCER to NIAGARA MOHAWK
                    pursuant to this Article 12 shall be verified and
                    certified by Price Waterhouse or the nationally
                    recognized firm of independent public accountants then
                    normally employed by NIAGARA MOHAWK. Producer shall pay
                    the accountants' fee for verifying the indemnity payment
                    pursuant to this Section 12.1(e), unless the
                    verification discloses an error in NIAGARA MOHAWK's
                    favor exceeding 2.5% for the amount of the payment as
                    determined by NIAGARA MOHAWK, in which case NIAGARA
                    MOHAWK shall pay the accountants' fee for verifying the
                    amount of the payment. PRODUCER and NIAGARA MOHAWK
                    hereby agree that the accountants' sole responsibility
                    shall be to verify the calculation of an indemnity
                    payment under this Article 12 and interpretation of this
                    AGREEMENT shall not be within the scope of the
                    accountants' responsibilities.

            12.2    Except as provided in Sections 12.3 and 12.5, PRODUCER shall
fully reimburse NIAGARA MOHAWK for the amount of any tax that is the
responsibility of PRODUCER pursuant to Section 12.1 within thirty (30) days of
being notified by NIAGARA MOHAWK, but not prior to the date that such taxes
(including any estimated payments of such taxes) are due. PRODUCER shall not be
liable for taxes that would otherwise be owed by NIAGARA MOHAWK in the absence
of this AGREEMENT or any activities hereunder.

            12.3    At the time of the payment or reimbursement of any amount by
PRODUCER under this AGREEMENT, or the transfer of any property, rights-of-way,
licenses,

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 30
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 30

certificates, permits or approvals from PRODUCER to NIAGARA MOHAWK pursuant to
this AGREEMENT, or the termination of the Power Purchase Agreement or the
occurrence of any other "disqualification event" within the meaning of IRS
Notice 88-129 and IRS notice 90-60, as they may be amended, PRODUCER shall also
pay to NIAGARA MOHAWK any amounts due under Section 12.1 if NIAGARA MOHAWK
advises PRODUCER that it believes the payment, reimbursement or transfer
constitutes gross income to NIAGARA MOHAWK; provided, however, NIAGARA MOHAWK
shall not file any return reflecting a liability for any tax subject to
indemnity under Section 12.1 or pay such tax if PRODUCER, at PRODUCER's sole
expense, furnishes NIAGARA MOHAWK with an opinion of independent tax counsel
selected by PRODUCER and reasonably satisfactory to NIAGARA MOHAWK, to the
effect that there is substantial authority within the meaning of Section
6662(d)(2)(5)(i) of the Internal Revenue Code of 1986, as amended, and the
regulations (whether final, temporary or proposed) thereunder (or with respect
to New York taxes, applying corresponding principles) ("Substantial Authority")
to conclude that the payments, reimbursements and transfers do not constitute
gross income to NIAGARA MOHAWK. If PRODUCER shall have furnished NIAGARA MOHAWK
with such an opinion concerning tax liability which NIAGARA MOHAWK believes may
be in excess of $100,000 and PRODUCER's senior unsecured debt is rated lower
than investment grade by either Moody's Investor's Services, Inc. or by Standard
and Poor's Corporation ("INVESTMENT GRADE"), PRODUCER shall provide collateral
to NIAGARA MOHAWK in a manner reasonably satisfactory to NIAGARA MOHAWK for any
tax that later may be imposed unless the opinion described in the preceding
sentence shall be to the effect that it is more likely than not that the
payment, reimbursement or transfer does not constitute gross income. In no event
shall PRODUCER be required to provide collateral in excess of the amount payable
under

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 31
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 31

Section 12.1 (the net amount of any taxes to be calculated assuming the taxes
are payable at the highest marginal statutory rates applicable to NIAGARA MOHAWK
for the relevant period, and further assuming, in the case of a termination of
the Power Purchase Agreement or the occurrence of any other "disqualification
event" within the meaning of IRS Notice 88-129 and IRS Notice 90-60, that
NIAGARA MOHAWK's gross income arising from such event will not exceed the lesser
of the INTERCONNECTION FACILITY's (i) fair market value as determined using the
depreciated replacement cost method, as defined in IRS Notice 90-60, and (ii)
fair market value as determined under a procedure or method established or
utilized by the relevant utility commission, as provided in IRS Notice 90-60).
Notwithstanding the foregoing, NIAGARA MOHAWK shall return all collateral
provided under this Section 12.3 to PRODUCER within 30 days from the date
PRODUCER's senior unsecured debt is rated INVESTMENT GRADE or higher, and in any
event, NIAGARA MOHAWK shall return the collateral provided under this Section
12.3 to PRODUCER upon the termination of the statute of limitations applicable
to the taxable year in which occurs such payment, reimbursement or transfer.
Nothing in this Section 12.3 shall reduce or limit any liability by PRODUCER to
pay such tax if, and when, it is imposed on NIAGARA MOHAWK. Notwithstanding the
foregoing provisions of this Section, 12.3, PRODUCER shall not be required to
provide collateral with respect to potential tax liability to the State of New
York.

            12.4    NIAGARA MOHAWK agrees to cooperate in good faith with
PRODUCER in attempting to minimize NIAGARA MOHAWK's costs under this Article,
provided PRODUCER reimburses NIAGARA MOHAWK for all out of pocket costs incurred
by NIAGARA MOHAWK in connection therewith, including attorneys fees, and
provided further that PRODUCER shall indemnify NIAGARA MOHAWK against any and
all penalties,

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 32
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 32

judgments, fines (civil or criminal), or other costs that may be imposed by any
governmental authority as a result hereof except to the extent caused by the
gross negligence or willful misconduct of NIAGARA MOHAWK.

            12.5    Notwithstanding the foregoing, PRODUCER shall have the
right to require NIAGARA MOHAWK to contest, appeal or seek abatement of any tax,
levy or assessment against NIAGARA MOHAWK and for which PRODUCER may be required
to reimburse NIAGARA MOHAWK under this Article if (i) PRODUCER shall have
furnished to NIAGARA MOHAWK, at PRODUCER's sole expense, an opinion of
independent tax counsel selected by PRODUCER and reasonably satisfactory to
NIAGARA MOHAWK, to the effect that there is Substantial Authority that such
contest, appeal or abatement will be successful. If the PRODUCER's senior
unsecured debt is rated lower than INVESTMENT GRADE, PRODUCER shall provide
collateral to NIAGARA MOHAWK in a manner reasonably satisfactory to NIAGARA
MOHAWK for the amount of the tax asserted (excluding taxes imposed by the State
of New York) and all out of pocket costs expected to be incurred by NIAGARA
MOHAWK in connection with such contest, appeal or abatement. NIAGARA MOHAWK
shall, in good faith, control any such contest, appeal or abatement, including,
but not limited to, the selection of counsel and the forum for such contest,
appeal or abatement. Unless prepayment of tax is necessary in the forum selected
(in which case PRODUCER shall make such prepayment in the form of an
interest-free loan to NIAGARA MOHAWK to be applied for that purpose, and NIAGARA
MOHAWK shall return to PRODUCER, at the conclusion of such contest, appeal or
abatement, any refund it actually receives of the amount of such prepayment and
any interest it actually receives thereon), no reimbursement shall be payable by
PRODUCER to NIAGARA MOHAWK under this Article until such tax, levy or assessment
is due by a final and non-

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 33
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 33

appealable order by a court or agency of competent jurisdiction. PRODUCER shall
reimburse NIAGARA MOHAWK for all out of pocket costs incurred by NIAGARA MOHAWK
in connection with such contest, appeal or abatement request, including but not
limited to interest charges, penalties, additions to tax, and attorneys' fees,
as such costs are incurred by NIAGARA MOHAWK.

            12.6    PRODUCER shall not be responsible for any taxes under this
Article to the extent that such liability is attributable to a "disqualification
event" within the meaning of IRS Notice 88-129 and IRS Notice 90-60, as they may
be amended, which is caused by NIAGARA MOHAWK. In addition, PRODUCER shall not
be responsible for any income tax assessed against NIAGARA MOHAWK to the extent
such tax would not be assessed but for NIAGARA MOHAWK's use of the
INTERCONNECTION FACILITY for any purpose other than transmitting power for, or
selling power to, PRODUCER or an entity which is a customer of PRODUCER (an
"unrelated use"); provided, however, that if such income tax would be assessed
against NIAGARA MOHAWK regardless of such unrelated use, then NIAGARA MOHAWK
shall only be obligated to pay the incremental portion of the tax above the
amount that would have been due if there had been no unrelated use.

            12.7    If NIAGARA MOHAWK shall obtain a refund of all or any part
of any tax for which it has been compensated by PRODUCER under this Article 12,
or if, in lieu of such refund, NIAGARA MOHAWK shall receive a credit against any
tax not indemnified against hereunder by reason of all or part of any such tax,
NIAGARA MOHAWK shall pay PRODUCER, on an after tax basis (after giving effect to
any tax savings the PRODUCER realizes determined in a manner consistent with
Section 12.1(e)), an amount equal to the amount

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 34
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 34

of such tax, refund or credit, including interest attributable thereto, to the
extent such amount has not previously been paid or credited to PRODUCER under
the provision of this AGREEMENT.

      13.   NOTICES

            13.1    All written notifications pursuant to this AGREEMENT shall
be in writing and shall be personally delivered or mailed by certified or
registered first class mail, return receipt requested, as follows:

To NIAGARA MOHAWK                           To PRODUCER:
                                               --------
MANAGER-TRANSMISSION CONTRACTS              General Manager
NIAGARA MOHAWK POWER CORPORATION            Sithe/Independence Power
300 Erie Boulevard West                     Partners, L.P.
Syracuse, New York  13202                   c/o Sithe/Independence, Inc.
                                            P.O. Box 1046
                                            76 Independence Way
                                            Oswego, NY  13126

                                            and

                                            Sithe Energies, Inc.
                                            335 Madison Ave.
                                            28th Floor
                                            New York, NY  10017
                                            Attn:  General Counsel

            Either party may change its address for notices by notice to the
other in the manner provided above.

            13.2    The above mentioned representatives of their designees
shall be authorized to act on behalf of the parties, and their instructions,
requests, and decisions will be binding upon the parties as to all matters
pertaining to this AGREEMENT and the performance of the parties hereunder. Only
these representatives shall have the authority to commit funds or make binding
obligations on behalf of the parties. These representatives shall be responsible
for

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 35
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 35

tracking work, costs, schedules and all other matters related to this AGREEMENT,
and for the performance of any third parties.

      14.   TERM

            14.1    This AGREEMENT shall be effective on the date of execution
by both parties.

            14.2    Upon such effectiveness, this AGREEMENT shall expire on the
date occurring twenty (20) years from the COMMERCIAL OPERATION DATE of the
PRODUCTION FACILITY.

            14.3    This AGREEMENT shall not merge with or be terminated or
superseded by any future agreement between the parties that does not
specifically so provide.

      15.   TERMINATION FOR BREACH/DEFAULT

            15.1    In the event of a material default or breach of any
provision of this AGREEMENT, where such default or breach shall have continued
for and not been cured within sixty (60) days after receipt of a written notice
from the non-breaching party specifying in reasonable detail the nature of such
default or breach, the non-breaching party may by written notice terminate the
AGREEMENT at the end of the next succeeding calendar month; provided however,
that if such default or breach cannot reasonably be cured within such sixty (60)
day period, the breaching party shall be entitled to an additional period of
time to cure the breach, as may be reasonable under the circumstances; provided
that the breaching party commences efforts to cure within the initial sixty (60)
day period and diligently pursues cure thereafter. Any LENDER (as defined in the
Transmission Services Agreement) shall have the right, in its sole discretion
and without obligation, to prevent such termination by curing any such default
or breach on PRODUCER's behalf within the relevant period.

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 36
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 36

            15.2    Termination of this AGREEMENT for breach or default shall
not relieve the breaching party of any of its liabilities and obligations
hereunder, and the non-breaching party may take whatever judicial or
administrative actions as appear necessary or desirable to enforce its rights
hereunder. The rights specified herein are not exclusive and shall be in
addition to all other remedies available to NIAGARA MOHAWK or PRODUCER, either
at law or in equity, for default or breach of any provision of this AGREEMENT.
Notwithstanding any other provision of this AGREEMENT, neither NIAGARA MOHAWK
nor the PRODUCER shall be liable to the other for incidental, consequential,
indirect, special or punitive damages arising from breach of this AGREEMENT.

            15.3    Upon termination, NIAGARA MOHAWK shall give any regulatory
or judicial authorities such notice as is required by law.

      16.   FORCE MAJEURE

            16.1    Neither party shall be considered to be in default or breach
hereunder, and each party shall be excused from performance hereunder, if and to
the extent that it shall be delayed in or prevented from performing or carrying
out any provision of this AGREEMENT by reason of or through storm, flood,
lightning strikes, earthquake, fire, ice, epidemic, war, invasion, riot, civil
disturbance, sabotage, explosion, insurrection, military or usurped power,
strikes, stoppage of labor, labor dispute, failure of contractors or supplies of
material, action of any court or public authority, or any civil or military
authority de facto or de jure, change in law, act of God or the public enemy, or
any other cause beyond such party's control, including, without limitation,
disconnection or limited operation of the PRODUCTION FACILITY, the
INTERCONNECTION FACILITY or NIAGARA MOHAWK's electric system due to failure of
facilities or unscheduled repairs or maintenance.

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 37
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 37

            16.2    The party claiming force majeure shall use due diligence to
resume performance or the provision of service hereunder as soon as practicable.

            16.3    Neither party shall be liable to the other party for or on
account of any loss, damage, injury or expense, including, but not limited to,
incidental, punitive, special, indirect and consequential damages, resulting
from or arising out of such delay or inability to perform.

      17.   RELATIONSHIP OF PARTIES

            17.1    Nothing contained in this AGREEMENT shall be construed or
deemed to cause, create, constitute, give effect to, or otherwise recognize
PRODUCER and NIAGARA MOHAWK to be partners, joint venturers, employer and
employee, principal and agent, or any other business association, with respect
to any matter.

            17.2    Unless otherwise agreed to in writing signed by both
parties, neither party shall have any authority to create or assume in the other
party's name or on its behalf any obligation, express or implied, or to act or
purport to act as the other party's agent or legally empowered representative
for any purpose whatsoever.

            17.3    Neither party shall be liable to any third party in any way
for any engagement, obligation, commitment, contract, representation or for any
negligent act or omission to act of the other party, except as expressly
provided for herein.

      18.   THIRD-PARTY BENEFICIARY

            18.1    No person or party shall have any rights or interests,
direct or indirect, in this AGREEMENT or the services or facilities to be
provided hereunder, or both, except the parties, their successors, and
authorized assigns.

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 38
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 38

            18.2    The parties specifically disclaim any intent to create any
rights in any person or party as a third-party beneficiary to this AGREEMENT or
to the services or facilities to be provided hereunder, or both.

      19.   APPROVAL

            19.1    If required by law, NIAGARA MOHAWK shall file this AGREEMENT
with the appropriate regulatory or judicial authorities within thirty days of
receipt of the executed AGREEMENT from PRODUCER. If such regulatory body
substantially modifies the terms and conditions of this AGREEMENT either party
shall have the right to unilaterally terminate this AGREEMENT effective upon
written notice to the other party; provided, however, that prior to exercising
such termination rights, the parties agree to meet and discuss possibly
modifying this AGREEMENT or entering into a new agreement.

            19.2    All filing fees for the initial filing of this AGREEMENT and
for any subsequent filings with any regulatory or judicial authorities for the
approval or effectiveness of this AGREEMENT shall be paid by PRODUCER. NIAGARA
MOHAWK shall pay any filing fees in connection with any other filing by it.
Nothing contained herein shall be construed as affecting in any way either
NIAGARA MOHAWK's right to make applications to the FERC or any other appropriate
regulatory authority having jurisdiction over the transactions contemplated
hereby or PRODUCER's right to challenge such application.

      20.   ASSIGNMENT

            20.1    Except as otherwise expressly provided in this Article 20,
neither party shall assign, pledge or otherwise transfer this AGREEMENT or any
right or obligation under this AGREEMENT, by operation of law or otherwise,
without first obtaining the other party's written consent, which consent shall
not be unreasonably withheld.

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 39
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 39

            20.2    Upon thirty (30) days prior written notice to NIAGARA
MOHAWK, PRODUCER may, without the consent of NIAGARA MOHAWK, assign its
interests in this AGREEMENT, in whole or in part, to (a) LENDERS (as defined in
the Transmission Services Agreement) or any successor to such LENDERS; or (b) an
entity controlling, controlled by, or under common control with PRODUCER
("Affiliate"); provided, however, that in each such case, such assignment shall
not relieve PRODUCER of its obligations under this AGREEMENT, unless the
assignee shall expressly assume all of PRODUCER's obligations under this
AGREEMENT. If LENDERS or any successor to such LENDERS succeed to the interest
of PRODUCER in this AGREEMENT by foreclosure or otherwise, NIAGARA MOHAWK shall
accord such LENDERS or any successor to such LENDERS, their successors and the
assigns, the same rights as PRODUCER hereunder. In connection with the FINANCIAL
CLOSING (as defined in the Transmission Services Agreement), NIAGARA MOHAWK
agrees to execute and deliver and to furnish a written consent to the assignment
by PRODUCER of this AGREEMENT to the LENDERS, a certificate of an authorized
officer of NIAGARA MOHAWK and an opinion of counsel to NIAGARA MOHAWK, in each
case in form and substance reasonably acceptable to the LENDERS and NIAGARA
MOHAWK.

            20.3    Any company or entity which shall succeed by purchase,
merger or consolidation to the properties, substantially or entirely, of either
NIAGARA MOHAWK or PRODUCER, as the case may be, shall be entitled to the rights
and shall be subject to the obligations of its predecessor in title under this
AGREEMENT provided that, at least thirty (30) days prior to the effective date
of the proposed assignment, the assignee shall unconditionally assume, and agree
to be bound by, all of the terms and conditions of this AGREEMENT, and the

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 40
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 40

assignee makes certain additional representations and warranties as appropriate
for assignee as contained in Article 2.

            20.4    This AGREEMENT shall bind and inure to the benefit of the
parties to this AGREEMENT, their successors and permitted assigns.

      21.   WAIVER

            21.1    No provision of this AGREEMENT may be waived except by
mutual agreement of the parties as expressed in writing and signed by both
parties.

            21.2    Any waiver that is not in writing and signed by both parties
shall be null and void from its inception.

            21.3    No express waiver in any specific instance as provided in a
required writing shall be construed as a waiver of future instances unless
specifically so provided in the required writing.

            21.4    No express waiver of any specific default shall be deemed a
waiver of any other default whether or not similar to the default waived, or a
continuing waiver of any other right or default by a party.

            21.5    The failure of either party to insist in any one or more
instances upon the strict performance of any of the provisions of this
AGREEMENT, or to exercise any right herein, shall not be construed as a waiver
or relinquishment for the future of such strict performance of such provision or
the exercise of such right.

      22.   AMENDMENT/MODIFICATION

            22.1    This AGREEMENT may be amended or modified only if the
amendment or modification is in writing and executed by both parties.

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 41
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 41

            22.2    Any amendment or modification that is not in writing and
signed by both parties shall be null and void from its inception.

            22.3    No express amendment or modification in any specific
instance as provided herein shall be construed as an amendment or modification
of future instances, unless specifically so provided in the required writing.

      23.   CHOICE OF LAW/JURISDICTION/SERVICE OF PROCESS

            23.1    This AGREEMENT shall be deemed to be executed in the State
of New York and shall be interpreted and enforced according to the Laws of the
State of New York.

            23.2    Each of the parties agrees to submit to the jurisdiction of
the courts in the State of New York for the purposes of interpretation and
enforcement of this AGREEMENT; provided, however, that this Article shall not
serve to divest an administrative agency of competent jurisdiction from
interpreting or enforcing this AGREEMENT.

            23.3    Each of the parties waives personal service by manual
delivery and agrees that service of process in any action concerning or arising
out of this AGREEMENT may be made by registered or certified mail, return
receipt requested, delivered at such party's address set forth in Section 13.1
hereof.

      24.   SEVERABILITY

            24.1    If any terms of this AGREEMENT, or the interpretation or
application of any term or provision to any prior circumstance, is held to be
unenforceable, illegal, or invalid by a court or agency of competent
jurisdiction, the remainder of this AGREEMENT, or the interpretation or
application of all other terms or provisions to persons or circumstances other
than those that are unenforceable, illegal, or invalid, shall not be affected

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 42
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 42

thereby and each term and provision shall be valid and be enforced to the
fullest extent permitted by law.

      25.   HEADINGS

            25.1    The headings in this AGREEMENT are included herein for
convenience of reference only and shall not constitute a part of this AGREEMENT
for any other purpose, or limit or be used as an aid in construing the
provisions of this AGREEMENT.

      26.   INTEGRATION/MERGER/SURVIVABILITY

            26.1    This AGREEMENT sets forth the entire understanding and
agreement of the parties as to the subject matter of this AGREEMENT, except to
the extent covered in the Transmission Services Agreement.

            26.2    This AGREEMENT merges and supersedes all prior agreements,
commitments, representations, writings and discussions between the parties
regarding the subject matter herein, except those contained in the Transmission
Services Agreement.

            26.3    In the event of any conflict between the terms and
conditions of this AGREEMENT and the Transmission Services Agreement, the terms
and conditions of the Transmission Services Agreement shall control.

            26.4    Neither party shall be bound or liable to the other party
for any prior obligations, affirmations of fact, conditions, warranties,
representations, understandings, promises, assurances, inducements, or
agreements of any kind, whether written or oral, made by any agent or person in
the other party's employ with respect to the subject matter of this AGREEMENT,
unless explicitly embodied herein.

<Table>
<S>                                                           <C>
Issued by: Susan L. Hodgson                                    Effective Date: July 1, 2001
           Manager- Transmission and Delivery Services
           Issued on: June 29, 2001
</Table>

<Page>

Niagara Mohawk Power Corporation                Substitute Original Sheet No. 43
Rate Schedule FERC No. 189                     Superceding Original Sheet No. 43

      27.   EXECUTION IN COUNTERPARTS

            27.1    This AGREEMENT may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and
the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above written.

SITHE/INDEPENDENCE POWER                      NIAGARA MOHAWK
PARTNERS, L.P.                                POWER CORPORATION
By:      Sithe/Independence, Inc.
its General Partner

By:   /s/ Martin B. Rosenberg                 By:    /s/ Edward J. Dienst
     -------------------------------                 --------------------------
Title:  Senior Vice President                 Title: Senior Vice President

Date:  June 29, 2001                          Date:  June 29, 2001<Page>

                                                                 EXHIBIT 10.7.10

                               TENTH AMENDMENT TO
                              AMENDED AND RESTATED
                            BASE GAS SALES AGREEMENT

      THIS TENTH AMENDMENT TO AMENDED AND RESTATED BASE GAS SALES AGREEMENT
(this "AMENDMENT") is made and entered into as of June 29, 2001 by and between
ENRON NORTH AMERICA CORP., a corporation organized and existing under the laws
of the State of Delaware, as successor in interest by merger to Enron Power
Services, Inc. ("SELLER"), and SITHE/INDEPENDENCE POWER PARTNERS, L.P., a
limited partnership organized and existing under the laws of the State of
Delaware ("BUYER").

                                   WITNESSETH:

      WHEREAS, Seller and Buyer are parties to that certain Amended and Restated
Base Gas Sales Agreement, dated as of October 26, 1992, as previously amended by
amendments, dated as of December 1, 1992, August 26, 1993, December 31, 1993,
October 31, 1994, February 1, 1995, March 1, 1995, March 31, 1995, October 10,
1995 and September 1, 2000 (as so amended, the "ORIGINAL AGREEMENT"); and

      WHEREAS, Buyer intends, at the Effective Date (as defined below), to enter
into a tolling agreement or similar arrangements (the "TOLLING AGREEMENT") for
the provision by Buyer of tolling services or similar arrangements at the
Facility; and

      WHEREAS, pursuant to the terms of the Tolling Agreement and related
documents, the purchaser or purchasers thereunder shall be obligated to procure
and deliver to the Facility all of the Facility's natural gas requirements
associated with such Tolling Agreement and related documents, and as a result
thereof, Seller and Buyer desire to terminate all of the obligations of Seller
to sell to Buyer, and Buyer to purchase from Seller, gas under the Original
Agreement; with the result that the sole obligations remaining under the
Original Agreement as amended by this Amendment are the obligations of the Buyer
to pay the agreed upon balance of the Tracking Account as provided in this
Amendment and to otherwise comply with the terms of the Original Agreement as
amended by this Amendment; and

      WHEREAS, Seller and Buyer wish to amend the Original Agreement as
hereinafter set forth.

      NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein and the benefits to be derived therefrom, the
receipt and sufficiency of which is hereby acknowledged by each of Seller and
Buyer, Seller and Buyer, intending to be legally bound, hereby agree that the
Original Agreement is amended effective as of the Effective Date as follows:

      1. Unless otherwise defined in this Amendment, capitalized terms used in
this Amendment shall have the meanings assigned to them in the Agreement.

<Page>

      2. The parties agree that Article I of the Original Agreement shall be
deleted in its entirety, and the following shall be inserted in its place:

                                   DEFINITIONS

            1.1 DEFINITIONS. The following expressions, as used in this
      Agreement, have the meanings set forth below or given them in the
      provisions hereof cited (such meanings to be equally applicable to both
      the singular and plural forms of the expressions defined):

                  "AFFILIATE" with respect to any Person means any other Person
            directly or indirectly controlling, controlled by, or under common
            control with such first Person whether through ownership, by
            contract, or otherwise; provided that any Person with direct or
            indirect ownership of 5% or more of the voting power for the
            election of directors or other governing body of a corporation or 5%
            or more of the economic interest of any other Person will be deemed
            to control such corporation or other Person.

                  "AGREEMENT" means this Amended and Restated Base Gas Sales
            Agreement, as amended from time to time.

                  "BUSINESS DAY" means any Day other than a Saturday, Sunday, or
            a state or federal bank holiday in Houston, Texas or New York, New
            York.

                  "BUYER EVENT OF DEFAULT" shall have the meaning set forth in
            Section 8.1.

                  "COLLATERAL" shall have the meaning set forth in the
            Intercreditor Agreement.

                  "CONED" means Consolidated Edison Company of New York, Inc.

                  "CONED SUBORDINATED OBLIGATIONS" means all amounts payable by
            Buyer to ConEd in accordance with Section 4.01 of the Amended and
            Restated Energy Purchase Agreement dated as of September 1, 2000 by
            and between Buyer and ConEd.

                  "CLAIM" means any actual or potential claim, suit, action,
            debt, account, damage, cost, loss or expense (including attorneys'
            fees and court costs).

                  "DAY" means a calendar day.

                  "DEFAULT INTEREST RATE" means, with respect to any date, the
            rate per annum equal to the lesser of (i) one percent (1%) over the
            rate identified in

                                       2
<Page>

            the final Eastern edition of THE WALL STREET JOURNAL for such date
            under "Money Rates" as the "Prime Rate" (or, if no such rate is
            identified, the "Prime Rate" as published by Citibank NA or its
            successor at its New York office), and (ii) the maximum rate of
            interest permitted by applicable law.

                  "EFFECTIVE DATE" shall mean June 29, 2001.

                  "FACILITY" means the gas-fired electrical and steam generating
            plant and associated materials, structures and systems constructed
            and owned by Buyer in the Town of Scriba, County of Oswego, New
            York, having a net generating capacity of approximately 1,040
            megawatts.

                  "FACILITY LENDERS" means the financial institutions or other
            Persons from which, or on the credit of which, Buyer incurs any
            Senior Obligations, and any trustee or agent acting on any such
            Person's behalf.

                  "INDENTURE" means the Trust Indenture dated January 1, 1993
            among Sithe/Independence Funding Corporation, Sithe/Independence
            Power Partners, L.P., and Bank of New York (as successor in interest
            to IBJ Schroder Bank and Trust Company), as Trustee, as amended, and
            any successor agreement thereto.

                  "INTERCREDITOR AGREEMENT" means the Collateral Agency and
            Intercreditor Agreement dated January 1, 1993 among Buyer, Seller,
            The Sumitomo Bank Limited (as successor in interest to Union Bank),
            Bank of New York (as successor in interest to IBJ Schroder Bank &
            Trust Company), Sithe/Independence Funding Corporation, the County
            of Oswego Industrial Development Agency and Manufacturers and
            Traders Trust Company.

                  "INTEREST PAYMENT DATE" shall have the meaning set forth in
            Section 4.4(c).

                  "INTEREST RATE" means, with respect to any date, a rate per
            annum equal to the lesser of (i) seven percent (7%) and (ii) the
            maximum rate of interest permitted by applicable law.

                  "OUTSTANDING BALANCE" shall have the meaning set forth in
            Section 4.4(a).

                  "PARENT" means Enron Corp., an Oregon corporation.

                  "PARENT GUARANTY" means the Base Guaranty Agreement dated as
            of December 1, 1992 and made by Enron Corp. to and for the benefit
            of the Buyer.

                                       3
<Page>

                  "PERSON" means any individual, corporation, partnership,
            trust, estate, limited liability company, governmental agency or
            authority, or other entity.

                  "PROJECT DOCUMENTS" shall have the meaning set forth in the
            Indenture.

                  "SECURITY AGREEMENT AND ASSIGNMENT OF CONTRACTS" means that
            certain Security Agreement and Assignment of Contracts, dated as of
            January 1, 1993, made by Buyer in favor of Manufacturers and Traders
            Trust Company.

                  "SENIOR DEBT TERMINATION DATE" shall have the meaning set
            forth in the Intercreditor Agreement.

                  "SENIOR OBLIGATIONS" means the "Financing Liabilities" (as
            that term is defined in the Intercreditor Agreement) outstanding as
            of the Effective Date, plus any other such Financing Liabilities
            incurred after the Effective Date, but only to the extent that the
            proceeds of which are used to repair, replace or modify all or any
            portion of the Facility to the extent required by the terms of the
            Senior Obligations.

                  "TENTH AMENDMENT" means the Tenth Amendment to Amended and
            Restated Base Gas Sales Agreement dated June 29, 2001.

                  "TERMINATION DATE" shall have the meaning set forth in Section
            8.1.

                  "TRACKING ACCOUNT" shall have the meaning set forth in Section
            4.4(a).

                  "TRACKING ACCOUNT LOAN" shall have the meaning set forth in
            Section 4.4(a)."

                  "TRACKING ACCOUNT MORTGAGE AND SECURITY AGREEMENT" means that
            certain Mortgage and Security Agreement, dated as of January 1,
            1993, from the County of Oswego Industrial Development Agency and
            Buyer to Manufacturers and Traders Trust Company.

            1.2 ACCOUNTING DEFINITIONS. All accounting definitions not
      specifically defined herein shall be construed in accordance with
      generally accepted accounting principles as in effect from time to time,
      including, without limitation, applicable statements, bulletins, and
      interpretations issued by the Financial Accounting Standards Board and
      bulletins, opinions, interpretations, and statements issued by the
      American Institute of Certified Public Accountants or its committees. When
      used herein, the expression "FINANCIAL STATEMENTS" includes the notes and
      schedules thereto, but unless

                                       4
<Page>

      otherwise prepared need not include such notes or schedules when used with
      reference to such statements of any Person as of any date other than the
      end of a fiscal year of such Person. Where the character or amount of any
      asset or liability or item of income or expense is required to be made,
      for the purpose of this Agreement, such determination or calculation
      shall, to the extent applicable and except as otherwise specified in this
      Agreement, be made in accordance with generally accepted accounting
      principles applied on a consistent basis.

            1.3 OTHER DEFINITIONS; USE OF DEFINED EXPRESSIONS. The words
      "HEREOF," "HEREIN" and "HEREUNDER," and words of similar import, when used
      in this Agreement, refer to this Agreement as a whole and not to any
      particular provision of this Agreement, and Article, Section, Exhibit, and
      like references refer to such portions of this Agreement unless otherwise
      specified. Each Exhibit attached hereto is made a part hereof for all
      purposes. Unless otherwise defined or the context otherwise requires,
      expressions for which meanings are provided in this Agreement shall have
      such meanings when used in each notice or other communication delivered or
      given from time to time under or in connection with this Agreement. Unless
      the context otherwise requires, any reference herein to any Project
      Document shall mean such Project Document and all schedules, exhibits, and
      attachments thereto as amended, supplemented, or otherwise modified and in
      effect from time to time. Unless otherwise stated, any reference in this
      Agreement to any Person shall include its permitted successors and assigns
      and, in the case of any governmental agency or authority, any Person
      succeeding to its functions and capacities.

      3. The parties agree that Article II of the Original Agreement shall be
deleted in its entirety, and the following shall be inserted in its place:

                                   ARTICLE II
                                   [RESERVED]

      4. The parties agree that Article III of the Original Agreement shall be
deleted in its entirety, and the following shall be inserted in its place:

                                  ARTICLE III
                                   [RESERVED]

      5. The parties agree that Article IV of the Original Agreement shall be
deleted in its entirety, and the following shall be inserted in its place:

                                   ARTICLE IV
                                    PAYMENTS

            4.1   [Reserved].

            4.2   [Reserved].

            4.3   [Reserved].

                                       5
<Page>

            4.4   TRACKING ACCOUNT.

            (a) Seller shall maintain an account (the "TRACKING ACCOUNT"), as
      provided in this Section 4.4. As of the Effective Date, the balance of the
      Tracking Account shall be an amount equal to the sum of (i) four hundred
      and eight million, seven hundred and fifty-nine thousand, nine hundred and
      sixteen dollars and seventy-one cents ($408,759,916.71) (which represents
      the agreed balance of the Tracking Account as of May 31, 2001) and (ii)
      the net change in the Tracking Account for the period from and including
      June 1, 2001 and ending on the Effective Date, determined pursuant to
      Section 4.4 of the Agreement as it existed immediately prior to the Tenth
      Amendment. Within thirty (30) days after the Effective Date, Seller shall
      provide Buyer with Seller's calculation of the Effective Date balance of
      the Tracking Account, together with supporting documentation therefor. If
      Buyer and Seller are unable to agree on the Effective Date balance of the
      Tracking Account within twenty (20) days of receipt by Buyer of Seller's
      calculation, the Effective Date balance of the Tracking Account shall be
      determined by a nationally recognized independent accounting firm mutually
      acceptable to the parties, the fees of which shall be shared equally
      between Buyer and Seller. Seller and Buyer agree that the Effective Date
      balance of the Tracking Account as finally determined hereunder (the
      "OUTSTANDING BALANCE") shall be deemed to be a loan by Seller to Buyer in
      a principal amount equal to the Outstanding Balance (the "TRACKING ACCOUNT
      LOAN"). Notwithstanding any limitations on recourse in any Project
      Document to the contrary, but subject to all terms and conditions of
      subordination (including with respect to the Collateral) set forth in the
      Intercreditor Agreement, Buyer hereby waives any such limitations on
      recourse applicable to it with respect to its obligations hereunder, and
      agrees that it shall be personally liable (on a recourse basis) for the
      repayment of the Tracking Account Loan and any accrued and unpaid interest
      thereon pursuant to this Agreement. Repayment of the Tracking Account Loan
      shall be made in accordance with this Section 4.4.

            (b) [Reserved].

            (c) Interest shall accrue on the unpaid balance of the Tracking
      Account Loan for the period commencing on the Effective Date until the
      Tracking Account Loan shall have been paid in full, at the Interest Rate,
      calculated on the basis of the actual number of Days elapsed divided by
      365. From the Effective Date to but excluding June 1, 2015, but subject to
      the provisions of Section 4.7, interest (i) shall be due and payable on
      each June 1 and December 1, commencing on December 1, 2001 (each such
      date, an "INTEREST PAYMENT DATE") in an amount equal to the interest
      accrued and unpaid on the Tracking Account Loan (including interest
      accrued on any deferred interest) as of such date and (ii) may be prepaid,
      at Buyer's option, on any Business Day on which any payments may be made
      to Buyer's equity investors under the Indenture, in an amount equal to the
      lesser of (A) the interest accrued on the unpaid balance of the Tracking
      Account Loan (including interest accrued on any deferred interest) as of
      such date, and (B) the amount available to be distributed to Buyer's
      equity investors pursuant to the Indenture on such date. Commencing on
      June 1, 2015 and continuing on the first day of each December and June

                                       6
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      thereafter until December 1, 2034 (or until the Tracking Account Loan has
      been paid in full), but subject to Section 4.7, the Tracking Account Loan
      shall be payable in forty (40) equal semi-annual installments of principal
      and interest, each such installment to be in such amount as is necessary
      to fully amortize the Tracking Account Loan over the period from and
      including June 1, 2015 to but excluding December 1, 2034. Each of Buyer
      and Seller shall use its reasonable efforts to prepare and attach to the
      Tenth Amendment, within thirty (30) days of the final determination of the
      Effective Date, the balance of the Tracking Account pursuant to Section
      4.4(a) and a schedule reflecting the payments required under the Tracking
      Account Loan pursuant to the immediately preceding sentence. Interest
      which is not paid as of the due date therefor shall not be capitalized
      into the principal amount of the Tracking Account Loan, but shall be
      carried by Buyer as a separate obligation on its books and records,
      provided that if any payment of interest is not made as of the due date,
      interest shall accrue on the amount of interest that Buyer has so failed
      to make payment at the Interest Rate (if Buyer was unable to make such
      payment pursuant to Section 4.7) or at the Default Interest Rate (in all
      other circumstances) for the period from such due date until the date upon
      which such payment is made in full. Buyer may, at any time after the date
      hereof and from time to time, prepay all or any portion of accrued but
      unpaid interest and/or the unpaid balance of the Tracking Account Loan,
      without penalty or premium. If (i) a Termination Date occurs pursuant to
      Section 8.1 hereof, the entire principal amount of the Tracking Account
      Loan outstanding, and all interest accrued and unpaid thereon, shall be
      accelerated and shall become immediately due and payable without any
      further presentment, demand, protest or further notice of any kind or (ii)
      the Facility Lenders declare the Senior Obligations to be due and payable
      prior to the scheduled maturity thereof and the Facility Lenders shall
      commence any judicial, non-judicial or other proceeding to foreclose or to
      realize against any of their liens or security interests on the Facility
      (including through a deed or other transfer in lieu of foreclosure on the
      Facility), then Seller, by notice to Buyer, may declare the unpaid balance
      of the Tracking Account Loan accelerated, whereupon the entire principal
      amount of the Tracking Account Loan outstanding, and all interest accrued
      and unpaid thereon, shall, upon Buyer's receipt of such notice, be
      accelerated and shall become immediately due and payable without any
      further presentment, demand, protest or further notice of any kind, and
      Buyer shall pay the amount due, determined as of the date of such notice
      (including any interest accrued thereon until the date of payment), to
      Seller; provided, however, that, in the case of clause (ii) of this
      sentence, if the Senior Obligations shall no longer be due and payable
      prior to the scheduled maturity thereof or if the Facility Lenders shall
      no longer be seeking to succeed to Buyer's interest in the Facility
      (whether through foreclosure or by delivery of a deed or other transfer of
      the ownership of the Facility in lieu of foreclosure), or, in the case of
      clause (i) or (ii) of this sentence, if the Facility Lenders or their
      designee(s) or assignee(s) shall succeed to Buyer's interest under this
      Agreement in the manner contemplated by the Intercreditor Agreement, then
      such payment shall no longer be due and payable under this Section 4.4(c)
      until a due date for such payment occurs thereafter, and if Buyer shall
      have theretofore made payment of all or any portion of the Tracking
      Account Loan or any interest thereon in accordance with clause (i) or
      clause (ii) of this sentence or if Seller shall have theretofore obtained
      any portion of any such payment, whether through

                                       7
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      foreclosure or otherwise, Seller shall refund any such payment or recovery
      to Buyer. Notwithstanding any other provision contained herein, but
      subject to the Intercreditor Agreement, Seller's sole remedy for Buyer's
      failure to make payment to Seller in accordance with clause (ii) of the
      immediately preceding sentence of this Section 4.4(c) shall be to
      foreclose on any collateral securing such payment.

            (d) At the written request of Seller at any time after the
      occurrence of a Buyer Event of Default pursuant to Section 8.1(a) or, in
      the case of any other Buyer Event of Default, on or after any Termination
      Date in respect thereof, Buyer agrees that it will immediately and
      irrevocably certify to the Trustee, pursuant to Section 4.14(b) of the
      Indenture that all principal and interest payments due in accordance with
      this Section 4.4 constitute amounts payable to Seller as the "Fuel
      Supplier" as contemplated by Section 4.14(b) of the Indenture. By its
      execution of this Agreement, Buyer irrevocably constitutes and appoints
      Seller as Buyer's "Authorized Representative" (as such term is defined in
      the Indenture), with full power and authority in Buyer's name, place and
      stead, to execute, acknowledge and deliver to the Trustee any certificate
      as may be required to be furnished to the Trustee in accordance with
      Section 4.14(b) of the Indenture; PROVIDED that Seller agrees that it
      shall only exercise such power and authority under the circumstances
      described in, and for the purpose of effectuating, the provisions of the
      immediately preceding sentence. The foregoing grant of authority (i) to
      act as Buyer's "Authorized Representative" under the Indenture is coupled
      with an interest in favor of Seller and as such shall be irrevocable and
      shall survive the merger, dissolution or other termination of Buyer's
      existence, (ii) may be exercised by a facsimile signature of the Seller,
      and (iii) shall survive the assignment by Buyer of this Agreement. If any
      payment under this Agreement shall be due on a Day which is not a Business
      Day, such payment shall be made without default on the next succeeding
      Business Day. Any payments made pursuant to this Article 4 shall be made
      by wire transfer in immediately available funds for credit to Seller's
      account at Bank of America, N.A., Houston, Texas, ABA No. 111000012,
      Account No. 3750494099, or as Seller may specify by notice to Buyer on or
      before the second Business Day prior to payment.

            (e) All payments received by Seller under this Agreement, shall be
      applied first to the payment of accrued and unpaid interest; and then to
      principal, with any prepayments of principal to be applied to the
      installments of the principal of the Tracking Account Loan in inverse
      order of maturity.

            4.5 [Reserved].

            4.6 [Reserved].

            4.7 DEFERRAL OF CERTAIN PAYMENTS. For as long as the Senior
      Obligations are outstanding, notwithstanding the provisions of Section
      4.4, payment of amounts otherwise due under Section 4.4 shall be deferred
      if and to the extent Buyer's agreements with the Facility Lenders in
      connection with the Senior Obligations prohibit payment of like amounts to
      Buyer's equity investors until such time as such payments to Buyer's

                                       8
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      equity investors could be made under such agreements (and Buyer agrees not
      to make payment to its equity investors during such deferral). For as long
      as the ConEd Subordinated Obligations are outstanding, notwithstanding the
      provisions of Section 4.4 hereof, if and to the extent that Buyer can make
      payments to its equity investors, all amounts which could be paid to
      Buyer's equity investors by Buyer shall be applied first to pay any and
      all amounts due and payable under the ConEd Subordinated Obligations, and
      second to pay all amounts due and payable under Section 4.4 hereof, and
      any additional amounts due under Section 4.4 hereof and not paid shall be
      deferred; PROVIDED, FURTHER, that Buyer shall not, on any Business Day on
      which any payments may be made to Buyer's equity investors under the
      Indenture, make any payments to its equity investors of amounts which
      could be paid to its equity investors unless and until Buyer shall have
      paid (i) first, all amounts due and payable under the ConEd Subordinated
      Obligations; (ii) second, all amounts due and payable under Section 4.4
      hereof (including accrued interest thereon) which have previously been
      deferred pursuant to this Section 4.7; (iii) third, all principal, accrued
      interest and all other amounts otherwise due and payable on such Business
      Day under Section 4.4 hereof; and (iv) fourth, if such Business Day is not
      an Interest Payment Date, all accrued and unpaid interest under Section
      4.4 hereof as of such Business Day. The provisions of this Section 4.7,
      however, shall not limit the ability of Seller to exercise its rights to
      accelerate the Tracking Account Loan or to foreclose on any collateral
      securing payment of amounts due under Section 4.4(c) when due as therein
      provided. Notwithstanding anything contained herein, if and to the extent
      that Buyer is required to defer payment of any amount due under Section
      4.4 in accordance with this Section 4.7, Buyer's failure to make any such
      payment shall not constitute or result in a Buyer Event of Default under
      this Agreement. Buyer and Seller expressly acknowledge and agree that the
      obligation of Buyer to pay the principal amount of the Tracking Account
      Loan and accrued interest thereon when due and payable in accordance with
      the provisions of Section 4.4, shall constitute Tracking Account
      Liabilities for purposes of the Intercreditor Agreement and shall be
      subject to, and shall be payable when and as permitted by, the provisions
      of Section 3(b) of the Intercreditor Agreement.

      6. The parties agree that Article V of the Original Agreement shall be
deleted in its entirety, and the following shall be inserted in its place:

                                   ARTICLE V
                                   [RESERVED]

      7. The parties agree that Article VI of the Original Agreement shall be
deleted in its entirety, and the following shall be inserted in its place:

                                   ARTICLE VI
                               COVENANTS OF BUYER

            6.1 COVENANTS OF BUYER. From the Effective Date hereof through the
      Day upon which the Tracking Account Loan is paid in full, Buyer shall,
      unless otherwise consented to by Seller in writing:

                                       9
<Page>

            (a) [Reserved].

            (b) REPORTS AND OTHER INFORMATION. Furnish, or cause to be
      furnished, to Seller:

            (i) NOTICE OF EVENTS. Promptly after Buyer shall have obtained
            knowledge of the occurrence of a Buyer Event of Default, written
            notice thereof setting forth the details of such Buyer Event of
            Default and the action which Buyer proposes to take with respect
            thereto.

            (ii) REPORTS TO FACILITY LENDERS. At the same time as they are (or
            if the Senior Obligations have been repaid, at the time they would
            have been) required to be delivered to the Facility Lenders, a copy
            of each quarterly, annual, or other audit or financial report and
            each report on the electrical or thermal output of the Facility to
            be furnished to Facility Lenders and each notice of default or
            condition or event that, with notice or lapse of time or the taking
            of any action, will constitute a default under the agreements with
            the Facility Lenders.

            (iii) OPERATION AND MAINTENANCE BUDGETS. Not later than five Days
            following Buyer's receipt thereof, a copy of each annual operations
            and maintenance budget prepared by the operator of the Facility; and
            at least thirty Days prior to the first Day of the second half of
            each annual operations and maintenance period, a copy of the
            semi-annual operations and maintenance budget for the next following
            six month period prepared by the operator of the Facility. Each
            annual and semi-annual budget shall, among other information, set
            out the amount and expected timing of all material expenses,
            including, without limitation, the amount to be expended for and the
            expected timing of capital expenditures, scheduled maintenance and
            other material non-operating expense categories. If and to the
            extent that the amount or expected timing of all material expenses,
            including, without limitation, the amount to be expended for and the
            expected timing of capital expenditures, scheduled maintenance and
            other material non-operating expense categories is materially
            revised, Buyer shall provide Seller with the revised schedule of
            such items.

            (iv) NOTICE OF OTHER DEFAULTS. Promptly upon Buyer having received
            or having sent any written notice of any default under any of the
            following: (A) Amended and Restated Energy Purchase Agreement dated
            as of September 1, 2000 by and between Buyer and ConEd; (B) Tolling
            Agreement dated July 1, 2001 between Buyer and Dynegy Power
            Marketing, Inc.; (C) Master Agreement dated July 1, 2001 between
            Buyer and Dynegy Power Marketing, Inc., the Schedule to the Master
            Agreement attached thereto dated July 1, 2001 and Confirmation #1A
            thereof dated July 1, 2001; (D) Gas Supply Agreement dated July 1,
            2001 between Buyer and Dynegy Canada Marketing and Trade; (E) Energy
            Management Agreement dated July 1, 2001 among Buyer, Dynegy
            Marketing and Trade and Dynegy Power Marketing, Inc.; and (F) Energy
            Sales Contract, dated as

                                       10
<Page>

            of November 18, 1992, between Buyer and Alcan Aluminium Corporation
            d/b/a Alcan Rolled Products Company, as amended, a copy of such
            written notice together with a written explanation of the details of
            such default and the action which Buyer proposes to take with
            respect thereto.

            (c) NO EQUITY DISTRIBUTIONS. Not make any distribution to its equity
      investors except in accordance with the second sentence of Section 4.7.

            (d) PROJECT DOCUMENTS. Deliver to Seller for Seller's timely review
      copies of all final drafts of Project Documents and final drafts of
      amendments thereto requiring Seller's acceptance entered into on or after
      the date hereof, promptly on their becoming available to Buyer (provided,
      however, that Seller may review engineering, procurement, and construction
      contracts only at Buyer's offices and Buyer shall not be required to
      provide Seller copies thereof and provided further that Seller may review
      Project Documents relating to the Senior Obligations only at Buyer's
      offices or such other location as shall be acceptable to Buyer and Buyer
      shall not be required to provide Seller copies thereof) and to enter into
      Project Documents (other than Project Documents relating to the Senior
      Obligations) only upon acceptance by Seller (which acceptance shall not be
      withheld or delayed unreasonably). Buyer may enter into amendments to any
      of the Project Documents relating to the Senior Obligations subject to the
      limitations contained in the definition of Senior Obligations contained
      herein. Buyer may not, without the consent of Seller (which consent shall
      not be unreasonably withheld or delayed), enter into any amendment to any
      other Project Document or fail to maintain such other Project Document in
      full force and effect or fail to perform its obligations under such other
      Project Document except to the extent such amendment or failure would not
      reasonably be expected materially and adversely to affect Buyer's ability
      to perform its obligations under this Agreement.

            (e) GOVERNMENTAL APPROVALS. Obtain and maintain in full force and
      effect all Governmental Approvals necessary for its execution, delivery,
      and performance of this Agreement and for the operation of the Facility.

            (f) TITLE, NO MERGER. (i) Maintain good and marketable title to all
      assets and properties comprising a part of the Facility, including fee
      simple title to the site on which the Facility is located (or a valid
      leasehold interest therein), and all easements and other interests
      acquired for use in connection with the Facility, in each case free and
      clear of all liens, claims, and encumbrances of any nature whatsoever,
      except those in favor of the Facility Lenders in connection with the
      Senior Obligations or Seller as contemplated hereby and those that would
      not reasonably be expected to have a material and adverse effect on
      Buyer's ability to own and operate the Facility and to perform its
      obligations under this Agreement; (ii) not sell, assign, transfer, convey
      or otherwise dispose of all or a material portion of the assets and
      properties comprising a part of the Facility; and (iii) not merge with or
      into or consolidate with any Person, or acquire, by lease, purchase, or
      otherwise all or substantially all of the assets or stock of any class of,
      or any partnership or joint venture interest in, any Person.

                                       11
<Page>

            (g) SECURITY INTEREST. Create, perfect, and preserve (including
      payment of all associated recording fees and Taxes, provided that Seller
      shall enter into such agreements, instruments, and documents (including
      amendments hereto) as Buyer may reasonably request to create, perfect, and
      preserve such security instruments and liens so long as such agreements,
      instruments, and documents do not, in Seller's reasonable opinion,
      materially and adversely affect Seller's rights hereunder) in favor of
      Seller a security interest and lien on the Facility, Buyer's interest in
      all Project Documents, and the proceeds of the foregoing, securing Buyer's
      obligations to pay the Tracking Account Loan when due as provided herein,
      free and clear of any other security interest or lien other than those in
      favor of the Facility Lenders in connection with the Senior Obligations
      (and subordinate to such security interests and liens of the Facility
      Lenders on terms satisfactory to Seller and the Facility Lenders) and
      those that would not reasonably be expected to have a material and adverse
      effect on Buyer's ability to own and operate the Facility and to perform
      its obligations under this Agreement, all on substantially the same terms
      and conditions as the security interests and liens in favor of the
      Facility Lenders in connection with the Senior Obligations (other than
      with respect to covenants specifically addressed in this Agreement) or as
      Seller and Buyer otherwise may agree.

            (h) [Reserved].

            (i) INDEBTEDNESS. Not directly or indirectly create, incur, assume,
      or otherwise be or become liable with respect to any indebtedness other
      than (i) indebtedness in respect of the Senior Obligations, (ii)
      indebtedness in respect of current accounts and other amounts payable in
      the ordinary course of business, (iii) unsecured indebtedness or
      indebtedness subject and subordinate (on terms and conditions reasonably
      satisfactory to Seller) to Buyer's obligations under Section 4.4, provided
      that such indebtedness is in respect of the acquisition, development,
      construction, completion, operation, maintenance, repair, replacement,
      use, expansion, or modification of all or any portion of the Facility or
      the performance of any of Buyer's obligations under this Agreement, and
      (iv) indebtedness, the proceeds of which are to be distributed by Buyer to
      the equity investors in Buyer, provided that such indebtedness has been
      approved by Seller.

            (j) [Reserved].

            6.2 COVENANTS OF SELLER. From the Effective Date hereof through the
      Day upon which the Tracking Account Loan is paid in full, Seller shall,
      unless otherwise consented to by Buyer in writing:

            (a) [Reserved].

            (b) [Reserved].

            (c) REVIEW OF PROJECT DOCUMENTS. Within 15 Days after receipt (as
      evidenced by Seller's written or electronic confirmation that such Project
      Documents have been actually received by each of the notice recipients),
      notify Buyer of any objections to drafts

                                       12
<Page>

      of Project Documents and amendments thereto delivered by Buyer as provided
      in Section 6.1(d).

            (d) GOVERNMENTAL APPROVALS. Obtain and maintain in full force and
      effect all Governmental Approvals necessary for its execution, delivery,
      and performance of this Agreement.

            (e) [Reserved].

      8. The parties agree that Article VII of the Original Agreement shall be
deleted in its entirety, and the following shall be inserted in its place:

                                  ARTICLE VII
                                   [RESERVED]

      9. The parties agree that Article VIII of the Original Agreement shall be
deleted in its entirety, and the following shall be inserted in its place:

                                  ARTICLE VIII
                                    REMEDIES

            8.1 BUYER EVENTS OF DEFAULT. If one or more of the following
      conditions or events (each a "BUYER EVENT OF DEFAULT") occurs and is
      continuing:

            (a) Buyer fails to pay any amounts due Seller hereunder when due and
      such failure continues for a period of three (3) Days;

            (b) Buyer generally fails to pay, or admits in writing its inability
      to pay, its debts as they become due, or shall voluntarily commence any
      case or proceeding or file any petition under any bankruptcy, insolvency
      or similar law seeking dissolution, liquidation or reorganization or the
      appointment of a receiver, trustee, custodian or liquidator for itself or
      for a substantial portion of its property, assets or business, or to
      effect a plan or other arrangement with its creditors, or shall file any
      answer admitting the jurisdiction of the court and the material
      allegations of any involuntary petition filed against it in any
      bankruptcy, insolvency or similar case or proceeding or is adjudicated
      bankrupt, or makes a general assignment for the benefit of creditors, or
      shall consent to, or acquiesce in the appointment of, a receiver, trustee,
      custodian or liquidator for itself or for a substantial portion of its
      property, assets or business, or corporate action is taken by Buyer for
      the purpose of effectuating any of the foregoing; and, in any such
      circumstance, the Person exercising control over the assets of the Buyer
      shall fail to affirm this Agreement within a reasonable period of time and
      shall fail to provide evidence reasonably satisfactory to Seller that the
      Buyer can reasonably be expected to perform its obligations when and as
      they become due under this Agreement;

            (c) involuntary proceedings or any involuntary petition shall be
      commenced or filed against Buyer under any bankruptcy, insolvency, or
      similar law seeking the

                                       13
<Page>

      dissolution, liquidation, or reorganization of Buyer, or the appointment
      of a receiver, trustee, custodian, or liquidator for Buyer, or of a
      substantial portion of the property, assets or business of Buyer, or any
      writ, judgment, warrant of attachment, execution or similar process is
      issued or levied against a substantial part of the property, assets or
      business of Buyer and, in any such circumstance, such involuntary
      bankruptcy or similar proceedings are not stayed or dismissed within 120
      Days or (ii) the Person exercising control over the assets of the Buyer
      shall fail to provide evidence reasonably satisfactory to Seller that the
      Buyer can reasonably be expected to perform its obligations when and as
      they become due under this Agreement; or

            (d) Buyer fails to perform in any material respect any of its
      material obligations under this Agreement or the documents evidencing the
      security interest described in Section 6.1(g);

      then Seller, in its sole discretion, may:

            (i) in the case of a Buyer Event of Default under Section 8.1(a), at
            any time on or after the 30th Day, or, if the Senior Debt
            Termination Date shall have occurred, at any time on or after the
            5th Day, following delivery of a notice from Seller to Buyer
            requesting the cure of such Buyer Event of Default, unless such
            Buyer Event of Default has been cured, designate a date of
            acceleration of the Tracking Account Loan by notice to Buyer, which
            date shall be no earlier than the 10th Day following the date of
            such notice or, if the Senior Debt Termination Date shall have
            occurred, which date shall be no earlier than the date Buyer
            receives such notice (the "TERMINATION DATE"); or

            (ii) in the case of any other Buyer Event of Default, at any time on
            or after the 30th Day (or if such condition or event cannot
            reasonably be cured by such 30th Day but can reasonably be expected
            to be cured by the 120th Day and Buyer is diligently pursuing such
            cure, on or after the 120th Day) following delivery of notice from
            Seller to Buyer requesting the cure of such Buyer Event of Default,
            unless it has been cured, designate by notice to Buyer a Termination
            Date.

            8.2 [Reserved].

            8.3 REMEDIES CUMULATIVE. Subject to the provisions of Section 8.4,
      the rights, powers, and remedies provided in Article VIII are in addition
      to other rights, powers, or remedies the parties may have at law or in
      equity. Seller shall have the right to obtain equitable relief from any
      court of competent jurisdiction to specifically enforce the provisions of
      Sections 4.4(d) and 6.1(c), and Buyer expressly acknowledges that damages
      would not be a sufficient remedy for any breach of Buyer's obligations
      under such Section.

            8.4 LIMITATION ON DAMAGES. Notwithstanding any other provision of
      this Agreement or applicable law, in no event shall any party hereto be
      liable for indirect,

                                       14
<Page>

      special, consequential, punitive, or exemplary damages for any breach of
      the provisions hereof.

      10. The parties agree that Article IX of the Original Agreement shall be
deleted in its entirety, and the following shall be inserted in its place:

                                   ARTICLE IX
                              ADDITIONAL AGREEMENTS

            9.1 [Reserved].

            9.2 MUTUAL WAIVERS AND RELEASES. Except (i) as specifically provided
      with respect to the Tracking Account Loan and (ii) with respect to the
      final invoice for payment submitted by Seller to Buyer in the ordinary
      course of business in connection with deliveries of gas by Seller to
      Buyer, in accordance with Section 4.1 of the Agreement as in effect prior
      to the Effective Date, for the period from and including June 1, 2001 to
      but excluding the Effective Date, and effective upon and in consideration
      for Buyer's payment to Seller, within thirty (30) Days of the Effective
      Date, of eleven million four hundred fifty-seven thousand three hundred
      ninety-four dollars ($11,457,394) by wire transfer in immediately
      available funds to an account to be specified by Seller, each of Seller
      and Buyer, on behalf of itself and its Affiliates, its shareholders, and
      their respective successors and assigns, hereby irrevocably waives and
      releases the other party and such party's Affiliates, shareholders, and
      their respective successors and assigns, from any and all Claims arising
      out of or relating to this Agreement as in effect prior to the Effective
      Date, including, without limitation, any and all Claims arising out of or
      relating to the purchase and sale of gas, any minimum annual or minimum
      monthly take obligations, any incremental revenues, any transportation
      savings or demand charges, any price risk management fees or any foreign
      currency adjustments.

            9.3 REVOCATION OF AGENCY. Buyer hereby expressly terminates and
      revokes any appointment of Seller to serve as Buyer's agent with respect
      to any matter arising under the Original Agreement, whether express or
      implied, including, without limitation, any appointment of Seller to serve
      as Buyer's agent for the purposes set forth in Section 3.3(a) of the
      Original Agreement. Seller acknowledges and agrees to the foregoing
      termination and revocation of any such agency.

      11. The parties agree that Article X of the Original Agreement shall be
deleted in its entirety, and the following shall be inserted in its place:

                                    ARTICLE X
                                  MISCELLANEOUS

            10.1 NOTICES. All notices under this Agreement shall be in writing
      and shall be deemed to have been duly given when actually delivered to the
      other party (by telecopier or other means) or when received by registered
      or certified mail, postage prepaid, by the receiving party at the
      following address or such other address as may be specified in

                                       15
<Page>

      writing from time to time by the receiving party by notice to the other in
      the foregoing manner:

            (a)   if to Seller:

                       Enron North America Corp.
                       Compliance Department
                       1400 Smith Street
                       Houston, Texas  77002
                       Attention:  Donna Lowry
                       Telecopy:  (713) 646-4039

                       WITH COPIES TO:

                       Enron North America Corp.
                       1400 Smith Street
                       Houston, Texas  77002
                       Attention:  Charles Ward
                       Telecopy:  (713) 646-3059

                       AND

                       Enron North America Corp.
                       1400 Smith Street
                       Houston, Texas  77002
                       Attention:  Sheila R. Tweed
                       Telecopy:  (713) 646-3490

            (b)   if to Buyer:

                       Sithe/Independence Power Partners, L.P.
                       76 Independence Way
                       P.O. Box 1046
                       Oswego, New York  13126
                       Attention:  Project Manager
                       Telecopy:  (315) 342-8425

                       WITH A COPY TO:

                       Sithe Energies U.S.A., Inc.
                       c/o Sithe Energies, Inc.
                       335 Madison Avenue
                       28th Floor
                       New York, New York  10017
                       Attention: General Counsel
                       Telecopy:  (212) 351-0800

                                       16
<Page>

            10.2 BINDING EFFECT; ASSIGNMENT; NO THIRD PARTY BENEFICIARY. Subject
      to the remaining provisions of this Section 10.2, this Agreement shall be
      binding upon and inure to the benefit of the parties hereto and their
      respective successors and permitted assigns. No party may assign any
      rights or obligations under this Agreement without the prior written
      consent of the other party or parties; provided, however, that Seller may
      assign its rights to receive payments hereunder and Seller acknowledges
      that Buyer has pledged its interests hereunder with the consent of the
      Seller to the Facility Lenders; and provided, further, that as long as the
      Parent Guaranty is in effect and Parent shall have confirmed in writing to
      Buyer and the Facility Lenders, in a manner and in form and substance
      reasonably satisfactory to Buyer and the Facility Lenders, the continuing
      validity and enforceability of the Parent Guaranty, Seller may assign this
      Agreement to any Person and thereby be relieved of its obligations
      hereunder. If Buyer does assign its rights under this Agreement, the
      expression "BUYER" as used herein and in the exhibits attached hereto
      shall be deemed to refer to Buyer's assignee. The parties acknowledge and
      agree that any assignment by any party of any rights or obligations
      hereunder shall not in any way release such party from any obligations so
      assigned. Nothing expressed or implied in this Agreement is intended to
      confer on any Person other than Buyer, Seller and their successors and
      permitted assigns, any rights or obligations under this Agreement.

            10.3 INCIDENTAL EXPENSES; BROKERS. Except as expressly provided
      otherwise herein, each party hereto shall bear and pay its own expenses of
      negotiating and consummating the transactions contemplated by this
      Agreement, and any broker's or other commissions that may be due as a
      result of any agreement made by the party.

            10.4 MULTIPLE COUNTERPARTS. This Agreement may be executed in
      multiple counterparts, each of which may be signed by fewer than all
      parties hereto, but all of which shall be considered one instrument for
      all purposes.

            10.5 ENTIRE AGREEMENT. This Agreement and the other documents, if
      any, to be delivered pursuant hereto constitute the entire agreement
      between the parties and supersede any prior or contemporaneous written or
      oral agreement or understanding between the parties with respect to the
      subject matter of this Agreement. The execution and delivery of any other
      documents contemplated to be executed and delivered hereunder shall not
      supersede or otherwise affect the provisions of this Agreement.

            10.6 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
      CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING
      CONFLICT-OF-LAWS RULES (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
      OBLIGATIONS LAW). EACH OF BUYER AND SELLER HEREBY IRREVOCABLY WAIVES, TO
      THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN
      ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
      OF THE OTHER AGREEMENTS

                                       17
<Page>

      REFERRED TO HEREIN OR ANY OF TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

            10.7 AMENDMENT. No amendment or modification of this Agreement shall
      be effective unless same is in writing and signed by the parties affected
      by such amendment or modification.

            10.8 WAIVER. No waiver of any provision of or rights under this
      Agreement shall be effective unless in writing and signed by the waiving
      party. No waiver of any specified right or provision shall be construed as
      a waiver of any other right or provision or as a continuing waiver.

            10.9 SEVERABILITY. If any term or other provision of this Agreement
      is invalid, illegal, or incapable of being enforced by any rule of law or
      public policy, all other conditions and provisions of this Agreement shall
      to the fullest extent permitted by law nevertheless remain in full force
      and effect. Upon such determination that any term or other provision is
      invalid, illegal, or incapable of being enforced, the parties hereto shall
      negotiate in good faith to modify this Agreement to effect the original
      intent of the parties as closely as possible in an acceptable manner so
      that the transactions contemplated hereby are fulfilled to the extent
      possible.

            10.10 [Reserved].

            10.11 PUBLICITY. Seller and Buyer will cooperate with each other in
      the development and distribution of all news releases and other public
      disclosures relating to the transactions contemplated hereby. Neither
      Seller nor Buyer shall issue or make, or cause to have issued or made, any
      press release or announcement concerning the transactions contemplated
      hereby without the advance approval in writing of the form and substance
      thereof by the other party, unless otherwise required by applicable law.

            10.12 PREPARATION. This Agreement was negotiated and prepared by
      both parties hereto with advice of counsel to the extent deemed necessary
      by each party, was not prepared by any party to the exclusion of the
      other, and accordingly, should not be construed against either party by
      reason of its preparation.

      12. The parties agree that Exhibit 2.2, Exhibit 4.2, Exhibit 4.6, Exhibit
4.6(d), Exhibit 7.2(e)(i) and Exhibit 7.2(e)(ii) of the Original Agreement shall
be deleted in their entirety. The parties further agree that Annex "A" and the
Schedule A referred to therein, which were incorporated into the Original
Agreement pursuant to the Fifth Amendment to the Amended and Restated Base Gas
Sales Agreement dated February 1, 1995, shall also be deleted in their entirety.

      13. This Amendment shall be effective as of 8:00 a.m. (Central time) on
June 29, 2001.

                                       18
<Page>

      14. Each party, to induce the other party to enter into this Amendment,
represents and warrants to the other Party that:

            (a) ORGANIZATION. Each party is a corporation duly organized,
      validly existing and in good standing under the laws of the State of
      Delaware and is qualified to do business in all jurisdictions in which the
      nature of business conducted by it makes such qualification necessary and
      where failure so to qualify would preclude its ability to perform its
      obligations under this Amendment.

            (b) AUTHORIZATION AND VALIDITY. This Amendment and the transactions
      contemplated hereby have been duly authorized by such party, and this
      Amendment has been duly executed and delivered by such party and
      constitutes the legal, valid and binding obligation of such party,
      enforceable against such party in accordance with its terms, subject,
      however, to applicable bankruptcy, insolvency, reorganization, moratorium,
      or similar laws affecting creditors' rights generally and except as the
      enforceability thereof may be limited by general principles of equity
      (regardless of whether considered in a proceeding in equity or at law).

            (c) NO VIOLATION. The execution and delivery of this Amendment by
      such party and the performance by such party of this Amendment and the
      transactions contemplated hereby, do not and will not (i) violate or
      conflict with any provision of such party's partnership agreement,
      certificate of incorporation or by-laws, as the case may be, (ii) violate
      any existing statute or law or any judgment, decree, order, regulation or
      rule of any court or governmental authority applicable to such party,
      which violation will have a material and adverse effect on such party's
      ability to perform its obligations under this Amendment or (iii) under
      existing law require any consent, approval or authorization of, or
      designation, declaration or filing with, any governmental authority on the
      part of such party.

            (d) LEGAL PROCEEDINGS. There are no judicial or administrative
      actions, proceedings, or to such party's knowledge, investigations
      (including, without limitation, bankruptcy, reorganization or insolvency
      actions, proceedings or investigations) pending or, to such party's
      knowledge, threatened that (i) challenge the validity of this Amendment or
      the transactions contemplated hereby or (ii) seek to restrain or prevent
      any action taken or to be taken by such party in connection with this
      Amendment would have a material and adverse effect on such party's ability
      to perform its obligations under this Amendment.

      15. Except as specifically amended herein, the Original Agreement, as
amended by this Amendment, shall continue to be in full force and effect and is
hereby ratified by Seller and Buyer.

      16. This Amendment may be executed in multiple counterparts, each of
which may be signed by fewer than all parties hereto, but all of which shall
be considered one instrument for all purposes. This Amendment was negotiated
and prepared by all parties hereto with the advice of counsel to the extent
deemed necessary by each party, was not prepared by any party to the
exclusion of the other parties, and accordingly, should not be construed
against any party by reason of its preparation.

                                       19

<Page>

      IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
in multiple originals as of the date first written above.

                                   ENRON NORTH AMERICA CORP.

                                   By:    /s/ Jeffrey M. Donahue
                                          -------------------------------------
                                   Name:   Jeffrey M. Donahue
                                   Title:  Managing Director

                                   SITHE/INDEPENDENCE POWER PARTNERS, L.P.

                                   By:  SITHE/INDEPENDENCE, INC.
                                        its General Partner

                                        By:   /s/ Sandra J. Manilla
                                          -------------------------------------
                                        Name:  Sandra J. Manilla
                                        Title: Vice President and Treasurer

                                       20

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