1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

X    Quarterly report pursuant to Section 13 or 15(d) of the Securities 
-----  Exchange Act of 1934

Transition report pursuant to Section 13 or 15(d) of the 
-----  Securities Exchange Act of 1934

For Quarter Ended  June 30, 1999           Commission File Number   333-33397
------------------------                         ---------

NRG Energy, Inc.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware                                    41-1724239              
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(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

1221 Nicollet Mall, Minneapolis, Minnesota                  55403
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(Address of principal executive officers)                 (Zip Code)

Registrant's telephone number, including area code        (612) 373-5300     
-----------------------------

None
--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

Indicated by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes  X   No
------  ------

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

Class                          Outstanding at August 16, 1999
--------------------------------           ------------------------------
Common Stock, $1.00 par value                    1,000 Shares

All outstanding common stock of NRG Energy, Inc., is owned beneficially
and of record by Northern States Power Company, a Minnesota corporation.

The Registrant meets the conditions set forth in general instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced
disclosure format.

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INDEX                                                                                            

PAGE NO.
-------   

PART I

Item 1       Consolidated Financial Statements and Notes

Consolidated Statements of Income                                                  1

Consolidated Balance Sheets                                                      2-3

Consolidated Statements of Stockholder's Equity                                    4

Consolidated Statements of Cash Flows                                              5

Notes to Financial Statements                                                    6-8

Item 2       Management's Discussion and Analysis of Financial
Condition and Results of Operations                                             9-11

PART II

Item 1       Legal Proceedings                                                                 13

Item 6       Exhibits, Financial Statement Schedules, and Reports                           14-15
on Form 8-K

SIGNATURES                                                                                     16

3

CONSOLIDATED STATEMENTS OF INCOME
NRG ENERGY, INC. AND SUBSIDIARIES
(UNAUDITED)

THREE MONTHS ENDED               SIX MONTHS ENDED
JUNE 30,                         JUNE 30,
(Thousands of Dollars)                                              1999            1998              1999            1998
-----------------------------------------------------------------------------------------------------------------------------------

OPERATING REVENUES

Revenues from wholly-owned operations                      $  60,034        $  25,260         $ 97,881         $ 49,782      
Equity in earnings of unconsolidated affiliates                6,625           13,102           15,292           29,183
-----------------------------------------------------------------------------------------------------------------------------------
Total operating revenues                                   66,659           38,362          113,173           78,965
===================================================================================================================================
OPERATING COSTS AND EXPENSES

Cost of wholly-owned operations                               41,124           12,659           69,064           26,305
Depreciation and amortization                                  6,291            4,373           11,025            8,049
General, administrative, and development                      16,288           11,210           32,273           24,380
-----------------------------------------------------------------------------------------------------------------------------------
Total operating costs and expenses                         63,703           28,242          112,362           58,734
===================================================================================================================================
OPERATING INCOME                                                     2,956           10,120              811           20,231
-----------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)

Minority interest in earnings of consolidated                 
subsidiaries                                                    (691)            (128)          (1,155)          (1,160)
Other income, net                                              2,574            1,842            3,308            1,899
Interest expense                                             (15,788)         (12,798)         (26,847)         (24,251)
-----------------------------------------------------------------------------------------------------------------------------------
Total other expense                                       (13,905)         (11,084)         (24,694)         (23,512)
===================================================================================================================================
LOSS BEFORE INCOME TAXES                                           (10,949)            (964)         (23,883)          (3,281)

INCOME TAXES - BENEFIT                                             (13,290)          (7,933)         (25,284)         (16,339)
-----------------------------------------------------------------------------------------------------------------------------------
NET INCOME                                                       $   2,341        $   6,969         $  1,401         $ 13,058 
===================================================================================================================================

See notes to consolidated financial statements.

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4

CONSOLIDATED BALANCE SHEETS
NRG ENERGY, INC. AND SUBSIDIARIES
(UNAUDITED)

JUNE 30,           DECEMBER 31,
(Thousands of Dollars)                                                                   1999                 1998
--------------------------------------------------------------------------------------------------------------------------

ASSETS

CURRENT ASSETS
Cash and cash equivalents                                                    $    65,962           $   6,381
Restricted cash                                                                    2,452               4,021
Accounts receivable-trade, less allowance                                                        
for doubtful accounts of $118 and $100                                          39,314              15,223       
Accounts receivable-affiliates                                                    16,751               7,324
Current portion of notes receivable - affiliates                                  11,895               4,460    
Current portion of notes receivable                                                   --              26,200
Income taxes receivable                                                            6,623              21,169
Inventory                                                                         48,028               2,647
Prepayments and other current assets                                              18,504               4,533
--------------------------------------------------------------------------------------------------------------------------
Total current assets                                                           209,529              91,958
==========================================================================================================================
PROPERTY, PLANT AND EQUIPMENT, AT ORIGINAL COST

In service                                                                     1,198,607             291,558
Under construction                                                                33,309               5,352
--------------------------------------------------------------------------------------------------------------------------
1,231,916             296,910
Less accumulated depreciation                                                   (104,713)            (92,181)
--------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment                                            1,127,203             204,729
--------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS

Investments in projects                                                          811,491             800,924
Capitalized project costs                                                         31,622              13,685
Notes receivable, less current portion - affiliates                              108,332             101,887
Notes receivable, less current portion                                             3,791               3,744

Intangible assets, net of accumulated amortization of $3,896 and $2,984           45,190              22,507
Debt issuance costs, net of accumulated amortization of $2,502 and $1,675         16,492               7,276
Other assets, net of accumulated amortization of $7,835 and $7,350                48,112              46,716
--------------------------------------------------------------------------------------------------------------------------
Total other asset                                                            1,065,030             996,739
==========================================================================================================================
TOTAL ASSETS                                                                       $ 2,401,762         $ 1,293,426
==========================================================================================================================

See notes to consolidated financial statements.

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5

CONSOLIDATED BALANCE SHEETS
NRG ENERGY, INC. AND SUBSIDIARIES
(UNAUDITED)

JUNE 30,      DECEMBER 31,
1999           1998
---------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES

Current portion of long-term debt                                                    $     7,747     $    8,258
Revolving line of credit                                                                 221,267             --
Consolidated project-level, non-recourse debt                                            539,965             --
Accounts payable-trade                                                                    36,936          7,371
Accrued property and sales taxes                                                           4,538          3,251
Accrued salaries, benefits and related costs                                               6,646          7,551
Accrued interest                                                                          11,117          7,648
Other current liabilities                                                                 25,078          8,289
---------------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                              853,294         42,368
===========================================================================================================================
MINORITY INTEREST                                                                               12,941         13,516

CONSOLIDATED PROJECT-LEVEL, LONG TERM, NONRECOURSE DEBT                                        126,914        113,437

CORPORATE LEVEL LONG-TERM DEBT, LESS CURRENT PORTION                                           675,000        504,781

DEFERRED INCOME TAXES                                                                           10,998         19,841

DEFERRED INVESTMENT TAX CREDITS                                                                  1,215          1,343

POSTRETIREMENT AND OTHER BENEFIT OBLIGATIONS                                                    11,113         11,060

DEFERRED INCOME AND OTHER LONG-TERM OBLIGATIONS                                                 11,761          7,748
---------------------------------------------------------------------------------------------------------------------------
Total liabilities                                                                    1,703,236        714,094
===========================================================================================================================
STOCKHOLDER'S EQUITY
Common stock; $1 par value; 1,000 shares authorized;
1,000 shares issued and outstanding                                                           1              1
Additional paid-in capital                                                               631,913        531,913
Retained earnings                                                                        131,416        130,015
Accumulated other comprehensive income                                                   (64,804)       (82,597)
---------------------------------------------------------------------------------------------------------------------------
Total Stockholder's Equity                                                               698,526        579,332
===========================================================================================================================
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY                                                 $ 2,401,762     $1,293,426
===========================================================================================================================

See notes to consolidated financial statements.

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6

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
NRG ENERGY, INC. AND SUBSIDIARIES
(UNAUDITED)

Accumulated
Additional                          Other            Total
Common Stock      Paid-in         Retained        Comprehensive    Stockholder's
(Thousands of Dollars)                                            Capital         Earnings            Income           Equity
--------------------------------------------------------------------------------------------------------------------------------

BALANCES AT JANUARY 1, 1998                       $     1            $ 431,913    $ 88,283        $ (69,499)        $ 450,698

Net Income                                                                          13,058                             13,058
Foreign currency translation adjustments                                                            (16,459)          (16,459)
---------
Comprehensive income                                                                                                   (3,401)
---------------------------------------------------------------------------
BALANCES AT JUNE 30, 1998                         $     1            $ 431,913    $101,341        $ (85,958)        $ 447,297
==============================================================================

BALANCES AT JANUARY 1, 1999                       $     1            $ 531,913    $130,015        $ (82,597)        $ 579,332

Net Income                                                                           1,401                              1,401
Foreign currency translation adjustments                                                             17,793            17,793
---------
Comprehensive income                                                                                                   19,194
Capital Contribution from parent                                       100,000                                        100,000
--------------------------------------------------------------------------------------------------------------------------------
BALANCES AT JUNE 30, 1999                         $     1            $ 631,913    $ 131,416       $ (64,804)        $ 698,526
==============================================================================

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS
NRG ENERGY, INC. AND SUBSIDIARIES
(UNAUDITED)

SIX MONTHS ENDED
JUNE 30,
(Thousands of Dollars)                                                                   1999           1998
--------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                     $   1,401       $ 13,058
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Undistributed equity earnings of unconsolidated affiliates                  26,141        (16,210)
Depreciation and amortization                                               11,025          8,049
Deferred income taxes and investment tax credits                            (8,971)        (5,120)
Minority interest                                                             (575)        (5,722)
Cash provided (used) by changes in certain working capital items,
net of acquisition effects
Accounts receivable                                                      (22,551)        (2,045)
Accounts receivable-affiliates                                            (9,427)          9,903
Accrued income taxes                                                      14,546            (995)
Inventory                                                                 (5,438)             --
Prepayments and other current assets                                     (13,971)          1,162
Accounts payable-trade                                                    29,565          (9,266)
Accrued property and sales tax                                             1,287            (924)
Accrued salaries, benefits and related costs                              (1,047)            (57)
Accrued interest                                                           3,469           1,585
Other current liabilities                                                  4,676             462
Cash used by changes in other assets and liabilities                     (11,313)            (62)
--------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                        18,817          (6,182)
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of liabilities assumed                                        (930,185)             --
Investments in projects                                                          (37,167)        (94,194)
Divestiture of projects                                                            1,000           9,219
Changes in notes receivable (net)                                                 12,273          32,255
Purchase of plant, property and equipment                                        (47,760)        (14,320)
Decrease (increase) in restricted cash                                             1,569          (2,970)
--------------------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES                                               (1,000,270)        (70,010)
--------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions from parent                                                100,000              --
Revolving line of credit                                                          97,267          53,000
Proceeds from issuance of note                                                   539,965              --
Proceeds from issuance of long-term debt                                         310,294          22,658
Principal payments on long-term debt                                              (6,492)         (6,069)
--------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                            1,041,034          69,589
--------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    59,581          (6,603)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                         6,381          11,986
--------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                           $  65,962       $   5,383
====================================================================================================================

See notes to consolidated financial statements.

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NRG ENERGY, INC.

NOTES TO FINANCIAL STATEMENTS

The Company is a wholly-owned subsidiary of Northern States Power Company (NSP),
a Minnesota corporation. Additional information regarding the Company can be
found in NSP's Form 10-Q for the six months ended June 30, 1999.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with SEC regulations for interim financial information and with
the instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The accounting policies followed by the
Company are set forth in Note 1 to the Company's financial statements in its
Annual Report on Form 10-K for the year ended December 31, 1998 (Form 10-K). The
following notes should be read in conjunction with such policies and other
disclosures in the Form 10-K. Interim results are not necessarily indicative of
results for a full year.

In the opinion of management, the accompanying unaudited interim consolidated 
financial statements contain all material adjustments necessary to present 
fairly the consolidated financial position of the Company as of June 30, 1999 
and December 31, 1998, the results of its operations for the three months and 
six months ended June 30, 1999 and 1998, and its cash flows and stockholders' 
equity for the six months ended June 30, 1999 and 1998.

1.   BUSINESS DEVELOPMENTS

In February 1999, NRG purchased from certain affiliates of Thermal
Ventures, Inc. (TVI) the remaining 50.1% limited partnership interests held
by the TVI affiliates in San Francisco Thermal Limited Partnership and
Pittsburgh Thermal Limited Partnership for $12.3 million. In April 1999,
NRG acquired TVI's 50% member interest in North American Thermal Systems
LLC (the entity holding the general partnership interest in the San
Francisco and Pittsburgh partnerships) for $500,000.

In April 1999, the Company completed the acquisition of the Somerset power
station for approximately $55 million from the Eastern Utilities
Association (EUA). The Somerset station, located in Somerset,
Massachusetts, includes two coal-fired generating facilities and two
aeroderivative combustion turbine peaking units supplying 229 MW in
aggregate, of which 69 MW is on deactivated reserve.

In April 1999, NRG reached agreement to purchase the 1,700 MW oil and
gas-fired Oswego generating station for $91 million from Niagara Mohawk
Power Corporation and Rochester Gas and Electric Corporation. The facility
is located in Oswego, New York. The acquisition is expected to close in the
fourth quarter of 1999, pending regulatory approvals and resolution of
certain litigation.

In May 1999, NRG and Dynegy completed the acquisition of the Encina
generating station and 17 combustion turbines for $356 million from San
Diego Gas & Electric Company. The facilities, which have a combined
capacity of 1,218 MW, are located near Carlsbad and San Diego California.
NRG and Dynegy will each own a 50% interest in these facilities.

In June 1999, NRG completed its acquisition of the Huntley and Dunkirk
generating stations from Niagara Mohawk Power Corporation for $355 million.
The two coal-fired power generation facilities are located near Buffalo,
New York, and have a combined summer capacity rating of 1,360 MW.

In June 1999, NRG completed its acquisition of the Arthur Kill generating
station and the Astoria gas turbine site for $505 million from the
Consolidated Edison Company of New York, Inc. These facilities, which are
located in Staten Island and Queens, New York, have a combined summer
capacity rating of 1,456 MW.

In July 1999, NRG executed a binding agreement to purchase four fossil fuel
electric generating stations and numerous remote gas turbines totaling
2,235 MW from Connecticut Light & Power Company for $460 million.

6

9

These facilities are located throughout Connecticut. The acquisition is
expected to close in the fourth quarter of 1999, pending regulatory
approvals.

In June 1999, NRG sold its interest in the Sunnyside project for book
value. The underlying assets were previously written down in accordance
with Financial Accounting Standards No. 121.

NRG, together with its partner, filed a plan with the United States
Bankruptcy Court for the Middle District of Louisiana to acquire 1,708 MW
of fossil generating assets from Cajun Electric Power Cooperative of Baton
Rouge, La., for approximately $1.0 billion. A second plan was submitted by 
Southwestern Electric Power Co. In June 1999, the bankruptcy court 
completed confirmation hearings on the two competing plans. NRG and
its partner are awaiting a final confirmation decision by the court, which
is expected in the third quarter.

2.   CONTINGENT REVENUES

NRG and its partner Dynegy each own a 50% interest in the Long Beach and El
Segundo generating stations ("California Projects"). During 1998, the first
year of deregulation of the state of California power industry, the
California Projects accrued certain receivables related to contingent
revenues. These revenues have been deferred pending resolution of the
contingency. Such amounts relate to items that are subject to contract
interpretations, compliance with processes and filed market disputes. The
California Projects are actively pursuing resolution and/or collection of
these amounts, which totaled approximately $53 million (NRG's share
approximates $26.5 million) as of June 30, 1999. Upon any final resolution
and/or collection of these amounts, such deferred revenues will be
recognized in NRG's equity income.

3.   SUMMARIZED INCOME STATEMENT INFORMATION OF AFFILIATES

The Company has 20-50% investments in four companies that are considered
significant subsidiaries, as defined by applicable SEC regulations, and
accounts for those investments using the equity method. The following
summarizes the income statements of these unconsolidated entities:

THREE MONTHS ENDED                   SIX MONTHS ENDED
JUNE 30,                            JUNE 30,
(Thousands of Dollars)                          1999              1998              1999               1998
-----------------------------------------------------------------------

Net sales                                        $ 166,076     $ 261,471        $ 320,421           $ 399,302
Other income (expense)                              12,876        (9,455)          13,000                (509)
Costs and expenses:
Cost of sales                                   110,287       112,129          237,403             229,953
General and administrative                       41,895         7,582           49,572              12,320
-----------------------------------------------------------------------
152,182       119,711          286,975             242,273
=======================================================================
Income before income taxes                          26,770       132,305           46,446             156,520
Income taxes                                         6,131         1,766           11,836               5,612
-----------------------------------------------------------------------
Net income                                        $ 20,639     $ 130,539        $  34,610           $ 150,908
=======================================================================
Company's share of net income                     $  9,084     $   5,829        $  14,595           $  13,395
=======================================================================

4.   SHORT TERM BORROWINGS

At June 30, 1999, the Company had $539.9 million in short-term project
level borrowings at an average interest rate of 6.35% (LIBOR + 125 basis
points) used for project acquisitions. The Company has $686.6 million of
available borrowing under this credit facility. The Company plans to
refinance its short-term project-level borrowings with long-term
project-level debt later this year.

As of June 30, 1999, the Company had $350 million in revolving credit
facilities under a commitment fee arrangement. These facilities provide
short-term financing in the form of bank loans and letters of credit. At
June 30,1999, the Company had $221 million outstanding under its revolving
credit agreements.

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5.   LONG TERM DEBT

In March 1999, NRG filed a shelf registration with the SEC for up to $500
million in debt securities. The net proceeds will be used to finance NRG's
equity investment in connection with pending acquisitions and for general
corporate purposes, which may include financing the development and
construction of new facilities, working capital, debt reduction, capital
expenditures and potential acquisitions. In May, 1999, NRG issued $300
million of 7.5% senior notes due in 2009 under this registration. In
anticipation of this transaction, NRG executed $175 million in 10-year
treasury locks with an effective yield of 5.26%.

6.   SEGMENT REPORTING

NRG conducts its business within three segments: Independent Power
Generation, Alternative Energy (Resource Recovery and Landfill Gas) and
Thermal projects. These segments are distinct components of NRG with
separate operating results and management structures in place. The `Other"
category includes operations that do not meet the threshold for separate
disclosure and corporate charges that have not been allocated to the
operating segments. Segment information for the second quarter and six
months ended periods of 1999 and 1998 are as follows:

THREE MONTHS ENDED
JUNE 30, 1999                                     INDEPENDENT
(Thousands of Dollars)                               POWER       ALTERNATIVE
GENERATION       ENERGY         THERMAL      OTHER       TOTAL
------------------------------------------------------------------

OPERATING REVENUES
Revenues from wholly-owned operations       $  28,068       $  8,862        $ 21,410    $  1,270   $ 59,610
Intersegment revenues                              --            424              --          --        424
Equity in earnings of unconsolidated                  
affiliates                                     12,297          1,087             (79)     (6,680)     6,625
------------------------------------------------------------------
Total operating revenues                  40,365         10,373          21,331      (5,410)    66,659
==================================================================
NET INCOME (LOSS)                           $   6,578       $  2,651        $  1,022    $ (7,910)  $  2,341

THREE MONTHS ENDED
JUNE 30, 1998                                     INDEPENDENT
(Thousands of Dollars)                               POWER       ALTERNATIVE
GENERATION       ENERGY         THERMAL      OTHER       TOTAL
------------------------------------------------------------------

OPERATING REVENUES
Revenues from wholly-owned operations       $     458       $  8,544        $ 12,235    $  3,694   $ 24,931
Intersegment revenues                              --            329              --          --        329
Equity in earnings of unconsolidated           
affiliates                                     13,292            (12)             82        (260)    13,102
------------------------------------------------------------------
Total operating revenues                  13,750          8,861          12,317       3,434     38,362
==================================================================
NET INCOME (LOSS)                           $   8,784       $  5,123        $  1,221    $ (8,159)  $  6,969

SIX MONTHS ENDED
JUNE 30, 1999                                     INDEPENDENT
(Thousands of Dollars)                               POWER       ALTERNATIVE
GENERATION       ENERGY        THERMAL       OTHER       TOTAL
------------------------------------------------------------------

OPERATING REVENUES
Revenues from wholly-owned operations       $  41,132       $ 15,142        $ 36,555    $  4,304   $ 97,133
Intersegment revenues                              --            748              --          --        748
Equity in earnings of unconsolidated                  
affiliates                                     20,126          1,336           1,083      (7,253)    15,292
------------------------------------------------------------------
Total operating revenues                  61,258         17,226          37,638      (2,949)   113,173
==================================================================
NET INCOME (LOSS)                           $   7,527       $  6,164        $  3,184    $(15,474)  $  1,401

8

11

SIX MONTHS ENDED
JUNE 30, 1998                                     INDEPENDENT
(Thousands of Dollars)                               POWER       ALTERNATIVE
GENERATION       ENERGY        THERMAL       OTHER       TOTAL
------------------------------------------------------------------

OPERATING REVENUES
Revenues from wholly-owned operations       $     858       $ 15,352        $ 26,653    $  6,238    $ 49,101
Intersegment revenues                              --            681              --          --         681
Equity in earnings of unconsolidated               
affiliates                                     28,952            375             236        (380)     29,183
------------------------------------------------------------------
Total operating revenues                  29,810         16,408          26,889       5,858      78,965
==================================================================
NET INCOME (LOSS)                           $  21,246       $  8,848        $  2,937    $(19,973)   $ 13,058

7.   NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires that all
derivatives be recognized at fair value in the Balance Sheet, and that
changes in fair value be recognized either currently in earnings or
deferred as a component of Other Comprehensive Income, depending on
the intended use of derivative, its resulting designation and its
effectiveness. The Company plans to adopt this standard in 2001, as
required. The potential impact of implementing this statement has not
yet been determined.

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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition is omitted
per conditions as set forth in General Instructions H(1) (a) and (b) of Form
10-Q for wholly owned subsidiaries. It is replaced with management's narrative
analysis of the results of operations set forth in General Instructions H(2)
(a) of Form 10-Q for wholly owned subsidiaries (reduced disclosure format). This
analysis will primarily compare the Company's revenue and expense items for the
six months ended June 30, 1999 with the six months ended June 30, 1998.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

Net income for the six months ended June 30, 1999, was $1.4 million
compared to $13.1 million for the same period in 1998. The decrease in net
income of $11.7 million was due to the factors described below.

OPERATING REVENUES

For the six months ended June 30, 1999, revenues were $113.2 million,
an increase of $34.2 million, or 43% over the same period in 1998.

The operating revenues from wholly owned operations for the six months
ended June 30, 1999 were $97.9 million, an increase of $48.1 million, or 97%,
over the same period in 1998. Approximately $26.0 million of the increase
relates to energy sales to Eastern Utilities Association (EUA) under an
agreement that went into effect on January 1, 1999. Under the terms of the
agreement, NRG will provide various entities within EUA with a fixed percentage
of their energy needs for a period of 6.2 to 11 years. In addition, NRG
purchased the remaining 50% interest in the Pittsburgh and San Francisco thermal
operations resulting in $10 million of additional revenues in 1999. The
remaining increase relates to the Dunkirk, Huntley, Astoria and Arthur Kill
facilities that were acquired in June 1999. For the six months ended June 30,
1999, revenues from wholly owned operations consisted primarily of revenue from
electrical generation (57%) heating, cooling and thermal activities (39%) and
technical services (4%).

Equity in earnings of unconsolidated affiliates was $15.3 million for
the six months ended June 30, 1999, compared to $29.2 million for the six months
ended June 30, 1998, a decrease of $13.9 million, or 48%. The decrease was due
to several factors, including a $6.5 million reduction in earnings from the Mt.
Poso project primarily due to curtailment revenues that were recorded in 1998, a
$2.5 million decrease in earnings due to cooler weather conditions at the El
Segundo, Long Beach and Encina facilities and a $1.5 million decrease in
earnings from NEO affiliates. In addition, there was a $3.7 million decrease in
equity earnings due to the transaction adjustment related to the Kladno Project.
A portion of the Kladno project's debt is denominated in U.S. dollars and German
deutsche marks, which strengthened against the Czech koruna in the first six
months of 1999. Under SFAS No. 52, the Kladno project records foreign currency
gains and losses through the income statement.

OPERATING COSTS AND EXPENSES

Cost of wholly owned operations was $69.1 million for the six months
ended June 30, 1999. This is an increase of $42.8 million or 163% over the same
period in 1998. The increase is due primarily to energy purchases made to
satisfy the EUA power sales agreement and increased operating costs from new
acquisitions.

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13

Depreciation and amortization costs were $11.0 million for the six
months ended June 30, 1999, compared to $8.0 million for the six months ended
June 30, 1998. The depreciation and amortization increase was due primarily to
new projects, including the Somerset, Dunkirk, Huntley, Astoria and Arthur Kill
facilities and depreciation from the Pittsburgh and San Francisco thermal
facilities that were previously recorded on the equity method of accounting.

General, administrative and development costs were $32.3 million for
the six months ended June 30, 1999, compared to $24.4 million for the six months
ended June 30, 1998. The $7.9 million increase is due primarily to increased
business development activities, associated legal, technical, and accounting
expenses, employees and equipment resulting from expanded operations and pending
acquisitions. The Company's asset base increased from $1.2 billion to $2.4
billion during the first six months of 1999.

OTHER INCOME (EXPENSE)

Other expense for the six months ended June 30, 1999, is $24.7 million,
an increase of $1.2 million, compared to $23.5 million for the same period in
1998. The increase in expenses is due primarily to interest costs related to a
new $300 Senior Note issuance and approximately $540 million of new short-term
debt which is partially offset by increased interest income from loans to
affiliates.

INCOME TAX

The Company recognized an income tax benefit due to a pre-tax loss from
domestic operations and due to the recognition of certain tax credits. The net
income tax benefit for the six months ended June 30, 1999, increased by $9.0
million to $25.3 million as compared to $16.3 million for the same period one
year earlier. The increase in tax benefits for the six months period was due
primarily to an increase in Section 29 credits from NEO operations and higher
domestic pre-tax losses.

YEAR 2000 (Y2K) READINESS

To the extent allowed, the information in the following section is
designated as a "Year 2000 Readiness Disclosure." NRG is incurring costs to
modify or replace existing technology, including computer software, for
uninterrupted operation in the year 2000 and beyond. A committee made up of
senior management is leading NRG's initiatives to identify Y2K related issues
and remediate business processes as necessary. NRG is also partnering with its
parent, NSP, to ensure a consistent overall company process in addressing the
Y2K issue, as discussed in NRG's 1998 Form 10-K.

NRG's is on schedule for completion of its Y2K project based on the following
revised timetable.

-        Assessment/discovery/analysis - Completed
-        Final testing - October 31, 1999
-        Y2K Ready - November 15, 1999

NRG is currently updating contingency plans for all material Y2K risk
and is on track to meet the contingency planning schedule that has been
established. In addition to Y2K readiness, NRG's contingency planning addresses 
the failure of key third party contracts to be Y2K compliant. A Y2K readiness 
plan is obtained as part of all new acquisitions.

FORWARD-LOOKING STATEMENTS

In addition to any assumptions and other factors referred to
specifically in connection with such forward-looking statements, factors that
could cause the actual results to differ materially from those contemplated in
any forward-looking statements include, among others, the following:

-  Economic conditions including inflation rates and monetary
fluctuations;
-  Trade, monetary, fiscal, taxation, and environmental policies of 
governments, agencies and similar organizations in geographic areas
where we have a financial interest;

11

14

-  Customer business conditions including demand for their products or
services and supply of labor and materials used in creating their 
products and services; 
-  Financial or regulatory accounting principles or policies
imposed by the Financial Accounting Standards Board, the Securities and
Exchange Commission, the Federal Energy Regulatory Commission and
similar entities with regulatory oversight; 
-  Availability or cost of capital such as changes in: interest rates;
market perceptions of the power generation industry, the Company or any
of its subsidiaries; or security ratings;
-  Factors affecting power generation operations such as unusual weather
conditions; catastrophic weather-related damage; unscheduled generation
outages, maintenance or repairs; unanticipated changes to fossil fuel,
or gas supply costs or availability due to higher demand, shortages,
transportation problems or other developments; environmental incidents;
or electric transmission or gas pipeline system constraints;
-  Employee workforce factors including loss or retirement of key
executives, collective bargaining agreements with union employees, or
work stoppages;
-  Increased competition in the power generation industry;
-  Cost and other effects of legal and administrative proceedings,
settlements, investigations and claims;
-  Technological developments that result in competitive disadvantages and
create the potential for impairment of existing assets;
-  Factors associated with various investments including conditions of
final legal closing, foreign government actions, foreign economic and
currency risks, political instability in foreign countries, partnership
actions, competition, operating risks, dependence on certain suppliers
and customers, domestic and foreign environmental and energy
regulations;
-  Limitations on our ability to control the development or operation of
projects in which the Company has less than 100% interest;
-  Other business or investment considerations that may be disclosed from
time to time in the Company's Securities and Exchange Commission
filings or in other publicly disseminated written documents, including
the Company's Registration Statement No. 333-33397, as amended.

We have no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
The foregoing review of factors pursuant to the Act should not be construed as
exhaustive.

12

15

PART II

ITEM 1. LEGAL PROCEEDINGS

On or about July 12, 1999, Fortistar Capital, Inc. ("Fortistar") commenced an
action against NRG Energy, Inc. ("NRG") in Hennepin County (Minnesota) District
Court, seeking damages in excess of $100 million and an order restraining NRG
from consummating the acquisition of Niagara Mohawk's Power Corporation's Oswego
generating station. Fortistar's motion for a temporary restraining order was
denied and a temporary injunction hearing has been scheduled for September 27,
1999. NRG intends to vigorously defend the suit and believes Fortistar's claims
to be without merit. NRG has asserted numerous counterclaims against Fortistar.
NRG expects to close the Oswego acquisition in the fourth quarter of 1999,
pending regulatory approvals and resolution of this lawsuit.

13

16

PART II

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS

4.3    Loan Agreement, dated June 4, 1999 between NRG Northeast Generating
LLC, Chase Manhattan Bank and Citibank, N.A. 

4.4    Indenture between the Company and Norwest Bank Minnesota, National
Association, as Trustee dated as of May 25, 1999 (incorporated 
herein by reference to Exhibit 4.1 to the Company's Current Report 
on Form 8-K dated May 25, 1999 and filed on May 27, 1999).

10.18  Wholesale Standard Offer Service Agreement between Blackstone
Valley Electric Company, Eastern Edison Company, Newport Electric
Corporation and NRG Power Marketing, Inc., dated October 13, 1998.
10.19  Asset Sales Agreement by and between Niagara Mohawk Power
Corporation and NRG Energy, Inc., dated December 23, 1998.
10.20  First Amendment to Wholesale Standard Offer Service Agreement
between Blackstone Valley Electric Company, Eastern Edison Company,
Newport Electric Corporation and NRG Power Marketing, Inc., dated
January 15, 1999.
10.21  Generating Plant and Gas Turbine Asset Purchase and Sale Agreement
for the Arthur Kill generating plants and Astoria gas turbines by
and between Consolidated Edison Company of New York, Inc., and NRG
Energy, Inc., dated January 27, 1999.
10.22  Transition Energy Sales Agreement between Arthur Kill Power LLC and
Consolidated Edison Company of New York, Inc., dated June 1, 1999.
10.23  Transition Energy Sales Agreement between Astoria Gas Turbine
Power LLC and Consolidated Edison Company of New York, Inc., dated
June 1, 1999.
10.24  Transition Power Purchase Agreement between Niagara Mohawk Power
Corporation and Huntley Power LLC, dated June 11, 1999.
10.25  Transition Power Purchase Agreement between Niagara Mohawk Power
Corporation and Dunkirk Power LLC, dated June 11, 1999.
10.26  Power Purchase Agreement between Niagara Mohawk Power Corporation
and Dunkirk Power LLC, dated June 11, 1999.
10.27  Power Purchase Agreement between Niagara Mohawk Power Corporation
and Huntley Power LLC, dated June 11, 1999.
10.28  Amendment to the Asset Sales Agreement by and between Niagara
Mohawk Power Corporation and NRG Energy, Inc., dated June 11, 1999.
10.29  Transition Capacity Agreement between Astoria Gas Turbine Power LLC
and Consolidated Edison Company of New York, Inc., dated June 25,
1999.
10.30  Transition Capacity Agreement between Arthur Kill Power LLC and
Consolidated Edison Company of New York, Inc., dated June 25, 1999.
27     Financial Data Schedule for the period ended June 30, 1999.

(b)  REPORTS ON FORM 8-K:

On May 24, 1999, NRG filed a Form 8-K reporting under Item 5 - Other
Events. NRG filed certain exhibits relating to the offering of $300,000,000
principal amount of the Company's 7.5% Senior Notes due 2009.

On May 27, 1999, NRG filed a Form 8-K reporting under Item 5 - Other
Events. NRG announced that the $300,000,000 Senior Note offering was
completed.

On June 28, 1999, NRG filed a Form 8-K reporting under Item 5 - Other
Events. NRG announced its acquisition of the Dunkirk and Huntley stations
from Niagara Mohawk Power Corporation. 

14

17

On July 8, 1999, NRG filed a Form 8-K reporting under Item 5 - Other
Events. NRG announced its acquisition of the Arthur Kill and Astoria
generating assets from the Consolidated Edison Company of New York, Inc.

On July 16, 1999, NRG filed a Form 8-K reporting under Item 5 - Other
Events. NRG announced that earnings for the six months ended June 30, 1999
would be below expectation.

15

18

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

NRG ENERGY, INC.
-----------------------------------
(Registrant)

/s/
---------------------------------
Leonard A. Bluhm
Executive Vice President and Chief
Financial Officer (Principal
Financial Officer)

/s/
---------------------------------
David E. Ripka
Vice President and Controller
(Principal Accounting Officer)

Date:  August 16, 1999              
--------------------

16

1
EXHIBIT 4.3

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

LOAN AGREEMENT

Dated as of June 4, 1999

among

NRG NORTHEAST GENERATING LLC,

THE SUBSIDIARY GUARANTORS PARTY HERETO

THE LENDERS PARTY HERETO

THE CHASE MANHATTAN BANK,
as an Administrative Agent and Collateral Agent

and

CITIBANK, N.A.,
as an Administrative Agent and Paying Agent

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED,
as Documentation Agent

$686,564,000

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

2
TABLE OF CONTENTS

Page

ARTICLE I.   DEFINITIONS..........................................................................................1
SECTION 1.01.  Defined Terms.............................................................................1
SECTION 1.02.  Terms Generally..........................................................................26
SECTION 1.03.  Accounting Terms; GAAP...................................................................26

ARTICLE II.  THE CREDITS.........................................................................................27
SECTION 2.01.  The Commitments..........................................................................27
SECTION 2.02.  Loans and Borrowings.....................................................................27
SECTION 2.03.  Requests for Borrowings..................................................................28
SECTION 2.04.  Funding of Borrowings....................................................................29
SECTION 2.05.  Interest Elections.......................................................................29
SECTION 2.06.  Termination and Reduction of the Commitments.............................................31
SECTION 2.07.  Repayment of Loans; Evidence of Debt.....................................................31
SECTION 2.08.  Prepayment of Loans......................................................................33
SECTION 2.09.  Fees.  34
SECTION 2.10.  Interest.................................................................................35
SECTION 2.11.  Alternate Rate of Interest...............................................................36
SECTION 2.12.  Increased Costs..........................................................................36
SECTION 2.13.  Break Funding Payments...................................................................37
SECTION 2.14.  Taxes. 38
SECTION 2.15.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs..............................39
SECTION 2.16.  Mitigation Obligations; Replacement of Lenders...........................................40

ARTICLE III. GUARANTEE...........................................................................................41
SECTION 3.01.  The Guarantee............................................................................41
SECTION 3.02.  Obligations Unconditional................................................................42
SECTION 3.03.  Reinstatement............................................................................42
SECTION 3.04.  Subrogation..............................................................................43
SECTION 3.05.  Remedies.................................................................................43
SECTION 3.06.  Instrument for the Payment of Money......................................................43
SECTION 3.07.  Continuing Guarantee.....................................................................43
SECTION 3.08.  Rights of Contribution...................................................................43
SECTION 3.09.  General Limitation on Guarantee Obligations..............................................44
SECTION 3.10.  Effectiveness............................................................................45

ARTICLE IV.  REPRESENTATIONS AND WARRANTIES......................................................................45
SECTION 4.01.  Organization; Powers.....................................................................45
SECTION 4.02.  Authorization; Enforceability............................................................45
SECTION 4.03.  Governmental Approvals; No Conflicts.....................................................45
SECTION 4.04.  Financial Condition; No Material Adverse Change..........................................46
SECTION 4.05.  Properties...............................................................................47
SECTION 4.06.  Litigation and Environmental Matters.....................................................47
SECTION 4.07.  Compliance with Laws and Agreements......................................................47

-i-

3

SECTION 4.08.  Investment Company Status................................................................47
SECTION 4.09.  Taxes....................................................................................48
SECTION 4.10.  ERISA....................................................................................48
SECTION 4.11.  Disclosure...............................................................................48
SECTION 4.12.  Use of Credit............................................................................48
SECTION 4.13.  Material Agreements and Liens............................................................48
SECTION 4.14.  Capitalization...........................................................................49
SECTION 4.15.  Subsidiaries and Investments.............................................................49
SECTION 4.16.  Utility Regulation.......................................................................50

ARTICLE V.  CONDITIONS PRECEDENT.................................................................................50
SECTION 5.01.  Effective Date...........................................................................50
SECTION 5.02.  Conditions Precedent for each Term Loan..................................................53
SECTION 5.03.  Conditions Precedent for each Revolving Loan.............................................56

ARTICLE VI.  AFFIRMATIVE COVENANTS...............................................................................57
SECTION 6.01.  Financial Statements and Other Information...............................................57
SECTION 6.02.  Notices of Material Events...............................................................58
SECTION 6.03.  Existence; Conduct of Business...........................................................59
SECTION 6.04.  Payment of Obligations...................................................................59
SECTION 6.05.  Maintenance of Properties; Insurance.....................................................59
SECTION 6.06.  Books and Records; Inspection Rights.....................................................60
SECTION 6.07.  Compliance with Laws and Contractual Obligations.........................................60
SECTION 6.08.  Use of Proceeds..........................................................................60
SECTION 6.09.  Rating of Index Debt.....................................................................60
SECTION 6.10.  Certain Obligations Respecting Subsidiaries..............................................61
SECTION 6.11.  Casualty Events..........................................................................61
SECTION 6.12.  EWG Status...............................................................................62
SECTION 6.13.  Debt Service Reserve Account.............................................................62

ARTICLE VII.  NEGATIVE COVENANTS.................................................................................65
SECTION 7.01.  Indebtedness.............................................................................65
SECTION 7.02.  Liens....................................................................................66
SECTION 7.03.  Fundamental Changes......................................................................66
SECTION 7.04.  Investments..............................................................................66
SECTION 7.05.  Restricted Payments......................................................................67
SECTION 7.06.  Transactions with Affiliates.............................................................67
SECTION 7.07.  Restrictive Agreements...................................................................67
SECTION 7.08.  [Reserved.]..............................................................................68
SECTION 7.09.  Capital Expenditures.....................................................................68
SECTION 7.10.  Modifications of Certain Documents.......................................................68
SECTION 7.11.  Fuel Agreements..........................................................................69
SECTION 7.12.  Power Marketing Agreements...............................................................69
SECTION 7.13.  Power Purchase Agreements................................................................69

-ii-

4

ARTICLE VIII.  EVENTS OF DEFAULT.................................................................................69

ARTICLE IX.  THE AGENTS..........................................................................................72

ARTICLE X.  MISCELLANEOUS........................................................................................75
SECTION 10.01.  Notices.................................................................................75
SECTION 10.02.  Waivers; Amendments.....................................................................76
SECTION 10.03.  Expenses; Indemnity; Damage Waiver......................................................76
SECTION 10.04.  Successors and Assigns..................................................................78
SECTION 10.05.  Survival................................................................................80
SECTION 10.06.  Counterparts; Integration; Effectiveness................................................80
SECTION 10.07.  Severability............................................................................81
SECTION 10.08.  Right of Setoff.........................................................................81
SECTION 10.09.  Governing Law; Jurisdiction; Etc........................................................81
SECTION 10.10.  Waiver Of Jury Trial....................................................................82
SECTION 10.11.  Headings................................................................................82
SECTION 10.12.  Treatment of Certain Information; Confidentiality.......................................82

SCHEDULE I            -      Commitments
SCHEDULE II           -      Material Agreements and Liens
SCHEDULE III          -      Subject Governmental Approvals
SCHEDULE IV                  Litigation
SCHEDULE V            -      Environmental Matters
SCHEDULE VI           -      Subsidiaries and Investments
SCHEDULE VII          -      Governmental Approvals
SCHEDULE VIII         -      Insurance Requirements
SCHEDULE IX           -      Permitted Encumbrances

EXHIBIT A             -      Form of Assignment and Acceptance
EXHIBIT B             -      Form of Security Agreement
EXHIBIT C             -      Form of Pledge Agreement
EXHIBIT D             -      Form of Guarantee Assumption Agreement
EXHIBIT E             -      Form of PMI Security Agreement
EXHIBIT F             -      [Reserved]
EXHIBIT G             -      Form of Equity Contribution Agreement
EXHIBIT H             -      Form of Consent and Agreement
EXHIBIT I             -      Form of Debt Service Reserve Letter of Credit
EXHIBIT J             -      Form of Debt Service Reserve Guarantee
EXHIBIT K             -      Form of Intercompany Note

-iii-

5

LOAN AGREEMENT

LOAN AGREEMENT dated as of June 4, 1999 among NRG NORTHEAST
GENERATING LLC, the SUBSIDIARY GUARANTORS party hereto, the LENDERS party
hereto, THE CHASE MANHATTAN BANK, as an Administrative Agent and as Collateral
Agent and CITIBANK, N.A., as an Administrative Agent and as Paying Agent.

The Borrower (as hereinafter defined) has requested that the
Lenders (as so defined) make loans to it, under the guarantee of the Subsidiary
Guarantors (as so defined), in an aggregate principal amount not exceeding
$686,564,000, to finance four separate acquisitions of electricity generating
assets. These acquisitions include the Dunkirk and Huntley generating facilities
from Niagara Mohawk Power Corporation, the Astoria and Arthur Kill generating
facilities from Consolidated Edison Company of New York, Inc., the Somerset
generating facilities from Montaup Electric Company and the Oswego generating
facility from Niagara Mohawk Power Corporation. The Lenders are prepared to make
such loans upon the terms and conditions hereof, and, accordingly, the parties
hereto agree as follows:

ARTICLE I.  DEFINITIONS.

SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:

"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans constituting such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.

"Acceptable Bank" means any bank or trust company which (a) is
organized under the laws of the United States of America, any state thereof, any
other member of the Organization for Economic Cooperation and Development or
Japan and has an office in the United States of America, (b) has capital,
surplus and undivided profits of at least $1,000,000,000 and (c) has outstanding
long-term unsecured indebtedness which is rated "A-" or better by S&P and "A3"
or better by Moody's (or an equivalent rating by another nationally recognized
statistical rating organization of similar standing if neither such corporation
is in the business of rating long-term unsecured bank indebtedness).

"Acceptable Guarantor" means any Person which (a) is organized
under the laws of any state of the United States of America, (b) has an
aggregate stockholders' equity of at least $250,000,000 and (c) has outstanding
long-term unsecured indebtedness which is rated "BBB-" or better by S&P and
"Baa3" or better by Moody's.

"Acquisition Documents" means the Dunkirk/Huntley Acquisition
Documents, the Somerset Acquisition Documents, the Con Ed Acquisition Documents
or the Oswego Acquisition Documents or any combination thereof (as the context
requires).

6
-2-

LOAN AGREEMENT

"Acquisitions" means the Con Ed Acquisition, the
Dunkirk/Huntley Acquisition, the Somerset Acquisition or the Oswego Acquisition,
or any combination thereof (as the context requires).

"Additional Project Document" means (a) any contract or
agreement entered into by the Borrower or any of its Subsidiaries relating to
the Restoration of Affected Property undertaken in accordance with Section 6.11
or (b) any other contract or agreement (other than any Project Document, any
Permitted Fuel Agreement, any Permitted Power Marketing Agreement or any
Permitted Power Purchase Agreement) entered into by the Borrower or any of its
Subsidiaries in the ordinary course of its business relating to acquisition,
ownership, leasing, occupation, operation, maintenance or use of the Facilities
and under which the Borrower or such Subsidiary, as the case may be, shall have
obligations not in excess of $5,000,000 under any such contract or agreement or
$20,000,000 in the aggregate as to all such agreements.

"Adjusted LIBO Rate" means, for the Interest Period for any
Eurodollar Borrowing, an interest rate per annum (rounded upwards, if necessary,
to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Rate for such Interest Period.

"Administrative Agents" means Chase and Citibank acting
jointly, in their respective capacities as administrative agents for the Lenders
hereunder.

"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied to the Lenders by the Administrative Agents.

"Affected Property" means, with respect to any Casualty Event,
the property of the Borrower and its Subsidiaries lost, destroyed, damaged,
condemned or otherwise taken as a result of such Casualty Event.

"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.

"Alternate Base Rate" means, for any day, a rate per annum
equal to the Prime Rate in effect on such day. Any change in the Alternate Base
Rate due to a change in the Prime Rate shall be effective from and including the
effective date of such change in the Prime Rate.

"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments or Loans of all Classes hereunder
represented by the aggregate amount of such Lender's Commitments or Loans of all
Classes hereunder.

"Applicable Rate" means, for any day, with respect to any ABR
Loan or Eurodollar Loan, the applicable rate per annum set forth below under the
caption "ABR Spread" or "Eurodollar Spread" based upon the ratings by Moody's
and S&P, respectively, applicable on such date to the Index Debt:

7
-3-

LOAN AGREEMENT

=============================================================================
Index Debt Ratings:           ABR Spread          Eurodollar Spread
-----------------------------------------------------------------------------

Category 1                 0.125%                 1.125%
-----------------------------------------------------------------------------
Category 2                 0.250%                 1.250%
-----------------------------------------------------------------------------
Category 3                 1.500%                 2.500%
=============================================================================

For purposes of the foregoing, (i) if either Moody's or S&P shall not have in
effect a rating for the Index Debt (other than by reason of the circumstances
referred to in the last sentence of this definition), then such rating agency
shall be deemed to have established a rating in Category 2; (ii) if the ratings
established or deemed to have been established by Moody's and S&P for the Index
Debt shall fall within different Categories, the Applicable Rate shall be based
on the lower of the two ratings; and (iii) if the ratings established or deemed
to have been established by Moody's and S&P for the Index Debt shall be changed
(other than as a result of a change in the rating system of Moody's or S&P),
such change shall be effective as of the date on which it is first announced by
the applicable rating agency. Each change in the Applicable Rate shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change. If
the rating system of Moody's or S&P shall change, or if either such rating
agency shall cease to be in the business of rating corporate debt obligations,
the Borrower and the Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the unavailability of
ratings from such rating agency and, pending the effectiveness of any such
amendment, the Applicable Rate shall be determined by reference to the rating
most recently in effect prior to such change or cessation.

"Arthur Kill Facility" means the electrical generating plant
and related property, plant and equipment to be purchased by Arthur Kill Power
pursuant to, and as more fully described in, the Con Ed Acquisition Documents.

"Arthur Kill Operator" means NRG Arthur Kill Operations Inc.,
a Delaware corporation.

"Arthur Kill Power" means Arthur Kill Power LLC, a Delaware
limited liability company.

"Astoria Facility" means the electrical generating plant and
related property, plant and equipment to be purchased by Astoria Power pursuant
to, and as more fully described in, the Con Ed Acquisition Documents.

"Astoria Operator" means NRG Astoria Gas Turbines Operations
Inc., a Delaware corporation.

8
-4-

LOAN AGREEMENT

"Astoria Power" means Astoria Gas Turbine Power LLC, a
Delaware limited liability company.

"Availability Period" means the period from and including the
Effective Date to and including (a) in the case of Revolving Loans, the date one
Business Day prior to the Maturity Date and (b) in the case of all other Loans,
February 15, 2000.

"Available Revolver Amount" means, as at any date of
determination, the aggregate amount of all Revolver Amounts as at such date.

"Base Case Financial Model" means the financial model and
associated assumptions of the operations of the Facilities as reviewed as to
capital expenditures, operating costs and other related matters by the
Independent Engineer in the form delivered to the Lenders on or before the date
hereof.

"Basic Documents" means, collectively, the Loan Documents and
the Project Documents.

"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.

"Borrower" means NRG Northeast Generating LLC, a Delaware
limited liability company.

"Borrower LLC Agreement" means the Limited Liability Company
Agreement dated as of March 11, 1999 by and between NRG Eastern and NRG
Generation as the same shall, subject to Section 7.11, be modified and
supplemented and in effect from time to time.

"Borrowing" means (a) all ABR Loans of the same Class made,
converted or continued on the same date or (b) all Eurodollar Loans of the same
Class that have the same Interest Period. For purposes hereof, the date of a
Borrowing comprising one or more Loans that have been converted or continued
shall be the effective date of the most recent conversion or continuation of
such Loan or Loans.

"Borrowing Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.

"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in Dollar deposits in the London interbank
market.

"Capital Expenditures" means, for any period, expenditures
(including the aggregate amount of Capital Lease Obligations incurred during
such period) made by the Borrower or any of its Subsidiaries to acquire or
construct fixed assets, plant and equipment (including renewals, improvements
and replacements, but excluding repairs) during such period computed in
accordance with GAAP.

9
-5-

LOAN AGREEMENT

"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

"Casualty Event" means, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation.

"Category 1" means a period during which each of the following
is true (a) the rating most recently published by Moody's for the Index Debt
then outstanding is equal to or better than "Baa2" and (b) the rating most
recently published by S&P for the Index Debt then outstanding is equal to or
better than "BBB".

"Category 2" means (a) initially, the period commencing on the
date hereof and ending on the date which is the earlier of (but excluding such
date in the case of clause (i); and including such date in the case of clause
(ii)) (i) the date on which Moody's or S&P, as the case may be, shall have
issued a rating on the Index Debt and (ii) the date which is 150 days after the
date hereof or (b) a period (other than a Category 1 period) during which each
of the following is true (i) the rating most recently published by Moody's for
the Index Debt then outstanding is equal to or better than "Baa3" and (ii) the
rating most recently published by S&P for the Index Debt then outstanding is
equal to or better than "BBB-".

"Category 3" means (a) in the event that the Index Debt is not
rated by Moody's or S&P on or before the 150th Day following the date hereof,
the period commencing on but not including such 150th Day and ending on (but not
including) the day on which Moody's or S&P, as the case may be, shall have
issued a rating on the Index Debt or (b) a period during which the ratings on
the Index Debt would not qualify under Category 1 or Category 2.

"Change in Control" means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof)
other than the Sponsor, of ownership interests representing more than 50% of the
aggregate ordinary voting power represented by the membership interests of the
Borrower; (b) the acquisition of direct or indirect Control of the Borrower by
any Person or group other than the Sponsor; or (c) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof)
other than the Sponsor, of any ownership interest in Power Marketing, or any
ownership interest in NRG Operating Services, Inc.
or any ownership interest in any Operator.

"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or 

10
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LOAN AGREEMENT

(c) compliance by any Lender (or, for purposes of Section 2.12(b), by any
lending office of such Lender or by such Lender's holding company, if any) with
any request, guideline or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement.

"Chase" means The Chase Manhattan Bank.

"Citibank" means Citibank, N.A.

"Class", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans constituting such Borrowing, are
Revolving Loans, Tranche A Loans, Tranche B Loans, Tranche C Loans or Tranche D
Loans and, when used in reference to any Commitment, refers to whether such
Commitment is a Revolving Commitment, Tranche A Commitment, Tranche B
Commitment, Tranche C Commitment or Tranche D Commitment.

"Code" means the Internal Revenue Code of 1986, as amended
from time to time.

"Commitment" means a Revolving Commitment, Tranche A
Commitment, Tranche B Commitment, Tranche C Commitment or Tranche D Commitment,
or any combination thereof (as the context requires).

"Con Ed" means Consolidated Edison Company of New York, Inc.

"Con Ed Acquisition" means, collectively, the purchase by
Arthur Kill Power of the Arthur Kill Facility and the purchase by Astoria Power
of the Astoria Facility, in each case pursuant to the Con Ed Acquisition
Documents and for all purposes of this Agreement (except where otherwise
specifically noted herein), such purchases together shall constitute one
Acquisition.

"Con Ed Acquisition Documents" means the Generating Plant and
Gas Turbine Asset Purchase and Sale Agreement dated as of January 27, 1999
between the Sponsor and Con Ed and each of the other agreements attached as a
form thereto.

"Consent and Agreement" means each Consent and Agreement
substantially in the form of Exhibit H by and between the Collateral Agent and
each Person (other than the Borrower or any Subsidiary of the Borrower) party to
a Corporate Service Agreement, Operations and Maintenance Agreement, Power Sales
Agreement, Transition Agreement or Additional Project Document, as the same
shall be modified and supplemented and in effect from time to time.

"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.

"Corporate Services Agreement" means (a) the Corporate
Services Agreement to be entered into between the Sponsor and Astoria Power, (b)
the Corporate Services Agreement to be entered into between the Sponsor and
Arthur Kill Power, (c) the Corporate Services 

11
-7-

LOAN AGREEMENT

Agreement to be entered into between the Sponsor and Dunkirk Power, (d) the
Corporate Services Agreement to be entered into between the Sponsor and Huntley
Power, (e) the Corporate Services Agreement to be entered into between the
Sponsor and Somerset Power and (f) the Corporate Services Agreement to be
entered into between the Sponsor and Oswego Harbor Power or any combination
thereof (as the context requires).

"Debt Incurrence" means the incurrence by the Borrower or any
of its Subsidiaries after the Effective Date of any Indebtedness.

"Debt Service Reserve Account" has the meaning set forth in
Section 6.13.

"Debt Service Reserve Amount" means a Tranche A DSR Amount,
Tranche B DSR Amount, Tranche C DSR Amount or Tranche D DSR Amount, or any
combination thereof (as the context requires).

"Debt Service Reserve Guarantee" means a guarantee of an
Acceptable Guarantor executed and delivered to the Collateral Agent to support
the obligations of the Borrower hereunder with respect to all or a part of its
obligations to fund the Debt Service Reserve Account and permitting demands for
payment thereunder as contemplated by Section 6.13, in each case:

(i)  in substantially the form attached hereto as Exhibit J;

(ii) with a term ending no earlier than the Maturity Date; and

(iii) providing for the amount thereof to be made available in
full to the Collateral Agent in multiple payments upon the demand of
the Collateral Agent.

"Debt Service Reserve Letter of Credit" means one or more
irrevocable direct pay letters of credit available for the purpose of drawing to
satisfy the obligations of the Borrower with respect to all or a part of its
obligations to fund the Debt Service Reserve Account hereunder and permitting
draws thereon as contemplated by Section 6.13, in each case:

(i) issued to the Collateral Agent (for the benefit of the
Lenders) by an Acceptable Bank;

(ii) in substance substantially similar to the form attached
hereto as Exhibit I;

(iii) expiring not earlier than the latest to occur of (a) the
date on which the stated amount is drawn down to zero, (b) the date on
which the Collateral Agent returns the letter of credit to the issuer
for cancellation and (c) the Maturity Date;

(iv) providing for the amount thereof to be made available in
full to the Collateral Agent in multiple drawings conditioned only upon
the presentation of a sight draft accompanied by the applicable
certificate in the form attached to such letter of credit; and

(v) which the Borrower certifies in a certificate of a
Financial Officer does not constitute Indebtedness of the Borrower and
is not secured by a Lien on any of the property of the Borrower.

"Debt Service Reserve Requirement" means, as at any date of
determination, the aggregate amount of all Debt Service Reserve Amounts as at
such date.

12
-8-

LOAN AGREEMENT

"Debt Service Reserve Shortfall" means, as at any date of
determination, the excess of the Debt Service Reserve Requirement over the
credit balance of the Debt Service Reserve Account as at such date.

"Debt Service Reserve Support Instrument" means one or more
Debt Service Guarantees or one or more Debt Service Letters of Credit or both
(as the context requires).

"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.

"Disclosed Matters" means the actions, suits and proceedings
disclosed in Schedule IV and the environmental matters disclosed in Schedule V.

"Disposition" means any sale, assignment, transfer or other
disposition of any property (whether now owned or hereafter acquired) by the
Borrower or any of its Subsidiaries to any Person other than the Borrower or any
Subsidiary Guarantor excluding any sale, assignment, transfer or other
disposition of any property sold or disposed of in the ordinary course of
business and on ordinary business terms.

"Dollars" or "$" refers to lawful money of the United States
of America.

"Dunkirk Facility" means, collectively, the electrical
generating plant and related properties, plants and equipment to be purchased by
Dunkirk Power pursuant to, and as more fully described in, the Dunkirk/Huntley
Acquisition Documents.

"Dunkirk Operator" means NRG Dunkirk Operations Inc., a
Delaware corporation.

"Dunkirk Power" means Dunkirk Power LLC, a Delaware limited
liability company.

"Dunkirk/Huntley Acquisition" means, collectively, the
purchase by Dunkirk Power of the Dunkirk Facility and the purchase by Huntley
Power of the Huntley Facility, in each case pursuant to the Dunkirk/Huntley
Acquisition Documents and for all purposes of this Agreement (except as
otherwise specifically noted herein), such purchases together shall constitute
one Acquisition.

"Dunkirk/Huntley Acquisition Documents" means the Asset Sales
Agreement between the Sponsor and Niagara Mohawk Power Corporation dated as of
December 23, 1998 and each of the other agreements attached as a form thereto.

"Dunkirk/Huntley Distribution" means a distribution by the
Borrower in an aggregate amount not to exceed $221,245,000 made on the date of
initial disbursement of Tranche A Loans.

"Dunkirk/Huntley Equity Contribution" means an Equity
Contribution (as defined in the Equity Contribution Agreement) to the Borrower
made by the Sponsor (indirectly through 

13
-9-

LOAN AGREEMENT

the Members) prior to the initial disbursement of Tranche A Loans in an
aggregate amount not less than the aggregate purchase price to be paid by
Dunkirk Power and Huntley Power in connection with the Dunkirk/Huntley
Acquisition.

"Effective Date" means the date on which the conditions
specified in Section 5.01 are satisfied (or waived in accordance with Section
10.02).

"Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices, standards
or binding agreements issued, promulgated or entered into by any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, release or threatened release of any
Hazardous Material or to health and safety matters.

"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any of its
Subsidiaries directly or indirectly resulting from or based upon (a) violation
of any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

"Equity Contribution Agreement" means an Equity Contribution
Agreement substantially in the form of Exhibit G among the Sponsor, the Members
and the Administrative Agents, as the same shall be modified and supplemented
and in effect from time to time.

"Equity Issuance" means (a) any issuance or sale by the
Borrower or any of its Subsidiaries after the Effective Date of (i) any of its
membership interests, (ii) any warrants or options exercisable in respect of its
membership interests or (iii) any other security or instrument representing an
equity interest (or the right to obtain any equity interest) in the Borrower or
any of its Subsidiaries or (b) the receipt by the Borrower or any of its
Subsidiaries after the Effective Date of any capital contribution (whether or
not evidenced by any equity security issued by the recipient of such
contribution); provided that Equity Issuance shall not include (x) any such
issuance or sale by any Subsidiary of the Borrower to the Borrower or any wholly
owned Subsidiary of the Borrower, (y) any capital contribution by the Borrower
or any wholly owned Subsidiary of the Borrower to any Subsidiary of the Borrower
or (z) any capital contribution by a Member to the Borrower pursuant to the
Equity Contribution Agreement.

"Equity Rights" means, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including any Members' or voting trust agreements) for the
issuance, sale, registration or voting of, or securities convertible into, any
additional shares of capital stock of any class, or partnership or other
ownership interests of any type in, such Person.

"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.

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LOAN AGREEMENT

"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any material unfunded liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by the Borrower or any
ERISA Affiliate from the PBGC or a plan administrator of any notice relating to
an intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan (other than a voluntary termination by the Plan
administrator with respect to which the Plan would have no material unfunded
liability); (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any Withdrawal Liability which could reasonably be expected to have a Material
Adverse Effect; or (g) the receipt by the Borrower or any ERISA Affiliate of any
notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA
Affiliate of any notice, concerning the imposition of Withdrawal Liability which
could reasonably be expected to have a Material Adverse Effect or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.

"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans constituting such Borrowing, are
bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

"Event of Default" has the meaning assigned to such term in
Article VIII.

"Excluded Taxes" means, with respect to the Administrative
Agents, the Paying Agent, the Collateral Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Borrower under Section 2.16(b)), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement or is attributable to such Foreign
Lender's failure or inability to comply with Section 2.14(e), except to the
extent that such Foreign Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such
withholding tax pursuant to Section 2.14(a).

"Excluded Waiting Period" means, for each Subject Governmental
Approval, the period commencing upon the issuance of such Subject Governmental
Approval during which any 

15
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LOAN AGREEMENT

Person may commence any action or proceeding seeking a rehearing of the merits
on the issuance of such Subject Governmental Approval or appeal the decision of
the relevant Governmental Authority to issue such Subject Governmental Approval.

"Facility" means the Arthur Kill Facility, the Astoria
Facility, the Dunkirk Facility, the Huntley Facility, the Somerset Facility or
the Oswego Facility, or any combination thereof (as the context requires).

"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Paying Agent from three Federal
funds brokers of recognized standing selected by it.

"Financial Officer" means the chief financial officer,
treasurer or other Person, acting in such capacity for and on behalf of the
Borrower.

"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.

"Fuel Agreement" means a Fuel Supply Agreement or a Fuel
Transportation Agreement, or any combination thereof (as the context requires).

"Fuel Supply Agreement" means each contract or agreement
entered into by the Borrower or any of its Subsidiaries for the supply of fuel
to one or more Facilities.

"Fuel Transportation Agreement" means each contract or
agreement entered into by the Borrower or any of its Subsidiaries for the
transportation of fuel to one or more Facilities.

"GAAP" means generally accepted accounting principles in the
United States of America.

"Governmental Approval" shall mean any authorization, consent,
approval, license, ruling, permit, concession, certification, exemption, filing,
variance, order, judgment, decree, publication, notice to, declaration of or
with or registration by or with any Governmental Authority.

"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

16
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LOAN AGREEMENT

"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.

"Guarantee Assumption Agreement" means a Guarantee Assumption
Agreement substantially in the form of Exhibit D by an entity that, pursuant to
Section 6.10(a) is required to become a "Subsidiary Guarantor" hereunder in
favor of the Administrative Agents.

"Guarantee Effectiveness Certificate" has the meaning set
forth in Section 3.10.

"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.

"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"Huntley Facility" means, collectively, the electrical
generating plant and related properties, plants and equipment to be purchased by
Huntley Power pursuant to the Dunkirk/Huntley Acquisition Documents.

"Huntley Operator" means NRG Huntley Operations Inc., a
Delaware corporation.

"Huntley Power" means Huntley Power LLC, a Delaware limited
liability company.

"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course 

17
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LOAN AGREEMENT

of business), (f) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and (j)
all obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.

"Indemnified Taxes" means Taxes other than Excluded Taxes.

"Independent Engineer" means Stone & Webster, and/or such
other Person as the Administrative Agents may engage on behalf of the Lenders
with the consent of the Borrower, so long as Event of Default shall not have
occurred and be continuing, to act as Independent Engineer for the purposes of
this Agreement.

"Independent Insurance Consultant" means Sedgwick of
Tennessee, Inc., and/or such other Person as the Administrative Agents may
engage on behalf of the Lenders with the consent of the Borrower, so long as
Event of Default shall not have occurred and be continuing, to act as
Independent Insurance Consultant for the purposes of this Agreement.

"Independent Market Consultant" means PHB Hagler Bailly,
and/or such other Person as the Administrative Agents may engage on behalf of
the Lenders with the consent of the Borrower, so long as Event of Default shall
not have occurred and be continuing, to act as Independent Market Consultant for
the purposes of this Agreement.

"Index Debt" means senior, long-term indebtedness for borrowed
money of the Borrower that is not guaranteed by any Person other than the
Subsidiaries or subject to any credit enhancement other than the Borrower's
assets.

"Intercompany Loan" means each intercompany loan made by the
Borrower to a Subsidiary Guarantor with the proceeds of Loans incurred by it
hereunder.

"Intercompany Note" means each promissory note or other
evidence of indebtedness issued by a Subsidiary Guarantor to the Borrower in
respect of an Intercompany Loan each substantially in the form of the attached
Exhibit K.

"Interest Election Request" means a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.05.

"Interest Payment Date" means (a) with respect to any ABR
Loan, each Quarterly Date and (b) with respect to any Eurodollar Loan, the last
day of each Interest Period therefor.

"Interest Period" means, for any Eurodollar Loan, the period
commencing on the date of such Loan and ending on the numerically corresponding
day in the calendar month that is 

18
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LOAN AGREEMENT

one, two or three months thereafter, as specified in the applicable Borrowing
Request or Interest Election Request; provided that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Loan initially
shall be the date on which such Loan is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Loan.

"Investment" means, for any Person: (a) the acquisition
(whether for cash, property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including any "short sale" or any sale of any securities at a time
when such securities are not owned by the Person entering into such sale); (b)
the making of any deposit with, or advance, loan or other extension of credit
to, any other Person (including the purchase of property from another Person
subject to an understanding or agreement, contingent or otherwise, to resell
such property to such Person), but excluding any such advance, loan or extension
of credit arising in connection with the sale of inventory or supplies by such
Person in the ordinary course of business; (c) the entering into of any
Guarantee of, or other contingent obligation with respect to, Indebtedness or
other liability of any other Person and (without duplication) any amount
committed to be advanced, lent or extended to such Person; or (d) the entering
into of any Hedging Agreement.

"Lenders" means the Persons listed on Schedule I and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.

"LIBO Rate" means, for the Interest Period for any Eurodollar
Borrowing, the rate appearing on Page 3750 of the Dow Jones Markets (Telerate)
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Paying Agent from time to time for purposes of providing
quotations of interest rates applicable to Dollar deposits in the London
interbank market) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period, as the rate for the offering
of Dollar deposits with a maturity comparable to such Interest Period. In the
event that such rate is not available at such time for any reason, then the LIBO
Rate for such Interest Period shall be the rate at which Dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Paying Agent in immediately available funds
in the London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period.

"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any 

19
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LOAN AGREEMENT

of the foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.

"Loan Documents" means, collectively, this Agreement, the
Security Documents and the Equity Contribution Agreement.

"Loans" means the loans made by the Lenders to the Borrower
pursuant to this Agreement.

"Loss Proceeds" means all Net Available Proceeds received by
the Borrower and its Subsidiaries in respect of a Casualty Event.

"Margin Stock" means "margin stock" within the meaning of
Regulations T, U and X of the Board.

"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries taken as a whole, (b) the
ability of any Obligor to perform any of its obligations under this Agreement or
any of the other Basic Documents to which it is a party or (c) the material
rights of or benefits available to the Lenders, the Administrative Agents, the
Paying Agent or the Collateral Agent under this Agreement or any of the other
Loan Documents.

"Material Indebtedness" means Indebtedness (other than the
Loans), or obligations in respect of one or more Hedging Agreements, of any one
or more of the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $5,000,000. For purposes of determining Material Indebtedness, the
"principal amount" of the obligations of any Person in respect of any Hedging
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that such Person would be required to pay if such
Hedging Agreement were terminated at such time.

"Maturity Date" means June 2, 2000.

"Member" means NRG Eastern or NRG Generation, or both (as the
context requires).

"Moody's" means Moody's Investor Service, Inc.

"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

"Net Available Proceeds" means:

(i) in the case of any Disposition, the amount of Net Cash
Payments received in connection with such Disposition;

(ii) in the case of any Casualty Event, the aggregate amount
of proceeds of insurance, condemnation awards and other compensation
received by the Borrower and its Subsidiaries in respect of such
Casualty Event net of reasonable expenses incurred by 

20
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LOAN AGREEMENT

the Borrower and its Subsidiaries in connection therewith and any
income and transfer taxes payable by the Borrower or any of its
Subsidiaries in respect of such Casualty Event;

(iii) in the case of any Equity Issuance, the aggregate amount
of all cash received by the Borrower and its Subsidiaries in respect of
such Equity Issuance net of reasonable expenses incurred by the
Borrower and its Subsidiaries in connection therewith; and

(iv) in the case of any Debt Incurrence, the aggregate amount
of all cash received by the Borrower and its Subsidiaries in respect of
such Debt Incurrence net of reasonable expenses incurred by the
Borrower and its Subsidiaries in connection therewith.

"Net Cash Payments" means, with respect to any Disposition,
the aggregate amount of all cash payments, and the fair market value of any
non-cash consideration, received by the Borrower and its Subsidiaries directly
or indirectly in connection with such Disposition; provided that Net Cash
Payments shall be net of the amount of any legal, title and recording tax
expenses, commissions and other fees and expenses paid by the Borrower and its
Subsidiaries in connection with such Disposition.

"NRG Eastern" means NRG Eastern LLC, a Delaware limited
liability company.

"NRG Generation" means Northeast Generation Holding LLC, a
Delaware limited liability company.

"NRG Operations" means NRG Operating Services, Inc., a
Delaware corporation.

"NRG Marketing" means NRG Northeast Power Marketing, Inc., a
Delaware corporation.

"Obligor" means the Borrower and each Subsidiary Guarantor.

"Operating Expenses" means for any period, the sum, computed
without duplication, of all costs and expenses incurred by the Borrower and its
Subsidiaries during such period (or, in the case of any future period, projected
to be paid or payable during such period) in connection with the operation,
maintenance and administration of the Facilities, including, subject to Section
7.09, capital expenditures.

"Operations and Maintenance Agreement" means (a) the
Operations and Maintenance Agreement to be entered into between the Astoria
Operator and Astoria Power, (b) the Operations and Maintenance Agreement to be
entered into between the Arthur Kill Operator and Arthur Kill Power, (c) the
Operations and Maintenance Agreement to be entered into between the Dunkirk
Operator and Dunkirk Power, (d) the Operations and Maintenance Agreement to be
entered into between the Huntley Operator and Huntley Power, (e) the Operations
and Maintenance Agreement to be entered into between the Somerset Operator and
Somerset Power and (f) the Operations and Maintenance Agreement to be entered
into between the Oswego Operator and the Oswego Harbor Power, or any combination
thereof (as the context requires).

21
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LOAN AGREEMENT

"Operator" means the Arthur Kill Operator, the Astoria
Operator, the Dunkirk Operator, the Huntley Operator, the Somerset Operator or
the Oswego Operator, or any combination thereof (as the context requires).

"Oswego Acquisition" means the purchase by Oswego Harbor Power
of the Oswego Facility pursuant to the Oswego Acquisition Documents.

"Oswego Acquisition Documents" means the Asset Sales Agreement
dated as of April 1, 1999 between the Sponsor, Niagara Mohawk Power Corporation,
Rochester Gas and Electric Corporation and Oswego Harbor Power and each of the
other agreements attached as a form thereto.

"Oswego Facility" means the electrical generating plant and
related property, plant and equipment to be purchased by Oswego Harbor Power
pursuant to, and as more fully described in, the Oswego Acquisition Documents.

"Oswego Harbor Power" means Oswego Harbor Power LLC, a
Delaware limited liability company.

"Oswego Operator" means NRG Oswego Harbor Power Operations
Inc., a Delaware corporation.

"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document, but not including Excluded Taxes.

"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.

"Permitted Encumbrances" means:

(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 6.04;

(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than 45 days or are being contested in compliance with
Section 6.04;

(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;

(d) cash deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;

22
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LOAN AGREEMENT

(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VIII;

(f) encumbrances identified on Schedule IX hereto, and other
easements, zoning restrictions, rights-of-way and similar encumbrances
on real property imposed by law or arising in the ordinary course of
business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any
Subsidiary; and

(g) Liens created or granted pursuant to the Security
Documents;

provided that, except as provided in the preceding clause (g), the term
"Permitted Encumbrances" shall not include any Lien securing Indebtedness.

"Permitted Fuel Agreement" means any Fuel Agreement with a
term of two years or less.

"Permitted Investments" means:

(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;

(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;

(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 270 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the United States of
America or any State thereof which has a combined capital and surplus
and undivided profits, as at the date of the most recent financial
statement of such commercial bank issued on or immediately prior to
such acquisition, of not less than $250,000,000; and

(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) of this
definition and entered into with a financial institution satisfying the
criteria described in clause (c) of this definition.

"Permitted Power Marketing Agreement" means (a) any Transition
Agreement, (b) any other Power Marketing Agreement with a term of two years or
less, (c) any other Power Marketing Agreement with a term of three years or
less; provided that any given Power Marketing Agreement shall not qualify as a
Permitted Power Marketing Agreement pursuant to this clause (c) if the amount
that the Borrower and its Subsidiaries shall have the right to receive
thereunder during any calendar year, when added to the aggregate amount that the
Borrower and its Subsidiaries shall have the right to receive during such
calendar year under all other Power Marketing Agreements that qualify as
Permitted Power Marketing Agreements pursuant to this 

23
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LOAN AGREEMENT

clause (c), would exceed $50,000,000 in the aggregate and (d) each other Power
Marketing Agreement entered into by the Borrower or any of its Subsidiaries with
the consent of the Required Lenders.

"Permitted Power Purchase Agreement" means (a) any Power
Purchase Agreement with a term of two years or less, entered into by the
Borrower or any of its Subsidiaries in the ordinary course of its business and
not for speculation, (b) any other Power Purchasing Agreement with a term of
three years or less; provided that any given Power Purchase Agreement shall not
qualify as a Permitted Power Purchase Agreement pursuant to this clause (b) if
the amount that the Borrower and its Subsidiaries shall be required to pay
thereunder during any calendar year, when added to the aggregate amount that the
Borrower and its Subsidiaries shall be required to pay during such calendar year
under all other Power Purchase Agreements that qualify as Permitted Power
Purchase Agreements pursuant to this clause (b) would exceed $50,000,000 in the
aggregate, in each case, entered into by the Borrower or any of its Subsidiaries
in the ordinary course of its business and not for speculation and (c) each
other Power Purchase Agreement entered into by the Borrower or any of its
Subsidiaries with the consent of the Required Lenders.

"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.

"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.

"Pledge Agreement" means a Pledge Agreement substantially in
the form of Exhibit C between the Members and the Collateral Agent, as the same
shall be modified and supplemented and in effect from time to time.

"PMI Security Agreement" means the Security Agreement
substantially in the form of Exhibit E, between NRG Marketing and the Collateral
Agent, as the same shall be modified and supplemented and in effect from time to
time.

"Power Marketing" means NRG Northeast Power Marketing LLC, a
Delaware limited liability company.

"Power Marketing Agreement" means each Transition Agreement
and each other contract or agreement, other than Power Sales Agreements, entered
into by the Borrower or any of its Subsidiaries for the sale of electrical
generating capacity, electrical energy or both.

"Power Purchase Agreement" means each contract or agreement,
other than Power Sales Agreements, entered into by the Borrower or any of its
Subsidiaries for the purchase of electrical generating capacity, electrical
energy or both.

"Power Sales Agreement" means (a) the Power Sales and Agency
Agreement to be entered into between Power Marketing and Astoria Power, (b) the
Power Sales and Agency 

24
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LOAN AGREEMENT

Agreement to be entered into between Power Marketing and Arthur Kill Power, (c)
the Power Sales and Agency Agreement to be entered into between NRG Marketing
(or, following the assignment thereof by NRG Marketing to Power Marketing, Power
Marketing) and Dunkirk Power, (d) the Power Sales and Agency Agreement to be
entered into between NRG Marketing (or, following the assignment thereof by NRG
Marketing to Power Marketing, Power Marketing) and Huntley Power, (e) the Power
Sales and Agency Agreement to be entered into between Power Marketing and Oswego
Harbor Power and (f) the Power Sales and Agency Agreement to be entered into
between NRG Marketing (or, following the assignment thereof by NRG Marketing to
Power Marketing, Power Marketing) and Somerset Power, or any combination thereof
(as the context requires).

"Prime Rate" means the rate of interest per annum publicly
announced from time to time by Citibank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.

"Project Documents" means each Acquisition Document, each
Power Sales Agreement, the Borrower LLC Agreement, the limited liability company
agreement of each Subsidiary of the Borrower, each Operations and Maintenance
Agreement, each Transition Agreement, each Intercompany Note, each Consent and
Agreement and each Corporate Services Agreement, or any combination thereof (as
the context requires).

"Quarterly Dates" means the last Business Day of January,
April, July and October in each year, the first of which shall be the first such
day after the date hereof.

"Reduction Certificate" has the meaning set forth in Section
6.13(e).

"Register" has the meaning set forth in Section 10.04.

"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.

"Required Lenders" means, at any time, subject to the last
paragraph of Section 10.02(b), Lenders having outstanding Loans and unused
Commitments representing more than 50% of the sum of the total outstanding Loans
and unused Commitments at such time. The "Required Lenders" of a particular
Class of Loans means Lenders having outstanding Loans and unused Commitments of
such Class representing more than 50% of the total outstanding Loans and unused
Commitments of such Class at such time.

"Restore" means, with respect to any Affected Property, to
rebuild, repair, restore or replace such Affected Property. The term
"Restoration" shall have a correlative meaning.

"Restricted Payment" means membership distributions of the
Borrower or any Subsidiary of the Borrower (in cash, property or obligations)
on, or other payments or distributions on account of, or the setting apart of
money for a sinking or other analogous fund for, or the purchase, redemption,
retirement or other acquisition of, any portion of any membership interest in
the Borrower or such Subsidiary or of any warrants, options or other 

25
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LOAN AGREEMENT 

rights to acquire any such membership interest (or to make any payments to any
Person, such as "phantom stock" payments, where the amount thereof is calculated
with reference to fair market or equity value of the Borrower or any Subsidiary)
excluding, to the extent included, the Somerset Distribution.

"Revolver Amount" means a Tranche A Revolver Amount, Tranche B
Revolver Amount, Tranche C Revolver Amount or Tranche D Revolver Amount, or any
combination thereof (as the context requires).

"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender to make one or more Revolving Loans hereunder during
the Availability Period, expressed as an amount representing the maximum
aggregate principal amount of the Revolving Loans to be made by such Lender
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.06 or 2.08(b) and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Lender's Revolving Commitment is set forth on Schedule I, or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Revolving Commitment, as applicable.

"Revolving Lender" means a Lender with a Revolving Commitment
or an outstanding Revolving Loan.

"Revolving Loan" means a Loan made pursuant to clause (e) of
Section 2.01 and subject to the conditions precedent in Section 5.03.

"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill Companies, Inc.

"Security Agreement" means a Security Agreement substantially
in the form of Exhibit B among the Borrower, the Subsidiary Guarantors and the
Collateral Agent, as the same shall be modified and supplemented and in effect
from time to time.

"Security Documents" means, collectively, the Security
Agreement, the Pledge Agreement, the PMI Security Agreement and all Uniform
Commercial Code financing statements required by the Security Agreement, the
Pledge Agreement or the PMI Security Agreement to be filed with respect to the
security interests in personal property created pursuant thereto.

"Somerset Acquisition" means the purchase by Somerset Power of
the Somerset Facility pursuant to the Somerset Acquisition Documents.

"Somerset Acquisition Documents" means the Asset Purchase
Agreement between the Sponsor and Montaup Electric Company dated as of October
13, 1998 and each of the agreements attached as a form thereto.

"Somerset Distribution" means any distribution in an amount
not to exceed $38,227,000 by Somerset Power to the Borrower on the date of
initial disbursement of Tranche C Loans to the extent that the proceeds of such
distribution are used by the Borrower (FOR ITSELF 

26
-22-

LOAN AGREEMENT

AND ON BEHALF OF THE MEMBERS) to prepay all or a part of its outstanding
Indebtedness evidenced by the Somerset Notes.

"Somerset Facility" means the electrical generating plant and
related property, plant and equipment to be purchased by Somerset Power pursuant
to, and as more fully described in, the Somerset Acquisition Documents.

"Somerset Notes" means, collectively, (a) the promissory note
of the Borrower dated June 1, 1999 in the principal amount of $27,101,250 made
in favor of Somerset Generation 1, Inc., (b) the promissory note of NRG Eastern
dated June 1, 1999 in the principal amount of $136,875 made in favor of Somerset
Generation 1, Inc., (c) the promissory note of NRG Generation dated June 1, 1999
in the principal amount of $136,875 made in favor of Somerset Generation 1,
Inc., (d) the promissory note of the Borrower dated June 1, 1999 in the
principal amount of $27,101,250 made in favor of Somerset Generation 2, Inc.,
(e) the promissory note of NRG Eastern dated June 1, 1999 in the principal
amount of $136,875 made in favor of Somerset Generation 2, Inc. and (f) the
promissory note of NRG Generation dated June 1, 1999 in the principal amount of
$136,875 made in favor of Somerset Generation 2, Inc.

"Somerset Operator" means Somerset Operations Inc., a Delaware
corporation.

"Somerset Power" means Somerset Power LLC, a Delaware limited
liability company.

"Sponsor" means NRG Energy, Inc., a Delaware corporation.

"Statutory Reserve Rate" means, for the Interest Period for
any Eurodollar Borrowing, a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the
arithmetic mean, taken over each day in such Interest Period, of the aggregate
of the maximum reserve percentages (including any marginal, special, emergency
or supplemental reserves) expressed as a decimal established by the Board to
which the Paying Agent is subject for eurocurrency funding (currently referred
to as "Eurocurrency liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

"Subject Governmental Approval" means each of the Governmental
Approvals identified on Schedule III.

"Subject Person" means the Borrower, each Subsidiary and NRG
Operating Services, Inc.

"Subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, 

27
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LOAN AGREEMENT

as well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent. Unless
otherwise specified, "Subsidiary" means a Subsidiary of the Borrower.

"Subsidiary Guarantor" means each of the PERSONS identified
under the caption "SUBSIDIARY GUARANTORS" on the signature pages hereto and each
Subsidiary of the Borrower that becomes a "Subsidiary Guarantor" after the date
hereof pursuant to Section 6.10(a).

"Tax Payment Amount" means, for any period, an amount not
exceeding in the aggregate the amount of Federal, state and local income taxes
the Borrower would otherwise have paid in the event it were a corporation (other
than an "S corporation" within the meaning of Section 1361 of the Code) for such
period and all prior periods.

"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.

"Tranche A Commitment" means, with respect to each Lender, the
commitment of such Lender to make a Tranche A Loan hereunder during the
Availability Period, expressed as an amount representing the maximum aggregate
principal amount of the Tranche A Loans to be made by such Lender hereunder, as
such commitment may be (a) reduced from time to time pursuant to Section 2.06 or
2.08(b) and (b) reduced or increased from time to time pursuant to assignments
by or to such Lender pursuant to Section 10.04. The initial amount of each
Lender's Tranche A Commitment is set forth on Schedule I, or in the Assignment
and Acceptance pursuant to which such Lender shall have assumed its Tranche A
Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche
A Commitments is $221,245,000.

"Tranche A DSR Amount" means (a) for the period from and
including the date hereof to but excluding the date of initial Borrowing of the
Tranche A Loan, $0, and (b) at all times from and after such date, $8,555,000.

"Tranche A Lender" means a Lender with a Tranche A Commitment
or an outstanding Tranche A Loan.

"Tranche A Loan" means a Loan made pursuant to clause (a) of
Section 2.01 and subject to the conditions precedent in Section 5.02.

"Tranche A Revolver Amount" means (a) for the period from and
including the date hereof to but excluding the date of initial Borrowing of the
Tranche A Loan, $0, and (b) at all times from and after such date, $13,687,000.

"Tranche B Commitment" means, with respect to each Lender, the
commitment of such Lender to make a Tranche B Loan hereunder during the
Availability Period, expressed as an amount representing the maximum aggregate
principal amount of the Tranche B Loans to be 

28
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LOAN AGREEMENT

made by such Lender hereunder, as such commitment may be (a) reduced from time
to time pursuant to Section 2.06 or 2.08(b) and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
10.04. The initial amount of each Lender's Tranche B Commitment is set forth on
Schedule I, or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Tranche B Commitment, as applicable. The initial
aggregate amount of the Lenders' Tranche B Commitments is $318,652,000.

"Tranche B DSR Amount" means (a) for the period from and
including the date hereof to but excluding the date of initial Borrowing of the
Tranche B Loan, $0, and (b) at all times from and after such date, $12,321,000.

"Tranche B Lender" means a Lender with a Tranche B Commitment
or an outstanding Tranche B Loan.

"Tranche B Loan" means a Loan made pursuant to clause (b) of
Section 2.01 and subject to the conditions precedent in Section 5.02.

"Tranche B Revolver Amount" means (a) for the period from and
including the date hereof to but excluding the date of initial Borrowing of the
Tranche B Loan, $0, and (b) at all times from and after such date, $19,714,000.

"Tranche C Commitment" means, with respect to each Lender, the
commitment of such Lender to make a Tranche C Loan hereunder during the
Availability Period, expressed as an amount representing the maximum aggregate
principal amount of the Tranche C Loans to be made by such Lender hereunder, as
such commitment may be (a) reduced from time to time pursuant to Section 2.06 or
2.08(b) and (b) reduced or increased from time to time pursuant to assignments
by or to such Lender pursuant to Section 10.04. The initial amount of each
Lender's Tranche C Commitment is set forth on Schedule I, or in the Assignment
and Acceptance pursuant to which such Lender shall have assumed its Tranche C
Commitment, as applicable. The initial aggregate amount of the Lenders' Tranche
C Commitments is $38,227,000.

"Tranche C DSR Amount" means (a) for the period from and
including the date hereof to but excluding the date of initial Borrowing of the
Tranche C Loan, $0, and (b) at all times from and after such date, $1,478,000.

"Tranche C Lender" means a Lender with a Tranche C Commitment
or an outstanding Tranche C Loan.

"Tranche C Loan" means a Loan made pursuant to clause (c) of
Section 2.01 and subject to the conditions precedent in Section 5.02.

"Tranche C Revolver Amount" means (a) for the period from and
including the date hereof to but excluding the date of initial Borrowing of the
Tranche C Loan, $0, and (b) at all times from and after such date, $2,365,000.

"Tranche D Commitment" means, with respect to each Lender, the
commitment of such Lender to make a Tranche D Loan hereunder during the
Availability Period, expressed as an amount representing the maximum aggregate
principal amount of the Tranche D Loans to be 

29
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LOAN AGREEMENT

made by such Lender hereunder, as such commitment may be (a) reduced from time
to time pursuant to Section 2.06 or 2.08(b) and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
10.04. The initial amount of each Lender's Tranche D Commitment is set forth on
Schedule I, or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Tranche D Commitment, as applicable. The initial
aggregate amount of the Lenders' Tranche D Commitments is $68,440,000.

"Tranche D DSR Amount" means (a) for the period from and
including the date hereof to but excluding the date of initial Borrowing of the
Tranche D Loan, $0, and (b) at all times from and after such date, $2,646,000.

"Tranche D Lender" means a Lender with a Tranche D Commitment
or an outstanding Tranche D Loan.

"Tranche D Loan" means a Loan made pursuant to clause (d) of
Section 2.01 and subject to the conditions precedent in Section 5.02.

"Tranche D Revolver Amount" means (a) for the period from and
including the date hereof to but excluding the date of initial Borrowing of the
Tranche D Loan, $0, and (b) at all times from and after such date, $4,234,000.

"Transactions" means the execution, delivery and performance
by each Obligor of this Agreement and the other Basic Documents to which such
Obligor is intended to be a party, the borrowing of Loans and the use of the
proceeds thereof.

"Transition Agreements" means (a) with respect to the Arthur
Kill Facility and the Astoria Facility, the Transition Capacity Agreement to be
entered into between Con Ed and Arthur Kill Power, the Transition Energy Sales
Agreement dated as of June 1, 1999 between Con Ed and Arthur Kill Power, the
Transition Energy Sales Agreement dated as of June 1, 1999 between Con Ed and
Astoria Power, the Transition Capacity Agreement to be entered into between Con
Ed and Astoria Power, (b) with respect to the Huntley Facility and the Dunkirk
Facility, the Swap Transaction to be entered into between Niagara Mohawk Power
Corporation and Power Marketing, the Transition Power Purchase Agreement
(Huntley) dated as of December 23, 1998 between Niagara Mohawk Power Corporation
and the Sponsor, the Transition Power Purchase Agreement (Fossil-Call
Option-PreISO) to be entered into between Niagara Mohawk Power Corporation and
Dunkirk Power and the Transition Power Purchase Agreement (Fossil-Call
Option-Pre ISO) to be entered into between Niagara Mohawk Power Corporation and
Huntley Power, (c) with respect to the Somerset Facility, the Wholesale Standard
Offer Service Agreement dated as of October 13, 1998 between Blackstone Valley
Electric Company, Eastern Edison Company, Newport Electric Corporation and NRG
Power Marketing, Inc., as amended by the First Amendment to the Wholesale
Standard Offer Service Agreement dated as of January 15, 1999, and (d) with
respect to the Oswego Facility, the Transition Power Purchase Agreement dated as
of April 1, 1999 between Niagara Mohawk Power Corporation and Oswego Harbor
Power.

30
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LOAN AGREEMENT

"Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans
constituting such Borrowing, is determined by reference to the Adjusted LIBO
Rate or the Alternate Base Rate.

"Withdrawal Certificate" has the meaning set forth in Section
6.13(c).

"Withdrawal Date" has the meaning set forth in Section 
6.13(c).

"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.

"Year 2000 Problem" means any significant risk that computer
hardware, software or equipment containing embedded microchips essential to the
businesses or operations of the Borrower and its Subsidiaries will not, in the
case of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.

SECTION 1.02. Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and effect as the
word "shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

SECTION 1.03. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that if the Borrower notifies the Administrative Agents that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agents notify the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

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ARTICLE II.  THE CREDITS.

SECTION 2.01.  The Commitments.

(a) Tranche A Loans. Subject to the terms and conditions set
forth herein, each Lender agrees to make Tranche A Loans to the Borrower during
the Availability Period in a principal amount not exceeding its Tranche A
Commitment. Amounts repaid in respect of Tranche A Loans may not be reborrowed.

(b) Tranche B Loans. Subject to the terms and conditions set
forth herein, each Lender agrees to make Tranche B Loans to the Borrower during
the Availability Period in a principal amount not exceeding its Tranche B
Commitment. Amounts repaid in respect of Tranche B Loans may not be reborrowed.

(c) Tranche C Loans. Subject to the terms and conditions set
forth herein, each Lender agrees to make Tranche C Loans to the Borrower during
the Availability Period in a principal amount not exceeding its Tranche C
Commitment. Amounts repaid in respect of Tranche C Loans may not be reborrowed.

(d) Tranche D Loans. Subject to the terms and conditions set
forth herein, each Lender agrees to make Tranche D Loans to the Borrower during
the Availability Period in a principal amount not exceeding its Tranche D
Commitment. Amounts repaid in respect of Tranche D Loans may not be reborrowed.

(e) Revolving Loans. Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Borrower from
time to time during the Availability Period in an aggregate principal amount not
exceeding the lesser of (i) its Revolving Commitment and (ii) its ratable share
(in accordance with its respective Revolving Commitment) of the Available
Revolver Amount as at the date such Revolving Loan is made. Within the foregoing
limits and subject to the terms and conditions set forth herein, the Borrower
may borrow, prepay and reborrow Revolving Loans.

SECTION 2.02.  Loans and Borrowings.

(a) Obligations of Lenders. Each Loan shall be made as part of
a Borrowing consisting of Loans of the same Class and Type made by the Lenders
ratably in accordance with their respective Commitments of the applicable Class.
The failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender's failure to make Loans as required.

(b) Type of Loans. Subject to Section 2.11, each Borrowing
shall be constituted entirely of ABR Loans or Eurodollar Loans as the Borrower
may request in accordance herewith. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement.

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LOAN AGREEMENT

(c) Minimum Amounts; Limitation on Number of Borrowings. At
the commencement of the Interest Period for any Eurodollar Borrowing, such
Borrowing shall (except in the case of a Borrowing that utilizes the full amount
of the relevant Commitment) be in an aggregate amount of $5,000,000 or a larger
multiple of $500,000. At the time that each ABR Borrowing is made, such
Borrowing shall (except in the case of a Borrowing that utilizes the full amount
of the relevant Commitment) be in an aggregate amount equal to $500,000 or a
larger multiple of $100,000. Borrowings of more than one Type and Class may be
outstanding at the same time; provided that there shall not at any time be more
than a total of twelve Eurodollar Borrowings outstanding.

(d) Limitations on Lengths of Interest Periods.
Notwithstanding any other provision of this Agreement, the Borrower shall not be
entitled to request, or to elect to convert to or continue as a Eurodollar
Borrowing, any Borrowing if the Interest Period requested therefor would end
after the Maturity Date.

SECTION 2.03. Requests for Borrowings. To request a Borrowing,
the Borrower shall notify the Paying Agent of such request by telephone (a) in
the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one
Business Day before the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Paying Agent of a written Borrowing Request in a
form approved by the Paying Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:

(i) whether the requested Borrowing is to be a Tranche A
Borrowing, Tranche B Borrowing, Tranche C Borrowing, Tranche D
Borrowing or Revolving Borrowing;

(ii)  the aggregate amount of the requested Borrowing;

(iii) the date of such Borrowing, which shall be a Business
Day;

(iv) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;

(v) in the case of a Eurodollar Borrowing, the Interest Period
therefor, which shall be a period contemplated by the definition of the
term "Interest Period";

(vi) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the
requirements of Section 2.04; and

(vii) in the case of a Revolving Loan Borrowing, a calculation
of the Available Revolver Amount as of the date of such Borrowing.

If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, 

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LOAN AGREEMENT

the Paying Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.

SECTION 2.04.  Funding of Borrowings.

(a) Funding by Lenders. Each Lender shall make each Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Paying Agent most recently designated by it for such purpose by notice to
the Lenders. The Paying Agent will make such Loans available to the Borrower by
promptly crediting the amounts so received, in like funds, to an account of the
Borrower maintained with the Paying Agent in New York City and designated by the
Borrower in the applicable Borrowing Request.

(b) Presumption by the Paying Agent. Unless the Paying Agent
shall have received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the Paying Agent such
Lender's share of such Borrowing, the Paying Agent may assume that such Lender
has made such share available on such date in accordance with paragraph (a) of
this Section and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Paying Agent, then the
applicable Lender and the Borrower severally agree to pay to the Paying Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Paying Agent, at (i) in the case of
such Lender, the Federal Funds Effective Rate or (ii) in the case of the
Borrower, the interest rate that applies to the applicable Borrowing. If such
Lender pays such amount to the Paying Agent, then such amount shall constitute
such Lender's Loan included in such Borrowing.

SECTION 2.05.  Interest Elections.

(a) Elections by the Borrower for Borrowings. Each Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Borrowing, shall have the Interest Period
specified in such Borrowing Request. Thereafter, the Borrower may elect to
convert such Borrowing to a Borrowing of a different Type or to continue such
Borrowing as a Borrowing of the same Type and, in the case of a Eurodollar
Borrowing, may elect the Interest Period therefor, all as provided in this
Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans constituting such
Borrowing, and the Loans constituting each such portion shall be considered a
separate Borrowing.

(b) Notice of Elections. To make an election pursuant to this
Section, the Borrower shall notify the Paying Agent of such election by
telephone by the time that a Borrowing Request would be required under Section
2.03 if the Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Paying Agent of a written Interest Election
Request in a form approved by the Paying Agent and signed by the Borrower.

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LOAN AGREEMENT

(c) Information in Interest Election Requests. Each telephonic
and written Interest Election Request shall specify the following information in
compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) of this paragraph shall be specified
for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period therefor after giving effect to such election, which
shall be a period contemplated by the definition of the term "Interest
Period".

If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.

(d) Notice by the Paying Agent to Lenders. Promptly following
receipt of an Interest Election Request, the Paying Agent shall advise each
Lender of the details thereof and of such Lender's portion of each resulting
Borrowing.

(e) Failure to Elect; Events of Default. If the Borrower fails
to deliver a timely Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period therefor, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agents, at the request of the Required Lenders, so notify the
Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing
at the end of the Interest Period therefor.

SECTION 2.06.  Termination and Reduction of the Commitments.

(a) Scheduled Termination. Unless previously terminated, the
Commitments of each Class shall terminate at 5:00 p.m., New York City time, on
the last day of the Availability Period.

(b) Voluntary Termination or Reduction. The Borrower may at
any time terminate, or from time to time reduce, the Commitments of any Class;
provided that (except in the case of any such termination of the full amount of
the relevant Commitment) each reduction 

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LOAN AGREEMENT

of the Commitments of any Class pursuant to this Section shall be in an amount
that is $5,000,000 or a larger multiple of $1,000,000.

(c) Notice of Voluntary Termination or Reduction. The Borrower
shall notify the Paying Agent of any election to terminate or reduce the
Commitments of any Class under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Paying Agent shall advise the Lenders of the contents
thereof. Each notice delivered by the Borrower pursuant to this Section shall be
irrevocable.

(d) Automatic Termination. Any portion of the Tranche A
Commitment, Tranche B Commitment, Tranche C Commitment or Tranche D Commitment
not utilized on the date of the initial Borrowing with respect to such Class
shall automatically terminate at 5:00 p.m., New York City time, on the date of
such initial Borrowing.

(e) Effect of Termination or Reduction. Any termination or
reduction of the Commitments of any Class shall be permanent. Each reduction of
the Commitments of any Class shall be made ratably among the Lenders in
accordance with their respective Commitments of such Class.

SECTION 2.07.  Repayment of Loans; Evidence of Debt.

(a) Repayment. The Borrower hereby unconditionally promises to
pay the Loans as follows:

(i) to the Paying Agent for account of the Tranche A Lenders
the outstanding principal amount of the Tranche A Loans on the Maturity
Date;

(ii) to the Paying Agent for account of the Tranche B Lenders
the outstanding principal amount of the Tranche B Loans on the Maturity
Date;

(iii) to the Paying for account of the Tranche C Lenders the
outstanding principal amount of the Tranche C Loans on the Maturity
Date;
(iv) to the Paying Agent for account of the Tranche D Lenders
the outstanding principal amount of the Tranche D Loans on the Maturity
Date; and

(v) to the Paying Agent for account of the Revolving Lenders
the outstanding principal amount of the Revolving Loans on the Maturity
Date.

(b) Manner of Payment. Prior to any repayment or prepayment of
any Borrowings of any Class hereunder, the Borrower shall select the Borrowing
or Borrowings of the applicable Class to be paid and shall notify the Paying
Agent by telephone (confirmed by telecopy) of such selection not later than
11:00 a.m., New York City time, in the case of any Loan other than a Revolving
Loan, three Business Days before, in the case of a Revolving Loan that is a
Eurodollar Loan, two Business Days before and in the case of a Revolving Loan
that is an ABR Loan, the same day as, the scheduled date of such repayment;
provided that each repayment of Borrowings of any Class shall be applied to
repay any outstanding ABR 

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LOAN AGREEMENT

Borrowings of such Class before any other Borrowings of such Class. If the
Borrower fails to make a timely selection of the Borrowing or Borrowings to be
repaid or prepaid, such payment shall be applied, first, to pay any outstanding
ABR Borrowings of the applicable Class and, second, to other Borrowings of such
Class in the order of the remaining duration of their respective Interest
Periods (the Borrowing with the shortest remaining Interest Period to be repaid
first). Each payment of a Borrowing shall be applied ratably to the Loans
included in such Borrowing.

(c) Maintenance of Loan Accounts by Lenders. Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to
such Lender from time to time hereunder.

(d) Maintenance of Loan Accounts by the Paying Agent. The
Paying Agent shall maintain accounts in which it shall record (i) the amount of
each Loan made hereunder, the Class and Type thereof and each Interest Period
therefor, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (iii) the
amount of any sum received by the Paying Agent hereunder for account of the
Lenders and each Lender's share thereof.

(e) Effect of Entries. The entries made in the accounts
maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie
evidence of the existence and amounts of the obligations recorded therein;
provided that the failure of any Lender or the Paying Agent to maintain such
accounts or any error therein shall not in any manner affect the obligation of
the Borrower to repay the Loans in accordance with the terms of this Agreement.

(f) Promissory Notes. Any Lender may request that Loans of any
Class made by it be evidenced by a promissory note. In such event, the Borrower
shall prepare, execute and deliver to such Lender a promissory note payable to
the order of such Lender (or, if requested by such Lender, to such Lender and
its registered assigns) and in a form approved by the Paying Agent. Thereafter,
the Loans evidenced by such promissory note and interest thereon shall at all
times (including after assignment pursuant to Section 10.04) be represented by
one or more promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note, to such payee
and its registered assigns).

SECTION 2.08.  Prepayment of Loans.

(a) Optional Prepayments. The Borrower shall have the right at
any time and from time to time to prepay any Borrowing in whole or in part, such
prepayment to be effected in each case in the manner specified in clause (c) of
this Section.

(b) Mandatory Prepayments. The Borrower will prepay the Loans,
and/or the Commitments shall be subject to automatic reduction, as follows:

(i) Casualty Events. Not later than the date specified in
Section 6.11 in respect of any Casualty Event affecting any Facility,
the Borrower shall prepay the Loans, and/or the Commitments shall be
subject to automatic reduction, in an aggregate amount, if any, equal
to 100% of the Net Available Proceeds of such Casualty Event, such
prepayment 

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LOAN AGREEMENT

and/or reduction to be effected in each case in the manner and to the
extent specified in clause (c) of this Section. Nothing in this
paragraph shall be deemed to limit any obligation of the Borrower or
any of its Subsidiaries pursuant to any of the Security Documents to
remit to a collateral or similar account maintained by the
Administrative Agents pursuant to any of the Security Documents the
proceeds of insurance, condemnation award or other compensation
received in respect of any Casualty Event.

(ii) Equity Issuance. Upon any Equity Issuance, the Borrower
shall prepay the Loans, and/or the Commitments shall be subject to
automatic reduction, in an aggregate amount equal to 100% of the Net
Available Proceeds thereof, such prepayment and/or reduction to be
effected in each case in the manner and to the extent specified in
clause (c) of this Section.

(iii) Sale of Assets. Without limiting the obligation of the
Borrower to obtain the consent of the Required Lenders pursuant to
Section 7.03 to any Disposition not otherwise permitted hereunder, in
the event that the Net Available Proceeds of any Disposition (herein,
the "Current Disposition"), and of all prior Dispositions, shall exceed
$5,000,000 then, no later than five Business Days prior to the
occurrence of the Current Disposition, the Borrower will deliver to the
Lenders a statement, certified by a Financial Officer of the Borrower,
in form and detail satisfactory to the Administrative Agents, of the
amount of the Net Available Proceeds of the Current Disposition and of
all such prior Dispositions and will prepay the Loans, and/or the
Commitments shall be subject to automatic reduction, in an aggregate
amount equal to 100% of the Net Available Proceeds of the Current
Disposition and such prior Dispositions in excess of $5,000,000, such
prepayment and/or reduction to be effected in each case in the manner
and to the extent specified in clause (c) of this Section.

(iv) Debt Incurrence. Upon any Debt Incurrence, the Borrower
shall prepay the Loans, and/or the Commitments shall be subject to
automatic reduction, in an aggregate amount equal to 100% of the Net
Available Proceeds thereof, such prepayment and/or reduction to be
effected in each case in the manner and to the extent specified in
clause (c) of this Section.

(c) Prepayments and/or reductions of the Commitments described
in this clause (b) shall be applied as follows:

first, to prepay the Loans then outstanding ratably among the
Classes of Loans (other than Revolving Loans) in accordance with the
aggregate amount of the outstanding Loans of such Class (if any);

second, after the payment in full of the Loans of all Classes
other than Revolving Loans, the Revolving Commitments shall be
automatically reduced in an amount equal to any excess over the amount
referred to in the foregoing clause "first" (and to the extent that,
after giving effect to such reduction, the aggregate principal amount
of the Revolving Loans would exceed the Revolving Commitments or
Available Revolver Amount, the Borrower will prepay the Revolving Loans
in an aggregate amount equal to such excess); and

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LOAN AGREEMENT

third, after the payment in full of the Loans of all Classes
then outstanding and the reduction of the Revolving Commitment to zero,
to reduce the amount of the unused Commitments of any single Class as
may be specified by the Borrower's notice delivered pursuant to clause
(d) of this Section until the unused Commitment of such Class is
reduced to zero and then to reduce the amount of the unused Commitment
of any other single Class as so specified.

(d) Notices, Etc. The Borrower shall notify the Paying Agent
by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case
of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York
City time, in the case of any loan other than a Revolving Loan, three Business
Days before the date of prepayment and, in the case of a Revolving Loan, two
Business Days before the date of prepayment or (ii) in the case of prepayment of
an ABR Borrowing, not later than 11:00 a.m., New York City time, in the case of
any loan other than a Revolving Loan, one Business Day before the date of
prepayment and, in the case of a Revolving Loan, the date of prepayment. Each
such notice shall be irrevocable and shall specify the prepayment date, the
principal amount to be prepaid, in the case of a reduction of Commitment, the
Class to which such reduction is to be applied and, in the case of a mandatory
prepayment, a reasonably detailed calculation of the amount of such prepayment.
Promptly following receipt of any such notice, the Paying Agent shall advise the
Lenders of the contents thereof. Each partial prepayment shall be in an amount
that would be permitted in the case of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of a
mandatory prepayment. Prepayments shall be accompanied by accrued interest to
the extent required by Section 2.10 and shall be made in the manner specified in
Section 2.07(b).

SECTION 2.09.  Fees.

(a) Commitment Fee. The Borrower agrees to pay to the Paying
Agent for account of each Lender a commitment fee, which shall accrue at a rate
per annum equal to 1/4 of 1% on the average daily unused amount of the
Commitments of such Lender for the period from and including the date hereof to
but not including the earlier of the date such Commitments terminate and the
last day of the Availability Period. Accrued commitment fees shall be payable in
arrears on each Quarterly Date and on the earlier of the date the relevant
Commitment terminates and the last day of the Availability Period, commencing on
the first such date to occur after the date hereof. All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

(b) Agents' Fees. The Borrower agrees to pay the Paying Agent
the fees payable to the Paying Agent in the amounts and at the times separately
agreed upon between the Borrower and the Paying Agent. The Borrower agrees to
pay the Collateral Agent the fees payable to the Collateral Agent in the amounts
and at the times separately agreed upon between the Borrower and the Collateral
Agent.

(c) Reserve Fees. In addition to commitment fee under clause
(a) of this Section 2.09, the Borrower agrees to pay to the Paying Agent for
account of each Lender (i) a reserve fee equal to 1/8 of 1% on the sum of (x)
unused amount of the Commitments of such Lender plus (y)

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LOAN AGREEMENT

the aggregate principal amount of the Loans of such Lender outstanding at the
close of business on December 30, 1999 and (ii) a second reserve fee equal to
1/8 of 1% on the sum of (x) unused amount of the Commitments of such Lender plus
(y) the aggregate principal amount of the Loans of such Lender outstanding at
the close of business on February 15, 2000. Accrued reserve fees shall be
payable on December 30, 1999 and February 15, 2000, respectively.

(d) Payment of Fees. All fees payable hereunder shall be paid
on the dates due, in immediately available funds, to the Paying Agent for
distribution, to the Lenders entitled thereto. Fees paid shall not be refundable
under any circumstances.

SECTION 2.10.  Interest.

(a) ABR Loans. The Loans constituting each ABR Borrowing shall
bear interest at a rate per annum equal to the Alternate Base Rate plus the
Applicable Rate.

(b) Eurodollar Loans. The Loans constituting each Eurodollar
Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO
Rate for the Interest Period for such Borrowing plus the Applicable Rate.

(c) Default Interest. Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by the
Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration, by mandatory prepayment or otherwise, such overdue amount shall
bear interest, after as well as before judgment, at a rate per annum equal to
(i) in the case of overdue principal of any Loan, 2% plus the rate otherwise
applicable to such Loan as provided above or (ii) in the case of any other
amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of
this Section.

(d) Payment of Interest. Accrued interest on each Loan shall
be payable in arrears on each Interest Payment Date for such Loan; provided that
(i) interest accrued pursuant to paragraph (c) of this Section shall be payable
on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Borrowing prior to the end of the Interest Period therefor, accrued
interest on such Borrowing shall be payable on the effective date of such
conversion.

(e) Computation. All interest hereunder shall be computed on
the basis of a year of 360 days, except that interest computed by reference to
the Alternate Base Rate at times when the Alternate Base Rate is based on the
Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in
a leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). The applicable
Alternate Base Rate or Adjusted LIBO Rate shall be determined by the Paying
Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.11. Alternate Rate of Interest. If prior to the
commencement of the Interest Period for a Eurodollar Borrowing:

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LOAN AGREEMENT

(a) the Administrative Agents determine (which determination
shall be conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate for such
Interest Period; or

(b) the Administrative Agents are advised by the Required
Lenders that the Adjusted LIBO Rate for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest
Period;

then the Administrative Agents shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agents notify the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.

SECTION 2.12.  Increased Costs.

(a)  Increased Costs Generally.  If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or

(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by
such Lender;

and the result of any of the foregoing shall be to increase the cost to such
Lenders of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.

(b) Capital Requirements. If any Lender determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of this Agreement or the
Loans made by such Lender to a level below that which such Lender or such
Lender's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy), then from time to time the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any such reduction
suffered.

(c) Certificates from Lenders. A certificate of a Lender
setting forth the amount or amounts necessary to compensate such Lender or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section shall be delivered to the Borrower and shall be 

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conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 30 days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any
Lender to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's right to demand such compensation; provided that the
Borrower shall not be required to compensate a Lender pursuant to this Section
for any increased costs or reductions incurred more than six months prior to the
date that such Lender notifies the Borrower of the Change in Law giving rise to
such increased costs or reductions and of such Lender's intention to claim
compensation therefor; provided, further, that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the six-month period
referred to above shall be extended to include the period of retroactive effect
thereof; provided, however, that, the Borrower shall have no obligation with
respect to demands made after the Maturity Date.

SECTION 2.13. Break Funding Payments. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of an
Interest Period therefor (including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of an Interest
Period therefor, (c) the failure to borrow, convert, continue or prepay any Loan
on the date specified in any notice delivered pursuant hereto or (d) the
assignment of any Eurodollar Loan other than on the last day of an Interest
Period therefor as a result of a request by the Borrower pursuant to Section
2.16, then, in any such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event. In the case of a Eurodollar
Loan, the loss to any Lender attributable to any such event shall be deemed to
include an amount determined by such Lender to be equal to the excess, if any,
of (i) the amount of interest that such Lender would pay for a deposit equal to
the principal amount of such Loan for the period from the date of such payment,
conversion, failure or assignment to the last day of the then current Interest
Period for such Loan (or, in the case of a failure to borrow, convert or
continue, the duration of the Interest Period that would have resulted from such
borrowing, conversion or continuation) if the interest rate payable on such
deposit were equal to the Adjusted LIBO Rate for such Interest Period, over (ii)
the amount of interest that such Lender would earn on such principal amount for
such period if such Lender were to invest such principal amount for such period
at the interest rate that would be bid by such Lender (or an affiliate of such
Lender) for Dollar deposits from other banks in the eurodollar market at the
commencement of such period. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender the amount shown as due on
any such certificate within 10 days after receipt thereof.

SECTION 2.14.  Taxes.

(a) Payments Free of Taxes. Any and all payments by or on
account of any obligation of the Borrower hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agents or Lender (as the case may be)
receives an amount equal to 

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the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.

(b) Payment of Other Taxes by the Borrower. In addition, the
Borrower shall pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable law.

(c) Indemnification by the Borrower. The Borrower shall
indemnify the Administrative Agents and each Lender, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agents or such Lender, as the case may be, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender, or by the
Administrative Agents on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.

(d) Evidence of Payments. As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental
Authority, the Borrower shall deliver to the Administrative Agents the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agents.

(e) Foreign Lenders. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the jurisdiction
in which the Borrower is located, or any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agents), at the time or times
prescribed by applicable law or reasonably requested by the Borrower, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate.

SECTION 2.15. Payments Generally; Pro Rata Treatment; Sharing
of Set-offs.

(a) Payments by the Obligors. Each Obligor shall make each
payment required to be made by it hereunder (whether of principal, interest or
fees, or under Section 2.12, 2.13 or 2.14, or otherwise) or under any other Loan
Document (except to the extent otherwise provided therein) prior to 12:00 noon,
New York City time, on the date when due, in immediately available funds,
without set-off or counterclaim. Any amounts received after such time on any
date may, in the discretion of the Paying Agent, be deemed to have been received
on the next succeeding Business Day for purposes of calculating interest
thereon. All such payments shall be made to the Paying Agent at its offices at
One Court Square, Long Island City, New York 11120, except as otherwise
expressly provided in the relevant Loan Document, and except that payments
pursuant to Sections 2.12, 2.13, 2.14 and 10.03 shall be made directly to the
Persons entitled thereto. The Paying Agent shall distribute any such payments
received by it for account of any other Person to the appropriate recipient
promptly following receipt thereof. If any 

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payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder or under any other Loan
Document (except to the extent otherwise provided therein) shall be made in
Dollars.

(b) Application of Insufficient Payments. If at any time
insufficient funds are received by and available to the Paying Agent to pay
fully all amounts of principal, interest and fees then due hereunder, such funds
shall be applied (i) first, to pay interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, to pay principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.

(c) Pro Rata Treatment. Except to the extent otherwise
provided herein: (i) each Borrowing of a particular Class shall be made from the
relevant Lenders, each payment of fees under Section 2.09 in respect of
Commitments of a particular Class shall be made for account of the relevant
Lenders, and each termination or reduction of the amount of the Commitments of a
particular Class under Section 2.06 shall be applied to the respective
Commitments of such Class of the relevant Lenders, pro rata according to the
amounts of their respective Commitments of such Class; (ii) each Borrowing of
any Class shall be allocated pro rata among the relevant Lenders according to
the amounts of their respective Commitments of such Class (in the case of the
making of Loans) or their respective Loans of such Class (in the case of
conversions and continuations of Loans); (iii) each payment or prepayment of
principal of Tranche A Loans, Tranche B Loans, Tranche C Loans, Tranche D Loans
and Revolving Loans by the Borrower shall be made for account of the relevant
Lenders pro rata in accordance with the respective unpaid principal amounts of
the Loans of such Class held by them; and (iv) each payment of interest on
Tranche A Loans, Tranche B Loans, Tranche C Loans, Tranche D Loans and Revolving
Loans by the Borrower shall be made for account of the relevant Lenders pro rata
in accordance with the amounts of interest on such Loans then due and payable to
the respective Lenders.

(d) Sharing of Payments by Lenders. If any Lender shall, by
exercising any right of set-off or counterclaim or otherwise, obtain payment in
respect of any principal of or interest on any of its Loans resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
Loans and accrued interest thereon then due than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by any Obligor pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this 

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LOAN AGREEMENT

paragraph shall apply). Each Obligor consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Obligor rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Obligor
in the amount of such participation.

(e) Presumptions of Payment. Unless the Paying Agent shall
have received notice from the Borrower prior to the date on which any payment is
due to the Paying Agent for account of the Lenders hereunder that the Borrower
will not make such payment, the Paying Agent may assume that the Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Paying Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Paying Agent, at the Federal Funds Effective Rate.

(f) Certain Deductions by the Paying Agent. If any Lender
shall fail to make any payment required to be made by it pursuant to Section
2.04(b) or 2.15(e), then the Paying Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Paying Agent for account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.

SECTION 2.16.  Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender
requests compensation under Section 2.12, or if the Borrower is required to pay
any additional amount to any Lender or any Governmental Authority for account of
any Lender pursuant to Section 2.14, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the sole judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.12 or 2.14, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

(b) Replacement of Lenders. If any Lender requests
compensation under Section 2.12, or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for account of any
Lender pursuant to Section 2.14, or if any Lender defaults in its obligation to
fund Loans hereunder, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agents, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 10.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agents, which consent shall not
unreasonably be withheld, (ii) such Lender shall 

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have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder (other than, in the case of the replacement of any Lender that
defaults in its obligation to fund Loans hereunder, amounts payable to such
Lender pursuant to Section 2.13 to the extent such amounts are payable solely as
a result of such replacement), from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.12 or payments required
to be made pursuant to Section 2.14, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.

ARTICLE III.  GUARANTEE.

SECTION 3.01. The Guarantee. Subject to each Subsidiary
Guarantor individually, to Section 3.10, the Subsidiary Guarantors hereby
jointly and severally guarantee to each Lender, the Administrative Agents, the
Paying Agent and the Collateral Agent and their respective successors and
assigns the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the principal of and interest on the Loans made by
the Lenders to the Borrower and all other amounts from time to time owing to the
Lenders or the Administrative Agents by the Borrower under this Agreement and by
any Obligor under any of the other Loan Documents, and all obligations of the
Borrower or any of its Subsidiaries to any Lender (or any affiliate of any
Lender) in respect of any Hedging Agreement, in each case strictly in accordance
with the terms thereof (such obligations being herein collectively called the
"Guaranteed Obligations"). Subject to each Subsidiary Guarantor individually, to
Section 3.10, the Subsidiary Guarantors hereby further jointly and severally
agree that if the Borrower shall fail to pay in full when due (whether at stated
maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the
Subsidiary Guarantors will promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of payment or renewal
of any of the Guaranteed Obligations, the same will be promptly paid in full
when due (whether at extended maturity, by acceleration or otherwise) in
accordance with the terms of such extension or renewal.

SECTION 3.02. Obligations Unconditional. The obligations of
the Subsidiary Guarantors under Section 3.01 are absolute and unconditional,
joint and several, irrespective of the value, genuineness, validity, regularity
or enforceability of the obligations of the Borrower under this Agreement or any
other agreement or instrument referred to herein, or any substitution, release
or exchange of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section that the obligations of the Subsidiary
Guarantors hereunder shall be absolute and unconditional, joint and several,
under any and all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the

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Subsidiary Guarantors hereunder, which shall remain absolute and
unconditional as described above:

(i) at any time or from time to time, without notice to the
Subsidiary Guarantors, the time for any performance of or compliance
with any of the Guaranteed Obligations shall be extended, or such
performance or compliance shall be waived;

(ii) any of the acts mentioned in any of the provisions of
this Agreement or any other agreement or instrument referred to herein
shall be done or omitted;

(iii) the maturity of any of the Guaranteed Obligations shall
be accelerated, or any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this
Agreement or any other agreement or instrument referred to herein shall
be waived or any other guarantee of any of the Guaranteed Obligations
or any security therefor shall be released or exchanged in whole or in
part or otherwise dealt with; or

(iv) any lien or security interest granted to, or in favor of,
the Administrative Agents or any Lender or Lenders as security for any
of the Guaranteed Obligations shall fail to be perfected.

The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand
of payment, protest and all notices whatsoever, and any requirement that the
Administrative Agents or any Lender exhaust any right, power or remedy or
proceed against the Borrower under this Agreement or any other agreement or
instrument referred to herein, or against any other Person under any other
guarantee of, or security for, any of the Guaranteed Obligations.

SECTION 3.03. Reinstatement. The obligations of the Subsidiary
Guarantors under this Article shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of the Borrower in
respect of the Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and the Subsidiary
Guarantors jointly and severally agree that they will indemnify the
Administrative Agents and each Lender on demand for all reasonable costs and
expenses (including fees of counsel) incurred by the Administrative Agents or
such Lender in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging that
such payment constituted a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law.

SECTION 3.04. Subrogation. The Subsidiary Guarantors hereby
jointly and severally agree that until the payment and satisfaction in full of
all Guaranteed Obligations and the expiration and termination of the Commitments
of the Lenders under this Agreement they shall not exercise any right or remedy
arising by reason of any performance by them of their guarantee in Section 3.01,
whether by subrogation or otherwise, against the Borrower or any other guarantor
of any of the Guaranteed Obligations or any security for any of the Guaranteed
Obligations.

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SECTION 3.05. Remedies. The Subsidiary Guarantors jointly and
severally agree that, as between the Subsidiary Guarantors and the Lenders, the
obligations of the Borrower under this Agreement may be declared to be forthwith
due and payable as provided in Article VIII (and shall be deemed to have become
automatically due and payable in the circumstances provided in Article VIII) for
purposes of Section 3.01 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Borrower and that, in the event of
such declaration (or such obligations being deemed to have become automatically
due and payable), such obligations (whether or not due and payable by the
Borrower) shall forthwith become due and payable by the Subsidiary Guarantors
for purposes of Section 3.01.

SECTION 3.06. Instrument for the Payment of Money. Each
Subsidiary Guarantor hereby acknowledges that the guarantee in this Article
constitutes an instrument for the payment of money, and consents and agrees that
any Lender or the Administrative Agents, at their sole option, in the event of a
dispute by such Subsidiary Guarantor in the payment of any moneys due hereunder,
shall have the right to bring motion-action under New York CPLR Section 3213.

SECTION 3.07. Continuing Guarantee. The guarantee in this
Article is a continuing guarantee, and shall apply to all Guaranteed Obligations
whenever arising.

SECTION 3.08. Rights of Contribution. The Subsidiary
Guarantors hereby agree, as between themselves, that if any Subsidiary Guarantor
shall become an Excess Funding Guarantor (as defined below) by reason of the
payment by such Subsidiary Guarantor of any Guaranteed Obligations, each other
Subsidiary Guarantor shall, on demand of such Excess Funding Guarantor (but
subject to the next sentence), pay to such Excess Funding Guarantor an amount
equal to such Subsidiary Guarantor's Pro Rata Share (as defined below and
determined, for this purpose, without reference to the properties, debts and
liabilities of such Excess Funding Guarantor) of the Excess Payment (as defined
below) in respect of such Guaranteed Obligations. The payment obligation of a
Subsidiary Guarantor to any Excess Funding Guarantor under this Section shall be
subordinate and subject in right of payment to the prior payment in full of the
obligations of such Subsidiary Guarantor under the other provisions of this
Article and such Excess Funding Guarantor shall not exercise any right or remedy
with respect to such excess until payment and satisfaction in full of all of
such obligations.

For purposes of this Section, (i) "Excess Funding Guarantor"
means, in respect of any Guaranteed Obligations, a Subsidiary Guarantor that has
paid an amount in excess of its Pro Rata Share of such Guaranteed Obligations,
(ii) "Excess Payment" means, in respect of any Guaranteed Obligations, the
amount paid by an Excess Funding Guarantor in excess of its Pro Rata Share of
such Guaranteed Obligations and (iii) "Pro Rata Share" means, for any Subsidiary
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present fair saleable value of all properties of such Subsidiary
Guarantor (excluding any shares of stock of any other Subsidiary Guarantor)
exceeds the amount of all the debts and liabilities of such Subsidiary Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of such Subsidiary Guarantor hereunder and any
obligations of any other Subsidiary Guarantor that have been Guaranteed by such
Subsidiary Guarantor) to (y) the amount by which the aggregate fair saleable
value of all properties of all of 

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the Subsidiary Guarantors exceeds the amount of all the debts and liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of the Borrower and the Subsidiary Guarantors
hereunder and under the other Loan Documents) of all of the Subsidiary
Guarantors, determined (A) with respect to any Subsidiary Guarantor that is a
party hereto on the Effective Date, as of the Effective Date, and (B) with
respect to any other Subsidiary Guarantor, as of the date such Subsidiary
Guarantor becomes a Subsidiary Guarantor hereunder.

SECTION 3.09. General Limitation on Guarantee Obligations. In
any action or proceeding involving any state corporate law, or any state or
Federal bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors generally, if the obligations of any Subsidiary Guarantor under
Section 3.01 would otherwise, taking into account the provisions of Section
3.08, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 3.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Subsidiary Guarantor, any Lender, the Administrative Agents or
any other Person, be automatically limited and reduced to the highest amount
that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.

SECTION 3.10. Effectiveness. The respective obligations of
each Subsidiary Guarantor under this Article III shall not be effective unless
and until a Financial Officer of the Borrower shall have delivered a certificate
(each, a "Guarantee Effectiveness Certificate") to each Administrative Agent to
the effect that all Governmental Approvals under Section 204 of the Federal
Power Act as may be necessary for such Subsidiary Guarantor to incur and perform
its obligations under this Article III have been obtained and remain in effect
and that all applicable waiting periods have expired without any action being
taken by any competent authority which restricts, prevents or imposes materially
adverse conditions upon the incurrence or performance of such obligations. The
Borrower shall cause a Guarantee Effectiveness Certificate in respect of Power
Marketing to be delivered to the Administrative Agents within four Business Days
after receipt by Power Marketing of such Governmental Approvals and the
expiration of such applicable waiting periods.

ARTICLE IV.  REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Lenders that:

SECTION 4.01. Organization; Powers. Each of the Borrower and
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.

SECTION 4.02. Authorization; Enforceability. The Transactions
are within each Obligor's limited liability company and other powers and have
been duly authorized by all necessary limited liability company and other action
and, if required, by all necessary member or 

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other action. This Agreement has been duly executed and delivered by each
Obligor and constitutes, and each of the other Basic Documents to which an
Obligor is a party when executed and delivered by such Obligor will constitute,
a legal, valid and binding obligation of such Obligor, enforceable against each
Obligor in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights and
(b) the application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

SECTION 4.03.  Governmental Approvals; No Conflicts.

(a) Governmental Approvals. Attached as Schedule VII is a true
and correct list of all Governmental Approvals which are necessary as of the
date of this Agreement for (i) each Obligor to execute, deliver and perform its
obligations under this Agreement and the other Basic Documents and (ii) the
Borrower to consummate the Acquisitions and the Transactions in accordance with
the Project Documents. Each Obligor has received or has the benefit of all
Governmental Approvals which are necessary for the execution, delivery and
performance of its respective obligations under this Agreement and the other
Loan Documents. Each Obligor has received or has the benefit of all Governmental
Approvals which are necessary for the execution, delivery and performance of its
obligations under the Project Documents (and all such Governmental Approvals are
in effect), in each case, other than (x) those identified on Schedule VII as
requiring further action for their procurement and which are not now necessary
and are expected to be obtained in the ordinary course of business by the time
they are necessary and (y) those the absence of which in respect of the Project
Documents could not reasonably be expected to have a Material Adverse Effect on
the Borrower or any of its Subsidiaries or the conduct of its respective
business. All Governmental Approvals which are necessary for the acquisition and
operation of the Facilities have been obtained and are in effect (other than
those which are not now necessary and which are identified in Schedule VII as
requiring further action for their procurement and which are expected to be
obtained in the ordinary course of business by the time they are necessary).

(b) No Conflicts. The Transactions (i) will not violate any
applicable law or regulation or the Borrower LLC Agreement or the charter,
by-laws or other organizational documents (including the limited liability
company operating agreement of each Subsidiary Guarantor) of the Borrower or any
of its Subsidiaries or any order of any Governmental Authority, (ii) will not
result in a default under any indenture, agreement or other instrument binding
upon the Borrower or any of its Subsidiaries or assets, or give rise to a right
thereunder to require any payment to be made by any such Person, and (iii)
except for the Liens created pursuant to the Security Documents, will not result
in the creation or imposition of any Lien on any asset of the Borrower or any of
its Subsidiaries.

SECTION 4.04.  Financial Condition; No Material Adverse 
Change.

(a) Financial Condition. The Borrower has heretofore furnished
to the Lenders its opening consolidated balance sheet as at April 30, 1999,
certified by a Financial Officer. Such financial statements present fairly, in
all material respects, the financial position of the Borrower and its
Subsidiaries as at such date in accordance with GAAP.

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(b) No Material Adverse Change. Since the date hereof, there
has been no material adverse change in the business, assets, operations,
prospects or condition, financial or otherwise, of the Borrower and its
Subsidiaries, taken as a whole.

(c) Year 2000 Issues. On the basis of a comprehensive review
and assessment of the Borrower's and its Subsidiaries' systems and equipment and
inquiry made of the Borrower's and its Subsidiaries' material suppliers, vendors
and customers, including testing and replacements to be completed by the fourth
quarter of 1999, the Borrower has no reason to believe that the Year 2000
Problem, including costs of remediation, will result in a Material Adverse
Effect. The Borrower and its Subsidiaries have developed and are developing
feasible contingency plans which the Borrower believes in good faith to be
adequate to ensure uninterrupted and unimpaired business operation without a
Material Adverse Effect in the event of failure of their own or a third party's
systems or equipment (including those of vendors, customers and suppliers) due
to the Year 2000 Problem.

SECTION 4.05.  Properties.

(a) Property Generally. Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, subject only to Liens permitted
by Section 7.02 and except for minor defects in title that do not interfere with
its ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.

(b) Intellectual Property. Each of the Borrower and its
Subsidiaries owns, or is licensed to use, all trademarks, tradenames,
copyrights, patents and other intellectual property material to its business,
and the use thereof by the Borrower and its Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

SECTION 4.06.  Litigation and Environmental Matters.

(a) Actions, Suits and Proceedings. There are no actions,
suits or proceedings by or before any arbitrator or Governmental Authority now
pending against or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any of its Subsidiaries (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve this Agreement or the Transactions.

(b) Environmental Matters. Except for the Disclosed Matters
and except with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.

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LOAN AGREEMENT

(c) Disclosed Matters. Since the date of this Agreement, there
has been no change in the status of the Disclosed Matters that, individually or
in the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect.

SECTION 4.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements, organizational documents and other instruments binding
upon it or its property, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.

SECTION 4.08. Investment Company Status. Neither the Borrower
nor any of its Subsidiaries is an "investment company" as defined in, or subject
to regulation under, the Investment Company Act of 1940.

SECTION 4.09. Taxes. Each of the Borrower and its Subsidiaries
has timely filed or caused to be filed all Tax returns, information statements
and reports required to have been filed and has paid or caused to be paid all
Taxes required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which such Person has
set aside on its books adequate reserves or (b) to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.

SECTION 4.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
materially exceed the fair market value of the assets of such Plan, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, materially exceed the fair market value of
the assets of all such underfunded Plans.

SECTION 4.11. Disclosure. The Borrower has disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Obligors to
the Lender in connection with the negotiation of this Agreement and the other
Loan Documents or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, the Borrower
represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.

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SECTION 4.12. Use of Credit. Neither the Borrower nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose, whether immediate,
incidental or ultimate, of buying or carrying Margin Stock, and no part of the
proceeds of any Loan hereunder will be used to buy or carry any Margin Stock.

SECTION 4.13.  Material Agreements and Liens.

(a) Material Agreements. Part A of Schedule II is a complete
and correct list (other than the Loan Documents) of each credit agreement, loan
agreement, indenture, purchase agreement, guarantee, letter of credit or other
arrangement providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or guarantee
by, the Borrower or any of its Subsidiaries outstanding on the date hereof the
aggregate principal or face amount of which equals or exceeds (or may equal or
exceed) $100,000, and the aggregate principal or face amount outstanding or that
may become outstanding under each such arrangement is correctly described in
Part A of Schedule II.

(b) Liens. Part B of Schedule II is a complete and correct
list of each Lien securing Indebtedness of any Person outstanding on the date
hereof the aggregate principal or face amount of which equals or exceeds (or may
equal or exceed) $100,000 and covering any property of the Borrower or any of
its Subsidiaries, and the aggregate Indebtedness secured (or that may be
secured) by each such Lien and the property covered by each such Lien is
correctly described in Part B of Schedule II.

SECTION 4.14. Capitalization. The Borrower has heretofore
delivered to the Lenders a true and complete copy of the Borrower LLC Agreement.
The only members of the Borrower on the date hereof are the Members. The only
members of each Subsidiary (other than Power Marketing) of the Borrower on the
date hereof are the Borrower and the Members. The only members of Power
Marketing on the date hereof are the borrower and NRG Marketing. The Sponsor
directly owns 100% of the ownership interests of each Member. As of the date
hereof, (x) there are no outstanding Equity Rights with respect to the Borrower
and (y) there are no outstanding obligations of the Borrower or any of its
Subsidiaries to repurchase, redeem, or otherwise acquire any membership or other
equity interests in the Borrower nor are there any outstanding obligations of
the Borrower or any of its Subsidiaries to make payments to any Person, such as
"phantom stock" payments, where the amount thereof is calculated with reference
to the fair market value or equity value of the Borrower or any of its
Subsidiaries.

SECTION 4.15.  Subsidiaries and Investments.

(a) Subsidiaries. Set forth in Part A of Schedule VI is a
complete and correct list of all of the Subsidiaries of the Borrower as of the
date hereof. The Borrower directly owns 99% of the ownership interests of each
Subsidiary. Except as disclosed in Part A of Schedule VI, (x) the Borrower owns,
free and clear of Liens (other than Liens created pursuant to the Security
Documents), and has the unencumbered right to vote, 99% of the ownership
interests in each Person shown to be held by it in Part A of Schedule VI, and
(y) there are no outstanding Equity Rights with respect to such Person.

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(b) Investments. Set forth in Part B of Schedule VI is a
complete and correct list of all Investments (other than Investments disclosed
in Part A of Schedule VI and other than Investments of the types referred to in
clauses (b), (c), (d), (e) and (f) of Section 7.04) held by the Borrower or any
of its Subsidiaries in any Person on the date hereof and, for each such
Investment, (x) the identity of the Person or Persons holding such Investment
and (y) the nature of such Investment. Except as disclosed in Part B of Schedule
VI, each of the Borrower and its Subsidiaries owns, free and clear of all Liens
(other than Liens created pursuant to the Security Documents), all such
Investments.

(c) Restrictions on Subsidiaries. None of the Subsidiaries of
the Borrower is, on the date hereof, subject to any indenture, agreement,
instrument or other arrangement of the type described in Section 7.07.

SECTION 4.16.  Utility Regulation.

(a) None of the Members, the Borrower, any Subsidiary nor any
Operator is a "public utility company", an "electric utility company" or a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended ("PUHCA"), nor subject to regulation under PUHCA except
pursuant to Section 9(a)(2) or Section 32 thereof.

(b) Each Subsidiary (other than Power Marketing) is an "exempt
wholesale generator" under Section 32(a) of PUHCA. None of the Affiliates of the
Subject Persons nor any of the Administrative Agents, the Collateral Agent or
Lenders is or will be, solely as a result of the participation by such parties
individually or as a group in the ownership of any of the Subject Persons or the
Subject Persons' use or operation of each Facility and sale of power generated
by any such the Facility, subject to regulation as a "public-utility company,"
an "electric utility company," a "holding company" or a "subsidiary company" or
"affiliate" of any of the foregoing, under PUHCA. The representations in this
clause (b) as they relate to a Subsidiary of the Borrower shall be deemed to be
made with respect to such Subsidiary only on and after the date on which the
Acquisition to which such Subsidiary is to be a party has been consummated.

(c) So long as each Subsidiary is an "exempt wholesale
generator" under Section 32(a) of PUHCA, none of the Administrative Agents, the
Collateral Agent or Lenders will solely by reason of the exercise of remedies
under the Security Documents be subject to regulation as a "public-utility
company," an "electric utility company," or a "holding company," or a
"subsidiary company" or "affiliate" of any of the foregoing, under PUHCA;
provided that (i) each Subsidiary remains the sole owner and operator of each
Facility, within the meaning of Section 2(a)(3) of PUHCA, or (ii) the
Administrative Agents, the Collateral Agent or Lenders assume ownership or
operation of a Facility through a special purpose subsidiary that obtains a
determination of "exempt wholesale generator" status.

ARTICLE V.  CONDITIONS PRECEDENT.

SECTION 5.01. Effective Date. The obligations of the Lenders
to make Loans hereunder shall not become effective until the date on which the
Administrative Agents shall have received each of the following documents, each
of which shall be satisfactory to the 

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Administrative Agents (and to the extent specified below, to each Lender) in
form and substance (or such condition shall have been waived in accordance with
Section 10.02):

(a) Executed Counterparts. From each party hereto either (i) a
counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Administrative Agents (which may
include telecopy transmission of a signed signature page to this
Agreement) that such party has signed a counterpart of this Agreement.

(b) Opinion of Counsel to the Obligors. Favorable written
opinions (addressed to the Administrative Agents and the Lenders and
dated the Effective Date) of James Bender, Esq., General Counsel of,
and Dorsey & Whitney LLP, special counsel for, the Obligors, the
Members and the Sponsor, in form and substance reasonably acceptable to
the Administrative Agents and covering such other matters relating to
the Borrower, this Agreement or the Transactions as the Required
Lenders shall reasonably request (and each Obligor hereby instructs
such counsel to deliver such opinion to the Lenders and the
Administrative Agents).

(c) Opinion of Special New York Counsel to the Lenders. An
opinion, dated the Effective Date, of Milbank, Tweed, Hadley & McCloy
LLP, special New York counsel to the Lenders.

(d) Corporate Documents. Such documents and certificates as
the Administrative Agents or their counsel may reasonably request
relating to the organization, existence and good standing of each
Obligor, each Member and the Sponsor, the authorization of the
Transactions and any other legal matters relating to the Obligors, the
Members and the Sponsor, this Agreement or the Transactions, all in
form and substance satisfactory to the Administrative Agents and their
counsel.

(e) Officer's Certificate. A certificate, dated the Effective
Date and signed by a Financial Officer of the Borrower confirming
compliance with the conditions set forth in clauses (j) and (k) of
Section 5.02.

(f) Security Agreement. The Security Agreement, duly executed
and delivered by the Borrower, the Subsidiary Guarantors and the
Collateral Agent and the certificates identified under the name of the
Borrower in Annex 1 thereto, in each case accompanied by undated stock
powers executed in blank. In addition, each Obligor shall have taken
such other action (including delivering to the Collateral Agent, for
filing, appropriately completed and duly executed copies of Uniform
Commercial Code financing statements) as the Collateral Agent shall
have requested in order to perfect the security interests created
pursuant to the Security Agreement.

(g) Pledge Agreement. The Pledge Agreement, duly executed and
delivered by each Member and the Collateral Agent and the certificates
identified under the name of such each such Member in Annex 1 thereto,
in each case, accompanied by undated stock powers executed in blank. In
addition, each Member shall have taken such other action (including
delivering to the Collateral Agent, for filing, appropriately completed
and duly executed copies of Uniform Commercial Code financing
statements) as the Collateral 

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Agent shall have requested in order to perfect the security interests
created pursuant to the Pledge Agreement.

(h) Transition Agreements. Certified copies of each Transition
Agreement then in effect, in form and substance satisfactory to the
Collateral Agent.

(i) Independent Engineer's Report. The Independent Engineer
shall have delivered its final report to the Lenders in form and
substance satisfactory in all respects to the Administrative Agents
favorably reviewing (among other matters to be reviewed at the request
of the Lenders as determined in their sole discretion) the technical
feasibility of all engineering, design, capacity and operating
specifications and arrangements and capital expenditure and operating
cost estimates relating to the Facilities and environmental matters
relating to the Facilities. In addition, if requested by the Required
Lenders (through the Administrative Agents), the Borrower shall have
completed (and delivered to each Lender) an environmental risk
questionnaire in a form provided to the Borrower by the Administrative
Agents (and containing such inquiries with respect to environmental
matters as shall have been requested by any Lender, through the
Administrative Agents, to be included in such questionnaire), and the
responses to such questionnaire (and the underlying facts and
circumstances shown thereby) shall be in form and substance
satisfactory to each Lender.

(j) Power Marketing Report. The Independent Market Consultant
shall have delivered its final report to the Lenders in form and
substance satisfactory in all respects to the Administrative Agents.

(k) Insurance Report. The Independent Insurance Consultant
shall have delivered its final report to the Lenders in form and
substance satisfactory in all respects to the Administrative Agents.

(l) Other Information. Reports and documents of regarding
information about litigation, tax, accounting, labor, insurance,
pension liabilities (actual and contingent), real estate, leases,
environmental matters, material contracts, debt agreements, property
ownership, contingent liabilities and management of the Borrower and
its subsidiaries including specific references to the Facilities.

(m) Equity Contribution Agreement. The Equity Contribution
Agreement, duly executed and delivered by the Sponsor, each Member and
the Administrative Agents pursuant to which the Sponsor shall have
agreed to make capital contributions, subject to the terms and
conditions thereof, to the Borrower, either directly or indirectly
through the Members, in an aggregate amount of not less than
$474,376,000.

(n) Fees and Taxes. (i) Evidence that all filing, recordation,
subscription and inscription fees and all recording and other similar
fees, and all recording, stamp and other taxes and other expenses
related to such filings, registrations and recordings necessary for the
consummation of the transactions contemplated by this Agreement and the
other Basic Documents have been paid in full (to the extent the
obligation to make such payment then exists) by or on behalf of the
Borrower and (ii) the Paying Agent shall 

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have received all fees and other amounts due and payable on or prior to
the Effective Date, including, to the extent invoiced, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid
by the Borrower hereunder.

(o) Debt Service Reserve Account. Evidence of the
establishment of the Debt Service Reserve Account.

(p) PMI Security Agreement. The PMI Security Agreement, duly
executed and delivered by NRG Marketing and the Collateral Agent and
certificates identified under the name of NRG Marketing in Annex 1
thereto, in each case accompanied by undated stock powers executed in
blank. In addition, NRG Marketing shall have taken such other action
(including delivering to the Collateral Agent, for filing,
appropriately completed and duly executed Copies of Uniform Commercial
Code financing statements) as the Collateral Agent shall have requested
in order to perfect the security interests created pursuant to the PMI
Security Agreement.

(q) Base Case. The Base Case Financial Model for the
Facilities prepared by the Borrower as of the Effective Date in form
and substance satisfactory to each Lender (in consultation with the
Independent Engineer) containing, without limitation, estimates of
future operations and costs.

(r) Other Documents. Such other documents as the
Administrative Agents or any Lender or special New York counsel to the
Lenders may reasonably request.

SECTION 5.02. Conditions Precedent for each Term Loan. The
obligation of each Lender to make a Loan of any Class (other than Revolving
Loans to which this Section 5.02 shall not apply) on or after the Effective Date
is subject to the satisfaction of the following conditions precedent:

(a) Governmental Approvals. Evidence that all Governmental
Approvals and third party consents and approvals required in connection
with the relevant Acquisition have been obtained and remain in effect,
and that all applicable waiting periods (other than any Excluded
Waiting Period) have expired without any action being taken by any
competent authority which restricts, prevents or imposes materially
adverse conditions upon such Acquisition.

(b) Acquisition Documents. Evidence that the relevant
Acquisition shall have been (or shall be simultaneously) consummated in
all material respects in accordance with the terms of its respective
Acquisition Documents (except for any modifications, supplements or
material waivers thereof, or written consents or determinations made by
the parties thereto that shall be satisfactory to the Required
Lenders), and the Administrative Agents shall have received a
certificate of a Financial Officer of the Borrower to such effect and
to the effect that attached thereto are true and complete copies of the
documents delivered in connection with the closing of such Acquisition
pursuant to the relevant Acquisition Documents. In addition, the
Administrative Agents shall have received copies of the legal opinions
delivered to the Borrower or its relevant Subsidiary in connection with
such Acquisition.

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(c) Insurance. Certificates of insurance evidencing the
existence of all insurance required to be maintained by the Borrower
and its Subsidiaries pursuant to Section 6.05 in respect of the
Facility that is the subject of the relevant Acquisition, such
certificates to be in such form and contain such information as is
specified in Section 6.05. The Borrower shall have delivered a
certificate of a Financial Officer of the Borrower setting forth the
insurance obtained by it in accordance with the requirements of Section
6.05 and stating that (i) such insurance is in full force and effect
and (ii) all premiums then due and payable thereon have been paid.

(d) Sponsor Credit Rating. The Administrative Agents shall
have received a certificate of a treasurer of the Sponsor to the effect
that, immediately prior to giving effect to such Borrowing, the
long-term unsecured Indebtedness of the Sponsor is rated Baa3 or better
by Moody's and BBB- or better by S&P.

(e) Equity Contribution. Evidence that the Sponsor shall have
contributed cash equity to the Borrower indirectly through the Members
in an amount in respect of such Acquisition of not less than the amount
specified therefor in Section 2.01 of the Equity Contribution
Agreement.

(f) Available Funds for Future Acquisitions. Evidence that,
immediately after giving effect to such Acquisition and the borrowing
of Loans hereunder and capital contributions to the Borrower under the
Equity Contribution Agreement, in each case in respect of such
Acquisition, the unutilized Commitments hereunder when added to the
amounts available to the Borrower under the Equity Contribution
Agreement are sufficient to finance (i) the purchase price of all
remaining Acquisitions to be made by the Borrower and its Subsidiaries,
(ii) the projected working capital needs with respect to the operation
and maintenance of the Facilities which are the subject of such
remaining Acquisitions and (iii) the funding of the Debt Service
Reserve Account required to be made in connection with each Borrowing
of a Loan in connection with such remaining Acquisitions.

(g) Tranche C and Tranche D Loans. In the case of a Borrowing
of a Tranche C Loan or Tranche D Loan only, the Borrower shall have (or
contemporaneously with the Borrowing of such Loan, will Borrow)
Borrowed Tranche A Loans and/or Tranche B Loans.

(h) Regulatory Matters. The Administrative Agents shall have
received an Officer's Certificate of the Borrower, in form and
substance acceptable to the Administrative Agents, confirming (i) that
the relevant Subsidiary is an "exempt wholesale generator" under
Section 32(a) of PUHCA, (ii) that none of such Subsidiary's Affiliates
is or will be, solely as a result of the participation by such parties
individually or as a group in the ownership of such Subsidiary and such
Subsidiary's use or operation of the relevant Facility, subject to
regulation as a "public-utility company," an "electric utility
company," a "holding company" or a "subsidiary company" or "affiliate"
of any of the foregoing, under PUHCA (collectively, a "PUHCA Entity"),
(iii) none of the Administrative Agents or the Lenders is or will be,
solely as a result of such Subsidiary's or the relevant OPERATOR'S use
or operation of the relevant Facility, subject to 

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regulation as a PUHCA Entity and (iv) none of the Administrative Agents
or the Lenders will, solely by reason of the exercise of the remedies
under the Security Documents, be subject to regulation as a PUHCA
Entity; provided, that (i) such Subsidiary remains the sole owner and
operator of such Facility, within the meaning of Section 2(a)(3) of
PUHCA, or (ii) the Administrative Agents, the Collateral Agent or
Lenders assume ownership or operation of such Facility through a
special purpose subsidiary that obtains a determination of "exempt
wholesale generator" status. In the case of the Con Ed Acquisition and
the Dunkirk/Huntley Acquisition respectively, the Borrower will deliver
such a certificate in respect of each Subsidiary party to the relevant
Acquisition as an acquiror.

(i) Opinion of Counsel. A favorable written opinion (addressed
to the Administrative Agents and the Lenders and dated the date of such
Loan) of counsel for the Obligors, in form and substance reasonably
acceptable to the Administrative Agents, and covering such other
matters relating to such Acquisition as the Required Lenders shall
reasonably request (and each Obligor hereby instructs such counsel to
deliver such opinion to the Lenders and the Administrative Agents).

(j) Representations and Warranties. The representations and
warranties of the Borrower set forth in this Agreement, and of each
Obligor in each of the Loan Documents to which such Obligor is a party,
shall be true and correct on and as of the date of such Borrowing.

(k) No Defaults. At the time of and immediately after giving
effect to such Borrowing, no Default shall have occurred and be
continuing.

(l) Debt Service Reserve Account. Evidence that the Borrower
shall have deposited or caused to be deposited in the Debt Service
Reserve Account an amount (including Permitted Investments and amounts
available under Debt Service Support Instruments delivered to the
Collateral Agent) equal to or greater than the Debt Service Reserve
Amount applicable to the relevant Acquisition.

(m) Project Documents. Certified copies of each Project
Document (other than the Acquisition Documents and those Transition
Agreements delivered on the Effective Date) relating to the operation
and maintenance of the Facility that is the subject of such
Acquisition, each in form and substance satisfactory to each Lender.

(n) Pro Formas. A copy of an estimated pro forma balance sheet
of the Borrower, certified by a Financial Officer of the Borrower as of
the date of the relevant Acquisition, giving effect to such
Acquisition, the extension of credit hereunder in respect of such
Acquisition and the other transactions contemplated hereby in respect
of such Acquisition and showing a financial condition of the Borrower
in substance reasonably satisfactory to the Required Lenders.

(o) Solvency Certificates. The Administrative Agents shall
have received a certificate from a Financial Officer of each of the
Borrower, the Subsidiary party to the relevant Acquisition and each
other Subsidiary party to an Acquisition that was (or is to 

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be) consummated on or before the date of the relevant Acquisition
certifying that (x) as of the date of such Loan and after giving effect
to such Loan to be made on such date and to the other transactions
contemplated hereby to be consummated on such date (including any
Intercompany Loans to be made by the Borrower to any such Subsidiary
with the proceeds of such Loan), (i) the aggregate value of all
properties of the Borrower or such Subsidiary, as the case may be, at
their present fair saleable value (i.e., the amount that may be
realized within a reasonable time, considered to be six months to one
year, either through collection or sale at the regular market value,
conceiving the latter as the amount that could be obtained for the
property in question within such period by a capable and diligent
businessman from an interested buyer who is willing to purchase under
ordinary selling conditions), exceeds the amount of all the debts and
liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of the Borrower or such Subsidiary, as the
case may be, (ii) the Borrower or such Subsidiary, as the case may be,
will not have an unreasonably small capital with which to conduct its
business operations as heretofore conducted and (iii) the Borrower or
such Subsidiary, as the case may be, will have sufficient cash flow to
enable it to pay its debts as they mature and (y) the financial
projections and underlying assumptions contained in such analyses were
at the time made, and on the date of such Loan, are, fair and
reasonable and accurately computed.

(p) Intercompany Notes. The Subsidiary of the Borrower party
to the relevant Acquisition as acquirer shall have executed and
delivered an Intercompany Note to the Borrower evidencing the
Intercompany Loan made by the Borrower with the proceeds of a Loan
hereunder. In addition, the Borrower shall have delivered to the
Collateral Agent such Intercompany Note accompanied by undated note
powers executed in blank.

(q) Guarantee Effectiveness Certificate. A Financial Officer
of the Borrower shall have delivered to each Agent and each Lender a
Guarantee Effectiveness Certificate in respect of the obligations under
Article III of the Subsidiary of the Borrower party to the relevant
Acquisition as acquirer.

(r) Somerset Acquisition. In the case of the borrowing of
Tranche C Loans only, Somerset Power shall be a subsidiary of the
borrower, the borrower shall directly own at least 99% of the ownership
interests in Somerset Power and all requirements under Section 6.10
with respect to the acquisition of Somerset Power by the Borrower shall
have been (or shall be simultaneously) satisfied.

Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in clauses (j) and
(k) above.

SECTION 5.03. Conditions Precedent for each Revolving Loan.
The obligation of each Lender to make a Revolving Loan on or after the Effective
Date is subject to the satisfaction of the following conditions precedent:

(a) Representations and Warranties. The representations and
warranties of the Borrower set forth in this Agreement, and of each
Obligor in each of the Loan 

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Documents to which such Obligor is a party, shall be true and correct
on and as of the date of such Borrowing.

(b) No Defaults. At the time of and immediately after giving
effect to such Borrowing, no Default shall have occurred and be
continuing.

(c) Available Revolver Amount. Immediately after giving effect
to such Borrowing, the aggregate outstanding principal amount of the
Revolving Loans of all Lenders will be equal to or less than the
Available Revolver Amount (determined as at the date of such
Borrowing).

Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in clauses (a), (b)
and (c) above.

ARTICLE VI.  AFFIRMATIVE COVENANTS.

Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees and expenses payable
hereunder shall have been paid in full, the Borrower covenants and agrees with
the Lenders that:

SECTION 6.01. Financial Statements and Other Information. The
Borrower will furnish to the Administrative Agents and each Lender:

(a) within 90 days after the end of each fiscal year of the
Borrower, the audited consolidated balance sheet and related statements
of operations, members' equity and cash flows of the Borrower and its
Subsidiaries as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all
reported on by PriceWaterhouse Coopers or other independent public
accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the
Borrower and its Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;

(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, the consolidated
balance sheet and related statements of operations, members' equity and
cash flows of the Borrower and its Subsidiaries as of the end of and
for such fiscal quarter and the then elapsed portion of the fiscal
year, setting forth in each case in comparative form the figures for
(or, in the case of the balance sheet, as of the end of) the
corresponding period or periods of the previous fiscal year, all
certified by a Financial Officer of the Borrower as presenting fairly
in all material respects the financial condition and results of
operations of the Borrower and its Subsidiaries on a consolidated basis
in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments and the absence of footnotes;

(c) concurrently with any delivery of financial statements
under clause (a) or (b) of this Section, a certificate of a Financial
Officer of the Borrower (i) certifying as to 

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whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 7.01, 7.05 and 7.09
and (iii) stating whether any change in GAAP or in the application
thereof has occurred since the date of the audited financial statements
referred to in Section 4.04 and, if any such change has occurred,
specifying the effect of such change on the financial statements
accompanying such certificate;

(d) concurrently with any delivery of financial statements
under clause (a) of this Section, a certificate of the accounting firm
that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such
financial statements of Defaults under Section 7.01, 7.05 or 7.09 or
under clause (g) or (k) of Article VIII (which certificate may be
limited to the extent required by accounting rules or guidelines);

(e) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by the Borrower or any of its Subsidiaries with the Securities
and Exchange Commission, or any Governmental Authority succeeding to
any or all of the functions of said Commission, or with any national
securities exchange, or distributed by the Borrower to its members
generally, as the case may be; and

(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Borrower or any of its Subsidiaries, or compliance
with the terms of this Agreement and the other Loan Documents, as the
Administrative Agents or any Lender (through the Administrative Agents)
may reasonably request.

SECTION 6.02. Notices of Material Events. The Borrower will
furnish to the Administrative Agents and each Lender, promptly upon becoming
aware thereof, written notice of the following:

(a)  the occurrence of any Default;

(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any of its Affiliates or any
Facility that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect;

(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Borrower and its Subsidiaries in
an aggregate amount that could reasonably be expected to have a
Material Adverse Effect;

(d) the assertion of any environmental matter by any Person
against, or with respect to the activities of, the Borrower or any of
its Subsidiaries and any alleged violation of or non-compliance with
any Environmental Laws or any permits, licenses or authorizations,
other than any environmental matter or alleged violation that, if
adversely 

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determined, would not (either individually or in the aggregate) have a
Material Adverse Effect; and

(e) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer of the Borrower setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.

SECTION 6.03. Existence; Conduct of Business. The Borrower
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section
7.03.

SECTION 6.04. Payment of Obligations. The Borrower will, and
will cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect before
the same shall become delinquent or in default, except where (a) the validity or
amount thereof is being contested in good faith by appropriate proceedings, (b)
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.

SECTION 6.05.  Maintenance of Properties; Insurance.

(a) The Borrower will, and will cause each of its Subsidiaries
to, (i) keep and maintain all property material to the conduct of its business
in good working order and condition, ordinary wear and tear excepted, and (ii)
maintain, with financially sound and reputable insurance companies, insurance
with respect to each Facility in such amounts and against such risks as are
customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations. The Borrower will maintain and will
cause its Subsidiaries to maintain in any event insurance with respect to each
Facility the insurance coverage set forth for such Facility on the attached
Schedule VIII.

(b) Subject to Section 7.09, the Borrower will provide funds
to each of its Subsidiaries at such times and in such amounts so as to enable
each of its Subsidiaries to pay all Operating Expenses incurred by each such
Subsidiary on or before the date such Operating Expenses become due and payable.
If, on the last Business Day of each calendar month, the funds available to the
Borrower exceed the amount equal to the aggregate amount of Operating Expenses
of the Borrower and its Subsidiaries then due and payable plus Operating
Expenses of the Borrower and its Subsidiaries reasonably anticipated to become
due and payable during the following calendar month, then, on or before the
third Business Day of such following calendar month, the Borrower shall deposit
into the Debt Service Reserve Account an amount equal to the lesser of (i) the
Debt Service Reserve Shortfall, if any, determined as at the last Business Day
of a calendar month and (ii) the amount of such excess. The Borrower will take
all reasonable steps necessary to ensure that the aggregate amount of funds held
by each Subsidiary, as at any date, 

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does not exceed an amount equal to the Operating Expenses of such Subsidiary
then due and payable plus Operating Expenses of such Subsidiary reasonably
anticipated to become due and payable within the next thirty days.

SECTION 6.06. Books and Records; Inspection Rights. The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agents, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable times and as
often as reasonably requested, subject to Section 10.12(b) hereof.

SECTION 6.07. Compliance with Laws and Contractual
Obligations. The Borrower will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders of any Governmental
Authority (including Environmental Laws and ERISA matters), and all contractual
obligations applicable to it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

SECTION 6.08. Use of Proceeds. The Borrower will use the
proceeds of Loans incurred by it and Equity Contributions made to it under the
Equity Contribution Agreement solely to (i) fund the Debt Service Reserve
Account, (ii) in the case of Revolving Loans only, provide working capital for
the Borrower and its Subsidiaries and (iii) make Intercompany Loans to the
Subsidiary Guarantors. The Borrower will use the proceeds of Loans (other than
Revolving Loans) of each Class to make Intercompany Loans in the following
manner (a) the proceeds of Tranche A Loans will be used solely to make
Intercompany Loans to Dunkirk Power and Huntley Power to be used solely either
(i) if the Dunkirk/Huntley Acquisition is completed prior to the date of initial
disbursement of Tranche A Loans and the purchase price thereunder is funded by
the Dunkirk/Huntley Equity Contribution, to make a distribution to the Borrower
to fund the Dunkirk/Huntley Distribution or (ii) in all other events, to finance
a portion of the acquisition price in respect of the Dunkirk/Huntley
Acquisition, (b) the proceeds of Tranche B Loans will be used solely to make
Intercompany Loans to Astoria Power and Arthur Kill Power to be used solely to
finance a portion of the acquisition price in respect of the Con Ed Acquisition,
(c) the proceeds of Tranche C Loans will be used solely to make Intercompany
Loans to Somerset Power to be used solely to make the Somerset Distribution and
(d) the proceeds of Tranche D Loans will be used solely to make Intercompany
Loans to Oswego Harbor Power to be used solely to finance a portion of the
acquisition price in respect of the Oswego Acquisition. Each Subsidiary
Guarantor will use the proceeds of the Intercompany Loans (and of all other
loans and advances received by it from the Borrower) solely to finance the
acquisition price of the Acquisition to which it is a party.

SECTION 6.09. Rating of Index Debt. The Borrower shall take
such actions as may be reasonably necessary to request and pursue the Index Debt
to be rated by each of Moody's and S&P within 150 days after the date hereof;
provided that the Borrower's obligation under this Section 6.09 is only to
request and pursue such a rating of the Index Debt and the 

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inability of the Borrower to obtain such a rating by such 150th day shall not,
by itself, constitute non-compliance with this Section 6.09.

SECTION 6.10.  Certain Obligations Respecting Subsidiaries.

(a) Subsidiary Guarantors. The Borrower will take such action,
and will cause each of its Subsidiaries to take such action, from time to time
as shall be necessary to ensure that all Subsidiaries of the Borrower are
"Subsidiary Guarantors" hereunder. Without limiting the generality of the
foregoing, in the event that the Borrower or any of its Subsidiaries shall form
or acquire any new Subsidiary that shall constitute a Subsidiary hereunder, the
Borrower and its Subsidiaries will cause such new Subsidiary to

(i) become a "Subsidiary Guarantor" hereunder, and an
"Obligor" under the Security Agreement pursuant to a Guarantee
Assumption Agreement;

(ii) cause such Subsidiary to take such action (including
delivering such membership interests or other ownership interests,
executing and delivering such Uniform Commercial Code financing
statements) as shall be necessary to create and perfect valid and
enforceable first priority Liens on substantially all of the personal
property of such new Subsidiary on which a Lien is required to be
created pursuant to the Security Agreement as collateral security for
the obligations of such new Subsidiary hereunder; and

(iii) deliver such proof of corporate action, incumbency of
officers, opinions of counsel and other documents as is consistent with
those delivered by each Obligor pursuant to Section 5.01 on the
Effective Date or as the Administrative Agents shall have requested.

(b) Ownership of Subsidiaries. The Borrower will, and will
cause each of its Subsidiaries to, take such action from time to time as shall
be necessary to ensure that the ownership interest of the Borrower in each of
its Subsidiaries shall not fall below 99%. In the event that any additional
membership interests shall be issued by any Subsidiary, the respective Obligor
agrees forthwith to deliver to the Collateral Agent pursuant to the Security
Agreement the certificates evidencing such membership interests, accompanied by
undated stock powers executed in blank and to take such other action as the
Collateral Agent shall request to perfect the security interest created therein
pursuant to the Security Agreement.

SECTION 6.11.  Casualty Events.

(a) The Borrower will, and will cause its Subsidiaries to,
apply all Loss Proceeds to either (i) so long as an Event of Default shall not
have occurred and be continuing, if the aggregate amount of Loss Proceeds for a
single Casualty Event or related series of Casualty Events is equal to or less
than $100,000,000 to Restore the Affected Property in compliance with this
Section 6.11 or (ii) if an Event of Default shall have occurred and is
continuing or the aggregate amount of Loss Proceeds for a single Casualty Event
or related series of Casualty Events is greater than $100,000,000, to prepay the
Loans and/or reduce the Commitments in compliance with Section 2.08(b)(i) within
30 days of receipt of such Loss Proceeds unless the Required Lenders otherwise
agree in writing.

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(b) If the aggregate amount of Loss Proceeds for a single
Casualty Event or related series of Casualty Events is greater than or equal to
$25,000,000 but less than or equal to $100,000,000, the Borrower shall, not
later than 45 days after receipt of all or any portion of such proceeds, deliver
to the Administrative Agents and each Lender a restoration plan setting forth
the sources and uses of funds (including such Loss Proceeds and any other
amounts of committed funds available to the Borrower) which demonstrates the
adequacy of available funds to Restore the Affected Property and to pay all
other expenses under the Loan Documents during the period of time that, in the
opinion of the Independent Engineer, is required to restore the Affected
Property. If within 30 days after receipt of any such restoration plan (which
30-day period may be extended by up to 30 days upon the request of the Required
Lenders prior to the expiration of the initial 30-day period) the Required
Lenders (in consultation with the Independent Engineer) have not approved such
restoration plan, then the Borrower will apply such proceeds to prepay the Loans
and/or reduce the Commitments pursuant to Section 2.08(b)(i) within five days
after the expiration of such period. Without limiting the obligation of the
Borrower under clause (a) of this Section 6.11 to Restore, or cause its
Subsidiaries to Restore, the Affected Property, the requirements of this clause
(b) shall not apply where the amount of Loss Proceeds for a single Casualty
Event or related Series of Casualty Events is less than $25,000,000.

SECTION 6.12. EWG Status. The Borrower will take, or cause to
be taken, all action required to maintain its and its Subsidiaries (other than
Power Marketing), status as an "exempt wholesale generator" under Section 32(a)
of PUHCA. The Borrower will take, or cause to be taken, all action required to
cause each Operator and NRG Operations to maintain its status as an "exempt
wholesale generator" under Section 32(a) of PUHCA.

SECTION 6.13.  Debt Service Reserve Account.

(a) Creating the Account. The Collateral Agent hereby
establishes and creates on its own books a special, irrevocable collateral
account (the "Debt Service Reserve Account") which shall be maintained at all
times until the termination of this Agreement. All amounts from time to time
held in the Debt Service Reserve Account shall be held (i) in the name of the
Collateral Agent for the benefit of the Lenders and (ii) under the exclusive
dominion and control of the Collateral Agent. Except as expressly provided in
this Agreement, neither the Borrower nor any other Obligor shall have any right
to withdraw funds from the Debt Service Reserve Account. All amounts on deposit
in the Debt Service Reserve Account and all Permitted Investments held therein
shall constitute a part of the Collateral and shall not constitute payment of
any Senior Debt until applied as provided in this Agreement. The Borrower hereby
irrevocably authorizes the Collateral Agent to withdraw funds from the Debt
Service Reserve Account in accordance with this Section 6.13.

(b) Funding of the Account. The Borrower shall deposit cash,
Permitted Investments, one or more Debt Service Reserve Support Instruments or
any combination thereof into the Debt Service Reserve Account in the amount and
by the time required in connection with the initial Borrowing of Loans of each
Class (other than Revolving Loans) as contemplated in Section 5.02(l) and
otherwise in the amounts and at the times specified in Section 6.05(b). In the
event that at any time the Borrower caused to be delivered to the Collateral
Agent, one or more Debt Service Reserve Guarantees, and thereafter Collateral
Agent is entitled or required to 

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make withdrawals from the Debt Service Reserve Account pursuant to clause (i) or
(ii) of this Section 6.13, then the Borrower shall be required to deposit with
the Collateral Agent for credit to the Debt Service Reserve Account, an amount
equal to the lesser of (x) the amount which the Collateral Agent is so entitled
or required to withdraw less any amount of any Debt Service Reserve Letters of
Credit then credited to the Debt Service Reserve Account and (y) the amount of
Guaranteed Obligations (as defined in the Debt Service Reserve Guarantees) then
available to be demanded under all such Debt Service Reserve Guarantees then
held by the Collateral Agent.

(c) Withdrawals from the Account.

(i) The Borrower may direct the withdrawal of funds from the
Debt Service Reserve Account to the extent that no other funds are
available to it to pay principal or interest on the Loans or fees in
respect of the Commitments that are due on the date of such withdrawal
(each, a "Withdrawal Date"). For each withdrawal from the Debt Service
Reserve Account pursuant to this Section 6.13(c), the Borrower shall
deliver to the Administrative Agents and the Collateral Agent, no less
than two Business Days prior to the relevant Withdrawal Date, a
certificate (each, a "Withdrawal Certificate") of a Financial Officer
stating that the funds available to it to pay the aggregate amount of
such principal, interest and fees due and payable on the Withdrawal
Date are insufficient to pay such amounts and setting out the relevant
Withdrawal Date and the amount to be withdrawn. On each Withdrawal
Date, Collateral Agent shall transfer from the Debt Service Reserve
Account, to the extent funds are available therein, to the Lenders
(through the Paying Agent) the amount specified in the relevant
Withdrawal Certificate.

(ii) If on any date on which principal or interest on the
Loans or fees in respect of the Commitments are due and payable the
Paying Agent shall have received from or on behalf of the Borrower
funds that are insufficient to pay the aggregate amount of such
principal, interest and fees in full, then, upon notice thereof by the
Paying Agent to the Collateral Agent specifying the amount of such
insufficiency, the Collateral Agent shall transfer from the Debt
Service Reserve Account, to the extent funds are available therein, to
the Lenders (through the Paying Agent) an amount equal to such
insufficiency.

(iii) If on any date on or prior to the Maturity Date on which
Collateral Agent is required to make withdrawals from the Debt Service
Reserve Account pursuant to the foregoing clauses (i) or (ii) the funds
on deposit in the Debt Service Reserve Account are insufficient to make
such withdrawals, the Collateral Agent shall draw on or demand payment
under any Debt Service Reserve Support Instrument then in its
possession in an amount equal, when added to all amounts paid under
each other Debt Service Reserve Support Instrument on such date, to
such insufficiency.

(iv) Unless the Administrative Agents shall have notified the
Collateral Agent that an Event of Default shall have occurred and is
continuing or would result therefrom, if on the last Business Day of
any calendar month, the credit balance of the Debt Service Reserve
Account exceeds the Debt Service Reserve Requirement, then upon the
written request of the Borrower delivered to the Administrative Agent
and the Collateral Agent no less than two Business Days prior to the
such last Business Day, the Collateral Agent 

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shall transfer from the Debt Service Reserve Account to the Borrower an
amount equal to such excess in accordance with the instructions
specified therefor in such request.

(d) Investment of Balance in Account. The cash balance
standing to the credit of the Debt Service Reserve Account shall be invested
from time to time in such Permitted Investments as the Borrower (or, after the
occurrence and during the continuance of a Default, the Collateral Agent) shall
determine, which Permitted Investments shall be held in the name and be under
the control of the Collateral Agent; provided that at any time after the
occurrence and during the continuance of an Event of Default, the Collateral
Agent may (and, if instructed by the Required Lenders, shall) in its (or their)
discretion at any time and from time to time elect to liquidate any such
Permitted Investments (in an amount necessary to cure such Event of Default) and
apply or cause to be applied the proceeds thereof to the payment of the Secured
Obligations in respect of principal and interest on the Loans and fees in
respect of the Commitments in the manner specified in Section 5.09 of the
Security Agreement.

(e)  Debt Service Support Instruments.

(i) At any time after the Effective Date, the Borrower may
deliver to the Collateral Agent a Debt Service Support Instrument in an
aggregate amount available to be drawn or demanded thereunder equal to
all or a portion of the Debt Service Reserve Requirement. At any time
upon or after delivery of a Debt Service Reserve Support Instrument,
the Borrower may deliver to the Collateral Agent a certificate (a
"Reduction Certificate") setting out the Borrower's calculation of the
excess of (x) the aggregate amount of cash and Permitted Investments on
deposit in the Debt Service Reserve Account plus the aggregate amount
then available to be drawn under all Debt Service Support Instruments
theretofore delivered to the Collateral Agent over (y) the Debt Service
Reserve Requirement. The Collateral Agent shall, in accordance with the
instructions specified therefor in such request, transfer from the Debt
Service Reserve Account to the Borrower cash or Permitted Investments
or reduce the amount available to be drawn on or demanded under such
Debt Service Support Instrument(s) in an amount equal to such excess.

(ii) In the event that at any time prior to the Maturity Date
the issuing bank in respect of any Debt Service Reserve Letter of
Credit fails to qualify as an Acceptable Bank the Borrower shall cause
all Debt Service Reserve Letters of Credit issued by such issuing bank
to be replaced by another Debt Service Reserve Support Instrument or
cash deposit in an amount at least equal to the available face amount
of the Debt Service Reserve Letter(s) of Credit being replaced. If such
Debt Service Reserve Letter of Credit is not so replaced within fifteen
(15) days of notice by the Collateral Agent to the Borrower of the
failure of such issuing bank to qualify as an Acceptable Bank, then in
each case, the Collateral Agent may (and if so directed by the Required
Lenders shall) draw on the full available face amount of such Debt
Service Reserve Letter of Credit in accordance with the terms thereof
and deposit the proceeds of such draw into the Debt Service Reserve
Account.

(iii) In the event that at any time prior to the Maturity Date
the guarantor under any Debt Service Reserve Guarantee fails to qualify
as an Acceptable Guarantor, the 

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Borrower shall cause the Debt Service Reserve Guarantee of such Person
to be replaced by another Debt Service Reserve Support Instrument or
cash deposit in an amount at least equal to the amount guaranteed under
the Debt Service Reserve Guarantee being replaced. If such Debt Service
Reserve Guarantee is not so replaced within fifteen (15) days of notice
by the Collateral Agent to the Borrower of the failure of such Person
to qualify as an Acceptable Guarantor, then in each case, the
Collateral Agent may (and if so directed by the Required Lenders shall)
draw on the full amount guaranteed under such Debt Service Reserve
Guarantee in accordance with the terms thereof and deposit the proceeds
of such draw into the Debt Service Reserve Account.

(f) The amount on deposit in the Debt Service Reserve Account
at any time shall be deemed to be equal to the aggregate amount of cash on
deposit therein at such time, plus the aggregate fair market value of all
Permitted Investments on deposit therein at such time, plus the amount available
to be drawn or demanded under all Debt Service Reserve Instruments held by the
Collateral Agent at such time.

ARTICLE VII.  NEGATIVE COVENANTS.

Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full, the Borrower covenants and agrees with the Lenders that:

SECTION 7.01. Indebtedness. The Borrower will not, nor will it permit
any of its Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, except:

(a)  Indebtedness created hereunder;

(b) Indebtedness of any Subsidiary to the Borrower (including
Indebtedness of a Subsidiary in respect of Intercompany Loans);

(c) Guarantees by any Subsidiary of Indebtedness of the
Borrower; AND

(d) Until and including the date of the of the initial
borrowing of the Tranche C Loans, unsecured indebtedness of the
Borrower in respect of the Somerset Notes in an aggregate principal
amount at any time outstanding not exceeding $54,202,500 so long as
such indebtedness is expressly made subordinated and subject in right
of payment to the prior payment in full of the principal of and
interest on the loans and all other amounts from time to time owing to
the Lenders hereunder other than payment on such indebtedness funded
with the proceeds of the Somerset distribution or an equity
contribution (as defined in the Equity Contribution Agreement).

SECTION 7.02. Liens. The Borrower will not, nor will it permit
any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except Permitted Encumbrances.

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SECTION 7.03.  Fundamental Changes.

(a) Mergers, Consolidations, Disposal of Assets, Etc. The
Borrower will not, nor will it permit any of its Subsidiaries to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or any substantial part of its
assets, or all or substantially all of the stock of any of its Subsidiaries (in
each case, whether now owned or hereafter acquired), or liquidate or dissolve,
except that, if at the time thereof and immediately after giving effect thereto
no Default shall have occurred and be continuing (i) any Subsidiary may merge
into the Borrower in a transaction in which the Borrower is the surviving
corporation, (ii) any Subsidiary may merge into any Subsidiary in a transaction
in which the surviving entity is a Subsidiary, (iii) any Subsidiary may sell,
transfer, lease or otherwise dispose of its assets to the Borrower or to another
Subsidiary and (iv) any Subsidiary may liquidate or dissolve if the Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders.

(b) Lines of Business. The Borrower will not, nor will it
permit any of its Subsidiaries to, engage to any material extent in any business
other than (i) in the case of the Borrower, the ownership of the Subsidiaries,
(ii) in the case of the Subsidiaries of the Borrower other than Power Marketing,
the consummation of the Acquisitions and the ownership, operation and use of its
respective Facility as contemplated by the Project Documents to which it is a
party and (iii) in the case of NRG Marketing, such activities to be engaged in
by it as contemplated by the Power Sales Agreement.

SECTION 7.04. Investments. The Borrower will not, nor will it
permit any of its Subsidiaries to, make or permit to remain outstanding any
Investments except:

(a) Investments outstanding on the date hereof and identified
in Part B of Schedule VI;

(b)  operating deposit accounts with banks;

(c)  Permitted Investments;

(d) Investments by the Borrower and its Subsidiaries in the
Borrower and its Subsidiaries (including Investments by the Borrower in
Intercompany Loans);

(e) Hedging Agreements entered into in the ordinary course of
the Borrower's financial planning and not for speculative purposes;

(f) Investments consisting of security deposits with utilities
and other like Persons made in the ordinary course of business; and

(g) additional Investments up to but not exceeding $10,000,000
in the aggregate.

For purposes of clause (g) of this Section, the aggregate amount of an
Investment at any time shall be deemed to be equal to (A) the aggregate amount
of cash, together with the aggregate fair market value of property, loaned,
advanced, contributed, transferred or otherwise invested that 

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gives rise to such Investment minus (B) the aggregate amount of dividends,
distributions or other payments received in cash in respect of such Investment;
the amount of an Investment shall not in any event be reduced by reason of any
write-off of such Investment nor increased by any increase in the amount of
earnings retained in the Person in which such Investment is made that have not
been dividend, distributed or otherwise paid out.

SECTION 7.05. Restricted Payments. The Borrower will not make,
or agree to pay or make, directly or indirectly, any Restricted Payment, except
that the Borrower may make (a) Restricted Payments to its members on or after
April 12 of each fiscal year (the "current year") in an amount equal to the Tax
Payment Amount for the immediately preceding fiscal year (the "prior year"), so
long as at least fifteen days prior to making any such Restricted Payment, the
Borrower shall have delivered to each Lender (x) notification of the amount and
proposed payment date of such Restricted Payment and (y) a statement from the
Borrower's independent certified public accountants setting forth a detailed
calculation of the Tax Payment Amount for the prior year and showing the amount
of such Restricted Payment and all prior Restricted Payments and (b) the
Dunkirk/Huntley Distribution if the Borrower shall have received the
Dunkirk/Huntley Equity Contribution. Notwithstanding the foregoing the Borrower
shall not make any Restricted Payment pursuant to clause (a) of the preceding
sentence if any Default in respect of clause (b) of Article VIII or if any Event
of Default shall have occurred and be continuing. Nothing herein shall be deemed
to prohibit the payment of dividends by any Subsidiary of the Borrower to the
Borrower.

SECTION 7.06. Transactions with Affiliates. The Borrower will
not, nor will it permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) transactions in the ordinary course of business at
prices and on terms and conditions not less favorable to the Borrower or such
Subsidiary than could be obtained on an arm's-length basis from unrelated third
parties, (b) transactions between or among the Borrower and its Subsidiaries not
involving any other Affiliate, (c) any Restricted Payment permitted by Section
7.05, (d) transactions that are contemplated by the Project Documents and (e)
payment by the Borrower of Indebtedness of the Borrower evidenced by the
Somerset Notes outstanding on the date of initial disbursement of the Tranche C
Loans.

SECTION 7.07. Restrictive Agreements. The Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any
of its property or assets, or (b) the ability of any Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that:

(i) the foregoing shall not apply to restrictions and
conditions imposed by law or by this Agreement; and

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(ii) clause (a) of the foregoing shall not apply to customary
provisions in leases and other contracts restricting the assignment
thereof.

SECTION 7.08.  [Reserved.]

SECTION 7.09. Capital Expenditures. The Borrower will not
permit the aggregate amount of Capital Expenditures by the Borrower and its
Subsidiaries to exceed the following respective amounts for the period
commencing on the Effective Date and ending on the Maturity Date:

SUBSIDIARY                                    AMOUNT
----------                                    ------
Dunkirk Power                            $  5,800,000
Huntley Power                            $  7,300,000
Astoria Power                            $  5,100,000
Arthur Kill Power                        $  5,200,000
Somerset Power                           $  8,900,000
Oswego Harbor Power                      $ 12,900,000

SECTION 7.10. Modifications of Certain Documents. The Borrower
will not consent, nor allow any Subsidiary to consent, to any material
modification, supplement or waiver of any of the provisions of any Acquisition
Document without the prior consent of the Administrative Agents (with the
approval of the Required Lenders). Without the prior consent of the Required
Lenders, the Borrower will not agree or consent to nor allow any Subsidiary to
agree or consent to any termination, modification, supplement or waiver of any
Project Document (other than an Acquisition Document) unless such termination,
modification, supplement or waiver could not, individually or collectively with
all other such terminations, modifications, supplements and waivers, reasonably
be expected to have a Material Adverse Effect. Without the prior written consent
of the Required Lenders, the Borrower will not, nor will it permit any of its
Subsidiaries to, enter into any contract or agreement relating to the
acquisition, ownership, leasing, occupation, operation, maintenance or use of
the Facilities other than (a) the Project Documents, (b) Hedging Agreements, (c)
any Additional Project Document, (d) any Permitted Fuel Agreement, (e) any
Permitted Power Marketing Agreement and (f) any Permitted Power Purchase
Agreement. Promptly after the execution and delivery thereof, the Borrower will
furnish to the Administrative Agents, the Collateral Agent and the Lenders (a)
certified copies of all such contracts and agreements and (b) a Consent and
Agreement from each Person (other than an Obligor or any Lender) party to any
such Hedging Agreement, any such Additional Project Documents or any such
Permitted Fuel Agreement or Permitted Power Marketing Agreement with a term in
excess of one year.

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SECTION 7.11. Fuel Agreements. The Borrower will not, nor will
it permit any of its Subsidiaries to, enter into any Fuel Agreement other than
any Fuel Agreement entered into by the Borrower or any of its Subsidiaries in
the ordinary course of its business and not for speculation.

SECTION 7.12. Power Marketing Agreements. The Borrower will
not, nor will it permit any of its Subsidiaries to, enter into any Power
Marketing Agreements other than any Power Marketing Agreement entered into by
the Borrower or any of its Subsidiaries in the ordinary course of its business
and not for speculation.

SECTION 7.13. Power Purchase Agreements. The Borrower will
not, nor will it permit any of its Subsidiaries to, enter into any Power
Purchase Agreement other than any Power Purchase Agreement entered into by the
Borrower or any of its Subsidiaries in the ordinary course of its business for
the purpose of balancing the obligations of the Borrower and its Subsidiaries to
sell electrical energy generating capacity and electrical energy under all Power
Marketing Agreements to which the Borrower and its Subsidiaries are party with
the aggregate electrical energy generating capacity and electrical energy to be
generated by the Facilities taken as a whole while operated and maintained in
accordance with prudent utility practice.

ARTICLE VIII.  EVENTS OF DEFAULT.

If any of the following events ("Events of Default") shall
occur:

(a) the Borrower shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or otherwise;

(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause
(a) of this Article) payable under this Agreement or under any other
Loan Document, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of three or more
Business Days;

(c) any representation or warranty made or deemed made by or
on behalf of the Borrower or any of its Subsidiaries in or in
connection with this Agreement or any other Loan Document or any
amendment or modification hereof or thereof, or in any report,
certificate, financial statement or other document furnished pursuant
to or in connection with this Agreement or any other Loan Document or
any amendment or modification hereof or thereof, shall prove to have
been incorrect in any material respect when made or deemed made;

(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 6.02, 6.03 (with
respect to the Borrower's existence), 6.08, 6.10 (other than clause
(a)(ii) thereof) or 6.12 or in Article VII or any Obligor shall default
in the performance of any of its obligations contained in Section 4.02
or 5.02 of the Security Agreement; or any Member party thereto shall
default in the performance of any of its obligations contained in the
Pledge Agreement;

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(e) any Obligor shall fail to observe or perform any covenant,
condition or agreement contained in Section 6.01 and such failure shall
continue unremedied for a period of 60 or more days after notice
thereof from the Administrative Agents (given at the request of any
Lender) to the Borrower.

(f) any Obligor shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those
specified in clause (a), (d) or (e) of this Article) or any other Loan
Document and such failure shall continue unremedied for a period of 30
or more days after notice thereof from the Administrative Agents (given
at the request of any Lender) to the Borrower;

(g) the Borrower or any of its Subsidiaries shall fail to make
any payment (whether of principal or interest and regardless of amount)
in respect of any Material Indebtedness when due (and any grace period
relating thereto has expired) or any event or condition occurs that
results in any Material Indebtedness becoming due prior to its
scheduled maturity or that enables or permits the holder or holders of
any Material Indebtedness or any trustee or agent on its or their
behalf to cause any Material Indebtedness to become due, or to require
the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity;

(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower, any of its
Subsidiaries, any Member, any Operator, NRG Marketing or NRG Operations
or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Borrower, any of its Subsidiaries, any Member, any
Operator, NRG Marketing or NRG Operations or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall
continue undismissed for a period of 60 or more days or an order or
decree approving or ordering any of the foregoing shall be entered;

(i) the Borrower, any of its Subsidiaries, any Member, any
Operator, NRG Northeast Marketing or NRG Operations shall (i)
voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for itself or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;

(j) the Borrower, any of its Subsidiaries, any Member, any
Operator, NRG Northeast Marketing or NRG Operations shall become
unable, admit in writing its inability or fail generally to pay its
debts as they become due;

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(k) one or more judgments for the payment of money in an
aggregate amount in excess of $5,000,000 shall be rendered against the
Borrower or any of its Subsidiaries or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to attach or levy upon
any assets of the Borrower or any of its Subsidiaries to enforce any
such judgment;

(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in a
Material Adverse Effect;

(m) there shall have been asserted in writing against the
Borrower or any of its Subsidiaries, or any predecessor in interest of
the Borrower or any of its Subsidiaries by a Governmental Authority,
any claims or liabilities, whether accrued, absolute or contingent,
based on or arising from the generation, storage, transport, handling
or disposal of Hazardous Materials by the Borrower or any of its
Subsidiaries or predecessors that, in the judgment of the Required
Lenders, are reasonably expected to be determined adversely to the
Borrower or any of its Subsidiaries, and the amount thereof (either
individually or in the aggregate) could reasonably be expected to have
a Material Adverse Effect (insofar as such amount is payable by the
Borrower or any of its Subsidiaries but after deducting any portion
thereof that is reasonably expected to be paid by other creditworthy
Persons jointly and severally liable therefor);

(n)  a Change in Control shall occur;

(o) the Borrower shall be terminated, dissolved or liquidated
(as a matter of law or otherwise) or proceedings shall be commenced by
any Person (including the Borrower) seeking the termination,
dissolution or liquidation of the Borrower;

(p) the Liens created by the Security Documents shall at any
time not constitute a valid and perfected Lien on the collateral
intended to be covered thereby (to the extent perfection by filing,
registration, recordation or possession is required herein or therein)
in favor of the Collateral Agent, free and clear of all other Liens
(other than Liens permitted under Section 7.02 or under the respective
Security Documents), or, except for expiration in accordance with its
terms, any of the Security Documents shall for whatever reason be
terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by any Obligor or Member;

(q) either (i) this Agreement or any other Loan Document is
declared in a final non-appealable judgment to be unenforceable against
any Obligor or Member party thereto, or any Obligor or Member shall
have expressly repudiated its obligations hereunder or thereunder; or
(ii) any Project Document is declared in a final non-appealable
judgment to be unenforceable against any party thereto, or any such
party shall have expressly repudiated its obligations thereunder and
ceased to perform such obligations, or defaulted in the performance or
observance of any of its material obligations thereunder and such
default has continued unremedied for a period of five 

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days or more or any such party is the subject of any proceeding under
the Bankruptcy Code; or

then, and in every such event (other than an event with respect to any Obligor
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agents may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Obligors accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by each Obligor; and in case of any
event with respect to any Obligor described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Obligors accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Obligor.

ARTICLE IX.  THE AGENTS.

Each of the Lenders hereby irrevocably appoints Chase and
Citibank as its agent hereunder and under the other Loan Documents and
authorizes Chase and Citibank to take such actions on its behalf and to exercise
such powers as are delegated to the Administrative Agents by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. Each of the Lenders hereby irrevocably appoints Citibank as its paying
agent hereunder and under the other Loan Documents and authorizes Citibank to
take such actions on its behalf and to exercise such powers as are delegated to
the Paying Agent by the terms hereof or thereof, together with such actions and
powers as are reasonably incidental thereto. Each of the Lenders hereby
irrevocably appoints Chase as its collateral agent hereunder and under the other
Loan Documents and authorizes Chase to take such actions on its behalf and to
exercise such powers as are delegated to the Collateral Agent by the terms
hereof or thereof, together with such actions and powers as are reasonably
incidental thereto. The following provisions of this Article IX shall apply to
the Collateral Agent and the Paying Agent mutatis mutandis.

The Persons serving as the Administrative Agents hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Administrative
Agents, and such Person and its Affiliates may accept deposits from, lend money
to and generally engage in any kind of business with the Borrower or any
Subsidiary or other Affiliate thereof as if it were not the Administrative
Agents hereunder.

The Administrative Agents shall not have any duties or
obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agents shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) the
Administrative 

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Agents shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative
Agents are required to exercise in writing by the Required Lenders, and (c)
except as expressly set forth herein and in the other Loan Documents, the
Administrative Agents shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agents or any of its Affiliates in any capacity. The
Administrative Agents shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders or in the absence
of its own gross negligence or willful misconduct. The Administrative Agents
shall be deemed not to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agents by the Borrower or a
Lender, and the Administrative Agents shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement or any other Loan Document, (ii)
the contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article V or elsewhere herein or therein, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agents.

The Administrative Agents shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agents also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agents may consult
with legal counsel (who may be counsel for an Obligor, Member or the Sponsor),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

The Administrative Agents may perform any and all its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agents. The Administrative Agents and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agents and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agents.

Each Administrative Agent may resign at any time by notifying
the Lenders and the Borrower. Upon any such resignation, the Required Lenders
shall have the right, in consultation with the Borrower, to appoint a successor.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent's
resignation shall nonetheless become effective and (1) the retiring

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Administrative Agent shall be discharged from its duties and obligations
hereunder and (2) the Required Lenders shall perform the duties of the
Administrative Agent (and all payments and communications provided to be made
by, to or through the Administrative Agent shall instead be made by or to each
Lender directly) until such time as the Required Lenders appoint a successor
agent as provided for above in this paragraph. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring (or retired) Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder (if not already discharged therefrom as provided above in this
paragraph). The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 10.03 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.

Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.

Except as otherwise provided in Section 10.02(b) with respect
to this Agreement, the Administrative Agent and the Collateral Agent may, with
the prior consent of the Required Lenders (but not otherwise), consent to any
modification, supplement or waiver under any of the Loan Documents to which it
is a party; provided that, without the prior consent of each Lender, (a) the
Collateral Agent shall not (except as provided herein or in the Security
Documents) release any collateral or otherwise terminate any Lien under any
Security Document providing for collateral security, agree to additional
obligations being secured by such collateral security (unless the Lien for such
additional obligations shall be junior to the Lien in favor of the other
obligations secured by such Security Document, in which event the Collateral
Agent may consent to such junior Lien provided that it obtains the consent of
the Required Lenders thereto), alter the relative priorities of the obligations
entitled to the benefits of the Liens created under the Security Documents,
except that no such consent shall be required, and the Collateral Agent is
hereby authorized, to release any Lien covering property that is the subject of
either a disposition of property permitted hereunder or a disposition to which
the Required Lenders have consented.

ARTICLE X.  MISCELLANEOUS.

SECTION 10.01. Notices. Except in the case of notices and
other communications expressly permitted to be given by telephone, all notices
and other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

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(a) if to the Borrower or any Subsidiary Guarantor, to it at
c/o NRG Energy, Inc., 1221 Nicollet Mall, Suite 700, Minneapolis, MN
55403, Attention of Michael O'Sullivan (Telecopy No.
612-373-5430; Telephone No. 612-373-5408);

(b) if to the Administrative Agents, to The Chase Manhattan
Bank, 1 Chase Manhattan Plaza, 8th Floor, New York, New York 10081,
Attention of Daniel Fischer, Loan and Agency Services Group (Telecopy
No. (212) 552-5777; Telephone No. (212) 552-7906), with a copy to The
Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017,
Attention of Bob Mathews (Telecopy No. (212) 270-3089; Telephone No.
(212) 270-6004); and Citibank, N.A., 399 Park Avenue, Fifth Floor, Zone
24, New York, New York, 10043, Attention: Lorraine Frankel (Telecopy
No. 212-793-4574; Telephone No. 212-559-2080, with a copy to Citibank,
N.A., 399 Park Avenue, Fifth Floor, Zone 24, New York, New York 10043,
Attention: Jasjeet S. Sood (Telecopy No.(212) 793-0092; Telephone No.
(212) 559-3482).

(c) if to the Collateral Agent, to The Chase Manhattan Bank,
450 W. 33rd Street, 15th Floor, New York, New York 10001-2697,
Attention: Valerie Dunbar (Telecopy No. (212) 946-8177; Telephone No.
(212) 946-3007);

(d) if to the Paying Agent, to Citibank, N.A., Global Loan
Operations, 2 Penns Way, Suite 200, New Castle, Delaware 19720 ,
Attention: Carlos Lopez (Telecopy No. (302) 894-6120; Telephone No.
(302) 894-6007); or

(e) if to a Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto (or, in the case
of any such change by a Lender, by notice to the Borrower and the Administrative
Agents). All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

SECTION 10.02.  Waivers; Amendments.

(a) No Deemed Waivers; Remedies Cumulative. No failure or
delay by the Administrative Agents, the Paying Agent, the Collateral Agent or
any Lender in exercising any right or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agents, the Paying
Agent, the Collateral Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by any Obligor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, 

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regardless of whether the Administrative Agents, the Paying Agent, the
Collateral Agent or any Lender may have had notice or knowledge of such Default
at the time.

(b) Amendments. Neither this Agreement nor any provision
hereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by the Borrower and the Required Lenders or
by the Borrower and the Administrative Agents with the consent of the Required
Lenders; provided that no such agreement shall (i) increase any Commitment of
any Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or reduce the rate or amount of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iii) postpone the scheduled date of payment of the principal amount of
any Loan, or any interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Commitment, without the written consent of each Lender
affected thereby, (iv) alter the manner in which payments or prepayments of
principal, interest or other amounts hereunder shall be applied as among the
Lenders or Types or Classes of Loans, without the written consent of each
Lender, (v) change any of the provisions of this Section or the definition of
the term "Required Lenders" or any other provision hereof specifying the number
or percentage of Lenders required to waive, amend or modify any rights hereunder
or make any determination or grant any consent hereunder, without the written
consent of each Lender, or (vi) release any Subsidiary Guarantor from any of its
guarantee obligations under Article III without the written consent of each
Lender; and provided, further, that (x) no such agreement shall amend, modify or
otherwise affect the rights or duties of the (1) Administrative Agents hereunder
without the prior written consent of each Administrative Agent, (2) Collateral
Agent hereunder without the prior written consent of the Collateral Agent or (3)
Paying Agent hereunder without the prior written consent of the Paying Agent and
(y) that any modification or supplement of Article III shall require the consent
of each Subsidiary Guarantor.

SECTION 10.03.  Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agents, the
Collateral Agent and the Paying Agent and their Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agents, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the provisions hereof
or thereof (whether or not the transactions contemplated hereby or thereby shall
be consummated), (ii) all out-of-pocket expenses incurred by the Administrative
Agents or any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agents, the Collateral Agent or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement and the other Loan Documents, including its rights under this
Section, or in connection with the Loans made hereunder, including in connection
with any workout, restructuring or negotiations in respect thereof and (iii) and
all costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated by any Security Document or any other document referred to therein.

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(b) Indemnification by the Borrower. The Borrower shall
indemnify the Administrative Agents, the Collateral Agent, the Paying Agent and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or the use of the proceeds therefrom, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee.

(c) Reimbursement by Lenders. To the extent that the Borrower
fails to pay any amount required to be paid by it to the Administrative Agents,
the Collateral Agent or the Paying Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agents, the
Collateral Agent or the Paying Agent, as the case may be, such Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agents, the Collateral Agent or the Paying Agent in
its capacity as such.

(d) Waiver of Consequential Damages, Etc. To the extent
permitted by applicable law, no party hereto shall assert, and each party hereto
hereby waives, any claim against any other party or any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.

(e) Payments. All amounts due under this Section shall be
payable not later than 20 days after written demand therefor.

SECTION 10.04.  Successors and Assigns.

(a) Assignments Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Obligor may
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or
transfer by any Obligor without such consent shall be null and void). Nothing in

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this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agents, the Collateral Agent, the Paying
Agent and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

(b) Assignments by Lenders. Any Lender may assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments and the Loans at the
time owing to it); provided that (i) except in the case of an assignment to a
Lender or an Affiliate of a Lender (other than in the case of an assignment to
such an Affiliate that would impose costs on the Borrower pursuant to Section
2.12 or 2.14 in excess of those costs incurred prior to such assignment), each
of the Borrower and each Administrative Agent must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender's
Commitment(s), the amount of the Commitment(s) of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agents) shall
not be less than $10,000,000 unless each of the Borrower and each Administrative
Agent otherwise consent, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, (iv) the parties to each assignment shall
execute and deliver to the Administrative Agents an Assignment and Acceptance,
together with a processing and recordation fee of $3,500, and (v) the assignee,
if it shall not be a Lender, shall deliver to the Administrative Agents an
Administrative Questionnaire; provided, further, that any consent of the
Borrower otherwise required under this paragraph shall not be required if an
Event of Default under clause (h) or (i) of Article VIII has occurred and is
continuing. Upon acceptance and recording pursuant to paragraph (d) of this
Section, from and after the effective date specified in each Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.12,
2.13, 2.14 and 10.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.

(c) Maintenance of Register by the Paying Agent. The Paying
Agent, acting for this purpose as an agent of the Borrower, shall maintain at
one of its offices in New York City a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitments of, and principal amount of the Loans owing to,
each Lender pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agents, the Collateral Agent, the Paying Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of 

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LOAN AGREEMENT

this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Administrative Agents, the
Collateral Agent and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.

(d) Effectiveness of Assignments. Upon their receipt of a duly
completed Assignment and Acceptance executed by an assigning Lender and an
assignee, the assignee's completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agents
and the Paying Agent shall accept such Assignment and Acceptance and the Paying
Agent record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

(e) Participations. Any Lender may, without the consent of the
Borrower or the Administrative Agents, sell participations to one or more banks
or other entities (a "Participant") in all or a portion of such Lender's rights
and obligations under this Agreement and the other Loan Documents (including all
or a portion of its Commitments and the Loans owing to it); provided that (i)
such Lender's obligations under this Agreement and the other Loan Documents
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agents, the Collateral Agent, the Paying Agent and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. Any agreement or instrument pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and the other Loan Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or any
other Loan Document; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
10.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.12, 2.13 and 2.14 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section.

(f) Limitations on Rights of Participants. A Participant shall
not be entitled to receive any greater payment under Section 2.12 or 2.14 than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.14 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.14(e) as though it were a
Lender.

(g) Certain Pledges. Any Lender may at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any such pledge or
assignment to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such 

83
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LOAN AGREEMENT

pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such assignee for such Lender as
a party hereto.

(h) No Assignments to the Obligors or Affiliates. Anything in
this Section to the contrary notwithstanding, no Lender may assign or
participate any interest in any Loan held by it hereunder to the Sponsor or any
of its Affiliates or the Borrower or any of its Affiliates or Subsidiaries
without the prior consent of each Lender.

SECTION 10.05. Survival. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans, regardless of any investigation made by any such other
party or on its behalf and notwithstanding that any Administrative Agent, the
Collateral Agent, the Paying Agent or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid and so long
as the Commitments have not expired or terminated. The provisions of Sections
2.12 (except to the extent provided in clause (d) thereof), 2.13, 2.14, 3.03 and
10.03 and Article IX shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Commitments or the
termination of this Agreement or any provision hereof.

SECTION 10.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement and
any separate letter agreements with respect to fees payable to the
Administrative Agents, the Collateral Agent and the Paying Agent constitute the
entire contract between and among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section
5.01, this Agreement shall become effective when it shall have been executed by
the Administrative Agents and when the Administrative Agents shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.

SECTION 10.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

SECTION 10.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest 

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LOAN AGREEMENT

extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of any Obligor against any of and all the obligations of any Obligor now
or hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.

SECTION 10.09.  Governing Law; Jurisdiction; Etc.

(a) Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York.

(b) Submission to Jurisdiction. Each Obligor hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agents or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against any Obligor or its properties in
the courts of any jurisdiction.

(c) Waiver of Venue. Each Obligor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

(d) Service of Process. Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices in
Section 10.01. Nothing in this Agreement will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.

SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD 

85
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LOAN AGREEMENT

NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

SECTION 10.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.

SECTION 10.12. Treatment of Certain Information;
Confidentiality.

(a) Treatment of Certain Information. The Borrower
acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Borrower or one or more of its
Subsidiaries (in connection with this Agreement or otherwise) by any Lender or
by one or more subsidiaries or affiliates of such Lender and the Borrower hereby
authorizes each Lender to share any information delivered to such Lender by the
Borrower and its Subsidiaries pursuant to this Agreement, or in connection with
the decision of such Lender to enter into this Agreement, to any such subsidiary
or affiliate, it being understood that any such subsidiary or affiliate
receiving such information shall be bound by the provisions of paragraph (b) of
this Section as if it were a Lender hereunder. Such authorization shall survive
the repayment of the Loans, the expiration or termination of the Commitments or
the termination of this Agreement or any provision hereof.

(b) Confidentiality. Each of the Administrative Agents, the
Collateral Agent, the Paying Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (i) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors on a
need-to-know basis (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (ii) to the extent requested
by regulatory authority having jurisdiction over such Person, (iii) to the
extent required by applicable laws or regulations or by any subpoena or similar
legal process, (iv) to any other party to this Agreement, (v) in connection with
the exercise of any remedies hereunder or under any other Loan Document or any
suit, action or proceeding relating to this Agreement or any other Loan Document
or the enforcement of rights hereunder or thereunder, (vi) subject to an
agreement containing provisions substantially the same as those of this
paragraph, to any assignee of or Participant in, or any prospective assignee of
or Participant in, any of its rights or obligations under this Agreement, (vii)
with the prior written consent of the Borrower in its sole discretion or (viii)
to the extent such Information (A) becomes publicly available other than as a
result of a breach of this paragraph or (B) becomes available to the
Administrative Agents, the Collateral Agent, the Paying Agent or any Lender on a
nonconfidential basis from a source other than an Obligor. For the purposes of
this paragraph, "Information" means all information received from any Obligor
relating to any Obligor or its business, other than any such information that is
available to the Administrative Agents, the Collateral Agent, the Paying Agent
or any Lender on a nonconfidential basis prior to disclosure by an Obligor. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has taken reasonable precautions to keep such 

86
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LOAN AGREEMENT

Information confidential in accordance with its customary procedures for
handling confidential information of the same nature and in accordance with safe
and sound banking practices. Unless prohibited by law or court order, each
Lender, each Administrative Agent, the Collateral Agent and the Paying Agent
shall, prior to disclosure thereof, notify the Borrower of any request for
disclosure of any Information pursuant to subclause (ii) or (iii) of the first
sentence of this clause (b).

87
S-1

LOAN AGREEMENT

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.

NRG NORTHEAST GENERATING LLC

By:   Craig Mataczynski 
-------------------------------
Name: Craig Mataczynski
Title:    President

88
S-2
LOAN AGREEMENT

SUBSIDIARY GUARANTORS

ARTHUR KILL POWER LLC

By:   Craig Mataczynski
-------------------------------
Name: Craig Mataczynski
Title:    President

ASTORIA GAS TURBINE POWER LLC

By:   Craig Mataczynski
-------------------------------           
Name: Craig Mataczynski
Title:    President

DUNKIRK POWER LLC

By:   Craig Mataczynski
-------------------------------
Name: Craig Mataczynski
Title:    President

HUNTLEY POWER LLC

By:   Craig Mataczynski
-------------------------------
Name: Craig Mataczynski
Title:    President

89
S-3

LOAN AGREEMENT

NRG NORTHEAST POWER 
MARKETING LLC

By:   Craig Mataczynski
-------------------------------
Name: Craig Mataczynski
Title:    President

OSWEGO HARBOR POWER LLC

By:   Craig Mataczynski
-------------------------------
Name: Craig Mataczynski
Title:    President

SOMERSET POWER LLC

By:   Craig Mataczynski
-------------------------------
Name: Craig Mataczynski
Title:    President

90
S-4

LOAN AGREEMENT

LENDERS

THE CHASE MANHATTAN BANK,
individually, as an Administrative Agent and 
as Collateral Agent

By:  Robert W. Mathews
-------------------------------
Name: Robert W. Mathews
Title: Vice President

91
S-5

LOAN AGREEMENT

CITIBANK, N.A.,
individually, as an Administrative Agent and 
as Paying Agent

By: Jasjeet S. Sood
---------------------------------
Name: Jasjeet S. Sood
Title: Managing Director
Attorney-in-fact
Global Project Finance
399 Park  5/24
212-559-3482

92
S-6

LOAN AGREEMENT

ABN AMRO BANK

By:  David B. Bryant
------------------------------
Name: David B. Bryant
Title: Group Vice President

By: Mark R. Lasek
------------------------------
Name: Mark R. Lasek
Title: Group Vice President

93
S-7

LOAN AGREEMENT

AUSTRALIAN & NEW ZEALAND
BANKING GROUP LIMITED

By:  Paul Clifford
------------------------------
Name: Paul Clifford
Title: Director

94
S-8

LOAN AGREEMENT

BANK HAPOALIM B.M.

By:  Laura Anne Raffa  
-----------------------------------
Name: Laura Anne Raffa        
Title: First Vice President & 
Corporate Manager

By: Conrad Wagner         
----------------------------
Name: Conrad Wagner
Title: Vice President

95
S-9

LOAN AGREEMENT

BANK OF MONTREAL

By:  Kresten M. Bjornsson
------------------------------
Name: Kresten M Bjornsson
Title: Director

96
S-10

LOAN AGREEMENT

THE BANK OF NOVA SCOTIA

By:  F.C.H. Ashby
-------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations

97
S-11

LOAN AGREEMENT

THE BANK OF TOKYO-MITSUBISHI, LTD.
NEW YORK BRANCH

By:  Makoto Kobayashi
-------------------------------
Name: Makoto Kobayashi
Title: Vice President

98
S-12

LOAN AGREEMENT

BAYERISCHE HYPO-UND VEREINSBANK AG 
- New York Branch

By:   Andrew G. Mathews
------------------------------
Name: Andrew G. Mathews
Title: Managing Director

By:  Gisela Kroess
------------------------------
Name: Gisela Kroess
Title: Director

99
S-13

LOAN AGREEMENT

CIBC INC.

By:  Denis P. O'Meara
------------------------------
Name: Denis P. O'Meara
Title: Executive Director

CIBC World Markets Corp. As Agent

100
S-14

LOAN AGREEMENT

COBANK, ACB

By:  Anita Feuerbach
------------------------------
Name: Anita Feuerbach
Title: Vice President

101
S-15

LOAN AGREEMENT

COMMERZBANK AG

By:  Dempsy L. Gable
------------------------------
Name: Dempsey L. Gable
Title: Senior Vice President

By:  Andrew Kjoller
-------------------------------
Name: Andrew Kjoller
Title: Assistant Vice President

102
S-16

LOAN AGREEMENT

CREDIT LOCAL DE FRANCE

By:  Philippe Ducos
-------------------------------
Name: Philippe Ducos
Title: Deputy General Manager

By:  Robert N. Sloan, Jr.
-------------------------------
Name: Robert N. Sloan, Jr.
Title: Vice President

103
S-17

LOAN AGREEMENT

DRESDNER KLEINWORT BENSON

By:  Thomas Lake
------------------------------
Name: Thomas Lake
Title: Vice President

By:  Kirk Edelman
------------------------------
Name: Kirk Edelman
Title: Vice President

104
S-18

LOAN AGREEMENT

THE INDUSTRIAL BANK OF JAPAN, LIMITED

By:  William Chin
------------------------------
Name: William Chin
Title: Senior Vice President

105
S-19

LOAN AGREEMENT

ING (U.S.) CAPITAL

By:  Stephen E. Fischer
------------------------------
Name: Stephen E. Fischer
Title: Managing Director

106
S-20

LOAN AGREEMENT

MEES PIERSON CAPITAL CORP.

By:  Hendrik Vreege
------------------------------
Name: Hendrik Vreege
Title: Managing Director

By:  Eugene Oliva
------------------------------
Name: Eugene Oliva
Title: Assistant Vice President

107
S-21

LOAN AGREEMENT

ROYAL BANK OF SCOTLAND PLC

By:  Siobhan Smyth
------------------------------
Name: Siobhan Smyth
Title: Vice President, Project Finance

108
S-22

LOAN AGREEMENT

THE SUMITOMO BANK, LIMITED

By:  Susumu Ogawa
------------------------------
Name: Susumu Ogawa
Title: Joint General Manager

109
S-23

LOAN AGREEMENT

WESTDEUTSCHE LANDESBANK 
GIROZENTRALE, New York Branch

By:  Johnathan Berman
------------------------------
Name: Jonathan Berman
Title: Managing Director

By:  Gary Bloomberg
------------------------------
Name: Gary Bloomberg
Title: Associate

1
EXHIBIT 10.18

WHOLESALE STANDARD OFFER SERVICE AGREEMENT

Wholesale Standard Offer
Service Agreement

between

Blackstone Valley Electric Company

Eastern Edison Company

Newport Electric Corporation

and

NRG Energy Power Marketing Inc.

2

TABLE OF CONTENTS

ARTICLE 1. Definitions ...................................................   2

ARTICLE 2. Term ..........................................................   4

ARTICLE 3  Supplier Responsibilities .....................................   4

ARTICLE 4. Estimation of Hourly Loads and Reporting to the ISO ...........   5

ARTICLE 5. Price .........................................................   6

ARTICLE 6. Billing and Payments ..........................................   7

ARTICLE 7. Security Provisions ...........................................   8

ARTICLE 8. Events of Default, Liability, Relationship of the Companies ...  10

ARTICLE 9.  Termination ...................................................  12

ARTICLE 10. Force Majeure .................................................  12

ARTICLE 11. Assignment ....................................................  13

ARTICLE 12. Successors and Assigns ........................................  13

ARTICLE 13. Resolution of Disputes ........................................  13

ARTICLE 14. Interpretation ................................................  15

ARTICLE 15. Severability of Provisions ....................................  15

ARTICLE 16. Accounts and Records ..........................................  15

ARTICLE 17. Limitations on Liability and Indemnification ..................  15

ARTICLE 18. Regulation ....................................................  16

ARTICLE 19. Notices .......................................................  16

ARTICLE 20. Miscellaneous .................................................  17

APPENDIX A  SCHEDULE OF SUPPLIER'S SHARE of STANDARD OFFER SERVICE
AND STANDARD OFFER WHOLESALE PRICE

APPENDIX B  SO REBATE

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WHOLESALE STANDARD OFFER SERVICE AGREEMENT

This Wholesale Standard Offer Service Agreement ("Agreement"), is made
and entered into this 13th day of October, 1998, between Eastern Edison Company,
("Eastern") a Massachusetts Corporation, Blackstone Valley Electric Company
("Blackstone"), a Rhode Island Corporation; and Newport Electric Corporation
("Newport"), a Rhode Island Corporation (referred to individually as the
'Company" or collectively as the "Companies"), on the one hand, and NRG Energy
Power Marketing Inc. ("Supplier"), on the other hand.

WHEREAS, the Supplier will purchase certain electric resources from
Montaup Electric Company, under an asset purchase agreement, (the "Asset
Purchase Agreement") dated as of October 13, 1998; and as condition of such
purchase and sale Supplier is required to assume a share of the Companies'
Standard Offer Service under this Agreement; and

WHEREAS, the Companies are required to provide firm all-requirements
service to any retail customer that is eligible for and is taking Standard Offer
Service in accordance with the Settlement Agreements; and

WHEREAS, this Agreement provides for the transfer, from the Companies
to Supplier, of the responsibility for providing firm all-requirements electric
service including capacity, energy, reserves, losses and other related services
necessary to serve a specified share of the Companies' aggregate load of retail
customers taking Standard Offer Service; and

WHEREAS, by entering into this Agreement, Supplier agrees to provide
and the Companies agree to receive and pay for electricity provided in
accordance with the terms and conditions of this Agreement and the applicable
Appendices, subject to any actions by any governmental bodies having regulatory
jurisdiction over services rendered hereunder.

NOW, THEREFORE, in consideration of the mutual promises, covenants, and
agreements contained herein. Supplier and Companies agree to the terms and
conditions as set forth below:

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ARTICLE 1. Definitions

Whenever used in this Agreement, the following terms shall have the
following meanings. In addition, except as otherwise expressly provided, where
terms used in this Agreement are defined in the Restated NEPOOL Agreement and
not otherwise defined herein, such terms shall have the meanings given them in
the Restated NEPOOL Agreement.

"Affiliate" shall mean any other entity (other than an individual)
that, directly or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, such entity. For purposes of
the foregoing the definition of "control" means the direct or indirect ownership
of more than seventy percent of the outstanding capital stock or other equity
interest having ordinary voting power.

"Agreement" shall mean this Agreement, including its Appendices as
amended from time to time.

"Commencement Date of Service" shall mean the later of the Closing
Date as defined in the Asset Purchase Agreement or the date on which required
regulatory approvals have been obtained.

"Contract Year" shall mean any calendar year, or in the case of 1998
part of a calendar year, after the Commencement Date of Service in which
Supplier is scheduled to provide electricity to the Companies for Standard Offer
Service.

"Companies' System" shall mean the electrical distribution systems of
Blackstone, Newport, Eastern, and/or the electrical transmission system of
Montaup Electric Company, as applicable.

"Delivered Energy" shall mean the kilowatthours delivered to the meters
of those retail customers taking Standard Offer Service.

"Delivery Point" shall be any location on the NEPOOL PTF system or
Companies' System.

"D.T.E." shall mean the Massachusetts Department of Telecommunications
and Energy or its successor state regulatory agency.

"Good Utility Practice" - Any of the applicable practices, methods and
acts (i) required by NEPOOL, the Northeast Power Coordinating Council, the North
American Electric Reliability Council, the ISO or the successor of any of them;
(ii) required by the policies and standards of the D.T.E. relating to emergency
operations; or (iii) otherwise engaged in or approved by a significant portion
of the electric utility industry during the relevant rime period: which in each
case in the exercise of reasonable judgment in light of the facts known or that
should have been known at the time a decision was made, could have

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been expected to accomplish the desired result in a manner consistent with law,
regulation, safety, environmental protection, economy, and expedition. Good
utility practice is intended to be acceptable practices, methods or acts
generally accepted in the region, and is not intended to be limited to the
optimum practices, methods or acts to the exclusion of all others.

"ISO" shall mean ISO New England, Inc., the independent system
operator established in accordance with the Restated NEPOOL Agreement, or its
successor.

"NEPOOL" shall mean the New England Power Pool or its successor.

"Party" or "Parties" shall mean the Supplier and the Companies and
their respective successors and assigns.

"Price" shall mean the annual amount per kilowatthour to be paid for
Delivered Energy set forth in Article 5 with no variation for time-of-use,
seasonality, or any other factor except as specified in Article 5. The Companies
or their Standard Offer customers shall not be obligated under this Agreement
for any payments for Delivered Energy in addition to the payments made pursuant
to Article 5.

"PTF" shall mean the facilities categorized as Pool Transmission
Facilities as defined in the Restated NEPOOL Agreement.

"P.U.C." shall mean the Rhode Island Public Utilities Commission or its
successor state regulatory agency.

"Restated NEPOOL Agreement" shall mean the New England Power Pool
Agreement dated December 31, 1996, as amended from time to time, as it is in
force at the time the action in question is taken.

"Settlement Agreements" shall mean any agreement or agreements that
have been approved by the D.T.E. in Docket No. 96-24, P.U.C. in Docket No. 2514,
and the Federal Energy Regulatory Commission in Docket Nos. ER97-2800-000 and
ER97-3127-000, together with all conditions, terms and modifications imposed by
those agencies.

"Standard Offer Service" shall mean firm all-requirements electric
service (minute by minute, hour by hour, day by day) including, but not limited
to: energy, installed capability, operable capability, reserves, and associated
losses necessary to fulfill all NEPOOL and ISO obligations as they may change
from time to time associated with providing firm all requirements power to the
Companies' retail customers taking Standard Offer Service in accordance with the
Settlement Agreements.

"Standard Offer Wholesale Price" shall mean the stipulated stream of
prices, in cents per kilowatthour, that will be paid to suppliers of Standard
Offer Service for Delivered

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Energy, as shown in Appendix A.

"Terms and Conditions for Suppliers" shall mean the Blackstone Valley
Electric Company and Newport Electric Corporation Terms and Conditions for
Electric Power Suppliers dated May 29, 1997 as approved by the P.U.C., or the
Eastern Edison Company Terms and Conditions for Competitive Suppliers as
approved by the D.T.E., as applicable. These Terms and Conditions may be
revised, amended, supplemented, or supplanted in whole or in part from time to
time by the P.U.C. or D.T.E. or as otherwise provided by law.

ARTICLE 2. Term

The term of this Agreement shall begin on the Commencement Date of
Service and end at 12:00 midnight on December 31, 2009, unless terminated sooner
in accordance with Article 8 or 9.

ARTICLE 3. Supplier Responsibilities

Supplier shall, prior to the Commencement Date of Service, (i) be a
member, in good standing, of NEPOOL or its successor entity and maintain an
own-load dispatch or settlement account established in accordance with the rules
and criteria established by the ISO throughout the term of this agreement, or
(ii) have an agreement in place, for the full term of this Agreement, with a
NEPOOL member whereby the NEPOOL member agrees to include the load to be served
by Supplier under this Agreement in its own-load dispatch or settlement account.
In addition, Supplier must satisfy registration and certification requirements,
as the case may be, as a Non-Regulated Power Producer in Massachusetts and Rhode
Island.

Supplier is responsible for providing firm all-requirements service
necessary to serve its share, as shown in Appendix A attached hereto, of the
Companies aggregate load attributed to those customers taking Standard Offer
Service, including changes in Standard Offer Service customer demand for any
reason, including, but not limited to, seasonal factors, daily load
fluctuations, increased or decreased usage, demand side management activities,
extremes in weather, and other similar events.

As a provider of Standard Offer Service, Supplier is solely responsible
for satisfying all requirements and paying all costs incurred or to be incurred
to provide those generation-related services including, without limitation, all
costs or other requirements to furnish installed capability, operable
capability, energy, operating reserves, line losses, automatic generation
control, and other generation-related ancillary services associated with the
provision of its share of Standard Offer Service. Supplier is also solely
responsible for meeting any other requirements and paying any other cost now
or hereafter imposed by the ISO from time to time which are attributable to the
provision of Standard Offer Service, as they may arise. If the ISO or any
successor entity or NEPOOL allocates any expenses or uplift costs to the
Standard Offer Service provided by the Supplier (on a load or peak load

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basis or otherwise), the expenses or costs so allocated will be borne by the
Supplier alone without recourse to the Companies.

Supplier shall be responsible for all transmission and distribution
losses associated with the delivery of electricity supplied under this Agreement
from the sources of its supply to the meters of those customers taking Standard
Offer Service; provided, however, the Companies shall operate their respective
distribution systems in accordance with Good Utility Practice.

Supplier is responsible for any transmission wheeling costs to the
Delivery Point and any distribution wheeling costs associated with supply
sources not included in Companies' approved distribution rates. If the NEPOOL
control area experiences congestion, Supplier will be responsible for any
congestion costs incurred in delivering power to the Delivery Point(s). In the
event that NEPOOL adopts a transmission congestion management approach
assigning priority rights or other benefits to transmission customers serving
native load in the congested area, then, if so requested by Supplier, the
Companies shall assign to the Supplier at no cost the proportional share of such
priority rights or other benefits associated with Seller's proportional share of
Standard Offer Service under this Agreement at such time. Supplier shall be
responsible for all transmission and distribution costs associated with the use
of transmission systems outside of NEPOOL and any local point-to-point
transmission charges and distribution charges incurred to deliver the power to
the NEPOOL PTF or the Companies' systems.

In the event that either the D.T.E. or the P.U.C. issue orders
requiring the Companies to implement uniform disclosure requirements that
pertain to the reporting of information regarding power plant emissions, fuel
types, or labor information for the sources of electricity used to supply
Standard Offer Service, the Supplier will provide, subject to any
confidentiality obligations to which it is bound, such information in a timely
manner in an appropriate form to enable the Companies to comply with such
requirements.

ARTICLE 4. Estimation of Hourly Loads and Reporting to the ISO

To meet their NEPOOL obligations, the Companies shall report to the ISO
Supplier's share of hourly Standard Offer Service load, including distribution
and non-PTF losses. As required by NEPOOL, the Companies will make all
reasonable efforts to report to the ISO Supplier's hourly share of Standard
Offer Service load by 12:00 noon of the second following business day. In making
such reports, the Companies will estimate Supplier's share of Standard Offer
Service load based on the methods and procedures approved in Terms and
Conditions for Suppliers on file with the P.U.C. and D.T.E., as amended from
time to time.

As described in the Terms and Conditions for Suppliers, to determine
Supplier's share of Delivered Energy, at the end of each month, the Companies
shall aggregate Supplier's hourly Standard Offer Service loads as reported to
the ISO for each hour of the month. The

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Supplier's aggregate share of Standard Offer Service. excluding losses, will be
deemed to be the quantity of Delivered Energy that Supplier provided for that
month and is the unadjusted kWh amount to be used for Billing and Payment as
described in Article 6.

The Companies will periodically reconcile the Delivered Energy to
actual meter readings of those customers taking Standard Offer Service, as
described in the Terms and Conditions for Suppliers. The Companies will apply
any resulting billing adjustment (debit or credit) to Supplier's account no
later than the last day of the third month following the billing month.

ARTICLE 5. Price

For each kilowatt-hour of Delivered Energy that Supplier provides in
each month, as determined in accordance with Article 4 and the Terms and
Conditions for Suppliers, the Companies shall pay Supplier the applicable Price
for the month in cents per kilowatt-hour calculated as follows:

Price = Standard Offer Wholesale Price
+ Fuel Adjustment Factor

Where:     Standard Offer Wholesale Price in cents per kilowatt hour is
as defined in Article I and shown in Appendix A, and

Fuel Adjustment Factor is a cents per kilowatt-hour adder based on
the incremental revenues collected, if any, attributed to the
operation of the Retail Standard Offer Fuel Index ("Fuel Index")
mechanism in the Companies'Standard Offer Service tariffs. The
revenues attributed to the Fuel Index will be fully allocated to
Suppliers in proportion to the Standard Offer Service energy provided
by each Supplier for the applicable billing month through the Fuel
Adjustment Factor. The Fuel Index, and the resulting Fuel Adjustment
Factor to be paid to Supplier, will be made subject to regulatory
approval and only to the extent that the Companies are allowed to
collect such revenues from their retail customers taking Standard
Offer Service.

With the exception of any sales or gross receipt taxes which are
required by law to be paid by Standard Offer Service customers, the Price for
Delivered Energy as set forth herein includes all local, state, and federal
taxes, fees and levies applicable as of the date hereof. For any new taxes, fees
and levies, assessed with respect to the services provided by Supplier after the
Commencement Date of Service, the Companies will fully support and pursue in
good faith the recovery of any such new tax, fee and levy imposed on Supplier
from the Companies' Standard Offer Service customers. To the extent such new
taxes, fees and levies are allowed to be recoverable by the Companies from their
Standard Offer Service

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customers, the Companies shall reimburse Supplier for such generation related
taxes, fees and levies paid by Supplier.

ARTICLE 6. Billing and Payments

Until reconciled with actual metered data pursuant to the Terms and
Conditions of Suppliers, computations by the Companies of the charges for the
purposes of billings hereunder shall be based on estimates of Supplier's
Delivered Energy in accordance with Article 4 and the Price as determined in
accordance with Article 5. The Companies shall calculate the amount payable to
Supplier for a given month on or before the twentieth (20th) day of the
following month. The calculation shall be provided to Supplier and shall show
the total amount due and payable for the previous month. Each bill shall be
subject to adjustment for any errors in arithmetic computation, estimating,
reconciliation pursuant to the Terms and Conditions of Suppliers or otherwise
only to the extent allowed by the terms of this Article 6.

On or before the last day of each month, Companies shall pay Supplier
any amounts due and payable for the Delivered Energy provided by Supplier in the
previous month ("Due Date"). Any amount remaining unpaid after the Due Date
shall bear interest at the Prime Rate then in effect at the main office of
BankBoston, or such other lending institution as agreed to by Companies and
Supplier, from the Due Date to the date of payment by Companies.

If Supplier disputes the amount of any bill or payment, Supplier shall
itemize the basis for its dispute in a written notice to Companies within
fifteen days after the Due Date. Billing and payment disputes shall be handled
in accordance with the provisions of Article 13 of this Agreement. Upon final
resolution of the dispute, payment of any amount due to a Party under the terms
of the resolution shall be made within thirty (30) days of the date thereof,
together with interest from and after the original Due Date at the rate
specified in this Article.

The Companies may make retroactive adjustments to any billing for a
period of up to one year from the date of the original billing in order to
reflect differences in charges resulting from receipt of more accurate data.
Supplier may dispute such adjustment in writing within thirty (30) days of
receipt of the proposed adjustment.

Commencing in 2001, Supplier will pay to each of the Companies a rebate
(the "S0 Rebate") for the prior Contract Year equal to the product of (i) the
Base SO Rebate for such Company set forth in Appendix B to this Agreement,
multiplied by (ii) a fraction, the numerator of which will be equal to such
Company's actual Delivered Energy for the Contact Year for which the SO Rebate
is being calculated, and the denominator of which will be equal to the Base
Delivered Energy for such Company set forth in Appendix B. The SO Rebate payable
to each Company for a Contract Year will be calculated on April 1 of the
following Contract Year and setoff in equal amounts against the amounts payable
by such

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Company for Delivered Energy over the next three billing periods; provided that
if the SO Rebate is not fully recovered by the applicable Company during such
billing periods, any remaining SO Rebate shall be paid by Supplier within 30
days of the applicable Company's written demand therefor.

ARTICLE 7. Security Provisions

As a condition of this Agreement and upon execution hereof, the
Supplier shall deliver to the Companies a financial surety to secure Supplier's
performance under this Agreement under one of the following forms, as Supplier
may from time to time determine:

(1) Except as otherwise provided in this Article, Supplier shall at all
times during the term of this Agreement (i) maintain an investment grade rating
on its senior debt securities, as determined by Standard & Poor's Corporation,
Moody's Investors Service, Inc. or another nationally recognized rating service
reasonably acceptable to the Companies and (ii) maintain total assets of at
least $500,000.000 times the percentage of the Companies' Standard Offer Service
which is initially satisfied by the Wholesale Standard Offer Service under this
Agreement (the foregoing items (i) and (ii) being herein referred to as the
"Creditworthiness Criteria"). If on the Commencement Date of Service or at any
time during the term of this Agreement the Supplier shall fail to meet the
Creditworthiness Criteria, then the Supplier shall promptly deliver to the
Companies an unconditional and irrevocable guaranty of its obligations under
this Agreement in form and substance acceptable to the Companies and issued by
an entity meeting the Creditworthiness Criteria (a "Guaranty"). The amount of
any such Guaranty shall be the difference between the value of Supplier's total
assets and its requirements pursuant to part (ii) of the Creditworthiness
Criteria; provided, however, that if Supplier meets or exceeds its obligations
pursuant to part (ii) of the Creditworthiness Criteria no Guaranty will be
required of it. Supplier or the issuer of the Guaranty, as applicable, shall
certify to the Companies no less frequently than the end of every calendar
quarter that it meets the Creditworthiness Criteria (which certification shall
include such calculations and evidence as the Companies shall reasonably request
from time to time), and shall deliver financial statements to the Companies
certified by a firm of certified public accountants of national standing at
least annually within sixty (60) days following the end of the Supplier's or the
garantor's fiscal year.

(2) In lieu of meeting the Creditworthiness Criteria or delivering the
Guaranty as required in Article 7(l), Supplier shall have the right to deliver
to the Companies an irrevocable standby letter of credit issued by a commercial
bank reasonably acceptable to the Companies. The amount of such letter of credit
shall be calculated annually based on the following formula:

SD(n) = SF x STDL(n-1) x { (PSTD(n) x TD(n))+(PSTD(n+1) x TD(n+l))+
(PSTD(n/2) x TD(n+2)) +.........+
(PSTD(2009) x TD(2009)) }

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Where:
SD(n) is the Security Deposit in Contract Year (n)

SF    is the Security Fee equal to $10.00/MWh

STDL(n-1) is the aggregate load of those customers taking Standard
Offer Service in the previous Contract Year (n-1),
expressed in MWh. In Contract Year 1997, STDL shall be
4,500,000 MWh.

PSTD(n)   is the percentage share of Standard Offer Service load that
the Supplier has committed to provide in Contract Year (n)
as shown in Appendix A.

TD(n) is the Transition Discount in Contract Year (n), calculated as
follows:

TD(n)     = 1.00
TD(n+1)   = (7-1)/7 = 0.857
TD(n+2)   = (7-2)/7 = 0.714
TD(n+3)   = (7-3)/7 = 0.571
TD(n+4)   = (7-4)/7 = 0.429
TD(n+5)   = (7-5)/7 = 0.286
TD(n+6)   = (7-6)/7 = 0.143
TD(n+7)   = 0
TD(n+8)   = 0
TD(n+9)   = 0
TD(n+10)  = 0
TD(n+11)  = 0

The letter of credit shall be available to be drawn upon by the
Companies in the event that an event of default occurs with respect to the
Supplier hereunder and shall otherwise be in form and substance reasonably
acceptable to the Companies (the "Initial Letter of Credit"). The draw down on
the Initial Letter of Credit shall be limited to the amount the Companies are
entitled to pursuant to Article 8(3) hereof. The bank issuing such Initial
Letter of Credit on behalf of a Supplier must maintain a long term debt rating
of "A" or better from Standard and Poor's Rating Service or Moody's Investment
Service.

The Initial Letter of Credit, if not issued for the full term of the
Supplier's Standard Offer Service obligation, shall be renewed on an annual
basis or replaced and superseded by a like kind of surety at least thirty (30)
days prior to the expiration of such prior surety on a continuing basis to the
termination of this Agreement or until Supplier's share of Standard Offer
Service load is zero. The amount of such financial surety may be amended on an
annual basis to reflect the security amount calculated pursuant to this Article
7 for the remaining term of this Agreement, provided that, if such Initial
Letter of Credit is drawn down upon by the Companies, Supplier shall have no
duty to renew or replace it with a letter of credit having a face amount greater
than that remaining on the drawn down Initial Letter

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of Credit.

ARTICLE 8. Events of Default, Liability, Relationship of the Companies

(1)     Unless excused by a Force Majeure as described in Article 10, each
of the following events shall be deemed to be an Event of Default hereunder:

(a)     Failure of the Company to pay when due any undisputed payment due
to Supplier and such failure shall continue for five (5) days
following the receipt of written notice from the Supplier
specifying the overdue amount.

(b)     Failure of Supplier, in a material respect, to comply with,
observe, or perform any covenant, warranty or obligation under this
Agreement, and such failure is not cured or rectified within
forty-five (45) days after receipt of written notice thereof from
the Companies.

(c)     Failure of the Companies, in a material respect, to comply with,
observe, or perform any covenant, warranty or obligation under this
Agreement, other than as described in (a) above, and such failure
is not cured or rectified within forty-five (45) days after receipt
of written notice thereof from the Supplier.

(d)     Failure of Supplier to maintain any of the security requirements
outlined in Article 7, and such failure is not cured or rectified
within ten (10) days after notice thereof from the Companies.

(e)     And with respect to the Supplier, any Company and/or the Companies,
a custodian, receiver, liquidator or trustee for such Party is
appointed or takes possession and such appointment or possession
remains uncontested or in effect for more than sixty days: or the
Party makes an assignment for the benefit of creditors or admits in
writing its inability to pay its debts as they mature; or the Party
is adjudicated as bankrupt or insolvent; or an order for relief is
entered under the Federal Bankruptcy Code against the Party; or any
material property of the Party is sequestered by court order and
the order remains in effect for more than sixty days; or a petition
is filed against the Party under any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law of any jurisdictions, whether now or subsequently
in effect, and is not stayed or dismissed within sixty days after
filing; or the Party files a petition in voluntary bankruptcy or
seeking relief under any provision of any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or subsequently in
effect; or the Party consents to the filing of any petition against
it under any such law; or the Party consents to the appointment or
taking possession by a custodian, receiver, trustee or liquidator
of the Party or any material portion of its

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property.

(2)     Upon the occurrence of an Event of Default by the Companies, the
Companies shall be liable to the Supplier for any direct damages resulting from
the Event of Default, including, but not limited to, reasonable additional
administrative and legal expenses incurred as a result of Companies failure to
perform.  Supplier shall take all commercially reasonable measures to mitigate
such direct damages. In addition, the Supplier may unconditionally terminate
this Agreement by giving written notice to the Companies, such termination to be
effective as of the date specified in such notice. Notwithstanding any other
provision of this Agreement to the contrary, the rights and obligations of the
Companies, herein are several and not joint. Each of the Company's share of such
rights and obligations shall be determined by the portion of its monthly
Standard Offer Service requirements represented as a percentage of the
Companies' total Standard Offer Service requirements during the period of time 
in which the right, obligation or liability in questions arose, accrued and/or
matured, and in the event of difficulty or a dispute in determining the
appropriate period of time, during the entire duration of the Agreement.

(3)     Upon the occurrence of an Event of Default by the Supplier, the
Supplier shall be liable to the Companies for all costs reasonably incurred by
the Companies resulting from Supplier's failure to deliver its share of the
Standard Offer Service. Such amount shall include the positive difference, if
any, obtained by subtracting the per unit Price established in Article 5, from
the per unit Replacement Price. The positive difference shall be applied to
each kilowatthour that Supplier falls to deliver.

"Replacement Price" shall mean the price at which the Companies acting in a
commercially reasonable manner purchase substitute Standard Offer Service
nor delivered by Supplier, plus any additional transmission and NEPOOL
charges, incurred by the Companies. The Parties hereby stipulate that
purchases at the applicable NEPOOL spot market prices will be deemed
commercially reasonable.

The Parties expressly agree that the amounts Set forth in this Article 8(3)
do not constitute liquidated damages. In addition to the amounts established in
this Article 8(3) above, the Supplier shall be liable to the Companies for any
additional direct damages resulting from an Event of Default associated with
reasonable additional administrative and legal expenses incurred as a result of
Supplier's failure to perform, and the Companies may unconditionally terminate
this Agreement by giving at least sixty (60) days advance written notice to the
Supplier, such termination to be effective as of the date specified in such
notice. The Parties expressly agree that the Companies may exercise their rights
under the financial surety provided under Article 7 to collect any and all
amounts owed and due from the Supplier resulting under this Article 8.

Nothing in this Article 8 shall be construed to limit the right of any
party to seek any remedies for a breach specified in this Agreement by the
other Party or Parties of its or their obligations hereunder, whether or not
such breach results in a termination of this Agreement

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under this Article 8 and whether or not such breach is cured per Articles
8(l)(a) or 8(l)(b), or during any period during which the non-breaching, Party
elects not to exercise its right to terminate this Agreement. In particular,
each Party shall have the right to seek a specific performance of any of the
obligations of any other Party hereunder.

ARTICLE 9. Termination

In addition to the termination rights for an Event of Default provided
in Article 8, the Companies may terminate this Agreement if Supplier's share of
Standard Offer Service load is less than one (1) megawatt for two consecutive
months.

ARTICLE 10. Force Majeure

As used in this Agreement, "Force Majeure" means any cause beyond the
reasonable control of, and without the fault or negligence of, the Party
claiming Force Majeure. A Force Majeure shall include, without limitation,
sabotage, strikes, riots or civil disturbance, acts of God, acts of a public
enemy, drought, earthquake, flood, explosion, fire, lightning, landslide, or any
similar cataclysmic occurrence, or appropriation or diversion of electricity by
sale or order of any governmental authority having jurisdiction thereof, but
only if and to the extent that the event adversely affects the availability of
the transmission or distribution facilities of NEPOOL and/or its participants,
the Companies or an affiliate of the Companies, and such affected facilities
are necessary to deliver Standard Offer Service electricity to the Standard
Offer Service customers.

An event chat affects the availability or cost of operating any
transmission or distribution facilities outside the NEPOOL control area, affects
the availability or cost of operating a generating facility, or any event that
merely causes an economic hardship to either Party shall not be deemed a Force
Majeure.

If either Party is rendered wholly or partly unable to perform its
obligations under this Agreement because of Force Majeure as defined above,
that Party shall be excused from whatever performance is affected by the Force
Majeure, to the extent so affected, provided that:

(a) The nonperforming Party promptly, but in no case longer than five
(5) working days after the occurrence of the Force Majeure, gives the
other Party written notice describing the particulars of the
occurrence;

(b) The suspension of performance shall be of no greater scope and of
no longer duration than is reasonably required by the Force Majeure;

(c) The nonperforming Party uses reasonable efforts to remedy its
inability to perform and expeditiously takes reasonable action to
correct or cure the event or condition; and

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(d) The nonperforming Party exercises all reasonable efforts to
mitigate or limit damages to the other Party. With respect to the
Supplier, this shall mean that Supplier must purchase, at its own
expense, electricity from the NEPOOL market to meet its obligations
under this Agreement, to the extent such electricity is available and
deliverable.

ARTICLE 11. Assignment

Unless mutually agreed to by the Parties, no assignment, pledge, or
transfer of this Agreement shall be made by either Party without the prior
written consent of the other Party, which shall nor be unreasonably withheld,
except no prior written consent shall be required for (i) the assignment, pledge
or other transfer to another company or Affiliate in the same holding company
system as the assignor, pledgor or transferor, provided, the assignee, pledgee
or transferee expressly assumes and demonstrates, to the reasonable satisfaction
of the non-assigning Party, that it can meet the obligations of the assignor,
pledgor or transferor under this Agreement, or (ii) the transfer, incident to a
merger or consolidation with, or transfer of all (or substantially all) of the
assets of the transferor, to another person or business entity, provided, such
transferee expressly assumes, and demonstrates to the reasonable satisfaction of
the non-assigning party that it can meet, all the obligations of the assignor,
pledgor or transferor under this Agreement.

ARTICLE 12. Successors and Assigns

This Agreement shall be binding upon and shall inure to the benefit of
the Parties and their successors and assignees.

ARTICLE 13. Resolution of Disputes

Subject to Article 8(3), all disputes between the Companies and
Supplier resulting from or arising out of performance under this Agreement shall
be referred to a senior representative of the Companies with authority to
settle, designated by the Companies, and a senior representative of Supplier
with authority to settle, designated by Supplier, for resolution on an informal,
face-to-face basis as promptly as practicable. The Parties agree that such
informal discussion shall be conducted in good faith. The discussions between
such representatives shall be considered "settlement talks" under Rule 403 of
the Federal Rules of Evidence or analogous Massachusetts rules or practices and
such discussions shall have no evidentiary value provided, however, that either
Party may introduce evidence of matters discussed in such settlement talks, if
the facts and documents reflecting such matters are discovered or otherwise come
into a Party's possession independent of such settlement talks. In the event the
designated senior representatives are unable to resolve the dispute within
thirty (30) days, or such other period as the Companies and the Supplier may
jointly agree upon, such dispute may be submitted to arbitration and resolved in
accordance with the arbitration procedure set forth herein if the Companies and
Supplier jointly agree to submit it to arbitration. For any dispute or claim
arising out of or relating to any charges incurred

13

16

under this Agreement having a value less than or equivalent to $100,000, such
arbitration shall be mandatory. Nothing in this Article 13 shall prevent the
Companies from issuing, pursuant to Sections 1(a) and (3) of Article 8, notice
of failure to comply with, observe or perform this Agreement.

The arbitration shall be conducted before a single neutral arbitrator
or arbitrator panel appointed by the Parties. If the Parties agree upon a single
arbitrator within ten (10) days of the referral of the dispute to arbitration,
that arbitrator shall serve, otherwise the Companies and Supplier shall each
choose one arbitrator, who shall serve on a three-member arbitration panel. The
two arbitrators so chosen shall within twenty (20) days select a third
arbitrator to act as chairman of the arbitration panel. If the two arbitrators
are unable to select a third arbitrator, each arbitrator shall select three
candidates. A list of the six candidates, along with their resumes, shall be
provided in alphabetical order, with no indication of the arbitrator who
selected such candidate or the Party who selected the arbitrator who selected
such candidate, to the American Arbitration Association ("AAA"), who will select
one candidate. If that candidate is unable or unwilling to serve, AAA shall
select another candidate. This process will be repeated until a third arbitrator
is selected or the list of candidates is exhausted. If the list of candidates is
exhausted, the arbitrators shall submit a new list of candidates and the process
set forth above shall be repeated a second time. In all cases, the arbitrator(s)
shall be knowledgeable in electric utility matters, including electricity
transmission and bulk power issues, and shall not have any current or past
substantial business or financial relationships with any Party to the
arbitration or any affiliate of such Party.

Except as otherwise provided herein, the arbitrator(s), shall generally
conduct the arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. There shall be no formal discovery
conducted in connection with the arbitration, except as specifically authorized
by a vote of the panel. The Parties shall exchange witness lists and copies of
any exhibits that they intend to utilize in their direct presentations at any
hearing before the arbitrator(s) at least ten (10) days prior to such hearing,
along with any other information or documents specifically requested by the
arbitrator(s) prior to the hearing. Unless otherwise agreed, the arbitrator(s)
shall render a decision within ninety (90) days of his, her, or their
appointment and shall notify the Parties in writing of such decision and the
reasons therefor, and shall make an award apportioning the payment of the costs
and expenses of arbitration, including panel costs, among the Parties,
provided, however, that each Party shall bear the costs and expenses of its own
attorneys, expert witnesses and consultants. The arbitrator(s) shall be
authorized only to interpret and apply the provisions of this Agreement and
shall have no power to amend or modify this Agreement in any manner. The
decision of the arbitrator(s) shall be final and binding upon the Parties, and
judgment on the award may be entered in any court having jurisdiction. The
decision of the arbitrator(s) may be appealed solely on the grounds that the
conduct of the arbitrator(s), or the decision itself, violated the standards
required under the Federal Arbitration Act (9 U.S.C.A. Sect. 1 et. al.) and/or
The Uniform Arbitration Act, as adopted in Massachusetts (M.G.L. c. 251. Sect. 1
et seq.).

14

17

ARTICLE 14. Interpretation

The interpretation and performance of this Agreement shall be in
accordance with and shall be controlled by the laws of the Commonwealth of
Massachusetts, without regard to Massachusetts conflict of law principles.

ARTICLE 15. Severability of Provisions

Subject to the provisions of Article 13, a holding by any court having
jurisdiction that any provision of this Agreement is invalid or unenforceable
shall not result in invalidation or unenforceability of the entire Agreement but
all remaining terms shall remain in full force and effect.

ARTICLE 16. Accounts and Records

The Companies and Supplier shall keep complete and accurate records of
their operations hereunder and shall maintain such data for a period of at least
two (2) years after final billing. The Companies and Supplier shall have the
right, during normal business hours, to examine and inspect all such records
insofar as may be necessary for the purpose of ascertaining the reasonableness
and accuracy of all relevant data, estimates or statement of charges associated
with service hereunder.

ARTICLE 17. Limitations on Liability and Indemnification

Each Party agrees to indemnify, defend, and hold the other Party
(including the other Party's affiliated companies, trustees, directors, board
members, officers, employees, and agents) harmless from and against any and all
damages, costs, claims, liabilities, actions or proceedings arising from or
claimed to have arisen from the wrongful acts or omissions of the indemnifying
Party's employees or agents, unless caused by an act of negligence or willful
misconduct by the indemnified Party (including the Party's affiliated companies,
trustees, directors, board members, officers. employees or agents).

The Parties hereby waive and release the other Party as well as the
other Party's affiliated companies, trustees, directors, officers, employees,
and agents from any liability, claim, or action arising from damage to its
property due to the performance of this Agreement.

To the fullest extent permissible by law, neither the Companies nor
Seller, nor their respective officers, directors, agents, employees, parent or
Affiliates, successors or assigns, or their respective officers, directors,
agents or employees, successors or assigns, shall be liable to the other party
or its parent, subsidiaries. Affiliates, officers, directors, agents, employees,
successors or assigns, for claims, suits, actions or causes of action for
incidental, indirect, special, punitive, multiple or consequential damages
(including attorneys' fees or litigation costs) connected with or resulting from
performance or non-performance of the

15

18

Agreement, or any actions undertaken in connection with or related to this
Agreement, including without limitation any such damages which are based upon
causes of action for breach of contract, tort (including negligence and
misrepresentation), breach of warranty, strict liability, Massachusetts General
Laws Chapter 93A, statute, operation of law, or any other theory of recovery.
The provisions of this Section 17 shall apply regardless of fault and shall
survive termination, cancellation, suspension, completion or expiration of this
Agreement.

ARTICLE 18. Regulation

(1) This Agreement and all rights, obligations, and performances of the
Parties hereunder, are subject to all applicable state and federal laws, and to
all duly promulgated orders and other duly authorized actions of governmental
authority having jurisdiction, provided, however, that this Agreement shall not
be subject to change through unilateral application under Sections 205 and 206
of the Federal Power Act,

(2) This Agreement is intended to comply with all NEPOOL Criteria,
Rules, and Standards ("Rules"). If, during the term of this Agreement, the
Restated NEPOOL Agreement is terminated or amended in a manner that would
eliminate or alter a Rule affecting a right or obligation of a Party hereunder,
or if such a Rule is eliminated or altered by NEPOOL or the ISO, in a manner
which materially affects the costs and obligations to provide Standard Offer
Service, the Companies and Supplier shall meet to determine appropriate
compensation to the affected Party. In the event that the Parties are not able
to agree on the materiality of the cost or obligations or the amount to be
reimbursed, Parties shall attempt to resolve the matter in accordance with
Article 13.

(3) In the event that the Standard Offer Service or the Terms and
Conditions for Suppliers are terminated, amended or replaced by any governmental
or regulatory agency having jurisdiction over the provision of Standard Offer
Service in a manner which materially increases Supplier's costs or obligations
to provide Standard Offer Service or the Companies are prevented from
recovering from customers taking Standard Offer Service the cost of electricity
provided by Supplier, the Companies and Supplier shall meet to determine
appropriate compensation to the negatively impacted Party. In the event that the
Parties are not able to agree on the materiality of the increased cost or
obligations or the amount to be reimbursed, Parties shall attempt to resolve the
matter in accordance with Article 13.

ARTICLE 19. Notices

Any notice, demand, or request permitted or required under this
Agreement shall be delivered in person or mailed by certified mail, postage
prepaid, return receipt requested, or otherwise confirmed receipt, to a Party at
the applicable address set forth below:

To Companies:

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19

Kevin A. Kirby
Vice President - Power Supply
EUA Service Corporation
P.0. Box 543
750 West Center Street
West Bridgewater, MA 02379

To Supplier:

NRG Power Marketing Inc.
1221 Nicollet Mall
Minneapolis, MN 55403-2445
Attention: Craig Mataczynski, President
Facsimile: 612-373-5430

With a copy to:

James Bender, Vice President
Facsimile: 612-373-5392

Such addresses may be changed from time to time by written notice by
either Party to the other Party.

ARTICLE 20, Miscellaneous:

(1) Each Party shall prepare, execute and deliver to the other Party
any documents reasonably required to implement any provision hereof.

(2) Each Party represents to the other that this Agreement and such
Party's performance thereof are within the corporate powers of such
Party and have been duly authorized by proper corporate action on the
part of such Party.

(3) Any number of counterparts to this Agreement may be executed and
each shall have the same force and effect as the original.

(4) This Agreement shall constitute the entire understanding between
the Parties and shall supersede all prior correspondence and
understandings pertaining to the subject matter of this Agreement.

(5) Failure of either Party to enforce any provision of this Agreement
or to require performance by the other Party of any of the provisions
hereof, shall not be construed as a waiver of such provisions or affect
the validity of this Agreement, any

17

20

part hereof, or the right of either Party to thereafter enforce each
and every provision.

(6) Article and Section headings used throughout this Agreement are for
the convenience of the Parties only and are not to be construed as part
of this Agreement.

(7) Nothing in this Agreement shall be construed as creating any
relationship between the Parties other than that of independent
contractor for the sale and purchase of electricity at wholesale.

(8) Notwithstanding any other provision of this Agreement to the
contrary, the rights and obligations of the Companies herein are
several and not joint. Each of the Companies share of such rights and
obligations shall be determined by the portion of its monthly Standard
Offer Service energy requirements represented as a percentage of the
Companies' total Standard Offer Service requirement.

(Remainder of this page intentionally left blank]

18

21

IN WITNESS WHEREOF. Supplier and the Companies have caused this
Agreement to be signed by their respective duly authorized representatives as
of the date first above written.

Supplier:                 NRG POWER MARKETING, INC.

By: /s/ CRAIG MATACZYNSKI
---------------------------
Name:  Craig Mataczynski
Title:  President

On Behalf of the Companies:

Blackstone:      BLACKSTONE VALLEY ELECTRIC COMPANY

By: /s/ KEVIN A. KIRBY
---------------------------
Name: Kevin A. Kirby
Title: Vice President

Eastern:         EASTERN EDISON COMPANY

By: /s/ KEVIN A. KIRBY
---------------------------
Name: Kevin A. Kirby
Title: Vice President

Newport:         NEWPORT ELECTRIC CORPORATION

By: /s/ KEVIN A. KIRBY
---------------------------
Name: Kevin A. Kirby
Title: Vice President

19

1
EXHIBIT 10.19

ASSET SALES AGREEMENT

BY AND BETWEEN

NIAGARA MOHAWK POWER CORPORATION

AND

NRG ENERGY, INC.

Dated as of December 23, 1998

2

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS

1.1.      Definition ........................................................-1-

ARTICLE II

PURCHASE AND SALE
2.1.      The Sale ......................................................... -9-
2.2.      Exclude Assets ................................................... -9-
2.3.      Assumed Obligations ..............................................-10-
2.4.      Excluded Liabilities .............................................-13-

ARTICLE III

PURCHASE PRICE

3.1.      Purchase Price ...................................................-15-
3.2.      Purchase Price Adjustment ........................................-15-
3.3.      Allocation of Purchase Price .....................................-15-
3.4.      Proration ........................................................-16-

ARTICLE IV

THE CLOSING

4.1.      Time and Place of Closing ........................................-17-
4.2.      Payment of Purchase Price ........................................-17-
4.3.      Deliveries by the Seller .........................................-18-
4.4       Deliveries by the Buyer ..........................................-19-

ARTICLE V

REPRESENTATIONS AND WARRANTS OF THE SELLER

5.1.     Organization; Qualification .......................................-19-
5.2.     Authority Relative to this Agreement ..............................-20-
5.3.     Consents and Approvals; No Violation ..............................-20-
5.4.     Reports............................................................-21-
5.5.     Company Reports; Financial Statements..............................-22-
5.6.     Undisclosed Liabilities............................................-23-

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5.7.     Absence of Certain Changes or Events...............................-23-
5.8.     Title and Related Matters..........................................-23-
5.9.     Leases.............................................................-24-
5.10.    Insurance..........................................................-24-
5.11.    Environmental Matters..............................................-24-
5.12.    Labor Matters......................................................-25-
5.13.    Real Estate........................................................-26-
5.14.    Condemnation.......................................................-26-
5.15.    Certain Contracts and Arrangements.................................-26-
5.16.    Legal Proceedings, etc.............................................-27-
5.17.    Permits............................................................-28-
5.18.    Tax Matters........................................................-28-
5.19.    Compliance with Laws...............................................-28-
5.20.    Satisfaction of Required Standards.................................-28-

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE BUYER

6.1.     Organization.......................................................-29-
6.2.     Authority Relative to this Agreement...............................-29-
6.3.     Consents and Approvals; No Violation...............................-30-
6.4.     Availability of Funds..............................................-31-

ARTICLE VII

COVENANTS OF THE PARTIES

7.1.     Conduct of Business Relating to the Purchased Assets...............-31-
7.2.     Access to Information..............................................-33-
7.3.     Expenses...........................................................-36-
7.4.     Further Assurances.................................................-36-
7.5.     Public Statements..................................................-37-
7.6.     Consents and Approvals.............................................-37-
7.7.     Fees and Commissions...............................................-38-
7.8.     Tax Matters........................................................-38-
7.9.     Supplements to Schedules...........................................-42-
7.10.    Employees..........................................................-42-
7.11.    Risk of Loss.......................................................-46-
7.12.    Tax Clearance Certificates.........................................-47-
7.13.    NYSERDA Compliance.................................................-47-
7.14.    Units 63 and 64....................................................-47-

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4

ARTICLE VIII

CONDITIONS

8.1.     Conditions to Each Party's Obligations to Effect the Transaction...-48-
8.2.     Conditions to Obligations of the Buyer.............................-49-
8.3.     Conditions to Obligations of the Seller............................-51-

ARTICLE IX

INDEMNIFICATION

9.1.     Indemnification....................................................-53-
9.2.     Defense of Claims..................................................-54-
9.3.     Tax Contest........................................................-57-

ARTICLE X

TERMINATION AND ABANDONMENT

10.1.    Termination........................................................-58-
10.2.    Procedure and Effect of Termination................................-59-

ARTICLE XI

MISCELLANEOUS PROVISIONS

11.1.    Amendment and Modification.........................................-60-
11.2.    Waiver of Compliance; Consents.....................................-60-
11.3.    No Survival........................................................-60-
11.4.    Notices............................................................-60-
11.5.    Assignment.........................................................-61-
11.6.    Governing Law......................................................-62-
11.7.    Counterparts.......................................................-62-
11.8.    Interpretation.....................................................-62-
11.9.    Schedules and Exhibits.............................................-63-
11.10.   Entire Agreement...................................................-63-
11.11.   Bulk Sales or Transfer Laws........................................-63-

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5

ASSET SALES AGREEMENT

ASSET SALES AGREEMENT, dated as of December 23, 1998, (this
"Agreement") by and between Niagara Mohawk Power Corporation, a New York
corporation (the "Seller") and NRG Energy, Inc., a Delaware corporation (the
"Buyer")

WHEREAS, the Buyer desires to purchase, and the Seller desires to sell,
the Purchased Assets (as defined herein) upon the terms and conditions
hereinafter set forth in this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, the parties
hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1. Definitions. (a) As used in this Agreement, the following terms
have the meanings specified in this Section 1.1(a). For capitalized terms used
in this subsection (a) but not defined herein, see subsection (b).

(1) "Affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act.

(2) "Ancillary Agreements" means the Site Agreement, the Swaption, the
Interconnection Agreement and the Huntley Agreement.

(3) "Bill of Sale" means the Bill of Sale to be delivered at the
Closing with respect to the Purchased Assets which constitute personal property
and which are to be transferred at such Closing, substantially in the form of
Exhibit A hereto.

(4) "Business Day" shall mean any day other than Saturday, Sunday and
any day which is a legal holiday or a day on which banking institutions in New
York City are authorized by law or other governmental action to close.

6

(5). "Buyer Representatives" means the Buyer's accountants, employees,
counsel, environmental consultants, financial advisors and other authorized
representatives.

(6) "Capital Expenditures" means (i) those capital expenditures which
are identified on Schedule 7.1 and (ii) those anticipated environmental
remediation costs identified on Schedule 7.1.

(7) "CERCLA" means the Federal Comprehensive Environmental Response,
Compensation and Liability Act and any amendment thereto.

(8) "COBRA" means the Consolidated Omnibus Reconciliation Act of 1985,
as amended'

(9) "Code" means the Internal Revenue Code of 1986, as amended.

(10) "Collective Bargaining Agreement" means the Collective Bargaining
Agreement, dated as of April 15, 1996, between the Seller and Local 97 of the
International Brotherhood of Electrical Workers ("IBEW").

(11) "Confidentiality Agreement" means the Confidentiality Agreement,
dated September 1998, between the Seller and the Buyer.

(12) "Easements" means, with respect to the Real Estate, the
reservations of easements to be included in the deeds of conveyance with respect
to such assets and easements for the benefit of third parties.

(13) "Encumbrances" means any mortgages, pledges, liens, security
interests, conditional and installment sale agreements, activity and use
limitations, Easements. (other than those set forth in the Ancillary
Agreements), deed restrictions, encumbrances or charges of any kind.

(14) "Environmental Laws" means all Federal, state, local and foreign
laws, regulations, rules, ordinances, codes, decrees, judgments, directives, or
judicial or administrative orders which relate to pollution or protection of the
environment, natural resources (including, without limitation, ambient air,
surface water, groundwater, land, surface and subsurface strata) or human health
and safety, including, without limitation, laws which

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7

relate to Releases or threatened Releases of Hazardous Substances or otherwise
relate to the manufacture, processing, distribution, use, treatment, storage,
Release, transport or handling of Hazardous Substances.

(15) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

(16) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

(17) "Federal Power Act" means the Federal Power Act of 1935.

(18) "FERC" means the Federal Energy Regulatory Commission.

(19) "FIRPTA Affidavit" means the Foreign Investment in Real Property
Tax Act Certification and Affidavit substantially in the form of Exhibit B
hereto.

(20) "Governmental Entity" means any governmental or regulatory
authority, agency, commission, body or other governmental entity or subdivision,
other than the Internal Revenue Service or the New York Department of Taxation
and Finance.

(21) "Hazardous Substances" means any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "restricted hazardous materials,"
"extremely hazardous substances," "toxic substances," contaminants" or
"pollutants" or words of similar meaning or substance found in any Environmental
Law, exposure to which is prohibited, limited or regulated by such Environmental
Law.

(22) "Holding Company Act" :means the Public Utility Holding Company
Act of 1935, as amended.

(23) "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.

(24) "Huntley Agreement" means the power purchase Agreement, dated as
of the date hereof, between the Buyer and the Seller.

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8

(25) "Income Tax" means any federal, state, local or foreign Tax (a)
based upon, measured by or calculated with respect to net income, profits or
receipts (including, without limitation, capital gains Taxes and minimum Taxes)
or (b) based upon, measured by or calculated with respect to multiple bases
(including, without limitation, corporate franchise taxes) if one or more of the
bases on which such Tax may be based, measured by or calculated with respect to,
is described in clause (a), in each case together with any interest, penalties,
or additions to such Tax.

(26) "Indenture" means the Mortgage Trust Indenture, dated as of
October 1, 1937 between Central New York Power Corporation and The Marine
Midland Trust Company of New York, as amended, modified and supplemented from
time to time.

(27) "Instrument of Assumption" means the Instrument of Assumption
substantially in the form of Exhibit C hereto relating to the assumption by the
Buyer of the liabilities and obligations of the Seller.

(28) "Interconnection Agreement" means the Interconnection Agreement,
to be dated as of the Closing Date, in the form attached hereto as Exhibit D,
between the Seller and the Buyer.

(29) "Laws" means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, judgment, order, injunction, decree, arbitration
award, agency requirement, license or permit of any Governmental Entity.

(30) "Maintenance Expenditures" means those maintenance expenditures
which are identified on Schedule

(31) "Maintenance and Capital Expenditures Amount" means the aggregate
amount of all funds actually expended on, or for which liabilities were accrued
in accordance with generally accepted accounting principles applied on a
consistent basis with respect to, Maintenance Expenditures and Capital
Expenditures by the Seller, if any, during the period beginning on the date
hereof and ending on the Closing Date.

(32) "Material Adverse Effect" means any change or changes in, or
effect on, the Purchased Assets that is,

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9

or in the aggregate are, materially adverse to the business, assets, operations
or conditions (financial or otherwise) of the Purchased Assets, taken as a
whole, other than (i) any change or effect affecting the international,
national, regional or local electric industry as a whole, and not Seller
exclusively, and specifically resulting from changes in the international,
national, regional or local wholesale or retail markets for electric power, (ii)
any change or effect resulting from changes in the international, national,
regional or local markets for any fuel used at the Purchased Assets, (iii) any
change or effect resulting from changes in the North American, national,
regional or local electric transmission systems, (iv) any change or effect'
resulting from changes in Laws or in industry standards, (v) any materially
adverse change in or effect on the Purchased Assets which is cured (including by
the payment of money) by the Seller before the Termination Date and (vi) any
materially adverse change resulting from this Agreement and the transactions
contemplated hereby.

(33) "Permitted Encumbrances" means (i) the Easements, (ii) those
exceptions to title to the Purchased Assets listed in Schedule 5.8 or 5.14,
(iii) with respect to any date before the Closing Date, Encumbrances created by
the Indenture, (iv) statutory liens for current Taxes or assessments not yet due
or delinquent or the validity of which is being contested in good faith by
appropriate proceedings, provided that the aggregate amount so contested -does
not exceed $500,000, (v) mechanics', carriers', workers', repairers' and other
similar liens arising or incurred in the ordinary course of business relating to
obligations as to which there is no default on the part of the Seller or the
validity of which are being contested in good faith by appropriate proceedings,
provided that the aggregate amount so contested does not. exceed $500,000, (vi)
zoning, entitlement, conservation restriction and other land use and
environmental regulations by governmental authorities, and (vii) such other
liens, imperfections in or failure of title, charges, easements, leases,
licenses, restrictions, Encumbrances, encroachments and defects which do not
materially detract from the value of or interfere with the present use of the
Purchased Assets and neither secure indebtedness, nor individually or in the
aggregate, create a Material Adverse Effect (the liens set forth in (iv) and (v)
being collectively referred to as "Indemnifiable Liens").

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10

(34) "Person" means an individual, a partnership, a limited liability
company, a joint venture, a corporation, a trust, an unincorporated organization
and a governmental entity or a department or agency thereof.

(35) "PSC" means the New York Public Service Commission.

(36) "Purchased Assets" means, subject to the Easements and Section
2.2, all of the right, title and interest in, to and under the real and
personal property, tangible or intangible, of the Seller and constituting
Dunkirk Steam Station and Huntley Steam Station or used principally for
generation purposes in connection with such sites including, but not limited to,
the following assets owned by the Seller:

(i) the real estate (including all buildings, structures and other
improvements thereon) described on Schedule 5.14 as associated with Dunkirk
Steam Station or Huntley Steam Station (the "Real Property");

(ii) all inventories of fuels, supplies, materials and spares located
on or in transit to the Real Property on the Closing Date, and all
warranties against manufacturers or vendors relating thereto, to the extent
that such warranties are freely transferable;

(iii) the machinery, equipment, vehicles, tools, furniture, furnishings
and other personal property located on the Real Property on the Closing
Date, including, without limitation, the items of personal property included
in Schedule 1.1.(a)(21)(iii) as being associated with Dunkirk Steam Station
or Huntley Steam Station and all warranties against manufacturers or vendors
relating thereto, to the extent that such warranties are freely
transferable;

(iv) the Transferable Permits listed on Schedule 1.1(a)(47) as being
associated with Dunkirk Steam Station or Huntley Steam Station;

(v)  all books, operating records, operating, safety and maintenance
manuals, engineering design plans, blueprints, reproducibles, cad files and
as-built plans, specifications, procedures and similar

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11

items in the Seller's possession relating specifically to the aforementioned
assets other than books of account;

(vi) certain allowances associated with Dunkirk Steam Station and
Huntley Steam Station as set forth on Schedule 1.1(a)(21)(vi); and

(vii) those vehicles which are leased and not owned by the Seller as to
which the Buyer elects to pay the Vehicle Amount pursuant to Section 3.2.

(37) "Release" means a release, spill, leak, discharge, disposal of,
pumping, pouring, emitting, emptying, injecting, leaching, dumping or otherwise
allowing to escape into or through the environment.

(38) "SEC" means the Securities and Exchange Commission.

(39) "Securities Act" means the Securities Act of 1933, as amended.

(40) "Site Agreement" means the Site Agreement, to be dated as of the
Closing Date, between the Seller and the Buyer, in substantially the form of
Exhibit E hereto (it being understood that such items as service points,
metering points, auxiliary load charges when the station is generating, and
services to be provided Seller, will be the subject of further negotiation and
agreement).

(41) "Subsidiary" when used in reference to any other Person means any
entity of which outstanding securities having ordinary voting power to elect a
majority of the Board of Directors or other Persons performing similar functions
of such entity are owned directly or indirectly by such other Person.

(42) "Swaption" means the International Swap Dealers Association, Inc.
Master Agreement, together with the Schedule (Multicurrency-Cross Border) and
the Confirmation, in the form of Exhibit F hereto between NRG Power Marketing
Inc. and the Seller, to be dated as of the Closing Date.

(43) "Taxes" means all taxes, charges, fees, levies, penalties or other
assessments imposed by any United

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States federal, state or local or foreign taxing authority, including, but not
limited to, income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest, penalties
or additions attributable thereto.

(44) "Tax Return" means any return, report, information return or other
document (including any related or supporting information) required to be filed
with any authority with respect to Taxes.

(45) "Transferable Permits" means those Permits (as hereinafter 
defined) which are transferable by the Seller to the Buyer and are set forth in 
Schedule 1.1(a)(47).

(46) "Transferring Employee Records" means all personnel files related
to the Seller's personnel who will become employees of the Buyer to the extent
such files pertain to (i) skill and development training and resumes, (ii)
seniority histories, (iii) salary and benefit information, (iv) Occupational
Safety and Health Administration medical reports, and (v) active medical
restriction forms.

(47) "WARN Act" means the Federal Worker Adjustment Retraining and
Notification Act of 1988.

(b)   Each of the following terms has the meaning specified in the
Section set forth opposite such term:

Term                                                           Section
----                                                           -------
Assumed Obligations                                             2.3(b)
Audit Date                                                      5.5
Buyer Employee                                                  7.10(a)
Buyer Required Regulatory Approvals                             6.3(b)
Closing                                                         4.1
Closing Date                                                    4.1
Contracts                                                       5.16(a)
Direct Claim                                                    9.2(c)
Environmental Losses                                            9.1(a)
Environmental Permits                                           5.11(a)
ERISA Affiliate                                                 5.13(a)
Excluded Assets                                                 2.2
Excluded Liabilities                                            2.4
Final Order                                                     8.1(c)
Indemnifiable Loss                                              9.1(a)
Indemnifying Party                                              9.1(d)

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Indemnitee                                                     9.1(c)
Independent Appraiser                                          3.3
Inventory Adjustment Amount                                    3.2(a)
Non-Union Employee                                             7.10(c)
Permits                                                        5.18
Purchased Assets                                               Recitals
Purchase Price                                                 3.1
Replacement Welfare Plans                                      7.10(d)
Seller Required Regulatory Approvals                           5.3(b)
Tax Audit                                                      9.3(a)
Termination Date                                               10.1(b)
Third Party Claim                                              9.2(a)
Transfer Taxes                                                 7.8(a)

ARTICLE II

PURCHASE AND SALE

2.1. The Sale. Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, at the Closing the Seller will sell,
assign, convey, transfer and deliver to the Buyer, and the Buyer will purchase
and acquire from the Seller, free and clear of all Encumbrances (except for
Permitted Encumbrances) the Purchased Assets.

2.2. Excluded Assets. Notwithstanding any provision herein to the
contrary, the Purchased Assets shall not include the following assets of the
Seller (herein referred to as the "Excluded Assets"):

(a) all cash, cash equivalents, bank deposits, accounts receivable, and
any income, sales, payroll or other tax receivables;

(b) certificates of deposit, shares of stock, securities, bonds,
debentures, evidences of indebtedness, interests in joint ventures,
partnerships, limited liability companies and other entities;

(c) the name "Niagara Mohawk" and any related or similar trade names,
trademarks, service marks or logos;

(d) the transmission, distribution, substation and communication
facilities and related support equipment

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described or referred to in Schedule 2.2(d) or described or referred to as an
"Excluded Asset" or an asset of "Seller" in the "Separation Document" (as
defined in the Site Agreement) or any document or exhibit referred to or
incorporated by reference in the Separation Document or which are otherwise
indicated in any such document as remaining with the Seller or any of its
Affiliates after the Closing,'

(e) any refund or credit (i) of Taxes paid or required to be reimbursed
by the Seller prior to the Closing Date in respect of the Purchased Assets,
whether such refund is received as a payment or as a credit against Taxes
payable or (ii) arising under any power purchase agreement that is subject to
cost of service regulation and relating to a period before the Closing Date;

(f) all personnel records, other than Transferring Employee Records, or
other records;

(g) the emission allowances, emission reduction credits and greenhouse
gas emissions listed on
Schedule 2.2(g) and

(h) the real property tax litigation listed on Schedule 2.2(h).

(i) the equipment installed at Dunkirk station relating to the biomass
system for utilization of biomass as an alternative/supplemental fuel, if Buyer
does not elect to purchase the biomass system and equipment.

2.3. Assumed Obligations. (a) On the Closing Date, the Buyer shall
deliver to the Seller the Instruments of Assumption pursuant to which the Buyer
shall assume and agree to discharge all of the liabilities and obligations of
the Seller, direct or indirect, known or unknown, absolute or contingent, which
relate to the Purchased Assets, other than Excluded Liabilities, in accordance
with the respective terms and subject to the respective conditions thereof,
including, without limitation, the following liabilities and obligations:

(i) all liabilities and obligations of the Seller under (a) the
Transferable Permits associated with the Purchased Assets in accordance with
the terms thereof, (b) contractual obligations of the Seller relating to

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the Purchased Assets which survive following the Closing, which are
transferable, which were entered into in the ordinary course of business and
which are not, individually or in the aggregate, material to the Purchased
Assets, and (c) liabilities for fuel and stores in transit; except in each
case, to the extent such liabilities and obligations, but for a breach
hereunder by the Seller, would have been paid, performed or otherwise
discharged on or prior to the Closing Date or to the extent the same arise
out of any such breach;

(ii) all liabilities and obligations associated with the Purchased
Assets in respect of Taxes for which the Buyer is liable pursuant to
Sections 3.4 or 7.8;

(iii) all liabilities and obligations associated with the Purchased
Assets for which the Buyer has agreed to indemnify the Seller pursuant to
Section 9.1;

(iv) all liabilities and obligations with respect to the Employees
employed at the Purchased Assets after the Closing Date for which the Buyer
is responsible pursuant to Section 7.10 and the terms of the Collective
Bargaining Agreement;

(v) any liability, obligation or responsibility under or related to
former, current or future Environmental Laws or the common law, whether such
liability or obligation or responsibility is known or unknown, contingent or
accrued, arising as a result of or in connection with (a) except as set
forth in Section 2.4(iii), any violation or alleged violation of
Environmental Law, whether prior to or on or after the Closing Date, with
respect to the ownership or operation of the Purchased Assets; (b) loss of
life, injury to persons or property or damage to natural resources (whether
or not such loss, injury or damage arose or was made manifest before the
Closing Date or arises or becomes manifest after the Closing Date), caused
(or allegedly caused) by the presence or Release of Hazardous Substances at,
on, in, under, adjacent to or migrating from the Purchased Assets either
prior to or on or after the Closing Date, including, but not limited to,
Hazardous Substances contained in building materials at the Purchased Assets
or in the soil, surface, water, sediments, groundwater, landfill cells,

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or in other environmental media at or adjacent to the Purchased Assets; (c)
loss of life, injury to persons or property or damage to natural resources
caused (or allegedly caused) by the off-site disposal, storage,
transportation, discharge, Release, recycling, or the arrangement for such
activities, of Hazardous Substances, on or after the Closing Date, in
connection with the ownership or operation of the Purchased Assets; (d) the
investigation and/or remediation (whether or not such investigation or
remediation commenced before the Closing Date or commences after the Closing
Date) of Hazardous Substances that are present or have been Released either
prior to or on or after the Closing Date at, on, in, under, adjacent to or
migrating from the Purchased Assets, including, but not limited to,
Hazardous Substances contained in building materials at the Purchased Assets
or in the soil, surface water, sediments, groundwater, landfill cells, or in
other environmental media at or adjacent to the Purchased Assets and (e) the
investigation and/or remediation of Hazardous Substances that are disposed,
stored, transported, discharged, Released, recycled, or the arrangement of
such activities, on or after the Closing Date, in connection with the
ownership or operation of the Purchased Assets, at any off-site location;
provided, as to all of the above, that nothing set forth in this subsection
2.3(a) shall require the Buyer to assume any liabilities that are expressly
excluded in Section 2.4;

(vi) all liabilities and obligations, other than fines, penalties or
assessments, of the Seller with respect to the Purchased Assets under the
agreements or consent orders set forth on Schedule 5.11;

(vii) all liabilities incurred by the Seller with respect to
Maintenance Expenditures and Capital Expenditures associated with the
Purchased Assets but only to the extent such liabilities were included in
the Maintenance and Capital Expenditures Amount;

(viii) any Taxes on the ownership, sale, operation or use of the
Purchased. Assets on or after the Closing Date; except for any Income Taxes
attributable to income (including, proceeds representing the Purchase Price
or proceeds of other asset sales) received by the Seller;

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(ix) all obligations of the Seller with respect to the operation and
ownership of the Purchased Assets pursuant to the agreements described in
Section 7.13; and

(x) the obligations of the Seller set forth on Schedule 5.16.

(b) All of the foregoing liabilities and obligations to be assumed by
the Buyer under Section 2.3(a) (excluding any Excluded Liabilities) are referred
to herein as the "Assumed obligations." It is understood and agreed that nothing
in this Section 2.3 shall constitute a waiver or release of any claims arising
out of the contractual relationships between the Seller and the Buyer.

2.4. Excluded Liabilities. The Buyer shall not assume or be obligated
to pay, perform or otherwise discharge the following liabilities or obligations:

(i)  any liabilities or obligations of the Seller in respect of any
Excluded Assets or other assets of the Seller which are not Purchased
Assets;

(ii) any liabilities or obligations in respect of Taxes attributable to
Purchased.  Assets for taxable periods ending on or before the Closing Date,
except for Taxes for which the Buyer is liable pursuant to Section 3.4 or
Section 7.8;

(iii) any fines, penalties or assessments imposed by a Governmental
Entity with respect to a violation or alleged violation of Environmental Law
which occurred prior to the Closing Date and any liabilities, obligations,
or responsibilities relating to the disposal, storage, transportation,
discharge, Release, recycling, or the arrangement for such activities, by
the Seller, of Hazardous Substances that were generated at the Purchased
Assets, at any off-site location, where the disposal, storage,
transportation, discharge, Release, recycling or the arrangement for such
activities at said off-site location occurred prior to the Closing Date,
provided that for purposes of this Section 2.4, "off-site location" does not
include any location to which Hazardous Substances disposed of or Released
at the Purchased Assets have migrated;

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(iv) except as provided in Section 16.3 of the Site Agreement, any
liabilities, obligations or responsibilities relating to (a) the property,
equipment or machinery within the switchyards for which the Seller will
retain either a fee interest or an Easement, (b) the transmission lines
delineated in the Easements or (c) any Seller's operations on, or usage of,
the Easements, including, without limitation, liabilities, obligations or
responsibilities arising as a result of or in connection with (1) any
violation or alleged violation of Environmental Law and (2) loss of life,
injury to persons or property or damage to natural resources, except to the
extent caused by Buyer;

(v) any liabilities or obligations relating to any personal injury,
discrimination, wrongful discharge, unfair labor practice or similar claim
or cause of action resulting from actions occurring prior to the Closing
Date;

(vi) any payment obligations of the Seller for goods delivered or
services rendered prior to the Closing;

(vii) any liabilities or obligations imposed upon, assumed or retained
by the Seller pursuant to the Site Agreement or any other Ancillary
Agreement; and

(viii) any liabilities, obligations or responsibilities relating to any
Benefit Plan or any "employee pension benefit plan" (as defined in Section
3(2) of ERISA) maintained by the Seller or any trade or business (whether or
not incorporated) which is under common control as a single employer, with
the Seller under Section 414(b), (c), (m) or (o) of the Code ("ERISA
Affiliate"), including any multiemployer plan, maintained by or contributed
to by the Seller or any ERISA Affiliate, or as to which the Seller or any
ERISA Affiliate is obligated to contribute to, at any time, including any
such liability (A) to the Pension Benefit Guaranty Corporation under Title
IV of ERISA; (B) relating to a multiemployer plan; (C) with respect to
non-compliance with the notice and benefit continuation requirements of
COBRA; (D) with respect to any noncompliance with ERISA or any other
applicable laws; or (E) with respect to any suit, proceeding or claim which

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is brought against the Buyer, any Benefit Plan, ERISA Affiliate Plan, any
fiduciary or former fiduciary of any such Benefit Plan or ERISA Affiliate
Plan.

All such liabilities and obligations not being assumed pursuant to
Section 2.4 are herein called the "Excluded Liabilities."

ARTICLE III

PURCHASE PRICE

3.1. Purchase Price. The purchase price for the. Purchased Assets shall
be $355,000,000, which may be adjusted pursuant to Section 3.2 hereof.

3.2. Purchase Price Adjustment. The Purchase Price shall be adjusted by
the following. If at Closing, the fuel inventory at the Huntley Steam Station
shall be more or less than 140,000 tons or the fuel inventory at the Dunkirk
Steam Station shall be more or less than 125,000 tons, as promptly as possible
following the Closing, the value of any shortfall shall be paid to the Buyer at
a rate of $35.65 per ton at Huntley and $33.60 per ton at Dunkirk and the value
of any excess shall be paid by the Buyer to the Seller at the same rates. If the
Buyer shall elect to purchase any leased vehicles listed on Schedule 3.2, it
shall pay the cost of such leases at Closing to the Buyer at the Closing. The
Seller shall pay to the Buyer any applicable Employee Transition Credit (as
determined pursuant to Exhibit 3.2) within one week following the Closing.
Within 3 days after receipt from the Seller of written notice of the amount
thereof, the Buyer shall pay to the Seller the Maintenance and Capital
Expenditures Amount applicable to the Purchased Assets.

3.3. Allocation of Purchase Price. The Buyer and the Seller shall use
their good faith best efforts to agree upon an allocation among the Purchased
Assets and the Ancillary Agreements of the Purchase Price consistent with
Section 1060 of the Code and the Treasury Regulations thereunder within 180 days
of the date of this Agreement but in no event less than 30 days prior to the
closing. Any post closing adjustments pursuant to Section 3.2 shall be jointly
made and agreed to within sixty (60) days following the Closing in a manner
consistent with the allocation

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determined pursuant to this Section 3.3. Each of the Buyer and the Seller agree
to file Internal. Revenue Service Form 8594, and all federal, state, local and
foreign Tax Returns, in accordance with such agreed allocation. Each of the
Buyer and the Seller shall report the transactions contemplated by the Agreement
for Tax purposes in a manner consistent with the allocation determined pursuant
to this Section 3.3 Each of the Buyer and the Seller agrees to provide the other
promptly with any other information reasonably required to complete Form 8594.
Each of the Buyer and the Seller shall notify the other in the event of an
examination, audit or other proceeding regarding the agreed upon allocation of
the Purchase Price.

3.4. Proration. (a) The Buyer and the Seller agree that all of the
items normally prorated, including those listed below, relating to the business
and operation of the Purchased Assets will be prorated as of the Closing Date,
with the Seller liable to the extent such items relate to any time period
through the Closing Date, and the Buyer liable to the extent such items relate
to periods subsequent to the Closing Date:

(i) except as provided in Section 7.8(a), Taxes, assessments and other
similar charges, if any, on or with respect to the business and operation of
the Purchased Assets and with respect to a Taxable Period that begins before
but does not end on the Closing Date shall be (1) prorated to the extent
such Tax is measured by time to the Seller biased on the number of days in
such Taxable Period, up to and including the Closing Date, and to the Buyer
biased on the number of days in such Taxable Period after the Closing Date,
and (2) to the extent such Tax is measured by income, receipts or pertains
to the business and operation of the Purchased Assets, allocated between
Buyer and Seller based on a closing of the books on the Closing Date with
respect to the business and operation of the Purchased Assets;

(ii) rent, Taxes and all other items payable by or to the Seller under
any of the power purchase agreements that are subject to cost of service
regulation; 

(iii) sewer rents and charges for water, telephone, electricity and
other utilities; and

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(iv) rent under any leases of real or personal property included in the
Purchased Assets.

(b) In connection with the prorations referred to in (a) above, in the
event that actual figures are not available at the Closing Date, the proration
shall be based upon the actual Taxes or fees for the preceding year (or
appropriate period) for which actual Taxes or fees are available and such Taxes
or fees shall be reprorated upon request of either the Seller, on the one hand,
or the Buyer, on the other hand, made within sixty (60) days of the date that
the actual amounts become available. Recoveries from tax certiorari proceedings
shall be reduced by all costs and expenses, including attorneys' fees, prior to
proration. The Buyer shall cooperate with the Seller in the prosecution of tax
certiorari proceedings which have not been completed by the Closing Date. The
Seller and the Buyer agree to furnish each other with such documents and other
records as may be reasonably requested in order to confirm all adjustment and
proration calculations made pursuant to this Section 3.4.

ARTICLE IV

THE CLOSING

4.1. Time and Place of Closing. Upon the terms and subject to the
satisfaction of the conditions contained in Article VIII of this Agreement, the
closing of the sale of the Purchased Assets contemplated by this Agreement (the
"Closing") will take place at the offices of Sullivan & Cromwell in New York, at
10:00 A.M. (local time) on such date as the parties may agree which date is as
soon as practicable, but no later than fifteen (15) Business Days, following the
date on which all of the conditions contained in Article VIII have been
satisfied or waived; or at such other place or time as the parties may agree.
The date and time at which the Closing actually occurs is hereinafter referred
to as the "Closing Date."

4.2. Payment of Purchase Price. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, in consideration of
the aforesaid sale, assignment, conveyance, transfer and delivery of the
Purchased Assets, the Buyer will pay or cause to be paid to the Seller at the
Closing the Purchase Price in United

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States dollars by wire transfer of immediately available funds or by such other
means as are agreed upon by the Seller and the Buyer.

4.3. Deliveries by the Seller. At the Closing, the Seller will deliver
the following to the Buyer:

(a) A Bill of Sale, duly executed by the Seller for the personal
property included in the Purchased Assets, in the form attached hereto as
Exhibit A;

(b) All consents, waivers or approvals obtained by the Seller with
respect to the Purchased Assets, the transfer of any Transferable Permit related
to the Purchased Assets, or the consummation of the transactions connected to
the sale of the Purchased Assets, contemplated by this Agreement, to the extent
specifically required hereunder;

(c) An opinion of counsel and certificate (as contemplated by Section
8.2) with respect to the Purchased Assets;

(d) One or more bargain and sale deeds with lien covenants conveying
the Real Estate related to the Purchased Assets, subject to the applicable
Easements and exceptions, duly executed and acknowledged by the Seller and in
recordable form along with TP-584 Forms and Equalization and Transfer Reports,
in the form attached hereto as Exhibit 4.3(d);

(e) A FIRPTA Affidavit executed by the Seller;

(f) All such other instruments of assignment or conveyance as shall, in
the reasonable opinion of the Buyer and its counsel, be necessary to transfer
to the Buyer the Purchased Assets, in accordance with this Agreement and where
necessary or desirable, in recordable form; and

(g) Such other agreements, documents, instruments and writings,
including the Interconnection Agreement, the Site Agreement and Swaption, as are
required to be delivered by the Seller at or prior to the Closing Date pursuant
to this Agreement or otherwise required in connection herewith.

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4.4. Deliveries by the Buyer. At the Closing, the Buyer will deliver
the following to the Seller:

(a) The Estimated Purchase Price and any amounts payable under Section
3.4 by wire transfer of immediately available funds or such other means as are
agreed upon by the Seller and the Buyer;

(b) Opinions of counsel and certificates (as contemplated by Section
8.3) with respect to the Purchased Assets;

(c) The Instruments of Assumption with respect to the Assumed
Obligations, duly executed by the Buyer;

(d) All such other instruments of assumption as shall, in the
reasonable opinion of the Seller and its counsel, be necessary for the Buyer to
assume the Assumed Obligations related to the Purchased Assets in accordance
with this Agreement;

(e) All tax certificates applicable to the transfers contemplated by
this Agreement, including, without limitation, direct pay permits and tax
exemption certificates; and

(f) Such other agreements, documents, instruments and writings,
including the Interconnection Agreement, the Site Agreement and the Swaption, as
are required to be delivered by the Buyer at or prior to the Closing Date
pursuant to this Agreement or otherwise required in connection herewith.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Buyer as follows (all such
representations and warranties, other than in Sections 5.1, 5.2, 5.3, 5.4 and
5.5, being made to the best knowledge of the Seller after reasonable inquiry or
investigation).

5.1. Organization; Qualification. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has all

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requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business as is now being conducted. The Seller
has heretofore delivered to the Buyer complete and correct copies of its
Certificate of Incorporation and Bylaws as currently in effect.

5.2. Authority Relative to this Agreement. The Seller has full
corporate power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Board of Directors of the
Seller and no other corporate proceedings on the part of the Seller are
necessary to authorize this Agreement or the Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Ancillary Agreements have been duly and validly executed and delivered by
the Seller, and, assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of the Buyer, subject to the receipt of
the Seller Required Regulatory Approvals (as defined in Section 5.3) and the
Buyer Required Regulatory Approvals, constitute valid and binding agreements of
the Seller, enforceable against the Seller in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "Bankruptcy and Equity
Exception").

5.3. Consents and Approvals; No Violation. (a) Other than obtaining
the Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals, neither the execution and delivery of this Agreement and the
Ancillary Agreements by the Seller nor the sale by the Seller of the Purchased
Assets pursuant to this Agreement or performance under the Ancillary Agreements
will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or Bylaws of the Seller, (ii) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (x) where the failure to obtain
such consent, approval, authorization or permit, or to make such filing or
notification, would not, individually or in the aggregate, create a Material
Adverse Effect or (y) for

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those requirements which become applicable to the Seller as a result of the
specific regulatory status of the Buyer (or any of its Affiliates) or as a
result of any other facts that specifically relate to the business or activities
in which the Buyer (or any of its Affiliates) is or proposes to be engaged;
(iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, agreement or other instrument
or obligation to which the Seller is a party or by which the Seller, or any of
the Purchased Assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained or which, in the aggregate, would not, individually
or in the aggregate, create a Material Adverse Effect; or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Seller, or any of its assets, which violation, individually or in the aggregate,
would create a Material Adverse Effect.

(b) Except for (i) any required approvals under the Federal Power Act,
(ii) any required approvals from the PSC, (iii) the approval, if required, of
the SEC pursuant to the Holding Company Act and (iv) the filings by the Seller
and the Buyer required by the HSR Act and the expiration or earlier termination
of all waiting periods under the HSR Act (the filings and approvals referred to
in clauses (i) through (iv) are collectively referred to as the "Seller Required
Regulatory Approvals"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any governmental or regulatory body
or authority is necessary for the consummation by the Seller of the transactions
contemplated hereby or by the Ancillary Agreements, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not obtained or made, will not, individually or in the
aggregate, create a Material Adverse Effect.

5.4. Reports. Since January 1, 1994, the Seller has filed or caused to
be filed with the SEC, the PSC and the FERC, as the case may be, all material
forms, statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by them with respect to the business
and operations of the Seller as it relates to the purchased assets under each of

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the Securities Act, the Exchange Act, New York public utility laws, the Federal
Power Act, the Holding Company Act and the respective rules and regulations
thereunder, all of which complied in all material respects with all applicable
requirements of the appropriate act and the rules and regulations thereunder in
effect on the date each such report was filed, and there are no material
misstatements or omissions in respect of such reports.

5.5. Company Reports; Financial Statements. The Seller has made
available to the Buyer each registration statement, report, proxy statement or
information statement prepared by it since December 31, 1997 (the "Audit
Date"), including (i) the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, (ii) the Company's Quarterly Reports on Form 10-Q for
the periods ended March 31, 1998, June 30, 1998 and September 30, 1998 and (iii)
the Company's Reports on Form 8-K dated February 18, 1998, June 30, 1998, July
2, 1998, September 28, 1998, October 23, 1998 and December 3, 1998, each in the
form (including exhibits, annexes and any amendments thereto) filed with the SEC
(collectively, including any such reports filed subsequent to the date hereof
and any amended reports, the "Company Reports"). As of their respective dates
(or, if amended, as of the date of such amendment), insofar as the Company
Reports relate to the Purchased Assets, the Company Reports did not, and any
Company Reports filed with the SEC subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. With
respect to the financial information relating to the Purchased Assets, each of
the consolidated balance sheets included in or incorporated by reference into
the Company Reports (including any related notes and schedules) fairly presents,
or will fairly present, the consolidated financial position of the Company and
its subsidiaries as of its date and each of the consolidated statements of
income and of changes in financial position included in or incorporated by
reference into the Company Reports (including any related notes and schedules)
fairly presents, or will fairly present, the results of operations, retained
earnings and changes in financial position, as the case may be, of the Company
and its subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that will
not be

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material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein.

5.6. Undisclosed Liabilities. Except as set forth in the Company
Reports, the Seller has no liability or obligation relating to the business or
operations of the Purchased Assets, secured or unsecured (whether absolute,
accrued, contingent or otherwise, and whether due or to become due), of a nature
required by generally accepted accounting principles as they have been
consistently applied by the Seller to be reflected in a corporate balance sheet
or disclosed in the notes thereto, which are not accrued or reserved against in
the Company Reports or disclosed in the notes thereto in accordance with
generally accepted accounting principles, except those which were incurred after
the date of the latest Company Report, all of which have been incurred in the
ordinary course of business.

5.7. Absence of Certain Chances or Events. Except as otherwise
contemplated by this Agreement, since September 30, 1998 there has not been: (a)
any Material Adverse Effect; (b) any damage, destruction or casualty loss,
whether covered by insurance or not, which, individually or in the aggregate,
created a Material Adverse Effect; (c) any entry into any agreement, commitment
or transaction (including, without limitation, any borrowing, capital
expenditure or capital financing) by the Seller, which is material to the
business or operations of the Purchased Assets; or (d) any change by the Seller,
with, respect to the Purchased Assets, in accounting methods, principles or
practices except as required or permitted by generally accepted accounting
principles.

5.8. Title And Related Matters. Seller holds an insurable fee simple
title to the Fossil Assets Real Property (it being understood that any title
insurance would reflect Permitted Encumbrances). Insurable fee simple title is
that which is insurable under an ALTA Owner's Policy (10-7-92) with New York
Endorsement Modifications ("New York Title Insurance"). Except for Permitted
Encumbrances, the Seller has good and valid title to the other Purchased Assets
which it purports to own that are reflected in the Company Reports (other than
those which have been disposed of since the date thereof in the ordinary course
of business), free and clear of all Encumbrances.

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5.9. Leases. There are no real property leases under which the Seller
is a lessee or lessor and which (x) are to be transferred and assigned to the
Buyer on the Closing Date and (y) (i) provide for annual payments of more than
$500,000 in the aggregate or $100,000 individually or (ii) are material to the
business, operations or financial condition of the Purchased Assets.

5.10. Insurance. Except as set forth in Schedule 5.10, all material
policies of fire, liability, worker's compensation and other forms of insurance
owned or held by the Seller and insuring the Purchased Assets are in full force
and effect, subject to the terms of each policy, all premiums with respect
thereto covering all periods up to and including the date as of which this
representation is being made have been paid (other than retroactive premiums
which may be payable with respect to comprehensive general liability and
worker's compensation insurance policies), and no notice of cancellation or
termination has been received with respect to any such policy which was riot
replaced on substantially similar terms prior to the date of such cancellation.
Except as described in Schedule 5.10, as of the date of this Agreement, the
Seller has not been refused insurance with respect to the Purchased Assets nor
has such coverage been limited by any insurance! carrier to which the Seller has
applied for any such insurance or with which it has carried insurance during the
last five years.

5.11. Environmental Matters. Except as disclosed in Schedule 5.11:

(a) The Seller holds, and is in compliance with, all material permits,
license and governmental authorizations ("Environmental Permits") required for
the Seller to conduct the business and operations of the Purchased Assets under
applicable Environmental Laws, and the Seller is otherwise in substantial
compliance with applicable Environmental Laws with respect to the business and
operations of the Purchased Assets except for such failures to hold or comply
with required Environmental Permits, or such failures to be in compliance with
applicable Environmental Laws, which, individually or in the aggregate, are not
reasonably likely to create a Material Adverse Effect;

(b) The Seller has not received any written request for information
under CERCLA or any similar State

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law with respect to any on-site location, except for such liability under such
laws as would not be reasonably likely to, individually or in the aggregate,
create a Material Adverse Effect nor has it been notified in writing that it is
a potentially responsible party under CERCLA or any similar State law; and

(c) The Seller has not entered into or agreed to any consent decree or
order, and is not subject to any outstanding judgment, decree, or judicial order
relating to compliance with any Environmental Law or to investigation or cleanup
of Hazardous Substances under any Environmental Law.

(d) To the Seller's best knowledge, except as described in Schedule
5.11, no Releases of Hazardous Substances have occurred at, from, in, on, or
under any Real Property, and no Hazardous Substances are present in, on, about
or migrating from any such Real Property that could give rise to an
Environmental Loss related to the Purchased Assets for which remediation
reasonably could be required, except in any such case to the extent that any
such Releases would not, individually or in the aggregate? create a Material
Adverse Effect.

The representations and warranties made in this Section 5.11 are the
Seller's exclusive representations and warranties relating to environmental
matters.

5.12. Labor Matters. The Seller delivered to the Buyer a copy of the
Collective Bargaining Agreement which is the only collective bargaining
agreement which relates to the business or operations of the Purchased Assets.
With respect to the business or operations of the Purchased Assets, except to
the extent set forth in Schedule 5.12 and except for such matters as will not,
individually or in the aggregate, create a Material Adverse Effect (a) the
Seller is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours;
(b) the Seller has not received written notice of any unfair labor practice
complaint against the Seller pending before the National Labor Relations Board;
(c) there is no labor strike, slowdown or stoppage actually pending or
threatened against or affecting the Seller; (d) the Seller has not received
notice that any representation petition respecting the employees of the Seller
has been filed with the National Labor Relations Board; (e) no arbitration
proceeding arising

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out of or under the Collective Bargaining Agreement is pending against the
Seller and (f) the Seller has not experienced any primary work stoppage in the
past five years. The Seller does not have any knowledge of any union (other
than IBEW) claiming to represent the employees associated with the Purchased
Assets and the Seller does not have any knowledge of any current union
organizing activities among its employees by any other such union, nor does any
question concerning representation exist concerning such employees.

5.13. Real Estate. Schedule 5.14 contains a schedule of title documents
identifying the Real Property. True and correct copies of any current surveys,
abstracts or title opinions in the Seller's possession and any policies of title
insurance in effect and in the possession of the Seller with respect to the Real
Property have been made available to the Buyer. The Real Property is encumbered
by the lien of a mortgage held by Bankers Trust Company, as successor trustee
under the Indenture which will be released or discharged at the Closing.
Schedule 5.14 also reflects that the Seller will be EXCEPTING AND RESERVING to
Seller fee simple title and/or a permanent Easement over parcels of land on
which the transmission, distribution, substation and communication facilities
and related support, equipment described or referred to in Section 2.2(d) are
located, together with access to those facilities, and those fee simple titles
and Easements identified as being reserved to seller in the deed or in Exhibit
"A" to be annexed to the deed, together with access to those parcels.

5.14. Condemnation. Neither the whole nor any part of the Real Estate
or any other real property or rights leased, used or occupied by the Seller in
connection with the ownership or operation of the Purchased Assets is subject to
any pending suit for condemnation or other taking by any public authority or any
other Person, and no such condemnation or other taking has been threatened.

5.15. Certain Contracts and Arrangements. (a) Except for (i) contracts,
agreements, personal property leases, commitments, understandings or instruments
which will expire prior to the Closing Date, (ii) agreements entered into in the
ordinary course of business that are not material to the Purchased Assets, (iii)
the Collective Bargaining Agreement and (iv) as set forth in Section 5.16
(contracts in (ii), (iii) and (iv) being the "Contracts"),

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the Seller is not a party to any written contract, agreement, personal property
lease, commitment, understanding or instrument which is material to the business
or operations of the Purchased Assets. Copies of the Contracts have been
available to the Buyer.

(b) Each of the Contracts (i) constitutes a valid and binding
obligation of the Seller, and to the best knowledge of the Seller constitutes a
valid and binding obligation of the other parties thereto, (ii) is in full force
and effect, and (iii) may be transferred to the Buyer pursuant to this Agreement
and will continue in full force and effect thereafter, in each case without
breaching the terms thereof or resulting in the forfeiture or impairment of any
rights thereunder.

(c) There is not, under any of the Contracts, any default or event
which, with notice or lapse of time or both, would constitute a default on the
part of any of the parties thereto, except, such events of default and other
events as to which requisite waivers or consents have been obtained or which
would not, individually or in the aggregate, create a Material Adverse Effect.

(d) If the Site Agreement and Interconnection Agreement were in full
force and effect between Seller's generation business and the Seller's
transmission business on the date of this Agreement, (i) the, Seller's
generation business would be in material compliance with the terms thereof, and
(ii) except as provided in the Interconnection Agreement, there is no event or
condition that would enable or require the Seller's transmission business to (x)
notify the Seller's generation business of the necessity of an addition to or
modification of the Interconnection Facilities, as defined in Section 1.10 of
the Interconnection Agreement, (y) operate and/or purchase from the Seller's
generation business any of the equipment or facilities specified in Section 20.0
of the Site Agreement, or (z) discontinue Interconnection Service as provided
for in the Interconnection Agreement.

5.16. Legal Proceeding, etc. There are no claims, actions,
proceedings or investigations pending or threatened against or relating to the
Seller before any court, governmental or regulatory authority or body acting in
an adjudicative capacity, which, if adversely determined, individually or in the
aggregate, would create a Material

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Adverse Effect. The Seller is not subject to any outstanding judgment, rule,
order, writ, injunction or decree of any court, governmental or regulatory
authority which, individually or in the aggregate, would create a Material
Adverse Effect.

5.17. Permit. (a) The Seller has or will have by the Closing Date all
permits, subdivision approvals, variances, licenses, franchises and other
governmental authorizations, consents and approvals, other than with respect to
Environmental Laws, (collectively, "Permits") necessary to operate the business
of the Purchased Assets as presently conducted, except where the failure to have
such Permits would not, individually or in the aggregate, create a Material
Adverse Effect. The Seller has not received any written notification that it is
in violation of any of such Permits, or any law, statute, order, rule,
regulation, ordinance or judgment of any governmental or regulatory body or
authority applicable to it, except for notifications of violations which would
not, individually or in the aggregate, create a Material Adverse Effect. The
Seller is in compliance with all Permits, laws, statutes, orders, rules,
regulations, ordinances, or judgments of any governmental or regulatory body
or authority applicable to it, except for violations which, individually or in
the aggregate, do not create a Material Adverse Effect.

(b) Schedule 5.18(b) sets forth all material Permits and Environmental
Permits other than Transferable Permits (which are set forth on Schedule
1.1(a)(47)).

5.18. Tax Matters. With respect to the Purchased Assets and trades or
businesses associated with the Purchased Assets (i) all Tax Returns required to
be filed, other than those Tax Returns the failure of which to file would not
create a Material Adverse Effect, have been filed, and (ii) all material Taxes
shown to be due on such Tax Returns have been paid in full.

5.19. Compliance with Laws. The Seller is in compliance with all
applicable laws affecting the Purchased Assets except where the failure to be
in compliance would not, individually or in the aggregate, create a Material
Adverse Effect.

5.20. Satisfaction of Required Standards. (a) The Purchased Assets, as
currently installed and operated,

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satisfy the requirements set forth in the Interconnection Agreement, the Site
Agreement and the Huntley Agreement, except as otherwise set forth in such
agreements.

(b) The Excluded Assets do not include any properties, physical assets,
contracts or leases that are individually or in the aggregate, necessary for the
operation of the Purchased Assets.

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN
THIS ARTICLE V, THE PURCHASED ASSETS ARE BEING SOLD AND TRANSFERRED "AS IS,
WHERE IS, " AND THE SELLER IS NOT MAKING ANY OTHER REPRESENTATIONS OR
WARRANTIES, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING SUCH
PURCHASED ASSETS, INCLUDING, IN PARTICULAR, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Seller as follows (all such
representations and warranties, except those regarding the Buyer, being made to
the best knowledge of the Buyer after reasonable inquiry or investigation).

6.1. Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as is now being conducted. The Buyer has
heretofore delivered to the Seller complete and correct copies of its
Certificate of Incorporation and By-laws (or other similar governing documents),
as currently in effect.

6.2. Authority Relative to this Agreement. The Buyer has full corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and thereby have been
duly

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and validly authorized by the Board of Directors of the Buyer and its parent
corporation and no other corporate proceedings on the part of the Buyer are
necessary to authorize this Agreement and the Ancillary Agreements or to
consummate the transaction contemplated hereby or thereby. This Agreement and
the Ancillary Agreements have been duly and validly executed and delivered by,
the Buyer, and assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of the Seller, this Agreement and the
Ancillary Agreements, subject to the receipt of the Buyer Required Regulatory
Approvals and the Seller Required Regulatory Approvals, constitute valid and
binding agreements of the Buyer, enforceable against the Buyer in accordance
with their terms, subject to the Bankruptcy and Equity Exception.

6.3. Consents and Approvals; No Violation. (a) Other than obtaining
the Buyer Required Regulatory Approvals and the Seller Required Regulatory
Approvals, neither the execution and delivery of this Agreement and the
Ancillary Agreements by the Buyer nor the purchase by the Buyer of the Purchased
Assets pursuant to this Agreement or performance under the Ancillary Agreements
will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-Laws (or other similar governing documents)
of the Buyer, (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, (iii)
result in a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, agreement, lease or other instrument or obligation to
which the Buyer or any of its subsidiaries is a party or by which any of their
respective assets may be bound, except for such defaults (or rights of
termination, cancellation or acceleration) as to which requisite waivers or
consents have been obtained.

(b) Except for (i) qualification of the Buyer as an exempt wholesale
generator under the Energy Policy Act of 1992, without restriction, including no
restriction on sales to Affiliates, (ii) authorization to sell power under
Section 205 of the FPA, including (A) authorizations required to implement sales
under the Ancillary Agreements, and (B) market-based rate approval for capacity,
energy and ancillary services, (iii) approval under Section 203 of the FPA to
transfer contracts and other jurisdictional assets,

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(iv) any necessary PSC approvals, (v) the filings by the Buyer and the Seller
required by the HSR Act and (vi) approval of the Interconnection Agreement and
the Transition Power Agreement by FERC (the filings and approvals referred to
in clauses (i) through (vi) are collectively referred to as the "Buyer Required
Regulatory Approvals"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of any governmental or regulatory
body or authority is necessary for the consummation by the Buyer of the
transactions contemplated hereby or by the Ancillary Agreements.

6.4. Availability of Funds. The Buyer will have sufficient funds
available to it or has received binding written commitments from responsible
financial institutions to provide sufficient funds on the Closing Date to pay
the Purchase Price.

ARTICLE VII

COVENANTS OF THE PARTIES

7.1. Conduct of Business Relating to the Purchased Assets. (a) Except
as described in Schedule 7.1, during the period from the date of this Agreement
to the Closing Date, the Seller will operate the Purchased Assets and related
businesses in the usual, regular and ordinary course consistent with good
industry practice and shall use all commercially reasonable efforts to preserve
intact the Purchased Assets and the businesses related thereto, and endeavor to
preserve the goodwill and relationships with customers, suppliers and others
having business dealings with them. Without limiting the generality of the
foregoing, and, except as contemplated in this Agreement or as described in
Schedule 7.1, prior to the Closing Date, without the prior written consent of
the Buyer, the Seller will not with respect to the Purchased Assets;

(i) (x) except for (1) Permitted Encumbrances and (2) indebtedness
constituting Excluded Liabilities that does not create an Encumbrance on the
Purchased Assets, create, incur, assume or suffer to exist any indebtedness
for borrowed money (including obligations in respect of capital leases); or
(y) assume, guarantee, endorse or otherwise become directly liable or
respon-

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sible (whether directly or indirectly, contingently or otherwise) for the
obligations of any Person;

(ii) make any material change in the levels of fuel inventory and
stores inventory customarily maintained by the Seller with respect to the
Purchased Assets, other than consistent with good industry practice;

(iii) sell, lease (as lessor), transfer or otherwise dispose of, any of
the Purchased Assets, other than assets used, consumed or replaced in the
ordinary course of business consistent with good industry practice,
including the practice of harvesting timber;

(iv) terminate, extend or otherwise amend any real property lease to
the extent any such extension or amendment would require the lease to be
disclosed pursuant to Section 5.9;

(v) execute, enter into, terminate or otherwise amend (x) any of the
Permits or Environmental Permits, other than routine renewals or
non-material modifications or amendments or (y) any other agreement, order,
decree or judgment relating to the current or any new permit;

(vi) enter into any power sales commitments having a term that extends
beyond June 30, 1999 or such other date that the parties mutually agree to
be the date on which the Closing is expected to occur;

(vii) with respect to the Purchased Assets and related businesses, (x)
amend or cancel any liability or casualty insurance policies related
thereto, (y) compromise, settle, withdraw, release or abate any claims made
or accruing thereunder or (z) fail to maintain by self insurance or with
financially responsible insurance companies insurance in such amounts and
against such risks and losses as was in place as of the date of this
Agreement for such assets and businesses;

(viii) enter into any commitment or contract for goods or services not
addressed in clauses (i) through (vii) above that will be delivered or
provided after June 30, 1999 or such other date that the parties

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mutually agree to be the date on which the Closing is expected to occur, in
an amount greater than $100,000 or $1,000,000 in the aggregate; or

(ix) enter into any written or oral contract, agreement, commitment or
arrangement with respect to any of the transactions set forth in the
foregoing paragraphs (i) through (viiii).

(b) Notwithstanding anything in Section 7.1 (a) to the contrary, the
Seller may, in its sole discretion, make (i) Maintenance Expenditures and
Capital Expenditures and (ii) at the Seller's expense, such other maintenance
and. capital expenditures as the Seller deems necessary;

7.2. Access to Information. (a) Between the date of this Agreement and
the Closing Date, the Seller will, during ordinary business hours and upon
reasonable notice (i) give the Buyer and the Buyer Representatives reasonable
access to all books, records, plants, offices and other facilities and
properties constituting the Purchased Assets to which the Buyer is not denied
access by law; (ii) permit the Buyer to make such reasonable inspections thereof
as the' Buyer may reasonably request; (iii) furnish the Buyer with such
financial and operating data and other information with respect to the Purchased
Assets as the Buyer may from time to time reasonably request, provided, however,
that the Seller will not be required to create special reports or perform any
studies; (iv) furnish the Buyer a copy of each material report, schedule or
other document filed or received by it with respect to the Purchased Assets with
or from the SEC, PSC or FERC; provided, however, that (A) any such investigation
shall be conducted in such manner as not to interfere with the operation of the
Purchased Assets, (B) the Seller shall not be required to take any action which
would constitute a waiver of the attorney-client privilege and (C) the Seller
need not supply the Buyer with any information which the Seller is under a legal
obligation not to supply. Notwithstanding anything in this Section 7.2 to the
contrary, (i) the Seller will only furnish or provide such access to
Transferring Employee Records and personnel and medical records as is required
by law, legal process or subpoena and (ii) the Buyer shall not have the right to
perform or conduct any environmental sampling or testing at, in, on, or
underneath the Purchased Assets.

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(b) All information furnished to or obtained by the Buyer and the Buyer
Representatives pursuant to this Section 7.2 or the Ancillary Agreements shall
be subject to the provisions of the Confidentiality Agreement and shall be
treated as "Proprietary Information" (as defined in the Confidentiality
Agreement).

(c) For a period of six years after the Closing Date, each party and
their representatives shall have reasonable access to all of the books and
records of the Purchased Assets, including all Transferring Employee Records, in
the possession of the other party to the extent that such access may reasonably
be required by such party. Such access shall be afforded by the party or parties
in possession of such books and records upon receipt of reasonable advance
notice and during normal business hours. The party or parties exercising this
right of access shall be solely responsible for any costs or expenses incurred
by it or them pursuant to this Section 7.2(c). If the party or parties in
possession of such books and records shall desire to dispose of any such books
and records upon or prior to the expiration of such six-year period, such party
or parties shall, prior to such disposition, give the other party or parties a
reasonable opportunity at such other party's or parties' expense, to segregate
and remove such books and records as such other party or parties may select.
During such six-year period, the Seller and its representatives and the
respondent parties and their representatives in the real property tax litigation
listed on Schedule 2.2(h) shall have physical access during normal business
hours to the Purchased Assets to the extent such access may reasonably be
required in connection with that litigation.

(d) The Seller agrees not to release any Person (other than the Buyer)
from any confidentiality agreement now existing with respect to the Purchased
Assets, or waive or amend any provision thereof.

(e) Notwithstanding the terms of the Confidentiality Agreement and
Section 7.2(b) above, the parties agree that prior to the Closing the Buyer may,
if reasonably necessary, reveal or disclose Proprietary Information to any other
Persons in order to obtain financing, and for purposes of risk management of or
with respect to the Purchased Assets, and to such Persons with whom the buyer
expects it may have business dealings regarding the Purchased Assets

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from and after the Closing Date, and, to the extent that Seller consents, which
consent shall not be unreasonably withheld, existing and potential customers
and suppliers.

(f) Except as required by law, unless otherwise agreed to in writing by
the Buyer, for a period commencing on the Closing Date and terminating three
years after such date the Seller shall keep all Proprietary Information
confidential and (i) shall not disclose or reveal any Proprietary Information to
any Person other than "Seller's Representatives" (as defined below) who are
actively and directly participating in the transactions contemplated hereby or
who otherwise need to know the Proprietary Information for such purpose and
shall cause those Persons to observe the terms of this Section 7.2(f) and (ii)
shall not use Proprietary Information for any purpose other than consistent with
the terms of this Agreement. The Seller shall continue to hold all Proprietary
Information according to the same internal procedures and with the same degree
of care regarding its secrecy and confidentiality as currently applicable
thereto. The Seller shall notify the Buyer of any unauthorized disclosure to
third parties that it discovers, and shall endeavor to prevent any further such
disclosures. The Seller shall be responsible for any breach of the terms of this
Section 7.2(f) by the Seller or the Seller's Representatives.

After the Closing Date, in the event that the Seller is requested
pursuant to, or required by, applicable law or regulation or by legal process to
disclose any Proprietary Information, or any other information concerning the
Purchased Assets, or the transactions contemplated hereby, the Seller shall
provide the Buyer with prompt notice of such request or requirement in order to
enable the Buyer to seek an appropriate protective order or other remedy, to
consult with the Seller with respect to taking steps to resist or narrow the
scope of such request or legal process, or to waive compliance, in whole or in
part, with the terms of this Section 7.2(f). The Seller agrees not to oppose any
action by the Buyer to obtain a protective order or other appropriate remedy
after the Closing Date. In the event that no such protective order or other
remedy is obtained, or that the Buyer waives compliance with the terms of this
Section 7.2(f), the Seller shall furnish only that portion of the Proprietary
Information which the Seller is advised by counsel is legally required. In any
such event the seller shall use its reasonable best efforts to ensure

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that all Proprietary Information and other information that is so disclosed will
be accorded confidential treatment.

7.3. Expenses.  Except to the extent specifically provided herein,
whether or not the transactions contemplated hereby are consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by the party incurring such costs and
expenses. Any title insurance obtained by the Buyer shall be at the Buyer's sole
expense.

7.4. Further Assurances. a) Subject to the terms and conditions of this
Agreement, each of the parties hereto will use its best efforts to take, or
cause to be taken, all action, and to do, or cause! to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the sale of the Purchased Assets pursuant to this
Agreement, including without limitation using its best efforts to ensure
satisfaction of the conditions precedent to each party's obligations hereunder.
Notwithstanding anything in the previous sentence to the contrary, the Seller
and the Buyer shall use commercially reasonable efforts to obtain all Permits
and Environmental Permits necessary for the Buyer to operate the Purchased
Assets. Neither of the parties hereto will, without prior written consent of the
other party, take or fail to take any action, which would reasonably be expected
to prevent or materially impede, interfere with or delay the transactions
contemplated by this Agreement. From time to time after the date hereof, without
further consideration, the Seller will, at its own expense, execute and deliver
such documents to the Buyer as the Buyer may reasonably request in order to vest
more effectively in the Buyer the Seller's title to the Purchased Assets subject
to Permitted Encumbrances and Schedule 5.8. From time to time after the date
hereof, the Buyer will, at its own expense, execute and deliver such documents
to the Seller as the Seller may reasonably request in order to consummate more
effectively the sale of the Purchased Assets pursuant to this Agreement.

(b) In the event that any Purchased Asset shall not have been conveyed
to the Buyer at the Closing, the Seller shall use its best efforts to convey
such asset to the Buyer as promptly as is practicable after the Closing. In the
event that any easement necessary or desirable for the Seller's ongoing
operations shall not have been retained

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by the Seller after the Closing, the Buyer shall use its best efforts to grant
such Easement to the Seller as promptly as is practicable after the Closing.

7.5. Public Statements. The parties shall consult with each other prior
to issuing any public announcement, statement or other disclosure with respect
to this Agreement or the transactions contemplated hereby and shall not issue
any such public announcement, statement or other disclosure prior to such
consultation, except as may be required by law and except that the parties may
make public announcements, statements or other disclosures with respect to this
Agreement and the transactions contemplated hereby to the extent and under the
circumstances in which the parties are expressly permitted by the 
Confidentiality Agreement to make disclosures of "Proprietary Information" (as
defined in the Confidentiality Agreement).

7.6. Consents and Approvals. (a) The Seller and the Buyer shall each
file or cause to be filed with the Federal Trade Commission and the United
States Department of Justice any notifications required to be filed under the
HSR Act and the rules and regulations promulgated thereunder with respect to
the transactions contemplated hereby. The parties shall consult with each other
as to the appropriate time of filing such notifications and shall use their best
efforts to make such filings at the agreed upon time, to respond promptly to any
requests for additional information made by either of such agencies, and to
cause the waiting periods under the HSR Act to terminate or expire at the
earliest possible date after the date of filing.

(b) The Seller and the Buyer shall cooperate with each other and (i)
promptly prepare and file all necessary documentation, (ii) effect all necessary
applications, notices, petitions and filings and execute all agreements and
documents, (iii) use all commercially reasonable efforts to obtain the transfer
or reissuance to the Buyer of all necessary Transferable Permits, consents,
approvals and authorizations of all governmental bodies and (iv) use all
commercially reasonable efforts to obtain all necessary consents, approvals and
authorizations of all other parties, in the case of each of the foregoing
clauses (i), (ii), (iii) and (iv), necessary or advisable to consummate the
transactions contemplated by this Agreement (including, without limitation, the
Seller Required Regulatory Approvals and the Buyer Required Regulatory
Approvals) or required by

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the terms of any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument to which the
Seller or the Buyer is a party or by which either of them is bound. Each of the
Seller and the Buyer shall have the right to review in advance all
characterizations of the information relating to the transactions contemplated
by this Agreement which appear in any filing made in connection with the
transactions contemplated hereby.

(c) The Seller and the Buyer shall cooperate with each other and
promptly prepare and file notifications with, and request tax clearances from,
state and local taxing authorities in jurisdictions in which a portion of the
Purchase Price may be required to be withheld or in which the Buyer would
otherwise be liable for any Tax liabilities of the Seller pursuant to such state
and local Tax law.

(d) The Seller and the Buyer agree to execute and deliver the
Interconnection Agreement, the Site Agreement and the Swaption at the Closing.

7.7. Fees and Commissions. The Seller and the Buyer each represent and
warrant to the other that, except for Merrill Lynch & Co. and Donaldson Lufkin &
Jenrette Securities Corporation, which are acting for and at the expense of the
Seller, and Chase Securities Inc., which is acting for and at the expense of the
Buyer, no broker, finder or other Person is entitled to any brokerage fees,
commissions or finder's fees in connection with the transaction contemplated
hereby by reason of any action taken by the party making such representation.

7.8. Tax Matters. (a) Other than the New York Real Estate Transfer Tax
(the "New York Tax"), which is the Seller's obligation, the Buyer shall be
solely liable for and shall pay all applicable sales, transfer, use, stamp,
conveyance, value added, recording, excise, New York Petroleum Business Tax and
other similar Taxes, if any, together with all recording or filing fees,
notarial fees and other similar costs of Closing, that may be imposed upon, or
payable, collectible or incurred in connection with the transfer of the
Purchased Assets to the Buyer or otherwise as a result of the transfer of the
Purchased Assets ("Transfer Taxes"). The Buyer shall release, indemnify and hold
harmless Seller with respect to all Transfer Taxes, other than the New York Tax.
The Buyer, at

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its own expense, will file, to the extent required by applicable law, all
necessary Tax Returns and other documentation with respect to all such Transfer
Taxes, and if required by applicable law, the Seller will join in the execution
of any such Tax Returns or other documentation.

(b) With respect to Taxes to be prorated in accordance with Section 3.4
of this Agreement only, the Buyer shall prepare and timely file all Tax Returns
required to be filed after the Closing with respect to the Purchased Assets, if
any, and shall duly and timely pay all such Taxes shown to be due on such Tax
Returns. The Buyer's preparation of any such Tax Returns shall be subject to the
Seller's approval, which approval shall not be unreasonably, withheld. The Buyer
shall make such Tax Returns available for the Seller's review and approval not
later than fifteen (15) Business Days prior to the due date for filing such Tax
Return. Within ten (10) Business Days after receipt of such Tax Return, the
Seller shall pay to the Buyer its proportionate share of the amount shown as due
on such Tax Return determined in accordance with Section 3.4 of this Agreement.

(c) Each of the Buyer and the Seller shall provide the other with such
assistance as may reasonably be requested by the other party in connection with
the preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each will retain and provide the requesting party with any
records or information that may be relevant to such return, audit, or
examination, proceedings or determination. Any information obtained pursuant to
this Section 7.8(c) or pursuant to any other Section hereof providing for the
sharing of information or review of any Tax Return or other schedule relating to
Taxes shall be kept confidential by the parties hereto.

(d) The Buyer shall remit to the Seller any refund or credit of Taxes
with respect to the Purchased Assets to the extent such Taxes are attributable
to any taxable period, or portion thereof, ending on or before the Closing Date.

(e) The Buyer shall pay to the Seller at Closing the portion of any
Taxes previously paid by the Seller with respect to the Purchased Assets to the
extent such taxes are

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properly allocable to a taxable period, or portion thereof, beginning after the
Closing Date.

(f) The Buyer shall prepare and timely file all real property tax
administrative and judicial proceedings which must be filed pursuant to any
existing settlement agreements or those which are negotiated with respect to the
litigation on Schedule 2.2(h). The Seller will provide all reasonable and
necessary assistance in preparing such filings.

(g)(i) Prior to Closing, the Seller shall have the right to control any
and all real property tax litigation relating to the Dunkirk and Huntley Steam
Station Real Property. The Buyer shall have the right to receive reasonable
advance notice of all meetings, proceedings and conferences relating thereto
and, to the extent not prohibited by the relevant taxing authority, to observe
and attend all such meetings, proceedings or conferences, to receive copies of
all notices, determinations, and filings received by the Seller in connection
therewith promptly after the Seller's receipt thereof, to receive copies of
pleadings, filings, and other submissions to be made by the Seller no later than
5 Business Days in advance of the Seller's submission thereof, and to consent to
all settlements or consent orders entered into by the Seller with respect to
real property tax litigation relating to the Real Property, such consent not to
be unreasonably withheld.

(ii) From and after the Closing, the Buyer shall have the right to
assume control of all real property tax litigation relating to the Real
Property pending as of the Closing Date. The Seller shall cooperate with,
and provide reasonable assistance to, the Buyer in connection with the
conduct of such litigation, including the right to use and consult with
personnel of the Seller principally responsible for management of Seller's
relationships with the relevant real property taxing authorities and
negotiation and litigation which such authorities regarding real property
tax assessments. With respect to any such litigation, the Seller shall have
the right to receive reasonable advance notice of all meetings, proceedings
and conferences relating thereto and, to the extent not prohibited by the
relevant taxing authority, to observe all such meetings, conferences and
proceedings, to receive copies of all notices, determinations, and

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filings received by the Buyer in connection therewith promptly after the
Buyer's receipt thereof, to receive copies of pleadings, filings, and other
submissions to be made by the Buyer not later than five (5) Business Days
in advance of the Buyer's submission thereof, and to consent to all
settlements or consent orders entered into by the Buyer with respect to
real property tax litigation relating to the Real Property, such consent
not to be unreasonably withheld.

(iii) The Buyer and the Seller will work together to negotiate the
PILOT Agreements or multi-year tax settlements for the Dunkirk and Huntley
Steam Stations. Such settlements (i.e. PILOTs and or Multi-year
settlements) as they are negotiated for this agreement, are hereinafter
referred to as "Actual Real Estate Taxes Paid." Actual Real Estate Taxes
Paid will apply to the Real Property being purchased, and do not include
any taxes on incremental investment (including repowering) at the site for
these calculations.

(iv) The Buyer shall pay to Seller fifty percent (50%) of the first
$10,000,000 net reduction difference Between Actual Real Estate Taxes Paid
and those shown in Schedule 7.8(g) and twenty percent (20%) of any net
reduction difference greater than $10,000,000 between Actual Tax Payments
Paid and Schedule 7.8(g). The Seller shall pay the Buyer twenty percent
(20%) of the net increase difference between Actual Real Estate Taxes Paid
and those shown in Schedule 7.8(g). All calculations made pursuant to this
Section 7.8(g)(iv) shall be on an after tax net present value basis, using
a 9% discount rate, as of the Closing Date. It will be assumed that the
scheduled payments in the last year of any PILOT Agreement or multi-year
real property tax settlement which has a term of 5 years or more would stay
in place from the end of the settlement through 2013.

The reconciliation and payment as provided for by Section 7.8(g)(iv)
shall occur no later than sixty (60) days after the finalization of any PILOT
and/or multi-year tax settlement. Final calculations will be provided to the
Buyer by the Seller within this time frame. Any Real Estate taxes relating to
the Dunkirk and Huntley Stations paid by the Buyer after the Closing but before
the implementation of any PILOT and/or multi-year tax settlement will be

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incorporated into the calculations set forth in this agreement.

7.9. Supplements to Schedules. Prior to the Closing Date, the Seller
and the Buyer shall supplement or amend the Schedules required by Section 2.4,
Article V and Article VI as the case may be, with respect to any matter relating
to the Purchased Assets, hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in such Schedules. No supplement or amendment of any Schedule made
pursuant to this Section shall be deemed to cure any breach of any
representation or warranty made in this Agreement unless the parties agree
thereto in writing.

7.10. Employees. (a) The Buyer and the Seller agree that the Buyer
shall be a successor within the meaning of the Collective Bargaining Agreement.
Each person who becomes employed by the Buyer or an Affiliate of Buyer pursuant
to this Section 7.10 shall be referred to herein as a "Buyer Employee." The
employment of employees who are represented by Local No. 97 of the IBEW shall
continue in accordance with the Collective Bargaining Agreement.

(b) The Seller has made available to the Buyer the Collective
Bargaining Agreement. With respect to Buyer Employees who are included in the
collective bargaining unit by the Collective Bargaining Agreement ("IBEW
Employees"), on the Closing Date, the Buyer and any Affiliate of Buyer who
employs Buyer Employees will assume the Collective Bargaining Agreement as it
relates to such Buyer Employees employed at the Purchased Assets.

(c) For the period commencing on the Closing Date and ending 12 months
thereafter, and except as the Buyer and any Buyer Employee may otherwise agree,
the Buyer shall provide all Buyer Employees who are not IBEW Employees
("Non-Union Employees") with total compensation (including, without limitation,
base pay, authorized overtime, bonuses, and benefits contained in the employee
benefit plans, programs and fringe benefit arrangements (excluding education
reimbursement)) which is, in the aggregate, at least equivalent in value to the
Non-Union Employee's total compensation, which shall be based upon (x) such
employee's existing individual base pay, (y) authorized overtime, if applicable,
and (z) an average bonus and benefit component

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for such employee's salary plan level, as consistently applied by the Seller,
apportioned according to such employee's base pay. The Buyer shall also pay
reasonable relocation costs with respect to any Non-Union Employees who shall
relocate at the Buyer's request.

(d) As of the Closing Date, all Non-Union Employees shall cease to
participate in the employee welfare benefit plans (as such term is defined in
ERISA) maintained or sponsored by the Seller or its Affiliates (the "Prior
Welfare Plans") and shall, if applicable, commence to participate in welfare
benefit plans of the Buyer or its Affiliates (the "Replacement Welfare Plans").
The Buyer shall (i) waive all limitations as to pre-existing condition
exclusions and waiting periods with respect to Non-Union Employees under the
Replacement Welfare Plans, other than, but only to the extent of, limitations or
waiting periods that were in effect with respect to such employees under the
Prior Welfare Plans and that have not been satisfied as of the Closing Date, and
(ii) provide each Non-Union Employee with credit for any co-payments and
deductibles paid prior to the Closing Date in satisfying any deductible or
out-of-pocket requirements under the Replacement Welfare Plans (on a pro-rata
basis in the event of a difference in plan years).

(e) Non-Union Employees shall be given credit for all service with the
Seller and its Affiliates under all employee benefit plans, programs, and fringe
benefit plans, programs, and fringe benefit arrangements of the Buyer ("Buyer
Benefit Plans") in which they become participants. The service credit given is
for purposes of eligibility, vesting and service related level of benefits, but
not benefit accrual (except as provided in the following sentence). For purposes
of benefit accrual, Non-Union Employees shall be given credit for all service
with the Seller and its Affiliates under all Buyer Benefit Plans, but the
ultimate benefits provided under the Buyer Benefit Plans may be offset by the
corresponding benefits previously provided by the Seller or benefit plans of the
Seller, or by the corresponding benefits accrued under the benefit plans of the
Seller or otherwise committed to be provided by the Seller in the future.
Nothing in this Agreement shall preclude the use of a "Defined Contribution
Plan" in substitution for the "Defined Benefit Plans" maintained by the Seller.

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(f) To the extent allowable by law, the Buyer shall take any and all
necessary action to cause the trustee of a defined contribution plan of the
Buyer or one of its Affiliates, if requested to do so by a Non-Union Employee,
to accept a direct "rollover" of all or a portion of said employee's
distribution (excluding securities) from the Seller's Represented and
Non-Represented Employees Savings Fund Plans or the defined benefit Pension
Plan.

(g) The Buyer shall pay to each Non-Union Employee whose employment is
terminated by the Buyer or one of its Affiliates within eighteen months of the
Closing Date a severance benefit package equivalent to that which would have
been provided to such individual upon such termination by the Seller under the
Niagara Mohawk Power Corporation Involuntary Severance Plan as in effect on the
Closing Date had such individual remained continuously employed by the Seller or
its Affiliates and had been eligible for, and entitled to benefits under, such
plan on the date of such termination.

(h) The Buyer also shall provide, to each Non-Union Employee who on the
Closing Date is at least 50 years of age and has at least 10 years of "Service"
(as that term is defined in the Niagara Mohawk Pension Plan) and who is hired by
the Buyer, a benefit that is equal to the following amount ("Transition
Benefit"): (i) the value of the "Accrued Benefit" each such employee would have
had under the Niagara Mohawk Pension Plan cash balance formula had such employee
remained employed by the Seller for five years after the Closing Date, assuming
such employee had retained the same job with the Seller as such employee had
immediately preceding the Closing Date and had the same "Compensation,"
"Interest Credit" (using an annual interest rate of 6.5 percent), and rate of
"Pay-Based Credit" (as those terms are defined in the Niagara Mohawk Pension
Plan) as such employee had immediately preceding the Closing Date; less (ii) the
percent value of the "Accrued Benefit" such employee has under the Niagara
Mohawk Pension Plan cash balance formula as of the Closing Date, plus the
"Interest Credit" (as that term is defined in the Niagara Mohawk Pension Plan)
that would have been received on the amount of such present value had it
remained in the Niagara mohawk pension plan for five years after the closing
Date (assuming the Interest Credit remained at an annual interest rate of 6.5
percent throughout that five year period). The Buyer shall provide the
Transition Benefit for each eligible Non-Union Employee

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in one or both of the following ways: (A) as vested accrued benefits for such
employee under a qualified retirement plan (or qualified retirement plans)
maintained by the Buyer, with such benefits accruing no later than the end of
the five year period following the Closing Date ("Five Year Period"); and/or (B)
as cash paid to such employee in a lump sum or in multiple payments (e.g.,
through a severance pay plan, a deferred compensation plan, or such other
arrangement deemed appropriate to the Buyer), with such payment(s) to commence
no later than the last day of the year in which such employee's employment with
the Buyer terminates (or, if later, 90 days after such employment terminates).
The present value of the vested accrued benefits described in (A), plus the
present value of the cash payment(s) to be made pursuant to (B), must at least
equal the total amount of the Transition Benefit for the applicable Non-Union
Employee (present value, for purposes of this sentence, shall be computed in the
same manner as the present value of an "Accrued Benefit" in the Niagara Mohawk
Pension Plan is computed). Notwithstanding anything in this subsection (h) to
the contrary, (1) if an eligible Non-Union Employee voluntarily terminates
employment with the Buyer before the end of the Five Year Period or dies before
the end of the Five Year Period, the Buyer shall have the right to reduce such
employee's Transition Benefit on a pro rata basis (e.g., if such employee
voluntarily leaves employment with the Buyer after one year, the Buyer could
reduce such employee's Transition Benefit to 20 percent of the original
Transition Benefit amount).

(i) The Buyer and the Seller do not anticipate the issuance of any
notices pursuant to the WARN Act. Notwithstanding the foregoing, the Seller
agrees to timely perform and discharge all requirements under the WARN Act and
under applicable state and local laws and regulations for the notification of
its employees arising from the sale of the Purchased Assets to the Buyer up to
and including the Closing Date for those employees who will become Buyer
Employees effective as of the Closing Date. After the Closing Date, the Buyer
shall be responsible for performing and discharging all requirements under the
WARN Act and under applicable state and local laws and regulations for the
notification of its employees with respect to the Purchased Assets.

(j) The Buyer shall not be responsible for extending COBRA continuation
coverage to any employees and

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former employees of Seller who do not elect to become Buyer Employees, or to any
qualified beneficiaries of such employees and former employees, who become or
became entitled to COBRA continuation coverage before the Closing, including
those for whom the Closing occurs during their COBRA election period.

(k) The Seller or the Seller's Affiliates shall remain responsible for
paying Buyer Employees for: (a) all salary, wages, bonuses and/or incentive
compensation that were earned for time worked for the Seller or the Seller's
Affiliates prior to the Closing Date; and (b) all workers' compensation,
disability benefits or other insurance benefits that were accrued and based upon
events occurring prior to the Closing Date. The Seller or Seller's Affiliates
shall pay to the Buyer as promptly as practicable following the Closing Date for
all vacation and holiday time for Buyer's Employees which is accrued as of the
Closing Date, and the Buyer shall provide to the Buyer Employees the opportunity
either to be paid for such accrued time or to take such time.

(1) Notwithstanding any other provision in this Agreement, the Buyer
shall have no obligation of any kind, and the Seller shall indemnify and hold
the Buyer harmless from, any liability with respect to any employee of the
Seller who does not elect to become a Buyer Employee.

7.11. Risk of Loss. (a) From the date hereof through the Closing Date,
all risk of loss or damage to the property included in the Purchased Assets
shall be borne by the Seller.

(b) If, before the Closing Date, all or any portion of the Purchased
Assets is taken by eminent domain or is the subject of a pending or (to the
knowledge of the Seller) contemplated taking which has not been consummated, the
Seller shall notify the Buyer promptly in writing of such fact. If the fair
market value of the Purchased Assets that are the subject of such taking is
greater than $1,000,000, the Buyer and the Seller shall negotiate in good faith
to settle the loss resulting from such taking (including, without limitation, by
making a fair and equitable adjustment to the Purchase Price) and, upon such
settlement, consummate the transaction contemplated by this Agreement pursuant
to the terms of this Agreement.

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(c) If, before the Closing Date, all or any material portion of the
Purchased Assets is damaged or destroyed by fire or other casualty, the Seller
shall notify the Buyer promptly in writing of such fact. If such damage or
destruction would result in a loss of more than $1,000,000 and the Seller has
not notified the Buyer of its intention to cure such damage or destruction
within fifteen (15) days after its occurrence, the Buyer and the Seller shall
negotiate in good faith to settle the loss resulting from such casualty
(including, without limitation, by making a fair and equitable adjustment to the
Purchase Price) and, upon such settlement, consummate the transactions
contemplated by this Agreement pursuant to the terms of this Agreement.

(d) If a taking or damage or destruction in (b) or (c) above shall
affect $1,000,000 or less in value of the Purchased Assets, the Buyer shall be
entitled to any compensation with respect to a taking and any insurance proceeds
with respect to damage or destruction.

7.12. Tax Clearance Certificates. The Buyer shall use reasonable
efforts to provide or obtain from any taxing authority any certificate, permit,
license, or other document necessary to mitigate, reduce or eliminate any Taxes
(including additions thereto or interest and penalties thereon) that otherwise
would be imposed with respect to the transactions contemplated in this
Agreement.

7.13. NYSERDA Compliance. Following the Closing, the Buyer agrees to
comply with the Seller's obligations with respect to the ownership and operation
of the Purchased Assets set forth in the participation agreements and tax
regulatory agreements listed on Schedule 7.13.

7.14. Units 63 and 64. Within two years, following the date hereof, the
Buyer agrees to repower or retire Units 63 and 64 at Huntley Steam Station. Upon
the retirement of Unit 63 or Unit 64, the Buyer shall provide the Seller the
right of first negotiation with respect to acquiring such Units' NOx credits.

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ARTICLE VIII

CONDITIONS

8.1. Conditions to Each Party's Obligations to Effect the Transaction.
The respective obligations of each party to effect the sale of the Purchased
Assets shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions:

(a) The waiting period under the HSR Act applicable to the consummation
of the sale of the Purchased Assets contemplated hereby shall have expired or
been terminated;

(b) No preliminary or permanent injunction or other order or decree by
any federal or state court which prevents the consummation of the sale of the
Purchased Assets contemplated hereby shall have been issued and remain in effect
(each party agreeing to use reasonable best efforts to have any such injunction,
order or decree lifted) and no statute, rule or regulation shall have been
enacted by any State or Federal government or governmental agency in the United
States which prohibits the consummation of the sale of the Purchased Assets;

(c) All Federal, State and local government consents and approvals
required for the consummation of the sale of the Purchased Assets and the Seller
Required Regulatory Approvals and the Buyer Required Regulatory Approvals, shall
have been obtained or become Final Orders (a "Final Order" for all purposes of
this Agreement means a final order after all opportunities for rehearing are
exhausted (whether or not any appeal thereof is pending) that has not been
revised, stayed, enjoined, set aside, annulled or suspended, with respect to
which any required waiting period has expired; and as to which all conditions to
effectiveness prescribed therein or otherwise by law, regulation or order have
been satisfied) and such Final Orders shall not impose materially adverse terms
or conditions on either the Seller or the Buyer, provided that either such party
may only invoke the foregoing condition if the terms or conditions have such a
material adverse effect on the benefits expected to be derived from the
consummation of the transactions contemplated hereby that such party reasonably
would not have been expected to enter into this Agreement if such terms or
conditions had been known as of the date hereof; and

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(d) All consents and approvals for the consummation of the sale of the
Purchased Assets contemplated hereby required under the terms of any note, bond,
mortgage, indenture, contract or other agreement to which the Seller or the
Buyer, or any of their subsidiaries, is a party shall have been obtained, other
than those which if not obtained, would not, in the aggregate, create a Material
Adverse Effect.

8.2. Conditions to Obligations of the Buyer. The obligation of the
Buyer to effect the purchase of the Purchased Assets contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
the following additional conditions:

(a) There shall not have occurred and be continuing a Material Adverse
Effect;

(b) The Seller shall have performed and complied with in all material
respects the covenants and agreements contained in this Agreement that are
required to be performed and complied with by the Seller on or prior to the
Closing Date, and the representations and warranties of the Seller set forth in
this Agreement shall be true and correct as of the date of this Agreement and as
of the Closing Date as though made at and as of the Closing Date;

(c) There shall be no Encumbrances on the Purchased Assets by virtue of
the Indenture;

(d) The Buyer shall have received certificates from authorized officers
of the Seller, dated the Closing Date, to the effect that, to the best of such
officers' knowledge, the conditions set forth in Sections 8.2(a), (b) and (c)
have been satisfied;

(e) The Buyer shall have received an opinion of the general counsel of
the Seller, dated the Closing Date and satisfactory in form and substance to
the Buyer and its counsel, substantially to the effect that:

(1) The Seller is a corporation duly organized, existing and in
good standing under the laws of New York and the seller has the corporate
power and authority to execute and deliver this Agreement and the
Ancillary Agreements and to consummate the transactions contemplated hereby

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and thereby; and the execution and delivery of this Agreement and such
Ancillary Agreements and the consummation of the sale of the Purchased
Assets contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of the Seller;

(2) This Agreement and the Ancillary Agreements have been duly
executed and delivered by the Seller and (assuming that the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are
obtained) are valid and binding obligations of the Seller, enforceable
against the Seller in accordance with their terms, (A) subject to the
Bankruptcy and Equity Exception and (B) except that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;

(3) The execution and delivery and performance of this
Agreement and the Ancillary Agreements by the Seller do not conflict with
the Certificate of Incorporation or Bylaws, as currently in effect, of the
Seller; and

(4) No declaration, filing or registration with, or notice to,
or authorization, consent or approval of any governmental authority is
necessary for the consummation by the Seller of the Closing other than (i)
the Seller Required Regulatory Approvals, all of such Seller Required
Regulatory Approvals hereunder having been obtained and being in full force
and effect with such terms and conditions as shall have been imposed by any
applicable governmental authority, and (ii) such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not
obtained or made, would not, in the aggregate create a Material Adverse
Effect.

As to any matter contained in such opinions which involves the laws of
any jurisdiction other than the Federal laws of the United States or the laws of
the State of

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New York, such counsel may rely upon opinions of counsel admitted in such other
jurisdictions. Any opinions relied upon by such counsel as aforesaid shall be
delivered together with the opinion of such counsel. Such opinions may expressly
rely as to matters of fact upon certificates furnished by the Seller and
appropriate officers and directors of the Seller and by public officials;

(f) The Buyer shall have received the qualifications or approvals set
forth in Section 6.3(b)(i) and (ii) hereof;

(g) The Buyer shall have obtained all material Environmental Permits
and material Permits; and

(h) The Buyer shall be able to obtain New York Title Insurance.

8.3. Conditions to Obligations of the Seller. The obligation of the
Seller to effect the sale of the Purchased Assets contemplated by this Agreement
shall be subject to the fulfillment at or prior to the Closing Date of the 
following additional conditions:

(a) The Buyer shall have performed in all material respects its
covenants and agreements contained in this Agreement which are required to be
performed on or prior to the Closing Date;

(b) The representations and warranties of the Buyer set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of
the Closing Date as though made at and as of the Closing Date;

(c) The Seller shall have received a certificate from an authorized
officer of the Buyer, dated the Closing Date, to the effect that, to the best of
such officer's knowledge, the conditions set forth in Sections 8.3(a) and (b)
have been satisfied;

(d) The Buyer shall have assumed, as set forth in Section 7.10, the
Collective Bargaining Agreement; and

(e) The Seller shall have received an opinion from the general counsel
of the Buyer, dated the Closing

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Date and satisfactory in form and substance to the Seller and their counsel,
substantially to the effect that:

(1) The Buyer is a corporation duly organized, existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to execute and deliver this Agreement and the Ancillary
Agreements and to consummate the transactions contemplated hereby and
thereby; and the execution and delivery of this Agreement and such
Ancillary Agreements and the consummation of the sale of the Purchased
Assets contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of the Buyer;

(2) This Agreement and the Ancillary Agreements have been duly
executed and delivered by the Buyer and (assuming that the Seller Required
Regulatory Approvals and the Buyer Required Regulatory Approvals are
obtained) are valid and binding obligations of the Buyer, enforceable
against the Buyer in accordance with their terms, (A) subject to the
Bankruptcy and Equity Exception and (B) except that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought;

(3) The execution and delivery and performance of this
Agreement and the Ancillary Agreements by the Buyer does not conflict with
the Certificate of Incorporation or Bylaws, as currently in effect, of the
Buyer; and

(4) No declaration, filing or registration with, or notice
to, or authorization, consent or approval of any governmental authority is
necessary for the consummation by the Buyer of the Closing other than the
Buyer Required Regulatory Approvals, all of such Buyer Required Regulatory
Approvals having been obtained and being in full force and effect with such
terms and conditions as shall have been imposed by any applicable
governmental authority.

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As to any matter contained in such opinion which involves the laws of
any jurisdiction other than the federal laws of the United States and Delaware,
such counsel may rely upon opinions of counsel admitted in such other
jurisdictions. Any opinions relied upon by such counsel as aforesaid shall be
delivered together with the opinion of such counsel. Such opinion may expressly
rely as to matters of facts upon certificates furnished by appropriate officers
and directors of the Buyer and its subsidiaries and by public officials.

ARTICLE IX

INDEMNIFICATION

9.1. Indemnification. (a) The Seller will indemnify, defend and hold
harmless the Buyer from and against any and all claims, demands or suits (by any
Person), losses, liabilities, damages (including consequential or special
damages), obligations, payments, costs and expenses (including, without
limitation, the costs and expenses of any and all actions, suits, proceedings,
assessments, judgments, settlements and compromises relating thereto and
reasonable attorneys' fees and reasonable disbursements in connection therewith)
(each, an "Indemnifiable Loss"), asserted against or suffered by the Buyer
relating to, resulting from or arising out of (i) any breach by the Seller of
any covenant or agreement of the Seller contained in this Agreement or the
representations and warranties contained in Sections 5.1, 5.2 or 5.3 hereof,
(ii) the Excluded Liabilities, (iii) noncompliance by the Seller with any bulk
sales or transfer laws as provided in Section 11.11 or (iv) the Indemnifiable
Liens.

(b) The Buyer will indemnify, defend and hold harmless the Seller from
and against any and all Indemnifiable Losses asserted against or suffered by the
Seller relating to, resulting from or arising out of (i) any breach by the Buyer
of any covenant or agreement of the Buyer contained in this Agreement or the
representations and warranties contained in Sections 6.1, 6.2 and 6.3 hereof and
(ii) the Assumed Obligations.

(c) Any Person entitled to receive indemnification under this Agreement
(an "Indemnitee") having a claim under these indemnification provisions shall
make a good

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faith effort to mitigate and to recover all losses, damages, costs and expenses
from insurers of such Indemnitee under applicable insurance policies so as to
reduce the amount of any Indemnifiable Loss hereunder. The amount of any
Indemnifiable Loss shall be reduced (i) to the extent that Indemnitee receives
any insurance proceeds with respect to an Indemnifiable Loss and (ii) to take
into account any net Tax benefit recognized by the Indemnitee arising from the
recognition of the Indemnifiable Loss and any payment actually received with
respect to an Indemnifiable Loss.

(d) The expiration, termination or extinguishment of any covenant or
agreement shall not affect the parties' obligations under this Section 9.1 if
the Indemnitee provided the Person required to provide indemnification under
this Agreement (the "Indemnifying Party") with proper notice of the claim or
event for which indemnification is sought prior to such expiration, termination
or extinguishment.

(e) The rights and remedies of the Seller and the Buyer under this
Article IX are exclusive and in lieu of any and all other rights and remedies
which the Seller and the Buyer may have under this Agreement or otherwise for
monetary relief with respect to (i) any breach or failure to perform any
covenant or agreement set forth in this Agreement or (ii) the Assumed
Obligations or the Excluded Liabilities, as the case may be.

(f) The Buyer and the Seller each agree that notwithstanding any
provisions in this Agreement to the contrary, all parties to this Agreement
retain their remedies at law or in equity with respect to willful or intentional
breaches of this Agreement.

(g) Any indemnity payment under this Agreement shall be treated as an
adjustment to the Purchase Price for tax purposes.

9.2. Defense of Claims. (a) If any Indemnitee receives notice of the
assertion of any claim or of the commencement of any claim, action, or
proceeding made or brought by any Person who is not a party to this Agreement or
an Affiliate of a party to this Agreement (a "Third Party Claim") with respect
to which indemnification is to be sought from an Indemnifying Party, the
Indemnitee will give such Indemnifying party reasonably prompt written notice
thereof, but in any event not later than ten (10) calendar

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days after the Indemnitee's receipt of notice of such Third Party Claim. Such
notice shall describe the nature of the Third Party Claim in reasonable detail
and shall indicate the estimated amount, if practicable, of the Indemnifiable
Loss that has been or may be sustained by the Indemnitee. The Indemnifying Party
will have the right to participate in or, by giving written notice to the
Indemnitee, to elect to assume the defense of any Third Party Claim at such
Indemnifying Party's own expense and by such Indemnifying Party's own counsel,
and the Indemnitee will cooperate in good faith in such defense at such
Indemnitee's own expense.

(b) If within ten (10) calendar days after an Indemnitee provides
written notice to the Indemnifying Party of any Third Party Claim the Indemnitee
receives written notice from the Indemnifying Party that such Indemnifying Party
has elected to assume the defense of such Third Party claim as provided in the
last sentence of Section 9.2(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; provided, however, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim
within twenty (20) calendar days after receiving notice from the Indemnitee that
the Indemnitee believes the Indemnifying Party has failed to take such steps,
the Indemnitee may assume its own defense, and the Indemnifying Party will be
liable for all reasonable expenses thereof. Without the prior written consent of
the Indemnitee, the Indemnifying Party will not enter into any settlement of any
Third Party Claim which would lead to liability or create any financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder. If a firm offer is made to settle a Third
Party claim without leading to liability or the creation of a financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder and the Indemnifying Party desires to
accept and agree to such offer, the Indemnifying Party will give written notice
to the Indemnitee to that effect. If the Indemnitee fails to consent to such
firm offer within ten (10) calendar days after its receipt of such notice, the
Indemnitee may continue to contest or defend such Third Party Claim and, in such
event, the maximum liability of the Indemnifying Party as to such Third Party
claim will be the amount of such settlement offer, plus reasonable costs and
expenses paid or incurred by the Indemnitee up to the date of such notice.

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(c) Any claim by an Indemnitee on account of an Indemnifiable Loss
which does not result from a Third Party Claim (a "Direct Claim") will be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event not later than ten (10)
calendar days after the Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party will have a period of thirty (30) calendar days within which
to respond to such Direct Claim. If the Indemnifying Party does not respond
within such thirty (30) calendar day period, the Indemnifying Party will be
deemed to have accepted such claim. If the Indemnifying Party rejects such
claim, the Indemnitee will be free to seek enforcement of its rights to
indemnification under this Agreement.

(d) If the amount of any Indemnifiable Loss, at any time subsequent to
the making of an indemnity payment in respect thereof, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or pursuant
to any claim, recovery, settlement or payment by or against any other entity,
the amount of such reduction, less any costs, expenses or premiums incurred in
connection therewith (together with interest thereon from the date of payment
thereof at the prime rate then in effect of the Bank of Boston), will promptly
be repaid by the Indemnitee to the Indemnifying Party. Upon making any indemnity
payment, the Indemnifying Party will, to the extent of such indemnity payment,
be subrogated to all rights of the Indemnitee against any third party in respect
of the Indemnifiable Loss to which the indemnity payment relates; provided,
however, that (i) the Indemnifying Party will then be in compliance with its
obligations under this Agreement in respect of such Indemnifiable Loss and (ii)
until the Indemnitee recovers full payment of its Indemnifiable Loss, any and
all claims of the Indemnifying Party against any such third party on account of
said indemnity payment is hereby made expressly subordinated and subject in
right of payment to the Indemnitee's rights against such third party. Without
limiting the generality or effect of any other provision hereof, each such
Indemnitee and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described subrogation and
subordination rights, and otherwise cooperate in the prosecution of such claims
at the direction of the Indemnifying Party. Nothing in this Section 9.2(d) shall
be construed to

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require any party hereto to obtain or maintain any insurance coverage.

(e) A failure to give timely notice as provided in this Section 9.2
will not affect the rights or obligations of any party hereunder except if, and
only to the extent that, as a result of such failure, the party which was
entitled to receive such notice was actually prejudiced as a result of such
failure.

9.3. Tax Contest. (a) The Buyer shall notify the Seller in writing
within thirty (30) days of receipt of written notice of any Federal or State
pending or threatened audits, adjustments or assessments (a "Tax Audit"), which
may affect the Seller's liability for Taxes. If the Buyer fails to give such
notice to the Seller, the Buyer shall not be entitled to indemnification for any
Taxes arising in connection with such Tax Audit if such failure to give notice
adversely affects the Seller's right to participate in the Tax Audit.

(b) (i) If such Tax Audit relates to any taxable period ending on or
before the Closing or for any Taxes for which the Seller is liable hereunder,
the Seller shall at its expense control the defense and settlement of such Tax
Audit; (ii) if such Tax Audit relates to any taxable period beginning after the
Closing for any Taxes, including without limitation Transfer Taxes as provided
in Section 7.8(a), for which the Buyer is liable in full hereunder, the Buyer
shall at its expense control the defense and settlement of such Tax Audit,
provided the Seller shall be entitled to participate in such Tax Audit at its
expense in such defense and to employ counsel of its choice at its expense; and
(iii) if such Tax Audit relates to a taxable period, or portion thereof,
beginning before and ending after the Closing and any Tax item cannot be
identified as being a liability of either party or cannot be separated from a
Tax item for which the other party is liable, the Seller shall control the
defense and settlement of the Tax Audit.

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ARTICLE X

TERMINATION AND ABANDONMENT

10.1. Termination. (a) This Agreement may be terminated at any time
prior to the Closing Date by mutual written consent of the Seller and the
Buyer.

(b) This Agreement may be terminated by the Seller or the Buyer if the
Closing contemplated hereby shall have not occurred on or before the first
anniversary of the date of this Agreement (the "Termination Date"); provided
that the right to terminate this Agreement under this Section 10.1(b)(i) shall
not be available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before such date; and provided further, that if on the first
anniversary of the date of this Agreement the conditions to the Closing set
forth in Section 8.1(c) shall not have been fulfilled but all other conditions
to the Closing shall be fulfilled or shall be capable of being fulfilled, then
the Termination Date shall be the day which is twenty-one months from the date
of this Agreement.

(c) This Agreement may be terminated by the Seller or the Buyer if (i)
any governmental or regulatory body, the consent of which is a condition to the
obligations of the Seller and the Buyer to consummate the Closing shall have
determined not to grant its or their consent and all appeals of such
determination shall have been taken and have been unsuccessful, (ii) one or more
courts of competent, jurisdiction in the United States or any State shall have
issued an order, judgment or decree permanently restraining, enjoining or
otherwise prohibiting the Closing, and such order, judgment or decree shall have
become final and nonappealable or (iii) any statute, rule or regulation shall
have been enacted by any State or Federal government or governmental agency in
the United States which prohibits the consummation of the Closing.

(d) This Agreement may be terminated by the Buyer, if there has been a
material violation or breach by the Seller of any agreement, representation or
warranty contained in this Agreement which has rendered the satisfaction of any
condition to the obligations of the

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Buyer to effect the Closing impossible and such violation or breach has not been
waived by the Buyer.

(e) This Agreement may be terminated by the Seller, if there has been a
material violation or breach by the Buyer of any agreement, representation or
warranty contained in this Agreement which has rendered the satisfaction of any
condition to the obligations of the Seller to effect the Closing impossible and
such violation or breach has not been waived by the Seller.

(f) This Agreement may be terminated by the Seller or the Buyer in
accordance with the provisions of Section 7.11(b) or (c).

10.2. Procedure and Effect of Termination. In the event of termination
of this Agreement and abandonment of the transactions contemplated hereby by
either or both of the parties pursuant to Section 10.1, written notice thereof
shall forthwith be given by the terminating party to the other party and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto. If this 
Agreement is terminated as provided herein:

(a) Said termination shall be the sole remedy of the parties hereto 
with respect to breaches of any agreement, representation or warranty contained
in this Agreement and none of the parties hereto nor any of their respective
trustees, directors, officers or Affiliates, as the case may be, shall have any
liability or further obligation to the other party or any of their respective
trustees, directors, officers or Affiliates, as the case may be, pursuant to
this Agreement, except in each case as stated in this Section 10.2 and in
Sections 7.2(b), 7.3 and 7.7.

(b) All filings, applications and other submissions made pursuant to
this Agreement, to the extent practicable, shall be withdrawn from the agency or
other Person to which they were made.

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ARTICLE XI

MISCELLANEOUS PROVISIONS

11.1.  Amendment and Modification.  Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
the Seller and the Buyer.

11.2.  Waiver of Compliance; Consents.  Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any
obligation, covenant, agreement or condition herein may be waived by the party
entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Notwithstanding anything in this Agreement to the contrary, the
condition set forth in Section 8.3(d) cannot be waived by the Seller without the
consent of the IBEW.

11.3.  No Survival.  Subject to the provisions of Section 9.2, each and
every representation, warranty and covenant contained in this Agreement (other
than the covenants contained in Sections 3.2, 3.2, 3.4, 7.2, 7.3, 7.4, 7.7, 7.8,
7.10, 7.12, 7.13 and 7.14 and in Articles IX and XI (which covenants shall
survive in accordance with their terms) and other than the representations and
warranties contained in Sections 5.1, 5.2 and 5.3 (which representations and
warranties shall survive for eighteen months from the Closing)) shall expire
with, and be terminated and extinguished by the consummation of the sale of the
Purchased Assets and the transfer of the Assumed Obligations pursuant to this
Agreement and such representations, warranties and covenants shall not survive
the Closing Date; and none of the Seller, the Buyer or any officer, director,
trustee or Affiliate of any of them shall be under any liability whatsoever with
respect to any such representation, warranty or covenant.

11.4.  Notices.  All notices an other communications hereunder shall be
in writing an shall be deemed given if delivered personally or by facsimile
transmission, telexed or mailed by overnight courier or registered or certified
mail (return receipt requested),

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postage prepaid, to the parties at the following address (or at such other
address for a party as shall be specified by like notice; provided that notices
of a change of address shall be effective only upon receipt thereof):

(a)  If to the Seller, to:

Niagara Mohawk Power Corporation
300 Erie Boulevard West
Syracuse, NY  13202
Facsimile:  (315) 428-5802
Attention:  Michael J. Kelleher

with a copy to:

Sullivan & Cromwell
1701 Pennsylvania Avenue, N.W.
Washington, D.C.  20006
Facsimile:  (202) 293-6330
Attention:  Janet T. Geldzahler, Esq.

(b)  If to the Buyer, to:

NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN  55403-2445
Facsimile:  (612) 373-5430
Attention:  Craig Mataczynski

with a copy to:
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, MN  55402-1498
Facsimile:  (612) 340-8738
Attention:  Frank H. Voigt

11.5.  Assignment.  This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by an party
hereto, including by operation of law without the prior written consent of the
other party, nor is this Agreement intended to confer upon any other Person
except the parties hereto any rights or remedies hereunder. Notwithstanding the
foregoing, no provision of this Agreement shall create any third party

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beneficiary rights in any employee or former employee of the Seller (including
any beneficiary or dependent thereof) in respect of continued employment or
resumed employment, and no provision of this Agreement shall create any rights
in any such Persons in respect of any benefits that may be provided, directly
or indirectly, under any employee benefit plan or arrangement except as
expressly provided for thereunder. Notwithstanding the foregoing, (i) the Buyer
may assign all of its rights and obligations hereunder to any of its wholly
owned Subsidiaries (direct or indirect) provided but no such assignment will
release the Buyer from any liabilities or obligations hereunder, and (ii) the
Buyer or its permitted assignee may assign, transfer, pledge or otherwise
dispose of its rights and interests hereunder to a trustee or lending
institution (s) for the purposes of financing or refinancing, or by way of
assignments, transfers, conveyances or dispositions in lieu thereof; provided,
however, that no such assignment or disposition shall relieve or in any way
discharge the Buyer or such assignee from the performance of its duties and
obligations under this Agreement. The Seller agrees to execute and deliver such
documents as may be reasonably necessary to accomplish any such assignment,
transfer, conveyance, pledge or disposition of rights hereunder so long as the
Seller's rights under this Agreement are not thereby altered, amended,
diminished or otherwise impaired.

11.6.  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable New York principles of
conflicts of law) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies, except where New York
law is preempted by federal law in which event federal law shall govern.

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

11.8.  Interpretation.  The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.

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11.9.  Schedules and Exhibits.  All Exhibits and Schedules referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.

11.10.  Entire Agreement.  This Agreement, the Confidentiality
Agreement and the Ancillary Agreements including the Exhibits, Schedules,
documents, certificates and instruments referred to herein or therein, embody
the entire agreement and understanding of the parties hereto in respect of the
transactions contemplated by this Agreement. There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein or therein.  It is expressly
acknowledged and agreed that there are no restrictions, promises,
representations, warranties, covenants or under takings contained in any
material made available to the Buyer pursuant to the terms of the
Confidentiality Agreement (including the Preliminary Information Memorandum,
dated April 1998, the Information Memorandum, dated May 1998, or the Request for
Proposal, dated July 1998, previously made available to the Buyer by the
Seller, Merrill Lynch & Co. and Donaldson, Lufkin & Jenrette Securities
Corporation). This Agreement supersedes all prior agreements and understandings
between the parties with respect to such transactions other than the
Confidentiality Agreement.

11.11.  Bulk Sales or Transfer Laws.  The Buyer acknowledges that the
Seller will not comply with the provision of any bulk sales or transfer laws
(other than sec. 1141(c) of the New York State Tax Law) of any jurisdiction in
connection with the transactions contemplated by this Agreement. The Buyer
hereby waives compliance by this Seller with the provisions of the bulk sales or
transfer laws of all applicable jurisdictions.

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IN WITNESS WHEREOF, the Seller and the Buyer have caused this agreement
to be signed by their respective duly authorized officers as of the date first
above written.

NIAGARA MOHAWK POWER CORPORATION

By: /s/ Michael J. Kelleher
-----------------------------------------
Name:   Michael J. Kelleher
Title:  Vice President Financial Planning

NRG ENERGY, INC.

By: /s/ Craig A. Mataczynski
-----------------------------------------
Name:   Craig A. Mataczynski
Title:  President

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1
EXHIBIT 10.20

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

FIRST AMENDMENT

to

WHOLESALE STANDARD OFFER SERVICE AGREEMENT

between

Blackstone Valley Electric Company,

Eastern Edison Company,

Newport Electric Corporation,

and

NRG Power Marketing Inc.

Dated as of January 15, 1999

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

2

FIRST AMENDMENT TO

WHOLESALE STANDARD OFFER SERVICE AGREEMENT

This FIRST AMENDMENT TO WHOLESALE STANDARD OFFER SERVICE AGREEMENT,
dated as of January 15, 1999 (this "Amendment"), among BLACKSTONE VALLEY
ELECTRIC COMPANY, EASTERN EDISON COMPANY, NEWPORT ELECTRIC CORPORATION, and NRG
POWER MARKETING INC.

WITNESSETH:

WHEREAS, the parTies to this Amendment have entered into a Wholesale
Standard Offer Service Agreement, dated as of October 13, 1998 (the "Wholesale
Standard Offer Service Agreement"; capitalized terms used but not defined
herein shall have the respective meanings set forth in the Wholesale Standard
Offer Service Agreement).

WHEREAS, the parties to this Amendment wish to amend the Wholesale
Standard Offer Service Agreement pursuant to the terms hereof.

NOW, THEREFORE, in consideration of the premises and of the agreements
contained herein, the parties hereto agree as follows:

SECTION 1. AMENDMENTS TO WHOLESALE STANDARD OFFER SERVICE AGREEMENT.
Article 7 of the Wholesale Standard Offer Service Agreement is hereby amended by
deleting clause (1) in its entirety and inserting the following:

"(1) Except as otherwise provided in this Article, Supplier shall at
all times during the term of this Agreement (i) maintain an investment grade
rating on its senior debt securities, as determined by Standard & Poor's
Corporation, Moody's Investors Service, Inc. or another nationally recognized
rating service reasonably acceptable to the Companies and (ii) maintain total
assets of at least $500,000,000 times the percentage of the Companies' Standard
Offer Service which is initially satisfied by the Wholesale Standard Offer
Service under this Agreement (the foregoing items (i) and (ii) being herein
referred to as the "Creditworthiness Criteria"). If on the Commencement Date of
Service or at any time during the term of this Agreement the Supplier shall fail
to meet the Creditworthiness Criteria, then the Supplier shall promptly deliver
to the Companies an unconditional and irrevocable guaranty of its obligations
under this Agreement in form and substance acceptable to the Companies and
issued by an entity meeting the Creditworthiness Criteria (a "Guaranty").
Supplier or the issuer of the Guaranty, as applicable, shall certify to the
Companies no less frequently than the end of every calendar quarter that it
meets the Creditworthiness Criteria (which certification shall include such
calculations and evidence as the Companies shall reasonably request from time to
time), and shall deliver financial statements to the Companies certified by a
firm of certified public

3

2

accountants of national standing at least annually within sixty (60) days
following the end of the Supplier's or the guarantor's fiscal year."

SECTION 2. CORRECTION. All references to "NRG Energy Power Marketing
Inc." or "NRG Power Marketing, Inc." are deemed to be references to "NRG Power
Marketing Inc.".

SECTION 3. REFERENCE TO AND EFFECT ON THE WHOLESALE STANDARD OFFER
SERVICE AGREEMENT. (a) Each reference in the Wholesale Standard Offer Service
Agreement to "this Agreement", "hereunder", "hereof", and "herein", and in the
Asset Purchase Agreement to the "Wholesale Standard Offer Service Agreement", or
words of like import referring to the Wholesale Standard Offer Service Agreement
shall mean and be a reference to the Wholesale Standard Offer Service Agreement,
as amended hereby.

(b) Except as specifically amended above, the Wholesale Standard Offer
Service Agreement shall remain in full force and effect.

(c) This Amendment shall be limited precisely as written and, except as
expressly provided herein, shall not be deemed to (i) be a consent to any waiver
or modification of any other term or condition of the Wholesale Standard Offer
Service Agreement or any of the instruments or documents referred to therein or
(ii) prejudice any right or rights which the parties may now have or may have in
the future under or in connection with the Wholesale Standard Offer Service
Agreement or any of the instruments or documents referred to therein.

SECTION 4. EFFECTIVENESS. This Amendment shall become effective
immediately upon the execution and delivery by each party hereto of a
counterpart of this Amendment.

SECTION 5. GOVERNING LAW. THIS AMEMMIENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS.

SECTION 6. COUNTERPARTS. This Amendment may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which together shall constitute one and the same instrument.

[Remainder of page left intentionally blank]

4

3

IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed and delivered on its behalf by its duly authorized
representative on the date first above written.

BLACKSTONE VALLEY ELECTRIC COMPANY

By:  /s/ KEVIN A. KIRBY
--------------------------
Name:  Kevin A. Kirby
Title: Vice President

EASTERN EDISON COMPANY

By:  /s/ KEVIN A. KIRBY
--------------------------
Name:  Kevin A. Kirby
Title: Vice President

NEWPORT ELECTRIC CORPORATION

By:  /s/ KEVIN A. KIRBY
--------------------------
Name:  Kevin A. Kirby
Title: Vice President

NRG POWER MARKETING INC.

By:   /s/ DANIEL HUDSON
--------------------------
Name:  Daniel Hudson
Title: Vice President

1
EXHIBIT 10.21

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

GENERATING PLANT
AND GAS TURBINE
ASSET PURCHASE AND SALE AGREEMENT

FOR

ARTHUR KILL GENERATING PLANTS

LOCATED AT STATEN ISLAND, RICHMOND COUNTY, NEW YORK

AND

ASTORIA GAS TURBINES

LOCATED AT ASTORIA, QUEENS COUNTY, NEW YORK

By and Between

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

and

NRG ENERGY, INC.

Dated as of January 27, 1999

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

2

TABLE OF CONTENTS

Page

ARTICLE I

Definitions
SECTION 1.01. Definitions ...................................................  1
SECTION 1.02. Accounting Terms .............................................. 14

ARTICLE II

Purchase and Sale; Assumption of Certain Liabilities

SECTION 2.01.  Purchase and Sale ............................................ 15
SECTION 2.02.  Auctioned Assets and Retained Assets ......................... 15
SECTION 2.03.  Assumed Obligations and Retained
Liabilities ................................................ 19
SECTION 2.04.  Third Party Consents ......................................... 24

ARTICLE III

Purchase Price

SECTION 3.01. Purchase Price ............................................... 24
SECTION 3.02. Post-Closing Adjustment ...................................... 24
SECTION 3.03. Allocation of Purchase Price ................................. 26

ARTICLE IV

The Closing

SECTION 4.01.  Time and Place of Closing .................................... 27
SECTION 4.02.  Payment of Purchase Price and Estimated
Adjustment Amount .......................................... 28

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ARTICLE V

Representations and Warranties of Seller

SECTION 5.01. Organization; Qualification ................................... 28
SECTION 5.02. Authority Relative to This Agreement .......................... 28
SECTION 5.03. Consents and Approvals; No Violation .......................... 28
SECTION 5.04. Year 2000 ..................................................... 30
SECTION 5.05. Personal Property ............................................. 30
SECTION 5.06. Real Estate ................................................... 30
SECTION 5.07. Leases ........................................................ 30
SECTION 5.08. Certain Contracts and Arrangements ............................ 30
SECTION 5.09. Legal Proceedings ............................................. 31
SECTION 5.10. Permits; Compliance with Law .................................. 31
SECTION 5.11. Environmental Matters ......................................... 32
SECTION 5.12. Labor Matters ................................................. 33
SECTION 5.13. ERISA; Benefit Plans .......................................... 33
SECTION 5.14. Taxes ......................................................... 34
SECTION 5.15. Independent Engineering Assessments;
Condition of Auctioned Assets .............................. 35
SECTION 5.16. Undisclosed Liabilities ....................................... 35
SECTION 5.17. Brokers ....................................................... 36
SECTION 5.18. Insurance ..................................................... 36

ARTICLE VI

Representations and Warranties of Buyer

SECTION 6.01. Organization .................................................. 36
SECTION 6.02. Authority Relative to This Agreement .......................... 37
SECTION 6.03. Consents and Approvals; No Violation .......................... 37
SECTION 6.04. Brokers ....................................................... 39

ARTICLE VII

Covenants of the Parties

SECTION 7.01. Conduct of Business Relating to the
Auctioned  Assets .......................................... 39
SECTION 7.02. Access to  Information ........................................ 41
SECTION 7.03. Consents and Approvals; Transferable
Permits .................................................... 43
SECTION 7.04. Further Assurances ............................................ 44
SECTION 7.05. Public Statements ............................................. 46
SECTION 7.06. Tax Matters ................................................... 46
SECTION 7.07. Bulk Sales or Transfer Laws ................................... 47
SECTION 7.08. Storage ....................................................... 47

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SECTION 7.09. Information Resources ......................................... 48
SECTION 7.10. Witness Services .............................................. 48
SECTION 7.11. Consent Orders ................................................ 49
SECTION 7.12. Nitrogen Oxide Allowances ..................................... 49
SECTION 7.13. Trade Names ................................................... 49

ARTICLE VIII

Conditions

SECTION 8.01. Conditions Precedent to Each Party's Obligation To Effect 
the Purchase and Sale ...................................... 49
SECTION 8.02. Conditions Precedent to Obligation of Buyer To Effect the 
Purchase and Sale .......................................... 50
SECTION 8.03. Conditions Precedent to Obligation of Seller To Effect the 
Purchase and Sale .......................................... 52

ARTICLE IX

Employee Matters

SECTION 9.01. Employee Matters .............................................. 54
SECTION 9.02. Continuation of Equivalent Benefit
Plans/Credited Service ..................................... 55
SECTION 9.03. Pension Plan .................................................. 56
SECTION 9.04. 401(k) Plan ................................................... 58
SECTION 9.05. Welfare Plans ................................................. 59
SECTION 9.06. Short- and Long-Term Disability ............................... 60
SECTION 9.07. Life Insurance and Accidental Death
and Dismemberment Insurance................................ 60
SECTION 9.08. Severance ..................................................... 60
SECTION 9.09. Workers Compensation .......................................... 62

ARTICLE X

Indemnification and Dispute Resolution

SECTION 10.01. Indemnification .............................................. 62
SECTION 10.02. Third Party Claims Procedures ................................ 65

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ARTICLE XI

Termination

SECTION 11.01.  Termination. . . . . . . . . . . . . . . . . . . . . . . . . 66

ARTICLE XII

Miscellaneous Provisions

SECTION 12.01.  Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 12.02.  Amendment and Modification; Extension;
Waiver  . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 12.03.  No Survival of Representations or
Warranties  . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 12.04.  Notices  . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 12.05.  Assignment; No Third Party
Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 12.06.  Governing  Law   . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 12.07.  Counterparts  . . . . . . . . .  .  .  . . . . . . . . . . . 69
SECTION 12.08.  Interpretation . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 12.09.  Jurisdiction and Enforcement . . . . . . . . . . . . . . . . 70
SECTION 12.10.  Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.11.  Severability . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.12.  Conflicts  . . . . . . . . . . . . . . . . . . . . . . . . . 72

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SCHEDULES AND EXHIBITS

Schedule 2.02(a)(ii)       Spare Parts
Schedule 2.02(a)(iii)(A)   Buyer Personal Property Located on
Buyer Real Estate
Schedule 2.02(a)(iii)(B)   Buyer Personal Property Located on
Seller Real Estate
Schedule 2.02(a)(iv)       Assigned Contracts
Schedule 2.02(a)(v)        Transferable Permits
Schedule 2.02(a)(vi)       S02 Allowances
Schedule 2.02(b)(ii)(A)    Seller Personal Property Located on
Buyer Real Estate
Schedule 2.02(b)(ii)(C)    Communications Equipment
Schedule 2.03(a)(iv)       Seller Consent Orders
Schedule 2.03(b)(iii)(C)   Retained Environmental Liabilities
Schedule 5.03(a)           Contracts Requiring Third Party
Consents
Schedule 5.08(a)           Material Contracts
Schedule 5.09              Legal Proceedings
Schedule 5.10(a)(i)        Exceptions Under Permits
Schedule 5.10(a)(ii)       Non-Environmental Violations
Schedule 5.10(b)           Nontransferable Permits and
Environmental Permits
Schedule 5.11              Environmental Matters
Schedule 5.13              Benefit Plans
Schedule 5.15(a)           Exceptions to Independent
Engineering Assessment
Schedule 5.15(b)           Changes to Auctioned Assets
Schedule 5.16              Other Undisclosed Liabilities
Schedule 9.01(a)           Job Titles
Schedule 9.01(b)           Collective Bargaining Agreements

Exhibit A-1                Form of Arthur Kill Zoning Lot
Development Agreement between
Seller and Buyer
Exhibit A-2                Form of Astoria Zoning Lot
Development Agreement between
Seller and Astoria Buyer
Exhibit A-3                Form of Astoria Zoning Lot
Development Agreement between
Seller and Buyer
Exhibit B-1                Form of Deed of Conveyance for
Richmond County
Exhibit B-2                Form of Deed of Conveyance for
Queens County
Exhibit C                  Form of FIRPTA Affidavit
Exhibit D                  Form of Opinion of John D.
McMahon, Esq., General Counsel of
Seller
Exhibit E                  Form of Opinion of Counsel to Buyer

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7

Exhibit F                  Summary of Terms and Conditions for 
License for A-11 Dock between
Seller and Buyer
Exhibit G                  Form of Transition Capacity 
Agreement between Seller and Buyer
Exhibit H                  Form of Arthur Kill Declaration of 
Subdivision Easements
Exhibit I                  Form of Astoria Declaration of 
Subdivision Easements
Exhibit J                  Form of Guarantee Agreement
Exhibit K                  Form of Opinion of Counsel to Guarantor

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8

GENERATING PLANT AND GAS TURBINE ASSET
PURCHASE AND SALE AGREEMENT (including the
Schedules hereto, this "Agreement"), dated as 
of January 27, 1999, by and between 
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., 
a New York corporation ("Seller"), and NRG 
ENERGY, INC., a Delaware corporation ("Buyer",
collectively with Seller, the "Parties").

WHEREAS Seller has offered the Auctioned Assets (as defined herein) for
sale at auction pursuant to the Order Authorizing the Process for Auctioning of
Generation Plant issued by the PSC (as defined herein) and effective as of July
21, 1998; and

WHEREAS Buyer desires to purchase, and Seller desires to sell, the
Auctioned Assets upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the Parties agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Definitions. (a) As used in this Agreement, the following
terms have the following meanings:

"A-11 License" means the license from Seller to Buyer in respect of the
A-11 dock at Astoria, the material terms of which shall be substantially as set
forth in Exhibit F.

"Accountants" shall have the meaning set forth in Section 3.02(b).

"Adjustment Amount" shall have the meaning set forth in Section
3.02(a).

"Adjustment Date" shall have the meaning set forth in Section 3.02(c).

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2

"Adjustment Statement" shall have the meaning set forth in Section
3.02(a).

"Affected Employees" shall have the meaning set forth in Section
9.01(a).

"Affected Union Employees" shall have the meaning set forth in Section
9.01(b).

"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended.

"Agreement" shall have the meaning set forth in the Preamble.

"Allocation" shall have the meaning set forth in Section 3.03.

"Ancillary Agreements" means the Continuing Site Agreements, the
Declaration of Easements Agreements, the Declarations of Subdivision Easements,
the Zoning Lot Development Agreements, the Transition Capacity Agreement, the
deeds contemplated by Section 8.02(e)(i) and any other agreement to which Buyer
and Seller are party and which is expressly identified by its terms as an
Ancillary Agreement hereunder.

"Applicable Law" shall have the meaning set forth in Section 3.03.

"Arthur Kill Continuing Site Agreement" means the Arthur Kill
Continuing Site Agreement dated as of even date herewith between Seller and
Buyer.

"Arthur Kill Declaration of Easements Agreement" means the Arthur
Kill Declaration of Easements Agreement dated as of even date herewith between
Seller and Buyer.

"Arthur Kill Declaration of Subdivision Easements" means the Arthur
Kill Declaration of Subdivision Easements to be made by Seller substantially in
the form of Exhibit H, except for changes required by any Governmental Authority
to the extent that no such change materially and adversely impairs the continued
use and operation of the Auctioned Assets as currently conducted.

"Arthur Kill Zoning Lot Development Agreement" means the Arthur Kill
Zoning Lot Development Agreement between Seller and Buyer in the form of Exhibit
A-1.

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3

"Assumed Consent Order Obligations" shall have the meaning set forth in
Section 2.03 (a)(iv).

"Assumed Obligations" shall have the meaning set forth in Section
2.03(a).

"Astoria Acquiror" means the person referred to as "Buyer" under the
Generating Plant and Gas Turbine Asset Purchase and Sale Agreement for Astoria
Generating Plants, Gowanus Gas Turbines and Narrows Gas Turbines between Seller
and such person.

"Astoria Declaration of Easements" means the Astoria Declaration of
Easements by Seller dated as of even date herewith, as may be modified in
accordance with changes requested by the Astoria Acquiror to the extent that no
such change materially and adversely impairs the continued use and operation of
the Auctioned Assets as currently conducted.

"Astoria Declaration of Subdivision Easements" means the Astoria
Declaration of Subdivision Easements to be made by Seller substantially in the
form of Exhibit I, except for changes required by any Governmental Authority or
requested by the Astoria Acquiror to the extent that no such change materially
and adversely impairs the continued use and operation of the Auctioned Assets as
currently conducted.

"Astoria Gas Turbine Continuing Site Agreement" means the Astoria Gas
Turbine Continuing Site Agreement dated as of even date herewith between Seller
and Buyer.

"Astoria Zoning Lot Development Agreement" means (a) the Astoria Zoning
Lot Development Agreement between Seller and Astoria Acquiror, in the form of
Exhibit A-2, if executed and delivered prior to the Closing Date or (b) the
Astoria Zoning Lot Development Agreement between Seller and Buyer, in the form
of Exhibit A-3.

"Auctioned Assets" shall have the meaning set forth in Section 2.02
(a).

"Benefit Plans" shall have the meaning set forth in Section 5.13.

"Bidder Confidentiality Agreements" shall have the meaning set forth
in Section 7.02(b).

"Business Day" means any day other than Saturday, Sunday and any day
which is a legal holiday or a day on

11
4

which banking institutions in New York are authorized or required by law or
other action of a Governmental Authority to close.

"Buyer" shall have the meaning set forth in the Preamble.

"Buyer Assets" shall have the meaning set forth in Section 2.03(a)(x).

"Buyer Benefit Plans" shall have the meaning set forth in Section
9.02(c).

"Buyer Facilities" shall mean the "Buyer Facilities" under the Arthur
Kill Declaration of Easements Agreement, together with the "Parcel C Facilities"
under the Astoria Declaration of Easements.

"Buyer Indemnitees" shall have the meaning set forth in Section
10.01(a).

"Buyer Material Adverse Effect" shall have the meaning set forth in
Section 6.03(a).

"Buyer Real Estate" shall have the meaning set forth in Section
2.02(a)(i).

"Buyer Required Regulatory Approvals" shall have the meaning set forth
in Section 6.03(b).

"Buyer's 401(k) Plans" shall have the meaning set forth in Section
9.04(a).

"Buyer's Pension Plans" shall have the meaning set forth in Section
9.03(a).

"Buyer's Welfare Plans" shall have the meaning set forth in Section
9.05(a).

"Closing" shall have the meaning set forth in Section 4.01.

"Closing Date" shall have the meaning set forth in Section 4.01.

"Code" means the Internal Revenue Code of 1986, as amended.

"Collective Bargaining Agreements" shall have the meaning set forth in
Section 9.01(b).

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5

"Communications Equipment" means the equipment, systems, switches and
lines used in connection with voice, data and other communications activities.

"Confidentiality Agreement" means the Confidentiality Agreement dated
August 19, 1998 between Seller and Buyer.

"Continued Employee" shall have the meaning set forth in Section
9.01(a).

"Continued Non-Union Employee" shall have the meaning set forth in
Section 9.02(a).

"Continued Union Employee" shall have the meaning set forth in Section
9.01(b).

"Continuing Site Agreements" means the Arthur Kill Continuing Site
Agreement and the Astoria Gas Turbine Continuing Site Agreement.

"Contracts" shall have the meaning set forth in Section 2.02(a)(iv).

"Conveyance Plans" shall have the meaning set forth in Section
2.02(a)(i).

"Declaration of Easements Agreements" means the Arthur Kill Declaration
of Easements Agreement and the Astoria Declaration of Easements.

"Declarations of Subdivision Easements" means the Arthur Kill
Declaration of Subdivision Easements and the Astoria Declaration of Subdivision
Easements.

"Emission Reduction Credits" means credits, in units that are
established by the environmental regulatory agency with jurisdiction over the
source or facility that has obtained the credits, resulting from a reduction in
the emissions of air pollutants from an emitting source or facility (including,
and to the extent allowable under applicable law, reductions from retirements,
control of emissions beyond that required by applicable law and fuel switching),
that: (i) have been certified by NYSDEC as complying with the law and
regulations of the State of New York governing the establishment of such credits
(including that such emissions reductions are real, enforceable, permanent and
quantifiable); or (ii) have been certified by any other applicable regulatory
authority as complying with the law and regulations governing the establishment
of such credits (including that such emissions

13

6

reductions are real, enforceable, permanent and quantifiable). Emission
Reduction Credits include certified air emissions reductions, as described
above, regardless of whether the regulatory agency certifying such reductions
designates such certified air emissions reductions by a name other than
"emissions reduction credits".

"Encumbrances" means any mortgages, pledges, liens, security interests,
conditional and installment sale agreements, activity and use limitations,
exceptions, conservation easements, rights-of-way, deed restrictions,
encumbrances and charges of any kind.

"Environmental Laws" means all former, current and future Federal,
state, local and foreign laws (including common law), treaties, regulations,
rules, ordinances, codes, decrees, judgments, directives or orders (including
consent orders) and Environmental Permits, in each case, relating to pollution
or protection of the environment or natural resources, including laws relating
to Releases or threatened Releases, or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage, arrangement for
disposal, transport, recycling or handling, of Hazardous Substances.

"Environmental Liability" means all liabilities, obligations, damages,
losses, claims, actions, suits, judgments, orders, fines, penalties, fees,
expenses and costs, including: (i) remediation costs, engineering costs,
environmental consultant fees, laboratory fees, permitting fees, investigation
costs and defense costs and reasonable attorneys' fees and expenses; (if) any
claims, demands and causes of action relating to or resulting from any personal
injury (including wrongful death), property damage (real or personal) or natural
resource damage; and (iii) any penalties, fines or costs associated with the
failure to comply with any Environmental Law.

"Environmental Permits" means the permits, licenses, consents,
approvals and other governmental authorizations with respect to Environmental
Laws relating primarily to the power generation operations of the Generating
Plants or the Gas Turbines.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"ERISA Affiliate" shall have the meaning set forth in Section 5.13.

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7

"Estimated Adjustment Amount" shall have the meaning set forth in
Section 4.02.

"FERC" means the Federal Energy Regulatory Commission.

"Federal Power Act" shall have the meaning set forth in Section
5.03(b).

"Filed Seller SEC Documents" means the reports, schedules, forms,
statements and other documents filed by Seller with the Securities and Exchange
Commission since January 1, 1997, and publicly available prior to the date of
this Agreement.

"Final Allocation" shall have the meaning set forth in Section 3.03.

"GAAP" shall have the meaning set forth in Section 1.02.

"Gas Turbines" means the gas turbine units comprised of the Arthur Kill
GT1, Astoria GT2 through GT5 and GT7 through GT13.

"Generating Facilities" means the Generating Plants, the Gas Turbines
and any additional generating plants, gas turbines or other generating
facilities constructed by Buyer after the Closing Date at the site of any
Auctioned Assets.

"Generating Plants" means the two steam turbine generating units
designated as Arthur Kill units 2 and 3.

"Governmental Authority" means any court, administrative or regulatory
agency or commission or other governmental entity or instrumentality, domestic,
foreign or supranational or any department thereof.

"Guarantee Agreement" means the Guarantee Agreement to be entered into
between Guarantor and Seller substantially in the form of Exhibit J.

"Guarantor" means NRG Energy, Inc.

"Hazardous Substances" means (i) any petrochemical or petroleum
products, crude oil or any fraction thereof, ash, radioactive materials, radon
gas, asbestos in any form, urea formaldehyde foam insulation or polychlorinated
biphenyls, (ii) any chemicals, materials, substances or wastes defined as or
included in the definition of

15
8

"hazardous substances," "hazardous wastes," "hazardous materials," "restricted
hazardous materials," "extremely hazardous substances," "toxic substances,"
"contaminants" or "pollutants" or words of similar meaning and regulatory effect
contained in any Environmental Law or (iii) any other chemical, material,
substance or waste which is prohibited, limited or regulated by any
Environmental Law.

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

"Income Tax" means any Federal, state, local or foreign Tax or surtax
(i) based upon, measured by or calculated with respect to net income, profits or
receipts (including the New York State Gross Receipts Tax (including the excess
dividends tax), the New York City Public Utilities Excise Tax, any and all
municipal gross receipts Taxes, capital gains Taxes and minimum Taxes) or (ii)
based upon, measured by or calculated with respect to multiple bases (including
corporate franchise taxes) if one or more of the bases on which such Tax may be
based, measured by or calculated with respect to, is described in clause (i), in
each case, together with any interest, penalties, or additions to such Tax.

"Indemnifiable Loss" shall have the meaning set forth in Section
10.01(a).

"Indemnifying Party" shall have the meaning set forth in Section
10.01(c).

"Indemnitee" shall have the meaning set forth in Section 10.01(c).

"Independent Engineering Assessments" shall have the meaning set forth
in Section 5.15.

"Interconnection Facilities" means those items of switching equipment,
switchyard controls, protective relays and related facilities of Seller that are
used by Seller in connection with the provision of Interconnection Services.

"Interconnection Services" means the service provided by Seller to
Buyer to interconnect the Generating Facilities to the Transmission System.

"Inventory Survey" shall have the meaning set forth in Section 3.02(a).

"ISO" means the New York Independent System Operator.

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9

"Local 1-2" shall have the meaning set forth in Section 9.01(a).

"Local 1-2 Collective Bargaining Agreement" shall have the meaning set
forth in Section 9-01(a).

"Local 3" shall have the meaning set forth in Section 9.01(a).

"Local 3 Collective Bargaining Agreement" shall have the meaning set
forth in Section 9.01(a).

"Material Adverse Effect" means any change, or effect on the Auctioned
Assets, that is materially adverse to the business, operations or condition
(financial or otherwise) of the Auctioned Assets, taken as a whole, other than
(i) any change or effect resulting from changes in the international, national,
regional or local wholesale or retail energy, capacity or ancillary services
electric power markets, (ii) any change or effect resulting from changes in the
international, national, regional or local markets for fuel, (iii) any change or
effect resulting from changes in the national, regional or local electric
transmission systems, (iv) any change or effect resulting from any bid cap,
price limitation, market power mitigation measure, including the Mitigation
Measures, or other regulatory or legislative measure in respect of transmission
services or the wholesale or retail energy, capacity or ancillary services
markets adopted or approved (or failed to be adopted or approved) by FERC, the
PSC or any other Governmental Authority or proposed by any person, (v) any
change or effect resulting from any regulation, rule, procedure or order adopted
or proposed (or failed to be adopted or proposed) by or with respect to, or
related to, the ISO, (vi) any change or effect resulting from any action or
measure taken or adopted, or proposed to be taken or adopted, by any local,
state, regional, national or international reliability organization and (vii)
any materially adverse change in or effect on the Auctioned Assets which is
cured by Seller before the Closing Date.

"Mitigation Measures" shall have the meaning set forth in Section
6.03(b).

"MMS" means the Material Management System, which is an information
resources system served by Seller's mainframe computer.

"NYPA" means the Power Authority of the State of New York.

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10

"NYPA Assignment" means the assignment to be entered into by Buyer,
Seller and NYPA pursuant to which certain rights and obligations under the NYPA
Agreements shall be assigned and amended.

"NYPA Agreements" means the Post Closing Agreement dated as of December
13, 1974, between Seller and NYPA, as amended, and the Astoria Operating
Agreement dated January 5, 1981, between Seller and NYPA, as amended.

"NYSDEC" means the New York State Department of Environmental
Conservation.

"Off-Site" means any location except (i) the Auctioned Assets and (ii)
any location to or under which Hazardous Substances present or Released at the
Auctioned Assets have migrated.

"Offering Memorandum" means the Offering Memorandum dated August 1998
describing the Generating Plants and the Gas Turbines, and the materials
delivered with such Offering Memorandum, as such Offering Memorandum and such
materials may have been amended or supplemented.

"Operating Records" shall have the meaning set forth in Section
2.02(a)(viii).

"Party" shall have the meaning set forth in the Preamble.

"Permits" means the permits, licenses, consents, approvals and other
governmental authorizations (other than with respect to Environmental Laws)
relating primarily to the power generation operations of the Generating Plants
or the Gas Turbines.

"Permitted Exceptions" means (i) all exceptions, restrictions,
easements, charges, rights-of-way and monetary and nonmonetary encumbrances
which are set forth in any Permits or Environmental Permits, (ii) statutory
liens for current taxes or assessments not yet due or delinquent or the validity
of which is being contested in good faith by appropriate proceedings, (iii)
mechanics', carriers', workers', repairers' and other similar liens arising or
incurred in the ordinary course of business relating to obligations as to which
there is no default on the part of Seller or the validity of which are being
contested in good faith by appropriate proceedings, (iv) zoning, entitlement,
conservation restriction and other land use and environmental regulations by
Governmental Authorities, (v) such title matters set forth in the Certificate of
Title

18
11

No. NY981785, as amended, and the Certificate of Title No. NY981605, as amended,
in each case issued by the Title Company and which would not, individually or in
the aggregate, reasonably be expected to materially impair the continued use and
operation of the Auctioned Assets as currently conducted, (vi) all matters
disclosed on the surveys prepared by GEOD Corporation and any other facts that
would be disclosed by an accurate survey and physical inspection of the Buyer
Real Estate, (vii) the VISY Option Agreement, (viii) Encumbrances, easements or
other restrictions created pursuant to or provided for in any Ancillary
Agreement, (ix) restrictions and regulations imposed by the ISO, any
Governmental Authority or any local, state, regional, national or international
reliability council and (x) such other Encumbrances or imperfections in or
failure of title which would not, individually or in the aggregate, reasonably
be expected to materially impair the continued use and operation of the
Auctioned Assets as currently conducted.

"person" means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization or Governmental
Authority.

"PPMIS" means the Power Plant Maintenance Information System, which is
an information resources system served by Seller's mainframe computer.

"Prorated Items" shall have the meaning set forth in Section 2.03(a) 
(viii).

"Protective Relaying System" means the system relating to the
Generating Facilities comprised of components collectively used to detect
defective power system elements or other conditions of an abnormal nature,
initiate appropriate control circuit action in response thereto and isolate the
appropriate system elements in order to minimize damage to equipment and
interruption to service.

"PSC" means the New York State Public Service Commission.

"Purchase Price" shall have the meaning set forth in Section 3.01.

"Release" means any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including ambient air, surface water,

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12

groundwater, land surface or subsurface strata) or within any building, 
structure, facility or fixture.

"Restraints" shall have the meaning set forth in Section 8.01(b).

"Retained Assets" shall have the meaning set forth in Section 2.02(b).

"Retained Liabilities" shall have the meaning set forth in Section
2.03(b).

"Revenue Meters" means all meters measuring demand, energy and reactive
components, and all pulse isolation relays, pulse conversion relays and
associated totalizing and remote access pulse recorder equipment, in each case,
required to measure the transfer of energy between the Parties.

"Segregated Reimbursement Accounts" shall have the meaning set forth in
Section 9.05(b).

"Seller" shall have the meaning set forth in the Preamble.

"Seller Assets" shall have the meaning set forth in Section 2.03(b)(x).

"Seller Consent Orders" shall have the meaning set forth in Section
2.03(a)(iv).

"Seller Facilities" shall mean the "Seller Facilities" under the Arthur
Kill Declaration of Easements Agreement, together with the "Parcel A Facilities"
under the Astoria Declaration of Easements.

"Seller Indemnitees" shall have the meaning set forth in Section
10.01(b).

"Seller Real Estate" means all real property and leaseholds or other
interests in real property of Seller (including the premises on which the
Substations are located), other than Buyer Real Estate.

"Seller Required Regulatory Approvals" shall have the meaning set forth
in Section 5.03(b).

"Seller's 401(k) Plans" shall have the meaning set forth in Section
9.04(a).

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"Seller's Pension Plans" shall have the meaning set forth in Section
9.03(a).

"Seller's Reimbursement Account Plans" shall have the meaning set forth
in Section 9.05(b).

"SO2 Allowances" means allowances that have been allocated to Seller
for the Generating Plants or the Gas Turbines by the Administrator of the United
States Environmental Protection Agency under Title IV of the Clean Air Act
authorizing the emission of one ton of sulfur dioxide per allowance during or
after the year 2000.

"Substations" shall have the meaning set forth in Section 2.02(b)(i).

"Tax Benefit" means, with respect to any Indemnifiable Loss for any
person, the positive excess, if any, of the Tax liability of such person without
regard to such Indemnifiable Loss over the Tax liability of such person taking
into account such Indemnifiable Loss, with all other circumstances remaining
unchanged.

"Tax Cost" means, with respect to any indemnity payment for any person,
the positive excess, if any, of the Tax liability of such person taking such
indemnity payment into account over the Tax liability of such person without
regard to such payment, with all other circumstances remaining unchanged.

"Tax Return" means any return, report, information return or other
document (including any related or supporting information) required to be
supplied to any authority with respect to Taxes.

"Taxes" means all taxes, surtaxes, charges, fees, levies, penalties or
other assessments imposed by any United States Federal, state or local or
foreign taxing authority, including Income Tax, excise, property, sales,
transfer, franchise, special franchise, payroll, recording, withholding, social
security or other taxes, or any liability for taxes incurred by reason of
joining in the filing of any consolidated, combined or unitary Tax Returns, in
each case including any interest, penalties or additions attributable thereto;
provided, however, that "Taxes" shall not include sewer rents or charges for
water.

"Termination Date" shall have the meaning set forth in Section
11.01(b).

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"Third Party Claim" shall have the meaning set forth in Section
10.02(a).

"Title Company" means Commonwealth Land Title Insurance Company or any
other reputable title insurance company licensed to do business in New York.

"Transferable Permits" shall have the meaning set forth in Section
2.02(a)(v).

"Transferring Employee Records" shall have the meaning set forth in
Section 2.02(a)(viii).

"Transferring Employees" shall have the meaning set forth in Section
2.02(a)(viii).

"Transition Capacity Agreement" means the Transition Capacity Agreement
to be entered into between Seller and Buyer substantially in the form of Exhibit
G.

"Transmission System" shall have the meaning set forth in Section 2.02
(b)(i).

"VISY" means VISY Paper (NY), Inc.

"VISY Option Agreement" means the Option Agreement, executed as of
December 28, 1995, between Seller and VISY.

"VISY Option Parcel" means that certain parcel of real property defined
in the VISY Option Agreement as the "Option Parcel".

"Zoning Lot Development Agreements" means the Arthur Kill Zoning Lot
Development Agreement and the Astoria Zoning Lot Development Agreement.

SECTION 1.02. Accounting Terms. Any accounting terms used in this
Agreement or the Ancillary Agreements shall, unless otherwise specifically
provided, have the meanings customarily given them in accordance with United
States generally accepted accounting principles ("GAAP") and all financial
computations hereunder or thereunder shall, unless otherwise specifically
provided, be computed in accordance with GAAP consistently applied.

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ARTICLE II
Purchase and Sale; Assumption of Certain Liabilities

SECTION 2.01. Purchase and Sale. Upon the terms and subject to the
satisfaction of the conditions contained in this Agreement, at the Closing,
Seller agrees to sell, assign, convey, transfer and deliver to Buyer, and Buyer
agrees to purchase, assume and acquire from Seller all the Auctioned Assets. In
the case of any Auctioned Assets not located at the Generating Plants or Gas
Turbines (including supplies, materials and spare parts inventory), Buyer agrees
that (i) from and after the Closing, except to the extent specifically otherwise
provided in the Ancillary Agreements, Buyer will bear all risk of casualty or
loss with regard to such Auctioned Assets (regardless of whether they remain on
Seller's property or otherwise in Seller's possession) and (ii) Seller shall
store such Auctioned Assets in accordance with Section 7.08.

SECTION 2.02. Auctioned Assets and Retained Assets. (a) Auctioned
Assets. The term "Auctioned Assets" means all the assets, real and personal
property, goodwill and rights of Seller of whatever kind and nature, whether
tangible or intangible, in each case, primarily relating to the power generation
operations of the Generating Plants or the Gas Turbines, other than the Retained
Assets, including:

(i) all real property and leaseholds or other interests in real
property of Seller relating primarily to the power generation operations of
the Generating Plants or the Gas Turbines described (A) as Parcel A, Parcel
C and Parcel D as shown on the Arthur Kill Generating Station Conveyance
Plan dated January 9, 1999 and (B) Parcel C as shown on the Astoria
Generating Station Conveyance Plan dated January 9, 1999, in each case, as
may hereafter be amended in immaterial respects (collectively, the
"Conveyance Plans"), together with all buildings, improvements, structures
and fixtures thereon, subject to Permitted Exceptions or Encumbrances
otherwise disclosed to Buyer in this Agreement or the Ancillary Agreements
with respect thereto (the "Buyer Real Estate"); provided, however, that
"Buyer Real Estate" shall not include the VISY Option Parcel if the sale
thereof by Seller to VISY pursuant to the VISY Option Agreement is
consummated prior to the Closing;

(ii) subject to Section 2.04, all inventories of fuels, supplies,
materials and spare parts relating primarily to the power generation
operations of the

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Generating Plants or the Gas Turbines, together with and subject to (A) all
Permitted Exceptions or Encumbrances otherwise disclosed to Buyer in this
Agreement or the Ancillary Agreements with respect thereto and (B) all
warranties against manufacturers and vendors relating thereto, including the
spare parts listed on Schedule 2.02(a)(ii), in each case, other than assets
that become obsolete or that are used, consumed, replaced or disposed in the
ordinary course of business consistent with past practice or as permitted by
this Agreement;

(iii) subject to Section 2.04, (A) the machinery, equipment,
facilities, furniture and other personal property (other than vehicles)
relating primarily to the power generation operations of the Generating
Plants or the Gas Turbines, including a stand-alone local area network, coal
handling equipment and other items of personal property located on Buyer
Real Estate or temporarily removed from Buyer Real Estate for repairs,
servicing or maintenance and listed on Schedule 2.02(a)(iii)(A) and (B)
machinery, equipment, facilities, furniture and other personal property
located on Seller Real Estate or temporarily removed from Seller Real Estate
for repairs, servicing or maintenance and listed on Schedule
2.02(a)(iii)(B), in each case, (1) together with and subject to (x) all
Permitted Exceptions or Encumbrances otherwise disclosed to Buyer in this
Agreement or the Ancillary Agreements with respect thereto and (y) all
warranties against manufacturers or vendors relating thereto and (2) other
than assets that become obsolete or that are used, consumed, replaced or
disposed in the ordinary course of business consistent with past practice or
as permitted by this Agreement;

(iv) subject to Section 2.04, all right, title and interest of Seller
in, to and under all contracts, agreements, personal property leases
(whether Seller is lessor or lessee thereunder), commitments and all other
legally binding arrangements (other than Seller Consent Orders), whether
oral or written (A) set forth on Schedule 2.02 (a)(iv) or (b) otherwise
relating primarily to the power generation operations of the Generating
Plants or the Gas Turbines and entered into by Seller in accordance with
Section 7.01 (the "Contracts"), in each case, to the extent in full force
and effect on the Closing Date;

(v) subject to section 7.03(c), the Permits and Environmental Permits
that are transferred or

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transferable by Seller to Buyer (collectively, the "Transferable Permits"),
including the Transferable Permits set forth on Schedule 2.02(a)(v), in each
case, to the extent in full force and effect on the Closing Date;

(vi) the SO2 Allowances listed on Schedule 2.02(a)(vi);

(vii) all nitrogen oxide allowances allocated to the Generating Plants
or the Gas Turbines by NYSDEC under the New York State Nitrogen Oxides
Budget Program that have not been used on or prior to the Closing Date (it
being understood that, for purposes of this Agreement, one nitrogen oxide
allowance shall be deemed "used" for each ton of actual nitrogen oxide
emitted from the Generating Plants or Gas Turbines between May 1 of any year
and September 30 of such year, inclusive);

(viii) (A) all data, information, books, operating records, operating,
safety and maintenance manuals, engineering design plans, blueprints and
as-built plans, specifications, procedures, facility compliance plans,
environmental procedures and similar records of Seller relating primarily to
the power generation operations of the Generating Plants or the Gas
Turbines, to the extent in Seller's possession or readily available
(collectively, "Operating Records"), and (B) all personnel files relating to
employees of Seller to be employed by Buyer after the Closing Date in
accordance with Article IX (the "Transferring Employees"), to the extent in
Seller's possession and readily available and to the extent such files
pertain to (1) skill and development training and resumes, (2) seniority
histories, (3) salary and benefit information, (4) Occupational Safety and
Health Act medical reports, (5) active medical restriction forms and (6) any
other matters, disclosure of which by Seller to Buyer is permitted under
applicable law without the consent of the Transferring Employee, but not
including any performance evaluations or disciplinary records (collectively,
the "Transferring Employee Records"); provided, however, that Seller shall 
be permitted to retain copies, or originals to the extent it provides Buyer
with copies of same, of all Operating Records and Transferring Employee
Records; and

(ix) (A) except as provided in Section 2.02(b)(iv) the software
relating primarily to the power generation operations of the Generating
Plants or the Gas Turbines

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(provided, however, that Buyer acknowledges that it will require licenses
from third parties in order to be legally entitled to use such software),
and (B) a nonexclusive, royalty-free license to use solely in connection
with the Auctioned Assets the software or other copyrighted material owned
by Seller located at Buyer Real Estate.

(b)  Retained Assets. The term "Retained Assets" means:

(i)  the transmission and distribution facilities owned, controlled or
operated by Seller for purposes of providing point-to-point transmission
service, network integration service and distribution service and other
related purposes, including the real property and equipment located at the
Fresh Kills Substations, the Astoria East Substation, the Astoria West
Substation and the North Queens Substation (collectively, the
"SUBSTATIONS"), used in controlling continuity between the Generating
Plants and Gas Turbines and the transmission and distribution facilities
and for other purposes (the "Transmission System");

(ii) (A) except as set forth in Section 2.02(a)(iii), all 
Interconnection Facilities and other transmission, distribution and
substation machinery, equipment and facilities and related support
equipment located on Buyer Real Estate or Seller Real Estate or temporarily
removed from Buyer Real Estate or Seller Real Estate for repairs, servicing
or maintenance, including items listed on Schedule 2.02(b)(ii)(A); (B)
all Revenue Meters Installed by Seller; (C) Communications Equipment and
related support equipment (1) located on Buyer Real Estate or temporarily
removed from Buyer Real Estate for repairs, servicing or maintenance and
listed on Schedule 2.02(b)(ii)(C) or acquired by Seller after the date of
this Agreement and designated by Seller as a Retained Asset or (2) located
on Seller Real Estate or temporarily removed from Seller Real Estate for
repairs, servicing or maintenance; and (D) all Protective Relaying Systems
not located on Buyer Real Estate;

(iii) all cash, cash equivalents, bank deposits and accounts 
receivable held or owned by Seller;

(iv) (A) all mainframe computer systems of Seller, (B) the code to 
all software described in Section 2.02(a)(ix)(13), and (C) all software,

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copyrights, know-how or other proprietary information relating primarily to
any other Retained Assets or any Retained Liabilities, including software,
copyrights, know-how or other proprietary information licensed to Buyer
pursuant to Section 2.02(a)(ix)(B);

(v)   the names "Consolidated Edison", "Con Edison", "Con Ed", 
"Consolidated Edison Company", "Consolidated Edison Company of New York,
Inc.", "Consolidated Edison, Inc.", "New York Edison", "Brooklyn Edison",
"Staten Island Edison" and "Edison" and any related or similar trade names,
trademarks, service marks or logos (and any rights to and in the same,
including any right to use the same);

(vi)  subject to Section 7.06(d), any refund or credit related to 
Taxes attributable to taxable periods (or portions thereof) prior to the
Closing Date, and sewer rents or water charges or any other liabilities or
obligations paid prior to the Closing Date in respect of the Auctioned
Assets;

(vii) all personnel records (other than Transferring Employee 
Records) and all other records (other than Operating Records);

(viii) (A) all Emission Reduction Credits held or possessed by Seller
and (B) SO2 Allowances held or possessed by Seller and not listed on
Schedule 2.02(a)(vi); and

(ix)  any other asset that is not described in this Agreement as an
Auctioned Asset.

SECTION 2.03.   Assumed Obligations and Retained Liabilities. (a) 
Assumed Obligations. At the Closing, Buyer shall assume, and from and after the
Closing, shall discharge, all of the liabilities and obligations, direct or
indirect, known or unknown, absolute or contingent, which relate to the
Auctioned Assets or are otherwise specified below, other than the Retained
Liabilities (collectively, the "Assumed Obligations"), including:

(i)  except as set forth in Section 2.03(b)(ii), any liabilities and
obligations under the Contracts;

(ii) any liabilities and obligations for goods delivered or services
rendered on or after the Closing Date relatinq to the Auctioned Assets;

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(iii) except as set forth in Sections 2.03(b)(iii) or (iv), any
Environmental Liability arising out of or in connection with (A) any
violation or alleged violation of, or noncompliance or alleged
noncompliance with, any Environmental Laws, prior to, on or after the
Closing Date, with respect to the ownership or operation of the Auctioned
Assets, notwithstanding that, as contemplated by Section 7.03(c), Seller
may remain the "holder of record" with respect to certain Transferable
Permits, (B) the condition of any Auctioned Assets prior to, on or after
the Closing Date, including any actual or alleged presence, Release or
threatened Release of any Hazardous Substance at, on, in, under or
migrating onto or from, the Auctioned Assets, prior to, on or after the
Closing Date (except for any such Release from equipment or property owned
or operated by Seller and located on, or constituting, Seller Real Estate
adjacent to Buyer Real Estate that occurs on or after the Closing Date),
(C) any Release or threatened Release of any Hazardous Substance on or
after the Closing Date from the Buyer Facilities or otherwise originating
from, or relating to, any equipment owned or used by Buyer that is located
on Seller Real Estate or (D) the transportation, storage, Release,
threatened Release or recycling of, or arrangement for such activities with
respect to, Hazardous Substances generated in respect of the Auctioned
Assets at or to any location, on or after the Closing Date;

(iv)  any liabilities and obligations relating to the Auctioned Assets
under the consent orders listed on Schedule 2.03(a)(iv) (the "Seller
Consent Orders") and identified thereon as "Assumed Consent Order
Obligations" (the "Assumed Consent Order Obligations");

(v)   except as set forth in Section 2.03(b)(iv), any liabilities and
obligations with respect to the Permits to the extent arising or accruing
on or after the Closing Date;

(vi) (A) all wages, overtime, employment taxes, severance pay,
transition payments, workers compensation benefits, occupational safety and
health liabilities or other similar liabilities and obligations in respect
of Transferring Employees to the extent arising or accruing on or after the
Closing Date, and (B) all other liabilities and obligations with respect to
the Transferring Employees for which Buyer is responsible pursuant to
Article IX;

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(vii) (A)  any liabilities and obligations (other than any 
Environmental Liabilities which are Retained Liabilities) in respect of any
personal injury or property damage claim relating to, resulting from or
arising out of the Generating Plants or Gas Turbines or (B) any liabilities
and obligations in respect of any discrimination, wrongful discharge or
unfair labor practice claim by any Transferring Employee, in the case of
each of the foregoing clauses (A) and (B), to the extent arising or
accruing on or after the Closing Date;

(viii) any liabilities and obligations, with respect to the periods
that include the Closing Date, with respect to real or personal property
rent, taxes based on the ownership or use of property, utilities charges
and similar charges that primarily relate to the Generating Plants or the
Gas Turbines (collectively, the "Prorated Items"), to the extent such
Prorated Items relate to the period from and after the Closing Date,
including (A) personal property taxes, real estate and occupancy taxes,
assessments and other charges (which shall be apportioned as provided in
the Zoning Lot Development Agreements), (B) rent and all other items
payable by Seller under any Contract, (C) any fees with respect to any
Transferable Permit and (D) sewer rents and charges for water, telephone,
electricity and other utilities, in each case calculated by multiplying the
amount of any such Prorated item by a fraction the numerator of which is
the number of days in such period from and after the Closing Date and the
denominator of which is the number of days in such period;

(ix) any liabilities and obligations in respect of Taxes (other than
Prorated items) attributable to the Auctioned Assets arising or accruing
during taxable periods (or portions thereof) beginning on or after the
Closing Date;

(x)  any liabilities and obligations in respect of damage to property 
or personal injury or death relating to, resulting from or arising out of
any property, machinery, equipment, facilities or systems from time to time
owned by Buyer or its Affiliates subject to the Ancillary Agreements or
employed by Buyer in connection with the performance of the Ancillary
Agreements ("Buyer Assets"), or any Protective Relaying System owned by
Seller as contemplated by the Continuing Site Agreement, regardless of
whether the property damage or

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personal injury is caused by a Seller Indemnitee or a Buyer Indemnitee; and

(xi) any liabilities and obligations under the Ancillary Agreements in
respect of the Auctioned Assets to the extent arising on or after the
Closing Date.

(b)  Retained Liabilities Buyer Shall not assume or be obligated to
pay, perform or otherwise discharge the following liabilities or obligations 
(the "Retained Liabilities"):

(i)  any liabilities and obligations of Seller primarily relating to 
any Retained Assets (other than as contemplated by Section 2.03(a)(x));

(ii) any payment obligations of Seller, including under Contracts, for
goods delivered or services rendered prior to the Closing Date;

(iii) (A) any Environmental Liability of Seller arising out of or in
connection with the transportation, storage, Release, threatened Release or
recycling of, or arrangement for such activities with respect to, Hazardous
Substances at or to any Off-Site location, prior to the Closing Date, (B)
any Environmental Liability of Seller arising out of or in connection with
any Release or threatened Release of any Hazardous Substance on or after
the Closing Date from the Seller Facilities or otherwise originating from,
or relating to, any equipment owned or used by Seller that is located on
Buyer Real Estate, (C) all liabilities and obligations of Seller arising
out of or in connection with matters set forth on Schedule 2.03(b)(iii)(C)
and (D) any liabilities and obligations relating to Auctioned Assets under
the Seller Consent Orders, except Assumed Consent Order obligations;

(iv) any monetary fines (excluding (A) natural resource damages, (B)
cleanup or remediation costs and (C) other costs of a similar nature)
imposed by a Governmental Authority to the extent arising out of or
relating to acts or omissions of Seller in respect of the Auctioned Assets
prior to the Closing Date;

(v) (A) all wages, overtime, employment taxes, severance pay,
transition payments, workers compensation benefits, occupational safety and
health liabilities or other similar liabilities and obligations in respect
of Transferring Employees to the

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extent arising or accruing prior to the Closing Date and (B) all other
liabilities and obligations with respect to the Transferring Employees for
which Seller is responsible pursuant to Article IX;

(vi)(A) any liabilities and obligations (other than any Environmental
Liabilities which are Assumed Obligations) in respect of any personal
injury or property damage claim relating to the Generating Plants or Gas
Turbines or (B) any liabilities and obligations in respect of any
discrimination, wrongful discharge or unfair labor practice claim by any
Transferring Employee, in the case of each of the foregoing clauses (A) and
(B), to the extent arising out of or relating to acts or omissions of
Seller prior to the Closing Date;

(vii)   any liabilities and obligations, with respect to the period 
prior to the Closing Date, for the Prorated Items, calculated as set forth
in Section 2.03(a)(viii);

(viii)  any liabilities and obligations in respect of Taxes (other 
than Prorated Items) attributable to the Auctioned Assets arising or
accruing during taxable periods (or portions thereof) ending before the
Closing Date, including Income Taxes attributable to income realized by
Seller pursuant to the transactions contemplated by this Agreement;

(ix)    any liabilities and obligations arising after the date of this
Agreement in respect of which Seller has provided pursuant to Section
7.01(d)(ii) that such liabilities and obligations shall not be assumed or
retained by Buyer;

(x)     any liabilities and obligations in respect of damage to 
property or personal injury or death relating to, resulting from or arising
out of any property, machinery, equipment, facilities or systems from time
to time owned by Seller or its Affiliates subject to the Ancillary
Agreements or employed by Seller in connection with the performance of the
Ancillary Agreements ("Seller Assets"), regardless of whether the property
damage or personal injury is caused by a Seller Indemnitee or a Buyer
Indemnitee; and

(xi)    any liabilities and obligations under the Ancillary Agreements
in respect of the Retained Assets.

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SECTION 2.04.  Third Party Consents (a) Notwithstanding Section 2.02
(a) (ii), (iii) or (iv), to the extent that Seller's rights under any
Contract or warranty may not be assigned without the consent of another
person which consent has not been obtained, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and Seller, at its expense,
shall use its reasonable best efforts to obtain prior to the Closing any
such required consents.

(b) Seller and Buyer agree that if any consent to an assignment of
any such Contract or warranty shall not be obtained or if any attempted
assignment would in Seller's reasonable opinion be ineffective or would
impair any material rights and obligations of Buyer under such Contract or
warranty, as applicable, so that Buyer would not acquire the benefit of all
such rights and obligations, Seller, to the maximum extent permitted by law
and such Contract or warranty, as applicable, shall after the Closing
appoint Buyer to be Seller's representative and agent with respect to such
Contract or warranty, as applicable, and Seller shall, to the maximum
extent permitted by law and such Contract or warranty, as applicable, enter
into such reasonable arrangements with Buyer as are necessary to provide
Buyer with the benefits and obligations of such Contract or warranty, as
applicable. Seller and Buyer shall cooperate and shall each use their
reasonable best efforts after the Closing to obtain an assignment of each
such Contract or warranty, as applicable, to Buyer.

ARTICLE III

Purchase Price

SECTION 3.01.  Purchase Price. The purchase price for the Auctioned
Assets shall be $505,000,000 minus the net proceeds received by Seller
pursuant to the sale of the VISY Option Parcel by Seller to VISY if the
sale thereof is consummated prior to the Closing (the "Purchase Price").

SECTION 3.02.  Post-Closing Adjustment. (a)  Within 20 Business Days
after the Closing, Seller shall prepare and deliver to Buyer a statement
(an "Adjustment Statement") which reflects the book cost, as reflected on
the books of Seller as of the Closing Date, of all fuel inventory and
supplies, materials and spare parts inventory included in the Auctioned
Assets (the "Adjustment Amount") and, upon request of Buyer, related
accounting material used by Seller to prepare the Adjustment Statement. The

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Adjustment Amount will be based, in respect of fuel, on the actual fuel
inventory on the Closing Date and, in respect of supplies, materials and
spare parts, on an inventory survey conducted within ten Business Days
prior to the Closing Date, in each case, consistent with the inventory
procedures of Seller in effect as of the date of this Agreement (the 
"Inventory Survey"). Seller will permit an employee, or representative, of
Buyer to observe the Inventory Survey. The Adjustment Statement shall be
prepared using (i) GAAP and (ii) the same rolling average unit costs that
Seller has historically used to calculate the book cost of its fuel and
supplies, materials and spare parts inventory. Buyer agrees to cooperate
with Seller in connection with the preparation of the Adjustment Statement
and related information, and shall provide to Seller such access, books,
records and information as may be reasonably requested from time to time.

(b)  Buyer may dispute the quantity delivered or quality of any
inventory item shown on the Adjustment Statement, or the mathematical
calculations reflected therein, by notifying Seller in writing of the
disputed amount, and the basis of such dispute, within 20 Business Days of
Buyer's receipt of the Adjustment Statement; provided, however, that in
respect of the quality of any inventory item, Buyer may not dispute
Seller's normal and customary methods for accounting for excess inventory.
Buyer shall have no right to dispute any other matter in respect of the
Adjustment Statement, including historical rolling average unit costs used
to calculate the book cost of the inventory or the appropriateness, under
GAAP or otherwise, of using such historical rolling average unit cost to
determine the book cost of any particular item of inventory. In the event
of a dispute with respect to the quantity or quality of any inventory item
shown on the Adjustment Statement, or the mathematical calculations
reflected therein, Buyer and Seller shall attempt to reconcile their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive on the Parties. If Buyer and Seller are
unable to reach a resolution of such differences within 20 Business Days of
receipt of Buyer's written notice of dispute to Seller, Buyer and Seller
shall submit the amounts remaining in dispute for determination and
resolution to PricewaterhouseCoopers LLP or any other accounting firm of
recognized national standing reasonably acceptable to Seller and Buyer (the
"Accountants"), which shall be instructed to determine and report to the
Parties, within 20 Business Days after such submission, upon such remaining
disputed amounts, and such report shall be final, binding and conclusive on
the Parties with respect to the amounts disputed. Buyer and

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Seller shall each pay one-half of the fees and disbursements of the
Accountants in connection with the resolution of such disputed amounts.

(c)  If the Adjustment Amount is greater or less than the Estimated
Adjustment Amount, then on the Adjustment Date (as defined below), (i) to
the extent that the Adjustment Amount exceeds the Estimated Adjustment
Amount, Buyer shall pay to Seller the amount of such excess and (ii) to the
extent that the Adjustment Amount is less than the Estimated Adjustment
Amount, Seller shall pay to Buyer the amount of such deficiency.
"Adjustment Date" means (1) if Buyer does not disagree in any respect with
the Adjustment Statement, the twenty-third Business Day following Buyer's
receipt of the Adjustment Statement or (2) if Buyer shall disagree in any
respect with the Adjustment Statement, the third Business Day following
either the resolution of such disagreement by the Parties or a final
determination by the Accountants in accordance with Section 3.02 (b). Any
amount paid under this Section 3.02(c) shall be paid with interest for the
period commencing on the Closing Date through the date of payment,
calculated at the prime rate of the Chase Manhattan Bank in effect on the
Closing Date, and in cash by wire transfer of immediately available funds.

SECTION 3.03.  Allocation of Purchase Price. Buyer shall deliver to 
Seller at Closing a preliminary allocation among the Auctioned Assets of 
the Purchase Price and among such other consideration paid to Seller 
pursuant to this Agreement that is properly includible in Buyer's tax basis
for the Auctioned Assets for Federal income tax purposes, and, as soon as
practicable following the Closing (but in any event within 10 Business Days
following the final determination of the Adjustment Amount), Buyer shall
prepare and deliver to Seller a final allocation of the Purchase Price and
additional consideration described in the preceding clause, and the
post-closing adjustment pursuant to Section 3.02, among the Auctioned
Assets (the "Allocation").  The Allocation shall be consistent with
Section 1060 of the Code and the Treasury Regulations thereunder. Seller
hereby agrees to accept Buyer's Allocation unless Seller determines that
such Allocation was not prepared in accordance with Section 1060 of the
Code and the regulations thereunder ("Applicable Law"). If Seller so
determines, Seller shall within 20 Business Days thereafter propose any
changes necessary to cause the Allocation to be prepared in accordance with
Applicable Law. Within 10 Business Days following delivery of such proposed
changes, Buyer shall provide Seller with a statement of any objections to
such proposed changes, together with a

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reasonably detailed explanation of the reasons therefor. If Buyer and
Seller are unable to resolve any disputed objections within 10 Business
Days thereafter, such objections shall be referred to the Accountants,
whose review will be limited to whether Buyer's Allocation of such disputed
items regarding the Allocation was prepared in accordance with Applicable
Law. The Accountants shall be instructed to deliver to Seller and Buyer a
written determination of the proper allocation of such disputed items
within 20 Business Days. Such determination shall be conclusive and binding
upon the parties hereto for all purposes, and the Allocation shall be so
adjusted (the Allocation, including the adjustment, if any, to be referred
to as the "Final Allocation"). The fees and disbursements of the
Accountants attributable to the Allocation shall be shared equally by Buyer
and Seller. Each of Buyer and Seller agrees to timely file Internal Revenue
Service Form 8594, and all Federal, state, local and foreign Tax Returns,
in accordance with such Final Allocation and to report the transactions
contemplated by this Agreement for Federal Income Tax and all other tax
purposes in a manner consistent with the Final Allocation. Each of Buyer
and Seller agrees to promptly provide the other party with any additional
information and reasonable assistance required to complete Form 8594, or
compute Taxes arising in connection with (or otherwise affected by) the
transactions contemplated hereunder. Each of Buyer and Seller shall timely
notify the other Party and each shall timely provide the other Party with
reasonable assistance in the event of an examination, audit or other
proceeding regarding the Final Allocation.

ARTICLE IV

The Closing

SECTION 4.01.   Time and Place of Closing.  Upon the terms and 
subject to the satisfaction of the conditions contained in Article VIII,
the closing of the sale of the Auctioned Assets contemplated by this
Agreement (the "Closing") will take place on such date as the Parties may
agree, which date shall be as soon as practicable, but no later than ten
Business Days, following the date on which all of the conditions set forth
in Article VIII have been satisfied or waived, at the offices of Cravath,
Swaine & Moore in New York City or at such other place or time as the
Parties may agree. The date and time at which the Closing actually occurs
is hereinafter referred to as the "Closing Date".

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SECTION 4.02. Payment of Purchase Price and Estimated Adjustment 
Amount. At the Closing, Buyer will pay or cause to be paid to Seller by wire 
transfer of immediately available funds to an account previously designated in 
writing by Seller an amount in United States dollars equal to (a) the Purchase 
Price plus or minus (b) Seller's good faith estimate of the Adjustment Amount 
(the "Estimated Adjustment Amount"), which estimate shall be provided to Buyer 
no later than five Business Days prior to the Closing.

ARTICLE V

Representations and Warranties of Seller

Seller represents and warrants to Buyer as follows:

SECTION 5.01. Organization; Qualification. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of New York and has all requisite corporate power and authority to own, lease
and operate the Auctioned Assets and to carry on the business of the Auctioned
Assets as currently conducted.

SECTION 5.02. Authority Relative to This Agreement. Seller has all
necessary corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by Seller of this Agreement and
the Ancillary Agreements and the consummation by Seller of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Board of Trustees of Seller or by a committee thereof to whom such authority has
been delegated and no other corporate proceedings on the part of Seller are
necessary to authorize this Agreement or the Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby. This Agreement
and the Ancillary Agreements have been duly and validly executed and delivered
by Seller and, assuming that this Agreement and the Ancillary Agreements
constitute valid and binding agreements of Buyer and each other party thereto,
subject to the receipt of the Seller Required Regulatory Approvals and the Buyer
Required Regulatory Approvals, constitute valid and binding agreements of
Seller, enforceable against Seller in accordance with their respective terms.

SECTION 5.03. Consents and Approvals; No Violation (a) Subject to
obtaining the Seller Required

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Regulatory Approvals and the Buyer Required Regulatory Approvals, neither the
execution and delivery of this Agreement or the Ancillary Agreements by Seller
nor the sale by Seller of the Auctioned Assets pursuant to this Agreement will 
(i) conflict with or result in any breach of any provision of the Certificate of
Incorporation or By-laws of Seller, (ii) except as set forth on Schedule
5.03(a), result in a default (or give rise to any right of termination,
cancelation or acceleration) under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, agreement, lease or other
instrument or obligation to which Seller is a party or by which Seller, or any
of the Auctioned Assets, may be bound, except for such defaults (or rights of
termination, cancelation or acceleration) as to which requisite waivers or
consents have been obtained or which would not, individually or in the
aggregate, create a material Adverse Effect or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Seller, or the
Auctioned Assets, except for such violations which would not, individually or in
the aggregate, create a Material Adverse Effect.

(b) Except for (i) application by Seller to, and the approval of, the
PSC, pursuant to sections 70 of the Public Service Law of the State of New York,
of the transfer to Buyer of the Auctioned Assets, (ii) the filings by Seller and
Buyer required by the HSR Act and the expiration or earlier termination of all
waiting periods under the HSR Act, (iii) application by Seller to, and the
approval of, FERC under (A) Section 203 of the Federal Power Act of 1935 (the
"Federal Power Act") with respect to the transfer of Auctioned Assets
constituting jurisdictional assets under the Federal Power Act and (B) Section
205 of the Federal Power Act with respect to each Continuing Site Agreement and
any wholesale power sales agreement to be entered into by Seller and Buyer,
including the Transition Capacity Agreement, (iv) the issuance of approval by
the New York City Department of Buildings and, to the extent required, the New
York City Department of Business Services of the tax lot subdivision
contemplated by this Agreement in a form suitable for submission to the New York
City Department of Finance for the issuance of tax lot numbers and (v)
declarations, filings or registrations with, or notices to, or authorizations,
consents or approvals of, any Governmental Authority which become applicable to
Seller or the transactions contemplated hereby or by the Ancillary Agreements as
a result of the specific regulatory status or jurisdiction of incorporation or
organization of Buyer (or any of its Affiliates) or as a result of any other
facts that specifically relate to the business or activities in which Buyer (or
any of its Affiliates) is or proposes to be

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engaged (collectively, the "Seller Required Regulatory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of any Governmental Authority is necessary for the
consummation by Seller of the transactions contemplated hereby or by the 
Ancillary Agreements, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals (A) which, it not obtained or
made, would not, individually or in the aggregate, create a Material Adverse
Effect or (B) which relate to the Transferable Permits.

(c) To the knowledge of Seller, there is no reason that it should fail
to obtain the Seller Required Regulatory Approvals.

SECTION 5.04. Year 2000.  Seller has informed Buyer of the status, as
of the date of this Agreement, of measures to prevent computer software,
hardware and embedded systems used in connection with the Auctioned Assets from
experiencing malfunctions or other usage problems in connection with years
beginning with "20", except for such malfunctions or other usage problems which
would not, individually or in the aggregate, create a Material Adverse Effect.

SECTION 5.05. Personal Property.  Except for Permitted Exceptions,
Seller has good and marketable title, free and clear of all Encumbrances, to all
personal property included in the Auctioned Assets.

SECTION 5.06. Real Estate. The Conveyance Plans contain descriptions of
the Buyer Real Estate. Copies of the most recent real property surveys and title
insurance information in the possession of Seller with respect to the Buyer Real
Estate or any portion thereof have heretofore been delivered by Seller to Buyer
or made available for inspection by Buyer, receipt of which is hereby
acknowledged by Buyer.

SECTION 5.07. As of the date of this Agreement, Seller is neither a
tenant nor a licensee under any real property leases which (a) are to be
transferred and assigned to Buyer on the Closing Date and (b) (i) provide for
annual payments of more than $100,000 or (ii) are material to the Auctioned
Assets.

SECTION 5.08. certain Contract and Arrangments. (a) Except for (i) any
contract or agreement listed on Schedule 2.02 (a) (iv) or Schedule 5.08 (a)
and (ii) Contracts which will expire prior to the Closing Date or that are 40
permitted to be entered into under this Agreement, Seller is

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not a party to any contract which is material to the business or operations of
the Auctioned Assets.

(b) Each Contract (i) constitutes a valid and binding obligation of
Seller, and, to the knowledge of Seller, constitutes a valid and binding
obligation of the other parties thereto, (ii) to the knowledge of Seller, is in
full force and effect and (iii) other than Contracts covered by Section 2.04, to
the knowledge of Seller, may be transferred to Buyer pursuant to this Agreement
and will continue in full force and effect thereafter, in each case, without
breaching the terms thereof or resulting in the forfeiture or impairment of any
rights thereunder, except for such breaches, forfeitures or impairments which
would not, individually or in the aggregate, create a Material Adverse Effect.

(c) There is not, under any of the Contracts, any default or event
which, with notice or lapse of time or both, would constitute a default by
Seller, except for such events of default and other events as to which requisite
waivers or consents have been obtained or which would not, individually or in
the aggregate, create a Material Adverse Effect.

SECTION 5.09. Legal Proceeding.  Except as set forth on Schedule 5.09
or in the Filed Seller SEC Documents, as of the date of this Agreement, there
are no claims, actions, proceedings or investigations pending or, to the
knowledge of Seller, threatened against or relating to Seller which would,
individually or in the aggregate, be reasonably expected to create a Material
Adverse Effect. With respect to the business or operations of the Auctioned
Assets, Seller is not, as of the date of this Agreement, subject to any
outstanding judgment, rule, order, writ, injunction or decree of any court,
governmental or regulatory authority which would create a Material Adverse
Effect. The representations and warranties of Seller set forth in this Section
5.09 shall not apply to, and do not cover, any environmental matters which, with
respect to any representations and warranties of Seller, are exclusively
governed by Section 5.11.

SECTION 5.10. Permits; Compliance with Law.
(a) Except as set forth on Schedule 5. 10 (a) (i) , Seller holds, and is
in compliance with, all Permits necessary to conduct the business and operations
of the Auctioned Assets as currently conducted, and, to the knowledge of Seller,
Seller is otherwise in compliance with all laws, statutes, orders, rules,
regulations, ordinances or judgments of any Governmental Authority applicable to
the business and

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operations of the Auctioned Assets, except for such failures to hold or comply
with such Permits, or such failures to be in compliance with such laws,
statutes, orders, rules, regulations, ordinances or judgments, which would not,
individually or in the aggregate, create a Material Adverse Effect. Except as
set forth on Schedule 5.10(a)(ii), Seller has not received any written
notification that it is in violation of any of such Permits or laws, statutes,
orders, rules, regulations, ordinances or judgments, except for notifications of
violations which would not, individually or in the aggregate, create a Material
Adverse Effect. The representations and warranties of Seller set forth in this
Section 5.10 shall not apply to, and do not cover, any environmental matters
which, with respect to any representations and warranties of Seller, are
exclusively governed by Section 5.11.

(b) Notwithstanding the last sentence of Section 5.10(a), except as set
forth on Schedule 5.10(b), there are no material Permits or material
Environmental Permits that, in each case, are not Transferable Permits and are
required for Buyer to conduct the business and operations of the Auctioned
Assets as currently conducted.

SECTION 5.11. Environmental Matters. (a) Except as set forth in
Schedule 5.11 or disclosed in the Filed Seller SEC Documents, Seller holds, and
is in compliance with, the Environmental Permits required for Seller to conduct
the business and operations of the Auctioned Assets as currently conducted under
applicable Environmental Laws, and, to the knowledge of Seller, Seller is
otherwise in compliance with applicable Environmental Laws with respect to the
business and operations of the Auctioned Assets, except for such failures to
hold or comply with such Environmental Permits, or such failures to be in
compliance with such Environmental Laws, which would not, individually or in the
aggregate, create a Material Adverse Effect.

(b) Except as set forth in Schedule 5.11 or disclosed in the Filed
Seller SEC Documents, Seller has not received any written notice of violation of
any Environmental Law or any written request for information with respect
thereto, or been notified that it is a potentially responsible party under the
Federal Comprehensive Environmental Response, Compensation, and Liability Act or
any similar state law with respect to any real property included in the Buyer
Real Estate or in any lease forming part of the Auctioned Assets, except for
such matters under such laws as would not, individually or in the aggregate,
create a Material Adverse Effect.

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(c) Except as set forth in Schedule 5.11 or disclosed in the Filed
Seller SEC Documents, with respect to the business and operations of the
Auctioned Assets, Seller is not subject to any outstanding judgment, decree or
judicial order relating to compliance with any Environmental Law or to
investigation or cleanup of Hazardous Substances under any applicable
Environmental Law, except for (i) the Seller Consent Orders and (ii) such
judgments, decrees or judicial orders that would not, individually or in the
aggregate, create a Material Adverse Effect.

(d) Except as set forth in Schedule 5.11 or disclosed in the Filed
Seller SEC Documents, as of the date of this Agreement, there are no claims,
actions, proceedings or investigations pending, or to the knowledge of Seller,
threatened against or relating to Seller, with respect to the exposure at the
Auctioned Assets of any person to Hazardous Substances, which, if adversely
determined, would, individually or in the aggregate, create a Material Adverse
Effect.

SECTION 5.12. Labor Matters. Seller has previously made available to
Buyer copies of all collective bargaining agreements to which Seller is a party
or is subject and which relate to the business or operations of the Auctioned
Assets. With respect to the business and operations of the Auctioned Assets, as
of the date of this Agreement, (a) Seller is in compliance with all applicable
laws regarding employment and employment practices, terms and conditions of
employment and wages and hours, (b) Seller has not received written notice of
any unfair labor practice complaint against Seller pending before the National
Labor Relations Board, (c) there is no labor strike, slowdown or stoppage
actually pending or, to the knowledge of Seller, threatened against or affecting
Seller, (d) Seller has not received notice that any representation petition
respecting the employees of Seller has been filed with the National Labor
Relations Board, (e) no arbitration proceeding arising out of or under
collective bargaining agreements is pending against Seller and (f) Seller has
not experienced any primary work stoppage since at least December 31, 1996,
except, in the case of each of the foregoing clauses (a) through (f), for such
matters as would not, individually or in the aggregate, create a Material
Adverse Effect.

SECTION 5.13. ERISA; Benefit Plans. Schedule 5.13 sets forth a list
of all material deferred compensation, profit-sharing, retirement and pension
plans and all material bonus and other material employee benefit or fringe
benefit plans maintained, or with respect to which contributions have been made,
by Seller with respect to

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current or former employees employed in connection with the power generation
operations of the Generating Plants and the Gas Turbines (collectively,
"Benefit Plans"). Seller and each trade or business (whether or not
incorporated) which are or have ever been under common control, or which are or
have ever been treated as a single employer, with Seller under Section 414 (b),
(c), (m) or (o) of the Code (an "ERISA Affiliate") have fulfilled their
respective obligations under the minimum funding requirements of Section 302 of
ERISA, and Section 412 of the Code, with respect to each Benefit Plan which is
an "employee pension benefit plan" as defined in Section 3 (2) of ERISA and each
such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, except for such failures to fulfill
such obligations or comply with such provisions which would not, individually or
in the aggregate, create a Material Adverse Effect. Neither Seller nor any ERISA
Affiliate has incurred any liability under Section 4062 (b) of ERISA, or any
withdrawal liability under Section 4201 of ERISA, to the Pension Benefit
Guaranty Corporation in connection with any Benefit Plan which is subject to
Title IV of ERISA which liability remains outstanding, and there has not been
any reportable event (as defined in Section 4043 of ERISA) with respect to any
such Benefit Plan (other than a reportable event with respect to which the
30-day notice requirement has been waived by the PBGC). Neither Seller nor any
ERISA Affiliate or parent corporation, within the meaning of Section 4069(b) or
Section 4212(c) of ERISA, has engaged in any transaction, within the meaning of
Section 4069(b) or Section 4212(c) of ERISA. No Benefit Plan and no "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) maintained by Seller
or any ERISA Affiliate or to which Seller or any ERISA Affiliate has contributed
is a multiemployer plan.

SECTION 5.14. Taxes. With respect to the Auctioned Assets and trades or
businesses associated with the Auctioned Assets, (a) all Tax Returns required to
be filed have been filed and (b) all Taxes shown to be due on such Tax Returns,
and all Taxes otherwise owed, have been paid in full, except to the extent that
any failure to file or any failure to pay any Taxes would not, individually or
in the aggregate, create a Material Adverse Effect. No written notice of
deficiency or assessment has been received from any taxing authority with
respect to liabilities for Taxes of Seller in respect of the Auctioned Assets
which has not been fully paid or finally settled or which is not being contested
in good faith through appropriate proceedings, except for any such notices
regarding Taxes which would not, individually or in the aggregate, create a
Material Adverse Effect. There are no outstanding agreements or waivers

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extending the applicable statutory periods of limitation for Taxes associated
with the Auctioned Assets for any period, except for any such agreements or
waivers which would not, individually or in the aggregate, create a Material
Adverse Effect.

SECTION 5.15. Independent Engineering Assessments; Condition of
Auctioned Assets. (a) Seller has reviewed the 1998 assessments prepared by Stone
& Webster with respect to the Generating Plants and the Gas Turbines (the
Independent Engineering Assessments"), and, except as set forth on Schedule
5.15(a), to the knowledge of Seller, as of the date of the Independent
Engineering Assessments, there was no untrue statement of a material fact or
omission of any material fact therein that would reasonably suggest that the
condition of the Generating Plants and the Gas Turbines, taken as a whole, as of
such date was materially and adversely different from that described in such
independent Engineering Assessments.

(b) Except as set forth on Schedule 5.15(b), since the date of the
Independent Engineering Assessments, there has not been, subject to ordinary
wear and tear and to routine maintenance, any casualty, physical damage,
destruction or physical loss with respect to, or any adverse change in the
physical condition of, any Generating Plant or Gas Turbine, except for such
casualty, physical damage, destruction, physical loss or adverse change which
would not, individually or in the aggregate, create a Material Adverse Effect.

(c) The condition of the Auctioned Assets is sufficient to permit
compliance in all material respects with the Ancillary Agreements, assuming the
Ancillary Agreements are in full force and effect.

SECTION 5.16. Undisclosed Liabilities. With respect to the
Auctioned Assets, there are no liabilities or obligations of any nature or kind
(absolute, accrued, contingent or otherwise) that would have been required to be
set forth on a balance sheet in respect of the Auctioned Assets or in the notes
thereto prepared in accordance with GAAP, as applied by Seller in connection
with its December 31, 1997 balance sheet, except for any such liabilities or
obligations which (a) are disclosed in or contemplated or permitted by this
Agreement or the Ancillary Agreements (including the Assumed Obligations), (b)
are disclosed in the Offering Memorandum, (c) are disclosed in the Filed Seller
SEC Documents, (d) have been incurred in the ordinary course of business, (e)
are disclosed on

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Schedule 5.16 or (f) which would not, individually or in the aggregate, create a
Material Adverse Effect.

SECTION 5.17. Brokers.  No broker, finder or other person is entitled
to any brokerage fees, commissions or finder's fees in connection with the
transaction contemplated hereby by reason of any action taken by Seller, except
Morgan Stanley & Co. Incorporated, which is acting for and at the expense of
Seller.

SECTION 5.18. Insurance.  Seller carries policies of insurance covering
fire, workers, compensation, property all-risk, comprehensive bodily injury,
property damage liability, automobile liability, product liability, completed
operations, explosion, collapse, contractual liability, personal injury
liability and other forms of insurance relating to the Auctioned Assets, or
otherwise self-insures in accordance with all statutory and regulatory criteria
against any such liabilities, which insurance is in such amounts, has such
deductibles and retentions and is underwritten by such companies as would be
obtained by a reasonably prudent electric power business.

EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN
THIS ARTICLE V, THE AUCTIONED ASSETS ARE BEING SOLD AND TRANSFERRED "AS IS,
WHERE IS", AND SELLER IS NOT MAKING ANY OTHER REPRESENTATIONS OR WARRANTIES
WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, CONCERNING SUCH AUCTIONED ASSETS
OR WITH RESPECT TO THIS AGREEMENT OR THE ANCILLARY AGREEMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, INCLUDING, IN PARTICULAR WITH
RESPECT TO THE AUCTIONED ASSETS, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED AND DISCLAIMED
BY SELLER AND WAIVED BY BUYER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
SELLER MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION SET
FORTH IN, OR CONTEMPLATED BY, THE OFFERING. MEMORANDUM (EXCEPT TO THE EXTENT
EXPRESSLY INCORPORATED BY REFERENCE INTO THIS AGREEMENT)

ARTICLE VI

Representations and Warranties of Buyer

Buyer represents and warrants to Seller as follows:

SECTION 6.01. Organization Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has all

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requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as is now being conducted. Buyer is duly qualified
and licensed to do business as a foreign corporation and is in good standing in
the State of New York.

SECTION 6.02. Authority Relative to This Agreement. Buyer has
all necessary corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is party and to consummate
the transactions contemplated hereby and thereby. The execution and delivery by
Buyer of this Agreement and such Ancillary Agreements and the consummation by
Buyer of the transactions contemplated hereby and thereby have been duly and
validly authorized by the Board of Directors of Buyer and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement or
such Ancillary Agreements or the consummation of the transactions contemplated
hereby or thereby. This Agreement and such Ancillary Agreements have been duly
and validly executed and delivered by Buyer and, assuming that this Agreement
and the Ancillary Agreements constitute valid and binding agreements of Seller
and each other party thereto, subject to the receipt of the Buyer Required
Regulatory Approvals and the Seller Required Regulatory Approvals, this
Agreement and the Ancillary Agreements constitute valid and binding agreements
of Buyer, enforceable against Buyer in accordance with their respective terms. 

SECTION 6.03. Consents and Approvals; No Violations. (a) Subject to
obtaining the Buyer Required Regulatory Approvals and the Seller Required
Regulatory Approvals, neither the execution and delivery of this Agreement or
the Ancillary Agreements to which it is party by Buyer nor the purchase by Buyer
of the Auctioned Assets pursuant to this Agreement will (i) conflict with or
result in any breach of any provision of the Certificate of Incorporation or
By-laws (or other similar governing documents) of Buyer, (ii) result in a
default (or give rise to any right of termination, cancelation or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement, lease or other instrument or obligation to which
Buyer or any of its subsidiaries is a party or by which any of their respective
assets may be bound or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer, or any of its assets, except in
the case of clauses (ii) and (iii) for such failures to obtain a necessary
consent, defaults and violations which would not, individually or in the
aggregate, have a material adverse effect on the ability of Buyer to consummate
the

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transactions contemplated by, and discharge its obligations under, this
Agreement and the Ancillary Agreements (a "Buyer Material Adverse Effect").

(b) Except for (i) approval of the PSC pursuant to ss. 70 of the Public
Service Law of the State of New York, of the transfer to Buyer of the Auctioned
Assets, (ii) the filings by Buyer and Seller required by the HSR Act and the
expiration or earlier termination of all waiting periods under the HSR Act,
(iii) application by Buyer to, and the approval of, FERC under (A) Section 203
of the Federal Power Act with respect to the transfer of Auctioned Assets
constituting jurisdictional assets under the Federal Power Act and (B) Section
205 of the Federal Power Act with respect to (1) each Continuing Site Agreement
and any wholesale power sales agreement to be entered into by Seller and Buyer,
including the Transition Capacity Agreement, and (2) authorization to sell
capacity and energy from Generating Plants and Gas Turbines at market-based
rates (provided, however, that Buyer acknowledges that "market based rates" for
the purpose of this Agreement means rates that are subject to any bid cap, price
limitation or other market power mitigation measure imposed by FERC or PSC in
respect of the New York State or New York City wholesale and retail energy and
capacity electric power markets or any other restriction imposed by FERC or PSC
with respect to the power generation operations and assets of Buyer, including
the FERC Order Accepting Market Power Mitigation Measures dated September 22,
1998, as modified (Docket No. ER98-3169-000) (the "Mitigation Measures")), (iv)
qualification of Buyer, with respect to the Auctioned Assets, as an exempt
wholesale generator under the Energy Policy Act of 1992 and (v) the issuance of
approval by the New York City Department of Buildings and, to the extent
required, the New York City Department of Business Services of the tax lot
subdivision contemplated by this Agreement in a form suitable for submission to
the New York City Department of Finance for the issuance of tax lot numbers
(collectively, the "Buyer Required Regulatory Approvals"), no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of any Governmental Authority is necessary for the consummation by Buyer of the
transactions contemplated hereby or by the Ancillary Agreements, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals (A) which, if not obtained or made would not, individually or in the
aggregate, have a Buyer Material Adverse Effect or (B) which relate to the
Transferable Permits.

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(c) To the knowledge of Buyer, there is no reason that it should fail
to obtain the Buyer Required Regulatory Approvals.

SECTION 6.04. Brokers.  No broker, finder or other person is entitled 
to any brokerage fees, commissions or finder's fees in connection with the 
transaction contemplated hereby by reason of any action taken by Buyer, except 
Salomon Smith Barney Inc., which is acting for and at the expense of Buyer.

ARTICLE VII

Covenants of the Parties

SECTION 7.01. Conduct of Business Relating to the Auctioned Assets.
(a) Except with the prior written consent of Buyer (such consent not to be
unreasonably withheld) or as required to effect the purchase and sale of the
Auctioned Assets and related transactions contemplated by this Agreement, during
the period from the date of this Agreement to the Closing Date, Seller will
operate the Auctioned Assets in the usual, regular and ordinary course and in
accordance with good industry practice and applicable legal requirements, and
continue to pay accounts payable which relate to the Auctioned Assets in a
timely manner, consistent with past practice.

(b) Notwithstanding the foregoing, except as contemplated in this
Agreement or the Ancillary Agreements, prior to the Closing Date, without the
prior written consent of Buyer (such consent not to be unreasonably withheld),
Seller will not:

(i)    except for Permitted Exceptions, grant any Encumbrance on the
Auctioned Assets securing any indebtedness for borrowed money or guarantee
or other liability for the obligations of any person;

(ii)   make any material change in the levels of fuel inventory and
supplies, materials and spare parts inventory customarily maintained by
Seller with respect to the Auctioned Assets, other than consistent with past
practice (including the use of spare parts in connection with certain power
generation assets of Seller described in the offering Memorandum other than
the Generating Plants or Gas Turbines);

(iii)  sell, lease (as lessor), transfer or otherwise dispose of, any
of the Auctioned Assets, other than

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assets (except coal handling equipment) that become obsolete or assets used,
consumed or replaced in the ordinary course of business consistent with past
practice (including the use of spare parts in connection with certain power
generation assets of Seller described in the Offering Memorandum other than
the Generating Plants or Gas Turbines); provided, however, that
notwithstanding any other provision of this Agreement to the contrary,
Seller may sell the VISY Option Parcel to VTSY pursuant to the exercise by
VISY of the option under the VISY option Agreement;

(iv)   terminate, materially extend or otherwise materially amend any 
of the Contracts (other than in accordance with their respective terms) or
waive any default by, or release, settle or compromise any material claim
against, any other party thereto;

(v)    amend any of the Transferable Permits, other than (A)
Transferable Permits not material to the operations of the Auctioned Assets
as currently conducted, (B) as reasonably necessary to complete the transfer
of Permits as contemplated hereby, (C) routine renewals or non-material
modifications or amendments and (D) modifications, alterations and
amendments contemplated by Section 7.03(b);

(vi)   enter into any Contract for the purchase, sale or storage of 
fuel with respect to the Auctioned Assets (whether commodity or
transportation) with a term in excess of 12 months, if the aggregate future
liability or receivable outstanding on the date for measurement for the
purpose of this covenant for all such Contracts would be in excess of $2
million, not including any such Contract terminable by notice of not more
than 30 days without penalty or cost (other than de minimis administrative
costs); provided, however, that Seller may enter into Contracts for the
storage of fuel with respect to the Auctioned Assets with a term ending not
later than December 31, 2000 and otherwise on terms consistent with Seller's
past practice;

(vii)  (A) establish, adopt, enter into or amend any Collective
Bargaining Agreement or Benefits Plans, except (1) if such action would not
create a Material Adverse Effect or (2) as required under applicable law or
under the terms of any Collective Bargaining Agreement or (B) grant to any
Affected Employee any increase in compensation, except (1) in the ordinary
course of business consistent with past practice or (2) to the extent
required by the terms of any

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Collective Bargaining Agreement, employment agreement in effect as of the
date of this Agreement or applicable law;

(viii) enter into any Contract with respect to the Auctioned Assets for
goods or services not addressed in clauses (i) through (vii) with a term in
excess of 12 months, it the aggregate future liability or receivable
outstanding on the date for measurement for the purpose of this covenant for
all such Contracts would be in excess of $2 million, not including any such
Contract terminable by notice of not more than 30 days without penalty or
cost (other than de minimis administrative costs); provided, however, that
notwithstanding any other provision of this Agreement to the contrary,
Seller may (A) enter into any Contract reasonably necessary to effect the
physical, legal or operational separation of the sites on which the
Auctioned Assets are located or to otherwise implement the change of
ownership contemplated hereby, or subdivision, of such sites or implement
the provisions of the Ancillary Agreements and (B) enter into and record the
Declarations of Subdivision Easements; or

(ix)   enter into any Contract with respect to the Auctioned Assets
relating to any of the transactions set forth in the foregoing clauses (i)
through (viii).

(c) Without limiting the generality of Sections 7.01(a) and (b), to the
extent Section 7.01(a) or (b) prohibits Seller from entering into any Contract
for goods and services in connection with maintenance or capital expenditures,
Buyer agrees that Seller may request Buyer's consent to enter into such
Contract, such consent not to be unreasonably withheld, and to the extent Buyer
so consents, all liabilities and obligations under such Contract shall
constitute Assumed Obligations and Buyer shall otherwise, reimburse Seller for
all its expenditures thereunder.

(d) Notwithstanding anything in this Section 7.01 to the contrary,
Seller may cake any action, incur any expense or enter into any obligation with
respect to the Auctioned Assets to the extent that (i) all obligations and
liabilities arising with respect thereto do not constitute Assumed Obligations
or (ii) Seller otherwise provides that such obligations and liabilities shall
not be assumed or retained by Buyer.

SECTION 7.02. Access to Information. (a) Between the date of this
Agreement and the Closing Date, Seller will, subject to the Confidentiality
Agreement,

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during ordinary business hours and upon reasonable notice (i) give Buyer and its
representatives reasonable access to all books, records, plants, offices and
other facilities and properties constituting the Auctioned Assets, including for
the purpose of observing the operation by Seller of the Auctioned Assets, (ii)
permit Buyer to make such reasonable inspections thereof as Buyer may reasonably
request, (iii) furnish Buyer with such financial and operating data and other
information with respect to the Auctioned Assets as Buyer may from time to time
reasonably request, (iv) furnish Buyer upon request a copy of each material
report, schedule or other document with respect to the Auctioned Assets filed by
Seller with, or received by Seller from, the PSC or FERC; provided, however
that (A) any such activities shall be conducted in such a manner as not to
interfere unreasonably with the operation of the Auctioned Assets, (B) Seller
shall not be required to take any action which would constitute a waiver of the
attorney-client privilege and (C) Seller need not supply Buyer with (1) any
information or access which Seller is under a legal obligation not to supply or
(2) any information which Seller has previously supplied to Buyer.
Notwithstanding anything in this Section 7.02 to the contrary, (I) Seller will
not be required to provide such information or access to any employee records
other than Transferring Employee Records, (II) Buyer shall not have the right to
perform or conduct any environmental sampling or testing at, in, on, around or
underneath the Auctioned Assets and (III) Seller shall not be required to
provide such access or information with respect to any Retained Asset or
Retained Liabilities.

(b) Unless otherwise agreed to in writing by Buyer, Seller shall, for a
period commencing on the Closing Date and terminating three years after the
Closing Date, keep confidential and shall cause its representatives to keep
confidential all Confidential Information (as defined in the Confidentiality
Agreement) on the terms set forth in the Confidentiality Agreement. Except as
contemplated by the following sentence, Seller shall not release any person from
any confidentiality agreement now existing with respect solely to the Auctioned
Assets or waive or amend any provision thereof. After the Closing Date, upon
reasonable request of Buyer, Seller shall, to the maximum extent permitted by
law and the applicable Bidder Confidentiality Agreement (as defined below),
appoint Buyer to be Seller's representative and agent in respect of confidential
information relating to the Auctioned Assets under the confidentiality
agreements ("Bidder Confidentiality Agreements") between Seller and
prospective purchasers of certain generation assets of Seller of which the
Auctioned Assets form part.

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(c) From and after the Closing Date, Buyer shall retain all Operating
Records (whether in electronic form or otherwise) relating to the Auctioned
Assets on or prior to the Closing Date. Buyer also agrees that, from and after
the Closing Date, Seller shall have the right, upon reasonable request to Buyer,
to receive from Buyer copies of any Operating Records or other information in
Buyer's possession relating to the Auctioned Assets on or prior to the Closing
Date and required by Seller in order to comply with applicable law. Seller shall
reimburse Buyer for its reasonable costs and expenses incurred in connection
with the foregoing sentence.

SECTION 7.03. Consents and Approvals; Transferable Permits. (a) Seller
and Buyer shall cooperate with each other and (i) prepare and file (or otherwise
effect) as soon as practicable all applications, notices, petitions and filings
with respect to and (ii) use their reasonable best efforts (including
negotiating in good faith modifications and amendments to this Agreement and the
Ancillary Agreements) to obtain (A) the Seller Required Regulatory Approvals and
the Buyer Required Regulatory Approvals and (B) any other consents, approvals or
authorizations of any other Governmental Authorities or third parties that are
necessary to consummate the transactions contemplated by this Agreement or the
Ancillary Agreements. Without limiting the generality of the foregoing, (1) each
Party agrees to, upon the other Party's request, support such other Party's
applications for regulatory approvals of the purchase and sale of the Auctioned
Assets contemplated by this Agreement, (2) Buyer agrees not to seek any relief
from, or modifications or amendments in respect of, any bid cap, price
limitation or other market power mitigation measure or other restriction with
respect to any power generation operations and assets described in or
contemplated by Section 6. 03 (b) (iii) (B) (2) until after the Closing Date and
(3) Buyer and Seller agree to defend any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or the Ancillary
Agreements, or the consummation of the transactions contemplated hereby or
thereby, including seeking to have any stay or temporary restraining order
entered by any Governmental Authority vacated or reversed.

(b) Upon execution of this Agreement, Seller shall commence the process
of transferring to Buyer the Transferable Permits, including completing and
filing applications and related documents with the appropriate Governmental
Authorities. Seller hereby reserves the right to modify, alter or amend any
Transferable Permit or to refuse to correct violations or deficiencies in
respect of

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any Transferable Permit as long as such modification, alteration, amendment or
refusal would not, individually or in the aggregate, create a Material Adverse
Effect. Seller shall use its reasonable best efforts to give notice to Buyer of
any modification, alteration or amendment to any Transferable Permit.

(c) Seller shall use its reasonable best efforts to cooperate with
Buyer in the transfer of Transferable Permits to Buyer by Closing. If the
transfer of any Transferable Permit cannot be completed by Closing, Buyer is
hereby authorized, but not required, to act as Seller's representative and agent
in respect of such Transferable Permit and to do all things necessary for
effecting transfer of such Transferable Permit as soon after the Closing as is
practicable, with Seller remaining the Transferable Permit "holder of record" in
such case until such transfer is completed, In the case of each such
Transferable Permit, Seller shall, to the maximum extent permitted by law and
such Transferable Permit, enter into such reasonable arrangements with Buyer as
are necessary to provide Buyer with the benefits and obligations of such
Transferable Permit. It Buyer is able to complete the transfer of any
Transferable Permit after Closing without the occurrence of any event that, if
such event had occurred between the execution of this Agreement and the Closing,
would have created, individually or in the aggregate, a Material Adverse Effect,
Seller may substitute Buyer in its place and stead as the Party responsible for
completing the transfer of such Transferable Permit.

SECTION 7.04. Further Assurances.  (a) Subject to the terms and
conditions of this Agreement, each of the Parties will use its reasonable best
efforts to take, or cause to be taken, as soon as possible, all action, and to
do, or cause to be done, as soon as possible, all things necessary, proper or
advisable under applicable laws and regulations to consummate the sale of the
Auctioned Assets pursuant to this Agreement as soon as possible, including using
its reasonable best efforts to ensure satisfaction of the conditions precedent
to each Party's obligations hereunder. Prior to Buyer's submission of any
application with a Governmental Authority for a regulatory approval, Buyer shall
submit such application to Seller for review and comment and Buyer shall
incorporate into such application any revisions reasonably requested by Seller.
Neither of the Parties will, without prior written consent of the other Party,
take or fail to take, or permit their respective Affiliates to take or fail to
take, any action, which would reasonably be expected to prevent or materially
impede, interfere with or delay the consummation, as soon as

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possible, of the transactions contemplated by this Agreement or the Ancillary
Agreements. Without limiting the generality of the foregoing, each of the
Parties shall use its reasonable best efforts to negotiate in good faith as soon
as possible after the date of this Agreement, and enter into (i) the A-11
License, the terms of which shall be substantially as set forth in Exhibit F,
(ii) the NYPA Assignment, the terms of which shall be reasonably satisfactory to
Buyer and Seller, (iii) to the extent required to achieve subdivision of the
Astoria site, one or more contracts, agreements or other arrangements
satisfactory to the New York City Fire Department regarding fire prevention at
the Astoria site and (iv) any other agreement reasonably necessary to consummate
the sale of the Auctioned Assets pursuant to this Agreement as soon as possible.

(b) From time to time after the date hereof, without further
consideration and at its own expense, (i) Seller will execute and deliver such
instruments of assignment or conveyance as Buyer may reasonably request to more
effectively vest in Buyer Seller's title to the Auctioned Assets (subject to
Permitted Exceptions and the other terms of this Agreement) and (ii) Buyer will
execute and deliver such instruments of assumption as Seller may reasonably
request in order to more effectively consummate the sale of the Auctioned Assets
and the assumption of the Assumed Obligations pursuant to this Agreement.

(c) Seller shall not sponsor or support any recommendation or
application to effect prior to April 1, 2002 (i) a reduction in the locational
generation capacity requirement that 80% of New York City peak electric loads
must be met with in-City generation capacity, as in effect as of the date of
this Agreement, unless such reduction is justified by a significant change in
the transmission import capability into New York City whether as a result of
actions by Seller or others, (ii) a reduction in the $105/kW-year bid and price
cap in respect of capacity under the Mitigation Measures, as in affect as of the
date of this Agreement, or (iii) a change in the method of determining required
system capability set forth in NYPP Billing Procedure 4-11 (Installed Reserve
Requirements), as in effect as of the date of this Agreement that would reduce
the installed reserve requirements for the winter capability period applicable
to summer peaking systems if such reduction would also reduce the annual price
for installed capacity that Buyer could otherwise obtain,

(d) Seller shall join or support Buyers application to the PSC for the
certification required under

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Section 32(c) of the Public Utility Holding Company Act of 1935 in order for
Buyer to obtain qualification, with respect to the Auctioned Assets, as an
exempt wholesale generator under the Energy Policy Act of 1992.

(e) Seller and Buyer shall cooperate in good faith to establish a
transition committee to consider operational and business issues related to the
purchase and sale of the Auctioned Assets.

(f) Prior to the Closing Date, Seller shall cooperate in good faith
with Buyer to enable Buyer to obtain insurance in respect of the Auctioned
Assets comparable to that maintained by Seller as of the date of this Agreement.

(g) Seller and Buyer shall cooperate in good faith to enable Buyer to
obtain fuel storage capacity with respect to the Auctioned Assets.

SECTION 7.05. Public Statement. The Parties shall consult with each
other prior to issuing any public announcement, statement or other disclosure
with respect to this Agreement, the Ancillary Agreements or the transactions
contemplated hereby or thereby, including any statement appearing in any filing
contemplated hereby or thereby, and shall not issue any such public
announcement, statement or other disclosure prior to such consultation, except
as may be required by law.

SECTION 7.06. Tax Matters. (a) All transfer and sales taxes (including
any petroleum business taxes and similar excise taxes on sales of petroleum
based products) incurred in connection with this Agreement and the transactions
contemplated hereby shall be borne by Buyer. Buyer shall prepare and file in a
timely manner any and all Tax Returns or other documentation relating to such
taxes; provided, however, that, to the extent required by applicable law, Seller
will join in the execution of any such Tax Returns or other documentation
relating to any such taxes. Buyer shall provide to Seller copies of each Tax
Return described in the proviso in the preceding sentence at least 30 days prior
to the date such Tax Return is required to be filed.

(b) At Seller's election, but on no less than 10 Business Days' notice
to Buyer, the transfer of the Auctioned Assets and the receipt of the Purchase
Price shall be made through a qualified intermediary in a manner satisfying the
requirements of Treasury Regulation Section 1.1031(k)-1(g), so long as such
election by Seller does not create a Material Adverse Effect and Seller

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indemnifies Buyer for its additional costs and expenses incurred by reason of
such election.

(c) Each Party shall provide the other Party with such assistance as
may reasonably be requested by the other Party in connection with the
preparation of any Tax Return, any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
for Taxes, and each Party shall retain and provide the other Party with any
records or information which may be relevant to such return, audit, examination
or proceedings. Any information obtained pursuant to this Section 7.06 (c) or
pursuant to any other Section hereof providing for the sharing of information or
review of any Tax Return or other instrument relating to Taxes shall be kept
confidential by the parties hereto.

(d) if either Buyer or Seller receives a refund of Taxes in respect of
the Auctioned Assets for a taxable period including the Closing Date, Buyer
shall pay to Seller the portion of any such refund attributable to the portion
of such taxable period prior to the Closing Date, and Seller shall pay to Buyer
the portion of any such refund attributable to the portion of such taxable
period on and after the Closing Date.

SECTION 7.07. Bulk Sales or Transfer Laws. Buyer acknowledges that
Seller will not comply with the provisions of any bulk sales or transfer laws of
any jurisdiction in connection with the transactions contemplated by this
Agreement. Buyer hereby waives compliance by Seller with the provisions of the
bulk sales or transfer laws of all applicable jurisdictions.

SECTION 7.08. Storage. Seller shall store for Buyer the Auctioned
Assets described in the second sentence of Section 2.01 until the date that is
six months after the Closing Date or, in respect of all or a portion of such
Auctioned Assets, until one or more earlier dates proposed by Buyer with
reasonable advance notice, which schedule shall be reasonably acceptable to
Seller. Buyer agrees to reimburse Seller for its reasonable costs and expenses
in connection with such storage. Buyer agrees that Seller shall have no
responsibility or liability for the actual removal of such Auctioned Assets from
the actual storage location, and that Buyer shall have sole responsibility
therefor. Notwithstanding the provisions of Section 10.01, Buyer agrees that
Seller shall have no liability for loss or damage with respect to the matters
contemplated by this Section 7.08 or such Auctioned Assets, and Buyer agrees to
hold each Seller Indemnitee harmless from and against all

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loss or damage or Indemnifiable Losses, and to indemnify each Seller Indemnitee
from and against all loss or damage or Indemnifiable Losses incurred, asserted
against or suffered as a result of any storage or other services provided by
Seller pursuant to this Section 7.08, in each case, except to the extent any
such loss or damage or Indemnifiable Loss results in whole or in part from the
gross negligence or wilful or wanton acts or omissions to act of any Seller
Indemnitee (or any contractor or subcontractor of Seller).

SECTION 7.09, Information Resources. From the Closing Date until the
date that is three months thereafter, Seller shall provide Buyer with access to
Seller's mainframe computer only to the extent reasonably necessary to enable
Buyer to use the PPMIS and MMS (in read only mode) systems and applications
solely in connection with the Auctioned Assets. Buyer agrees that it will not
use any such access for any purpose other than for the use of the PPMIS and MMS
systems and applications solely in connection with the Auctioned Assets. Buyer
acknowledges that, as long as it retains access to Seller's mainframe computer,
Seller, its employees and third parties may have access to Buyer's information
resources systems and applications (including the PPMIS and MMS systems and
applications served by Seller's mainframe computer). Notwithstanding the
provisions of Section 10.01, Buyer agrees that Seller shall have no liability or
obligation whatsoever with respect to the matters contemplated by this Section
7.09, and Buyer agrees to hold each Seller Indemnitee harmless from and against
all loss or damage or Indemnifiable Losses, and to indemnify each Seller
Indemnitee from and against all loss or damage or Indemnifiable Losses incurred,
asserted against or suffered as a result of Buyer's access to Seller's mainframe
computer pursuant to this Section 7.09, in each case, except to the extent any
such loss or damage or Indemnifiable Loss results in whole or in part from the
gross negligence or wilful or wanton acts or omissions to act of any Seller
Indemnitee (or any contractor or subcontractor of Seller).

SECTION 7.10. WITNESS SERVICES. At all times from and after the Closing
Date, each Party shall use reasonable best efforts to make available to the
other Party, upon reasonable written request, its and its subsidiaries' then
current or former officers, directors, employees (including former employees of
Seller) and agents as witnesses to the extent that (i) such persons may
reasonably be required by such requesting Party in connection with any claim,
action, proceeding or investigation in which such requesting Party may be
involved

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and (ii) there is no conflict between Buyer and Seller in such claim, action,
proceeding or investigation. Such other Party shall be entitled to receive from
such requesting Party, upon the presentation of invoices for such witness
services, payments for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses and direct and indirect costs of employees who are
witnesses, as may be reasonably incurred in providing such witness services.

SECTION 7.11. Consent Orders. Buyer and Seller agree to cooperate with
each other and NYSDEC to facilitate the entry of a consent order between NYSDEC
and Buyer, wherein Buyer will agree to assume and perform the Assumed Consent
Order Obligations.

SECTION 7.12. Nitrogen Oxide Allowances. Seller agrees to negotiate in
good faith with NYSDEC for nitrogen oxide allowances to be allocated to the
Auctioned Assets for any period subsequent to the year 2002.

SECTION 7.13. Trade Names. Seller shall not object to the use by Buyer
of any trade names, trademarks, service marks or logos (and any rights to and in
the same, including any right to use the same) primarily relating to the
Generating Facilities that contain the words "Arthur Kill", "Astoria Gas
Turbine" or "Astoria Gas Turbines"; provided, however, that Buyer shall not use
any trade names, trademarks, service marks or logos containing the word
"Astoria" unless in each case immediately followed by the words "Gas Turbine" or
"Gas Turbines".

ARTICLE VIII

Conditions

SECTION 8.01. Conditions Precedent to Each Party's Obligation to Effect
the Purchase and Sale. The respective obligations of each Party to effect the
purchase and sale of the Auctioned Assets shall be subject to the satisfaction
or waiver by such Party on or prior to the Closing Date of the following
conditions, unless, in the case of Section 8.01(c) below, the PSC determines
that such condition need not be included or complied with:

(a) the Seller Required Regulatory Approvals and Buyer Required
Regulatory Approvals shall have been obtained and all conditions to
effectiveness prescribed therein or otherwise by law, regulation or order
shall have been satisfied; provided, however, that if at the time any
Seller Required Regulatory Approval or Buyer

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Required Regulatory Approval is obtained, a Party reasonably expects a
request for rehearing or a challenge thereto to be filed or if a request
for rehearing or a challenge thereto has been filed, in each case, which,
if successful, would cause such Seller Required Regulatory Approval or
Buyer Required Regulatory Approval, as the case may be, to be reversed,
stayed, enjoined, set aside, annulled, suspended or substantially modified,
then such Party may by notice to the other Party within five Business Days
after receipt of such Seller Required Regulatory Approval or Buyer Required
Regulatory Approval, as the case may be, delay the Closing until the time
for requesting rehearing has expired or until such challenge is decided, in
each case, whether or not any appeal thereof is pending; provided
further, however, that if the Closing is delayed pursuant to the
foregoing provision, the Termination Date shall be automatically extended
for a period of time equal to the period of such delay;

(b) no preliminary or permanent injunction or other order or decree by
any Federal or state court of competent jurisdiction and no statute or
regulation enacted by any Governmental Authority prohibiting the
consummation of the purchase and sale of the Auctioned Assets
(collectively, "Restraints") shall be in effect;

(c) the ISO shall have become operational to the extent reasonably
necessary to monitor market power in respect of the Auctioned Assets;

(d) delivery of each Continuing Site Agreement, each Declaration of
Easements Agreement, each Declaration of Subdivision Easements and each
Zoning Lot Development Agreement to the Title Company for recording; and

(e) execution and delivery by NYPA of the NYPA Assignment.

SECTION 8.02. Conditions Precedent to Obligation of Buyer To Effect the
Purchase and Sale. The obligation of Buyer to effect the purchase and sale of
the Auctioned Assets contemplated by this Agreement shall be subject to the
satisfaction or waiver by Buyer on or prior to the Closing Date of the following
additional conditions:

(a) Seller shall have performed in all material respects its covenants
and agreements contained in this

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Agreement which are required to be performed on or prior to the Closing
Date;

(b) the representations and warranties of Seller which are set forth in
this Agreement shall be true and correct as of the date of this Agreement
and as of the Closing Date, as it made at and as of such time (except to
the extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, create a Material Adverse Effect;

(c) Buyer shall have received a certificate from an authorized officer
of Seller, dated the Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Sections 8.02(a) and (b)
have been satisfied;

(d) all material Permits and Environmental Permits required for Buyer
to conduct the business and operations of the Auctioned Assets as currently
conducted shall have been transferred or will be transferable to Buyer, or
shall have been obtained or will be obtainable by Buyer, or shall have been
made available to Buyer in accordance with section 7.03(c), on, prior to or
within a reasonable period of time after the Closing Date;

(e) Buyer shall have received (i) the deeds of conveyance substantially
in the form of Exhibits B-1 and B-2, respectively, (ii) a Foreign
investment in Real Property Tax Act Certification and Affidavit
substantially in the form of Exhibit C and (iii) an opinion from John D.
McMahon, Esq., General Counsel of Seller or other counsel reasonably
acceptable to Buyer, dated the Closing Date, substantially in the form set
forth in Exhibit D;

(f) execution and delivery by Seller of each of (i) the Transition
Capacity Agreement and the Zoning Lot Development Agreements, (ii) the A-11
License in a form reasonably satisfactory to Buyer and (iii) the NYPA
Assignment, in a form and on terms reasonably satisfactory to Buyer;

(g) the Title Company shall be willing to issue to Buyer a New York
form of ALTA (1992) Owner's Title Insurance Policy insuring fee title to
the Buyer Real

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Estate in an amount equal to that portion of the Purchase Price properly
allocable to Buyer Real Estate, subject only to the Permitted Exceptions;
and

(h) Buyer shall have received originals of the ALTA/ACSM Land Title
Surveys which include the Buyer Real Estate in addition to other property,
signed by the surveyor with Buyer's name and the name of not more than one
other Party designated by Buyer added to the certification set forth
thereon.

SECTION 8.03. Conditions Precedent to Obligation of Seller To Effect
the Purchase and Sale. The obligation of Seller to effect the purchase and the
sale of the Auctioned Assets contemplated by this Agreement shall be subject to
the satisfaction or waiver by Seller on or prior to the Closing Date of the
following additional conditions;

(a) Buyer shall have performed in all material respects its covenants
and agreements contained in this Agreement which are required to be
performed on or prior to the Closing Date;

(b) the representations and warranties of Buyer which are set forth in
this Agreement shall be true and correct as of the date of this Agreement
and as of the Closing Date, as if made at and as of such time (except to
the extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "Buyer Material Adverse Effect" set forth therein) would
not, individually or in the aggregate, create a Buyer Material Adverse
Effect;

(c) Seller shall have received a certificate from an authorized officer
of Buyer, dated the Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Sections 8.03(a) and (b)
have been satisfied;

(d) Seller shall have received an opinion substantially in the form of
Exhibit E dated as of the Closing Date and from counsel reasonably
acceptable to Seller;

(e) execution and delivery by Buyer of each of (i) the Transition
Capacity Agreement, the Arthur Kill Zoning Lot Development Agreement and,
unless executed and delivered prior to the Closing Date, the Astoria Zoning
Lot Development Agreement, (ii) the A-11 License

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in a form reasonably satisfactory to Seller and (iii) the NYPA Assignment,
in a form and on terms reasonably satisfactory to Seller;

(f) Buyer shall have provided evidence in form and substance reasonably
satisfactory to Seller of compliance by Buyer with its obligations under
Article IX; and

(g) if Buyer has assigned its rights, interests and obligations under
this Agreement in accordance with the terms hereof,

(i) Buyer and Seller shall have executed and delivered the
Guarantee Agreement;

(ii) Guarantor shall have performed in all material respects its
covenants and agreements contained in the Guarantee Agreement which are
required to be performed on or prior to the Closing Date;

(iii) the representations and warranties of Guarantor which are
set forth in the Guarantee Agreement shall be true and correct as of
the date of the Guarantee Agreement and as of the Closing Date, as if
made at and as of such time (except to the extent expressly made as of
an earlier date, in which case as of such date), except where the
failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"Guarantor Material Adverse Effect" set forth therein) would not,
individually or in the aggregate, create a Guarantor Material Adverse
Effect (as defined therein);

(iv) Seller shall have received a certificate from an authorized
officer of Guarantor, dated the Closing Date, to the effect that, to
the best of such officer's knowledge, the conditions set forth in
Sections 8, 03(g) (ii) and (iii) have been satisfied; and

(v) Seller shall have received an opinion substantially in the
form of Exhibit K dated the Closing Date and from counsel reasonably
acceptable to Seller.

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ARTICLE IX

Employee Matters

SECTION 9.01. Employee Matters. (a) Buyer shall offer equivalent
employment at the Auctioned Assets to those employees of Seller regularly
assigned by Seller to work at the Auctioned Assets on the Closing Date in the
job titles and facilities listed in Schedule 9.01(a)(all such employees
described above and those individuals described in the following sentence being
hereinafter referred to as "Affected Employees"). Affected Employees include
each such employee of Seller who is not actively at work on the Closing Date due
solely to a temporary short-term absence, whether paid or unpaid, in accordance
with applicable policies of Seller, including as a result of vacation, holiday,
personal time, leave of absence, union leave, short- or long-term disability
leave, military leave or jury duty. Affected Employees shall cease to be
employees of Seller on the Closing Date and their period of employment by Buyer
shall begin on the Closing Date. Seller shall be responsible for any obligation
to provide employee benefits to an Affected Employee prior to such employee's
period of employment by Buyer.

All such offers of employment will be made (i) in accordance with all
applicable laws and regulations, and (ii) for employees represented by Utility
Workers' Union of America AFL-CIO and its Local Union 1-2 ("Local 1-2"), in
accordance with the Local 1-2 Collective Bargaining Agreement (as defined in
Schedule 9.01(b)) and (iii) for employees represented by Local Union No. 3 of
the International Brotherhood of Electrical Workers, AFL-CIO ("Local 3") in
accordance with the Local 3 Collective Bargaining Agreement (as defined in
Schedule 9.01(b)). Each Affected Employee who becomes employed by Buyer pursuant
to this Section 9.01(a) shall be referred to herein as a "Continued Employee".

Buyer may commence discussions concerning offers for employment
beginning on the Closing Date to Affected Employees at any time following the
date of this Agreement.

(b) Schedule 9.01(b) sets forth the collective bargaining agreements,
and amendments thereto, to which Seller is a party in connection with the
Auctioned Assets (the "Collective Bargaining Agreements"). Affected employees
who are included in the collective bargaining units covered by the Collective
Bargaining Agreements are referred to herein as "Affected Union Employees". Each
Continued Employee who is an Affected Union Employee shall

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be referred to herein as a "Continued Union Employee". On the Closing Date,
Buyer will assume the terms and conditions of the Collective Bargaining
Agreements, except as set forth in Section 9.02(b) below, as they relate to
Affected Union Employees until the respective expiration dates of the Collective
Bargaining Agreements. Buyer will comply with its legal obligations with respect
to collective bargaining under Federal labor law for the employees at the
Auctioned Assets in the job titles or related work responsibilities of the
Affected Union Employees, and Buyer will comply with all applicable obligations
thereunder as the new owner of the Auctioned Assets. Buyer shall recognize Local
1-2 and Local 3 as the exclusive collective bargaining representatives of the
employees at the Auctioned Assets in the job titles or related work
responsibilities of the Affected Union Employees and Buyer agrees that, should
any other business entity (regardless of its relationship to Buyer) acquire all
or a portion of the Auctioned Assets from Buyer prior to the expiration date of
the respective Collective Bargaining Agreements, Buyer will require such
business entity to (i) offer employment to Affected Union Employees employed by
Buyer at the Auctioned Assets immediately prior to the change in ownership, (ii)
recognize Local 1-2 and Local 3 as the exclusive collective bargaining
representatives of Buyer's employees at the Auctioned Assets in the job titles
and work responsibilities of the Affected Union Employees, and (iii) assume the
terms and conditions of the Collective Bargaining Agreements as they relate to
Affected Union Employees from the date of such acquisition through the
expiration date of the Collective Bargaining Agreements.

SECTION 9.02. Continuation of Equivalent Benefit Plans/Credited 
Service (a) For not less than three years following the Closing Date, Buyer
shall maintain compensation (including base pay and bonus compensation) and
employee benefits and employee benefit plans and arrangements for each Continued
Employee who is not a Continued Union Employee (a "Continued Non-Union
Employee") which are at least equivalent to those provided pursuant to the
compensation, employee benefits and employee benefit plans and arrangements in
effect on the Closing Date for the Affected Employees who are not Affected Union
Employees. Such total compensation shall be based upon (x) such employee's
existing individual base pay, (y) such employee's authorized overtime, if
applicable, and (z) the average bonus and benefit component for such employee's
salary plan level, as consistently applied by Seller, apportioned according to
such employee's base pay. No provision of this Agreement shall affect any
Continued Non-Union Employee's status as an employee-at-will.

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(b) From the Closing Date until the expiration date of the applicable
Collective Bargaining Agreement, Buyer shall provide to each Continued Union
Employee benefits and employee benefit plans and arrangements which are
equivalent to those provided under such Collective Bargaining Agreement or any
other collective bargaining agreement entered into between Buyer and the
applicable collective bargaining representatives for the employees at the
Auctioned Assets in effect from time to time after the Closing Date. Such
benefits, plans and arrangements include the following: (i) hospital, medical,
dental, vision care and prescription drug benefits (including employee
contributions to be made on a pre-tax basis), (ii) health care and dependent
care flexible spending accounts; (iii) employer-provided basic group term life
and accidental death and dismemberment insurance; (iv) employee-paid group
universal life and spousal and dependent child life insurance; (v) sick
allowance (short term disability) and long term disability benefits; (vi)
business travel accident insurance and crime protection insurance; (vii)
occupational accidental death insurance; (viii) adoption benefits and child care
and elder care referral benefits; (ix)) tuition aid benefits (x) vacation and
holidays; (xi) employee stock purchase plan (including employer matching
contributions) and (xii) defined benefit pension and 401(k) plan benefits. In
providing such benefits, Buyer shall have the right, subject to any applicable
laws, to use different providers from those used by Seller and to establish
Buyer's own benefit plans or use Buyer's existing benefit plans. For purposes
hereof, except as provided in Section 9.04(b), Buyer shall have no obligation to
maintain a fund holding or measured by common stock of Seller's parent under any
of Buyer's plans or arrangements, notwithstanding any such fund maintained by
Seller under its plans and arrangements.

(c) Continued Employees shall be given credit by Buyer for all service
with Seller and its Affiliates under all existing or future employee benefit and
fringe benefit plans, programs and arrangements of the Buyer ("Buyer Benefit
Plans") in which they become participants. The service credit given by Buyer
shall be for purposes of eligibility, vesting, eligibility for early retirement
and early retirement subsidies, benefit accrual and service related level of
benefits. Buyer shall assume and honor all vacation, sick and personal days
accrued and unused by Continued Employees through the Closing Date in accordance
with Seller's applicable policies and arrangements.

SECTION 9.03. Pension Plan (a) Effective as of the Closing Date, Buyer
shall have in effect defined benefit pension plans ("Buyer's Pension Plans")
intended to be

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(i) qualified pursuant to Section 401(a) of the Code and (ii) nonqualified, in
order to provide for benefits which would otherwise be payable under the
applicable qualified plan but for the application of Sections 401 (a) (17) and
415 of the Code, providing benefits as of the Closing Date identical in all
material respects (except for such changes as may be required by law) to the
benefits provided to them under Seller's Pension Plans (as defined below), in
particular (x) for Continued Non-Union Employees, such Buyer's Pension Plans to
provide benefits identical in all material respects to those benefits provided
under Seller's Retirement Plan for Management Employees and Seller's
Supplemental Retirement Income Plan, and (y) for Continued Union Employees, such
Buyer's Pension Plans to provide benefits identical in all material respects to
those provided under Seller's Pension and Benefits Plan (collectively, "Seller's
Pension Plans"), in each case, as of the Closing Date. Buyer acknowledges and
agrees that one such material respect is to count age after termination of
employment for purposes of satisfying requirements for early retirement
eligibility and early retirement subsidies.

(b) Continued Employees participating in Seller's Pension Plans
immediately prior to the Closing Date shall become participants in Buyer's
Pension Plans as of the Closing Date. Without limiting the generality of Section
9.02 (c), Continued Employees shall receive credit for all compensation and
service with Seller (subject to the terms of Seller's Pension Plans) for
purposes of eligibility for participation, vesting, eligibility for early
retirement and early retirement subsidies and benefit accrual under Buyer's
Pension Plans. Seller shall be responsible for Continued Employees' pension
benefits accrued up to the Closing Date, and Buyer shall be responsible for
pension benefits accrued by such Continued Employees on and after the Closing
Date as provided herein. Buyer may offset against the accrued benefits
determined under Buyer's Pension Plans the accrued benefits determined under
Seller's Pension Plans. For the purpose of this Section 9.03 (b), "accrued
benefit" means the amount that would be paid as a life annuity at normal
retirement age irrespective of the date of actual distribution from either
Seller's or Buyer's Pension Plans. Seller shall make pension distributions to
Continued Employees of the vested portion of their accrued benefits in
accordance with the terms of Seller's Pension Plans as in effect from time to
time. As soon as reasonably practicable following the Closing Date, Seller shall
provide Buyer a list showing, as of the Closing Date, the accrued benefit of
each Continued Employee under Seller's Pension Plans.

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(c) In the event that any other business entity (regardless of its
relationship to Buyer) acquires all or a portion of the Auctioned Assets from
Buyer at any time prior to the third anniversary of the Closing Date in the case
of Continued Non-Union Employees and prior to the expiration date of the
applicable Collective Bargaining Agreement in the case of Continued Union
Employees, Buyer will require such entity to maintain the defined benefit plans,
provide the benefits and recognize compensation and service with Seller and
Buyer to the same extent as Buyer is required under Sections 9.03(a) and (b)
above.

SECTION 9.04. 401(k) Plan (a) Effective as of the Closing Date, Buyer
shall have in effect tax-qualified defined contribution plans that include a
qualified cash or deferred arrangement within the meaning of Section 401(k) of
the Code ("Buyer's 401(k) Plans") that will provide benefits that are identical
in all material respects (except for such changes as may be required by law) to
those provided by (i) Seller's Thrift Savings Plan for Management Employees, in
the case of Continued Non-Union Employees, and (ii) Seller's Retirement Income
Savings Plan for Weekly Employees, in the case of Continued Union Employees
(such Seller plans herein referred to collectively as "Seller's 401(k) Plans"),
in each case, as of the Closing Date. Each Continued Employee participating in
Seller's 401(k) Plans immediately prior to the Closing Date shall become a
participant in Buyer's 401(k) Plans as of the Closing Date. Continued Employees
shall receive credit for all service with Seller for purposes of eligibility and
vesting under Buyer's 401(k) Plans.

(b) At such time after the Closing Date as Seller is reasonably
satisfied that Buyer's 401(k) Plans meet the requirements for qualification
under Section 401(a) of the Code, Seller shall cause to be transferred to
Buyer's 401(k) Plans in a trust-to-trust transfer in common stock of Seller's
parent (as provided in the following sentence) and cash (or other property
reasonably acceptable to BUYER) an amount equal to the value of the assets held
in the accounts of all Continued Employees (including any outstanding loan
balances of Continued Employees in Seller's 401(k) Plans), subject to any
qualified domestic relations orders. In connection therewith, Buyer shall
establish an investment fund under Buyer's 401(k) Plans to which shall be
transferred the shares of common stock of Seller's parent (or any successor
thereto) which, as of the date of transfer, are credited to the accounts of the
Continued Employees under Seller's 401(k) Plans. After the Closing Date and
prior to any such transfer, Buyer shall cooperate with Seller in the
administration of distributions to and

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loan repayments by Continued Employees. Prior to such transfer of assets, Seller
shall vest any unvested benefits of Continued Employees under Seller's 401(k)
Plans. Following any such transfer of assets, Buyer shall assume all obligations
and liabilities of Seller under Seller's 401(k) Plans with respect to such
Continued Employees, and Seller shall have no further liability to Buyer or any
Continued Employee with respect thereto.

SECTION 9.05. Welfare Plans. (a) Continued Employees and their
dependents who are eligible to participate in Seller's current welfare benefits
plans, programs or arrangements shall be eligible to participate in the welfare
benefits plans, programs or arrangements maintained or established by Buyer
("Buyer's Welfare P1ans"), effective as of the Closing Date. Effective as of the
Closing Date, any and all limitations as to pre-existing conditions and
actively-at-work exclusions and waiting periods under Buyer's Welfare Plans
shall be waived by Buyer with respect to Continued Employees and their eligible
dependents to the extent satisfied under Seller's applicable Welfare Plans. in
addition, effective as of the Closing Date, Buyer shall cause Buyer's Welfare
Plans to recognize any out-of-pocket health care expenses incurred by Continued
Employees and their eligible dependents prior to the Closing Date and during the
calendar year in which such Closing Date occurs for purposes of determining
their deductibles and out-of-pocket maximums under Buyer's Welfare Plans.
Seller shall retain responsibility under Seller's welfare plans for claims
relating to expenses incurred by Continued Employees and their eligible
dependents prior to the Closing Date. Buyer shall have responsibility under
Buyer's Welfare Plans for claims relating to expenses incurred by Continued
Employees and their eligible dependents on and after the Closing Date.

(b) Effective as of the Closing Date, Buyer shall have in effect health
care and dependent care reimbursement account plans for the benefit of each
Continued Employee, the terms of which shall (i) be identical in all material
respects to the Flexible Reimbursement Account Plans for Management and Weekly
Employees of Seller ("Seller's Reimbursement Account Plans") as in effect on the
Closing Date and (ii) give full effect to, and continue in effect, salary
reduction elections made under Seller's Reimbursement Account Plans. Prior to
the Closing Date, Seller shall cause the accounts of Continued Employees under
Seller's Reimbursement Account Plans to be segregated into separate health care
and dependent care reimbursement accounts (the "Segregated Reimbursement
Accounts"), and such Segregated

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Reimbursement Accounts shall be transferred to and assumed by Buyer as of the
Closing Date.

(c) Buyer shall, subject to any applicable laws, provide a retiree
health program identical in all material respects to Seller's retiree health
program as in effect on the Closing Date to each Continued Employee who
terminates his employment with Buyer within three years after the Closing Date,
in the case of a Continued Non-Union Employee, and on or prior to the expiration
date of the applicable Collective Bargaining Agreement, in the case of a
Continued Union Employee, and, in each case, who at the time of such termination
of employment satisfies the eligibility requirements for such retiree health
program provided by Buyer; provided, however, that Seller shall remain liable,
pursuant to Seller's retiree health program, for all Continued Employees who
satisfy, as of the Closing Date, the eligibility requirements then in effect for
Seller's retiree health program.

SECTION 9.06. Short- and Long-Term Disability. Effective as of the
Closing Date, Buyer shall have in effect short- and long-term disability plans
for the benefit of Continued Employees, the cost of which to Continued Employees
shall be the same as under, and the terms of which are identical in all material
respects to, Seller's applicable plans as in effect as of the Closing Date. Any
and all waiting periods and pre-existing condition clauses shall be waived under
Buyer's short- and long-term disability plans with respect to Continued
Employees.

SECTION 9.07. Life Insurance and Accidental Death and Dismemberment
Insurance. Effective as of the Closing Date, Buyer shall have in effect group
term life insurance, group universal life insurance, accidental death and
dismemberment insurance, occupational accidental death insurance, business
travel accident insurance and crime protection insurance plans for the benefit
of Continued Employees, the cost of which to Continued Employees shall be the
same as under, and terms of which are identical in all material respects to,
Seller's applicable plans that provide such benefits to Continued Employees
immediately prior to the Closing Date.

SECTION 9.08. Severance. (a) Effective as of the Closing Date, Buyer
shall have in effect a severance plan covering Continued Non-Union Employees
that contains terms identical in all material respects to those under Seller's
Severance Pay Plan for Management Employees as of the Closing Date.

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(b) Buyer shall, subject to any applicable laws, provide a special
separation allowance for any Continued Employee whose employment with Buyer is
terminated involuntarily by Buyer other than for cause on or prior to, in the
case of Continued Non-Union Employees, three years after the Closing Date and,
in the case of Continued Union Employees, the expiration date of the applicable
Collective Bargaining Agreement. Such allowance shall be not less than the sum
of four weeks pay plus one week pay for each completed year of service (as
determined by aggregating each affected individual's respective service with
Seller and Buyer) and shall be payable by Buyer in a lump sum within 30 days
after termination of employment. In addition, in the case of each Continued
Non-Union Employee described in the first sentence of this Section 9.08(b),
Buyer shall pay the Continued Non-Union Employee a lump sum equal to the excess
of (i) the actuarial equivalent of the Employee's "potential benefit" under the
applicable Buyer's Pension Plans, which such Employee would receive if such
Employee's employment continued until three years after the Closing Date and
such Employee's base and incentive compensation for such deemed additional
period was the same as in effect on the date of such Employee's termination of
employment with Buyer, over (ii) the actuarial equivalent of such Employee's
"actual benefit under the applicable Buyer's Pension Plans, as of the date of
such Employee's termination of employment from Buyer. For the purpose of the
foregoing sentence, (i) the term "potential benefit" shall refer to the monthly
pension that would have been payable to the applicable Employee commencing on
the first day of the month following the latest of (A) the last day of the
deemed additional period, (B) Employee's attainment of age 55, or (C) the
earlier of (1) the first date as of which the sum of such Employee's age and
years of service, as taken into account in determining the actuarial reduction
for commencement prior to normal retirement age that is to be applied to his
accrued benefit under the applicable Buyer's Pension Plans, equals 75 or (2)
such Employee's attainment of age 65, (ii) the term "actual benefit" shall refer
to the monthly pension payable to such Employee under the applicable Buyer's
Pension Plans commencing as of the date determined in accordance with clause (i)
of this sentence, and (iii) the actuarial equivalent of the "potential benefit"
and the "actual benefit" shall each be a lump sum payable as of the date of such
Employee's termination of employment from Buyer, determined on the basis of the
interest rate used to determine the amount of lump sum distributions and, to the
extent applicable, other actuarial assumptions then in effect under the
applicable Buyer's Pension Plans. Buyer shall also provide outplacement services
to such terminated Continued Non-Union Employee appropriate to the level of the

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Employee's position and job responsibilities. Buyer shall also continue to
provide or cause to be provided to any such terminated Continued Employee health
insurance coverage and group term and universal life insurance coverage at the
same rates as for active Continued Employees for a period equal to the number of
weeks of separation allowance which any such terminated Continued Employee is
entitled to from Buyer. Buyer shall have the right to require a release in form
reasonably satisfactory to Buyer as a condition for eligibility to receive such
separation allowance. The allowance shall not apply to Continued Employees whose
employment is terminated due to death or expiration of sick allowance or other
authorized leave of absence or who terminate employment voluntarily. If at any
time during the three-year period following the Closing Date, Buyer shall assign
a Continued Non-Union Employee to work on a regular basis at a location that is
more than fifty miles from the location to which such Employee is assigned as of
the Closing Date, Buyer shall offer such Employee the option to terminate
employment and receive the severance benefits set forth in this Section 9.08(b)
in lieu of the reassignment.

SECTION 9.09. Workers Compensation. Effective as of the Closing Date,
Buyer shall have in effect a workers compensation program for Continued
Employees that shall provide coverage identical in all material respects to
Seller's workers compensation program as of the Closing Date.

ARTICLE X

Indemnification and Dispute Resolution

SECTION 10.01. Indemnification. (a) Seller will indemnify and hold
harmless Buyer and its Affiliates and their respective directors, officers,
employees and agents (collectively with Buyer and its Affiliates, the "Buyer
Indemnitees") from and against any and all claims, demands or suits by any
person, and all losses, liabilities, damages, obligations, payments, costs and
expenses (including reasonable legal fees and expenses and including costs and
expenses incurred in connection with investigations and settlement proceedings)
(each, an "Indemnifiable Loss"), as incurred, asserted against or suffered by
any Buyer Indemnitee relating to, resulting from or arising out of:

(i) any breach by Seller of any covenant or agreement of Seller
contained in this Agreement or, prior to their expiration in accordance
with Section 12.03, the

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representations and warranties contained in Sections 5.01, 5.02, 5.03 and
5.17;

(ii) the Retained Liabilities;

(iii) noncompliance by Seller with any bulk sales or transfer laws as
provided in Section 7.07; or

(iv) any breach by Seller of any Ancillary Agreement.

(b) Buyer will indemnify and hold harmless Seller and its Affiliates
and their respective directors, officers, trustees, employees and agents
(collectively with Seller and its Affiliates, the "Seller Indemnitees") from and
against any and all Indemnifiable Losses, as incurred, asserted against or
suffered by any Seller Indemnitee relating to, resulting from or arising out of:

(i) any breach by Buyer of any covenant or agreement of Buyer contained
in this Agreement or, prior to their expiration in accordance with Section
12.03, the representations and warranties contained in Sections 6.01, 6.02,
6.03 and 6.04;

(ii) the Assumed Obligations;

(iii) any obligation resulting from any action or inaction of Buyer (A)
under any Contract or warranty pursuant to Section 2.04(b) (whether acting
as principal or representative and agent for Seller pursuant to Section
2.04(b) or otherwise) or (B) pursuant to any Transferable Permit in respect
of which Seller remains the holder of record after the Closing Date
pursuant to Section 7.03(c); or

(iv) any breach by Buyer of any Ancillary Agreement.

(c) The amount of any Indemnifiable Loss shall be reduced to the extent
that the relevant Buyer Indemnitee or Seller Indemnitee (each, an "Indemnitee")
receives any insurance proceeds with respect to an Indemnifiable Loss and shall
be (i) increased to take account of any Tax Cost incurred by the Indemnitee
arising from the receipt of indemnity payments hereunder (grossed up for such
increase) and (ii) reduced to take account of any Tax Benefit realized by the
Indemnitee arising from the incurrence or payment of any such Indemnifiable
Loss. If the amount of any Indemnifiable Loss, at any time subsequent to the
making of an indemnity payment in respect thereof, is reduced by

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recovery, settlement or otherwise under or pursuant to any insurance coverage,
or pursuant to any claim, recovery, settlement or payment by or against any
other person, the amount of such reduction, less any costs, expenses or premiums
incurred in connection therewith, will promptly be repaid by the Indemnitee to
the Party required to provide indemnification hereunder (the "Indemnifying
Party") with respect to such Indemnifiable Loss.

(d) To the fullest extent permitted by law, neither Party nor any Buyer
Indemnitee or any Seller Indemnitee shall be liable to the other Party or any
other Buyer Indemnitee or Seller Indemnitee for any claims, demands or suits for
consequential, incidental, special, exemplary, punitive, indirect or multiple
damages connected with or resulting from any breach after the Closing Date of
this Agreement or the Ancillary Agreements (other than breach of this Article
X), or any actions undertaken in connection with or related hereto or thereto,
including any such damages which are based upon breach of contract, tort
(including negligence and misrepresentation), breach of warranty, strict
liability, statute, operation of law or any other theory of recovery.

(e) The rights and remedies of Seller and Buyer under this Article X
are, solely as between Seller and Buyer, exclusive and in lieu of any and all
other rights and remedies which Seller and Buyer may have under this Agreement,
the Ancillary Agreements (except as expressly provided in either Continuing Site
Agreement or either Declaration of Easements Agreement) or otherwise for
monetary relief with respect to (i) any breach of, or failure to perform, any
covenant or agreement set forth in this Agreement or the Ancillary Agreements by
Seller or Buyer, (ii) any breach of any representation or warranty by Seller or
Buyer, (iii) the Assumed Obligations or the Retained Liabilities, (iv)
noncompliance by Seller with any bulk sales or transfer laws and (v) any
obligation in respect of Section 2.04 or Section 7.03. Each Party agrees that
the previous sentence shall not limit or otherwise affect any non-monetary right
or remedy which either Party may have under this Agreement or the Ancillary
Agreements or otherwise limit or affect either Party's right to seek equitable
relief, including the remedy of specific performance,

(f) Buyer and Seller agree that, notwithstanding Section 10.01(e),
each Party shall retain, subject to the other provisions of this Agreement,
including Sections 10.01(d) and 12.03, all remedies at law or in equity with
respect to (i) fraud or wilful or intentional

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breaches of this Agreement or the Ancillary Agreements and (ii) gross negligence
or wilful or wanton acts or omissions to act of any Indemnitee (or any
contractor or subcontractor thereof) on or after the Closing Date.

SECTION 10.02. Third Party Claims Procedures, (a) If any Indemnitee
receives notice of the assertion of any claim or of the commencement of any
claim, action, or proceeding made or brought by any person who is not a Party or
an Affiliate of a Party (a "Third Party Claim") with respect to which
indemnification is to be sought from an Indemnifying Party, the Indemnitee will
give such Indemnifying Party reasonably prompt written notice thereof, but in
any event not later than 20 Business Days after the Indemnitee's receipt of
notice of such Third Party Claim; provided, however, that a failure to give
timely notice will not affect the rights or obligations of any Indemnitee except
if, and only to the extent that, as a result of such failure, the Indemnifying
Party was actually prejudiced. Such notice shall describe the nature of the
Third Party Claim in reasonable detail and will indicate the estimated amount,
if practicable, of the Indemnifiable Loss that has been or may be sustained by
the Indemnitee.

(b) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided, however, that such counsel is not reasonably
objected to by the Indemnitee; and provided further that the Indemnifying Party
first admits in writing its liability to the Indemnitee with respect to all
material elements of such claim. Should the Indemnifying Party so elect to
assume the defense of a Third Party Claim, the Indemnifying Party will not be
liable to the Indemnitee for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof. If the Indemnifying Party
elects to assume the defense of a Third Party Claim, the Indemnitee will (i)
cooperate in all reasonable respects with the Indemnifying Party in connection
with such defense, (ii) not admit any liability with respect to, or settle,
compromise or discharge, any Third Party Claim without the Indemnifying Party's
prior written consent and (iii) agree to any settlement, compromise or discharge
of a Third Party Claim which the Indemnifying Party may recommend and which by
its terms obligates the Indemnifying Party to pay the full amount of the
liability in connection with such Third Party Claim and releases the Indemnitee
completely in connection with such Third Party Claim. In the event the
Indemnifying Party shall assume the defense of any Third Party Claim, the
Indemnitee shall be entitled to participate

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in (but not control) such defense with its own counsel at its own expense. It
the Indemnifying Party does not assume the defense of any such Third Party
Claim, the Indemnitee may defend the same in such manner as it may deem
appropriate, including settling such claim or litigation after giving notice to
the Indemnifying Party of the terms of the proposed settlement and the
Indemnifying Party will promptly reimburse the Indemnitee upon written request.
Anything contained in this Agreement to the contrary notwithstanding, no
Indemnifying Party shall be entitled to assume the defense of any Third Party
Claim if such Third Party Claim seeks an order, injunction or other equitable
relief or relief for other than monetary damages against the Indemnitee which,
if successful, would materially adversely affect the business of the Indemnitee.

ARTICLE XI

Termination

SECTION 11.01. Termination. (a) This Agreement may be terminated at any
time prior to the Closing by an instrument in writing signed on behalf of each
of the Parties.

(b) This Agreement may be terminated by Seller or Buyer if the Closing
shall not have occurred on or before the date that is 12 months from the date of
this Agreement (the "Termination Date"); provided, however, that the right to
terminate this Agreement pursuant to this Section 11.01(b) shall not be
available to any Party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before such date.

(c) This Agreement may be terminated by either Seller or Buyer if any
Restraint having any of the effects set forth in Section 8.01(b) shall be in
effect and shall have become final and nonappealable; provided, however, that
the Party seeking to terminate this Agreement pursuant to this Section 11-01(c)
shall have used its reasonable best efforts to prevent the entry of and to
remove such Restraint.

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ARTICLE XII

Miscellaneous Provisions

SECTION 12.01. Expenses. Except to the extent specifically provided
herein, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be borne by the Party incurring such
costs and expenses, whether or not the transactions contemplated hereby are
consummated.

SECTION 12.02. Amendment and Modification; Extension; Waiver. This
Agreement may be amended, modified or supplemented only by an instrument in
writing signed on behalf of each of the Parties. Either Party may (i) extend the
time for the performance of any of the obligations or other acts of the other
Party, (ii) waive any inaccuracies in the representations and warranties of the
other Party contained in this Agreement or (iii) waive compliance by the other
Party with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a Party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such Party.
The failure of a Party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.

SECTION 12.03. No Survival of Representations or Warranties. Each and
every representation and warranty contained in this Agreement, other than the
representations and warranties contained in Sections 5.01, 5.02, 5.03 and 5.17
and 6,01, 6.02, 6.03 and 6.04 (which representations and warranties shall
survive for 18 months from the Closing Date), shall expire with, and be
terminated and extinguished by the Closing and no such representation or
warranty shall survive the Closing Date. From and after the Closing Date, none
of Seller, Buyer or any officer, director, trustee or Affiliate of any of them
shall have any liability whatsoever with respect to any such representation or
warranty. The expiration of the representations and warranties contained in
Sections 5.01, 5.02, 5.03 and 5.17 and 6.01, 6.02, 6.03 and 6.04 shall not
affect the Parties' obligations under Article X if the Indemnitee provided the
Indemnifying Party with proper notice of the claim or event for which
indemnification is sought prior to such expiration.

SECTION 12.04. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given (as of the time of delivery or, in
the case of a telecopied communication, of confirmation) if delivered
personally, telecopied (which is confirmed) or sent by

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overnight courier (providing proof of delivery) to the Parties at the following
addresses (or at such other address for a Party as shall be specified by like
notice):

if to Seller, to:

Consolidated Edison Company of New York, Inc. 
4 Irving Place 
New York, NY 10003
Telecopy No.: (212) 677-0601 
Attention: General Counsel 

with a copy on or prior to the Closing Date to:

Cravath, Swaine & Moore 
825 Eighth Avenue
New York, NY 10019 
Telecopy No.: (212) 474-3700 
Attention: George W. Bilicic, Jr., Esq.

if to Buyer, to:

NRG Energy, Inc. 
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403-2445 
Telecopy No.: (612) 373-5392
Attention: General Counsel

with a copy to:

NRG North America
1221 Nicollet Mall, Suite 700
Minneapolis, MN 55403-2445
Telecopy No.: (612) 373-5430
Attention: President & CEO

with a copy to:

Dorsey & Whitney LLP 
Pillsbury Center South 
220 South Sixth Street 
Minneapolis, MN 55402-1498 
Telecopy No.: (612) 340-8738
Attention: Frank H. Voigt

SECTION 12.05. Assignment; No Third Party Beneficiaries  (a) This 
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the Parties and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned

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by any Party, including by operation of law, without the prior written consent
of the other Party, except (i) in the case of Seller (A) to an Affiliate of
Seller or a third party in connection with the transfer of the Transmission
System to such Affiliate or third party or (B) to a lending institution or
trustee in connection with a pledge or granting of a security interest in all or
any part of the Transmission System and this Agreement and (ii) in the case of
Buyer (A) to an Affiliate of Buyer in connection with the transfer of the
Auctioned Assets to such Affiliate and (B) to a lending institution or trustee
in connection with a pledge or granting of a security interest in the Auctioned
Assets and this Agreement; provided, however, that no assignment or transfer of
rights or obligations by either Party shall relieve it from the full liabilities
and the full financial responsibility, as provided for under this Agreement,
unless and until the transferee or assignee shall agree in writing to assume
such obligations and duties and the other Party has consented in writing to such
assumption.

(b) Nothing in this Agreement is intended to confer upon any other
person except the Parties any rights or remedies hereunder or shall create any
third party beneficiary rights in any person, including, with respect to
continued or resumed employment, any employee or former employee of Seller
(including any beneficiary or dependent thereof). No provision of this Agreement
shall create any rights in any such persons in respect of any benefits that may
be provided, directly or indirectly, under any employee benefit plan or
arrangement except as expressly provided for thereunder.

SECTION 12.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law).

SECTION 12.07. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

SECTION 12.08. Interpretation. When a reference is made in this
Agreement to an Article, Section, Schedule or Exhibit, such reference shall be
to an Article or Section of, or Schedule or Exhibit to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words

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"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation" or equivalent words. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meanings when used in the Ancillary Agreements and any
certificate or other document made or delivered pursuant hereto or thereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term, Any
agreement, instrument, statute, regulation, rule or order defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement, instrument, statute, regulation, rule or order as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes, regulations,
rules or orders) by succession of comparable successor statutes, regulations,
rules or orders and references to all attachments thereto and instruments
incorporated therein. References to a person are also to its permitted
successors and assigns.

SECTION 12.09. Jurisdiction and Enforcement. (a) Each of the Parties
irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of
the State of New York, New York County and (ii) the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the Parties agrees to commence any action, suit or proceeding
relating hereto either in the United States District Court for the Southern
District of New York or, if such suit, action or proceeding may not be brought
in such court for jurisdictional reasons, in the Supreme Court of the State of
New York, New York County. Each of the Parties further agrees that service of
process, summons, notice or document by hand delivery or U.S. registered mail at
the address specified for such Party in Section 12.04 (or such other address
specified by such Party from time to time pursuant to Section 12.04) shall be
effective service of process for any action, suit or proceeding brought against
such Party in any such court. Each of the Parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Supreme Court of the State of New York, New York County, or
(ii) the United States District Court

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71

for the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.

(b) The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement or any Ancillary Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement or any Ancillary Agreement and
to enforce specifically the terms and provisions of this Agreement or any
Ancillary Agreement, this being in addition to any other remedy to which they
are entitled at law or in equity.

SECTION 12.10. Entire Agreement. This Agreement, the Confidentiality
Agreement and the Ancillary Agreements including the Exhibits, Schedules,
documents, certificates and instruments referred to herein or therein and other
contracts, agreements and instruments contemplated hereby or thereby, embody the
entire agreement and understanding of the Parties in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth or referred to herein or therein. This Agreement and the
Ancillary Agreements supersede all prior agreements and understandings between
the Parties with respect to the transactions contemplated by this Agreement
other than the Confidentiality Agreement.

SECTION 12.11. 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
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 shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.

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SECTION 12.12. Conflicts. Except as expressly otherwise provided herein
or therein, in the event of any conflict or inconsistency between the terms of
this Agreement and the terms of any Ancillary Agreement, the terms of this
Agreement shall prevail.

IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written.

CONSOLIDATED EDISON COMPANY OF 
NEW YORK, INC., 

by     /s/ Joan S. Freilich
--------------------------------------
Name:    Joan S. Freilich
Title:   Executive Vice President & CFO

NRG ENERGY, INC., 

by     /s/ Craig A. Mataczynski
--------------------------------------
Name.    Craig A. Mataczynski
Title:   Senior Vice President

80

STATE OF NEW YORK    )
)    SS.:
COUNTY OF NEW YORK   )

On this 27th day of January 1999, before me personally appeared Joan S.
Freilich, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that she executed the same in her capacity, and that her
signature on the instrument, the individual, or the corporation upon behalf of
which the individual acted, executed the instrument.

/s/ Peter J. Barrett
---------------------------------------
Peter J. Barrett
NOTARY PUBLIC, STATE OF NEW YORK
NO. 02BA4973207
QUALIFIED IN WESTCHESTER COUNTY
COMMISSION EXPIRES: OCTOBER 15, 2000

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Section 12.12.  Conflicts.  Except as expressly otherwise provided
herein or therein, in the event of any conflict or inconsistency between the
terms of this Agreement and the terms of any Ancillary Agreement, the terms of
this Agreement shall prevail.

IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed by their respective duly authorized officers as of the date first above
written. 

CONSOLIDATED EDISON COMPANY OF 
NEW YORK, INC.,

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73

STATE OF MINNESOTA   )
)    SS.:
COUNTY OF HENNEPIN   )

On this 27th day of January 1999, before me personally appeared Craig
Mataczynski, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that she executed the same in her capacity, and that her
signature on the instrument, the individual, or the corporation upon behalf of
which the individual acted, executed the instrument.

/s/ Cynthia C. Jensen
---------------------------------------
NOTARY PUBLIC

Cynthia C. Jensen
NOTARY PUBLIC-MINNESOTA            
MY COMMISSION EXPIRES JAN. 31, 2000

1
EXHIBIT 10.22

TRANSITION ENERGY SALES AGREEMENT

BETWEEN

ARTHUR KILL POWER LLC

AND

CONSOLIDATED EDISON COMPANY
OF NEW YORK, INC.

Dated as of June 1, 1999

2

TABLE OF CONTENTS
-----------------

Page
----

ARTICLE 1 DEFINITIONS.................................................     2

ARTICLE 2 TERM........................................................     5

ARTICLE 3 ENERGY PURCHASES AND PAYMENTS...............................     6

(a) Energy Conversion Payments.....................................     7

(b) Equivalent Forced Outage Penalty And Incentive Payments........     7

ARTICLE 4 SCHEDULING..................................................     9

ARTICLE 5 FUEL........................................................    11  

ARTICLE 6 ENVIRONMENTAL...............................................    12

6.1 Use of NOx Allowances..........................................    12

ARTICLE 7 BILLING AND PAYMENT PROCEDURES..............................    14

7.1 Billing and Payments...........................................    14

7.2 Billing Disputes...............................................    16

7.3 Survival.......................................................    16

ARTICLE 8 INDEMNIFICATION

8.1 Indemnification...............................................    17

8.2 Third Party Claims Procedures.................................    19

8.3 Survival......................................................    20

ARTICLE 9 LIMITATION OF LIABILITY.....................................    20

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3

ARTICLE 10 FORCE MAJEURE...............................................   21

ARTICLE 11 DEFAULT AND TERMINATION.....................................   22

ARTICLE 12 ADDITIONAL REMEDIES.........................................   22

ARTICLE 13 DISPUTES....................................................   23

ARTICLE 14 REPRESENTATIONS AND WARRANTIES..............................   23

14.1 Representations and Warranties of Con Edison..................   23

14.2 Representations and Warranties of AK Power....................   24

ARTICLE 15 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES....................   25

ARTICLE 16 EXTENSION; WAIVER...........................................   26

ARTICLE 17 COUNTERPARTS................................................   27

ARTICLE 18 GOVERNING LAW...............................................   27

ARTICLE 19 SEVERABILITY................................................   27

ARTICLE 20 AMENDMENT...................................................

27

ARTICLE 21 ENTIRE AGREEMENT............................................   28

ARTICLE 22 FURTHER ASSURANCES..........................................   28

ARTICLE 23 INTERPRETATION..............................................   28

ARTICLE 24 CONFIDENTIALITY.............................................   29

ARTICLE 25 INDEPENDENT CONTRACTOR STATUS...............................   30

ARTICLE 26 JURISDICTION................................................   30

ii

4

ARTICLE 27 CONFLICTS...................................................   31

ARTICLE 28 NOTICES.....................................................   31

iii

5

TRANSITION ENERGY SALES AGREEMENT BETWEEN
ARTHUR KILL POWER LLC AND
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

This Agreement is made and entered into as of June 1, 1999 between
Arthur Kill Power LLC ("AK Power"), a Delaware limited liability company having
its principal place of business at 1221 Nicollet Mall, Minneapolis, Minnesota
55403, and Consolidated Edison Company of New York, Inc. ("Con Edison"), a New
York corporation having its principal place of business at 4 Irving Place, New
York, New York 10003. AK Power and Con Edison shall each be referred to as a
"Party", and shall be referred to collectively as the "Parties."

WHEREAS, Con Edison offered for sale by auction certain electric
generating facilities located at the Arthur Kill Generating Station and the
Astoria Gas Turbine site and certain other assets primarily related thereto
("Auctioned Assets");

WHEREAS, NRG Energy, Inc. ("NRG Energy") and Con Edison have entered
into the Generating Plant and Gas Turbine Asset Purchase and Sale Agreement
("APSA"), dated January 27, 1999, and NRG Energy will assign to AK Power prior 
to the Closing Date (as defined below) its rights and obligations under the APSA
relating to the purchase from Con Edison of the Generating Plant (as defined
below) and certain other assets primarily related thereto in accordance with the
terms and conditions of the APSA, and NRG Energy will assign to Astoria Gas
Turbine Power LLC ("Astoria Power") prior to the Closing Date its rights and
obligations under the APSA relating to the purchase from Con Edison of the Gas
Turbines (as defined below) and certain other assets primarily relating thereto
in accordance with the terms and conditions of the APSA;

WHEREAS, the rights and obligations of AK Power and Con Edison
relating to generators of electric generating capacity, energy, transmission and
ancillary services may be modified by a proposal (the "Proposal") currently
pending before the Federal Energy Regulatory Commission ("FERC") to restructure
the New York Power Pool, which contemplates the formation of the New York
Independent System Operator ("ISO") and the implementation of the ISO Tariff
filed on December 19, 1997, as approved by FERC in FERC Docket Nos.
ER971523-000, OA97-470-000 and ER97-4234-000, as such tariff may be amended from
time to time;

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6

WHEREAS, FERC may approve, accept, modify, or reject the Proposal, and
its actions may affect the Parties' rights and obligations under this Agreement;

WHEREAS, FERC has accepted for filing certain market power mitigation
measures applicable to sales of capacity, energy and certain other services from
specified electric generating units in New York City in FERC Docket No.
ER98-3169-000 (such measures, as may be modified from time to time, and any
other applicable market power mitigation measures that may be imposed by FERC,
ISO or the New York Public Service Commission ("PSC"), the "Mitigation
Measures");

WHEREAS, sales of capacity, energy and certain other services from the
Auctioned Assets will be subject to, and the rights and obligations of the
Parties under this Agreement may be affected by, the Mitigation Measures;

WHEREAS, in recognition of Con Edison's requirements to provide Energy
to its firm customers, AK Power and Con Edison agree to enter into this
Transition Energy Sales Agreement, whereby Con Edison will purchase from AK
Power and AK Power will sell to Con Edison various amounts of Energy for the
term of this Agreement.

NOW THEREFORE, in consideration of the mutual agreements and
commitments contained herein, AK Power and Con Edison hereby agree as follows:

ARTICLE 1      DEFINITIONS

The following terms shall have the meanings set forth below. Any term
used in this Agreement that is not defined herein shall have the meaning that is
in the APSA or, if the term is not defined in the APSA, then the term shall have
the meaning customarily attributed to it by the electric utility industry.

"Agreement" shall mean this Transition Energy Sales Agreement between
AK Power and Con Edison, as it may be amended from time to time.

2

7

"Business Day" shall mean any day other than Saturday, Sunday or any
day on which banking institutions in the State of New York are authorized by law
or other governmental action to close.

"Closing Date" shall mean the date and time at which the closing of
the transactions contemplated by the APSA actually occurs.

"Continuing Site Agreement" means the Arthur Kill Continuing Site
Agreement between Con Edison and NAG Energy, dated January 27, 1999.

"EFOR" shall mean the equivalent forced outage rates set forth in
Appendix A hereto.

"Energy" shall mean the amount of energy in megawatt hours ("MWH")
that AK Power will generate in the Generating Plant and deliver to Con Edison.

"Energy Control Center" shall mean the headquarters of Con Edison's
electric transmission and distribution operations.

"FERC" shall mean the Federal Energy Regulatory Commission or its
successor.

"Firm Commitment" shall mean Con Edison's designation of a Unit for
dispatch during a Week, which designation is communicated in writing to AK Power
by 5 p.m. an the Thursday preceding the Week.

"Fuel" shall mean natural gas, which is commonly burned in the
Generating Plant.

"Gas Turbines" means the gas turbine units GT2 through GT5 and GT7
through GT13 located at the Astoria Gas Turbine site.

"Generating Plant" means the units 2 and 3 steam-powered generating
facilities and gas turbine unit GT 1 located at the Arthur Kill Generating
Station.

"Good Utility Practices" mean any of the practices, methods or acts
engaged in or approved by a significant portion of the electric utility industry
with respect to similar facilities during the relevant time period which in each
case, in the exercise of reasonable judgment in light of

3

8

the facts known at the time the decision was made, could have been expected to
accomplish the desired result at a reasonable cost consistent with good business
practices, reliability, safety, law, regulation, environmental protection, and
expedition. Good Utility Practices are not intended to be limited to the optimum
practices, methods or acts to the exclusion of all others, but rather to
delineate the acceptable practices, methods or acts generally accepted in such
industry.

"Holiday" shall mean any day which is a day on which banking
institutions in the State of New York are authorized by law or other
governmental action to close.

"ISO" shall mean the New York Independent System Operator, as
described in the Supplemental Filing, or its successors.

"ISO Commencement Date" shall mean the date on which the ISO
officially commences operations of a spot market for energy, spinning and
non-spinning reserves and automatic generator control, as signified by the first
day that resources such as the Generating Plant are allowed to bid into each
market on a non-trial or non-experimental basis.

"ISO Tariff" shall mean the tariff described in the Supplemental
Filing, as it may be amended from time to time.

"Maintenance Outage Schedule" shall mean a timetable detailing AK
Power's schedule for removal (full or partial) from service of one or more of
the Units for inspection, maintenance or repair.

"Month" shall mean calendar month, and not a specific 30 day time
period.

"Metering Point" shall mean the Point of Interconnection (as defined
in the Continuing Site Agreement), which is the point to which the Revenue
Meters installed pursuant to Section 3.05 of the Continuing Site Agreement
measure the Energy.

"NERC" shall mean the North American Electric Reliability Council or
its successors.

"NYPP" shall mean the New York Power Pool or its successors.

4

9

"Summer Capability Period" shall have the meaning provided by the
NYPP, or its successor(s), as may be modified from time to time. Summer
Capability Period is currently May 1 through October 31 of each year.

"Supplemental Filing" shall mean the December 19, 1997 Supplemental
Filing to the Comprehensive Proposal to Restructure the New York Wholesale
Electric Market in FERC Docket Nos. ER97-1523000, OA97-470-000, and
ER97-4234-000.

"Time Period" shall mean the period from 10:00 a.m. to 6:00 p.m. on
each of the days from Monday through Friday of each week, excluding Holidays.

"Unit" shall mean any unit comprising the Generating Plant.

"Week" shall mean the period from any Monday at 12:00 a.m. to the
immediately following Sunday at 11:59 p.m.

"Winter Capability Period" shall have the meaning provided by the
NYPP, or its successor(s), as may be modified from time to time. Winter
Capability Period is currently each November 1 through April 30 of the following
calendar year.

ARTICLE 2      TERM

(a) The obligations of the Parties under this Agreement shall commence
on the Closing Date and continue until the ISO Commencement Date; provided,
however, that (i) if, within 30 days after the ISO Commencement Date or the ISO
Resumption Date (as defined below) the ISO suspends operations for any reason,
the parties' obligations under this Agreement shall recommence and continue
until the ISO resumes operation (the "ISO Resumption Date"); and (ii) in the
event that the ISO Commencement Date does not occur by March 1, 2000, either
Party may request the other Party to renegotiate in good faith the terms and
conditions, including payment terms, for Energy purchases under this Agreement.
If, upon such request by either Party, the Parties are unable to reach agreement
on such revised terms and conditions, AK Power shall file tariffs governing such
purchases with the appropriate regulatory agency or agencies, to become
effective as of June 1, 2000, and, upon the effectiveness of such tariffs, as
may be modified by such regulatory agency or agencies, the terms and

5

10

conditions contained in the approved tariffs shall be binding upon the Parties
and shall govern the purchases of Energy under this Agreement; provided,
however, that Con Edison shall have the right to protest the tariffs filed by AK
Power to such regulatory agency or agencies.

(b) This Agreement is subject to all necessary regulatory
authorizations without any modifications or conditions. If any regulatory agency
having jurisdiction over this Agreement requires any modification to, or imposes
any condition of acceptance or approval of, this Agreement, then the Parties
shall engage in good faith negotiations for a period of 30 days following the
issuance of that modified or conditional acceptance or approval in order to
agree to revisions to this Agreement to satisfy, or otherwise address, such
modification or condition. If the Parties fail to agree mutually to such
changes, then AK Power may make a unilateral filing to such regulatory agency to
satisfy the modification or condition, which filing shall attempt to satisfy the
intent of the Parties under this Agreement; provided, however, that Con Edison
shall have the right to protest the manner in which AK Power has proposed to
satisfy such modification or condition.

(c) AK Power shall file this Agreement with FERC prior to commencement
of services with a request that it be accepted for filing to be effective no
later than the Closing Date. Notwithstanding the foregoing, the Parties agree
that the effectiveness of clause (ii) of paragraph (a) of this Article shall not
be contingent upon FERC approval.

(d) This Agreement is further conditioned upon FERC not modifying or
rejecting Articles 2(a) and 3 of the First Amendment to the APSA ("APSA 
Amendment"), dated as of June 1, 1999, between Con Edison and NRG Energy;
provided, however, that in the event that FERC modifies the APSA Amendment, the
Parties will, if and to the extent necessary, modify this Agreement to conform
it to the modified APSA Amendment under the procedures sot forth in paragraph
(b) of this Article. Notwithstanding the foregoing, the Parties agree that the
effectiveness of Article 2(b) of the APSA Amendment shall not be contingent upon
FERC approval.

ARTICLE 3      ENERGY PURCHASES AND PAYMENTS

Con Edison shall receive and purchase from AK Power, and AK Power
shall deliver and sell to Con Edison, Energy at the Metering Point during the
term of, and in accordance with the terms and conditions of,

6

11

this Agreement. The Energy to be delivered by AK Power to Con Edison shall be
generated at the Generating Plant. AK Power shall operate the Generating Plant
in accordance with Good Utility Practices.

(a) Energy Conversion Payments

Con Edison shall pay AK Power an Energy Conversion Payment ("ECP") of
$1/MWH multiplied by the average net electrical output of each Unit at the
Generating Plant sold to Con Edison on an hourly basis. For purposes of this
Agreement, the net electrical output sold to Con Edison shall mean, on a monthly
basis, the Energy generated by the Generating Plant minus the auxiliary power
consumed by the Generating Plant and other related Auctioned Assets assigned by
NRG Energy to AK Power, each measured by Con Edison at their associated Metering
Points, less Energy generated by AK Power for delivery to third parties.

(b) Equivalent Forced Outage Penalty And Incentive Payments

Con Edison shall either pay to AK Power an Incentive Payment or AK
Power shall pay to Con Edison a Penalty Payment, as determined below, based on
the availability of the steam-powered Generating Plant units subject to a Firm
Commitment relative to the historical EFOR of the Generating Plant as set forth
in Appendix A. Penalty and Incentive Payments shall be based on performance of
the Generating Plant only during the Time Period. Calculation of the Penalty and
Incentive Payments shall exclude (i) the performance of any Unit scheduled for
maintenance during the applicable Time Period in accordance with a Maintenance
Outage Schedule, a maintenance outage request or a load limitation request
approved by Con Edison in accordance with Article 4 (f), and (ii) AK Power's
inability to comply with the Firm Commitment due to Con Edison's failure to
provide Fuel in accordance with Article 5, Con Edison's inability to accept
Energy generated by the Generating Plant into its transmission system or a Force
Majeure Event specified in Article 10. The formulas for computing such Penalty
and Incentive Payments are set forth below and illustrative computations are
included in Appendix E hereto.

Penalty and Incentive Payments based an the performance of each
steam-powered unit at the Generating Plant shall be calculated as follows:

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12

1. The number of MWs as committed by Con Edison in the Firm Commitment;
2. The historic EFOR, expressed as a decimal, set forth in Appendix A hereto;
3. Penalty Payment Rate is equal to $10/MWh;
4. Incentive Payment Rate is equal to Penalty Payment Rate times historic EFOR,
divided by 1 minus historic EFOR;
5. For each hour in the Time Period, the Penalty Payment is equal to the number
of MWs not available for dispatch times the Penalty Payment Rate;
6. For each hour in the Time Period, the Incentive Payment is equal to the
number of MWs available for dispatch times the Incentive Payment Rate;
7. At the end of the month, hourly Penalty and Incentive Payments are summed;
8. For the month, if the total Incentive Payments less the total Penalty
Payments is a positive value (net Incentive Payment), Con Edison will pay the
net Incentive Payment to AK Power. If the difference is a negative value (net
Penalty Payment), AK Power will pay the net Penalty Payment to Con Edison.

(c) Billing and payment of the ECP and Incentive and Penalty Payments
shall be made in accordance with Article 7. Con Edison shall reimburse AK Power
for all taxes, surcharges, adjustments or other assessments imposed by law, rule
or regulation, other than those based on income (such as federal income taxes),
which are of general applicability and imposed on the sales of Energy hereunder.

(d) Except as otherwise provided in this Agreement, Con Edison shall
make no other payment to AK Power for Energy actually provided under this
Agreement.

(e) Notwithstanding anything in the foregoing to the contrary,
calculations of Penalty and Incentive Payments shall also be based upon the
performance of the Generating Plant during the entire 64-hour period beginning
at 6 p.m. on Friday, December 31, 1999 and ending on 10 a.m. on Monday, January
3, 2000, which performance shall not be excused by a Year 2000 (Y2K) computer
error, malfunction, or problem.

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ARTICLE 4      SCHEDULING

(a) AK POWER and Con Edison shall comply in all material respects with
the applicable Energy scheduling requirements under NYPP rules and regulations.
Unless otherwise provided for under NYPP rules and regulations, Con Edison shall
have the sole authority to dispatch any of the Generating Plant units specified
in the Firm Commitments, up to their full capability, from Con Edison's Energy
Control Center. For the steam-powered Generating Plant, the Unit(s) specified in
the Firm Commitments must be on-line at minimum load and available for dispatch
by 12:01 a.m. Monday morning of the applicable Week for the Unit's minimum run
time. Con Edison retains the option to dispatch the Units to their full
capability for the entire Monday to Sunday period. The full capability, minimum
loads and minimum run times for each Unit are specified in Appendix B.

(b) Con Edison shall specify Firm Commitments for each Week by 5 p.m.
on the Thursday preceding the Week. If at any time after receipt of Con Edison's
Firm Commitment, AK Power determines that it cannot comply with such Firm
Commitment with respect to any Unit, AK Power shall immediately notify Con
Edison of such determination.

(c) AK Power shall have the right to enter into a bilateral contract
for the sale of Energy generated by a Unit not subject to a Firm Commitment to a
third party. Con Edison shall provide transmission service under Con Edison's
Open Access Transmission Tariff ("OATT") to AK Power for sales to third parties
within and outside Con Edison's service area. In the event and to the extent
that undergeneration by AK Power during a bilateral sale is covered and provided
by Con Edison, AK Power shall reimburse Con Edison for the amount OF SUCH
undergeneration based upon Con Edison's incremental power costs coincident with
the undergeneration period, as determined by Con Edison. When Con Edison
provides AK Power with transmission service for deliveries to third parties
outside Con Edison's service area, the transmission service will be provided up
to the interconnection point between Con Edison's transmission system and the
transmission system of the third party or the transmission system of an
intervening party through which such deliveries are to be made. AK Power shall
notify Con Edison of bilateral transactions made with third parties and shall
reserve and pay for Con Edison OATT transmission services required to support
these sales. If AK Power does not enter into a bilateral contract for the sale
of Energy from a Unit not subject to a Firm Commitment,

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Con Edison shall have the right to commit and dispatch that Unit on a real-time
basis. For the purpose of the penalty and Incentive calculations as described in
Article 3(b), such real-time commitment and dispatch shall be considered a Firm
Commitment.

(d) On a real-time basis, Con Edison shall dispatch a Unit from the
Con Edison Energy Control Center using signals from the NYPP or modified NYPP
signals based on Con Edison's transmission control area regulation requirements
or local reliability rules. Con Edison shall commit or dispatch a Unit to
respond to system conditions, including, but not limited to: storm watch,
maximum generation levels, minimum oil burn and remote start.

(e) Whenever the Units are committed or dispatched by Con Edison, the
Units shall provide Energy and ancillary services on a real time dispatch basis
(including appropriate levels of 10 minute spinning, 10 minute non-spinning, and
30 minute operating reserves as required by the NYPP, voltage support such as
supplying or absorbing VoltAmpere-Reactive (VARS) power, frequency control and
automatic generation control) as required by Con Edison. AK Power shall receive
no additional payment for any such ancillary services,

(f) Within 14 days of the Closing Date, AK Power shall provide to Con
Edison a Maintenance Outage Schedule relating to the Generating Plant for the
first year following the Closing Date. AK Power shall provide subsequent
Maintenance Outage Schedules to Con Edison one year from the Closing Date, and
annually thereafter until this Agreement is terminated. All Maintenance Outage
Schedules shall be subject to Con Edison's approval within 30 days of receipt by
Con Edison, such approval not to be unreasonably withheld; provided, however,
that Con Edison may require AK Power to subsequently amend an approved
Maintenance Outage Schedule with respect to any Unit, at any time prior to the
date that the Unit is scheduled to be removed from service, due to Con Edison's
concerns with the reliability of the electric system, unless the planned
maintenance cannot be delayed pursuant to Good Utility Practices. As necessary,
AK Power shall provide Con Edison with maintenance outage requests and load
limitation requests in order to perform necessary maintenance that is not
indicated on a Maintenance Outage Schedule. If necessary, such request shall be
renewed by AK Power on a weekly basis in accordance with the Firm Commitment.
All such changes to the Maintenance Outage Schedules

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shall be subject to Con Edison's approval, such approval not to be unreasonably 
withheld.

(g) If AK Power enters into a bilateral transaction with a third party
as provided by Article 4(c), such transactions must be scheduled in advance with
Con Edison. These transactions must conform to all NYPP scheduling requirements,
including NERC tagging requirements. All bilateral transactions must be
scheduled with Con Edison on a daily basis as soon as they are finalized, but no
later than noon of the day prior to the day the transaction will occur.
Intra-day transactions between AK Power and a third party will be scheduled by
Con Edison provided that they do not conflict with or otherwise reduce Con
Edison's electric system reliability. Notwithstanding the foregoing, Con Edison
reserves the right to curtail all bilateral transactions that may jeopardize
system reliability in accordance with NYPP standards.

(h) AK Power shall immediately notify Con Edison of any change in the
availability and/or capability of any Unit and the expected duration of any
outage or derating.

ARTICLE 5      FUEL

(a) Con Edison shall, at its own cost, procure and supply all Fuel
required by the Generating Plant to operate for Energy sales to Con Edison. All
such fuel shall meet Con Edison's specifications in effect as of the Closing
Date. Con Edison shall provide and be responsible for all costs for all services
associated with the delivery of Fuel, including but not limited to natural gas
balancing and all local gas transportation costs associated with the supply of
natural gas to the Generating Plant.

(b) AK Power shall procure and supply all the natural gas required to
support a bilateral sale to a third party and shall be responsible for all
incremental costs associated with such natural gas supply incurred by Con
Edison, including but not limited to balancing the natural gas supply and all
incremental local transportation costs associated with AK Power's bilateral
sales incurred by Con Edison. Upon reasonable request by AK Power, Con Edison
shall make available daily information on gas balancing and nomination,

(c) Con Edison shall be responsible for all required Fuel sampling and
shall provide copies of sample results to AK Power.

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(d) If AK Power returns the FO6-1 fuel oil tank at the Generating
Plant to service or installs a new FO6 system, Con Edison shall not have the
right under this Agreement to require AK Power to burn FO6 in the Generating
Plant. AK Power shall take all appropriate notification and other actions with
respect to oil spills as required by law and regulation.

(e) Fuel provided by Con Edison will be compliant with all applicable
Environmental Laws.

(f) Con Edison shall use the historic monthly average heat rates, as
set forth in Appendix C hereto, to monitor each Unit's performance. For each
month, the historic average heat rates shall be adjusted for average load level.
Adjustments to historic heat rates due to changes in average load level will be
made using a ratio based on the most recent NYPP MP-3 test data. For each month,
the actual net generation from each Unit will be multiplied by the adjusted
historic average heat rate for that specific month, yielding a target BTU heat
input ("Target"). The Target will be compared to the actual BTU heat input to
the Unit. AK Power shall pay Con Edison for all BTU consumed in excess of 104%
of the Target. Con Edison shall pay AK Power for BTU consumption savings below
96% of the Target. Such payments shall be based on Con Edison's average BTU
costs (in $/MBTU) for that specific month for Fuel supplied to the Generating
Plant. The preceding performance measurement methodology and payment obligations
shall apply to steam-powered units at the Generating Plant.

ARTICLE 6      ENVIRONMENTAL

6.1 Use of NOx Allowances

(a) All nitrogen oxide (NOx) allowances allocated to the Generating
Plant by the Department of Environmental Conservation (DEC) under 6 NYCRR Part
227-3.5 (a) may be used by Con Edison for NOx emissions from either the
Ravenswood Generating Station or Ravenswood Gas Turbines, or Arthur Kill and
Astoria Generating Stations or Narrows, Gowanus or Astoria Gas Turbines
(hereinafter collectively referred to as "Generators"); provided, however, that
such allowances may be so used at the Generators other than the Arthur Kill
Generating Station only to the extent that NOx emissions exceed allowances
allocated to those Generators under 6 NYCRR Part 227-3.5(a), and only to the
extent that NOx allowances from those

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Generators are also made available to Con Edison for similar use. AK Power shall
provide NOx allowances for its bilateral transactions with third parties
pursuant to Article 4(c).

(b) AK Power agrees to utilize either the 3-year historic NOx emission
values measured by Con Edison's CEMS or the NOx Emission Target Values developed
by Con Edison as set forth in Appendix D, whichever is greater, for each Unit in
the Generating Plant as the NOx emission performance criteria.

(c) At the end of each ozone season (May 1 through September 30), Con
Edison shall determine the number of tons of NOx emissions that were emitted
from the Generators. This amount shall be subtracted from the NOx allowances
allocated to the Generators under 6 NYCRR Part 227-3.5 (a) to determine if any
of these Part 227-3.5(a) NOx allowances remain. Only to the extent that such NOx
allowances remain, Con Edison shall have the right to direct the reallocation by
November 15 of each year of these NOx allowances an a pro-rata basis in relation
to the total NOx allowances allocated to the Generator under 6 NYCRR Part 227 -
3.5 (a); provided, however, that such allocation may be proportionately
increased or decreased by Con Edison based on the performance of the Generators
in relation to the NOx emission performance criteria as described in Article
6.1(b). At the end of each ozone season, AK Power shall transfer the Part
227-3.5(a) NOx allowances in the Arthur Kill Generating Station account to the
Generators as determined by Con Edison pursuant to this paragraph, provided that
the owners of the other Generators similarly make such transfers as determined
by Con Edison. If the NOx allowances allocated to the Generators under 6 NYCRR
Part 227-3.5 (a) are not sufficient to satisfy the NOx emissions from the
Generators during the ozone season, then Con Edison shall be responsible for the
allowance deficiency except to the extent that such deficiency is due to
operation above the NOx emission performance criteria described in Article
6.1(b).

(d) Con Edison shall include the Generating Plant in its NOx RACT
System-wide Averaging Program ("Program") and shall be responsible for meeting
the 24-hour allowable system-wide NOx average for all generators included in the
Program. Con Edison shall monitor the hourly NOx emissions at the Generating
Plant via the existing CEMS computers. Con Edison shall prepare and file with
DEC the quarterly NOx RACT Report on the system-wide averaging. In the event of
a forced outage of a Unit at the Generating Plant, Con Edison shall

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prepare, with the support of AK Power, the documentation required by the DEC
regulations (6 NYCRR Section 227-2.5(b)(1)). Con Edison shall provide to AK
Power bi-weekly reports on NOx allowances estimated usage by all Generators. Con
Edison has the right to curtail any third-party bilateral transaction that may,
in its sole opinion, jeopardize the 24-hour allowable system-wide NOx average.

(e) AK Power shall be responsible for the operation and maintenance of
the CEMS equipment including, but not limited to, the daily calibration of the
analyzers. Con Edison shall be responsible for the preparation for AK Power's
approval, and AK Power shall submit, the quarterly electronic data report to the
U.S. Environmental Protection Agency as required by the DEC NOx Budget Rule.

(f) In the event that the DEC does not approve the inclusion of the
Generating Plant in Con Edison's NOx RACT System-wide Averaging Program, the
Parties shall renegotiate the provisions of this Article 6 to otherwise carry
out the intent of this Article 6 and other pertinent provisions.

ARTICLE 7      BILLING AND PAYMENT PROCEDURES

7.1 Billing and Payment

(a) In respect of each Month ending after the Closing Date, AK Power
shall, on or prior to the twentieth day of the following Month prepare and
render an invoice to Con Edison for the ECP, less any Penalty Payments or plus
any Incentive Payments as described in Article 3, due from Con Edison to AK
Power for the preceding Month, calculated in accordance with Article 3. The
Payments owed shall be due and payable 10 Business Days after Con Edison
receives an invoice. All payments due under this Agreement shall be made in
immediately available funds by wire transfer to accounts designated by the
Parties.

(b) If any payment falls due on a day that is not a Business Day, then
the payment shall be made on the next Business Day.

(c) Interest on unpaid amounts, payments received after the due date
or payments in dispute that are held in escrow shall accrue at a rate equal to
the prime commercial lending rate established from time to time by Chase
Manhattan Bank, N.A., New York, New York, or its

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successor, from the due date until the date upon which payment is
made.

(d) All billings to Con Edison shall be sent to:

Consolidated Edison Company of New York, Inc.
4 Irving Place
New York, New York 10003
Attention: (To Be Specified By Con Edison Prior To The
Closing Date)

All billings to AK Power shall be sent to:

Arthur Kill Power LLC
1221 Nicollet Mall; Suite 700
Minneapolis, Minnesota, 55403
Attention: (To Be Specified By AK Power Prior To The Closing
Date)

(e) Any payments owed directly by AK Power to the NYPP, shall be made
pursuant to the procedures established by the NYPP. AK Power shall be
responsible for its share of the NYPP Control Performance System payments or
penalties, as the case may be, as applied to Con Edison based on the performance
of the Generating Plant. Con Edison shall determine the allocation of NYPP
Control Performance System payments or penalties to the Generating Plant.
Invoices for such payments or penalties shall be submitted by Con Edison to AK
Power, and payments by AK Power shall be made to Con Edison, in accordance with
the timeframe set forth in Article 7.1(a).

(f) Any other payments due under this Agreement (such as, for fuel
handling and labor and for excess BTU consumption and BTU savings) shall be
invoiced and paid in accordance with the timeframe set forth in Article 7.1(a).
To the extent the auxiliary power consumed by the Generating Plant and other
related Auctioned Assets owned by AK Power is not fully offset in any month by
Energy generated by the Generating Plant, as contemplated in Article 3(a)(1),
such remaining auxiliary power shall be carried forward in an account to be so
offset by Energy generated by the Generating Plant in the next month, and AK
Power shall reimburse Con Edison for any auxiliary power remaining in the
account at the termination of this Agreement based upon the

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payments for Energy made by Con Edison in the last month prior to the
termination of this Agreement.

(g) The Parties shall maintain records, accounts and other documents
sufficient to reflect accurately all transactions hereunder for a period of four
years from the time of the transactions. Each Party shall, at its own expense,
have the right to audit such records, accounts and other documents of the other
Party during such four-year period upon reasonable prior notice to the other
Party, subject to Article 24.

7.2 Billing Disputes

If a Party contests the amount billed in accordance with Article 7.1
before such amount is due, the contesting Party shall pay the undisputed billed
amount when due and promptly provide written notice to the other Party of the
disputed amount, identifying the reason for the dispute. If neither Party
disputes a bill within six Months after the due date of such bill, such bill
shall be deemed correct. The Parties shall engage in good faith negotiations to
resolve any disputed amounts within 30 days, after receipt of the written notice
identifying the dispute. If the Parties are unable to resolve a dispute within
such period, the disputed amounts shall, if requested by the billing party, be
paid into an escrow account within 30 days of such request pending resolution of
the dispute. Thereafter, either Party may exercise such remedies as may be
available under this Agreement, at law or in equity. However, such billing
dispute under this Section 7.2 shall not constitute an Event of Default as that
term is defined in Article 9(c) and such remedies do not include the temporary
or long-term cessation of the supply of Energy from AK Power to Con Edison in
accordance with the terms of this Agreement. Interest at the rate specified in
Section 7.1(c) shall accrue on any amount due hereunder, if any, that is
refunded or credited to the contesting Party or that is released from escrow to
the non-contending Party, when the contested amount is resolved.

7.3 Survival

The provisions of this Agreement shall survive termination, expiration,
cancellation, suspension, or completion of this Agreement to the extent
necessary to allow for final billing and payment.

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ARTICLE 8      INDEMNIFICATION

8.1 Indemnification

(a) AK Power shall indemnify and hold harmless Con Edison and its
Affiliates and their respective officers, directors, trustees, employees and
agents (collectively with Con Edison and its Affiliates, the "Con Edison
Indemnitees") from and against any and all claims, demands, liabilities, costs,
losses, judgments, damages, obligations, payments and expenses (including
reasonable legal fees and expenses and including costs and expenses incurred in
connection with investigations and settlement proceedings) (each, an
"Indemnifiable Loss"), as incurred, asserted against or suffered by any Con
Edison Indemnitee relating to, resulting from or arising out of (A) damage to
property or (B) injury to or death of any person, including Con Edison
Indemnitees, AK Power's Indemnitees (as defined below), or any third parties, in
each case, to the extent caused by the gross negligence or willful misconduct of
AK Power, its Affiliates or their respective officers, directors, trustees,
employees, agents, subcontractors and successors and arising out of or in
connection with this Agreement and not caused by the negligence or willful
misconduct of such Con Edison Indemnitee, or (C) any breach by AK Power of any
covenant or agreement by AK Power, or representation or warranty of AK Power
that survives Closing pursuant to Article 14.3, contained in this Agreement.

(b) Con Edison shall indemnify and hold harmless AK Power and its
Affiliates and their respective officers, directors, trustees, employees and
agents from and against (collectively with AK Power and its Affiliates, the "AK
Power Indemnitees") any and all Indemnifiable Losses, as incurred, asserted
against or suffered by any AK Power Indemnitee relating to, resulting from or
arising out of (A) damage to property, or (B) injury to or death of any person,
including AK Power Indemnitees, Con Edison's Indemnitees or any third parties,
in each case, to the extent caused by the gross negligence or willful misconduct
of Con Edison, its Affiliates or its their respective officers, directors,
trustees, employees, agents, subcontractors and successors and arising out of or
connected with this Agreement and not caused by the negligence or willful
misconduct of such AK Power Indemnitee, or (C) any breach by Con Edison of any
covenant or agreement by Con Edison, or representation or warranty of Con Edison
that survives Closing pursuant to Article 14.3, contained in this Agreement.

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(c) The amount of any Indemnifiable Loss shall be reduced to the extent
that the relevant AK Power Indemnitee or Con Edison Indemnitee (each, an
"Indemnitee") receives any insurance proceeds with respect to an Indemnifiable
Loss. If the amount of any Indemnifiable Loss, at any time subsequent to the
making of an indemnity payment in respect thereof, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or pursuant
to any claim, recovery, settlement or payment by or against any other person,
the amount of such reduction, less any costs, expenses or premiums incurred in
connection therewith, will promptly be repaid by the Indemnitee to the Party
required to provide indemnification hereunder (the "Indemnifying Part") with
respect to such Indemnifiable Loss.

(d) To the fullest extent permitted by law, neither Party nor any AK
Power Indemnitee or any Con Edison Indemnitee shall be liable to the other Party
or any other AK Power Indemnitee or Con Edison Indemnitee for any claims,
demands or suits for consequential, incidental, special, exemplary, punitive,
indirect or multiple damages connected with or resulting from any breach of this
Agreement, or any actions undertaken in connection with or related hereto,
including any such damages which are based upon breach of contract, tort
(including negligence and misrepresentation), breach of warranty, strict
liability, statute, operation of law or any other theory of recovery.

(e) The rights and remedies of Con Edison and AK Power under this
Article 8 are, solely as between Con Edison and AK Power, exclusive and in lieu
of any and all other rights and remedies which Con Edison and AK Power may have
under this Agreement or otherwise for monetary relief with respect to (i) any
breach of, or failure to perform, any covenant or agreement set forth in this
Agreement by Con Edison or AK Power or (ii) any breach of any representation or
warranty by Con Edison or AK Power. Each Party agrees that the previous sentence
shall not limit or otherwise affect any non-monetary right or remedy which
either Party may have under this Agreement or otherwise limit or affect either
Party's right to seek equitable relief, including the remedy of specific
performance.

(f) AK Power and Con Edison agree that, notwithstanding Section 8.1(e),
each Party shall retain, subject to the other provisions of this Agreement,
including Sections 8.1(d), all remedies at law or in

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equity with respect to fraud or willful or intentional breaches of this
Agreement.

8.2 Third Party Claims Procedures

(a) If any Indemnitee receives notice of the assertion of any claim or
of the commencement of any claim, action, or proceeding made or brought by any
person who is not a Party or an Affiliate of a Party (a "Third Party claim")
with respect to which indemnification is to be sought from an Indemnifying
Party, the Indemnitee will give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 20 Business Days after
the Indemnity's receipt of notice of such Third Party Claim; provided, however,
that a failure to give timely notice will not affect the rights or obligations
of any Indemnitee except if, and only to the extent that, as a result of such
failure, the Indemnifying Party was actually prejudiced. Such notice shall
describe the nature of the Third Party Claim in reasonable detail and will
indicate the estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee.

(b) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided, however, that such counsel is not reasonably
objected to by the Indemnitee; and provided further that the Indemnifying Party
first admits in writing its liability to the Indemnitee with respect to all
material elements of such claim. Should the Indemnifying Party elect to assume
the defense of a Third Party Claim, the Indemnifying Party will not be liable to
the Indemnitee for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof. If the Indemnifying Party elects to assume
the defense of a Third Party Claim, the Indemnitee will (i) cooperate in all
reasonable respects with the Indemnifying Party in connection with such defense,
(ii) not admit any liability with respect to, or settle, compromise or
discharge, any Third Party Claim without the Indemnifying Party's prior written
consent and (iii) agree to any settlement, compromise or discharge of a Third
Party Claim which the Indemnifying Party may recommend and which by its terms
obligates the Indemnifying Party to pay the full amount of the liability in
connection with such Third Party Claim and releases the Indemnitee completely in
connection with such Third Party Claim. in the event the Indemnifying

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Party shall assume the defense of any Third Party Claim, the Indemnitee shall be
entitled to participate in (but not control) such defense with its own counsel
at its own expense. If the Indemnifying Party does not assume the defense of any
such Third Party Claim, the Indemnitee may defend the same in such manner as it
may deem appropriate, including settling such claim or litigation after giving
notice to the Indemnifying Party of the terms of the proposed settlement and the
Indemnifying Party will promptly reimburse the Indemnitee upon written request.
Anything contained in this Agreement to the contrary notwithstanding, no
Indemnifying Party shall be entitled to assume the defense of any Third Party
Claim if such Third Party Claim seeks an order, injunction or other equitable
relief or relief for other than monetary damages against the Indemnitee which,
if successful, would materially adversely affect the business of the Indemnitee.

8.3 Survival

The indemnification obligations of each Party under this Article 8
shall become effective upon the occurrence of the Closing Date, and, for acts
and occurrences prior to expiration, termination, completion, suspension or
cancellation of this Agreement, shall continue in full force and effect
regardless of whether this Agreement expires, terminates, or is suspended,
completed or canceled. Such obligations shall not be limited in any way by any
limitation on insurance or by any compensation or benefits payable by the
Parties under workers' compensation acts, disability benefit acts or other
employee acts, or otherwise.

ARTICLE 9      LIMITATION OF LIABILITY

(a) Subject to indemnity obligations set forth in Article 8, upon an
Event of Default by Con Edison under this Agreement, which Event of Default is
not excusable due to a Force Majeure Event or due to an Event of Default by AK
Power under this Agreement, Con Edison's liability to AK Power shall be limited
to AK Power's direct damages incurred by AK Power as a result of such Event of
Default by Con Edison.

(b) Subject to indemnity obligations set forth in Article 8, upon an
Event of Default by AK Power under this Agreement, which Event of Default is not
excusable due to a Force Majeure Event or due to an Event of Default by Con
Edison under this Agreement, AK Power's

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liability to Con Edison shall be limited to Con Edison's direct damages incurred
by Con Edison as a result of such Event of Default by AK Power,

(c) Unless excused by a Force Majeure Event, or an Event of Default by
the other Party, each of the following events individually shall constitute an
"Event of Default" by a Party hereunder: failure by such Party, in any material
respect, to comply with, observe, or perform any covenant, warranty or
obligation under this Agreement, if such failure is not cured or rectified
within 30 days after receipt of written notice of such failure from the other
Party or such longer period as may be reasonably required provided, however,
that the defaulting Party diligently attempts to cure such Event of Default.

(d) The provisions of this Article 9 shall survive termination,
cancellation, suspension, completion, or expiration of this Agreement.

ARTICLE 10      FORCE MAJEURE

(a) Notwithstanding anything in this Agreement to the contrary,
neither Party shall have any liability or be otherwise responsible to the other
for its failure to carry out its obligations, with the exception of any
obligation to pay money, under this Agreement if and only to the extent that
it becomes impossible for either Party to so perform as a result of any
occurrence or event which is beyond the reasonable control, and does not result
from any negligence, of the Party affected (each, a "Force Majeure Event"),
including any act of God, strike or any other labor disturbance, act of a public
enemy, war, act of terrorism, riot, any other civil disturbance, fire, storm,
lightning, flood, earthquake, any other natural disasters, explosion, any order
or regulation or restriction imposed by any Governmental Authority, failure of a
contractor or subcontractor caused by a Force Majeure Event and transportation
delays or stoppages.

(b) Nothing contained in this Article 10 shall relieve any Party of
the obligation to make payments when due pursuant to this Agreement.

(c) If a Party shall rely on the occurrence of a Force Majeure Event
as a basis for being excused from performance of its obligations under this
Agreement, then the Party relying on such occurrence shall (i) provide prompt
written notice of such Force Majeure Event to the other

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Party giving an estimate of its expected duration and the probable impact on the
performance of its obligations hereunder; (ii) exercise its reasonable best
efforts to continue to perform its obligations under this Agreement; (iii)
reasonably and expeditiously take action to correct or cure the Force Majeure
Event, provided, however, that settlement of strikes or any other labor
disturbance will be completely within the sole discretion of the Party affected
by such strike or labor dispute; (iv) exercise its reasonable best efforts to
mitigate or limit damages to the other Party; and (v) provide prompt written
notice to the other Party of the cessation of the Force Majeure Event.

(d) The provisions of this Article 10 shall survive termination,
cancellation, suspension, completion or expiration of this Agreement.

ARTICLE 11      DEFAULT AND TERMINATION

(a) This Agreement shall automatically terminate if the APSA is
terminated.

(b) Con Edison and AK Power agree that, notwithstanding any other
provision of this Agreement or in the APSA, this Agreement may not be terminated
prior to its expiration by either Party under any circumstances, including as a
result of a breach, whether or not material, by the other Party, except pursuant
to an agreement in writing executed by each Party.

ARTICLE 12      ADDITIONAL REMEDIES

The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, the non-defaulting Party may pursue
any remedies and may begin proceedings at the FERC to terminate this Agreement
by giving at least ten days advance written notice to the defaulting Party, such
termination to be effective as of the date specified in such notice, subject to
the approval of the FERC, in accordance with FERC regulations.

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ARTICLE 13      DISPUTES

Any disputes between Con Edison and AK Power as to their rights and
obligations under this Agreement shall first be addressed by the Parties. If
representatives of the Parties are unable in good faith to satisfactorily
resolve their disagreement, the Parties shall refer the matter to their
respective senior management. If after using their reasonable best efforts to
try to resolve the dispute, senior management cannot resolve the dispute within
30 days, either Party may exercise any right or remedy available pursuant to
this Agreement.

ARTICLE 14      REPRESENTATIONS AND WARRANTIES

14.1 Representations and Warranties of Con Edison

Con Edison represents and warrants to AK Power as follows:

(a) Organization. Con Edison is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and Con
Edison has all requisite corporate power and authority to carry on its business
as currently conducted.

(b) Authority Relative to this Agreement. Con Edison has all necessary
corporate power and authority to execute and deliver this Agreement and, subject
to the procurement of applicable regulatory approvals, to perform its
obligations under this Agreement. To the extent necessary, the execution and
delivery by Con Edison of this Agreement and the performance by Con Edison of
its obligations hereunder have been duly and validly authorized by the Board of
Trustees of Con Edison or by a committee thereof to whom such authority has been
delegated and no other corporate proceedings on the part of Con Edison are
necessary to authorize this Agreement or the performance of its obligations
hereunder. This Agreement has been duly and validly executed and delivered by
Con Edison and, assuming that this Agreement constitutes a valid and binding
agreement of AK Power, constitutes a valid and binding agreement of Con Edison,
enforceable against Con Edison in accordance with its terms.

(c) Regulatory Approval. Con Edison has obtained or made, as the case
may be, or will obtain or make, as the case may be, by the Closing Date any and
all declarations, filings, registrations, notices,

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authorizations, consents or approvals of or to any public authority that are
required for Con Edison to execute and deliver this Agreement and to perform its
obligations hereunder, other than such declarations filings, registrations,
notices, authorizations, consents or approvals which, if not obtained or made,
would not, individually or in the aggregate, create a material adverse effect in
respect of the performance by Con Edison of its obligations under this
Agreement.

(d) Compliance With Law. Con Edison is in compliance with all
applicable laws, statutes, orders, rules, regulations, ordinances or judgments
of any Federal, state, or local governmental authority other than such failures
to be in compliance with such applicable laws, statutes, orders, rules,
regulations, ordinances or judgments which would not, individually or in the
aggregate, create a material adverse effect in respect of the performance by Con
Edison of its obligations under this Agreement. Con Edison has not received any
written notification that it is in violation of any of such laws, statutes,
orders, rules, regulations, ordinances or judgments, except for notification of
violations which would not, individually or in the aggregate, create a material
adverse effect in respect of the performance by Con Edison of its obligations
under this Agreement.

14.2 Representations and Warranties of AK Power

AK Power represents and warrants to Con Edison as follows:

(a) Organization. AK Power is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and AK Power has all requisite power and authority to carry on its
business as is now being conducted.

(b) Authority Relative to this Agreement. AK Power has all necessary
power and authority to execute and deliver this Agreement and, subject to the
procurement of applicable regulatory approvals, to perform its obligations under
this Agreement. To the extent necessary, the execution and delivery of this
Agreement and the performance by AK Power of its obligations hereunder have been
duly and validly authorized by the Executive Committee of AK Power or by a
committee thereof to whom such authority has been delegated and no other
proceedings on the part of AK Power are necessary to authorize this Agreement or
the performance of its obligations hereunder. This Agreement has been duly and
validly executed and delivered by AK

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Power and, assuming that this Agreement constitutes a valid and binding
agreement of Con Edison, constitutes a valid and binding agreement of AK Power,
enforceable against AK Power in accordance with its terms.

(c) Regulatory Approval. AK Power has obtained or made, as the case
may be, or will obtain or make, as the case may be, by the Closing Date any and
all declarations, filings, registrations, notices, authorizations, consents or
approvals of or to any public authority that are required for it to execute and
deliver this Agreement and to perform its obligations hereunder, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not obtained or made, would not, individually or in the
aggregate, create a material adverse effect in respect of the performance by AK
Power of its obligations under this Agreement.

(d) Compliance With Law. AK Power is in compliance with all applicable
laws, statutes, orders, rules, regulations, ordinances or judgments of any
Federal, state, or local governmental authority, other than such failures to be
in compliance with such applicable laws, statutes, orders, rules, regulations,
ordinances or judgments which would not, individually or in the aggregate,
create a material adverse effect in respect of the performance by AK Power of
its obligations under this Agreement. AK Power has not received any written
notification that it is in violation of any of such laws, statutes, orders,
rules, regulations, ordinances or judgments, except for notifications of
violations which would not, individually or in the aggregate, create a material
adverse effect in respect of the performance by AK Power of its obligations
under this Agreement.

14.3 The representations and warranties in this Article 14 (except as
set forth in Articles 14.1(d) and 14.2(d)) shall survive the Closing and
continue in full force and effect for the term of this Agreement.

ARTICLE 15      ASSIGNMENT; NO THIRD PARTY BENEFICIARIES

(a) This Agreement and all of the provisions hereof shall be binding
upon, and inure to the benefit of, the Parties and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either Party, including
by operation of law, without the prior written consent of

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the other Party, except (i) in the case of Con Edison, to an Affiliate of Con
Edison or a third party that has a contractual or statutory obligation to supply
Energy to Con Edison's retail customers; (ii) in the case of AK Power, to an
Affiliate of AK Power; and (iii) in the case of either Party, to a lending
institution or trustee in connection with a pledge or granting of a security
interest in the Auctioned Assets and/or this Agreement; provided, however, that
no assignment or transfer of rights or obligations by either Party shall relieve
it from the full liabilities and the full financial responsibility, as provided
for under this Agreement, unless and until the transferee or assignee shall
agree in writing to assume such obligations and duties and the other Party has
consented in writing to such assumption. For purposes of this Agreement, the
term "Affiliate" shall have the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended.

(b) Nothing in this Agreement is intended to confer upon any other
person except the Parties any rights or remedies hereunder or shall create any
other party beneficiary rights in any person.

(c) Notwithstanding anything herein to the contrary, this Agreement
shall not constitute a consent by Con Edison to any assignment by NRG Energy
pursuant to Section 12.05 of the APSA.

ARTICLE 16      EXTENSION; WAIVER

Either Party may (a) extend the time for the performance of any of the
obligations or other acts of the other Party or (b) waive compliance by the
other Party with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a Party to any such extension or 
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such Party. The failure of a Party to this Agreement to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
such rights. Notwithstanding anything herein to the contrary, to the extent that
either Party fails, in any particular instance, to take affirmative steps to
exercise its rights to witness, inspect, observe or approve the activities of
the other Party, such rights shall, solely with respect to such instance, be
deemed waived in respect of such activity.

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ARTICLE 21      ENTIRE AGREEMENT

This Agreement embodies the entire agreement and understanding of the
Parties in respect of the transactions contemplated by this Agreement. There are
no restrictions, promises, representations, warranties, covenants or
undertakings other than those expressly set forth or referred to herein or
therein. This Agreement supersedes all prior agreements and understandings
between the Parties with respect to the transaction contemplated by this
Agreement.

ARTICLE 22      FURTHER ASSURANCES

The Parties agree to, from time to time upon the reasonable request of
either Party, negotiate in good faith and execute and deliver amendments to this
Agreement, including in response to regulatory, technological, operational or
other changes affecting the Auctioned Assets or the electric power industry
generally, or such other documents or instruments as may be necessary, in order
to effectuate the transactions contemplated hereby.

ARTICLE 23 INTERPRETATION

When a reference is made in this Agreement to an Article or Section,
such reference shall be to an Article or Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation" or equivalent words. The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument, statute, regulation, rule or
order defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument, statute, regulation, rule
or order as from time to time amended, modified or

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supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes, regulations, rules or orders) by
succession of comparable successor statutes, regulations, rules or orders and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.

ARTICLE 24      CONFIDENTIALITY

(a) All information regarding a Party (the "Disclosing Party") that
is furnished directly or indirectly to the other Party (the "Recipient")
pursuant to this Agreement and marked "Confidential" shall be deemed
"Confidential Information". Notwithstanding the foregoing, Confidential
Information does not include information that (i) is rightfully received by
Recipient from a third party not having an obligation of confidence to the
Disclosing Party, (ii) is or becomes in the public domain through no action on
Recipient's part in violation of this Agreement, (iii) is already known by
Recipient as of the date hereof, or (iv) is developed by Recipient independently
of any Confidential Information of the Disclosing Party. Information that is
specific as to certain data shall not be deemed to be in the public domain
merely because such information is embraced by more general disclosure in the
public domain.

(b) Recipient shall keep the Confidential Information strictly
confidential and shall not (except as required by applicable law, regulation or
legal process and then only after compliance with paragraph (c) below), without
any prior written consent, disclose any Confidential Information in any manner
whatsoever to any third party for a period of two years from the date the
Confidential Information was received by Recipient, except as otherwise provided
herein; provided, however, that Recipient may disclose the Confidential
Information to its and its Affiliates' respective directors, trustees, officers,
employees, consultants, advisors and agents who need to know the Confidential
Information for the purpose of assisting Recipient with respect to its
obligations under this Agreement. Recipient shall inform all such parties, in
advance, of the confidential nature of the Confidential Information. Recipient
shall use reasonable efforts to cause such parties to observe the terms of this
Agreement and shall be responsible for any breach of this Agreement by any such
parties.

(c) If Recipient is requested pursuant to, or required by, applicable
law, regulation or legal process to disclose any of the

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Confidential Information (including pursuant to the rules or regulations of the
NYPP, ISO or FERC), Recipient will notify the Disclosing Party promptly so that
the Disclosing Party may seek a protective order or other appropriate remedy. In
the absence of a protective order, or other appropriate remedy Recipient will
furnish only that portion of the Confidential Information which its legal
counsel advises Recipient is legally required and Recipient will exercise all
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded the Confidential Information so furnished.

(d) Recipient shall promptly return to the Disclosing Party all items
containing or constituting Confidential Information, together with all copies,
extracts, or summaries thereof, upon the earlier of (i) the Disclosing Party's
request, or (ii) four years after the termination or expiration of this
Agreement.

(e) The obligations set forth in this Article 24 shall extend for a
period of four years after termination or expiration of this Agreement.

ARTICLE 25      INDEPENDENT CONTRACTOR STATUS

Nothing in this Agreement is intended to create an association, trust,
partnership or joint venture between the Parties, or to impose a trust,
partnership, or fiduciary duty, obligation or liability on or with respect to
either Party, and nothing in this Agreement shall be construed as creating any
relationship between Con Edison and AK Power other than that of independent
contractors.

ARTICLE 26      JURISDICTION

Each of the Parties irrevocably submits to the exclusive jurisdiction
of (i) the Supreme Court of the State of New York, New York County and (ii) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of the Parties agrees to commence
any action, suit or proceeding relating hereto either in the United States
District Court for the Southern District of New York or, if such suit, action or
proceeding may not be brought in such court for jurisdictional reasons, in the
Supreme Court of the State of New York, New York County. Each of the Parties
further agrees that service of process, summons, notice or document by hand
delivery or U.S. registered mail at the address specified for such Party in

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Article 28 (or such other address specified by such Party from time to time
pursuant to Article 28 shall be effective service of process for any action,
suit or proceeding brought against such Party in any such court. Each of the
Parties irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) the Supreme Court of the State of New
York, New York County, or (ii) the United States District Court for the Southern
District of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.

ARTICLE 27      CONFLICTS

Can Edison and AK Power agree that, except as expressly otherwise
provided herein or therein, in the event of any conflict or inconsistency
between the terms of this Agreement and the terms of the APSA or the APSA
Amendment, the terms of this Agreement shall prevail.

ARTICLE 28      NOTICES

Unless otherwise specified herein, all notices and other
communications hereunder shall be in writing and shall be deemed given (as of
the time of delivery or, in the case of a telecopied communication, of
confirmation), if delivered personally, telecopies (which is confirmed) or sent
by overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other addresses for a Party as shall be
specified by like notice):

If to Con Edison, to:

Consolidated Edison Company of New York, Inc.
4 Irving Place                          
New York, New York 10003                
Telecopy No.: (212) 677-0601            
Attention: General Counsel              

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If to AK Power to:

Arthur Kill Power LLC        
1221 Nicollet Mall, Suite 700
Minneapolis, Minnesota,55403 
Telecopy No.: (612) 373- 5392
Attention: President         

With a copy to:                    

Arthur Kill Power LLC              
1221 Nicollet Mall, Suite 700      
Minneapolis, Minnesota, 55403      
Telecopy No.: (612) 373-5340       
Attention: Commercial Asset Manager

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IN WITNESS WHEREOF, the Parties hereto have caused this' Agreement to
be duly executed as of the date and year first above written. 

CONSOLIDATED EDISON COMPANY 
OF NEW YORK, INC.

By:/s/ Joan S. Freilich 
--------------------------------------- 
Name:  Joan S. Freilich
Title: Executive Vice President and CFO

ARTHUR KILL POWER LLC

By:/s/ Craig A. Mataczynski 
--------------------------------------- 
Name:  Craig A. Mataczynski
Title: President

1

EXHIBIT 10.23

TRANSITION ENERGY SALES AGREEMENT

BETWEEN

ASTORIA GAS TURBINE POWER LLC

AND

CONSOLIDATED EDISON COMPANY
OF NEW YORK, INC.

Dated as of June 1, 1999

2

TABLE OF CONTENTS

PAGE

ARTICLE 1 DEFINITIONS........................................................2

ARTICLE 2 TERM...............................................................5

ARTICLE 3 ENERGY PURCHASES AND PAYMENTS......................................6

(a) Energy Conversion Payments.............................................7

(b) Equivalent Forced Outage Penalty And Incentive Payments................8

ARTICLE 4 SCHEDULING.........................................................9

ARTICLE 5 FUEL...............................................................12

ARTICLE 6 ENVIRONMENTAL......................................................13

6.1 Use of NOx Allowances..................................................13

6.2 Fuel Oil Spills........................................................14

ARTICLE 7 BILLING AND PAYMENT PROCEDURES ....................................14

7.1 Billing and Payments...................................................14

7.2 Billing Disputes.......................................................16

7.3 Survival...............................................................17

ARTICLE 8 INDEMNIFICATION ...................................................17

8.1 Indemnification........................................................17

8.2 Third Party Claims Procedure...........................................19

8.3 Survival...............................................................20

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ARTICLE 9 LIMITATION OF LIABILITY............................................21

ARTICLE 10 FORCE MAJEURE.....................................................21

ARTICLE 11 DEFAULT AND TERMINATION...........................................22

ARTICLE 12 ADDITIONAL REMEDIES...............................................23

ARTICLE 13 DISPUTES..........................................................23

ARTICLE 14 REPRESENTATIONS AND WARRANTIES....................................23

14.1 Representations and Warranties of Con Edison..........................23

14.2 Representations and Warranties of Astoria Power.......................24

ARTICLE 15 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES..........................26

ARTICLE 16 EXTENSION; WAIVER.................................................27

ARTICLE 17 COUNTERPARTS......................................................27

ARTICLE 18 GOVERNING LAW.....................................................27

ARTICLE 19 SEVERABILITY......................................................27

ARTICLE 20 AMENDMENT.........................................................28 

ARTICLE 21 ENTIRE AGREEMENT..................................................28

ARTICLE 22 FURTHER ASSURANCES................................................28

ARTICLE 23 INTERPRETATION....................................................28

ARTICLE 24 CONFIDENTIALITY...................................................29

ARTICLE 25 INDEPENDENT CONTRACTOR STATUS.....................................30

ARTICLE 26 JURISDICTION......................................................31

ii

4

ARTICLE 27 CONFLICTS ........................................................31

ARTICLE 28 NOTICES ..........................................................31

iii

5

TRANSITION ENERGY SALES AGREEMENT BETWEEN
ASTORIA GAS TURBINE POWER LLC AND
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

This Agreement is made and entered into as of June 1, 1999 between
Astoria Gas Turbine Power LLC ("Astoria Power"), a Delaware limited liability
company having its principal place of business at 1221 Nicollet Mall,
Minneapolis, Minnesota 55403, and Consolidated Edison Company of New York, Inc.
("Con Edison"), a New York corporation having its principal place of business at
4 Irving Place, New York, New York 10003. Astoria Power and Con Edison shall
each be referred to as a "Party", and shall be referred to collectively as the
"Parties."

WHEREAS, Con Edison offered for sale by auction certain electric
generating facilities located at the Arthur Kill Generating Station and the
Astoria Gas Turbine site and certain other assets primarily related thereto
("Auctioned Assets");

WHEREAS, NRG Energy, Inc. ("NRG Energy") and Con Edison have entered
into the Generating Plant and Gas Turbine Asset Purchase and Sale Agreement
("APSA"), dated January 27,1999, and NRG Energy will assign prior to the Closing
Date (as defined below) its rights and obligations under the APSA relating to
the purchase from Con Edison of the Gas Turbines (as defined below) and certain
other assets primarily related thereto in accordance with the terms and
conditions of the APSA, and NRG Energy will assign to Arthur Kill Power LLC ("AK
Power") prior to the Closing Date its rights and obligations under the APSA
relating to the purchase from Con Edison of the Generating Plant (as defined
below) and certain other assets primarily relating thereto in accordance with
the terms and conditions of the APSA;

WHEREAS, the rights and obligations of Astoria Power and Con Edison
relating to generators of electric generating capacity, energy, transmission and
ancillary services may be modified by a proposal (the "Proposal") currently
pending before the Federal Energy Regulatory Commission ("FERC") to restructure
the New York Power Pool, which contemplates the formation of the New York
Independent System Operator ("ISO") and the implementation of the ISO Tariff
filed on December 19, 1997, as approved by FERC in FERC Docket Nos.
ER97-1523-000, OA97-470-000 and ER97-4234-000, as such tariff may be amended
from time to time;

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WHEREAS, FERC may approve, accept, modify, or reject the Proposal, and
its actions may affect the Parties' rights and obligations under this Agreement;

WHEREAS, FERC has accepted for filing certain market power mitigation
measures applicable to sales of capacity, energy and certain other services
from specified electric generating units in New York City in FERC Docket No.
ER98-3169-000 (such measures, as may be modified from time to time, and any
other applicable market power mitigation measures that may be imposed by FERC,
ISO or the New York Public Service Commission ("PSC"), the "Mitigation
Measures");

WHEREAS, sales of capacity, energy and certain other services from the
Auctioned Assets will be subject to, and the rights and obligations of the
Parties under this Agreement may be affected by, the Mitigation Measures;

WHEREAS, in recognition of Con Edison's requirements to provide Energy
to its firm customers, Astoria Power and Con Edison agree to enter into this
Transition Energy Sales Agreement, whereby Con Edison will purchase from Astoria
Power and Astoria Power will sell to Con Edison various amounts of Energy for
the term of this Agreement.

NOW THEREFORE, in consideration of the mutual agreements and
commitments contained herein, Astoria Power and Con Edison hereby agree as
follows:

ARTICLE 1   DEFINITIONS

The following terms shall have the meanings set forth below. Any term
used in this Agreement that is not defined herein shall have the meaning that is
in the APSA or, if the term is not defined in the APSA, then the term shall have
the meaning customarily attributed to it by the electric utility industry.

"Agreement" shall mean this Transition Energy Sales Agreement between
Astoria Power and Con Edison, as it may be amended from time to time.

"Business Day" shall mean any day other than Saturday, Sunday or any
day on which banking institutions in the State of New York are authorized by law
or other governmental action to close.

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"Closing Date" shall mean the date and time at which the closing of the
transactions contemplated by the APSA actually occurs.

"Continuing Site Agreement" means the Astoria Gas Turbine Continuing
Site Agreement between Con Edison and NRG Energy, dated January 27, 1999.

"Energy" shall mean the amount of energy in megawatt hours ("MWH") that
Astoria Power will generate in the Gas Turbines and deliver to Con Edison.

"Energy Control Center" shall mean the headquarters of Con Edison's
electric transmission and distribution operations.

"FERC" shall mean the Federal Energy Regulatory Commission or its
successor.

"Firm Commitment" shall mean Con Edison's designation of a Unit for
dispatch during a Week, which designation is communicated in writing to Astoria
Power by 5 p.m. on the Thursday preceding the Week.

"FOF" shall mean the forced outage factor set forth in Appendix A
hereto.

"Fuel" shall mean the fuels commonly burned in the Gas Turbines,
including natural gas and kerosene.

"Fuel Oil" shall mean kerosene.

"Gas Turbines" means the gas turbine units GT2 through GT5 and GT7
through GT13 located at the Astoria Gas Turbine site.

"Generating Plant" means the units 2 and 3 steam-powered generating
facilities and gas turbine unit GT 1 located at the Arthur Kill Generating
Station.

"Good Utility Practices" mean any of the practices, methods or acts
engaged in or approved by a significant portion of the electric utility industry
with respect to similar facilities during the relevant time period which in each
case, in the exercise of reasonable judgment in light of

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the facts known at the time the decision was made, could have been expected to
accomplish the desired result at a reasonable cost consistent with good business
practices, reliability, safety, law, regulation, environmental protection, and
expedition. Good Utility Practices are not intended to be limited to the optimum
practices, methods or acts to the exclusion of all others, but rather to
delineate the acceptable practices, methods or acts generally accepted in such
industry.

"Holiday" shall mean any day which is a day on which banking
institutions in the State of Now York are authorized by law or other
governmental action to close.

"ISO" shall mean the New York Independent System Operator, as described
in the Supplemental Filing, or its successors.

"ISO Commencement Date" shall mean the date on which the ISO officially
commences operations of a spot market for energy, spinning and non-spinning
reserves and automatic generator control, as signified by the first day that
resources such as the Gas Turbines are allowed to bid into each market on a
non-trial or non-experimental basis.

"ISO Tariff" shall mean the tariff described in the Supplemental
Filing, as it may be amended from time to time.

"Maintenance Outage Schedule" shall mean a timetable detailing Astoria
Power's schedule for removal (full or partial) from service of one or more of
the Units for inspection, maintenance or repair.

"Month" shall mean calendar month, and not a specific 30 day time
period.

"Metering Point" shall mean the Point of Interconnection (as defined in
the Continuing Site Agreement), which is the point to which the Revenue Meters
installed pursuant to Section 3.05 of the Continuing Site Agreement measure the
Energy.

"NERC" shall mean the North American Electric Reliability Council or
its successors.

"NYPP" shall mean the New York Power Pool or its successors.

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9

"Summer Capability Period" shall have the meaning provided by the NYPP,
or its successor(s), as may be modified from time to time. Summer Capability
Period is currently May 1 through October 31 of each year.

"Supplemental Filing" shall mean the December 19, 1997 Supplemental
Filing to the Comprehensive Proposal to Restructure the New York Wholesale
Electric Market in FERC Docket Nos. ER97-1523-000, OA97-470-000, and
ER97-4234-000.

"Time Period" shall mean the period from 10:00 a.m. to 6:00 p.m. on
each of the days from Monday through Friday of each week, excluding Holidays.

"Unit" shall mean any of the Gas Turbines.

"Week" shall mean the period from any Monday at 12:00 a.m. to the
immediately following Sunday at 11:59 p.m.

"Winter Capability Period" shall have the meaning provided by the NYPP,
or its successor(s), as may be modified from time to time. Winter Capability
Period is currently each November 1 through April 30 of the following calendar
year.

ARTICLE 2     TERM

(a)  The obligations of the Parties under this Agreement shall commence
on the Closing Date and continue until the ISO Commencement Date; provided,
however, that (i) if, within 30 days after the ISO Commencement Date or the ISO
Resumption Date (as defined below) the ISO suspends operations for any reason,
the parties' obligations under this Agreement shall recommence and continue
until the ISO resumes operation (the "ISO Resumption Date"); and (ii) in the
event that the ISO Commencement Date does not occur by March 1, 2000, either
Party may request the other Party to renegotiate in good faith the terms and
conditions, including payment terms, for Energy purchases under this Agreement.
If, upon such request by either Party, the Parties are unable to reach agreement
on such revised terms and conditions, Astoria Power shall file tariffs governing
such purchases with the appropriate regulatory agency or agencies, to become
effective as of June 1, 2000, and, upon the effectiveness of such tariffs, as
may be modified by such regulatory agency or agencies, the terms and

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10

conditions contained in the approved tariffs shall be binding upon the Parties
and shall govern the purchases of Energy under this Agreement; provided,
however, that Con Edison shall have the right to protest the tariffs filed by
Astoria Power to such regulatory agency or agencies.

(b)  This Agreement is subject to all necessary regulatory
authorizations without any modifications or conditions. If any regulatory agency
having jurisdiction over this Agreement requires any modification to, or imposes
any condition of acceptance or approval of, this Agreement, then the Parties
shall engage in good faith negotiations for a period of 30 days following the
issuance of that modified or conditional acceptance or approval in order to
agree to revisions to this Agreement to satisfy, or otherwise address, such
modification or condition. If the Parties fail to agree mutually to such
changes, then Astoria Power may make a unilateral filing to such regulatory
agency to satisfy the modification or condition, which filing shall attempt to
satisfy the intent of the Parties under this Agreement; provided, however, that
Con Edison shall have the right to protest the manner in which Astoria Power has
proposed to satisfy such modification or condition.

(c)  Astoria Power shall file this Agreement with FERC prior to
commencement of services with a request that it be accepted for filing to be
effective no later than the Closing Date. Notwithstanding the foregoing, the
Parties agree that the effectiveness of clause (ii) of paragraph (a) of this
Article shall not be contingent upon FERC approval.

(d)  This Agreement is further conditioned upon FERC not modifying or
rejecting Articles 2(a) and 3 of the First Amendment to the APSA ("APSA
Amendment"), dated as of June 1, 1999, between Con Edison and NRG Energy;
provided, however, that in the event that FERC modifies the APSA Amendment, the
Parties will, if and to the extent necessary, modify this Agreement to conform
it to the modified APSA Amendment under the procedures set forth in paragraph
(b) of this Article. Notwithstanding the foregoing, the Parties agree that the
effectiveness of Article 2(b) of the APSA Amendment shall not be contingent upon
FERC approval.

ARTICLE 3     ENERGY PURCHASES AND PAYMENTS

Con Edison shall receive and purchase from Astoria Power, and Astoria
Power shall deliver and sell to Con Edison, Energy at the

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Metering Point during the term of, and in accordance with the terms and
conditions of, this Agreement. The Energy to be delivered by Astoria Power to
Con Edison shall be generated at the Gas Turbines. Astoria Power shall operate
the Gas Turbines in accordance with Good Utility Practices.

(a)  Energy Conversion Payments

1.   Con Edison shall pay Astoria Power an Energy Conversion Payment
("ECP") of $1/MWH multiplied by the average net electrical output of each Unit
sold to Con Edison on an hourly basis. For purposes of this Agreement, the net
electrical output sold to Con Edison shall mean, on a monthly basis, the Energy
generated by the Gas Turbines minus the auxiliary power consumed by the Gas
Turbines and other related Auctioned Assets assigned by NRG Energy to Astoria
Power, each measured by Con Edison at their associated Metering Points, less
Energy generated by Astoria Power for delivery to third parties.

2.  Within 30 days after each consecutive 12-Month period after the
Closing Date, (i) Con Edison shall pay Astoria Power $4/MWH, in addition to the
$1/MWH required by Article 3(a)(1) which is paid monthly in accordance with
Article 7, for the amount by which the net electric output of the Gas Turbines
sold to Con Edison (excluding Energy generated by Astoria Power for delivery to
third parties) during such 12-Month period exceeded 110% of the average annual
output of the Gas Turbines in the years 1996 through 1998, or (ii) Astoria Power
shall pay Con Edison $2.5/MWH for the amount by which the net electric output of
the Gas Turbines sold to Con Edison (excluding Energy generated by Astoria Power
for delivery to third parties) during such 12-Month period was less than 90% the
average annual output of the Gas Turbines in the years 1996 through 1998;
provided, however, that Con Edison shall be excused from making payments to
Astoria Power in excess of $2.5/MWH under clause (i) of this paragraph (a)(2) to
the extent that Con Edison cannot recover such payments from its customers under
a ruling by the PSC. Payments under this paragraph for a period less than 12
Months following the termination of this Agreement shall be due within 30 days
of such termination and shall be based on the electric net output of the Gas
Turbines in such period as compared to the average output during comparable
periods in the years 1996 through 1998.

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(b)  Equivalent Forced Outage Penalty And Incentive Payments

Con Edison shall either pay to Astoria Power an Incentive Payment or
Astoria Power shall pay to Con Edison a Penalty Payment, as determined below,
based on the availability of the Gas Turbines subject to a Firm Commitment
relative to the historical FOF of the Gas Turbines as set forth in Appendix A.
Penalty and Incentive Payments shall be based on performance of the Gas Turbines
only during the Time Period. Calculation of the Penalty and Incentive Payments
shall exclude (i) the performance of any Unit scheduled for maintenance during
the applicable Time Period in accordance with a Maintenance Outage Schedule, a
maintenance outage request or a load limitation request approved by Con Edison
in accordance with Article 4(f), and (ii) Astoria Power's inability to comply
with the Firm Commitment due to Con Edison's failure to provide Fuel in
accordance with Article 5, Con Edison's inability to accept Energy generated by
the Gas Turbines into its transmission system or a Force Majeure Event specified
in Article 10. The formulas for computing such Penalty and Incentive Payments
are set forth below and illustrative computations are included in Appendix C
hereto.

Penalty and Incentive Payments based on the performance of the Gas
Turbines shall be calculated as follows:

1.   The number of MWs as committed by Con Edison in the Firm Commitment;
2.   The historic FOF, expressed as a decimal, set forth on Appendix A hereto;
3.   Penalty Payment Rate is equal to $10/MWh;
4.   Incentive Payment Rate is equal to Penalty Payment Rate times historic FOF,
divided by 1 minus historic FOF;
5.   For each hour in the Time Period when Gas Turbines on an aggregate basis
are dispatched, the Penalty Payment is equal to the number of MWs not
available for dispatch times the Penalty Payment Rate;
6.   For each hour in the Time Period when Gas Turbines on an aggregate basis
are dispatched, the Incentive Payment is equal to the number of MWs
dispatched times the Incentive Payment Rate;
7.   At the end of the month, hourly Penalty Payments and Incentive Payments are
summed;
8.   For the month, if the total Incentive Payments less the total Penalty
Payments is a positive value (net Incentive Payment), Con Edison will pay
the net Incentive Payment to Astoria Power. If the difference is

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a negative value (not Penalty Payment), Astoria Power will pay the net Penalty 
Payments to Con Edison.

(c) Billing and payment of the ECP and Incentive and Penalty Payments
shall be made in accordance with Article 7. Con Edison shall reimburse Astoria
Power for all taxes, surcharges, adjustments or other assessments imposed by
law, rule or regulation, other than those based on income (such as federal
income taxes), which are of general applicability and imposed on the sales of
Energy hereunder.

(d) Except as otherwise provided in this Agreement, Con Edison shall
make no other payment to Astoria Power for Energy actually provided under this
Agreement.

(e) Notwithstanding anything in the foregoing to the contrary,
calculations of Penalty and Incentive Payments shall also be based upon the
performance of the Gas Turbines during the entire 64-hour period beginning at 6
p.m. on Friday, December 31, 1999 and ending on 10 a.m. on Monday, January 3,
2000, which performance shall not be excused by a Year 2000 (Y2K) computer
error, malfunction, or problem.

ARTICLE 4       SCHEDULING

(a) Astoria Power and Con Edison shall comply in all material respects
with the applicable Energy scheduling requirements under NYPP rules and
regulations. Unless otherwise provided for under NYPP rules and regulations, Con
Edison shall have the sole authority to dispatch any of the Gas Turbines
specified in the Firm Commitments, up to their full capability, from Con
Edison's Energy Control Center. The Gas Turbine Unit(s) specified in the Firm
Commitments must be available for dispatch for the entire Monday through Sunday
period starting at 12:01 a.m. Monday morning of the applicable Week. The full
capability and minimum run time of each Unit is specified in Appendix B.

(b) Con Edison shall specify Firm Commitments for each Week by 5 p.m.
on the Thursday preceding the Week. If at any time after receipt of Con Edison's
Firm Commitment, Astoria Power determines that it cannot comply with such Firm
Commitment with respect to any Unit, Astoria Power shall immediately notify Con
Edison of such determination,

(c) Astoria Power shall have the right to enter into a bilateral

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contract for the sale of Energy generated by a Unit not subject to a Firm
Commitment to a third party. Con Edison shall provide transmission service under
Con Edison's Open Access Transmission Tariff ("OATT") to Astoria Power for sales
to third parties within and outside Con Edison's service area. In the event and
to the extent that undergeneration by Astoria Power during a bilateral sale is
covered and provided by Con Edison, Astoria Power shall reimburse Con Edison for
the amount of such undergeneration based upon Con Edison's incremental power
costs coincident with the undergeneration period, as determined by Con Edison.
When Con Edison provides Astoria Power with transmission service for deliveries
to third parties outside Con Edison's service area, the transmission service
will be provided up to the interconnection point between Con Edison's
transmission system and the transmission system of the third party or the
transmission system of an intervening party through which such deliveries are to
be made. Astoria Power shall notify Con Edison of bilateral transactions made
with third parties and shall reserve and pay for Con Edison OATT transmission
services required to support these sales. If Astoria Power does not enter into a
bilateral contract for the sale of Energy from a Unit not subject to a Firm
Commitment, Con Edison shall have the right to commit and dispatch that Unit on
a real-time basis. For the purpose of the Penalty and Incentive calculations as
described in Article 3(b), such real-time commitment and dispatch shall be
considered a Firm Commitment.

(d) On a real-time basis, Con Edison shall dispatch a Unit from the
Con Edison Energy Control Center using signals from the NYPP or modified NYPP
signals based on Con Edison's transmission control area regulation requirements
or local reliability rules. Con Edison shall commit or dispatch a Unit to
respond to system conditions, including, but not limited to: storm watch,
maximum generation levels, minimum oil burn and remote start.

(e) Whenever the Units are committed or dispatched by Con Edison, the
Units shall provide Energy and ancillary services on a real time dispatch basis
(including appropriate levels of 10 minute spinning, 10 minute non-spinning, and
30 minute operating reserves as required by the NYPP, voltage support such as
supplying or absorbing Volt Ampere-Reactive (VARS) power, frequency control and
automatic generation control) as required by Con Edison. Astoria Power shall
receive no additional payment for any such ancillary services.

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(f) Within 14 days of the Closing Date, Astoria Power shall provide to
Con Edison a Maintenance Outage Schedule relating to the Gas Turbines for the
first year following Closing. Astoria Power shall provide subsequent Maintenance
Outage Schedules to Con Edison one year from the Closing Date, and annually
thereafter, until this Agreement is terminated. All Maintenance Outage Schedules
shall be subject to Con Edison's approval within 30 days of receipt by Con
Edison, such approval not to be unreasonably withheld; provided, however, that
Con Edison may require Astoria Power to subsequently amend an approved
Maintenance Outage Schedule with respect to any Unit, at any time prior to the
date that the Unit is scheduled to be removed from service, due to Con Edison's
concerns with the reliability of the electric system, unless the planned
maintenance cannot be delayed pursuant to Good Utility Practices. As necessary,
Astoria Power shall provide Con Edison with maintenance outage requests and load
limitation requests in order to perform necessary maintenance that is not
indicated on a Maintenance Outage Schedule. If necessary, such request shall be
renewed by Astoria Power on a weekly basis in accordance with the Firm
Commitment. All such changes to the Maintenance Outage Schedules shall be
subject to Con Edison's approval, such approval not to be unreasonably withheld.

(g) If Astoria Power enters into a bilateral transaction with a third
party as provided by Article 4(c), such transactions must be scheduled in
advance with Con Edison. These transactions must conform to all NYPP scheduling
requirements, including NERC tagging requirements. All bilateral transactions
must be scheduled with Con Edison on a daily basis as soon as they are
finalized, but no later than noon of the day prior to the day the transaction
will occur. Intra-day transactions between Astoria Power and a third party will
be scheduled by Con Edison provided that they do not conflict with or otherwise
reduce Con Edison's electric system reliability. Notwithstanding the foregoing,
Con Edison reserves the right to curtail all bilateral transactions that may
jeopardize system reliability in accordance with NYPP standards.

(h) Astoria Power shall immediately notify Con Edison of any change in
the availability and/or capability of any Unit and the expected duration of any
outage or derating.

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ARTICLE 5       FUEL

(a) Con Edison shall, at its own cost, procure and supply all Fuel
required by the Gas Turbines to operate for Energy sales to Con Edison. All such
Fuel shall meet Con Edison's specifications in effect as of the Closing Date.
Con Edison shall provide and be responsible for all costs for all services
associated with the delivery of Fuel, including but not limited to natural gas
balancing and all local gas transportation costs associated with the supply of
natural gas to the Gas Turbines.

(b) Con Edison shall also procure and supply all Fuel Oil required by
the Gas Turbines for Energy sales to third parties by Astoria Power. Astoria
Power shall reimburse Con Edison for Fuel Oil used for such Astoria Power
third-party sales, based on Con Edison's cost of fuel. Astoria Power shall
procure and supply all the natural gas required to support a bilateral sale to a
third party and shall be responsible for all incremental costs associated with
such natural gas supply incurred by Con Edison, including but not limited to
balancing the natural gas supply and all incremental local transportation costs
associated with Astoria Power's bilateral sales incurred by Con Edison. Upon
reasonable request by Astoria Power, Con Edison shall make available daily
information on gas balancing and nomination.

(c) Con Edison shall procure, manage and pay all costs associated with
transportation of Fuel Oil to the site. Fuel Oil deliveries shall be scheduled
during normal business hours, unless otherwise required by conditions outside
the reasonable control of the either Party, with 24-hours advance notification.

(d) Astoria Power shall be responsible for all on-site storage,
equipment related thereto and handling of the Fuel Oil, including receiving all
Fuel Oil from the Fuel Oil delivery barges and Fuel Oil metering and
measurement, Con Edison shall be responsible for all required Fuel sampling and
shall provide copies of sample results to Astoria Power.

(e) Con Edison shall have sole discretion in determining which Fuels
are to be burned in each Unit and will specify the fuel mix to Astoria Power as
appropriate; provided, however, that, to the extent feasible, Con Edison shall
use natural gas as the primary fuel to be burned in the Gas Turbine units GT2
through GT4; and, provided, further, that in all instances, Fuel selected to be
burned will be

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compliant with all applicable Environmental Laws,

ARTICLE 6       ENVIRONMENTAL

6.1 Use of NOx Allowances

(a) All nitrogen oxide (NOx) allowances allocated to the Gas Turbines
by the Department of Environmental Conservation (DEC) under 6 NYCRR Part 227-3.5
(a) may be used by Con Edison for NOx emissions from either the Ravenswood
Generating Station or Ravenswood Gas Turbines, or Arthur Kill and Astoria
Generating Stations or Narrows, Gowanus or Astoria Gas Turbines (hereinafter
collectively referred to as "Generators"); provided, however, that such
allowances may be so used at the Generators other than the Astoria Gas Turbines
only to the extent that NOx emissions exceed allowances allocated to those
Generators under 6 NYCRR Part 227-3.5(a), and only to the extent that NOx
allowances from those Generators are also made available to Con Edison for
similar use. Astoria Power shall provide NOx allowances for its bilateral
transactions with third parties pursuant to Article 4(c).

(b) At the end of each ozone season (May 1 through September 30), Con
Edison shall determine the number of tons of NOx emissions that were emitted
from the Generators. This amount shall be subtracted from the NOx allowances
allocated to the Generators under 6 NYCRR Part 227-3.5 (a) to determine if any
of these Part 227-3.5(a) NOx allowances remain. Only to the extent that such NOx
allowances remain, Con Edison shall have the right to direct the reallocation by
November 15 of each year of these NOx allowances on a pro-rata basis in relation
to the total NOx allowances allocated to the Generator under 6 NYCRR Part 227 -
3.5 (a); provided, however, that such allocation may be proportionately
increased or decreased by Con Edison based on the performance of the Generators
for which NOx emission performance criteria have been established. At the end of
each ozone season, Astoria Power shall transfer the Part 227-3.5(a) NOx
allowances in the Astoria Gas Turbines account to the Generators as determined
by Con Edison pursuant to this paragraph, provided that the owners of the other
Generators similarly make such transfers as determined by Con Edison. If the NOx
allowances allocated to the Generators under 6 NYCRR Part 227-3.5 (a) are not
sufficient to satisfy the NOx emissions from the Generators during the ozone
season, then Con Edison shall be

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responsible for the allowance deficiency except to the extent that such
deficiency is due to operation of Generators for which NOx emission performance
criteria have been established.

(c) Con Edison shall include the Gas Turbines in its NOx RACT
System-wide Averaging Program ("Program") and shall be responsible for meeting
the 24-hour allowable system-wide NOx average for all generators included in the
Program. Con Edison shall monitor the operation of the Gas Turbines and apply
the applicable NOx emission rate. Con Edison shall prepare and file with DEC the
quarterly NOx RACT Report an the system-wide averaging. In the event of a forced
outage of a Unit, Con Edison shall prepare, with the support of Astoria Power,
the documentation required by the DEC regulations (6 NYCRR Section
227-2.5(b)(1). Con Edison shall provide to Astoria Power bi-weekly reports on
NOx allowances estimated usage by all Generators. Con Edison has the right to
curtail any third-party bilateral transaction that may, in its sole opinion,
jeopardize the 24-hour allowable system wide NOx average.

(d) Con Edison shall be responsible for the preparation for Astoria
Power's approval, and Astoria Power shall submit, the quarterly electronic data
report to the U.S. Environmental Protection Agency as required by the DEC NOx
Budget Rule.

(e) In the event that the DEC does not approve the inclusion of the
Gas Turbines in Con Edison's NOx RACT System-wide Averaging Program, the Parties
shall renegotiate the provisions of this Article 6 to otherwise carry out the
intent of this Article 6 and other pertinent provisions.

6.2 Fuel Oil Spills

Astoria Power shall take all appropriate notification and other
actions with respect to Fuel Oil spills as required by law and regulation.

ARTICLE 7       BILLING AND PAYMENT PROCEDURES

7.1 Billing and Payments

(a) In respect of each Month ending after the Closing Date, Astoria
Power shall, on or prior to the twentieth day of the following Month prepare and
render an invoice to Con Edison for the ECP, less

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any Penalty Payments or plus any Incentive Payments as described in Article 3,
due from Con Edison to Astoria Power for the preceding Month, calculated in
accordance with Article 3. The Payments owed, shall be due and payable 10
Business Days after Con Edison receives an invoice. All payments due under this
Agreement shall be made in immediately available funds by wire transfer to
accounts designated by the Parties.

(b) If any payment falls due on a day that is not a Business Day, then
the payment shall be made on the next Business Day.

(c) Interest on unpaid amounts, payments received after the due date
or payments in dispute that are held in escrow shall accrue at a rate equal to
the prime commercial lending rate established from time to time by Chase
Manhattan Bank, N.A., New York, New York, or its successor, from the due date
until the date upon which payment is made.

(d) All billings to Con Edison shall be sent to:

Consolidated Edison Company of New York, Inc.
4 Irving Place
New York, New York 10003
Attention: (To Be Specified By Con Edison Prior To The
Closing Date)

All billings to Astoria Power shall be sent to:

Astoria Gas Turbine Power LLC
1221 Nicollet Mail; Suite 700
Minneapolis, Minnesota, 55403
Attention: (To Be Specified By Astoria Power Prior To The
Closing Date)

(e) Any payments owed directly by Astoria Power to the NYPP, shall be
made pursuant to the procedures established by the NYPP, Astoria Power shall be
responsible for its share of the NYPP Control Performance System payments or
penalties, as the case may be, as applied to Con Edison based on the performance
of the Gas Turbines. Con Edison shall determine the allocation of NYPP Control
Performance System payments or penalties to the Gas Turbines. Invoices for such

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payments or penalties shall be submitted by Con Edison to Astoria Power, and 
payments by Astoria Power shall be made to Con Edison, in accordance with the 
timeframe set forth in Article 7.1 (a).

(f) Any other payments due under this Agreement shall be invoiced and
paid in accordance with the timeframe set forth in Article 7. 1 (a). To the
extent the auxiliary power consumed by the Gas Turbines and other related
Auctioned Assets owned by Astoria Power is not fully offset in any month by
Energy generated by the Gas Turbines, as contemplated in Article 3(a)(1), such
remaining auxiliary power shall be carried forward to be so offset by Energy
generated by the Gas Turbines in the next month, and Astoria Power shall
reimburse Con Edison for any remaining auxiliary power at the termination of
this Agreement based upon the payments for Energy made by Con Edison in the last
month prior to the termination of this Agreement.

(g) The Parties shall maintain records, accounts and other documents
sufficient to reflect accurately all transactions hereunder for a period of four
years from the time of the transactions. Each Party shall, at its own expense,
have the right to audit such records, accounts and other documents of the other
Party during such four-year period upon reasonable prior notice to the other
Party, subject to Article 24.

7.2 Billing Disputes

If a Party contests the amount billed in accordance with Article 7.1
before such amount is due, the contesting Party shall pay the undisputed billed
amount when due and promptly provide written notice to the other Party of the
disputed amount, identifying the reason for the dispute. If neither Party
disputes a bill within six Months after the due date of such bill, such bill
shall be deemed correct. The Parties shall engage in good faith negotiations to
resolve any disputed amounts within 30 days, after receipt of the written notice
identifying the dispute. If the Parties are unable to resolve a dispute within
such period, the disputed amounts shall, if requested by the billing party, be
paid into an escrow account within 30 days of such request pending resolution of
the dispute. Thereafter, either Party may exercise such remedies as may be
available under this Agreement, at law or in equity. However, such billing
dispute under this Section 7.2 shall not constitute an Event of Default as that
term is defined in Article 9(c) and such remedies do not include the temporary
or long-term cessation of the supply of Energy from Astoria Power to Con Edison
in accordance with

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the terms of this Agreement. Interest at the rate specified in Section 7.1 (c)
shall accrue on any amount due hereunder, if any, that is refunded or credited
to the contesting Party or that is released from escrow to the non-contending
Party, when the contested amount is resolved.

7.3 Survival

The provisions of this Agreement shall survive termination,
expiration, cancellation, suspension, or completion of this Agreement to the
extent necessary to allow for final billing and payment.

ARTICLE 8       INDEMNIFICATION

8.1 Indemnification

(a) Astoria Power shall indemnify and hold harmless Con Edison and its
Affiliates and their respective officers, directors, trustees, employees and
agents (collectively with Con Edison and its Affiliates, the "Con Edison
Indemnitees") from and against any and all claims, demands, liabilities, costs,
losses, judgments, damages, obligations, payments and expenses (including
reasonable legal fees and expenses and including costs and expenses incurred in
connection with investigations and settlement proceedings) (each, an
"Indemnifiable Loss"), as incurred, asserted against or suffered by any Con
Edison Indemnitee relating to, resulting from or arising out of (A) damage to
property or (B) injury to or death of any person, including Con Edison
Indemnitees, Astoria Power's Indemnitees (as defined below), or any third
parties, in each case, to the extent caused by the gross negligence or willful
misconduct of Astoria Power, its Affiliates or their respective officers,
directors, trustees, employees, agents, subcontractors and successors and
arising out of or in connection with this Agreement and not caused by the
negligence or willful misconduct of such Con Edison Indemnitee, or (C) any
breach by Astoria Power of any covenant or agreement by Astoria Power, or
representation or warranty of Astoria Power that survives Closing pursuant to
Article 14-3. contained in this Agreement,

(b) Con Edison shall indemnify and hold harmless Astoria Power and its
Affiliates and their respective officers, directors, trustees, employees and
agents from and against (collectively with Astoria Power and its Affiliates, the
'Astoria Power Indemnitees") any and all

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Indemnifiable Losses, as incurred, asserted against or suffered by any Astoria
Power Indemnitee relating to, resulting from or arising out of (A) damage to
property, or (B) injury to or death of any person, including Astoria Power
Indemnitees, Con Edison's Indemnitees or any third parties, in each case, to the
extent caused by the gross negligence or willful misconduct of Con Edison, its
Affiliates or its their respective officers, directors, trustees, employees,
agents, subcontractors and successors and arising out of or connected with this
Agreement and not caused by the negligence or willful misconduct of such Astoria
Power Indemnitee, or (C) any breach by Con Edison of any covenant or agreement
by Con Edison, or representation or warranty of Con Edison that survives Closing
pursuant to Article 14.3, contained in this Agreement.

(c) The amount of any Indemnifiable Loss shall be reduced to the
extent that the relevant Astoria Power Indemnitee or Con Edison Indemnitee
(each, an "Indemnitee") receives any insurance proceeds with respect to an
Indemnifiable Loss. If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an indemnity payment in respect thereof, is reduced
by recovery, settlement or otherwise under or pursuant to any insurance
coverage, or pursuant to any claim, recovery, settlement or payment by or
against any other person, the amount of such reduction, less any costs, expenses
or premiums incurred in connection therewith, will promptly be repaid by the
Indemnitee to the Party required to provide indemnification hereunder (the
"Indemnifying Part") with respect to such Indemnifiable Loss.

(d) To the fullest extent permitted by law, neither Party nor any
Astoria Power Indemnitee or any Con Edison Indemnitee shall be liable to the
other Party or any other Astoria Power Indemnitee or Con Edison Indemnitee for
any claims, demands or suits for consequential, incidental, special, exemplary,
punitive, indirect or multiple damages connected with or resulting from any
breach of this Agreement, or any actions undertaken in connection with or
related hereto, including any such damages which are based upon breach of
contract, tort (including negligence and misrepresentation), breach of warranty,
strict liability, statute, operation of law or any other theory of recovery.

(e) The rights and remedies of Con Edison and Astoria Power under this
Article 8 are, solely as between Con Edison and Astoria Power, exclusive and in
lieu of any and all other rights and remedies

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which Con Edison and Astoria Power may have under this Agreement or otherwise
for monetary relief with respect to (i) any breach of, or failure to perform,
any covenant or agreement set forth in this Agreement by Con Edison or Astoria
Power or (ii) any breach of any representation or warranty by Con Edison or
Astoria Power. Each Party agrees that the previous sentence shall not limit or
otherwise affect any non-monetary right or remedy which either Party may have
under this Agreement or otherwise limit or affect either Party's right to seek
equitable relief, including the remedy of specific performance.

(f) Astoria Power and Con Edison agree that, notwithstanding Section
8.1 (e), each Party shall retain, subject to the other provisions of this
Agreement, including Sections 8.1 (d), all remedies at law or in equity with
respect to fraud or willful or intentional breaches of this Agreement.

8.2 Third Party Claims Procedures

(a) If any Indemnitee receives notice of the assertion of any claim or
of the commencement of any claim, action, or proceeding made or brought by any
person who is not a Party or an Affiliate of a Party (a "Third Party claim")
with respect to which indemnification is to be sought from an Indemnifying
Party, the Indemnitee will give such Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 20 Business Days after
the Indemnity's receipt of notice of such Third Party Claim; provided, however,
that a failure to give timely notice will not affect the rights or obligations
of any Indemnitee except if, and only to the extent that, as a result of such
failure, the Indemnifying Party was actually prejudiced. Such notice shall
describe the nature of the Third Party Claim in reasonable detail and will
indicate the estimated amount, if practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee.

(b) If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided, however, that such counsel is not reasonably
objected to by the Indemnitee; and provided further that the Indemnifying Party
first admits in writing its liability to the Indemnitee with respect to all
material elements of such claim. Should the Indemnifying Party elect to assume
the defense of a Third

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Party Claim, the Indemnifying Party will not be liable to the Indemnitee for any
legal expenses subsequently incurred by the Indemnitee in connection with the
defense thereof. If the Indemnifying Party elects to assume the defense of a
Third Party Claim, the Indemnitee will (i) cooperate in all reasonable respects
with the Indemnifying Party in connection with such defense, (ii) not admit any
liability with respect to, or settle, compromise or discharge, any Third Party
Claim without the Indemnifying Party's prior written consent and (iii) agree to
any settlement, compromise or discharge of a Third Party Claim which the
Indemnifying Party may recommend and which by its terms obligates the
Indemnifying Party to pay the full amount of the liability in connection with
such Third Party Claim and releases the Indemnitee completely in connection with
such Third Party Claim. In the event the Indemnifying Party shall assume the
defense of any Third Party Claim, the Indemnitee shall be entitled to
participate in (but not control) such defense with its own counsel at its own
expense. If the Indemnifying Party does not assume the defense of any such Third
Party Claim, the Indemnitee may defend the same in such manner as it may deem
appropriate, including settling such claim or litigation after giving notice to
the Indemnifying Party of the terms of the proposed settlement and the
Indemnifying Party will promptly reimburse the Indemnitee upon written request.
Anything contained in this Agreement to the contrary notwithstanding, no
Indemnifying Party shall be entitled to assume the defense of any Third Party
Claim if such Third Party Claim seeks an order, injunction or other equitable
relief or relief for other than monetary damages against the Indemnitee which,
if successful, would materially adversely affect the business of the Indemnitee.

8.3 Survival

The indemnification obligations of each Party under this Article 8
shall become effective upon the occurrence of the Closing Date, and, for acts
and occurrences prior to expiration, termination, completion, suspension or
cancellation of this Agreement, shall continue in full force and effect
regardless of whether this Agreement expires, terminates, or is suspended,
completed or canceled. Such obligations shall not be limited in any way by any
limitation on insurance or by any compensation or benefits payable by the
Parties under workers' compensation acts, disability benefit acts or other
employee acts, or otherwise.

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ARTICLE 9       LIMITATION OF LIABILITY

(a) Subject to indemnity obligations set forth in Article 8, upon an
Event of Default by Con Edison under this Agreement, which Event of Default is
not excusable due to a Force Majeure Event or due to an Event of Default by
Astoria Power under this Agreement, Con Edison's liability to Astoria Power
shall be limited to Astoria Power's direct damages incurred by Astoria Power as
a result of such Event of Default by Con Edison.

(b) Subject to indemnity obligations set forth in Article 8, upon an
Event of Default by Astoria Power under this Agreement, which Event of Default
is not excusable due to a Force Majeure Event or due to an Event of Default by
Con Edison under this Agreement, Astoria Power's liability to Con Edison shall
be limited to Con Edison's direct damages incurred by Con Edison as a result of
such Event of Default by Astoria Power.

(c) Unless excused by a Force Majoure Event, or an Event of Default by
the other Party, each of the following events individually shall constitute an
"Event of Default" by a Party hereunder: failure by such Party, in any material
respect, to comply with, observe, or perform any covenant, warranty or
obligation under this Agreement, if such failure is not cured or rectified
within 30 days after receipt of written notice of such failure from the other
Party or such longer period as may be reasonably required provided, however,
that the defaulting Party diligently attempts to cure such Event of Default.

(d) The provisions of this Article 9 shall survive termination,
cancellation, suspension, completion, or expiration of this Agreement.

ARTICLE 10       FORCE MAJEURE

(a) Notwithstanding anything in this Agreement to the contrary,
neither Party shall have any liability or be otherwise responsible to the other
for its failure to carry out its obligations, with the exception of any
obligation to pay money, under this Agreement if and only to the extent that it
becomes impossible for either Party to so perform as a result of any occurrence
or event which is beyond the reasonable control, and does not result from any
negligence, of the Party affected (each, a "Force Majeure Event"), including any
act of God, strike or any other labor disturbance, act of a public enemy, war,

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act of terrorism, riot, any other civil disturbance, fire, storm, lightning,
flood, earthquake, any other natural disasters, explosion, any order or
regulation or restriction imposed by any Governmental Authority, failure of a
contractor or subcontractor caused by a Force Majeure Event and transportation
delays or stoppages.

(b) Nothing contained in this Article 10 shall relieve any Party of
the obligation to make payments when due pursuant to this Agreement.

(c) If a Party shall rely on the occurrence of a Force Majeure Event
as a basis for being excused from performance of its obligations under this
Agreement, then the Party relying on such occurrence shall (i) provide prompt
written notice of such Force Majeure Event to the other Party giving an estimate
of its expected duration and the probable impact on the performance of its
obligations hereunder; (ii) exercise its reasonable best efforts to continue to
perform its obligations under this Agreement; (iii) reasonably and expeditiously
take action to correct or cure the Force Majeure Event, provided, however, that
settlement of strikes or any other labor disturbance will be completely within
the sole discretion of the Party affected by such strike or labor dispute; (iv)
exercise its reasonable best efforts to mitigate or limit damages to the other
Party; and (v) provide prompt written notice to the other Party of the cessation
of the Force Majeure Event.

(d) The provisions of this Article 10 shall survive termination,
cancellation, suspension, completion or expiration of this Agreement.

ARTICLE 11       DEFAULT AND TERMINATION

(a) This Agreement shall automatically terminate if the APSA is
terminated.

(b) Con Edison and Astoria Power agree that, notwithstanding any other
provision of this Agreement or in the APSA, this Agreement may not be terminated
prior to its expiration by either Party under any circumstances, including as a
result of a breach, whether or not material, by the other Party, except pursuant
to an agreement in writing executed by each Party.

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ARTICLE 12      ADDI11ONAL REMEDIES

The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, the non-defaulting Party may pursue
any remedies and may begin proceedings at the FERC to terminate this Agreement
by giving at least ten days advance written notice to the defaulting Party, such
termination to be effective as of the date specified in such notice, subject to
the approval of the FERC, in accordance with FERC regulations.

ARTICLE 13      DISPUTES

Any disputes between Con Edison and Astoria Power as to their rights
and obligations under this Agreement shall first be addressed by the Parties. If
representatives of the Parties are unable in good faith to satisfactorily
resolve their disagreement, the Parties shall refer the matter to their
respective senior management. If after using their reasonable best efforts to
try to resolve the dispute, senior management cannot resolve the dispute within
30 days, either Party may exercise any right or remedy available pursuant to
this Agreement.

ARTICLE 14     REPRESENTATIONS AND WARRANTIES

14.1 Representations and Warranties of Con Edison

Con Edison represents and warrants to Astoria Power as follows:

(a) Organization. Con Edison is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and Con
Edison has all requisite corporate power and authority to carry on its business
as currently conducted.

(b) Authority Relative to this Agreement. Con Edison has all necessary
corporate power and authority to execute and deliver this Agreement and, subject
to the procurement of applicable regulatory

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approvals, to perform its obligations under this Agreement. To the extent 
necessary, the execution and delivery by Con Edison of this Agreement and
the performance by Con Edison of its obligations hereunder have been duly and
validly authorized by the Board of Trustees of Con Edison or by a committee
thereof to whom such authority has been delegated and no other corporate
proceedings on the part of Con Edison are necessary to authorize this Agreement
or the performance of its obligations hereunder. This Agreement has been duly
and validly executed and delivered by Con Edison and, assuming that this
Agreement constitutes a valid and binding agreement of Astoria Power,
constitutes a valid and binding agreement of Con Edison, enforceable against Con
Edison in accordance with its terms.

(c) Regulatory Approval. Con Edison has obtained or made, as the case
may be, or will obtain or make, as the case may be, by the Closing Date any and
all declarations, filings, registrations, notices, authorizations, consents or
approvals of or to any public authority that are required for Con Edison to
execute and deliver this Agreement and to perform its obligations hereunder,
other than such declarations filings, registrations, notices, authorizations,
consents or approvals which, if not obtained or made, would not, individually or
in the aggregate, create a material adverse effect in respect of the performance
by Con Edison of its obligations under this Agreement.

(d) Compliance With Law. Con Edison is in compliance with all
applicable laws, statutes, orders, rules, regulations, ordinances or judgments
of any Federal, state, or local governmental authority other than such failures
to be in compliance with such applicable laws, statutes, orders, rules,
regulations, ordinances or judgments which would not, individually or in the
aggregate, create a material adverse effect in respect of the performance by Con
Edison of its obligations under this Agreement. Con Edison has not received any
written notification that it is in violation of any of such laws, statutes,
orders, rules, regulations, ordinances or judgments, except for notification of
violations which would not, individually or in the aggregate, create a material
adverse effect in respect of the performance by Con Edison of its obligations
under this Agreement.

14.2 Representations and Warranties of Astoria Power

Astoria Power represents and warrants to Con Edison as follows:

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(a) Organization. Astoria Power is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and Astoria Power has all requisite power and authority to carry on its
business as is now being conducted.

(b) Authority Relative to this Agreement. Astoria Power has all
necessary power and authority to execute and deliver this Agreement and, subject
to the procurement of applicable regulatory approvals, to perform its
obligations under this Agreement. To the extent necessary, the execution and
delivery of this Agreement and the performance by Astoria Power of its
obligations hereunder have been duly and validly authorized by the Executive
Committee of Astoria Power or by a committee thereof to whom such authority has
been delegated and no other proceedings on the part of Astoria Power are
necessary to authorize this Agreement or the performance of its obligations
hereunder. This Agreement has been duly and validly executed and delivered by
Astoria Power and, assuming that this Agreement constitutes a valid and binding
agreement of Con Edison, constitutes a valid and binding agreement of Astoria
Power, enforceable against Astoria Power in accordance with its terms.

(c) Regulatory Approval. Astoria Power has obtained or made, as the
case may be, or will obtain or make, as the case may be, by the Closing Date any
and all declarations, filings, registrations, notices, authorizations, consents
or approvals of or to any public authority that are required for it to execute
and deliver this Agreement and to perform its obligations hereunder, other than
such declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not obtained or made, would not, individually or in the
aggregate, create a material adverse effect in respect of the performance by
Astoria Power of its obligations under this Agreement.

(d) Compliance With Law. Astoria Power is in compliance with all
applicable laws, statutes, orders, rules, regulations, ordinances or judgments
of any Federal, state, or local governmental authority, other than such failures
to be in compliance with such applicable laws, statutes, orders, rules,
regulations, ordinances or judgments which would not, individually or in the
aggregate, create a material adverse effect in respect of the performance by
Astoria Power of its obligations under this Agreement. Astoria Power has not
received any written notification that it is in violation of any of such laws,
statutes, orders, rules, regulations, ordinances or judgments, except for
notifications of

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violations which would not, individually or in the aggregate, create a material
adverse effect in respect of the performance by Astoria Power of its obligations
under this Agreement.

14.3 The representations and warranties in this Article 14 (except as
set forth in Articles 14.1 (d) and 14.2(d)) shall survive the Closing and
continue in full force and effect for the term of this Agreement.

ARTICLE 15      ASSIGNMENT; NO THIRD PARTY BENEFICIARIES

(a) This Agreement and all of the provisions hereof shall be binding
upon, and inure to the benefit of, the Parties and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either Party, including
by operation of law, without the prior written consent of the other Party,
except (i) in the case of Con Edison, to an Affiliate of Con Edison or a third
party that has a contractual or statutory obligation to supply Energy to Con
Edison's retail customers; (ii) in the case of Astoria Power, to an Affiliate of
Astoria Power; and (iii) in the case of either Party, to a lending institution
or trustee in connection with a pledge or granting of a security interest in the
Auctioned Assets and/or this Agreement; provided, however, that no assignment or
transfer of rights or obligations by either Party shall relieve it from the full
liabilities and the full financial responsibility, as provided for under this
Agreement, unless and until the transferee or assignee shall agree in writing to
assume such obligations and duties and the other Party has consented in writing
to such assumption. For purposes of this Agreement, the term "Affiliate" shall
have the meaning set forth in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.

(b) Nothing in this Agreement is intended to confer upon any other
person except the Parties any rights or remedies hereunder or shall create any
other party beneficiary rights in any person.

(c) Notwithstanding anything herein to the contrary, this Agreement
shall not constitute a consent by Con Edison to any assignment by NRG Energy
pursuant to Section 12.05 of the APSA.

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ARTICLE 16      EXTENSION; WAIVER

Either Party may (a) extend the time for the performance of any of the
obligations or other acts of the other Party or (b) waive compliance by the
other Party with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a Party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such Party. The failure of a Party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
Notwithstanding anything herein to the contrary, to the extent that either Party
fails, in any particular instance, to take affirmative steps to exercise its
rights to witness, inspect, observe or approve the activities of the other
Party, such rights shall, solely with respect to such instance, be deemed waived
in respect of such activity.

ARTICLE 17      COUNTERPARTS

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

ARTICLE 18      GOVERNING LAW

This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law).

ARTICLE 19      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 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 shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.

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ARTICLE 20     AMENDMENT

This Agreement may be amended, modified, or supplemented only by an
instrument in writing signed on behalf of each of the Parties. If the applicable
rules or procedures of the NYPP relating to the transactions contemplated by
this Agreement or otherwise affecting the implementation of this Agreement are
changed materially, the Parties shall endeavor in good faith to make conforming
changes to this Agreement with the intent to fulfill the purposes of this
Agreement; provided, however, that in no event shall such changes modify the
pricing provisions. Any such conforming change to this Agreement shall be
subject to all necessary regulatory authorizations, which the Parties shall
request or support, as applicable.

ARTICLE 21      ENTIRE AGREEMENT

This Agreement embodies the entire agreement and understanding of the
Parties in respect of the transactions contemplated by this Agreement. There are
no restrictions, promises, representations, warranties, covenants or
undertakings other than those expressly set forth or referred to herein or
therein. This Agreement supersedes all prior agreements and understandings
between the Parties with respect to the transaction contemplated by this
Agreement.

ARTICLE 22      FURTHER ASSURANCES

The Parties agree to, from time to time upon the reasonable request of
either Party, negotiate in good faith and execute and deliver amendments to this
Agreement, including in response to regulatory, technological, operational or
other changes affecting the Auctioned Assets or the electric power industry
generally, or such other documents or instruments as may be necessary, in order
to effectuate the transactions contemplated hereby.

ARTICLE 23     INTERPRETATION

When a reference is made in this Agreement to an Article or Section,
such reference shall be to an Article or Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including"

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are used in this Agreement, they shall be deemed to be followed by the words
"without limitation" or equivalent words. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument, statute, regulation, rule or order defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement, instrument, statute, regulation, rule or order as from time to time
amended, modified of supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes, regulations,
rules or orders) by succession of comparable successor statutes, regulations,
rules or orders and references to all attachments thereto and instruments
incorporated therein. References to a person are also to its permitted
successors and assigns.

ARTICLE 24     CONFIDENTIALITY

(a) All information regarding a Party (the "Disclosing Party") that is
furnished directly or indirectly to the other Party (the "Recipient") pursuant
to this Agreement and marked "Confidential" shall be deemed "Confidential
Information". Notwithstanding the foregoing, Confidential Information does not
include information that (i) is rightfully received by Recipient from a third
party not having an obligation of confidence to the Disclosing Party, (ii) is or
becomes in the public domain through no action on Recipient's part in violation
of this Agreement, (iii) is already known by Recipient as of the date hereof, or
(iv) is developed by Recipient independently of any Confidential Information of
the Disclosing Party. Information that is specific as to certain data shall not
be deemed to be in the public domain merely because such information is embraced
by more general disclosure in the public domain.

(b) Recipient shall keep the Confidential Information strictly
confidential and shall not (except as required by applicable law, regulation or
legal process and then only after compliance with paragraph (c) below), without
any prior written consent, disclose any Confidential Information in any manner
whatsoever to any third party for

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a period of two years from the date the Confidential Information was received by
Recipient, except as otherwise provided herein; provided, however, that
Recipient may disclose the Confidential Information to its and its Affiliates'
respective directors, trustees, officers, employees, consultants, advisors and
agents who need to know the Confidential Information for the purpose of
assisting Recipient with respect to its obligations under this Agreement.
Recipient shall inform all such parties, in advance, of the confidential nature
of the Confidential Information. Recipient shall use reasonable efforts to cause
such parties to observe the terms of this Agreement and shall be responsible for
any breach of this Agreement by any such parties.

(c) If Recipient is requested pursuant to, or required by, applicable
law, regulation or legal process to disclose any of the Confidential Information
(including pursuant to the rules or regulations of the NYPP, ISO or FERC),
Recipient will notify the Disclosing Party promptly so that the Disclosing Party
may seek a protective order or other appropriate remedy. In the absence of a
protective order, or other appropriate remedy Recipient will furnish only that
portion of the Confidential Information which its legal counsel advises
Recipient is legally required and Recipient will exercise all reasonable efforts
to obtain reliable assurance that confidential treatment will be accorded the
Confidential Information so furnished.

(d) Recipient shall promptly return to the Disclosing Party all items
containing or constituting Confidential Information, together with all copies,
extracts, or summaries thereof, upon the earlier of (i) the Disclosing Party's
request, or (ii) four years after the termination or expiration of this
Agreement.

(e) The obligations set forth in this Article 24 shall extend for a
period of four years after termination or expiration of this Agreement.

ARTICLE 25     INDEPENDENT CONTRACTOR STATUS

Nothing in this Agreement is intended to create an association, trust,
partnership or joint venture between the Parties, or to impose a trust,
partnership, or fiduciary duty, obligation or liability on or with respect to
either Party, and nothing in this Agreement shall be construed as creating any
relationship between Con Edison and Astoria Power other than that of
independent contractors.

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ARTICLE 26     JURISDICTION

Each of the Parties irrevocably submits to the exclusive jurisdiction
of (i) the Supreme Court of the State of New York, New York County and (ii) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of the Parties agrees to commence
any action, suit or proceeding relating hereto either in the United States
District Court for the Southern District of New York or, if such suit, action or
proceeding may not be brought in such court for jurisdictional reasons, in the
Supreme Court of the State of New York, New York County. Each of the Parties
further agrees that service of process, summons, notice or document by hand
delivery or U.S. registered mail at the address specified for such Party in
Article 28 (or such other address specified by such Party from time to time
pursuant to Article 28 shall be effective service of process for any action,
suit or proceeding brought against such Party in any such court. Each of the
Parties irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) the Supreme Court of the State of New
York, New York County, or (ii) the United States District Court for the Southern
District of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.

ARTICLE 27      CONFLICTS

Con Edison and Astoria Power agree that, except as expressly otherwise
provided herein or therein, in the event of any conflict or inconsistency
between the terms of this Agreement and the terms of the APSA or the APSA
Amendment, the terms of this Agreement shall prevail.

ARTICLE 28     NOTICES

Unless otherwise specified herein, all notices and other
communications hereunder shall be in writing and shall be deemed given (as of
the time of delivery or, in the case of a telecopied communication, of
confirmation), if delivered personally, telecopies (which is confirmed) or sent
by overnight courier (providing proof of delivery) to the parties at

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the following addresses (or at such other addresses for a Party as shall
be specified by like notice):

If to Con Edison, to:

Consolidated Edison Company of New York, Inc.
4 Irving Place
New York, New York 10003
Telecopy No.: (212) 677-0601
Attention: General Counsel

If to Astoria Power to:

Astoria Gas Turbine Power LLC
1221 Nicollet Mail, Suite 700
Minneapolis, Minnesota,55403
Telecopy No.: (612) 373- 5392
Attention: President

With a copy to:

Astoria Gas Turbine Power LLC
1221 Nicollet Mall, Suite 700
Minneapolis, Minnesota, 55403
Telecopy No.: (612) 373-5340
Attention: Commercial Asset Manager

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be duly executed as of the date and year first above written.

Consolidated Edison Company
of New York, Inc.

By: /s/ Joan S. Freilich
Name: Joan S. Freilich
Title: Exec. VP & CFO

Astoria Gas Turbine Power LLC

By: /s/ Craig A. Mataczynski
Name: Craig A. Mataczynski
Title: President

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1

Exhibit 10.24

TRANSITION POWER PURCHASE AGREEMENT
(HUNTLEY - CALL OPTION - PRE-ISO, PRE INVESTMENT GRADE)

This Transition Power Purchase Agreement (the "Agreement") is entered
into as of this 11th day of June, 1999 between Niagara Mohawk Power Corporation
("Niagara Mohawk"), a New York corporation, and Huntley Power LLC, a Delaware
limited liability company ("Producer") (each individually a "Party", or
collectively the "Parties").

WHEREAS in November 1997 and on March 6, 1998 Niagara Mohawk filed its
Plan for Divestiture of its Non-Nuclear Electric Generating Facilities (the
"Plan") with the New York State Public Service Commission;

WHEREAS on May 6, 1998 the New York State Public Service Commission
approved the Plan subject to certain conditions;

WHEREAS Niagara Mohawk has conducted a Non-Nuclear Generation
Divestiture Auction ("Auction") to divest itself of its non-nuclear electrical
generating facilities, including its Huntley and Dunkirk generating facilities;

WHEREAS Producer or its affiliate has entered into an agreement ("Asset
Sales Agreement, or ASA") to acquire certain facilities from Niagara Mohawk,
facilities, including its Huntley generating facility;

WHEREAS Producer, entered into a certain interconnection agreement with
Niagara Mohawk in April, 1999 for the interconnection of the Huntley facility;
and

WHEREAS pursuant to the ASA, Niagara Mohawk and Producer agreed to
enter into Transition Power Purchase Agreements pursuant to which; for a certain
period of time, Niagara Mohawk is to purchase from Producer certain quantities
of electricity generated by the facility.

NOW THEREFORE, in consideration of the mutual representations,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the Parties agree as follows:

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ARTICLE 1.
DEFINITIONS

Whenever used in this Agreement with initial capitalization, the
following terms shall have the meanings specified or referred to in this Article
1.

"Agreement" means this Transition Power Purchase Agreement (Huntley - 
Call Option - Pre-ISO, Pre Investment Grade) dated as of the Closing Date,
between, Niagara Mohawk Power Corporation and Producer including all attached
schedules.

"Asset Sales Agreement" or "ASA" means the Asset Sales Agreement dated
as of December 23, 1998, between Niagara Mohawk Power Corporation and NRG
Energy, Inc.

"Business Day" means any day other than Saturday, Sunday and any day
which is a legal holiday or a day on which banking institutions in New York City
are authorized by law or other governmental action to close; and a Business Day
shall open at 8:00 a.m. and close at 5:00 p.m. Eastern Standard (or Daylight)
time.

"Closing" means the closing of the transactions contemplated by the
ASA.

"Closing Date" means the date and time at which the Closing actually
occurs.

"Decline Quantity Cap" means the Maximum Capacity set forth in Schedule
A times the hours that make up the previous six Scheduled Quantity Months
(adjusted for leap year) times the Equivalent Forced Outage Rate ("EFOR") set
forth in Schedule A. The declined quantity shall be calculated on a rolling
interval basis during the previous six-Scheduled Quantity Months (for example,
hour ending 1400 on February 15, last year through hour ending 1300 February 15,
this year including all of the Scheduled Quantity Months). Furthermore, it is
understood that on the Closing Date, it shall be deemed that the previous
six-Scheduled Quantity Months have an EFOR as listed in Schedule A.

"Delivery Point" means the point at which the interconnection facility
is connected to the transmission system as is indicated on a one-line diagram
included as part of Exhibit A of the Interconnection Agreement.

"Effective Date" means the Closing Date, as such term is defined in the
Asset Sales Agreement between Niagara Mohawk and NRG Energy Inc.

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3

"Energy Management System" means the computer system Niagara Mohawk
utilizes to control the operations of the bulk power system in the Company's
control area.

"Force Majeure" means (with respect to Firm Transactions) an event not
anticipated as of the Effective Date which is not within the reasonable control
of the Party claiming Force Majeure (the "Claiming Party"), and which, by the
exercise of reasonable due diligence, the Claiming Party, is unable to overcome
or avoid or cause to be avoided. Force Majeure includes, but is not restricted
to: acts of God; fire; civil disturbance; labor dispute; labor or material
shortage; sabotage; action or restraint by court order to public or governmental
authority (so long as the Claiming Party has not applied for or assisted in the
application for, and has opposed where and to the extent reasonable, such
government action); provided, however, that an event of Force Majeure shall not
include (i) the loss of Niagara Mohawk's power markets; (ii) Niagara Mohawk's
inability economically to use or resell Power purchased hereunder, (iii) the
loss or failure of Producer's Power supply; and (iv) Producer's ability to sell
Power to a market at a more advantageous price. A party's year 2000 computer
compliance failure shall not constitute Force Majeure.

"Interconnection Agreement" means a separate Interconnection Agreement
between Niagara Mohawk Power Corporation and Huntley Power LLC.

"Interest Rate" means, for any date, the prime rate of Citibank as may
from time to time be published in The Wall Street Journal under "Money Rates".

"New York Independent System Operator" or "NYISO" means an organization
formed in accordance with orders of the Federal Energy Regulatory Commission to
administer the operation of the transmission system of New York State, to
provide equal access to the bulk power-transmission system and to maintain the
reliability of the transmission system of New York State.

"New York Power Pool" or "NYPP" means an organization established by
agreement ("the New York Power Pool Agreement") made as of July 21, 1966, and
amended as of July 16, 1991, by and among Central Hudson Gas & Electric
Corporation, Consolidated Edison Company of New York, Inc., Long Island Lighting
Company, New York State Electric & Gas Corporation, Niagara Mohawk Power
Corporation, Orange and Rockland Utilities, Inc., Rochester Gas and Electric
Corporation, and the Power Authority of the State of New York.

"Power" means electric capacity as measured in MW or KW and/or energy
as measured in MWh or KWh. Energy purchased hereunder will include

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applicable reserves (operating capacity), unless the Parties expressly agree
otherwise.

"Price" means the price to be paid per unit as specified by Niagara
Mohawk to Producer for the purchase of Power, including the energy price, demand
charges, and any other charges pursuant to Article 2.

"Quantity" means that quantity of Power that Producer is required to
make available or sell and deliver, or cause to be delivered, to Niagara Mohawk,
and that Niagara Mohawk agrees to purchase and receive, or cause to be received,
from Producer pursuant to Article 3.

"Replacement Price" means, prior to the commencement of the NYISO,
Niagara Mohawk's weighted average purchases and sales in the NYPP for each hour
as found in the Niagara Mohawk's Energy Management System log line 6033-19, and
on or after the commencement of the NYISO, the real time locational based market
price ("LBMP") paid to Producers for energy for each hour, at the Unit's bus bar
or the region in which the Unit's bus bar is located, specified and published by
the NYISO.

"Scheduled Quantity Month" means any calendar month in which a Call
Quantity is pre-scheduled pursuant to Schedule D; specifically the calendar
months of June, July, August, December, January, February, and the month of
March during the year 1999, and 2000 for Huntley, but excluding the month of
December during the year 2002 for Dunkirk.

"Scheduling" or "Schedule" means the acts of Producer, Niagara Mohawk
and/or their designated representatives, of notifying, requesting and confirming
to each other the quantity and type of Power to be delivered on a given hour,
day or days at a specified Delivery Point.

"Settlement Date" means the last day of each calendar month during the
Term of this Agreement.

"Settlement Period" means with respect to each Settlement Date the
period from (but excluding) the immediately preceding Settlement Date (or, in
the case of the first Settlement Date, from and including the Effective Date) to
(and including) such Settlement Date (or, in the case of the last Settlement
Date, to and including the end of the Term of this Agreement).

"Transmission Providers" means the entity or entities transmitting or
transporting the Power on behalf of Producer or Niagara Mohawk from the Delivery
Point.

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ARTICLE 2.
TRANSACTIONS

2.1. Term of Agreement. The term of this Agreement will begin upon the Closing
Date of the ASA (the Effective Date) and will terminate upon the earlier of (i)
the fourth anniversary of the Closing Date, or (ii) last day of the month in
which the later of (i) the NYISO goes into operation, or (ii) Niagara Mohawk's
senior notes of the series having the longest maturity then outstanding have
been rated investment grade by (a) S&P and Moody's or (b) S&P or Moody's and at
least one other rating agency.

2.2. Compensation. For each month during the term, Niagara Mohawk shall pay
Producer one-twelfth of the Call Fee - Stage 1 as set forth in Schedule C. In
addition to the foregoing, if Niagara Mohawk has exercised the Call Option (as
defined in Article 3.1), for a given hour, Niagara Mohawk shall pay Producer the
sum of (A) the product of the hourly Call Quantity multiplied by the Fixed Price
("Pc") as set forth in Schedule C for such hour plus (B) the aggregate Call
Fee-Stage 2 as set forth in Schedule C for each such hour, provided that (x) a
warm start Call Fee - Stage 2 shall apply and a cold start Call Fee shall not
apply with respect to an hour if the respective Unit has been off-line for the
preceding 1 hour, but was on-line during any time in the preceding 10 hours, and
(y) a cold start Call Fee - Stage 2 shall apply, and a warm start Call Fee -
Stage 2 shall not apply, if the Unit has been off-line for the preceding 10
hours. Notwithstanding the provision of (x) and (y), a Call Fee - Stage 2 shall
not apply if the Unit was on-line in the preceding hour.

2.3. Compensation Adjustment. Compensation as provided by Article 2.2 shall be
offset by Niagara Mohawk's Replacement Power Price less the Fixed Price ("Pc")
(as set forth in schedule C) multiplied by the quantity of electricity not
delivered in excess of the EFOR targets under Article 3.1. Specifically, in the
event the Call Option is exercised and Producer declines and/or fails to deliver
and such decline and/or failure of non-delivery quantities exceeds the Decline
Quantity Cap, then this Compensation Adjustment shall be made.

2.4. Delivery. Producer will make all of the capacity, energy, and ancillary
services of the Units available to Niagara Mohawk at the Delivery Point.

2.5. Installed Capacity. Niagara Mohawk shall retain the right to claim the
Capacity, and Producer must provide such Capacity, for Niagara Mohawk's capacity
requirements to the NYPP or the NYISO up to the Maximum Capacity set forth in
Schedule A. In the event the Producer is unable to provide Capacity acceptable
to the NYPP or NYISO in the amount claimed by Niagara Mohawk from its
(Producer's) own sources, the Producer must procure the Capacity from the market
and provide it to Niagara Mohawk at no cost to Niagara Mohawk. In

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the event the Producer fails to provide such Capacity, Producer shall be charged
a penalty equivalent to the greater of (i) the penalty rate assessed by the NYPP
or NYISO, or (ii) the capacity rate component of Niagara Mohawk's Service
Classification Number 6 Tariff.

ARTICLE 3.
NIAGARA MOHAWK'S CALL OPTION

3.1 Scheduling and Commitment. Schedule D shall be deemed to be the Call
Quantity. Niagara Mohawk shall have the right ("the Call Option") to require
Producer to commit, schedule, and generate electrical output by the Units up to
the Call Quantity Cap as set forth in Schedule B not to exceed the Maximum
Capacity in Schedule A for any hour. Notwithstanding the foregoing, Producer
shall retain the right to refuse a portion of a Call Quantity for a Unit if the
Unit is unavailable or derated sufficiently to be unable to fulfill a portion of
the Call Quantity. Any such refusal with respect to a Call Quantity, for each
Settlement Period, shall be limited to the Decline Quantity Cap. In the event
the Decline Quantity Cap is reached during a Settlement Period, Producer shall
compensate Niagara Mohawk in accordance with Article 2.3. Producer shall
immediately notify Niagara Mohawk of any such refusal, the reason for such
refusal and the Call Quantity refused. At the request of Niagara Mohawk,
Producer shall provide evidence of such Unit unavailability or derate. Any Call
Option exercised by Niagara Mohawk which is refused by Producer in accordance
herewith shall be deemed not to have been exercised.

For any exercised Call Option refused by Producer, Niagara Mohawk shall have the
right to make up such quantities.

3.2 Exercise of Call Option. Niagara Mohawk may exercise the Call Option with
respect to any Interval by delivery of an exercise notice to Producer (which may
be delivered orally, including by telephone). Any such notice shall specify the
relevant Interval and Call Quantity (in MWh), and shall be given prior Friday at
5:00 PM (EST) for the following week.

If any notice is delivered orally, Niagara Mohawk will execute and deliver a
written confirmation confirming the substance of that notice within two Business
Days of that notice. Failure to provide that written confirmation will not
affect the validity of that oral notice.

3.3 Ancillary Service. Niagara Mohawk may request and, subject to unit
availability, Producer must commit Unit(s) to be utilized for ancillary services
to the NYPP or NYISO or Niagara Mohawk. Niagara Mohawk may utilize the full
operating capacity available from the units it commits for its contribution to

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operating capacity and reserve obligations to the NYPP or NYISO, subject to unit
availability as determined by Producer in its sale discretion. Niagara Mohawk
shall have the right during the term of the Agreement to commit, schedule, and
designate for dispatch (if the Unit is capable of receiving base points from the
NYPP or NYISO) any and all of the Units. Niagara Mohawk shall have the right to
require Unit(s) be available for economic dispatch for purposes of providing
ancillary services to the NYPP or NYISO and may rely on Unit(s) to provide
voltage support, load following, regulation, reserves, and other similar
ancillary services. Changes in the quantity that result from this Article 3.3
shall apply to the Call Quantity.

3.4 Scheduling and Commitment Limitations. Call Quantities shall be subject to
the following limitations: (i) no individual Unit Call Quantity nomination
schedule can change by more than its response rate (set forth in Schedule A
hereto); and (ii) Minimum Capacity and Minimum Down Time (set forth in Schedule
A hereto), must be adhered to in the nomination of Call Quantities (e.g. to
adhere to the Minimum Down Time, if a Call Quantity is scheduled to zero, the
Call Quantity cannot exceed zero again until the Minimum Down Time is met.

ARTICLE 4.
PAYMENT

4.1 Payment. Producer shall provide Niagara Mohawk with an invoice setting forth
the quantity of power which was delivered to Niagara Mohawk during the preceding
calendar month, the total amount due from Niagara Mohawk, and any applicable
supporting documentation. Niagara Mohawk shall remit the amount due by wire
transfer, or as otherwise agreed, pursuant to Producer's invoice instructions,
on the later of fifteen days from receipt of Producer's invoice or the
twenty-fifth (25th) day of the calendar month in which the invoice is rendered.

4.2 Overdue Payments. Overdue payment shall accrue interest at the Interest Rate
from, and including, the due date to, but excluding, the date of payment.

4.3 Billing Dispute. If Niagara Mohawk, in good faith, disputes an invoice,
then Niagara Mohawk shall immediately notify Producer of the basis for the
dispute and pay the portion of such statement conceded to be correct no later
than the due date. If any amount withheld under dispute by Niagara Mohawk is
ultimately determined (under the terms herein) to be due to Producer, then the
disputed amount shall be paid within one (1) day of such determination along
with interest accrued at the Interest Rate until the date paid. Inadvertent
overpayments shall be returned by Producer upon request or deducted by Producer
from subsequent payments, with interest accrued at the Interest Rate until the
date paid or deducted.

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ARTICLE 5.
FORCE MAJEURE

5.1 Performance Excused. If either Party is rendered unable by an event of Force
Majeure to carry out, in whole or part, its obligations under the Agreement,
then, for only the pendency of such Force Majeure, the Party affected by the
event (other than the obligation to make payments then due or becoming due with
respect to performance which occurred prior to the event) shall be temporarily
relieved of its obligations insofar as they are affected by Force Majeure but
for no longer period. The Party affected by an event of Force Majeure shall
provide the other Party with written notice setting forth the full details
thereof within two (2) business days after the occurrence of such event and
shall take all reasonable measures to mitigate or minimize the effects of such
event of Force Majeure; provided, however, that this provision shall not require
Producer to deliver, or Niagara Mohawk to receive, Power at points other than
the Delivery Point.

ARTICLE 6.
TITLE TRANSFER; LIABILITY

6.1 Title and Risk of Loss. Title to and risk of loss related to the Quantity
shall transfer from Producer to Niagara Mohawk at the Delivery Point. Producer
warrants that it will deliver to Niagara Mohawk the Quantity free and clear of
all liens, claims and encumbrances arising prior to the Delivery Point.

6.2 Indemnity. Each Party shall indemnify, defend and hold harmless the other
Party from any Claims arising from any act or incident occurring during the
period when control and title to Power is vested, as between the Parties as
provided in Article 6.1, in the indemnifying Party. "Claims" means all third
party claims or actions, threatened or filed and, whether groundless, false or
fraudulent, that directly or indirectly relate to the subject matter of an
indemnity, and the resulting losses, damages, expenses, reasonable attorneys'
fees and court costs, whether incurred by settlement or otherwise, and whether
such claims or actions are threatened or filed prior to or after the termination
of this Agreement.

6.3 Duty to Mitigate. Each Party agrees that it has a duty to mitigate damages
and covenants and that it will use commercially reasonable efforts to minimize
any damages it may incur as a result of the other Party's performance or
non-performance of this Agreement.

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ARTICLE 7.
LAW

7.1 Governing Law and Jurisdiction. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. Any lawsuits arising under this AGREEMENT shall
be instituted in the Federal or State courts of New York located in the City of
Syracuse and each Party hereby irrevocably submits to the in personam
jurisdiction of such courts. Each Party herein waives its respective right to a
jury trial with respect to any litigation arising under or in connection with
this Agreement or any Transaction.

ARTICLE 8.
MISCELLANEOUS

8.1 Assignment. Neither Party shall assign this Agreement or its rights
hereunder without the prior written consent of the other Party; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber
or assign this Agreement or the accounts, revenues or proceeds hereof in
connection with any financing or other financial arrangements, (ii) transfer or
assign this Agreement to an affiliate of such Party which affiliate's
creditworthiness is not materially different than that of such Party, or (iii)
transfer or assign this Agreement to any person or entity succeeding to all or
substantially all of the assets of such Party; provided, however, that in each
such case, any such assignee shall agree in writing, to be bound by the terms
and conditions hereof and creditworthiness is not materially different than that
of such Party.

8.2 Notices. All Notices and other communications hereunder shall be in writing
and shall be deemed given (as of the time of delivery or, in the case of a
telecopied communication, as of confirmation), if delivered personally, if sent
by telecopy (which is confirmed) or if sent by overnight courier (providing
proof of delivery) to the Parties at the following addresses (or at such other
addresses for a Party as shall be specified by like Notice). Scheduling and
dispatching Notices can be given orally as outlined in Article 3.

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TO NIAGARA MOHAWK:

NOTICES & CORRESPONDENCE:                    SCHEDULING:         
Niagara Mohawk Power Corporation             (315) 460-2468      
Supply Services - HCB#3                      (315) 460-2425      
300 Erie Boulevard West                      Fax - (315) 460-2122
Syracuse, New York 13202-4250                
Phone: (315) 460-2341
DISPATCHERS:        
Phone: (315) 460-2271                        (315) 460-2120      
Fax: (315) 460-2660                          (315) 460-2130      
Fax - (315) 460-2197

INVOICES:                                    CHECK PAYMENTS:              
Niagara Mohawk Power Corporation             Niagara Mohawk Power Corp.   
Power Scheduling and Billing - HCB#3         Misc. Accounts Receivable C-3
300 Erie Boulevard West                      300 Erie Boulevard West      
Syracuse, New York 13202-4250                Syracuse, New York 13202-4250
Phone: (315) 460-2190                        
Fax: (315) 460-2494                          PAYMENTS BY WIRE:              
Citibank New York              
Account#: 40662754              
ABA #: 021000089               
Credit To: Niagara Mohawk Power
Corporation                    

TO PRODUCER:

NOTICES & CORRESPONDENCE:                    PAYMENTS:                     
Huntley Power LLC                            LaSalle National Bank, Chicago
1221 Nicollet Mall                           ABA #:       071 000 505        
Minneapolis, MN 55403                        Account #:   58 000 768 52    
Attn:        President                       Beneficiary: NRG Energy, Inc. 
Fax No.:     (612) 373-5430                  
Phone No.:   (612) 373-8864

INVOICES:                                    SCHEDULING:                
Attn:        Dan Hudson                      Attn:        Dan Hudson    
Fax No.:     (612) 373-5430                  Fax No.:     (612) 373-5430
Phone No.:   (612) 373-8864                  Phone No.:   (612) 373-8864

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8.3. General. This Agreement (including the Schedules attached hereto)
constitutes the entire agreement between the Parties with respect to the subject
matter contemplated by this Agreement. The Agreement shall be considered for all
purposes as prepared through the joint efforts of the Parties and shall not be
construed against one Party or the other as a result of the preparation,
substitution, submission or other event of negotiation, drafting or execution
hereof. No amendment or modification to this Agreement shall be enforceable
unless reduced to writing and executed by both Parties. This Agreement shall not
impact any rights enforceable by any third party (other than a permitted
successor or assignee bound to this Agreement). No waiver by a Party of any
default by the other Party shall be construed as a waiver of any other default.
Any provision declared or rendered unlawful by any applicable court of law or
regulatory agency or deemed unlawful because of a statutory change will not
otherwise affect the remaining lawful obligations that arise under this
Agreement. The term "including" when used in this Agreement shall be by way of
example only and shall not be considered in any way to be in limitation. The
headings used herein are for convenience and reference purposes only. All
indemnity and audit rights shall survive the termination of this Agreement for
six years.

8.4. Audit. If requested, a Party shall provide to the other Party statements
evidencing the quantities of Power delivered at the Delivery Point. If any such
examination reveals any inaccuracy in any statement, the necessary adjustments
in such statement and the payments thereof will be made promptly and shall bear
interest calculated at the Interest Rate from the date the overpayment or
underpayment was made until paid; provided, however, that no adjustment for any
statement or payment will be made unless objection to the accuracy thereof was
made prior to the lapse of one (1) year from the rendition thereof.

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TRANSITION POWER PURCHASE AGREEMENT
(HUNTLEY - CALL OPTION - PRE-ISO, PRE INVESTMENT GRADE)

The Parties have executed this Agreement in multiple counterparts to be
construed as one effective as of the Effective Date.

HUNTLEY POWER LLC                            NIAGRA MOHAWK POWER CORPORATION

By: /s/ Michael O'Sullivan                   By: /s/ Clement E. Nadeau
------------------------------               ------------------------------
Name:  Michael O'Sullivan                    Name:  Clement E. Nadeau
Title: Vice President                        Title: Vice President
Date:  6/11/99                                      Electric Delivery
Date:  6/8/99

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EXHIBIT 10.25

TRANSITION POWER PURCHASE AGREEMENT
(DUNKIRK - CALL OPTION - PRE-ISO, PRE INVESTMENT GRADE)

This Transition Power Purchase Agreement (the "Agreement") is entered
into as of this 11th day of June, 1999 between Niagara Mohawk Power Corporation
("Niagara Mohawk"), a New York corporation, and Dunkirk Power LLC, a Delaware
limited liability company ("Producer") (each individually a "Party", or
collectively the "Parties").

WHEREAS in November 1997 and on March 6,1998 Niagara Mohawk filed its
Plan for Divestiture of its Non-Nuclear Electric Generating Facilities (the
"Plan") with the New York State Public Service Commission;

WHEREAS on May 6, 1998 the New York State Public Service Commission
approved the Plan subject to certain conditions;

WHEREAS Niagara Mohawk has conducted a Non-Nuclear Generation
Divestiture Auction ("Auction") to divest itself of its non-nuclear electrical
generating facilities, including its Huntley and Dunkirk generating facilities;

WHEREAS Producer or its affiliate has entered into an agreement ("Asset
Sales Agreement, or ASA") to acquire certain facilities from Niagara Mohawk,
facilities, including its Dunkirk generating facility;

WHEREAS Producer, entered into a certain interconnection agreement with
Niagara Mohawk in April, 1999 for the interconnection of the Dunkirk facility;
and

WHEREAS pursuant to the ASA, Niagara Mohawk and Producer agreed to
enter into Transition Power Purchase Agreements pursuant to which; for a certain
period of time, Niagara Mohawk is to purchase from Producer certain quantities
of electricity generated by the facility.

NOW THEREFORE, in consideration of the mutual representations,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the Parties agree as follows:

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ARTICLE 1.
DEFINITIONS

Whenever used in this Agreement with initial capitalization, the
following terms shall have the meanings specified or referred to in this Article
1.

"Agreement" means this Transition Power Purchase Agreement (Dunkirk
- Call Option - Pre-ISO, Pre Investment Grade) dated as of the Closing Date,
between Niagara Mohawk Power Corporation and Producer including all attached
schedules.

"Asset Sales Agreement" or "ASA" means the Asset Sales Agreement dated
as of December 23, 1998, between Niagara Mohawk Power Corporation and NRG
Energy, Inc.

"Business Day" means any day other than Saturday, Sunday and any day
which is a legal holiday or a day on which banking institutions in New York City
are authorized by law or other governmental action to close; and a Business Day
shall open at 8:00 a.m. and close at 5:00 p.m. Eastern Standard (or Daylight)
time.

"Closing" means the closing of the transactions contemplated by the
ASA.

"Closing Date" means the date and time at which the Closing actually
occurs.

"Decline Quantity Cap" means the Maximum Capacity set forth in Schedule
A times the hours that make up the previous six Scheduled Quantity Months
(adjusted for leap year) times the Equivalent Forced Outage Rate ("EFOR") set
forth in Schedule A. The declined quantity shall be calculated on a rolling
Interval basis during the previous six-Scheduled Quantity Months (for example,
hour ending 1400 on February 15, last year through hour ending 1300 February 15,
this year including all of the Scheduled Quantity Months). Furthermore, it is
understood that on the Closing Date, it shall be deemed that the previous
six-Scheduled Quantity Months have an EFOR as listed in Schedule A.

"Delivery Point" means the point at which the interconnection facility
is connected to the transmission system as is indicated on a one-line diagram
included as part of Exhibit A of the Interconnection Agreement.

"Effective Date" means the Closing Date, as such term is defined in the
Asset Sales Agreement between Niagara Mohawk and NRG Energy Inc.

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"Energy Management System" means the computer system Niagara Mohawk
utilizes to control the operations of the bulk power system in the Company's
control area.

"Force Majeure" means (with respect to Firm Transactions) an event not
anticipated as of the Effective Date which is not within the reasonable control
of the Party claiming Force Majeure (the "Claiming Party"), and which, by the
exercise, of reasonable due diligence, the Claiming Party, is unable to overcome
or avoid or cause to be avoided. Force Majeure includes, but is not restricted
to: acts of God; fire; civil disturbance; labor dispute; labor or material
shortage; sabotage; action or restraint by court order to public or governmental
authority (so long as the Claiming Party has not applied for or assisted in the
application for, and has opposed where and to the extent reasonable, such
government action); provided, however, that an event of Force Majeure shall not
include (i) the loss of Niagara Mohawk's power markets; (ii) Niagara Mohawk's
inability economically to use or resell Power purchased hereunder, (iii) the
loss or failure of Producer's Power supply; and (iv) Producer's ability to sell
Power to a market at a more advantageous price. A party's year 2000 computer
compliance failure shall not constitute Force Majeure.

"Interconnection Agreement" means a separate Interconnection Agreement
between Niagara Mohawk Power Corporation and Dunkirk Power LLC.

"Interest Rate" means, for any date, the prime rate of Citibank as may
from time to time be published in The Wall Street Journal under "Money Rates".

"New York Independent System Operator" or "NYISO" means an organization
formed in accordance with orders of the Federal Energy Regulatory Commission to
administer the operation of the transmission system of New York State, to
provide equal access to the bulk power-transmission system and to maintain the
reliability of the transmission system of New York State.

"New York Power Pool" or "NYPP" means an organization established by
agreement ("the New York Power Pool Agreement") made as of July 21, 1966, and
amended as of July 16, 1991, by and among Central Hudson Gas & Electric
Corporation, Consolidated Edison Company of New York, Inc., Long Island Lighting
Company, New York State Electric & Gas Corporation, Niagara Mohawk Power
Corporation, Orange and Rockland Utilities, Inc., Rochester Gas and Electric
Corporation, and the Power Authority of the State of New York.

"Power" means electric capacity as measured in MW or KW and/or energy
as measured in MWh or KWh. Energy purchased hereunder will include

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applicable reserves (operating capacity), unless the Parties expressly agree
otherwise.

"Price" means the price to be paid per unit as specified by Niagara
Mohawk to Producer for the purchase of Power, including the energy price, demand
charges, and any other charges pursuant to Article 2.

"Quantity" means that quantity of Power that Producer is required to
make available or sell and deliver, or cause to be delivered, to Niagara Mohawk,
and that Niagara Mohawk agrees to purchase and receive, or cause to be received,
from Producer pursuant to Article 3.

"Replacement Price" means, prior to the commencement of the NYISO,
Niagara Mohawk's weighted average purchases and sales in the NYPP for each hour
as found in the Niagara Mohawk's Energy Management System log line 6033-19, and
on or after the commencement of the NYISO, the real time locational based market
price ("LBMP") paid to Producers for energy for each hour, at the Unit's bus bar
or the region in which the Unit's bus bar is located, specified and published by
the NYISO.

"Scheduled Quantity Month" means any calendar month in which a Call
Quantity is pre-scheduled pursuant to Schedule D; specifically the calendar
months of June, July, August, December, January, February, and the month of
March during the year 1999, and 2000 for Huntley, but excluding the month of
December during the year 2002 for Dunkirk.

"Scheduling" or "Schedule" means the acts of Producer, Niagara Mohawk
and/or their designated representatives, of notifying, requesting and confirming
to each other the quantity and type of Power to be delivered on a given hour,
day or days at a specified Delivery Point.

"Settlement Date" means the last day of each calendar month during the
Term of this Agreement.

"Settlement Period" means with respect to each Settlement Date the
period from (but excluding) the immediately preceding Settlement Date (or, in
the case of the first Settlement Date, from and including the Effective Date) to
(and including) such Settlement Date (or, in the case of the last Settlement
Date, to and including the end of the Term of this Agreement).

"Transmission Providers" means the entity or entities transmitting or
transporting the Power on behalf of Producer or Niagara Mohawk from the Delivery
Point.

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ARTICLE 2.
TRANSACTIONS

2.1. Term of Agreement. The term of this Agreement will begin upon the Closing
Date of the ASA (the Effective Date) and will terminate upon the earlier of (i)
the fourth anniversary of the Closing Date, or (ii) last day of the month in
which the later of (i) the NYISO goes into operation, or (ii) Niagara Mohawk's
senior notes of the series having the longest maturity then outstanding have
been rated investment grade by (a) S&P and Moody's or (b) S&P or Moody's and at
least one other rating agency.

2.2. Compensation. For each month during the term, Niagara Mohawk shall pay
Producer one-twelfth of the Call Fee - Stage 1 as set forth in Schedule C. In
addition to the foregoing, if Niagara Mohawk has exercised the Call Option (as
defined in Article 3.1), for a given hour, Niagara Mohawk shall pay Producer the
sum of (A) the product of the hourly Call Quantity multiplied by the Fixed Price
("Pc") as set forth in Schedule C for such hour plus (B) the aggregate Call
Fee-Stage 2 as set forth in Schedule C for each such hour, provided that (x) a
warm start Call Fee - Stage 2 shall apply and a cold start Call Fee shall not
apply with respect to an hour if the respective Unit has been off-line for the
preceding 1 hour, but was on-line during any time in the preceding 10 hours, and
(y) a cold start Call Fee - Stage 2 shall apply, and a warm start Call Fee -
Stage 2 shall not apply, if the Unit has been off-line for the preceding 10
hours. Notwithstanding the provision of (x) and (y), a Call Fee - Stage 2 shall
not apply if the Unit was on-line in the preceding hour.

2.3. Compensation Adjustment. Compensation as provided by Article 2.2 shall be
offset by Niagara Mohawk's Replacement Power Price less the Fixed Price ("Pc")
(as set forth in Schedule C) multiplied by the quantity of electricity not
delivered in excess of the EFOR targets under Article 3.1. Specifically, in the
event the Call Option is exercised and Producer declines and/or fails to deliver
and such decline and/or failure of non-delivery quantities exceeds the Decline
Quantity Cap, then this Compensation Adjustment shall be made.

2.4. Delivery. Producer will make all of the capacity, energy, and ancillary
services of the Units available to Niagara Mohawk at the Delivery Point.

2.5. Installed Capacity. Niagara Mohawk shall retain the right to claim the
Capacity, and Producer must provide such Capacity, for Niagara Mohawk's capacity
requirements to the NYPP or the NYISO up to the Maximum Capacity set forth in
Schedule A. In the event the Producer is unable to provide Capacity acceptable
to the NYPP or NYISO in the amount claimed by Niagara Mohawk from its
(Producer's) own sources, the Producer must procure the Capacity from the market
and provide it to Niagara Mohawk at no cost to Niagara Mohawk. In

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the event the Producer fails to provide such Capacity, Producer shall be charged
a penalty equivalent to the greater of (i) the penalty rate assessed by the NYPP
or NYISO, or (ii) the capacity rate component of Niagara Mohawk's Service
Classification Number 6 Tariff.

ARTICLE 3.
NIAGARA MOHAWK'S CALL OPTION

3.1 Scheduling and Commitment. Schedule D shall be deemed to be the Call
Quantity. Niagara Mohawk shall have the right ("the Call Option") to require
Producer to commit, schedule, and generate electrical output by the Units up to
the Call Quantity Cap as set forth in Schedule B not to exceed the Maximum
Capacity in Schedule A for any hour. Notwithstanding the foregoing, Producer
shall retain the right to refuse a portion of a Call Quantity for a Unit if the
Unit is unavailable or derated sufficiently to be unable to fulfill a portion of
the Call Quantity. Any such refusal with respect to a Call Quantity, for each
Settlement Period, shall be limited to the Decline Quantity Cap. In the event
the Decline Quantity Cap is reached during a Settlement Period, Producer shall
compensate Niagara Mohawk in accordance with Article 2.3. Producer shall
immediately notify Niagara Mohawk of any such refusal, the reason for such
refusal and the Call Quantity refused. At the request of Niagara Mohawk,
Producer shall provide evidence Of such Unit unavailability or derate. Any Call
Option exercised by Niagara Mohawk which is refused by Producer in accordance
herewith shall be deemed not to have been exercised.

For any exercised Call Option refused by Producer, Niagara Mohawk shall have the
right to make up such quantities.

3.2 Exercise of Call Option. Niagara Mohawk may exercise the Call Option with
respect to any Interval by delivery of an exercise notice to Producer (which may
be delivered orally, including by telephone). Any such notice shall specify the
relevant Interval and Call Quantity (in MWh), and shall be given prior Friday at
5:00 PM (EST) for the following week.

If any notice is delivered orally, Niagara Mohawk will execute and deliver a
written confirmation confirming the substance of that notice within two Business
Days of that notice. Failure to provide that written confirmation will not
affect the validity of that oral notice.

3.3 Ancillary Service. Niagara Mohawk may request and, subject to unit
availability, Producer must commit Unit(s) to be utilized for ancillary services
to the NYPP or NYISO or Niagara Mohawk. Niagara Mohawk may utilize the full
operating capacity available from the units it commits for its contribution to

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operating capacity and reserve obligations to the NYPP or NYISO, subject to unit
availability as determined by Producer in its sale discretion. Niagara Mohawk
shall have the right during the term of the Agreement to commit, schedule, and
designate for dispatch (if the Unit is capable of receiving base points from the
NYPP or NYISO) any and all of the Units. Niagara Mohawk shall have the right to
require Unit(s) be available for economic dispatch for purposes of providing
ancillary services to the NYPP or NYISO and may rely on Unit(s) to provide
voltage support, load following, regulation, reserves, and other similar
ancillary services. Changes in the quantity that result from this Article 3.3
shall apply to the Call Quantity.

3.4 Scheduling and Commitment Limitations. Call Quantities shall be subject to
the following limitations: (i) no individual Unit Call Quantity nomination
schedule can change by more than its response rate (set forth in Schedule A
hereto); and (ii) Minimum Capacity and Minimum Down Time (set forth in Schedule
A hereto), must be adhered to in the nomination of Call Quantities (e.g. to
adhere to the Minimum Down Time, if a Call Quantity is scheduled to zero, the
Call Quantity cannot exceed zero again until the Minimum Down Time is met.

ARTICLE 4.
PAYMENT

4.1 Payment. Producer shall provide Niagara Mohawk with an invoice setting forth
the quantity of power which was delivered to Niagara Mohawk during the preceding
calendar month, the total amount due from Niagara Mohawk, and any applicable
supporting documentation. Niagara Mohawk shall remit the amount due by wire
transfer, or as otherwise agreed, pursuant to Producer's invoice instructions,
on the later of fifteen days from receipt of Producer's invoice or the
twenty-fifth (25th) day of the calendar month in which the invoice is rendered.

4.2 Overdue Payments. Overdue payment shall accrue interest at the Interest Rate
from, and including, the due date to, but excluding, the date of payment.

4.3 Billing Dispute. If Niagara Mohawk, in good faith, disputes an invoice,
then Niagara Mohawk shall immediately notify Producer of the basis for the
dispute and pay the portion of such statement conceded to be correct no later
than the due date. If any amount withheld under dispute by Niagara Mohawk is
ultimately determined (under the terms herein) to be due to Producer, then the
disputed amount shall be paid within one (1) day of such determination along
with interest accrued at the Interest Rate until the date paid. Inadvertent
overpayments shall be returned by Producer upon request or deducted by Producer
from subsequent payments, with interest accrued at the Interest Rate until the
date paid or deducted.

-7-

8

ARTICLE 5.
FORCE MAJEURE

5.1 Performance Excused. If either Party is rendered unable by an event of Force
Majeure to carry out, in whole or part, its obligations under the Agreement,
then, for only the pendency of such Force Majeure, the Party affected by the
event (other than the obligation to make payments then due or becoming due with
respect to performance which occurred prior to the event) shall be temporarily
relieved of its obligations insofar as they are affected by Force Majeure but
for no longer period. The Party affected by an event of Force Majeure shall
provide the other Party with written notice setting forth the full details
thereof within two (2) business days after the occurrence of such event and
shall take all reasonable measures to mitigate or minimize the effects of such
event of Force Majeure; provided, however, that this provision shall not require
Producer to deliver, or Niagara Mohawk to receive, Power at points other than
the Delivery Point.

ARTICLE 6.
TITLE TRANSFER; LIABILITY

6.1 Title and Risk of Loss. Title to and risk of loss related to the Quantity
shall transfer from Producer to Niagara Mohawk at the Delivery Point. Producer
warrants that it will deliver to Niagara Mohawk the Quantity free and clear of
all liens, claims and encumbrances arising prior to the Delivery Point.

6.2 Indemnity. Each Party shall indemnify, defend and hold harmless the other
Party from any Claims arising from any act or incident occurring during the
period when control and title to Power is vested, as between the Parties as
provided in Article 6.1, in the indemnifying Party. "Claims" means all third
party claims or actions, threatened or filed and, whether groundless, false or
fraudulent, that directly or indirectly relate to the subject matter of an
indemnity, and the resulting losses, damages, expenses, reasonable attorneys'
fees and court costs, whether incurred by settlement or otherwise, and whether
such claims or actions are threatened or filed prior to or after the termination
of this Agreement.

6.3 Duty to Mitigate. Each Party agrees that it has a duty to mitigate damages
and covenants and that it will use commercially reasonable efforts to minimize
any damages it may incur as a result of the other Party's performance or
non-performance of this Agreement.

-8-

9

ARTICLE 7.
LAW

7.1 Governing Law and Jurisdiction. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. Any lawsuits arising under this AGREEMENT shall
be instituted in the Federal or State courts of New York located in the City of
Syracuse and each Party hereby irrevocably submits to the in personam
jurisdiction of such courts. Each Party herein waives its respective right to a
jury trial with respect to any litigation arising under or in connection with
this Agreement or any Transaction.

ARTICLE 8.
MISCELLANEOUS

8.1 Assignment. Neither Party shall assign this Agreement or its rights
hereunder without the prior written consent of the other Party; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber
or assign this Agreement or the accounts, revenues or proceeds hereof in
connection with any financing or other financial arrangements, (ii) transfer or
assign this Agreement to an affiliate of such Party which affiliate's
creditworthiness is not materially different than that of such Party, or (iii)
transfer or assign this Agreement to any person or entity succeeding to all or
substantially all of the assets of such Party; provided, however, that in each
such case, any such assignee shall agree in writing, to be bound by the terms
and conditions hereof and creditworthiness is not materially different than that
of such Party.

8.2 Notices. All Notices and other communications hereunder shall be in writing
and shall be deemed given (as of the time of delivery or, in the case of a
telecopied communication, as of confirmation), if delivered personally, if sent
by telecopy (which is confirmed) or if sent by overnight courier (providing
proof of delivery) to the Parties at the following addresses (or at such other
addresses for a Party as shall be specified by like Notice). Scheduling and
dispatching Notices can be given orally as outlined in Article 3.

-9-

10

TO NIAGARA MOHAWK:

NOTICES & CORRESPONDENCE:                    SCHEDULING:         
Niagara Mohawk Power Corporation             (315) 460-2468      
Supply Services - HCB#3                      (315) 460-2425      
300 Erie Boulevard West                      Fax - (315) 460-2122
Syracuse, New York 13202-4250                
Phone: (315) 460-2341
DISPATCHERS:        
Phone: (315) 460-2271                        (315) 460-2120      
Fax: (315) 460-2660                          (315) 460-2130      
Fax - (315) 460-2197

INVOICES:                                    CHECK PAYMENTS:              
Niagara Mohawk Power Corporation             Niagara Mohawk Power Corp.   
Power Scheduling and Billing - HCB#3         Misc. Accounts Receivable C-3
300 Erie Boulevard West                      300 Erie Boulevard West      
Syracuse, New York 13202-4250                Syracuse, New York 13202-4250
Phone: (315) 460-2190                        
Fax: (315) 460-2494                          PAYMENTS BY WIRE:              
Citibank New York              
Account #: 40662754              
ABA #: 021000089               
Credit To: Niagara Mohawk Power
Corporation                    

TO PRODUCER:

NOTICES & CORRESPONDENCE:                    PAYMENTS:                     
Dunkirk Power LLC                            LaSalle National Bank, Chicago
1221 Nicollet Mail                           ABA #:       071 000 505        
Minneapolis, MN 55403                        Account #:   58 000 768 52    
Attn:        President                       Beneficiary: NRG Energy, Inc. 
Fax No.:     (612) 373-5430                  
Phone No.:   (612) 373-8864

INVOICES:                                    SCHEDULING:                
Attn:        Dan Hudson                      Attn:        Dan Hudson    
Fax No.:     (612) 373-5430                  Fax No.:     (612) 373-5430
Phone No.:   (612) 373-8864                  Phone No.:   (612) 373-8864

-10-

11

8.3. General. This Agreement (including the Schedules attached hereto)
constitutes the entire agreement between the Parties with respect to the subject
matter contemplated by this Agreement. The Agreement shall be considered for all
purposes as prepared through the joint efforts of the Parties and shall not be
construed against one Party or the other as a result of the preparation,
substitution, submission or other event of negotiation, drafting or execution
hereof. No amendment or modification to this Agreement shall be enforceable
unless reduced to writing and executed by both Parties. This Agreement shall not
impact any rights enforceable by any third party (other than a permitted
successor or assignee bound to this Agreement). No waiver by a Party of any
default by the other Party shall be construed as a waiver of any other default.
Any provision declared or rendered unlawful by any applicable court of law or
regulatory agency or deemed unlawful because of a statutory change will not
otherwise affect the remaining lawful obligations that arise under this
Agreement. The term "including" when used in this Agreement shall be by way of
example only and shall not be considered in any way to be in limitation. The
headings used herein are for convenience and reference purposes only. All
indemnity and audit rights shall survive the termination of this Agreement for
six years.

8.4. Audit. If requested, a Party shall provide to the other Party statements
evidencing the quantities of Power delivered at the Delivery Point. If any such
examination reveals any inaccuracy in any statement, the necessary adjustments
in such statement and the payments thereof will be made promptly and shall bear
interest calculated at the Interest Rate from the date the overpayment or
underpayment was made until paid; provided, however, that no adjustment for any
statement or payment will be made unless objection to the accuracy thereof was
made prior to the lapse of one (1) year from the rendition thereof.

-11-

12

TRANSITION POWER PURCHASE AGREEMENT
(DUNKIRK - CALL OPTION -- PRO-ISO, PRE INVESTMENT GRADE)

The Parties have executed this Agreement in multiple counterparts to be
construed as one effective as of the Effective Date.

DUNKIRK POWER LLC                            NIAGRA MOHAWK POWER CORPORATION

By: /s/ Michael O'Sullivan                   By: /s/ Clement E. Nadeau
-------------------------                    --------------------------
Name:  Michael O'Sullivan                    Name:  Clement E. Nadeau
Title: Vice President                        Title: Vice President
Date:  6/11/99                                      Electric Delivery
Date:  6/4/99

-12-

1

EXHIBIT 10.26

TRANSITION POWER PURCHASE AGREEMENT
(DUNKIRK - EXCESS POWER FROM NYPP SCD)

This Power Purchase Agreement (the "Agreement") is entered into as of
this 11th day of June, 1999 between Niagara Mohawk Power Corporation ("Niagara
Mohawk"), a New York corporation, and Dunkirk Power LLC, a Delaware limited
liability company ("Producer") (each individually a "Party", or collectively the
"Parties").

WHEREAS in November 1997 and on March 6, 1998 Niagara Mohawk filed its
Plan for Divestiture of it's Non-Nuclear Electric Generating Facilities (the
"Plan") with the New York State Public Service Commission;

WHEREAS on May 6, 1998 the New York State Public Service Commission
approved the Plan subject to certain conditions;

WHEREAS Niagara Mohawk has conducted a Non-Nuclear Generation
Divestiture Auction ("Auction") to divest itself of its non-nuclear electrical
generating facilities, including its Huntley and Dunkirk generating facilities;

WHEREAS Producer has entered into an agreement ("Asset Sales Agreement,
or ASA") to acquire certain facilities from Niagara Mohawk, facilities,
including it's Dunkirk generating facility;

WHEREAS Producer, entered into an interconnection agreement with
Niagara Mohawk in April, 1999 for the interconnection of the facility under this
agreement; and

WHEREAS pursuant to the ASA Niagara Mohawk and Producer agreed to enter
into Transition Power Purchase Agreements pursuant to which; for a certain
period of time. Niagara Mohawk is to purchase from Producer certain quantities
of electricity generated by the facility; and

WHEREAS Producer has entered into a Transaction Power Purchase
Agreement (Dunkirk - Call Option - Pre-ISO, Pre Investment Grade) (the "TPPA")
effective upon the Closing Date which provides for among other items, Article
3.3 of the TPPA which gives Niagara Mohawk the right to place specific Units at
the Dunkirk site on economic dispatch to the NYPP or NYISO.

NOW THEREFORE, in consideration of the mutual representations,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the Parties agree as follows:

-1-

2
ARTICLE 1.
DEFINITIONS

The definitions within the TPPA shall be incorporated herein.
Whenever used in this Agreement with initial capitalization, the following terms
shall have the meanings specified or referred to in this Article 1.

"Agreement" shall mean this Transition Power Purchase Agreement
(Dunkirk - Excess Power from NYPP SCD) dated as of the Closing Date, between
Niagara Mohawk Power Corporation and Dunkirk Power LLC and all attached
schedules.

"SCD Excess Power" means the quantity of electricity delivered by
Producer to Niagara Mohawk, for a given hour that is in excess of the initial
schedule notice from Niagara Mohawk (either Schedule D or week-ahead schedule
notices of make-up quantities, each pursuant to the TPPA) for hours when Niagara
Mohawk has exercised the Call Option of the TPPA and placed the Unit(s) on
economic dispatch to the NYPP or NYISO.

ARTICLE 2.
TRANSACTIONS

2.1. Term of Agreement. Term of Agreement will begin upon the Closing Date of
the ASA (the Effective Date) and will terminate upon the earlier of (i) the
fourth anniversary of the Closing Date, or (ii) last day of the month in which
the later of (i) the NYISO goes into operation, or (ii) Niagara Mohawk's senior
notes of the series having the longest maturity then outstanding have been rated
investment grade by (a) S&P and Moody's or (b) S&P or Moody's and at least one
other rating agency.

2.2. Compensation. For each month during the term Niagara Mohawk shall pay
Producer the accumulation of the product of the hourly SCD Excess Power
multiplied by the Replacement Price.

2.3. Delivery. Producer will make all of the capacity, energy, and ancillary
services of the Units available to Niagara Mohawk at the Delivery Point.

ARTICLE 3.
NIAGARA MOHAWK'S CALL OPTION

3.1 Scheduling and Commitment. Pursuant to Article 3.3 of the TPPA, During hours
in Schedule D and/or hours in which Niagara Mohawk provides notice to Producer
for make-up quantities, Niagara Mohawk may place such Unit(s) on economic
dispatch to the NYPP or NYISO and producer shall respond to such based point
signals, either electronic or telephone.

-2-

3

Producer shall provide Niagara Mohawk with applicable coefficients by unit to be
used in the NYPP security constrained dispatch ("SCD") program. These
coefficients shall include those historically used in economic dispatch.

Producer will be limited to one update per month for changes to unit efficiency
coefficients (i.e. equation coefficients and dispatch operating factors) and one
update per week for changes to cost coefficients (i.e. maintenance adder,
delivered fuel cost, fuel handling cost, SOx cost and NOx cost). More frequent
changes can be made if agreed to by Niagara Mohawk.

ARTICLE 4.
PAYMENT

4.1 Payment. Producer shall provide Niagara Mohawk with an invoice setting forth
the quantity of power which was delivered to Niagara Mohawk, during the
preceding calendar month, the total amount due from Niagara Mohawk, and any
applicable supporting documentation. Niagara Mohawk shall remit the amount due
by wire transfer, or as otherwise agreed, pursuant to Producer's invoice
instructions, on the later of fifteen days from receipt of Producer's invoice or
the twenty-fifth (25th) day of the calendar month in which the invoice is
rendered,

4.2 Overdue Payments. Overdue payment shall accrue interest at the Interest Rate
from, and including, the due date to, but excluding, the date of payment.

4.3 Billing Dispute. If Niagara Mohawk, in good faith, disputes an invoice,
Niagara Mohawk shall immediately notify Producer of the Basis for the dispute
and pay the portion of such statement conceded to be correct no later than the
due date. If any amount withheld under dispute by Niagara Mohawk is ultimately
determined (under the terms herein) to be due to Producer, it shall be paid
within one (1) day of such determination along with interest accrued at the
Interest Rate until the date paid. Inadvertent overpayments shall be returned by
Producer upon request or deducted by Producer from subsequent payments, with
interest accrued at the Interest Rate until the date paid or deducted.

ARTICLE 5.
FORCE MAJEURE

5.1 Performance Excused. If either Party is rendered unable by an event of Force
Majeure to carry out, in whole or part, its obligations under the Agreement,
then, for only the pendency of such Force Majeure, the Party affected by the
event (other than the obligation to make payments then due or becoming due with
respect to performance which occurred prior to the event) shall be temporarily
relieved of its obligations insofar as they are affected by Force Majeure but
for no longer period. The Party affected by an event of Force Majeure shall
provide the

-3-

4
other Party with written notice setting forth the full details thereof within
two (2) business days after the occurrence of such event and shall take all
reasonable measures to mitigate or minimize the effects of such event of Force
Majeure; provided, however, that this provision shall not require Producer to
deliver, or Niagara Mohawk to receive, Power at points other then the Delivery
Point.

ARTICLE 6.
TITLE TRANSFER; LIABILITY

6.1 Title and Risk of Loss. Title to and risk of loss related to the Quantity
shall transfer from Producer to Niagara Mohawk at the Delivery Point. Producer
warrants that it will deliver to Niagara Mohawk the Quantity free and clear of
all liens, claims and encumbrances arising prior to the Delivery Point.

6.2 Indemnity. Each Party shall indemnify, defend and hold harmless the other
Party from any Claims arising from any act or incident occurring during the
period when control and title to Power is vested, as between the Parties as
provided in Article 7.1, in the indemnifying Party. "Claims" means all claims
or actions, threatened or filed and, whether groundless, false or fraudulent,
that directly or indirectly relate to the subject matter of an indemnity, and
the resulting losses, damages, expenses, attorneys' fees and court costs,
whether incurred by settlement or otherwise, and whether such claims or actions
are threatened or filed prior to or after the termination of this Agreement.

6.3 Duty to Mitigate. Each Party agrees that it has a duty to mitigate damages
and covenants and that it will use commercially reasonable efforts to minimize
any damages it may incur as a result of the other Party's performance or non-
performance of this Agreement.

ARTICLE 7.
LAW

7.1 Governing Law and Jurisdiction. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. Except as provided in Article 9.2, any law suits
arising under this AGREEMENT shall be instituted in the Federal or State courts
of New York located in the City of Syracuse and each party hereby irrevocably
submits to the in personam jurisdiction of such courts. Each Party herein waives
its respective right to a jury trial with respect to any litigation arising
under or in connection with this Agreement or any Transaction.

-4-

5
ARTICLE 8.
MISCELLANEOUS

8.1 Assignment. Neither Party shall assign this Agreement or its rights
hereunder without the prior written consent of the other Party; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer. sell, pledge, encumber
or assign this Agreement or the accounts, revenues or proceeds hereof in
connection with any financing or other financial arrangements, (ii) transfer or
assign this Agreement to an affiliate of such Party which affiliate's
creditworthiness is not materially different than that of such Party, or (iii)
transfer or assign this Agreement to any person or entity succeeding to all or
substantially all of the assets of such Party; provided, however, that in each
such case, any such assignee shall agree to in writing be bound by the terms and
conditions hereof and creditworthiness is not materially different than that of
such Party.

8.2 Notices. All Notices and other communications hereunder shall be in writing
and shall be deemed given (as of the time of delivery or, in the case of a
telecopied communication. as of confirmation), if delivered personally, if sent
by telecopy (which is confirmed) or if sent by overnight courier (providing
proof of delivery) to the Parties at the following addresses (or at such other
addresses for a Party as shall be specified by like Notice). Scheduling and
dispatching Notices can be given orally as outlined in Article 3.

TO NIAGARA MOHAWK:

NOTICES & CORRESPONDENCE:                    SCHEDULING:         
Niagara Mohawk Power Corporation             (315) 460-2468
Supply Services - HCB#3                      (315) 460-2425      
300 Erie Boulevard West                      Fax - (315) 460-2122
Syracuse, New York 13202-4250                
Phone: (315) 460-2341                        DISPATCHERS:        
Phone: (315) 460-2271                        (315) 460-2120      
Fax: (315) 460-2660                          (315) 460-2130      
Fax - (315) 460-2197

INVOICES:                                    CHECK PAYMENTS:              
Niagara Mohawk Power Corporation             Niagara Mohawk Power Corp    
Power Scheduling and Billing - HCB#3         Misc. Accounts Receivable C-3
300 Erie Boulevard West                      300 Erie Boulevard West      
Syracuse, New York 13202-4250                Syracuse, New York 13202-4250
Phone: (315) 460-2190                        
Fax: (315) 460-2494                          PAYMENTS BY WIRE:  
Citibank New York  
Account #: 40662754

-5-

6

ABA#:          021000089
Credit To:     NIAGARA MOHAWK POWER
CORPORATION

TO PRODUCER:

NOTICES & CORRESPONDENCE:               PAYMENTS:                     
Dunkirk Power LLC                       LaSalle National Bank, Chicago
1221 Nicollet Mall                      ABA #:       071 000 505       
Minneapolis, MN 55403                   Account #:   58 000 768 52    
Attn:        President                  Beneficiary: NRG Energy, Inc. 
Fax No.:     (612) 373-5430             
Phone No.:   (612) 373-8864

INVOICES:                               SCHEDULING:                
Attn:        Dan Hudson                 Attn:        Dan Hudson    
Fax No.:     (612) 373-5430             Fax No.:     (612) 373-5430
Phone No.:   (612) 373-8864             Phone No.:   (612) 373-8864

8.3. General. This Agreement constitutes the entire agreement between the
Parties with respect to the subject matter contemplated by this Agreement. The
Agreement shall be considered for all purposes as prepared through the joint
efforts of the parties and shall not be construed against one party or the other
as a result of the preparation, substitution, submission or other event of
negotiation, drafting or execution hereof. No amendment or modification to this
Transition Power Agreement shall be enforceable unless reduced to writing and
executed by both Parties. This Master Power Agreement shall not impact any
rights enforceable by any third party (other than a permitted successor or
assignee bound to this Agreement). No waiver by a Party of any default by the
other Party shall be construed as a waiver of any other default. Any provision
declared or rendered unlawful by any applicable court of law or regulatory
agency or deemed unlawful because of a statutory change will not otherwise
affect the remaining lawful obligations that arise under this Agreement, The
term "including" when used in this Agreement shall be by way of example only and
shall not be considered in any way to be in limitation. The headings used herein
are for convenience and reference purposes only. All indemnity and audit rights
shall survive the termination of this Agreement for six years.

8.4. Audit. If requested, a Party shall provide to the other Party statements
evidencing the quantities of Power delivered at the Delivery Point. If any such
examination reveals any inaccuracy in any statement, the necessary adjustments
in such statement and the payments thereof will be made promptly and shall bear
interest calculated at the Interest Rate from the date the overpayment or

-6-

7

underpayment was made until paid; provided, however, that no adjustment for any
statement or payment will be made unless objection to the accuracy thereof was
made prior to the lapse of one (1) year from the rendition thereof.

-7-

8

TRANSITION POWER PURCHASE AGREEMENT
(DUNKIRK - EXCESS POWER FROM NYPP SCD)

The Parties have executed this Master Power Agreement in multiple
counterparts to be construed as one effective as of the Effective Date.

HUNTLEY POWER LLC                  NIAGARA MOHAWK POWER CORPORATION

By: /s/ Michael O'Sullivan         By: /s/ Clement E. Nadeau
-----------------------            -----------------------

Name:  Michael O'Sullivan          Name: Clement E. Nadeau
---------------------

Title: Vice President              Title: Vice President Electric Delivery

Date:     6/11/99                  Date:       6/8/99
---------------------              ---------------------

-8-

1
EXHIBIT 10.27

TRANSITION POWER PURCHASE AGREEMENT
(HUNTLEY - EXCESS POWER FROM NYPP SCD)

This Power Purchase Agreement (the "Agreement") is entered into as of
this 11th day of June, 1999 between Niagara Mohawk Power Corporation ("Niagara
Mohawk"), a New York corporation, and Huntley Power LLC, a Delaware limited
liability company ("Producer") (each individually a "Party", or collectively the
"Parties").

WHEREAS in November 1997 and on March 6, 1998 Niagara Mohawk filed its
Plan for Divestiture of it's Non-Nuclear Electric Generating Facilities (the
"Plan") with the New York State Public Service Commission;

WHEREAS on May 6, 1998 the New York State Public Service Commission
approved the Plan subject to certain conditions;

WHEREAS Niagara Mohawk has conducted a Non-Nuclear Generation
Divestiture Auction ("Auction") to divest itself of its non-nuclear electrical
generating facilities, including its Huntley and Dunkirk generating facilities;

WHEREAS Producer has entered into an agreement ("Asset Sales Agreement,
or ASA") to acquire certain facilities from Niagara Mohawk, facilities,
including it's Huntley generating facility;

WHEREAS Producer, entered into an interconnection agreement with
Niagara Mohawk in April, 1999 for the interconnection of the facility under this
agreement; and

WHEREAS pursuant to the ASA Niagara Mohawk and Producer agreed to enter
into Transition Power Purchase Agreements pursuant to which; for a certain
period of time, Niagara Mohawk is to purchase from Producer certain quantities
of electricity generated by the facility, and

WHEREAS Producer has entered into a Transaction Power Purchase
Agreement (Huntley - Call Option - Pre-ISO, Pre Investment Grade) (the "TPPA")
effective upon the Closing Date which provides for among other items, Article
3.3 of the TPPA which gives Niagara Mohawk the right to place specific Units at
the Huntley site on economic dispatch to the NYPP or NYISO.

NOW THEREFORE, in consideration of the mutual representations,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the Parties agree as follows:

-1-

2

ARTICLE 1.
DEFINITIONS

The definitions within the TPPA shall be incorporated herein. Whenever
used in this Agreement with initial capitalization, the following terms shall
have the meanings specified or referred to in this Article 1.

"Agreement" shall mean this Transition Power Purchase Agreement 
(Huntley -- Excess Power from NYPP SCD) dated as of the Closing Date, between 
Niagara Mohawk Power Corporation and Huntley Power LLC and all attached 
schedules.

"SCD Excess Power" means the quantity of electricity delivered by
Producer to Niagara Mohawk, for a given hour that is in excess of the initial
schedule notice from Niagara Mohawk (either Schedule D or week-ahead schedule
notices of make-up quantities, each pursuant to the TPPA) for hours when Niagara
Mohawk has exercised the Call Option of the TPPA and placed the Unit(s) on
economic dispatch to the NYPP or NYISO.

ARTICLE 2.
TRANSACTIONS

2.1. Term of Agreement. Term of Agreement will begin upon the Closing Date of
the ASA (the Effective Date) and will terminate upon the earlier of (i) the
fourth anniversary of the Closing Date, or (ii) last day of the month in which
the later of (i) the NYISO goes into operation, or (ii) Niagara Mohawk's senior
notes of the series having the longest maturity then outstanding have been rated
investment grade by (a) S&P and Moody's or (b) S&P or Moody's and at least one
other rating agency.

2.2. Compensation. For each month during the term Niagara Mohawk shall pay
Producer the accumulation of the product of the hourly SCD Excess Power
multiplied by the Replacement Price.

2.3. Delivery. Producer will make all of the capacity, energy, and ancillary
services of the Units available to Niagara Mohawk at the Delivery Point.

ARTICLE 3.
NIAGARA MOHAWK'S CALL OPTION

3.1 Scheduling and Commitment. Pursuant to Article 3.3 of the TPPA, During hours
in Schedule D and/or hours in which Niagara Mohawk provides notice to Producer
for make-up quantities, Niagara Mohawk may place such Unit(s) on economic
dispatch to the NYPP or NYISO and producer shall respond to such based point
signals, either electronic or telephone.

-2-

3

Producer shall provide Niagara Mohawk with applicable coefficients by unit to be
used in the NYPP security constrained dispatch ("SCD") program. These
coefficients shall include those historically used in economic dispatch.

Producer will be limited to one update per month for changes to unit efficiency
coefficients (i.e. equation coefficients and dispatch operating factors) and one
update per week for changes to cost coefficients (i.e. maintenance adder,
delivered fuel cost, fuel handling cost, SOx cost and NOx cost).
More frequent changes can be made if agreed to by Niagara Mohawk.

ARTICLE 4.
PAYMENT

4.1. Payment. Producer shall provide Niagara Mohawk with an invoice setting
forth the quantity of power which was delivered to Niagara Mohawk, during the
preceding calendar month, the total amount due from Niagara Mohawk, and any
applicable supporting documentation. Niagara Mohawk shall remit the amount due
by wire transfer, or as otherwise agreed, pursuant to Producer's invoice
instructions, on the later of fifteen days from receipt of Producer's invoice or
the twenty-fifth (25th) day of the calendar month in which the invoice is
rendered.

4.2 Overdue Payments. Overdue payment shall accrue interest at the Interest Rate
from, and including, the due date to, but excluding, the date of payment.

4.3 Billing Dispute. If Niagara Mohawk, in good faith, disputes an invoice,
Niagara Mohawk shall immediately notify Producer of the Basis for the dispute
and pay the portion of such statement conceded to be correct no later than the
due date. If any amount withheld under dispute by Niagara Mohawk is ultimately
determined (under the terms herein) to be due to Producer, it shall be paid
within one (1) day of such determination along with interest accrued at the
Interest Rate until the date paid. Inadvertent overpayments shall be returned by
Producer upon request or deducted by Producer from subsequent payments, with
interest accrued at the Interest Rate until the date paid or deducted.

ARTICLE 5.
FORCE MAJEURE

5.1 Performance Excused. If either Party is rendered unable by an event of Force
Majeure to carry out, in whole or part, its obligations under the Agreement,
then, for only the pendency of such Force Majeure, the Party affected by the
event (other than the obligation to make payments then due or becoming due with
respect to performance which occurred prior to the event) shall be temporarily
relieved of its obligations insofar as they are affected by Force Majeure but
for no longer period. The Party affected by an event of Force Majeure shall
provide the

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other Party with written notice setting forth the full details thereof within
two (2) business days after the occurrence of such event and shall take all
reasonable measures to mitigate or minimize the effects of such event of Force
Majeure; provided, however, that this provision shall not require Producer to
deliver, or Niagara Mohawk to receive, Power at points other than the Delivery
Point.

ARTICLE 6.
TITLE TRANSFER; LIABILITY

6.1 Title and Risk of Loss. Title to and risk of loss related to the Quantity
shall transfer from Producer to Niagara Mohawk at the Delivery Point. Producer
warrants that it will deliver to Niagara Mohawk the Quantity free and clear of
all liens, claims and encumbrances arising prior to the Delivery Point.

6.2 Indemnity. Each Party shall indemnify, defend and hold harmless the other
Party from any Claims arising from any act or incident occurring during the
period when control and title to Power is vested, as between the Parties as
provided in Article 7.1, in the indemnifying Party. "Claims" means all claims or
actions, threatened or filed and, whether groundless, false or fraudulent, that
directly or indirectly relate to the subject matter of an indemnity, and the
resulting losses, damages, expenses, attorneys' fees and court costs, whether
incurred by settlement or otherwise, and whether such claims or actions are
threatened or filed prior to or after the termination of this Agreement.

6.3 Duty to Mitigate. Each Party agrees that it has a duty to mitigate damages
and covenants and that it will use commercially reasonable efforts to minimize
any damages it may incur as a result of the other Party's performance or non-
performance of this Agreement.

ARTICLE 7.
LAW

7.1 Governing Law and Jurisdiction. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. Except as provided in Article 9.2, any law suits
arising under this AGREEMENT shall be instituted in the Federal or State courts
of New York located in the City of Syracuse and each party hereby irrevocably
submits to the in personam jurisdiction of such courts. Each Party herein waives
its respective right to a jury trial with respect to any litigation arising
under or in connection with this Agreement or any Transaction.

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ARTICLE 8.
MISCELLANEOUS

8.1 Assignment. Neither Party shall assign this Agreement or its rights
hereunder without the prior written consent of the other Party; provided,
however, either Party may, without the consent of the other Party (and without
relieving itself from liability hereunder), (i) transfer, sell, pledge, encumber
or assign this Agreement or the accounts, revenues or proceeds hereof in
connection with any financing or other financial arrangements, (ii) transfer or
assign this Agreement to an affiliate of such Party which affiliate's
creditworthiness is not materially different than that of such Party, or (iii)
transfer or assign this Agreement to any person or entity succeeding to all or
substantially all of the assets of such Party; provided, however, that in each
such case, any such assignee shall agree to in writing be bound by the terms and
conditions hereof and creditworthiness is not materially different than that of
such Party.

8.2 Notices. All Notices and other communications hereunder shall be in writing
and shall be deemed given (as of the time of delivery or, in the case of a
telecopied communication, as of confirmation), if delivered personally, if sent
by telecopy (which is confirmed) or if sent by overnight courier (providing
proof of delivery) to the Parties at the following addresses (or at such other
addresses for a Party as shall be specified by like Notice). Scheduling and
dispatching Notices can be given orally as outlined in Article 3.

TO NIAGARA MOHAWK.

NOTICES & CORRESPONDENCE:                    SCHEDULING:          
Niagara Mohawk Power Corporation             (315) 460-2468       
Supply Services - HCB#3                      (315) 460-2425       
300 Erie Boulevard West                      Fax - (315) 460-2122 
Syracuse, New York 13202-4250                
Phone: (315) 460-2341                        DISPATCHERS:        
Phone: (315) 460-2271                        (315) 460-2120      
Fax: (315) 460-2660                          (315) 460-2130      
Fax - (315) 460-2197

INVOICES:                                    CHECK PAYMENTS:              
Niagara Mohawk Power Corporation             Niagara Mohawk Power Corp    
Power Scheduling and Billing - HCB#3         Misc. Accounts Receivable C-3
300 Erie Boulevard West                      300 Erie Boulevard West      
Syracuse, New York 13202-4250                Syracuse, New York 13202-4250
Phone: (315) 460-2190                        
Fax: (315) 460-2494                          PAYMENTS BY WIRE:  
Citibank New York  
Account #: 40662754

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ABA#:          021000089
Credit To:     Niagara Mohawk Power
Corporation

TO PRODUCER:

NOTICES & CORRESPONDENCE:               PAYMENTS;                     
Huntley Power LLC                       LaSalle National Bank, Chicago
1221 Nicollet Mall                      ABA #:       071 000 505        
Minneapolis, MN 55403                   Account #:   58 000 768 52    
Attn:        President                  Beneficiary: NRG Energy, Inc. 
Fax No.:     (612) 373-5430             
Phone No.:   (612) 373-8864

INVOICES:                               SCHEDULING:                
Attn:        Dan Hudson                 Attn:        Dan Hudson    
Fax No.:     (612) 373-5430             Fax No.:     (612) 373-5430
Phone No.:   (612) 373-8864             Phone No.:   (612) 373-8864

8.3. General. This Agreement constitutes the entire agreement between the
Parties with respect to the subject matter contemplated by this Agreement. The
Agreement shall be considered for all purposes as prepared through the joint
efforts of the parties and shall not be construed against one party or the other
as a result of the preparation, substitution, submission or other event of
negotiation, drafting or execution hereof. No amendment or modification to this
Transition Power Agreement shall be enforceable unless reduced to writing and
executed by both Parties. This Master Power Agreement shall not impact any
rights enforceable by any third party (other than a permitted successor or
assignee bound to this Agreement). No waiver by a Party of any default by the
other Party shall be construed as a waiver of any other default. Any provision
declared or rendered unlawful by any applicable court of law or regulatory
agency or deemed unlawful because of a statutory change will not otherwise
affect the remaining lawful obligations that arise under this Agreement. The
term "including" when used in this Agreement shall be by way of example only and
shall not be considered in any way to be in limitation. The headings used herein
are for convenience and reference purposes only.  All indemnity and audit rights
shall survive the termination of this Agreement for six years.

8.4. Audit. If requested, a Party shall provide to the other Party statements
evidencing the quantities of Power delivered at the Delivery Point. If any such
examination reveals any inaccuracy in any statement, the necessary adjustments
in such statement and the payments thereof will be made promptly and shall bear
interest calculated at the Interest Rate from the date the overpayment or

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underpayment was made until paid; provided, however, that no adjustment for any
statement or payment will be made unless objection to the accuracy thereof was
made prior to the lapse of one (1) year from the rendition thereof.

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TRANSITION POWER PURCHASE AGREEMENT
(HUNTLEY - EXCESS POWER FROM NYPP SCD)

The Parties have executed this Master Power Agreement in multiple
counterparts to be construed as one effective as of the Effective Date.

HUNTLEY POWER LLC                  NIAGARA MOHAWK POWER CORPORATION

By: /s/ Michael O'Sullivan         By: /s/ Clement E. Nadeau
-----------------------            ---------------------------     
Name:  Michael O'Sullivan          Name: Clement E. Nadeau
Title: Vice President              Title: Vice President Electric Delivery
Date:     6/11/99                  Date:       6/8/99

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EXHIBIT 10.28

AMENDMENT
TO THE
ASSET SALES AGREEMENT

This Amendment, dated as of June 11, 1999 (this "Amendment"), is by and
between NIAGARA MOHAWK POWER CORPORATION, a New York corporation (the "Seller"),
and NRG ENERGY, INC., a Delaware corporation (the "Buyer").

RECITALS

A.  Seller and Buyer are parties to an Asset Sales Agreement dated as
of December 23, 1998 (the "Asset Sales Agreement") pursuant to which the Buyer
has agreed to purchase from Seller the Purchased Assets (as defined in the Asset
Sales Agreement) upon the terms and conditions set forth in the Asset Sales
Agreement.

B.  Section 11.1 of the Asset Sales Agreement provides that the Asset
Sales Agreement may be amended by written agreement of the Seller and the Buyer.

C.  The parties desire to amend certain Sections of the Asset Sales
Agreement as set forth below:

NOW, THEREFORE, the parties hereby agree as follows:

1.  Definitions. All capitalized terms used in this Amendment that are
not defined elsewhere in this Amendment shall have the meanings given to those
terms in the Asset Sales Agreement.

2.  Amendment of the Asset Sales Agreement. The Asset Sales Agreement
is hereby amended as follows:

(a) Ancillary Agreements. Sections 1.1(a)(2) is hereby amended by
deleting the language that is now in that Section and substituting the
following language in its place:

(2) "Ancillary Agreements" means any and all transition or
other power purchase agreements, the Site Agreement or any form
thereof, the Interconnection Agreement, as amended, and the Swaption
executed by the Seller and the Buyer or any Affiliate of the Buyer on
or before the Closing Date relating to the post-Closing conduct of the
Buyer or the Seller or any post-Closing Transactions between the Buyer
and the Seller.

(b) Purchase Price Adjustments and Proration Amounts. The following
Section 3.5 is added:

3.5 Purchase Price Adjustments and Proration Amounts.
Notwithstanding any other provision in this Article III to the
contrary, the Seller shall present to the Buyer on

2

or before the Closing Date a written statement setting forth (i) the
estimated amount of all Purchase Price adjustments proposed to be made
in accordance with Section 3.2, excluding any amounts relating to the
fuel inventory, and (ii) the amounts to be paid by the Seller pursuant
to the proration provisions of Section 3.4, all of which amounts shall
be determined in good faith. The Buyer shall pay the amounts set forth
in such statement within seven (7) days following receipt of such
notice, together with interest thereon from the Closing Date calculated
at the rate of six percent (6%) per annum on the basis of a 360 day
year. As soon as practicable after the Closing, the Seller shall
deliver to the Buyer a written statement of the amount of the
Maintenance and Capital Expenditure Amount. Within three (3) days
following receipt of such statement, the Buyer shall pay such amount,
less the amount of the Employee Transition Credit, without interest.
The Buyer shall have thirty (30) days following the receipt of either
of such statements to review and object in writing to the amount of any
adjustment, proration or calculation set forth therein. If the Buyer
does object to the amount of any such adjustment or proration, and the
Buyer and the Seller have not settled the amount in dispute within
twenty (20) days following such objection, then the resolution thereof
shall be submitted to a firm of independent public accountants of
nationally recognized reputation selected by the Buyer and the Seller,
other than a firm representing either the Buyer or the Seller. The
determination by such firm of any amount shall be final. The Buyer and
the Seller shall each pay one-half of the cost of employing such firm.

(c) Collective Bargaining Agreement. Section 7.10(a) is hereby amended
by deleting the language that is now in that Section and substituting the
following language in its place:

(a) The Buyer and the Seller agree that the Buyer shall be a
successor within the meaning of the Collective Bargaining Agreement.
Each person who is included in the collective bargaining unit covered
by the Collective Bargaining Agreement, who becomes employed by the
Buyer or an Affiliate of the Buyer pursuant to this Section 7.10, and
who transitions to employment with the Buyer in accordance with the
requirements of the May 5, 1999 Memorandum of Agreement Between and
Among the Buyer, the Seller, and Local 97 of the IBEW shall be referred
to herein as an IBEW Employee. Each other person who becomes employed
by the Buyer or an Affiliate of the Buyer pursuant to this Section 7.10
who is not included in the collective bargaining unit covered by the
Collective Bargaining Agreement shall be referred to herein as a
Non-Union Employee. IBEW Employees and Non-Union Employees shall
collectively be referred to herein as Buyer Employees. The employment
of IBEW Employees shall continue in accordance with the Collective
Bargaining Agreement.

(d) Credit for Service. Section 7.10(e) is hereby amended by adding a
proviso at the end of the third sentence, and by deleting the last sentence. As
so amended, Section 7.10(e) shall read as follows:

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3

(e) Non-Union Employees shall be given credit for all service with
the Seller and its Affiliates under all employee benefit plans,
programs, and fringe benefit plans, programs, and fringe benefit
arrangements of the Buyer ("Buyer Benefit Plans") in which they become
participants. The service credit given is for purposes of eligibility,
vesting and service related level of benefits, but not benefit accrual
(except as provided in the following sentence). For purposes of benefit
accrual, Non-Union Employees shall be given credit for all service with
the Seller and its Affiliates under all Buyer Benefit Plans, but the
ultimate benefits provided under the Buyer Benefit Plans may be offset
by the corresponding benefits previously provided by the Seller or
benefit plans of the Seller, or by the corresponding benefits accrued
under the benefit plans of the Seller or otherwise committed to be
provided by the Seller in the future; provided, however, that such an
offset shall not be permitted with respect to Buyer's Defined Benefit
Plan described in Section 7.10(h).

(e) Trust-to-Trust Transfer. Section 7.10(f) is hereby amended by
deleting the language that is now in that Section and substituting the following
language in its place:

(f) To the extent allowable by law, the Seller shall cause to be
transferred to the Buyer's tax-qualified 401(k) plans and trusts in
which any Buyer Employee participates after the Closing Date ("Buyer
401(k) Plans"), as soon as practicable following the Closing Date,
assets representing the full account balances of all such Buyer
Employees under the corresponding tax-qualified 401(k) plans and trusts
maintained by the Seller for the benefit of the Seller's employees
("Seller 401(k) Plans"). The Buyer agrees that the assets so
transferred may include promissory notes evidencing loans from the
Seller 401(k) Plans to Buyer Employees that are outstanding as of the
transfer date. Any assets in a Niagara Mohawk Stock Fund that a Buyer
Employee has in a Seller 401(k) Plan will be transferred to a Niagara
Mohawk Stock Fund in the applicable Buyer 401(k) Plan ("Buyer Niagara
Mohawk Stock Fund"), subject to the following restrictions: the Buyer
Employee will be able to transfer assets out of the Buyer Niagara
Mohawk Stock Fund, but will not be able to make new contributions to,
or transfer any assets into, the Buyer Niagara Mohawk Stock Fund. All
transfers under this Section shall be made in accordance with
applicable Code requirements, and Buyer agrees to include in the Buyer
401(k) Plans such protected benefits from the Seller 401(k) Plans as
are required by the Code to allow such transfers to occur. The Buyer
agrees that it shall submit each Buyer 401(k) Plan to the Internal
Revenue Service for a determination letter on its tax-qualified status
under Section 401(a) of the Code as soon as practicable after the
Closing Date, and to make any amendment(s) that is, or are, determined
by the Internal Revenue Service to be necessary in order for such a
determination letter to be issued.

3

4

(f) Buyer's Defined Benefit Plan. Section 7.10(h) is hereby amended by
deleting the language that is now in that Section and substituting the following
language in its place:

(h) Effective as of the Closing Date, the Buyer shall cause to be
established a defined benefit pension plan for the benefit of the Buyer
Employees (the "Buyer's Defined Benefit Plan"). The Buyer's Defined
Benefit Plan shall have the same terms as the Niagara Mohawk Pension
Plan as of the Closing Date, and Buyer agrees to maintain such terms
for Non-Union Employees for a period of at least seven (7) years after
the Closing Date; provided, however, that (i) if changes in the law
require any such terms to be modified, the Buyer may change such terms
to the extent necessary to comply with such laws, and (ii) if, after
consolidating the financial results of NRG Dunkirk Operations, Inc.,
NRG Huntley Operations, Inc., and NRG Oswego Harbor Power Operations,
Inc. (collectively, the "NRG Operating Companies"), the NRG Operating
Companies have two or more consecutive full calendar years of "negative
earnings" after the Closing Date, the Buyer shall have the option to
modify the level of benefits for Non-Union Employees in the Buyer's
Defined Benefit Plan in such manner as the Buyer deems appropriate and
is permitted by applicable law (for purposes of this sentence, the term
"negative earnings" means a consolidated net loss as reported on the
audited income statements of the NRG Operating Companies, for a full
calendar year before the inclusion of any one-time extraordinary items,
one-time write-off adjustments, impairment write-offs, and other
nonrecurring major adjustments booked to the income statements of the
NRG Operating Companies, as determined in accordance with generally
accepted accounting principles). The Buyer Employees shall be given
credit in the Buyer's Defined Benefit Plan for all service with and
compensation from the Seller and its Affiliates as if it were service
with and compensation from the Buyer for purposes of determining
eligibility for benefits, the amount of any benefits or benefit
accruals, vesting, and service related levels of benefits under the
Buyer's Defined Benefit Plan.

In connection with the foregoing, the following actions shall be
taken as of the Closing Date:

(1) At the time specified in subparagraph (4) below, the Seller
shall cause to be transferred to the Buyer's Defined Benefit Plan
assets equal to the Projected Benefit Obligation ("PBO"), as
determined in accordance with the 1999 actuarial assumptions as set
forth in the 1998 year-end disclosure of the Seller under Financial
Accounting Standards Board Statement 87 and listed in Section
7.10(h)(6) below (the "Assumptions"), attributable to the Buyer
Employees as of the Closing Date, together with interest at an
annual rate that is equivalent to the discount rate set forth in
the Assumptions for the period from the Closing Date to the date of
the actual transfer of assets and adjusted for benefit payments
under the Niagara Mohawk Pension Plan made pursuant to subparagraph
(5) below; provided, however, that if the Seller is unable to
transfer an amount equal to the PBO, then:

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(A)      the Seller shall transfer such amount as the
Seller determines is appropriate to satisfy
the requirements of Section 414(l) of the
Code; and

(B)      the Seller shall pay to the Buyer in cash
the amount of the difference between (i) the
PBO, together with interest at an annual
rate that is equivalent to the discount rate
set forth in the Assumptions for the period
from the Closing Date to the date of the
actual transfer of assets and adjusted for
benefit payments under the Niagara Mohawk
Pension Plan pursuant to subparagraph (5)
below; and (ii) the amount actually
transferred.

The transfer of the amount under this subparagraph (1) shall
be made in accordance with Section 414(l) of the Code and
Treasury Regulation Section 1.414(l)-1.

(2)      The PBO shall be calculated in accordance
with the Assumptions, and assuming that 75 percent of the
Buyer Employees elect a lump sum upon retirement or
withdrawal.

(3)      All assets transferred under subparagraph
(1) shall be transferred in cash, or in marketable securities
that are reasonably acceptable to the Buyer.

(4)      Within 45 days after the Closing Date, the
Seller shall file or cause to be filed any Forms 5310-A that
may be required to be submitted to the Internal Revenue
Service ("IRS") in connection with the transfer described in
subparagraph (1). The transfer described in subparagraph (1)
shall be made as soon as practicable following the
determination of the amount described in subparagraph (1), but
in no event prior to the thirtieth (30th) day following the
filing of such Forms 5310-A with the IRS or, in the event that
the IRS, the Pension Benefit Guaranty Corporation ("PBGC"), or
any other governmental entity raises any objections to the
transfer, the date as of which the IRS, the PBGC, or other
governmental entity withdraws such objections or is satisfied
that the terms of the transfer have been modified to the
extent necessary to meet such objections.

(5)      Upon completion of the transfer under
subparagraph (1), all benefit payments from the Buyer's
Defined Benefit Plan shall be the responsibility of the Buyer.
Pending completion of the transfer under subparagraph (1), any
benefits that are payable to the Buyer Employees under the
Buyer's Defined Benefit Plan shall be paid or continue to be
paid out of the Niagara Mohawk Pension Plan, and the amount to
be transferred under subparagraph (1) shall be reduced by the
amount of such payments. Pending the completion of such
transfer, the Seller

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will cooperate with the Buyer with respect to plan
administration, including the disbursement of benefits.

(6)      The Assumptions are as follows:

Discount Rate       6.75%

Salary Scale        2.5%, plus merit table

Interest Crediting Rate   5.2%

Lump Sum Conversion       5.2% and the 1983
GATT Mortality

Basis                     Table

Mortality Table           1983 Interim GAM
table projected to
1988 with scale H

Other Applicable
Assumptions               The other 1999
actuarial
assumptions
described in the
1998 year-end
disclosure of
Seller under
Financial
Accounting
Standards Board
Statement 87

(7) The Buyer agrees that it shall submit
the Buyer's Defined Benefit Plan to the Internal
Revenue Service for a determination letter on its
tax-qualified status under Section 401(a) of the Code
as soon as practicable after the Closing Date, and to
make any amendment(s) that is, or are, determined by
the Internal Revenue Service to be necessary in order
for such a determination letter to be issued.

The Seller agrees that it shall use its reasonable
best efforts to accomplish the transfer of assets described in
subparagraph (1) of this Section 7.10(h); provided, however,
that if Seller determines in good faith that it is unable to
make such a transfer, then, notwithstanding the language in
this Section 7.10(h), the Seller and the Buyer agree to
negotiate a mutually agreeable resolution of the defined
benefit issues in this Section 7.10(h).

(g)      Allocation of Emissions Credits. Schedule 2.2(g) is hereby
amended to provide as follows:

The Excluded Assets shall include 41/153rds of the NOx
Emission Reduction Credits available to the Seller on the Closing Date
that are attributable to any of the Purchased Assets. The remainder of
such NOx Emission Reduction Credits, and all SOx

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Emission Reduction Credits available to the Seller on the Closing Date
that are attributable to any of the Purchased Assets, shall be included
in the Purchased Assets.

(h) Huntley Real Property Lease. Section 1.1(36)(i) is hereby amended
by adding the following language at the end of such Section:

, provided, however, that any provision of this Agreement to the
contrary notwithstanding, until the conveyance of the Huntley Real
Property by the Seller to the Buyer pursuant to the terms of the Lease
Agreement dated the Closing Date between the Seller as lessor and
Huntley Power LLC as lessee, the rights and obligations of the Buyer
and Seller with respect to the Huntley Real Property shall be governed
by the terms of such Lease Agreement, and for all other purposes of
this Agreement, the Huntley Real Property shall be included in the
Purchased Assets

3. Confirmation of the Asset Sales Agreement. Except as amended by this
Amendment, all of the provisions of the Asset Sales Agreement remain in full
force and effect from and after the date of this Amendment, and the parties
hereby ratify and confirm the Asset Sales Agreement and each of its obligations.
From and after the date of this Amendment, all references in the Asset Sales
Agreement to "this Agreement", "hereof", "herein", or similar terms, shall mean
and refer to the Asset Sales Agreement as amended by this Amendment.

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

IN WITNESS WHEREOF, the Seller and the Buyer have caused this Amendment
to be signed by their respective duly authorized officers as of the date first
above written.

NIAGARA MOHAWK POWER CORPORATION

By: /s/ Michael J. Kelleher
-----------------------------------------
Name: Michael J. Kelleher
Title: Vice President Financial Planning

NRG ENERGY, INC.

By: /s/ James J. Bender
-----------------------------------------
Name: James J. Bender
Title: Vice President and General Counsel

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EXHIBIT 10.29

TRANSITION CAPACITY AGREEMENT

BETWEEN

ASTORIA GAS TURBINE POWER LLC

AND

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

Dated as of June 25, 1999

2

TABLE OF CONTENTS

Page
----
1. DEFINITIONS .........................................................   3
2. EFFECTIVENESS, TERM AND TERMINATION .................................   5
3. CAPABILITY AND AVAILABILITY REQUIREMENTS ...........................    6
4. INSTALLED CAPACITY PURCHASE, QUANTITY AND PAYMENTS ..................   7

4.1 Capacity Purchase Quantity .................................   7
4.2 Capacity Payments ..........................................   7
4.3 Capacity Deficiency Payments ...............................   8

5. SCHEDULING ..........................................................   9

6. BILLING AND PAYMENT PROCEDURES ......................................   9

6.1 Billing and Payments .......................................   9
6.2 Billing Disputes ...........................................  10
6.3 Survival ...................................................  10

7. FORCE MAJEURE .......................................................  10
8. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES ............................  11
9. EXTENSION; WAIVER ...................................................  11
10. COUNTERPARTS .......................................................  12
11. GOVERNING LAW ......................................................  12
12. SEVERABILITY .......................................................  12
13. AMENDMENT ..........................................................  12
14. ENTIRE AGREEMENT ...................................................  13
15. FURTHER ASSURANCES .................................................  13
16. INDEPENDENT CONTRACTOR STATUS ......................................  13
17. NOTICES ............................................................  13

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3

18. INTERPRETATION .....................................................  14
19. JURISDICTION AND ENFORCEMENT .......................................  15
20. CONFLICT ...........................................................  15

ii

4

TRANSITION CAPACITY AGREEMENT BETWEEN
ASTORIA GAS TURBINE POWER LLC AND CONSOLIDATED
EDISON COMPANY OF NEW YORK, INC.

This Transition Capacity Agreement ("Agreement") is made and entered
into as of this day of June 25, 1999, by and between Astoria Gas Turbine Power
LLC ("ASTORIA POWER"), a Delaware limited liability company having its principal
place of business at 1221 Nicollet Mall, Minneapolis, Minnesota 55403, and
Consolidated Edison Company of New York, Inc. ("Con Edison"), a New York
corporation. Astoria Power and Con Edison shall each be referred to as a
"Party", and shall be referred to collectively as the "Parties."

WHEREAS, NRG Energy, Inc. ("NRG Energy") and Con Edison have entered
into the Generating Plant and Gas Turbine Asset Purchase and Sale Agreement
("APA"), dated January 27, 1999, as amended, and certain other agreements
specified in the APA relating to the purchase by NRG Energy of certain of Con
Edison's generating assets comprised of generating facilities (collectively, the
"Purchased Assets").

WHEREAS, NRG Energy will assign to Astoria Power on or prior to the
Closing Date (as defined below) its rights and obligations under the APA
relating to the purchase from Con Edison OF the Gas Turbines (as defined below)
and certain other assets related thereto in accordance with the terms and
conditions of the APA, and NRG Energy will assign to Arthur Kill Power LLC ("AK
POWER") on or prior to the Closing Date its rights and obligations under the APA
relating to the purchase from Con Edison of the Generating Plant (as defined
below) and certain other assets relating thereto in accordance with the terms
and conditions of the APA.

WHEREAS, the rights and obligations of buyers and providers of
electric generating capacity, energy, transmission and ancillary services may be
modified by a proposal (the "Proposal") currently pending before the Federal
Energy Regulatory Commission ("FERC") to restructure the New York Power Pool,
which Proposal contemplates, among other things, (i) the formation of the ISO
(as defined) and (ii) the implementation of the ISO Tariff filed on December 19,
1997, in FERC Docket Nos. ER97-1523-000, OA97-470-000 and ER97-4234-000, as such
filings may be amended from time-to-time;

WHEREAS, FERC may approve, accept, modify, or reject the Proposal, and
its actions may affect the rights and obligations of the Parties under this
Agreement;

WHEREAS, FERC has accepted for filing certain market power mitigation
measures applicable to sales of capacity, energy and certain other services from
specified electric generating units in New York City in FERC Docket No.
ER98-3169-000 (such measures, as may be modified from time to time, and any
other applicable market power mitigation measures that may be imposed by FERC,
ISO or the New York State Public Service Commission ("PSC"), the "Mitigation
Measures");

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WHEREAS, SALES of capacity, energy and certain other services from
the Gas Turbines will be subject to, and the rights and obligations of the
Parties under this Agreement may be affected by, the Mitigation Measures; and

WHEREAS, in recognition of Con Edison's installed capacity
requirements for its delivery service customers and its remaining native load
customers, Astoria Power and Con Edison are entering into this Agreement,
whereby Astoria Power will maintain the electric generating capability and
availability of the Gas Turbines at specified levels for the term of this
Agreement and whereby, during certain periods, Con Edison will purchase from
Astoria Power, and Astoria Power will sell to Con Edison, specified amounts of
Installed Capacity (as defined herein).

NOW THEREFORE, in consideration of the mutual agreements and
commitments contained herein, Astoria Power and Con Edison hereby agree as
follows:

1.        DEFINITIONS.

(a) The following terms shall have the meanings set forth below. Any
term used in this Agreement that is not defined herein shall have the meaning
customarily attributed to such term by the electric utility industry in New
York.

"Ancillary Agreements" shall have the meaning ascribed thereto in the
APA.

"Business Day" shall mean any day other than Saturday, Sunday or any
day which is a legal holiday or a day on which banking institutions in the State
of New York are authorized or required by law or other governmental action to
close.

"Closing" shall mean the closing of the sale of the Purchased Assets
and certain other assets as contemplated by the APA.

"Closing Date" shall mean the date and time at which the Closing
actually occurs.

"Gas Turbines" means the gas turbine units GT2 through GT5 and GT7
through GT13 located at the Astoria Gas Turbine site.

"Generating Plant" means the units 2 and 3 steam-powered generating
facilities and gas turbine unit GT 1 located at the Arthur Kill Generating
Station.

"Government Authority" shall mean any court, administrative or
regulatory agency or commission or other government entity or instrumentality or
any department thereof.

"Installed Capacity" shall mean electric generating capacity of the
Gas Turbines that satisfies all of the requirements applicable to installed
capacity established by the NYPP or ISO, as the case may be, as such
requirements apply to Con Edison.

"ISO" shall mean the New York Independent System Operator, as
described in the Supplemental Filing, or its successors. 

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"ISO Commencement Date" shall mean the date on which the ISO
officially commences operations of a spot market for energy, spinning and
non-spinning reserves and automatic generator control, as signified by the first
day that resources such as the Generating Plant or Gas Turbines are allowed to
bid into each market on a non-trial or non-experimental basis.

"ISO Rules" shall mean the rules and procedures adopted by the ISO
pursuant to the ISO Tariff from time to time in effect and the related ISO
agreements.

"ISO Tariff" shall mean the tariff described in the Supplemental
Filing, as it may be amended from time to time.

"NERC" shall mean the North American Electric Reliability Council or
its successors.

"NYPP" shall mean the New York Power Pool or its successors.

"NPCC" shall mean the Northwest Power Coordinating Council or its
successors.

"NYPP Rules" shall mean the rules and procedures of the NYPP from time
to time in effect.

"NYSRC" shall mean the New York State Reliability Council or its
successor.

"Replacement Capacity" shall mean installed capacity from resources
other than the Gas Turbines which resources are identified by Astoria Power and
subsequently identified to the NYPP or ISO, as the case may be, as sources of
installed capacity in Con Edison's periodic reports required under applicable
procedures, provided that such installed capacity (i) is from resources that are
located in New York City or directly interconnected to Con Edison's electric
system in New York City, and (ii) would satisfy the installed capacity
requirements applicable to Con Edison, including any applicable delivery
requirements, established by the NYPP or ISO, as the case may be.

"Replacement Capacity Costs" shall mean the incremental costs and
expenses for Replacement Capacity to the extent costs and expenses for
Replacement Capacity exceed the payments for ICAP calculated in accordance with
Section 4.2.

"Supplemental Filing" shall mean the December 19, 1997 Supplemental
Filing to the Comprehensive Proposal to Restructure the New York Wholesale
Electric Market in FERC Docket Nos. E-R97-1523-000, OA97-47000, and
ER97-4234-000.

"Summer Capability Period" shall have the meaning provided by the NYPP
or ISO, as the case may be, as may be modified from time to time. Summer
Capability Period is currently May 1 through October 31 of each year.

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"Winter Capability Period" shall have the meaning provided by the NYPP
or ISO, as the case may be, as may be modified from time to time. Winter
Capability Period is currently each November 1 through April 30 of the following
calendar year.

(b) Each of the following terms has the meaning specified in the
Section set forth opposite such term:

Term                                        Section
----                                        -------

Astoria Power                               Preamble
Affiliate                                   8(a)
Agreement                                   Preamble
APA                                         Recitals
Capacity Payment                            4.2
Capacity Deficiency Payments                4.3
Con Edison                                  Preamble
Confidentiality Agreement                   14
DMNC                                        3(a)
FERC                                        Recitals
Force Majeure Event                         7(a)
ICAP                                        4.2
Mitigation Measures                         Recitals
Party                                       Preamble
PSC                                         Recitals
Proposal                                    Recitals
Purchased Assets                            Recitals
Required Net Capability                     3(a)

2.        EFFECTIVENESS, TERM AND TERMINATION.

2.1 This Agreement shall only become effective upon the consummation
of the Closing. If the APA is terminated for any reason prior to the Closing,
then this Agreement shall also terminate and be of no further force or effect.

2.2 This Agreement shall expire on the later of (a) the earlier of (i)
December 31, 2002 or (ii) the date on which Astoria Power receives written
notice from the ISO to the effect that none of the electric capacity of the Gas
Turbines is required for meeting the installed capacity requirements in New York
City as determined by the ISO, or (b) the end of the capability period
immediately preceding the capability period covered by the first auction for
capacity sponsored by the ISO that occurs after the Closing Date.

2.3 The Parties agree that, notwithstanding any other provision of
this Agreement, the APA or any other Ancillary Agreement, this Agreement may not
be terminated prior to its expiration by either Party under any circumstances, 
including as a result of a breach, whether

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or not material, by the other Party, except pursuant to an agreement in writing
executed by each Party.

2.4 If any Governmental Authority having jurisdiction over this
Agreement requires any modification to, or imposes any condition on acceptance
or approval of this Agreement, then the Parties shall engage in good faith
negotiations in order to amend this agreement to satisfy, or otherwise address,
such modification or condition. Notwithstanding the foregoing, the Parties
acknowledge and agree that the effectiveness of Section 2.5 hereof is not
contingent upon FERC approval.

2.5 In the event that the ISO Commencement Date does not occur by
December 31, 2001, either Party may request the other Party to renegotiate in
good faith the terms and conditions, including payment terms, for purchases of
Installed Capacity under this Agreement. If, upon such request by either Party,
the Parties are unable to reach agreement on such revised terms and conditions,
Astoria Power shall file tariffs governing such purchases with the appropriate
regulatory agency or agencies, to become effective as of April 1, 2002, and,
upon the effectiveness of such tariffs, as may be modified by such regulatory
agency or agencies, the terms and conditions contained in the approved tariffs
shall be binding upon the Parties and shall govern the purchases of Installed
Capacity under this Agreement; provided, however, that Con Edison shall have the
right to protest the tariffs filed by Astoria Power to such regulatory agency or
agencies.

3.        CAPABILITY AND AVAILABILITY REQUIREMENTS.

(a) During the term of this Agreement, Astoria Power will use
commercially reasonable efforts to maintain the electric generating capability
and availability of the Gas Turbines (i) to provide 614 MWs of Installed
Capacity, after any adjustment set forth in the ISO Rules to reflect the failure
by the Gas Turbines to satisfy the minimum generator availability targets
established by the ISO Rules applicable to the Gas Turbines (the "Required Net
Capability") and (ii) to satisfy all criteria, standards and requirements
applicable to providers of installed capacity (including locational, seasonal
and other performance requirements and compliance with all applicable tariffs,
rules and practices) established by the NYSRC, NPCC, NERC and by the NYPP or the
ISO, as applicable. Subject to Astoria Power's obligations under Section 4
below, the foregoing obligations shall not apply to any portion of the electric
generating capacity of the Gas Turbines with respect to which Astoria Power
receives a written notice from the ISO that such capacity is no longer required
for meeting the installed capacity requirements in New York City as determined
by the ISO.

(b) For each capability period in which Astoria Power fails to
maintain the capability and availability of the Gas Turbines to provide an
amount of Installed Capacity of no less than the Required Net Capability as
required under Section 3(a)(i), as such amount of Installed Capacity is
demonstrated by a DMNC test and adjusted, if necessary, in accordance with the
ISO Rules to reflect the failure by the Gas Turbines to satisfy the applicable
minimum generator availability targets, Astoria Power shall pay to Con Edison a
deficiency charge equal to the product of (i) the amount (in MW) by which the
Installed Capacity provided is deficient, less any Replacement Capacity
purchased by Astoria Power for the applicable

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capability period to the extent such Replacement Capacity is not otherwise
required to meet the installed capacity requirements for New York City under
applicable ISO Rules in such capability period, and (ii) the deficiency charge
per MW applicable under the NYPP Rules or ISO Rules, as the case may be, for
failure by providers of installed capacity to satisfy applicable installed
capacity requirements. Payment of such deficiency charges shall be due at the
end of the first month following the end of the capability period for which the
deficiency charged is assessed.

(c) Following each capability period, and at such other times as may
reasonably be requested by Con Edison, Astoria Power shall provide Con Edison
access to, or copies of, such relevant plant data and other documents and
records reasonably requested by Con Edison as is necessary to verify the
electric generating capability and availability of the Gas Turbines, and any
deficiency in the amount of Installed Capacity provided, for such capability
period or for another period as may be reasonably requested by Con Edison.

4.        INSTALLED CAPACITY PURCHASE, QUANTITY AND PAYMENTS.

4.1 Capacity Purchase Quantity

(a) From the Closing Date until the later of (i) the end of the 1999
Summer Capability Period or (ii) the end of the capability period immediately
preceding the capability period covered by the first auction for capacity for or
including New York City sponsored by the ISO that occurs after the Closing Date,
Astoria Power will sell to Con Edison and Con Edison will purchase from
Astoria Power an amount of Installed Capacity equal to 100 percent of the
Installed Capacity as demonstrated by the Gas Turbines during the most recent
DMNC test, performed during the applicable capability period in accordance with
applicable procedures of the NYPP or ISO, as the case may be, provided, however,
that the amount of Installed Capacity to be provided under this Section 4.l(a)
shall be no less than the Required Net Capability. Astoria Power shall notify
Con Edison five days prior to the conduct of any DMNC test, and Con Edison shall
have the right to observe such test.

(b) If the 1999-2000 Winter Capability Period is covered by an auction
for capacity for or including New York City sponsored by the ISO, Astoria Power
will sell to Con Edison and Con Edison will purchase from Astoria Power 191 MW
of Installed Capacity during the 1999-2000 Winter Capability Period. Astoria
Power shall identify to Con Edison in writing the specific generating units of
the Gas Turbines that Astoria Power will use to supply such Installed Capacity
to Con Edison and the amount of Installed Capacity to be supplied from each such
generating unit in accordance with Section 5.

(c) Subject to Astoria Power's obligations under Section 3(a), and to
the extent permitted by NYPP Rules or ISO Rules, as the case may be, Astoria
Power may use Replacement Capacity to supply the Installed Capacity required to
be provided to Con Edison under this Section 4.1.

4.2 Capacity Payments

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Subject to the provisions of Section 2.5, the monthly payment from Con
Edison to Astoria Power for Installed Capacity ("Capacity Payment") shall equal
the product of (a) the ICAP, (b) a daily per-MW rate which, on an annualized
basis, is equivalent to $105/kW-Year and (c) the number of days in the 
applicable month (or portion thereof, if applicable). "ICAP" is the amount of
Installed Capacity, in MW, including Replacement Capacity, that is actually
provided by Astoria Power to Con Edison based upon the applicable summer period
DMNC testing performed in accordance with applicable procedures of the NYPP or
ISO, as the case may be adjusted, if necessary, in accordance with the ISO
Rules to reflect the failure by the Gas Turbines to satisfy the applicable
minimum generator availability targets established by the ISO Rules.

4.3 Capacity Deficiency Payments

(a) Whenever ICAP provided by Astoria Power to Con Edison is less than
the amount of Installed Capacity that Astoria Power is required to sell to Con
Edison under Section 4.1, Astoria Power shall pay to Con Edison deficiency
payments ("Capacity Deficiency Payments"), which shall equal:

The sum of (i) all installed capacity deficiency charges imposed by
the NYPP or ISO, as the case may be, on Con Edison, to the extent the
deficiency charges exceed payments for Installed Capacity, in respect
of which a deficiency charge was imposed, that would have been due
under Section 4-2; (ii) Con Edison's Replacement Capacity Costs that
are reasonably incurred if, and to the extent that, Astoria Power
fails to provide Replacement Capacity and Con Edison obtains such
Replacement Capacity; (iii) all other directly related costs and
expenses, to the extent not included in (i) and (ii), that are
reasonably incurred by Con Edison as a direct result of Astoria
Power's failure to provide Con Edison with the required amount of
Installed Capacity; provided, however, that any Capacity Deficiency
Payments will be credited against deficiency charges due to Con Edison
under Section 3(b).

(b) If Con Edison incurs any reasonable costs and expenses described
in Section 4.3(a) over a period greater than one calendar month, Con Edison
shall, subject to Astoria Power's approval, which shall not be unreasonably
withheld, allocate those costs on a monthly basis.

4.4 Billing and payments of the Capacity Payment due under Section 4.2
and the Capacity Deficiency Payments due under Section 4.3 shall be made in
accordance with Section 6.

4.5 Subject to the terms and conditions set forth herein, Astoria
Power shall satisfy all requirements applicable to suppliers of installed
capacity established by the NYPP or ISO, as the case may be, including any
applicable locational and seasonal requirements and compliance with and
satisfaction of all applicable tariffs, rules and practices, so that Con Edison
will receive the amount of Installed Capacity specified in Section 4.1.

4.6 Subject to the terms and conditions set forth herein, Con Edison
shall satisfy all requirements applicable to purchasers of installed capacity
established by the NYPP or ISO, as

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the case may be. Notwithstanding the provisions of Section 4.3, Con Edison shall
have no obligation to obtain Replacement Capacity if Astoria Power fails to
supply all or part of the Installed Capacity required under Section 4.1 or to
obtain Replacement Capacity for any shortfall in such Installed Capacity.

5.        SCHEDULING.

Consistent with the procedures of the NYPP or ISO, as the case may be,
and consistent with Astoria Power's obligations under Section 4.1 and 4.5,
Astoria Power shall specify to Con Edison in writing, for each Summer Capability
Period and for each Winter Capability Period, the generating units of the Gas
Turbines that Astoria Power will use to supply Installed Capacity to Con Edison
for such Summer Capability Period or Winter Capability Period, as the case may
be, and the amount of Installed Capacity to be supplied from each generating
unit, or any change thereto, at least 30 days before the date Con Edison is
required to report such information, or any changes thereto, to the NYPP or ISO,
as the case may be.

6.        BILLING AND PAYMENT PROCEDURES.

6.1 Billing and Payments

(a) In respect of each calendar month ending after the Closing Date,
Astoria Power shall, on or prior to the twentieth day of the following month,
prepare and render an invoice to Con Edison for the Capacity Payment due from
Con Edison to Astoria Power for the preceding calendar month, calculated in
accordance with Section 4.2. The Capacity Payment owed shall be due and payable
10 Business Days after Con Edison receives an invoice.

(b) In respect of each calendar month ending after the Closing Date,
Con Edison shall, on or prior to the twentieth day of the following month,
prepare and render an invoice to Astoria Power for any Capacity Deficiency
Payments due from Astoria Power to Con Edison for the preceding calendar month,
calculated in accordance with Section 4.3. The Deficiency Capacity Payments owed
shall be due and payable 10 Business Days after Astoria Power receives an
invoice.

(c) Each Party may set off any undisputed amount owed to the other
Party against any undisputed amount owed to such Party by the other Party
pursuant to this Agreement or other arrangement(s) specifically agreed to
between the Parties, including, without limitation, amounts owed by Astoria
Power to Con Edison under Section 3(b).

(d) If any payment under Sections 3(b), 6.1(a) or 6.1(b) falls
due on a day that is not a Business Day, then the payment shall be made on the
next Business Day,

(e) Interest on unpaid amounts or payments received after the due date
shall accrue at a rate equal to the prime commercial lending rate established
from time to time by 

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Chase Manhattan Bank, N.A., New York, New York. or its successor, from the due
date until the date upon which payment is made.

(f) Any payments owed directly by Astoria Power to the NYPP or ISO, as
the case may be, shall be made pursuant to the procedures established by the
NYPP or ISO, as the case may be. Astoria Power shall be solely responsible for
making all such payments to the NYPP or ISO.

(g) The Parties shall maintain records, accounts and other documents
sufficient to reflect accurately all transactions hereunder for a period of four
years from the time of the transactions. Each Party shall, at its own expense,
have the right to audit such records, accounts and other documents of the other
Party during such four-year period upon reasonable prior notice to the other
Party,

6.2 Billing Disputes

If a Party contests the amount billed in accordance with Sections 6.1
(a) or (b) before such amount is due, the contesting Party shall pay the
undisputed billed amount when due and promptly provide written notice to the
other Party of the disputed amount and identifying the reason for the dispute.
If neither Party disputes a bill within six months after the due date of such
bill, such bill shall be deemed correct. The Parties shall engage in good faith
negotiations to resolve any disputed amounts within 30 days. If the Parties are
unable to resolve a dispute within such period, disputed amounts shall, if
requested by the billing Party, be paid into an escrow account within 30 days of
such request pending resolution of the dispute, Thereafter, either Party may
exercise such remedies as may be available under this Agreement, at law or in
equity. In addition to any other remedies available to Astoria Power, in the
event Con Edison fails to pay a disputed bill into such escrow account within 30
days of a request by Astoria Power pursuant to the previous sentence, Astoria
Power may withhold Installed Capacity to be provided to Con Edison under Section
4.1 until such bill is paid into such escrow account, Interest at the rate
specified in Section 5.l(e) shall accrue on any amount due hereunder, if any,
that is refunded or credited to the contesting Party or that is released from
escrow to the non-contesting Party, when the contested amount is resolved.

6.3 Survival

The provisions of Section 3, Section 4 and this Section 6 shall
survive termination, expiration, cancellation, suspension, or completion of this
Agreement to the extent necessary to allow for final billing and payment.

7.        FORCE MAJEURE.

(a) Notwithstanding anything in this Agreement to the contrary,
neither Party shall have any liability or be otherwise responsible to the other
for its failure to carry out its obligations, with the exception of any
obligation to pay money, under this Agreement if and only to the extent that it
becomes impossible for either Party to so perform as a result of any occurrence
or event which is beyond the reasonable control, and does not result from any
fault

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or negligence, of the Party affected (each, a "Force Majeure Event"), including
any act of God, strike or any other labor disturbance, act of a public enemy,
war, act of terrorism, riot, any other civil disturbance, fire, storm,
lightning, flood, earthquake, any other natural disasters, explosion, materials
shortage, breakage or accident involving facilities, equipment or systems, any
order or regulation or restriction imposed by any Governmental Authority, 
failure of a contractor or subcontractor caused by a Force Majeure Event and
transportation delays or stoppages.

(b) If a Party shall rely on the occurrence of a Force Majeure Event
as a basis for being excused from performance of its obligations under this
Agreement, then the Party relying on such occurrence shall (i) provide prompt
written notice of such Force Majeure Event to the other Party giving an estimate
of its expected duration and the probable impact on the performance of its
obligations hereunder; (ii) exercise its reasonable best efforts to continue to
perform its obligations under this Agreement; (iii) reasonably and expeditiously
take action to correct or cure the Force Majeure Event, provided. however. that
settlement of strikes or any other labor disturbance will be completely within
the sole discretion of the Party affected by such strike or labor dispute; (iv)
exercise its reasonable best efforts to mitigate or limit damages to the other
Party, and (v) provide prompt written notice to the other Party of the cessation
of the Force Majeure Event.

8.        ASSIGNMENT, NO THIRD PARTY BENEFICIARIES.

(a) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by either Party, including by
operation of law, without the prior written consent of the other Party, except
(i) In the case of Con Edison, to an Affiliate of Con Edison or a third party
that has a contractual or statutory obligation to supply Installed Capacity to
Con Edison's retail customers; (ii) in the case of Astoria Power, to an
Affiliate of Astoria Power or a third party in connection with the transfer of
all of Astoria Power's right, title and interest in and to the Gas Turbines to
such. Affiliate or third party, and (iii) in the case of either Party, to a
lending institution or trustee in connection with a pledge or granting of a
security interest in the Gas Turbines and/or this Agreement; provided, however,
that no assignment or transfer of rights or obligations by either Party shall
relieve it from the full liabilities and the full financial responsibility, as
provided for under this Agreement, unless and until the transferee or assignee
shall agree in writing to assume such obligations and duties and the other Party
has consented in writing to such assumption. For purposes of this Agreement, the
term "Affiliate" shall have the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended.

(b) Nothing in this Agreement is intended to confer upon any other
person except the Parties any rights or remedies hereunder or shall create any
third party beneficiary rights in any person.

9.        EXTENSION, WAIVER.

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Either Party may (a) extend the time for the performance of any of the
obligations or other acts of the other Party or (b) waive compliance by the
other Party with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a Party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed On behalf of
such Party. The failure of a Party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
Notwithstanding anything herein to the contrary, to the extent that either Party
fails, in any particular instance, to take affirmative steps to exercise its
rights to witness, inspect, observe or approve the activities of the other
Party, such rights shall, solely with respect to such instance, be deemed waived
in respect of such activity.

10.       COUNTERPARTS.

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

11.       GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law).

12.       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 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 shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.

13.       AMENDMENT.

This Agreement may be amended, modified or supplemented only by an
instrument in writing signed on behalf of each of the Parties. If the
applicable provisions of the NYPP Rules, or the applicable provisions of the ISO
Tariff or ISO Rules, relating to installed capacity requirements applicable to
this Agreement or the implementation of this Agreement are changed materially,
the Parties shall endeavor in good faith to make conforming changes to this
Agreement with the intent to fulfill the purposes of this Agreement, Provided,
however that, except as provided for in Section 2.5, in no event shall such
changes modify the price for

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Installed Capacity set forth in Section 4.2 or excuse Astoria Power from paying,
or otherwise modifying its obligations in respect of, Capacity Deficiency
Payments under Section 4.3. Any such conforming change to this Agreement shall
be subject to all necessary regulatory authorizations, which the Parties shall
request or support, as applicable.

14.       ENTIRE AGREEMENT.

This Agreement, the APA, the other Ancillary Agreements and the
Confidentiality Agreement dated August 19, 1998 between Con Edison and NRG
Energy (the "Confidentiality Agreement"), including the Exhibits, Schedules,
documents, certificates and instruments referred to herein or therein and other
contracts, agreements and instruments contemplated hereby or thereby embody the
entire agreement and understanding of the Parties in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth or referred to herein or therein. This Agreement, the APA
and the other Ancillary Agreements supersede all prior agreements and
understandings between the Parties with respect to the transaction contemplated
by this Agreement other than the Confidentiality Agreement.

15.       FURTHER ASSURANCES.

The Parties agree to, from time to time upon the reasonable request of
either Party, negotiate in good faith and execute and deliver amendments to this
Agreement, including in response to regulatory, technological, operational or
other changes affecting the Gas Turbines or the electric power industry
generally, or such other documents or instruments as may be necessary, in order
to effectuate the transactions contemplated hereby,

16.       INDEPENDENT CONTRACTOR STATUS.

Nothing in this Agreement is intended to create an association, trust,
partnership or joint venture between the Parties, or to impose a trust,
partnership, or fiduciary duty, obligation or liability on or with respect to
either Party, and nothing in this Agreement shall be construed as creating any
relationship between Con Edison and Astoria Power other than that of independent
contractors.

17.       NOTICES.

Unless otherwise specified herein, all notices and other
communications hereunder shall be in writing and shall be deemed given (as of
the time of delivery or, in the case of a telecopied communication, of
confirmation) if delivered personally, telecopied (which is confirmed) or sent
by overnight courier (providing proof of delivery) to the Parties at the
following addresses (or at such other address for a Party as shall be specified
by like notice)

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if to Con Edison, to:

Consolidated Edison Company of New York, Inc.
4 Irving Place
New York, NY 10003
Telecopy No.: (212) 677-0601
Attention.- Senior Vice President & General Counsel

if to Astoria Power, to:

Astoria Gas Turbine Power LLC 
c/o NRG Energy Inc. 
1221 Nicollet Mill, Suite 700 
Mnneapolis, Mrinesota, 55403-2445 
Telecopy No.: (612) 373-5392 
Attention: Vice-President and General Counsel

With a copy to:

Astoria Gas Turbine Power LLC 
c/o NRG Energy Inc. 
1221 Nicollet Mail, Suite 700 
Minneapolis, Minnesota, 55403-2445 
Telecopy No.: (612) 373-5340 
Attention: Commercial Asset Manager

18.      INTERPRETATION.

When a reference is made in this Agreement to an Article or Section,
such reference shall be to an Article or Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation" or equivalent words. The words
"hereof, "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms. Any agreement, instrument, statute, regulation, rule or
order defined or referred to herein or in any agreementOTinstrument that is
referred to herein means such agreement, instrument, statute, regulations, rule
or order as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes, regulations, rules or orders) by succession of comparable successor

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statutes, regulations, rules or orders and references to all attachments
thereto and instruments incorporated therein. References to a person are also
to its permitted successors and assigns.

19.       JURISDICTION AND ENFORCEMENT.

(a) Each of the Parties irrevocably submits to the exclusive
jurisdiction of (i) the Supreme Court of the State of New York, New York
County and (ii) the United States District Court for the Southern District of
New York, for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated hereby. Each of the Parties
agrees to commence any action, suit or proceeding relating hereto either in the
United States District Court for the Southern District of New York or, if such
suit, action or proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each of
the Parties further agrees that service of process, summons, notice or document
by hand delivery or U.S. registered mail at the address specified for such Party
in Section 17 (or such other address specified by such Party from time to time
pursuant to Section 17 shall be effective service of process for any action,
suit or proceeding brought against such Party in any such court. Each of the
Parties irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) the Supreme Court of the State of New
York, New York County, or (ii) the United States District Court for the Southern
District of New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.

(b) The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement, this being in addition to any other remedy to which they are
entitled at law or in equity.

20.       CONFLICT.

Except as expressly otherwise provided herein or therein, in
the event of any conflict or inconsistency between the terms of this Agreement
and the terms of the APA or any other Ancillary Agreement, the terms of this
Agreement shall prevail.

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be signed by their respective duly authorized officers as of the date and year
first above written.

ASTORIA GAS TURBINE POWER LLC

By: /s/ Michael O'Sullivan
------------------------------------------- 
Name:   Michael O'Sullivan
Title:  Vice President

CONSOLIDATED EDISON COMPANY OF NEW YORK INC.

By: /s/ Joan J. Freilich  
------------------------------------------- 
Name:   Joan J. Freilich  
Title:  Executive VP and CFO

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1

EXHIBIT 10.30
TRANSITION CAPACITY AGREEMENT

BETWEEN

ARTHUR KILL POWER LLC

AND

CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.

Dated as of June 25, 1999

2

TABLE OF CONTENTS

Page
----

1. DEFINITIONS .............................................................3

2. EFFECTIVENESS, TERM AND TERMINATION .....................................5

3. CAPABILITY AND AVAILABILITY REQUIREMENTS ................................6

4. INSTALLED CAPACITY PURCHASE, QUANTITY AND PAYMENTS ......................7

4.1 Capacity Purchase Quantity ....................................7
4.2 Capacity Payments .............................................8
4.3 Capacity Deficiency Payments ..................................8

5. SCHEDULING ..............................................................9

6. BILLING AND PAYMENT PROCEDURES ..........................................9

6.1 Billing and Payments ..........................................9
6.2 Billing Disputes .............................................10
6.3 Survival .....................................................11

7. FORCE MAJEURE ..........................................................11

8. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES ...............................11

9. EXTENSION, WAIVER ......................................................12

10. COUNTERPARTS ..........................................................12

11. GOVERNING LAW .........................................................12

12. SEVERABILITY ..........................................................13

13. AMENDMENT .............................................................13

14. ENTIRE AGREEMENT ......................................................13

15. FURTHER ASSURANCES ....................................................14

16. INDEPENDENT CONTRACTOR STATUS .........................................14

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17. NOTICES ...............................................................14

18. INTERPRETATION ........................................................15

19. JURISDICTION AND ENFORCEMENT ..........................................15

20. CONFLICT ..............................................................16

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TRANSITION CAPACITY AGREEMENT BETWEEN
ARTHUR KILL POWER LLC AND CONSOLIDATED EDISON
COMPANY OF NEW YORK, INC.

This Transition Capacity Agreement ("Agreement") is made and entered
into as of this day of June 25, 1999, by and between Arthur Kill Power LLC ("AK
POWER"), a Delaware limited liability company having its principal place of
business at 1221 Nicollet Mail, Minneapolis, Minnesota 55403, and Consolidated
Edison Company of New York, Inc. ("Cori Edison"), a New York corporation, AK
POWER and Con Edison shall each be referred to as a "Party", and shall be
referred to collectively as the "Parties."

WHEREAS, NRG Energy, Inc. ("NRG Energy") and Con Edison have entered
into the Generating Plant and Gas Turbine Asset Purchase and Sale Agreement
("APA"), dated January 27, 1999, as amended, and certain other agreements
specified in the APA relating to the purchase by NRG Energy of certain of Con
Edison's generating assets comprised of generating facilities (collectively, the
"Purchased Assets");

WHEREAS, NRG Energy will assign to AK POWER on or prior to the Closing
Date (as defined below) its rights and obligations under the APA relating to the
purchase from Con Edison of the Generating Plant (as defined below) and certain
other assets related thereto in accordance with the terms and conditions of the
APA, and NRG Energy will assign to Astoria Gas Turbine Power LLC ("Astoria
Power") on or prior to the Closing Date its rights and obligations under the
APA relating to the purchase from Con Edison of the Gas Turbines (as defined
below) and certain other assets relating thereto in accordance with the terms
and conditions of the APA;

WHEREAS, the rights and obligations of buyers and providers of electric
generating capacity, energy, transmission and ancillary services may be modified
by a proposal (the "Proposal") currently pending before the Federal Energy
Regulatory Commission ("FERC") to restructure the New York Power Pool, which
Proposal contemplates, among other things, (i) the formation of the ISO (as
defined) and (ii) the implementation of the ISO Tariff filed on December 19,
1997, in FERC Docket Nos. ER97-1523-000, OA97-470-000 and ER97-4234-000, as such
filings may be amended from time-to-time;

WHEREAS, FERC may approve, accept, modify, or reject the Proposal, and
its actions may affect the rights and obligations of the Parties under this
Agreement;

WHEREAS, FERC has accepted for filing certain market power mitigation
measures applicable to sales of capacity, energy and certain other services from
specified electric generating units in New York City in FERC Docket No.
ER98-3169-000 (such measures, as may be modified from time to time, and any
other applicable market power mitigation measures that may be imposed by FERC,
ISO or the New York State Public Service Commission ("PSC"), the "Mitigation
Measures");

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WHEREAS, sales of capacity, energy and certain other services from the
Generating Plant will be subject to, and the rights and obligations of the
Parties under this Agreement may be affected by, the Mitigation Measures; and

WHEREAS, in recognition of Con Edison's installed capacity requirements
for its delivery service customers and its remaining native load customers, AK
POWER and Con Edison are entering into this Agreement, whereby AK POWER will
maintain the electric generating capability and availability of the Generating
Plant at specified levels for the term of this Agreement and whereby, during
certain periods, Con Edison will purchase from AK POWER, and AK POWER will sell
to Con Edison, specified amounts of Installed Capacity (as defined herein).

NOW THEREFORE, in consideration of the mutual agreements and
commitments contained herein, AK POWER and Con Edison hereby agree as follows:

1.       DEFINITIONS.

(a) The following terms shall have the meanings set forth below. Any
term used in this Agreement that is not defined herein shall have the meaning
customarily attributed to such term by the electric utility industry in New
York.

"Ancillary Agreements" shall have the meaning ascribed thereto in
the APA.

"Business Day" shall mean any day other than Saturday, Sunday or any
day which is a legal holiday or a day on which banking institutions in the State
of New York are authorized or required by law or other governmental action to
close.

"Closing" shall mean the closing of the sale of the Purchased Assets
and certain other assets as contemplated by the APA.

"Closing Date" shall mean the date and time at which the Closing
actually occurs.

"Gas Turbines" means the gas turbine units GT2 through GT5 and GT7
through GT13 located at the Astoria Gas Turbine site.

"Generating Plant" means the units 2 and 3 steam-powered generating
facilities and gas turbine unit GT 1 located at the Arthur Kill Generating
Station.

"Government Authority" shall mean any court, administrative or
regulatory agency or commission or other government entity or instrumentality or
any department thereof.

"Installed Capacity" shall mean electric generating capacity of the
Generating Plant that satisfies all of the requirements applicable to installed
capacity established by the NYPP or ISO, as the case may be, as such
requirements apply to Con Edison.

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"ISO" shall mean the New York Independent System Operator, as described
in the Supplemental Filing, or its successors.

"ISO Commencement Date" shall mean the date on which the ISO officially
commences operations of a spot market for energy, spinning and non-spinning
reserves and automatic generator control, as signified by the first day that
resources such as the Generating Plant or Gas Turbines are allowed to bid into
each market on a non-trial or non-experimental basis,

"ISO Rules" shall mean the rules and procedures adopted by the ISO
pursuant to the ISO Tariff from time to time in effect and the related ISO
agreements.

"ISO Tariff" shall mean the tariff described in the Supplemental
Filing, as it may be amended from time to time.

"NERC" shall mean the North American Electric Reliability Council or
its successors.

"NYPP" shall mean the New York Power Pool or its successors.

"NPCC" shall mean the Northwest Power Coordinating Council or its
successors.

"NYPP Rules" shall mean the rules and procedures of the NYPP from time
to time in effect.

"NYSRC" shall mean the New York State Reliability Council or its
successor.

"Replacement Capacity" shall mean installed capacity from resources
other than the Generating Plant which resources are identified by AK POWER and
subsequently identified to the NYPP or ISO, as the case may be, as sources of
installed capacity in Con Edison's periodic reports required under applicable
procedures, provided that such installed capacity (i) is from resources that are
located in New York City or directly interconnected to Con Edison's electric
system in New York City, and (ii) would satisfy the installed capacity
requirements applicable to Con Edison, including any applicable delivery
requirements, established by the NYPP or ISO, as the case may be.

"Replacement Capacity Costs" shall mean the incremental costs and
expenses for Replacement Capacity to the extent costs and expenses for
Replacement Capacity exceed the payments for ICAP calculated in accordance with
Section 4.2.

"Supplemental Filing" shall mean the December 19, 1997 Supplemental
Filing to the Comprehensive Proposal to Restructure the New York Wholesale
Electric Market in FERC Docket Nos. ER97-1523-000, OA97-47000, and
ER97-4234-000.

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"Summer Capability Period" shall have the meaning provided by the NYPP
or ISO, as the case may be, as may be modified from time to time. Summer
Capability Period is currently May 1 through October 31 of each year.

"Winter Capability Period" shall have the meaning provided by the NYPP
or ISO, as the case may be, as may be modified from time to time. Winter
Capability Period is currently each November 1 through April 30 of the following
calendar year.

(b) Each of the following terms has the meaning specified in the
Section set forth opposite such term:

Term                                             Section
----                                             -------

AK POWER                                         Preamble
Affiliate                                        8(a)
Agreement                                        Preamble
APA                                              Recitals
Capacity Payment                                 4.2
Capacity Deficiency Payments                     4.3
Con Edison                                       Preamble
Confidentiality Agreement                        14
DMNC                                             3(a)
FERC                                             Recitals
Force Majeure Event                              7(a)
ICAP                                             4.2
Mitigation Measures                              Recitals
Party                                            Preamble
PSC                                              Recitals
Proposal                                         Recitals
Purchased Assets                                 Recitals
Required Net Capability                          3(a)

2.       EFFECTIVENESS, TERM AND TERMINATION.

2.1 This Agreement shall only become effective upon the consummation of
the Closing. If the APA is terminated for any reason prior to the Closing, then
this Agreement shall also terminate and be of no further force or effect.

2.2 This Agreement shall expire on the later of (a) the earlier of (i)
December 31, 2002 or (ii) the date on which AK POWER receives written notice
from the ISO to the effect that none of the electric capacity of the Generating
Plant is required for meeting the installed capacity requirements in New York
City as determined by the ISO, or (b) the end of the

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capability period immediately preceding the capability period covered by the
first auction for capacity sponsored by the ISO that occurs after the Closing
Date.

2.3 The Parties agree that, notwithstanding any other provision of this
Agreement, the APA or any other Ancillary Agreement, this Agreement may not be
terminated prior to its expiration by either Party under any circumstances,
including as a result of a breach, whether or not material, by the other Party,
except pursuant to an agreement in writing executed by each Party.

2.4 If any Governmental Authority having jurisdiction over this
Agreement requires any modification to, or imposes any condition on acceptance
or approval of, this Agreement, then the Parties shall engage in good faith
negotiations in order to amend this Agreement to satisfy, or otherwise address,
such modification or condition. Notwithstanding the foregoing, the Parties
acknowledge and agree that the effectiveness of Section 2.5 hereof is not
contingent upon FERC approval.

2.5 In the event that the ISO Commencement Date does not occur by
December 31, 2001, either Party may request the other Party to renegotiate in
good faith the terms and conditions, including payment terms, for purchases of
Installed Capacity under this Agreement. If, upon such request by either Party,
the Parties are unable to reach agreement on such revised terms and conditions,
AK POWER shall file tariffs governing such purchases with the appropriate
regulatory agency or agencies, to become effective as of April 1, 2002, and,
upon the effectiveness of such tariffs, as may be modified by such regulatory
agency or agencies, the terms and conditions contained in the approved tariffs
shall be binding upon the Parties and shall govern the purchases of Installed
Capacity under this Agreement; provided, however, that Can Edison shall have the
right to protest the tariffs filed by AK POWER to such regulatory agency or
agencies.

3.       CAPABILITY AND AVAILABILITY REQUIREMENTS.

(a) During the term of this Agreement, AK POWER will use commercially
reasonable efforts to maintain the electric generating capability and
availability of the Generating Plant (i) to provide 840 MWs of Installed
Capacity, after any adjustment set forth in the ISO Rules to reflect the failure
by the Generating Plant to satisfy the minimum generator availability targets
established by the ISO Rules applicable to the Generating Plant (the "Required
Net Capability") and (ii) to satisfy all criteria, standards and requirements
applicable to providers of installed capacity (including locational, seasonal
and other performance requirements and compliance with all applicable tariffs,
rules and practices) established by the NYSRC, NPCC, NERC and by the NYPP or
the ISO, as applicable. Subject to AK POWER's obligations under Section 4 below,
the foregoing obligations shall not apply to any portion of the electric
generating capacity of the Generating Plant with respect to which AK POWER
receives a written notice from the ISO that such capacity is no longer required
for meeting the installed capacity requirements in New York City as determined
by the ISO.

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(b) For each capability period in which AK POWER fails to maintain the
capability and availability of the Generating Plant to provide an amount of
Installed Capacity of no less than the Required Net Capability as required under
Section 3(a)(i), as such amount of Installed Capacity is demonstrated by a DMNC
test and adjusted, if necessary, in accordance with the ISO Rules to reflect the
failure by the Generating Plant to satisfy the applicable minimum generator
availability targets, AK POWER shall pay to Con Edison a deficiency charge equal
to the product of (i) the amount (in MW) by which the Installed Capacity
provided is deficient, less any Replacement Capacity purchased by AK POWER for
the applicable capability period, to the extent such Replacement Capacity is not
otherwise required to meet the installed capacity requirements for New York City
under applicable ISO Rules in such capability period, and (ii) the deficiency
charge per MW applicable under the NYPP Rules or ISO Rules, as the case may be,
for failure by providers of installed capacity to satisfy applicable installed
capacity requirements. Payment of such deficiency charges shall be due at the
end of the first month following the end of the capability period for which the
deficiency charged is assessed.

(c) Following each capability period, and at such other times as may
reasonably be requested by Con Edison, AK POWER shall provide Con Edison access
to, or copies of, such relevant plant data and other documents and records
reasonably requested by Con Edison as is necessary to verify the electric
generating capability and availability of the Generating Plant, and any
deficiency in the amount of Installed Capacity provided, for such capability
period or for another period as may be reasonably requested by Con Edison.

4.       INSTALLED CAPACITY PURCHASE, QUANTITY AND PAYMENTS

4.1 Capacity Purchase Quantity

(a) From the Closing Date until the later of (i) the end of the 1999
Summer Capability Period or (ii) the end of the capability period immediately
preceding the capability period covered by the first auction for capacity for or
including New York City sponsored by the ISO that occurs after the Closing Date,
AK POWER will sell to Con Edison and Con Edison will purchase from AK POWER an
amount of Installed Capacity equal to 100 percent of the Installed Capacity as
demonstrated by the Generating Plant during the most recent DMNC test, performed
during the applicable capability period in accordance with applicable procedures
of the NYPP or ISO, as the case may be; provided, however, that the amount of
Installed Capacity to be provided under this Section 4.1(a) shall be no less
than the Required Net Capability. AK POWER shall notify Con Edison five days
prior to the conduct of any DMNC test, and Con Edison shall have the right to
observe such test.

(b) If the 1999-2000 Winter Capability Period is covered by an auction
for capacity for or including New York City, sponsored by the ISO, AK POWER will
sell to Con Edison and Con Edison will purchase from AK POWER 263 MW of
Installed Capacity during the 1999-2000 Winter Capability Period. AK POWER shall
identify to Con Edison in writing

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the specific generating units of the Generating Plant that AK POWER will use to
supply such Installed Capacity to Con Edison and the amount of Installed
Capacity to be supplied from each such generating unit in accordance with
Section 5.

(c) Subject to AK POWER's obligations under Section 3(a), and to the
extent permitted by NYPP Rules or ISO Rules, as the case may be, AK POWER may
use Replacement Capacity to supply the Installed Capacity required to be
provided to Con Edison under this Section 4.1.

4.2 Capacity Payments

Subject to the provisions of Section 2.5, the monthly payment from Con
Edison to AK POWER for Installed Capacity ("Capacity Payment") shall equal the
product of (a) the ICAP, (b) a daily per-MW rate which, on an annualized basis,
is equivalent to $105/kW-Year and (c) the number of days in the applicable
month (or portion thereof, if applicable). "ICAP" is the amount of Installed
Capacity in MW, including Replacement Capacity, that is actually provided
by AK POWER to Con Edison based upon the applicable summer period DMNC testing
performed in accordance with applicable procedures of the NYPP or ISO, as the
case may be, adjusted, if necessary, in accordance with the ISO Rules to reflect
the failure by the Generating Plant to satisfy the applicable minimum generator
availability targets established by the ISO Rules.

4.3 Capacity Deficiency Payments

(a) Whenever ICAP provided by AK POWER to Con Edison is less than the
amount of Installed Capacity that AK POWER is required to sell to Con Edison
under Section 4.1, AK POWER shall pay to Con Edison deficiency payments
("Capacity Deficiency Payments"), which shall equal:

The sum of (i) all installed capacity deficiency charges imposed by the
NYPP or ISO, as the case may be, on Con Edison, to the extent the deficiency
charges exceed payments for Installed Capacity, in respect of which a deficiency
charge was imposed, that would have been due under Section 4.2; (ii) Con
Edison's Replacement Capacity Costs that are reasonably incurred if, and to the
extent that, AK POWER fails to provide Replacement Capacity and Con Edison
obtains such Replacement Capacity; (iii) all other directly related costs and
expenses, to the extent not included in (i) and (ii), that are reasonably
incurred by Con Edison as a direct result of AK POWER's failure to provide Con
Edison with the required amount of Installed Capacity; provided, however, that
any Capacity Deficiency Payments will be credited against deficiency charges
due to Con Edison under Section 3(b),

(b) If Con Edison incurs any reasonable costs and expenses described in
Section 4.3(a) over a period greater than one calendar month, Con Edison shall,
subject to AK POWER's approval, which shall not be unreasonably withheld,
allocate those costs on a monthly basis.

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4.4 Billing and payments of the Capacity Payment due under Section
4.2 and the Capacity Deficiency Payments due under Section 4.3 shall be made in
accordance with Section 6.

4.5 Subject to the terms and conditions set forth herein, AK POWER
shall satisfy all requirements applicable to suppliers of installed capacity
established by the NYPP or ISO, as the case may be, including any applicable
locational and seasonal requirements and compliance with and satisfaction of all
applicable tariffs, rules and practices, so that Con Edison will receive the
amount of Installed Capacity specified in Section 4.1.

4.6 Subject to the terms and conditions set forth herein, Con Edison
shall satisfy all requirements applicable to purchasers of installed capacity
established by the NYPP or ISO, as the case may be. Notwithstanding the
provisions of Section 4.3, Con Edison shall have no obligation to obtain
Replacement Capacity if AK POWER fails to supply all or part of the Installed
Capacity required under Section 4.1 or to obtain Replacement Capacity for any
shortfall in such Installed Capacity.

5.       SCHEDULING.

Consistent with the procedures of the NYPP or ISO, as the case may be,
and consistent with AK POWER's obligations under Section 4.1 and 4.5, AK POWER
shall specify to Con Edison in writing, for each Summer Capability Period and
for each Winter Capability Period, the generating units of the Generating Plant
that AK POWER will use to supply Installed Capacity to Con Edison for such
Summer Capability Period or Winter Capability Period, as the case may be, and
the amount of Installed Capacity to be supplied from each generating unit, or
any change thereto, at least 30 days before the date Con Edison is required to
report such information, or any changes thereto, to the NYPP or ISO, as the case
may be,

6.       BILLING AND PAYMENT PROCEDURES.

6.1 Billing and Payments

(a) In respect of each calendar month ending after the Closing Date, AK
POWER shall, on or prior to the twentieth day of the following month, prepare
and render an invoice to Con Edison for the Capacity Payment due from Con Edison
to AK POWER for the preceding calendar month, calculated in accordance with
Section 4.2. The Capacity Payment owed shall be due and payable 10 Business Days
after Con Edison receives an invoice.

(b) In respect of each calendar month ending after the Closing Date,
Con Edison shall, on or prior to the twentieth day of the following month,
prepare and render an invoice to AK POWER for any Capacity Deficiency Payments
due from AK POWER to Con Edison for the preceding calendar month, calculated in
accordance with Section 4.3. The Deficiency

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Capacity Payments owed shall be due and payable 10 Business Days after AK POWER
receives an invoice.

(c) Each Party may set off any undisputed amount owed to the other
Party against any undisputed amount owed to such Party by the other Party
pursuant to this Agreement or other arrangement(s) specifically agreed to
between the Parties, including, without limitation, amounts owed by AK POWER to
Con Edison under Section 3(b).

(d) If any payment under Sections 3(b), 6.1(a) or 6.1(b) falls due
on a day that is not a Business Day, then the payment shall be made on the next
Business Day.

(e) Interest on unpaid amounts or payments received after the due date
shall accrue at a rate equal to the prime commercial lending rate established
from time to time by Chase Manhattan Bank, N.A., New York, New York, or its
successor, from the due date until the date upon which payment is made.

(f) Any payments owed directly by AK POWER to the NYPP or ISO, as the
case may be, shall be made pursuant to the procedures established by the NYPP or
ISO, as the case may be. AK POWER shall be solely responsible for making all
such payments to the NYPP or ISO.

(g) The Parties shall maintain records, accounts and other documents
sufficient to reflect accurately all transactions hereunder for a period of four
years from the time of the transactions. Each Party shall, at its own expense,
have the right to audit such records, accounts and other documents of the other
Party during, such four-year period upon reasonable prior notice to the other
Party.

6.2 Billing Disputes

If a Party contests the amount billed in accordance with Sections
6.1(a) or (b) before such amount is due, the contesting Party shall pay the
undisputed billed amount when due and promptly provide written notice to the
other Party of the disputed amount and identifying the reason for the dispute.
If neither Party disputes a bill within six months after the due date of such
bill, such bill shall be deemed correct.. The Parties shall engage in good faith
negotiations to resolve any disputed amounts within 30 days. If the Parties are
unable to resolve a dispute within such period, disputed amounts shall, if
requested by the billing Party, be paid into an escrow account within 30 days of
such request pending resolution of the dispute. Thereafter, either Party may
exercise such remedies as may be available under this Agreement, at law or in
equity. In addition to any other remedies available to AK POWER, in the event
Con Edison fails to pay a disputed bill into such escrow account within 30
days of a request by AK POWER pursuant to the previous sentence, AK POWER may
withhold Installed Capacity to be provided to Con Edison under Section 4.1 until
such bill is paid into such escrow account. Interest at the rate specified in
Section 5.1(e) shall accrue on any amount due hereunder, if any, that is
refunded or credited to the contesting Party or that is released from escrow to
the non-contesting Party, when the contested amount is resolved.

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6.3 Survival

The provisions of Section 3, Section 4 and this Section 6 shall survive
termination, expiration, cancellation, suspension, or completion of this
Agreement to the extent necessary to allow for final billing and payment.

7.       FORCE MAJEURE 

(a) Notwithstanding anything in this Agreement to the contrary,
neither Party shall have any liability or be otherwise responsible to the other
for its failure to carry out its obligations, with the exception of any
obligation to pay money, under this Agreement if and only to the extent that it
becomes impossible for either Party to so perform as a result of any occurrence
or event which is beyond the reasonable control, and does not result from any
fault or negligence, of the Party affected (each, a "Force Majeure Event"),
including any act of God, strike or any other labor disturbance, act of a public
enemy, war, act of terrorism, riot, any other civil disturbance, fire, storm,
lightning, flood, earthquake, any other natural disasters, explosion, materials
shortage, breakage or accident involving facilities, equipment or systems, any
order or regulation or restriction imposed by any Governmental Authority,
failure of a contractor or subcontractor caused by a Force Majeure Event and
transportation delays or stoppages.

(b) If a Party shall rely on the occurrence of a Force Majeure Event as
a basis for being excused from performance of its obligations under this
Agreement, then the Party relying on such occurrence shall (i) provide prompt
written notice of such Force Majeure Event to the other Party giving an estimate
of its expected duration and the probable impact on the performance of its
obligations hereunder; (ii) exercise its reasonable best efforts to continue to
perform its obligations under this Agreement; (iii) reasonably and
expeditiously take action to correct or cure the Force Majeure Event, provided,
however, that settlement of strikes or any other labor disturbance will be
completely within the sole discretion of the Party affected by such strike or
labor dispute; (iv) exercise its reasonable best efforts to mitigate or limit
damages to the other Party; and (v) provide prompt written notice to the other
Party of the cessation of the Force Majeure Event.

9.       ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.

(a) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by either Party, including by
operation of law, without the prior written consent of the other Party, except
(i) in the case of Con Edison, to an Affiliate of Con Edison or a third party
that has a contractual or statutory obligation to supply Installed Capacity to
Con Edison's retail customers; (ii) in the case of AK POWER, to an Affiliate of
AK POWER or a third party in

11

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connection with the transfer of all of AK POWER's right, title and interest in
and to the Generating Plant to such Affiliate or third party; and (iii) in the
case of either Party, to a lending institution or trustee in connection with a
pledge or granting of a security interest in the Generating Plant and/or this
Agreement; provided, however, that no assignment or transfer of rights or
obligations by either Party shall relieve it from the full liabilities and the
full financial responsibility, as provided for under this Agreement, unless and
until the transferee or assignee shall agree in writing to assume such
obligations and duties and the other Party has consented in writing to such
assumption. For purposes of this Agreement, the term "Affiliate" shall have the
meaning set forth in Rule l2b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended.

(b) Nothing in this Agreement is intended to confer upon any other
person except the Parties any rights or remedies hereunder or shall create any
third party beneficiary rights in any person.

9.       EXTENSION; WAIVER.

Either Party may (a) extend the time for the performance of any of
the obligations or other acts of the other Party or (b) waive compliance by the
other Party with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a Party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such Party. The failure of a Party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
Notwithstanding anything herein to the contrary, to the extent that either Party
fails, in any particular instance, to take affirmative steps to exercise its
rights to witness, inspect, observe or approve the activities of the other
Party, such rights shall, solely with respect to such instance, be deemed waived
in respect of such activity.

10.      COUNTERPARTS.

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

11.      GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law).

12

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12.      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 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 shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.

13.      AMENDMENT.

This Agreement may be amended, modified or supplemented only by an
instrument in writing signed on behalf of each of the Parties. If the applicable
provisions of the NYPP Rules, or the applicable provisions of the ISO Tariff or
ISO Rules, relating to installed capacity requirements applicable to this
Agreement or the implementation of this Agreement are changed materially, the
Parties shall endeavor in good faith to make conforming changes to this
Agreement with the intent to fulfill the purposes of this Agreement; provided,
however, that, except as provided for in Section 2.5, in no event shall such
changes modify the price for Installed Capacity set forth in Section 4.2 or
excuse AK POWER from paying, or otherwise modifying its obligations in respect
of, Capacity Deficiency Payments under Section 4.3. Any such conforming change
to this Agreement shall be subject to all necessary regulatory authorizations,
which the Parties shall request or support, as applicable.

14.      ENTIRE AGREEMENT

This Agreement, the APA, the other Ancillary Agreements and the
Confidentiality Agreement dated August 19, 1998 between Con Edison and NRG
Energy (the "Confidentiality Agreement"), including the Exhibits, Schedules,
documents, certificates and instruments referred to herein or therein and other
contracts, agreements and instruments contemplated hereby or thereby embody the
entire agreement and understanding of the Parties in respect of the transactions
contemplated by this Agreement. There are no restrictions, promises,
representations, warranties, covenants or undertakings other than those
expressly set forth or referred to herein or therein. This Agreement, the APA
and the other Ancillary Agreements supersede all prior agreements and
understandings between the Parties with respect to the transaction contemplated
by this Agreement other than the Confidentiality Agreement.

13

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15.      FURTHER ASSURANCES.

The Parties agree to, from time to time upon the reasonable request
of either Party, negotiate in good faith and execute and deliver amendments to
this Agreement, including in response to regulatory, technological, operational
or other changes affecting the Generating Plant or the electric power industry
generally, or such other documents or instruments as may be necessary, in order
to effectuate the transactions contemplated hereby.

16.      INDEPENDENT CONTRACTOR STATUS.

Nothing in this Agreement is intended to create an association, trust,
partnership or joint venture between the Parties, or to impose a trust,
partnership, or fiduciary duty, obligation or liability on or with respect to
either Party, and nothing in this Agreement shall be construed as creating any
relationship between Con Edison and AK POWER other than that of independent
contractors.

17.      NOTICES.

Unless otherwise specified herein, all notices and other communications
hereunder shall be in writing and shall be deemed given (as of the time of
delivery or, in the case of a telecopied communication, of confirmation) if
delivered personally, telecopied (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the Parties at the following
addresses (or at such other address for a Party as shall be specified by like
notice) 

if to Con Edison, to:

Consolidated Edison Company of New York, Inc.
4 Irving Place
New York, NY 10003,
Telecopy No.: (212) 677-0601
Attention: Senior Vice President & General Counsel

if to AK POWER, to
Arthur Kill Power LLC
c/o NRG Energy Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, Minnesota, 55403-2445 
Telecopy No.: (612) 373-5392 
Attention: Vice-President and General Counsel

14

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With a copy to:

Arthur Kill Power LLC 
c/o NRG Energy Inc.
1221 Nicollet Mall, Suite 700 
Minneapolis, Minnesota, 55403-2445 
Telecopy No.: (612) 373-5340 
Attention, Commercial Asset Manager

18.      INTERPRETATION.

When a reference is made in this Agreement to an Article or Section,
such reference shall be to an Article or Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation" or equivalent words. The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms. Any agreement, instrument, statute,
regulation, rule or order defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument, statute,
regulations, rule or order as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes, regulations, rules or orders) by
succession of comparable successor statutes, regulations, rules or orders and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.

19.      JURISDICTION AND ENFORCEMENT.

(a) Each of the Parties irrevocably submits to the exclusive
jurisdiction of (i) the Supreme Court of the State of New York, New York County
and (ii) the United States District Court for the Southern District of New York,
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the Parties agrees to
commence any action, suit or proceeding relating hereto either in the United
States District Court for the Southern District of New York or, if such suit,
action or proceeding may not be brought in such court for jurisdictional
reasons, in the Supreme Court of the State of New York, New York County. Each of
the Parties further agrees that service of process, summons, notice or document
by hand delivery or U.S registered mail at the address specified for such Party
in Section 17 (or such other address specified by such Party

15

18

from time to time pursuant to Section 17 shall be effective service of process
for any action, suit or proceeding brought against such Party in any such
court. Each of the Parties irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in (i) the Supreme Court of
the State of New York, New York County, or (ii) the United States District Court
for the Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.

(b) The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the Parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement, this being in addition to any other remedy to which they are
entitled at law or in equity.

20.      CONFLICT.

Except as expressly otherwise provided herein or therein, in the event
of any conflict or inconsistency between the terms of this Agreement and the
terms of the APA or any other Ancillary Agreement, the terms of this Agreement
shall prevail.

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
signed by their respective duly authorized officers as of the date and year
first above written.

ARTHUR KILL POWER LLC

By: /s/ Michael O'Sullivan
-----------------------------------------
Name:  Michael O'Sullivan
Title: Vice President

CONSOLIDATED EDISON COMPANY OF NEW YORK INC.

By: /s/ Joan J. Freilich
-----------------------------------------
Name:  Joan J. Freilich
Title: Executive Vice President and CFO

17

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the June 30,
1999 Financial Statements included in the Company's Form 10-Q and is qualified
in its entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1,000

<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               JUN-30-1999
<CASH>                                          65,962
<SECURITIES>                                         0
<RECEIVABLES>                                   39,432
<ALLOWANCES>                                       118
<INVENTORY>                                     48,028
<CURRENT-ASSETS>                               209,529
<PP                                       1,231,916
<DEPRECIATION>                                 104,713
<TOTAL-ASSETS>                               2,401,762
<CURRENT-LIABILITIES>                          853,294
<BONDS>                                        801,914
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             1
<OTHER-SE>                                     698,525
<TOTAL-LIABILITY-AND-EQUITY>                 2,401,762
<SALES>                                         97,133
<TOTAL-REVENUES>                               113,173
<CGS>                                           69,064
<TOTAL-COSTS>                                  112,362
<OTHER-EXPENSES>                                24,694
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              26,847
<INCOME-PRETAX>                               (23,883)
<INCOME-TAX>                                  (25,284)
<INCOME-CONTINUING>                              1,401
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     1,401
<EPS-BASIC>                                          0
<EPS-DILUTED>                                        0