ML17059C168

Revised Niagara Mohawk Powerchoice Settlement Document for NMPC PSC Case Numbers 94-E-0098 & 94-E-0099, Vols 1 & 2

ML17059C168
Person / Time
Site:	Nine Mile Point
Issue date:	03/19/1998
From:	NIAGARA MOHAWK POWER CORP.
To:
Shared Package
ML17059C167	List: ML17059C166 ML17059C168 ML18041A066
References
NUDOCS 9807310005
Download: ML17059C168 (708)

Text

IAAAIHAWKOlVePOECeSettlementDocumentVolume1-AgreementNiagaraMohawkPowerCorporationPSCCaseNos.94-K-009Sand94-K-0099RevisedMarch19,199S98073f000598072fPDRADOCK05000220PPDR'

TNIASARAUMOHAWKNIAGARAMOHAWKPOWERCO1lPORATloN/SOOERIE80UIEVAROV/EST,SYRACUSE,NY.l3202fTELEPHONE(315)474.15'IlOctober10,1997Hon.JohnC.Crary,SecretaryNYSDepartmentofPublicServiceThreeEmpireStatePlaza19thFloorAlbany,NewYork12223Re:NiagaraMohawkPowerCorporationCasos9+E4098etal.

DearSecretaryCrary;EnciosodforfilingwiththeCommission,

pursuantto16NYCRRQ3.5(f)and3.9,areanoriginalandtwenty-fivecopesoftheSfipulabonandAgreementsettingforththesettlementoftheseproceedlngLNiagaraMohawkisfilingthisSettlementwiththeexpectationandunderstandingthatDepartmentofPubRcServiceCommissionstaff,Muipleintervenorsandotherswillsignit,Wewillprovidesignaturepagesastheybecomeavailable,Iaskthatyoukindlyacknowledgereceiptandfilingoftheenclosuresbydate-stampingtheenclosedcopyofthisletterandreturningitinthepostag~idenvelopeprovidedforyourconvenience.Asbackgroundtothisfiling,theCompanynotesthatovertwoyearsago,byitsOctober1995PowelChoiceproposal,NiagaraMohawkbecamethefirstenergycompanyintheStateofNewYorktoproposeacomprehensiverestructuringofitselectricbusiness.However,becauseoftheneedtoaddressgrowingandcripplingpaymentstoindependentPowerProducerswhoseoutputtheCompanywasrequiredtopurchaseatgovernment-mandatedpricesinexcessofmarketprices,progressonPowerChoicewasdelayed.WiththisSettlement,itisnowtimetofinalizeandlmplemenlPowerChoice.TheSettlementistheresultofintensiveandlengthynegotiationsamongnumerouspartieshavingmanydifferingperspectivesonindustryrestructuring.lthasbeenreachedafterextensiveanalysis,negotiation,andgiv~take,andtheCompanyisofferingitwiththefollowingfivegoalsinmind:StabilizetheCompany'sfinancialconditionthroughconsummationoftheMasterRestructuringAgreementwiththeSettlingIndependentPowerProducers('SIPPs").ProvideforthecontinueddevelopmentofacompetitiveelectricgenerationmarketthroughauctionofalltheCompany'sfossilandhydrogeneratingplantstothirdparties.PromotejobsandeconomicdevelopmentinCentralNewYorkbyreducingindustrialratessubstantiallyandbyprovidingchoiceforsuchcustomersimmediately.gS1755Wp5.1win

~Reducepricesandintroducecustomerchoiceandcompetitionforallothercustomersoverthenextthreeyears,vvhllelmprovinocustomerservice,~Maintainandimprovetheeffectivenessofessentialenvironmentalandotherpublicpolicyprograms.TheSettlementfurtherrequiresthattheCompany'sstockholdersabsorbasIpnlficantportionofitsstrandedcostsoverthenextfiveyears,butaffordstheCompanytheopportunitytocollecttheremainingstrandedcoststhroughacompeNivetransitionchargeandexitfees.lnshort,theCompanybelievesthattheSeNetnantbalancestheneedsofallstakeholdersand,therefore,shouldbeapproved.YoyPauJ.Kacc:Hon.WilliamBoutelllarAllPartiesonAttachedServiceLIst~YQ~D

NIAGARAMOHAWKPOWERCORPORATIONPSCCASENOS,94-E-009894-E-0099PhaseIIActivePartListSDetofPublicServiceHon.JeflrcyStockholm¹S054Hon.JaclynBrillingHon.JudithA.LeeThreeEmpireStatePlazaOAH-SwanSt.Albany,NY12223-1350PH:(518)474-8400FX:(518)473-3263SitheEneriesInc.¹S055Mr.GanyBrown25EagleSt.Albany,NY12207-1901PH:(518)4624101FX:(518)462-4256Mr.RobertE.Fernandez,Esq.SitheEnergies,Inc.¹S056450LexingtonAve37thFlNewYork,NY10017:(212)450-9049:(212)450-9055PublicUtilitLawPro'ecs¹S062Mr.GeraldNorlander90StateSt.Suite601Albany,NY12207-2717PH:(518)449-3375FX:(518)449-1769NYSDetofLaw¹R15Mr.RichardW.Golden120BroadwayNewYork,NY10271PH:(212)416-8340FX:(212)416-6003NYSDetofPublicService¹S059Mr.FrancisHerbertThreeEmpireStatePlazaOAF-6thFl.Albany,NY12223-1350PH:(518)474A508FX:(518)486-7254NYSConsumerProtectionBoardMr.JamesF.Warden¹R165EmpireStatePlazaSuite2101Albany,NY12223-1556PH:(518)474-5015FX:(518)473-7482NationalPowerLendersForumMr.JohnDax¹R22Cohen,Dax&Koenig90StateSt.Suite1030Albany,NY12207PH:(518)432-1002FX:(518)432-1028RtailouncilofNewYork¹R22Mr.PaulC.RappCohen,Dax&Koenig90StateSt.Suite1030Albany,NY12207PH:(518)432-1002FX:(518)432-1028MultileIntervenors¹R07Ms.BarbaraS.BrennerMr.RobertM.LoughneyMr.AlgirdF.WhiteCouch,White,Brenner,Howard&FcigenbaumP.O.Box22222540BroadwayAlbany,NY12201PH:(518)4264600FX:(518)426-0376NYDefPublicService¹R06Ms.ElizabethH.LiebschutzMs.JaneC.AssafThreeEmpireStatePlazaOGC18thFl.Albany,NY12223-1350PH:(518)486-1895FX:(518)486-5710NYS

DeartmentofEconomicMs.GloriaKavanahOneCommercePlazaAlbany,

NY12245PH:(518)4744102FX:(518)473-8347NYSitizenilitBord¹S060146WashingtonAvcAlbany,NY12210PH:(518)4264282FX:(518)432-6178ExecutiveAenciesoftheUnitedStates¹R18Mr.RobertA.GantonDepartmentoftheArmyRegulatoryLawOffice901N.StuartStSuite713Arlington,VA22203-1837PH:(703)696-1645FX:(703)696-2960NewYorkPowerAuthorit¹R23Mr.EricJ.SchmalerMs.MariaZazzera1633Broadway,22ndFlNewYork,NY10019PH:(212)468-6138FX:(212)468-6272IndeendentPowerProducersofNYInc.¹R04Mr.AaronL.Breidenbaugh291HudsonAveAlbany,NY12210PH:(518)436-3749FX:(518)436-0369ENRONCaital&TradeResources¹S066HowardA.Fromer130WashingtonAve.Albany,NY12210PH:(518)427-0531FX:(518)427-0734NacaggLaaelbl.wpdPageIOcaober9,l997

NIAGARAMOHAWKPOWERCORPORATIONPCCASENOS.94-F009894-F0099PhaseIIActivePartListaceEnerProect/NRD(Dialseparately)Mr.FredZalcmanMollieLampiMr.DavidWooleyPaceUniversitySchoolofLaw78NorthBroadwayWhitePlains,NY10603PH:(914)4224386or:PH:(518)472-1762FX:(914)4224180or:FX:518)472-1544NaturalResourcesDefenseCouncilMs.KathcrincKennedy¹R14AshokGupta40W20thStNewYork,NY10011PH:(212)7274463FX:(212)727-1773SitheEneies¹S026.CraigIndykeadandLaniado5EagleStAlbany,NY12207-1901PH:(518)465-9313FX:(518)465-9315AdirondackHdroDeve.CoJohnM.Forester.Esq.¹S05839HudsonFallsRd.S.GlensFalls,NY12803PH:(518)747-0930FX:(518)747-2409NorthAmericanEnerIncJ.BradfordMorris¹S0678850WestRoute20P.O.Box100Westfield,NY14787-0100PH:(716)326-4977FX:(716)3264970CoenEnerTechnoloMeanRacine¹S068RobertL.Daileadcr,Jr.,Esq.Nixon,Hargrave,DevanskDoyleSuite700OneThomasCircle,NWWashington,DC20006PH:(202)457-5318FX:(202)457-5355ValerieS.J.Paul¹S081Nixon,Hargrave,DevansRDoyleOneKeyCorpPlaza~Albany,NY12207PH:(518)427-2650FX:(518)427-2666Mean-RacineAssociatesInc.¹R03PeterL.Hubbard,Esq.Menter,Rudin2Trivelpiece,P.C.500S.SalinaStSuite500Syracuse,NY13202-3300PH:(315)474-7541FX:(315)474P040CentralHudsonGas&Electric~CorPS070RobertJ.GlasserGouldkWilkieOneChaseManhattanPlazaNewYork,NY10005-1401PH:(212)344-5680FX:(212)809-6890NYSEG¹R24Ms.AmyDavisHuber,Lawrence,Abell605ThirdAve.NewYork,NY10158PH:(212)682-6200FX:(212)661-5759or5792NewYorkStateElectric&GasMr.ErnestWalker¹S069Ms.CathyHughto-Delzer4500VestalParkwayEastBinghamton,NY13903gkk(607)762-7484FX:(607)762-8645rAmericanRef-FuelComan¹S082GlennJ.Berger,Esq.Skadden,Arps,Slate,MeagherkFlom1440NewYorkAveNWWashington,DC20005-2111PH:(202)371-7920FX:(202)393-5760CitofFulton&Osweo¹R09PaulV.Nolan,Esq5515North17thStArlington,VA22205PH:(703)534-5509FX:(703)538-5257Kamine/Besico¹S083JackYoskowitzKellyDrye8hWarren101ParkAveNewYork,NY10178PH:(212)808-7800FX:(212)808-7897CoastalGasMarketinComanEmireStatePielineANRPielineCpman¹S084ArthurB.Cohn,Esq.CullenandDykman177MontagueStBrooklyn,NY11201-3611PH:(718)855-9000FX:(718)855Q282MunicialElectricUtilities¹S085JeffreyC.GenzerDuncan,Weinberg,Miller4Pembroke1615MStNWSuite800Washington,DC20037PH:(202)467-6370FX:(202)467-6379NMacs~1lsl.wpdPage2Oeseber9,1997

NIAGARAMOHAWKPOWERCORPORATIONPSCCASENOS.94-E-009894-E-0099PhaseIIActivePartListillametteIndustriesPS096MichaelC.DottenAndrewF.BehrendHeller,Ehrman,White&,McAuliffe200SWMarketSTSuite1750Portland,OR97201PH:(503)227-7400FX:(503)241-0950CitofWatertownQS091FrancesFrancisSpiegel&McDiannid1350NewYorkAveNWWashington,DC20005A798PH:(202)8794000FX:(202)393-2866ElectricPowerAssociationPS072LynnChurch1401HStNWSuite760Washington,DC20005PH:(202)789-7200:(202)789-7201LonsdaleEnerPS077BohdanBuchynsky633W.FiQhStSuite2800LosAngeles,CA90071PH:(213)892-1302FX:(213)892-1332LG&EPowerAS073AnneM.Gleason-RocheDirector,ProjectFinanceLGkEPowerInc.12500FairLakesCircle,Suite350Fairfax,VA22033-3804PH:(703)968-7200FX:(703)968-5458AmericanAssoc.OfRetiredDouglasH.WardWard,Sommer8hMoore122SouthSwanSt.Albany,NY12210:(518)472-1776J.'518)472-1774IndeckEnrServicesIncPS075SteveDowdy1130LakeCookRdSuite300BuffaloGrove,IL60089PH:(708)520-3212FX:(708)520-9883HudsonRiverPowerTransmissionWendyJoRabinowitz,PEPS076TheHudsonRiverPowerTransmissionCompany455NewKarnerRdAlbany,NY12205PH:(518)456-7712FX:(518)456-8451ConsolidatedEdisonPS078JohnD.McMahonAsst.GeneralCounsel4IrvingPlaceRoom1815SNcwYork,NY10003PH:(212)460-6330FX:(212)677-5850ReducedEnerSecialistsInc.BruceN.J.Hotz,VPPR117095E.MarketStWarren,OH44484PH:(216)526-9086(Clevcl)FX:(330)856-1806(Warren)CNGProducinComanHS087CNGTransmissionCorMichaelWhiteman,csq.PaulC.Rapp,Esq.WhitemanOsterman2HannaOneCommercePlazaAlbany,NY12260PH:(518)487-7600FX:(518)487-7777CNGTransmissionCorpHenxyE.Brown,Esp.DrewKovalak,Esq.CNGTransmissionCorp445WestMainStClarksburg,WV26302-2450CoastalCoorationPS088J.GordonPennington2000MSt.NWSuite300Washington,DC20036PH:(202)331-4615FX:(202)331-4617UtilitWorkersUnionofAmericaSethGoldsteinPS074Local1-2386ParkAveS.Suite401NewYork,NY10016-8846PH:(212)532-7110FX:(212)684-3987CitofNewYorkOS095DetofBusinessServicesScottButler110WilliamSt2ndFlNewYork,NY10038PH:(212)618-8940FX:(212)618-8898NYPAIndustrialIntervenrPR12DavidM.KleppingerMcNees,Wallace2Nurick100PineStHarrisburg,PA17108-1166PH:(717)232-8000FX:(717)237-5300NewYorkStateAssemblPS039CarolTaylorNcwYorkStateAssemblyProgramDevelopmentGroupRoom547CapitolAlbany,NY12248PH:(518)455-4386FX:(518)455-5573Mr.GeorgeH.Dali,Jr.37LivingstonStWarsaw,NY14569PH:(716)786-2015FX:(716)426-8088NMocs~lhl.wpdPage3Ocuhcr9,1997

NIAGARAMOHAWKPOWERCORPORATIONPSCCASENOS.94-E-009894-E-0099PhaseIIActivePartListorTwnofMlnPS045LillianAndersonDuffyAttorneyatLaw55WestMainStMalone,NY12953PH:(518)483-6171FX:(518)481-5003IBEWSS047CharlesT.Conine,Pres.713ErieBlvdWestSyracuse,NY13204PH(315)476-9797FX:(315)4784070WheeledElectricPowero.AlS048T.BrendanWhalen304RitaDrNSyracuseNY13212PH(315)458-3229FX(315)458-6699O'rienCharlesLindberghBlvd.Suite207Uniondale,NY11553PH:(516)390-7600FX:(516)390-7628MercerComaniesInc.PS097F.MichaelTucker330BroadwayAlbany,NY12207PH(518)434-1311FX(518)434-6157TheCitofCohoesNS071PeterHenner,Esq.P.O.Box326Clarksville,NY12041-0326PH:(518)768-8332FX:(518)768-8235NiaaraMohawkPowerCoTimShechanPR10Adams,Dayter&,ShcehanorthPearlSt.any,NY12207PH:(518)463-3388FX:(518)463-3440NMocs'yhascllsl.wpdPage4OeIober9,1997StevenAgrcstaPR01Swidlcr&,Berlin3000KSt.NWSuite300WashingtonDC20007-3841PH:(202)424-7501FX:(202)424-7692USGcneratinComanIIS098DanielDuBois111WashingtonAveSuite701Albany,NY12210PH:(518)432-8725FX:(518)432-0587SecialCounseltotheSettlinIMPSSS099MerrillL.Kramer,Esq.Akin,Gump,Strauss,HauertRFeld,LLP1333NewHampshireAveSuite400WashingtonDC20036PH:(202)8874000FX:(202)8874288StrateicPowerManaementIncMr.DanielP.DuthiePS00751GreenwichAvcGoshen,NY10924PH:(516)922-6548FX:(516)922-2705NortheastUtilitiesPS081AndrewGansbergNixon,Hargrave,Devans&,DoyleLLPOneKeyCorpPlazaSuite900Albany,NY12207PH:(518)427-2650FX:(518)427-2666RochesterGas&ElectricRichardN.GeorgePS006Nixon,Hargrave,Devans8hDoyleLLPP.O.Box1051Rochester,NY14603-1051PH:(716)263-1000FX:(716)263-1600AmericanRiversInc.PS002MargaretBowman,Esq.1025VermontAveNWSuite720Washington,DC20005PH:(202)547-6900FX:(202)347-9240LocalReulatoCounseltotheSettlinIPPSPS026SamM.LaniadoReadandLaniado25EagleStAlbany,NY12207-1901PH:(518)465-9313FX:(518)465-9315TownofBethlehemNYPS003MelvinH.Osterman,Esq.D.ScottBassinson,Esq.WhitemanOsterman&,HannaOneCommercePlazaAlbany,NY12260PH:(518)487-7600FX:(518)487-7777AaEnerServicesInc,NS004UsherFogelRoland,Fogel,Koblenz4CarrLLP1ColumbiaPlaceAlbany,NY12207PH:(518)434-8112FX:(518)434-3232TelerJointVenturePS005TheresaAtkins20CorporateWoodsAlbany,NY12211PH:(518)462-1882FX:(518)463-9937

NIAGARAMOHAWKPOWERCORPORATIONPSCCASENOS.94-E-009S94-E-0099PhaseIIFinerLakesNYChaterofNECAInc.PS008JanS.KublickMcMahon,Kublick,McGintyR,Smith,P.C.500S.SalinaSt.Syracuse,NY13202PH:(315)424-1105FX:(315)424-3793NYSCommuniActinAssocSueMontgomeryCoreyAS001754FourthAveTroy,NY12182PH:(518)238-1955FX:(518)238-1839TheECubedComanfortheNationalAssociationofEnerServicesComaniesandtheJointortersinS.BrownPS092201West70thStSuite41ENewYork,NY10023PH:(212)724-1528FX:(212)721-2556GlennCamusCNGEnergyServicesCorpOneParkRidgeCenterP.O.Box15746Pittsburgh,Pa.15244(412)4944222DianGrueneichGrueneichResourceAdvocates582MarketSt.Suite407SanFrancisco,CA94104(415)834-2300MaryJaneRudermanTanneryIslandPowerCo30N.MainStCarthage,NY13619PH:(315)493-1472FX:(315)ClJohnSullivanCityAttorneyMuncipalBldg.141S.FirstStFulton,NY13069PH:FX:TimJ.Lawrie1610WoodsteadCourtTheWoodlands,TX77380PH:(281)362-9966FX:(281)364-7325NYSSenateCommitteeonEner&TelecommunicationsCarolE.CoyneLegislativeOQiceBldg.Room307Albany,NY12247PH:(518)455-3131FX:(518)455-3123NMocs~natwpdPage5Ocacbcr9,l997

NIAGARAMOHAWKPOWERCORPORATIONPOWERCHOICESETTLEMENTAGREEMENTTableofContentsPacae1.0BACKGROUND.2.0RATEPLAN.2.1Introduction/Summary42.2TermandEffectiveDateofRates2.3MasterRestructuringAgreement(MRA)2.3.1PrudenceoftheMRA.2.3.2ReasonableOpportunitytoRecoverCosts.......2.3.3RecoveryofCostsAssociatedwithTerminationofRelatedGasTransportationandPeakShavingAgreements..2.3.4SIPPCostRecovery..56662.4OverallRateandRevenueLevels2.4.1AveragePrices2.4.1.1YearsOneThroughThree.2.4.1.2PriceCapforYearsFourandFive..772.4.2RevenuesandFinancialForecast..2.4.3RateAdjustmentMechanisms..24.4GrossReceiptsTax(GRT)Reform.2.4.5Securitization8810102.5StrandedCostRecovery..102.6Deferrals..2.6.1CostCategoriesEligibleforDeferrals.............2.6.2NewYorkPowerAuthorityTransmissionAccessCharge(NTAC)Deferral.2.6.3TaxRefunds/Payments.2.6.4AdditionalIPPContractTerminationorRestructuring.111112 2.6.5DispositionofExistingCostDeferralsNotYetReflectedinRates..122.6.5.1Generally..2.6.5.2SiteInvestigationandRemediationProgram..12122.7SFASNo.71Applicability142.8RateFilingforPeriodAfterTermofThisAgreement3.0NIAGARAMOHAWKGENERATION153.1IntroductionandSummary153.1.1GenerationOwnedbyNiagaraMohawk..3.1.2GenerationPurchasedfromIPPs15163.2GuidingPrinciplesforFossil/HydroGenerationAuction..163.2.1AgreementtoDivestFossil/HydroGeneration..3.2.2Non-NuclearGenerationSaleIncentive.......3.2.3LaborIssuesAssociatedwithDivestiture......1619203.2.3.1LaborContractIssues.3.2.3.2RetrainingandSeveranceCosts20213.24UnhedgedEnergyandtheCTCforFossil/HydroAssets213.3GuidingPrinciplesforNuclearAssets..223.3.1StudytoDetermineFutureDisposition...........3.3.2RecoveryofStrandedCosts3.3.3CostTreatmentifaNuclearPlantisSold,TransferredorDivested3.3.4CostTreatmentintheEventofaPlantRetirement.222223233.4DesignPrinciplesforTransitionContractswithGenerators.3.4.1DesignFeaturesCommontoAllGenerators.......25253.4.1.1TransitionContractOverview..3.4.1.2PrimaryDesignComponents25253.4.2NMPCFossilandHydroGenerationTransitionContract(s)26 3.4.3NuclearGenerationTransitionContracts~..,...3.4.4SettlingIndependentPowerProducers(SIPPs)..28293.5OtherIndependentPowerProducers(IPPs)304.0ELECTRICPRICES324.1OverviewofBundledandUnbundledPrices324.1.1BundledPrices324.1.1.1ResidentialandCommercialClassPriceLevels.........4.1.1.2IndustrialandLargeCommercialPriceLevels....33344.1.2MethodologyforArrivingatBundledPrices..354.1.2.1Calculationof"Base"1997RatesBeforeDecreases....4.1.2.2ApplicationofPercentageDecreasesforSC1,2,834.1.2.3CalculationofSC-3ARates............3536374.1.3RelationshiptoDairyleaPilot..4.1.4PlannedReductionsAssociatedwithGrossReceiptsTaxReform..4.1.5PotentialSecuritizationSavings3738384.2CTCandMarketPriceHedging384.2.1Overview...4.2.2GeneralCalculationandApplication.........4.2.3CommodityAdjustmentCharge~4.2.4SignificanceofHedgedandUnhedgedEnergy.4.2.5CTCOptionsandMarketPriceForecast38383939404.2.5.1ForS.C.No.3AandS.C.No.4(>2IVIW)Customers..4.2.5.2ForS.C.Nos.1,2,83Customers.....40424.2.6AdjustmentstotheCTCinYearsFourandFive4.2.7AlcanandSithe/Independence42434.3SurchargeandReconciliationMechanisms43 4.3.14.3.24.3.34.3.44.3.54.3.6SurchargeMechanismsThatWillBeAbolished.GrossReceiptsTaxSurcharge..NYPAHydropowerBenefitReconciliation......SystemBenefitsChargeDeferrals.RecoveryofGenerationSaleIncentive4344444445454.4UnbundledServicesandPrices...474.4.14.4.24.4.34.4.4UnbundledEnergyCommodityChargeUnbundledTransmissionChargesUnbundledDistributionCharges..PriceCapPlanforTransmissionandDistributionServices474848494.4.4.1T8DRateIncreases4.4.4.2CTCOffsetstoIncreasedT&DPrices4.4.4.3PriceCapforYears4and5..4949494.4.54.4.64.4.7AvailabilityofUnbundledPricesforInformationalPui'posesRelationshiptoGenerationSeparation.........CustomerServiceBackoutCredit..5050504.5ResidentialPricingDesigns504.5.1ServiceClassificationNo.1-StandardResidentialRate.504.5.1.1FlatRateStructure...4.5.1.2Phased-inRebalancingofCustomerandEnergyCharge.4.5.1.3Phased-inDiscountfromInitialPriceLevels5050514.5.24.5.34.5.4ServiceClassificationNos.1Band1C-ResidentialTime-of-UseRates.ServiceClassificationNo.1H-OptionalResidentialRate~.CTC5152524.6CommercialPricingDesigns524.6.1ServiceClassificationNos.2ND-SmallGeneralServiceRates52 4.6.1.1FlatRate.4.6.1.2Phased-inRebalancingofCustomer-andEnergyCharges.....4.6.1.3Phased-inDiscountfromInitialPriceLevels52524.6.2ServiceClassificationNo.2D-SmallGeneralServiceRates534.6.2.1Phased-inRebalancingofCustomerandEnergyCharges4.6.2.2Phased-inDiscountfromInitialPriceLevels53534.6.3CTC..544.7LargeGeneralService(S.C.Nos.3,3A,4and5)PricingDesigns544.7.1S.C.No.3(LargeGeneralService<2MW)andSmallerS.C.No.4Customers(<2MW)~.........4.7.1.1RateDesign~..4.7.1.2InitialPriceLevels4.7.1.3CTC545454554.7.2S.C.No.3A(LargeGeneralService,MandatoryTime-of-Use,HighDemand)andLargeS.C.No.4Customers(>2MW)4.7.2.1RateDesign...4.7.2.2InitialPriceLevels4.7.2.3RebalancingofDemandCharges4.7.2.4CTC55555556564.7.3S.C.No.5(Combination258,60CyclePower)....4.7.4ProjectedIndustrialPrices56564.8CustomerswithS.C.No.11ContractsandEconomicDevelopmentPrograms4.9OptionalTariffsfornon-ResidentialCustomers......57584.10CustomersSellingPowertoNiagaraMohawkUnderS.C.No.6584.11ExitFeeforCustomerswhoBypasstheCompany'sDeliveryServiceandCustomersTakingServiceUnderS.C.No.7(Sale, Backup,MaintenanceandSupplementalEnergyandCapacitytoCustomerswithOn-SiteGenerationFacilities)...........4.11.1Rationale...4.11.2Applicability4.11.3ExitFee....4.11.4S.C.No.7...59595960624.11.4.1ExistingCustomers....4.11.4.2NewSubscribersandExistingS.C.No.7CustomersFollowingDivestitureoftheCompany'sFossilandHydroAssets.....4.12EconomicDevelopmentZoneRider(EDZR)4.13PricingDesignsforServiceClassificationsUnderPSCNo.214-Electricity....4.14ApplicationofUnbundledPricestoNYPAAllocations4.15AnnualTariffFilings...4.16RateFlexibility.4.16.1General..4.16.2OptionalRatesandServices.4.17MiscellaneousTariffAmendments626263646467676768684.17.1AggregationofDemandandCustomerCharges4.17.2LowVoltageBypass...5.0CUSTOMERSERVICEBACKOUTCREDIT6868695.1GrossRevenueExposure5.2DesignPrinciples5.3RelationshiptoaGenericProceeding6.0CUSTOMERSERVICEINCENTIVE696970716.1CustomerServicePerformance.6.1.1PSCComplaintRate71 6.26.1.2CorporateResidentialTransactionSatisfactionIndex6.1.3LowIncomeAssistanceProgram...~StatementofIntent7172726.36.4ServiceReliabilityIncentive6.3.1SystemInterruptionFrequency(SIF).6.3.2CustomerInterruptionDuration(CID)6.3.3PowerQuality~AccountingMechanism72727373737.0SYSTEMBENEFITSCHARGEPROGRAMS747.17.2SystemBenefitsCharge7.1.1ProgramsandFundingLevels7.1.2State-WideThirdPartyAdministrator.7.1.3LowIncomeCustomerAssistanceProgram(LICAP)...Miscellaneous74747575758.0RETAILACCESS818.1ConditionsNecessaryForRetailAccess8.1.1ProperMetering....8.1.2BillingandSettlementProceduresConsistentwithMarket8181818.2RetailAccessTimetable828.38.2.1Farm8FoodProcessorPilot.8.2.2Group18.2.3Group28.2.4Group38.2.5Group48.2.6Group58.2.7CustomersWithSpecialContracts...8.2.8MonitoringProgressThroughTime....8.2.9Contingencies..........RetailAccessSettlementMethod..~.82838383848484848585 8.3.1ForecastingandSchedulingRequirements8.3.2MeteringRequirements..8.3.3ServicesNotCoveredbytheSettlementSystem..8.3.4NondiscriminatoryTreatmentofCustomers......8.3.5AuditingoftheSettlementFunction..87878888888.4ReciprocityAssurances.899.0CORPORATESTRUCTUREANDAFFILIATERULES929.1ProposedCorporateStructure929.2RulesGoverningAffiliateTransactions...939.2.1Organization939.2.1.1SeparationandLocation9.2.1.2BoardofDirectorsMembershipandFiduciaryDuty....9.2.1.3CostAllocation....9393949.2.2TransferofNon-GenerationAssets.9.2.3TransferofServices...9.2.4SpecialServices9.2.5HumanResources....949495969.2.5.1SeparationofEmployeesandOfficers..9.2.5.2EmployeeTransfers~...9.2.5.3EmployeeLoansinanEmergency.....9.2.5.4CompensationforTransfers..........9.2.5.5EmployeeCompensationandBenefits9.2.5.6LegalRepresentation...9697979798989.2.6MaintainingFinancialIntegrity~...9.2.7AccesstoBooks,RecordsandReports9.2.8Reporting.9899999.3StandardsofCompetitiveConduct999.3.1UseofCorporateNameandRoyalties........9.3.2SalesLeads....9.3.3CustomerInquiries...9.3.4NoAdvantageGainedbyDealingwithAffiliate.9.3.5NoRateDiscrimination99100100100100 9.49.3.6FERCJurisdiction.~9.3.7CustomerInformation..9.3.8OtherInformation..9.3.9ComplaintProcedures...Miscellaneous.1011011011011029.59.4.1ApplicabilityofSettlementStandardsofConduct.....9.4.2AnnualMeeting9.4.3TrainingandCertification9.4.4Telergy..MergersandAcquisitions9.5.1RecoveryofPremium..9.5.2RelationshiptoDivestiture....9.5.3ApplicabilityofthisAgreementPostMerger..9.54ExpeditedReview10210210210310310310310310310.0SUPPLIEROFLASTRESORTOBLIGATIONANDIMPLEMENTATION...10410.110.2ObligationtoServeImplementation10.2.1EnergyServiceProviders,MarketersandBrokers10.2.2CustomerOperationsProcedures10.2.3CreditandCollectionMatters...10410410410610810.2.3.1CustomerCreditworthiness10.2.3.2ESCoCreditworthinessEvaluation10810910.2.4TerminationDecisions~..10.2.5CostRecovery..11.0REGULATORYCHANGESANDAPPROVALS11011111211.1EliminationofCertainRegulatoryRequirements11.1.1RegulatoryReportingRequirements....11.1.2TreatmentofFutureRefunds...11211211211.2RegulatoryApprovals11.2.1CommercializationofProductsandTechnologies113 DevelopedasaResultofResearchandDevelopment11311.2.2PSLSections69and70ApprovaloftheSale,LeasingorFinancingofBuildingFacilities..........11311.2.3Conversionof25CycleCustomers...11512.0LOWINCOMECUSTOMERASSISTANCEPROGRAM(LICAP)..12.1EligibilityCriteria.12.2ProgramDescription12.3ProgramFunding13.0MISCELLANEOUS11611611611711813.1ForceMajeure13.2CommissionAuthority..13.3ProvisionsNotSeparable:EffectofCommissionModification13.4ProvisionsNotPrecedent.13.5DisputeResolution13.6WithdrawalfromLitigation13.7ConstrictionofTerms13.8SteamHostIssues14.0TERMOFTHISAGREEMENT118118118119119119119120121 SECTION1.0BACKGROUNDInFebruaryof1994,NiagaraMohawkfiledacomprehensivefive-yearrateproposal,whichopeneddocket94-E-0098.Followingextensivepublicstatementandevidentiaryhearings,theproposalwassplitintotwo"phases"forbriefinganddecisionbytheCommission.TheCommissiondecidedthefirstphase,setting1995rates,inanApril21,1995"shortorder"andinOpinion95-21.'hemulti-yearpartoftherecordwasneverpresentedtotheCommission.Rather,intheApril21Order,theCommissionurgedthepartiestoattempttonegotiateacomprehensivelong-termsolutiontoNiagaraMohawk'sescalatingcosts.TheCommissionorderedtheparties,amongotherthings,"toaddress[theCompany's1996-1999)ratelevels,NiagaraMohawk'sfinancialsecurity,theprotectionofcustomerservicequality,andregulatorychangesreflectingincreasedcompetition....[and]improvethecompany'scompetitiveposition,withoutanti-competitiveeffects,byaddressingtheexcessivegenerationcostburden."TheCommissionalsodirectedthepartiestodevelopamulti-yearplan"consistentwithpoliciesbeingdevelopedinconnectionwiththereviewofcompetitiveopportunitiesinCase94-E-0952."TheCompanyansweredtheCommission'scallforacomprehensivesolutionandmulti-yearplanbyfilingitsPowerChoiceproposalonOctober6,1995,whichfollowedinformationalsessionsamongallpartiesheldJune-September1995.PowerChoiceproposedanelectricitypricefreezeformostcustomerclassesandreductionsforothersfortheperiod1996-2000;financialconcessionsbytheCompanyandtheIPPsinproportiontotheircontributiontostrandablecostsinordertofinancethepricefreeze;creationofcompetitivewholesalegenerationmarketintheCompany'sserviceterritorythroughtheformationofanIndependentSystemOperator(ISO)anddivestitureofallofNiagaraMohawk'sgeneration,includingitsnuclearunits;andintroductionofcustomerchoiceforallclassesoverathree-yearperiod.InexchangefortheCompany'swillingnesstoundertaketheseinitiatives,NiagaraMohawkaskedthattheStatehelpiniaawwe,Cases94-E-0098and94-E-0099,etal.,OrderSettingElectric,ElectricStreetLightingandGasRates(April21,1995),andOpinionandOrderConcerningRevenueRequirementandRateDesign(December29,1995.)'IntheMtterofCetitive0rtunitieReardintricSeie,Cases94-E-0952,~eta.(alsoknownasthe"CompetitiveOpportunitiesProceeding.").¹11810hVP8.1Page1

reducingthecostsofabovemarketIPPcontracts;forassuranceofareasonableopportunitytorecoverstrandablecostsremainingafterconcessionsbyNiagaraMohawkandtheIPPs;andforpermissiontoformaholdingcompanywhoseunregulatedsubsidiarieswouldhaveafairopportunitytocompeteinthenewmarket.IntheninemonthsfollowingthefilingofPowerChoice,theCompanyengagedinextensivenegotiationsanddiscussionswithallparties.Duringthistime,proceedingswereongoingintheCompetitiveOpportunitiesProceeding.Thereafter,inOpinion96-12,0inionndOrderReardinComtitive0ortunitiesforElectricService(issuedMay20,1996),theCommissionexpressedits"visionforthefutureoftheelectricindustryinlightofcompetitiveopportunities.~.,"andaddedthatutilitiesandIPPs"...arestronglyencouragedtopursueagreementsthatreduceratestobenefitratepayers.Ifpartiesareunwilling,however,torestructurethosecontractsvoluntarily,theCommissionshallpursuepoliciestomitigatetheimpactofsuchcontractsonrates."TheCommissionfurtherdirectedtheIPPs"tomoveforwardaggressivelyinappropriateforumstoseeksolutionssuchasabuyoutofcontractsorrenegotiationsofthemsoastoalignthemmorecloselywithacompetitiveframework."Opinion96-12wentontorequireeachutilitytofilearate/restructuringplan"consistentwithourpolicyandvisionforincreasedcompetition"byOctober1,1996.NiagaraMohawkwasspecificallyexcludedfromthatfilingrequirementbecauseithadpreviouslyfileditsPowerChoiceplan.ByJune1996,ithadbecomeclearthatnofurtherprogressinNiagaraMohawk'sPowerChoicenegotiationscouldbemadeuntiltheCompanycouldputforwardadefinitiverateplan,andadefinitiverateplanwouldrequireacomprehensivesettlementwiththeIPPs.TheCompanysuspendedPowerChoicenegotiationsandfocusedonnegotiationswiththeIPPs.OnJuly9,1997,after16monthsofarduousandcontentiousnegotiationsagainstthebackdropofmanyyearsofcourtandadministrativelitigationandtheveryrealprospectofyearsoffuturelitigation,theCompanyexecutedtheMasterRestructuringAgreement,("MRA")with29IPPsrepresentedby16developerswhocollectivelyrepresentmorethan80%oftheCompany'sabove-marketIPPcosts.TheseIPPs(the"SettlingIPPs",or"SIPPs")agreedtorestructure,amendorreplacetheircurrentIPPcontractsinexchangefor:o$3.6billioninnewlyissueddebtorcash;o46millionsharesofcommonstock(slightlylessthan25%oftheCompany'sequity);and¹11810/WP6.1Page2

oaportfolioofcertainfinancialorphysicaldeliverycontracts.OnJuly23,1997,theCompanyfiledarevisedsettlementofferforPowerChoice.Twomonthsofintensivenegotiationsfollowed,withtheCompany,StaffandseveralintervenorsreachinganAgreementinPrincipleonSeptember25,1997.Morethansixtypartieshaveintervenedinthisproceeding,withalmost30partiesparticipatingactivelyinthesettlementnegotiations.UnliketheotherNewYorkelectricutilityrestructuringproceedings,theCompany,StaffandotherpartiesnegotiatedwithoutwaiveroftheCommission'sSettlementregulations.AdministrativeLawJudgeStockholmhasmediatedthenegotiationsthroughout,withJudgesLeeandBrillingjoininghimsincetheCompany'sJuly23,1997SettlementOfferfiling,TheSettlementAgreement(alsotheAgreementorSettlement)thatfollows,liketheMRAuponwhichitrests,resolvesmanycomplexandseeminglyinsolubleissuesandistheproductofmuchhardbargainingamongthemany,normally-adversarialpartiestothisproceeding.ThesignatoriestothisSettlementAgreementstronglyrecommenditsswiftapproval.011810/WPB.1Page3

SECTION2.0RATEPLAN

2.1INTRODUCTION

ANDSUMMARYPriceleveltargetsandpricedesignsaredescribedinSection4.0.ThisSectiondescribestheRatePlan,includingthedateonwhichtheAgreementbecomeseffective,thetreatmentofcostsduringthetermoftheAgreement,andthemechanismsforadjustingpricesovertime.RatePlanforYearsOnethroughThree.DuringyearsonethroughthreeoftheAgreement,priceshavebeensetatthetargetslistedinTable4-1and4-2.Duringthefirstthreeyears,pricesmayonlybeadjustedforalimitednumberofsurchargeswhichcouldraiseorlowerprices.ThesesurchargesincludetheNewYorkPowerAuthority(NYPA)HydropowerCreditdescribedinSection2.4.3,asurchargetoaccountforvariationsfromforecastedcostsintheeventanuclearpowerplantisretired(describedinSection2.5and3.3.4)andanincreaseinspendinglevelsfortheSystemBenefitsCharge(iforderedbytheCommission,asdescribedinSection2.4.3).However,duringthefirstthreeyears,certaincostsorsavingscanbedeferredforrecoveryorrefundbeginninginyearsfourandfiveoftheAgreement.TheitemsthatcanbedeferredarelimitedandaredescribedinSection2.6.RatePlanforYearsFourandFive.ForyearsfourandfiveoftheAgreement,'heCompanycanfileforarateincrease,butthatincreasemustbecappedat1%forallelementsofratesexceptthemarketpriceoftheelectriccommodityitself,andexceptasspecifiedbelow.ThedetailsofthispricecapplanaredescribedinSection2.4.1.2.Inaddition,NiagaraMohawkcanbegintorecoverthroughasurcharge,theexpensesthatitwasallowedtodeferinthefirstthreeyearsoftheAgreement.SurchargesapplicableinyearsfourandfivearethesurchargesapplicableinthefirstthreeyearsaswellasthegenerationauctionincentivesurchargewhichisdescribedinSection2.4.3.Recoveryofdeferralsandthegenerationauctionincentiveinyearsfourandfiveislimitedsuchthatthesesurchargesplusanyallowedrateincreaseunderthe1%pricecapcannotexceedtherateofinflation.ThismechanismisdescribedinmoredetailinSection2.4.3.Finally,thepricecapandtheinflationcapfordeferralrecoveryexcludetherecoveryorrefundofthedifferencebetweentheactualandforecastedcostsassociatedwithcertainapprovedIPPIndexedContracts,whichwillbegininyearfourasdescribedinSection2.4.1.2.011810/WP6.1Page4

StrandedCostRecovery.Uponfulfillingcertaincommitmentsdescribedherein,theCompanyshallhaveareasonableopportunitytorecoveritsstrandedgenerationcosts,includingcostsassociatedwithitsowngenerationaswellasthecostsassociatedwiththeMasterRestructuringAgreementbetweentheCompanyandtheSettlingIndependentPowei'roducers(SIPPs)asdescribedinSections2.3,2.5and3.0.2.2TERMANDEFFECTIVEDATEOFRATESTheCompanyproposestoimplementtherateplanforaperiodoffiveyears,commencingonthePowerChoiceImplementationDate.ThePowerChoiceImplementationDateisdependentuponreceiptofPublicServiceCommissionapprovalofthisSettlementAgreement,aswellascompletionofotherstepssubsequenttoPSCapproval,including,butnotlimitedto,obtainingvariousapprovalstoissuedebtandsellequity,SIPPssettlementoftheirthirdpartyobligationsandnegotiationbetweentheCompanyandtheSIPPsofnewcontractualarrangements.Newtariffswillnotbecomeeffectiveuntilthesestepsarecompleted.TheCompanywillfileproposedtariffstoimplementthisagreementassoonasisreasonablypossiblefollowingapprovalofthisagreement,butinnoeventlaterthan60daysfollowingapprovalofthisagreement.TheCompany'sobjectiveistoconsummatethesestepsassoonaspossible.ManystepsonthecriticalpathtoimplementationarepredicatedonreceivingwrittenPSCapproval.AnydelaysinreceivingwrittenPSCapprovalwillresultinadelayintheimplementationofnewrates.Anydelayinthecompletionofsubsequentstepswouldalsodelaytheeffectivedate.Forthepurposeofdefiningthefiveyeartermoftherateplan,thefirstrateyearbeginswiththePowerChoiceImplementationDateandeachsubsequentrateyearbeginsontheanniversarythereof.2.3MASTERRESTRUCTURINGAGREEMENT(MRA)2.3.1PrudenceofMRATheMRAandthecontractstobeexecutedpursuanttheretoarefoundtobeprudentandrecoverabletotheextentprovidedherein.ThespecificdetailsofdebtandstockissuancesrequiredtofinancetheMRAwillbesubjecttoseparatereviewandapprovalafterfiling.011810/WP6.1Page5

2.3.2Reasonable0ortunitoRecoverCostsTheCompanywillhaveareasonableopportunitytorecoverstrandedcostsassociatedwiththeMRA,includingallcostsofthecontractstobeexecutedpursuanttotheMRA(asdescribedinAppendixAandSection3.4),exceptforthereturnontheregulatoryasset,throughtheCompetitiveTransitionCharge(CTC)or,whereapplicable,exitfees.TheCommissionwillconsideranyrequestforareturnontheregulatoryassetpostyearfiveofthePowerChoiceSettlementAgreement.2.3.3RecoveofCostsAssociatedwtTerminationofRelatedGasTransortationandPeakShavinAreementsThePartiesagreethattheCompanywillrecoveringasratescertaincostsassociatedwiththeterminationofgastransportationandpeakshavingagreementsbetweentheSIPPsandNiagaraMohawk,asdescribedinAppendixB.2.3.4SIPPCostRecoveThecostsoftheSIPPcontractrestructuringandterminationresultingfromtheMRAandassociatedcontractswillbedeferredandamortizedoveraperiodnottoexceedtenyears.ToachievethepricelevelsdescribedinTables4-1and4-2,theCompanyproposesnottosetaspecificrateofreturnontheregulatoryasset,althoughitisobviousfromthefinancialforecastinAppendixCthatlittleornoreturnisforecasttobeearnedonthatassetduringthetermofthesettlementagreement.TheCompanywillbetakingthepositionwiththeInternalRevenueServicegenerallythatthecashandcommonstockportionoftheSIPPsettlementcostsarecurrentlydeductible,creatingaNetOperatingLosscarrybackthatwouldentitletheCompanytoarefundofprioryearspaidtaxes.TherefundwouldbeusedtofundaportionofthecashneededfortheSIPPsettlement,andwouldnotbeotherwisedeferredforotherratemakingpurposes.¹11610/WP8.1Page6

2.4OVERALLRATEANDREVENUELEVELS2.4.1A~Pi2.4.1.1YearsOneThroughThreeTheagreeduponpricesforthemajorserviceclassificationsforyearsonethroughthreearesetforthinTables4-1and4-2anddescribedingreaterdetailinSection4.0.ThestartingpointforestablishingthebundledretailpricesthatwillapplyforthedurationofthisagreementistheretailbaseratesthatbecameeffectiveApril27,1995adjustedtocapture1995surcharges.PricesfordistributionandtransmissionserviceswillbeincreasedduringyearsonethroughthreeasdescribedinSection4.4.4,butoffsetbyanequivalentreductionintheCTCtomeettheoverallpricegoals.2.4.1.2PriceCapForYearsFourAndFivePricesinyearsfourandfivecanbeincreasedbyanamountnottoexceed1%oftheall-inpriceexceptthecommodity(e.g.inclusiveoftransmission,distributionandforecastedCTCcharges)exceptforexclusionsnotedbelow.Unlessanincreaseissought,theCompanyisnotrequiredtofile.AnyrateincreasestotransmissionpricesapprovedbyFERCthatwouldbechargedtoretailcustomerswouldcounttowardsthepricecapincrease.ThepricecapexcludesrecoveryofdeferralsestablishedpursuanttotheSettlementAgreementandanygenerationsaleincentive,andvariationsintheMRAcontractcostsduetotheindexingprovisionsoftheIPPcontracts.TheCompanywillbeallowedtofilefordeferralsandgenerationsaleincentiverecoverypursuanttoSection2A.3,withoutafilingforthepricecap.Beginninginyearfour,theCompanywilladjusttheCTCquarterlyforchangesintheIPPIndexedContractsthroughtheCACasdescribedinSection4.2.6.TheCompanyagreestofiletheamendedorrestatedcontractswiththeCommissionforitsreviewandapprovaloftheindexingprovisions.ThecontractsshallbeapprovedasjustandreasonableiftheindexingprovisionsareconsistentwiththetermsandconditionsforamendedandrestatedcontractscontainedinExhibitAoftheMRA.Inparticular,theindexingformula,whencalculatedusingtheassumptionssetforthinExhibitA,AttachmentA-5oftheMRA,willresultinweightedaveragecontractpricesthatdonotexceedtheweighted<<>>eiome.iPage7

averagecontractpricesthatarecontainedinAttachmentA-3toExhibitAtotheMRA,withsuchweightedaveragecontractpricesbeingsubjecttoadjustmentifoneormoreoftheSIPPsdonotconsummatethecontractscontemplatedintheMRA.2.4.2RevenuesandFinanc'alForecastTheCompany'sprojectionofthefinancialimpactsoftheMRAandthissettlementagreementarepresentedinAppendixC.2.4.3RateAdustmentMechanismsTheprojectedpricesaresubjecttochangeonlyasspecifiedinthisAgreement.Thepartieshaveagreeduponseveralspecificmechanismsthatcouldchangepricesperiodically.ThesemechanismsincludeSystemsBenefitsCharge(SBC)AsdescribedinSection7.0,theSBCwillbeusedtocollectthecostsofpublicpolicyprograms,tobeimposedonalldistributioncustomersexceptasotherwiseprovidedherein.SpendingforSBC-relatedprogramswillbesetat$15millionannuallyforyearsonethroughthree.ThatlevelofspendingisincludedwithinthepricinggoalssetforthinTables4-1and4-2.Additionalspending,ifapprovedbythePSC,wouldbecollectedthroughasurchargetocustomers.NYPAResidentialHydropowerCreditInaccordancewithcontractsbetweenNYPAandtheCompany,residentialcustomersaretoreceivetheactualbenefitsofNYPAhydropower.TheproceduretoreflectactualbenefitsinresidentialpricesisdescribedinSection4.3.3.GenerationSaleincentiveSection3.2.2describestheCompany'sincentiveforthesaleoffossilandhydroassets.Tocollectthisincentive,theCompanywillincludeasurchargeinyearsfourandfive.Thesurchargewillbelimitedtoanamountequaltoinflationlessamountsauthorizedunderthepricecapsfilinganddeferralrecovery.Unamortizedamountsofincentiveremainingattheendofyear5willbeamortizedoveraperiodnottoexceed3years.011810hNP6.1Page8

AllcustomerswhopaytheCTC,or,whereapplicable,exitfees,willpaythegenerationincentivethroughasurcharge.CustomerswhodonotpaytheCTCorexitfeeswillnotbeobligedtopaythegenerationincentive.Totheextentthesalespriceoftheassetsissufficientlyinexcessofbookvaluetofundsomeoralloftheincentive,theCompanywillretainthatcashandtheincentivesurchargewillbereducedoreliminated(bookvalueincludesrelatedcosts,suchaspartsandfuelinventory,allocationofcommonfacilitycosts,etc.).Totheextentthereisanetbookgain(afterauctioncostsandincentive)onthesaleoftheassets,thenetgainwillbeusedtoreducestrandedcostsforallcustomersthatpaytheCTC.Totheextentthereareunrecoveredcostsremaining(i.e.,strandedcosts),thesecostswillbedeferredforrecoveryinyearsixoveraperioduptotheremaininglifeoftheassetssold,asprovidedherein.RecoveryofDeferralsTheCompanywillfileforrecoveryofdeferralsfromyearsonethroughthree,beginninginyearfour.Deferralswillincludethosereferredtoherein.Theamountofamortizationandrecoverywillbelimitedtoanamountequaltotherateofinflationlesstheamountallowedunderthepricecapsfilingandgenerationsaleincentiverecoveryifany.TherateofinflationwillbethelatestBlueChipindicatorforecastofGDPPIatthetimeoftheCommissiondecision.Newdeferralsrecordedinyearfourwillbefactoredintotheyearfivedeferralfiling.Anyremainingunamortizeddeferralsattheendofyearfivewillberecoveredoveraperiodnottoexceedfiveyearsbeginninginyearsix.Deferralswillbecollectedthroughappropriateratemechanisms,dependinguponthenatureofthecost,i.e.,generation-relateddeferralssuchaschangesinnuclearcostswillbecollectedthroughasurchargetoallcustomerswhopayaCTC.CustomerswhodonotpaytheCTCorexitfeewillnotbeobligedtopayforgenerationdeferrals.Distribution-relateddeferralswillbecollectedthroughadistributionsurcharge.,Whenavailable,newdeferreddebitswillbenettedagainstnewdeferredcreditsarisingduringthetermofthissettlementagreement.¹11810hhfP6.1Page9

2.4.4GrossReceitsTaxGRTReformNewYorkStateenactedlegislationin1997phasingina1%reductionoftheStategrossreceiptstaxby2000.SuchreductionintheGRT,asrealized,willbepassedthroughtocustomersasdescribedinSection4.1.4.2.4.5~SFurtherratereductionscouldbeachievediftheStateofNewYorkweretoauthorize"securitization"ofcertaincostsinawaythatreducestheborrowingcostoftheCompany.Totheextentthatitisnototherwiseprohibitedbyanylegislationauthorizingsecuritization,thebenefitsofsecuritizationshouldbeusedtofurtherreducepricestoSC1,2,and3customers.TheCompanyandStaffrecommendthattheCommissionconsiderallocatingaportionofsuchsavingsforenergyefficiencyandcleantechnology.2.5STRANDEDCOSTRECOVERYNiagaraMohawkwillbeentitledtorecoverallowablestrandedcoststhroughanon-bypassableCompetitiveTransitionCharge(CTC)or,insomecircumstances,anexitfee.ThedetailsoftheCTCandtheexitfeearecontainedinSection4.0.AsdescribedinSection3.0,NiagaraMohawkwillhaveareasonableopportunitytorecoverstrandedcostsassociatedwithitsfossilandhydrounits,whichwillbequantifiedthroughauctionanddivestiture.NiagaraMohawkwillhaveareasonableopportunitytorecoverstrandedcostsassociatedwithitsnucleargenerationduringthetermofthisagreement,asdescribedinSection3.0.RecoveryofstrandedcostsassociatedwithretirementofanuclearunitduringthetermofthisagreementissubjecttoaseparateCommissionreviewprocessdescribedinSection3.0.AsdescribedinSection2.3.2above,NiagaraMohawkwillhaveareasonableopportunitytorecoverstrandedcostsassociatedwiththeMRA,withtheexceptionofthereturnontheregulatoryassetrelatedtotheMRA.Duringthetermofthisagreement,NiagaraMohawkhaslimiteditsreturnontheregulatoryasset,resultinginalowprojectedreturnonequity,asshowninAppendixC.TheprojectedforgonereturnsrepresentNiagaraMohawk'sshareofstrandedcostresponsibilityduringthetermofthisagreement.//11810/WP6.1Page10

DEFERRALS2.6.1CostCatepriesElilbleforDeferralsSiteInvestigationandRemediation(SIR)costsareeligiblefortrue-upanddeferral.Inaddition,thefollowingchangesinforecastcostsareeligiblefordeferral:changesinlaws,regulations,rulesandaccountingthatcanbesubstantiatedasincreasingordecreasingthecostofdoingbusiness(inexcessof$500,000perchange),andnuclearcostsbeyondmanagement'scontrol(includingdecommissioning,thePriceAndersonActcoveringnuclearaccidents,fuelstorage,disposalofwaste(exclusiveofcostincreasesunrelatedtochangesinlaws,regulations,etc.),significantNRCactionsandothergovernmentagencymandatesandpolicyissues).ChangesinregulationswillincludefinancialconsequencesassociatedwithafinaldecisioninCase97-E-0251.Inaddition,somegrossrevenuelossesassociatedwiththecustomerservicebackoutcredit(SeeSection5.0)willbedeferred.AnypenaltiesaccruedundertheCustomerServiceQualityIncentive(SeeSection6.0)willbedeferredtooffsetcostdeferrals.TheCompanywillbeentitledtopetitionfordeferralandrecoveryofanyotherincrementalcostsnotspecificallyanticipatedinthefinancialforecastandnototherwiseprovidedforinthefirstsentenceofthissubparagraph,includingincrementalcostsassociatedwiththeCompany'sroleasprovideroflastresortaswellasincrementalbusinessretentionpricediscountsasdescribedinherein.2.6.2NewYorkPowerAuoriTransmissionAccessChareNTACDeferralTheCompanyshallbeentitledtodeferannuallytheactualNTACcostsuptoacappedlevelreflectingthetotalof(1)theactualamountofleveragedco-fundingandgrantsusedforelectrictechnologies,renewableprojectsandmarketingandpromotionsrelatedtoenergyefficiencyorotherprojectsqualifyingforfundingundertheSBC,and(2)theactualamountofLowIncomeCustomerAssistanceProgram(LICAP)programgeneratedarrearsforgiveness.2.6.3axRefundsPaentsTheCompanyissubjecttoongoingexaminationsbyfederalandstatetax-authorities.Noamountshavebeenprovidedforinthefinancialforecastforresolution,eitherresultinginarefundorliability,oftheseexaminations.Totheextentthatrefundsorpayments,includinginterestandpenaltiesandnetofanydeferredtaxes,individuallyexceed$500,000,theCompanywilldefersuchrefundorpaymentfordispositioninratesassetforthinSection2.4.3.¹11810hNP6.1Page11

2.6.4AdditionalIPPContractTerminationorRestructurinTheremaybeadditionalopportunitiestorestructureorterminateIPPcontractsnotincludedinthecurrentMRA.WithrespecttoanysuchopportunitiesthatarepureIPPbuyouts,theCompanywilldefertheup-frontcostsandamortizethosecostsoverafiveyearperiodfromthedateofthebuyout.Theup-frontcostswillbeaccountedforonanaccrualbasis(includinginstanceswherethebuyoutpaymentisstructuredoveranumberofyears).TheCompanywillretainthesavingsfromthebuyoutduringthefiveyearperiodofthePowerChoicesettlement.Unamortizedcostsandsavingsremainingattheendofyearfivewillberecoveredorrefundedinsubsequentrateproceedingssubjecttoprudencereview.WithrespecttorestructuringofadditionalIPPcontracts,theCompanywillsubmittotheCommissionforapprovalandratetreatmenteachproposedrestructuring,alongwithacalculationoftheanticipatedsavingsonbothanominalandNPVbasis.ThepartiesagreethattheCompanyshouldbeentitledtoashareofsavingstoprovideasameaningfulincentivetopursuerestructuring.Thesharinglevel,shallbedeterminedbytheCommissiononacasebycasebasis.2.6.5DisositionOfExistinCostDeferralsNotYetReflectedInRates2.6.5.1~GenerallDeferreddebitsandcreditsexistingasofthePowerChoiceImplementationDateshallbenettedagainsteachother,andthenetbalanceshallbeadded/subtractedto/fromanydeferralsprovidedforherein.AppendixEsetsforththeaccountsandestimatedbalancestobenetted.TheCompanywilldiscontinuetrue-upaccountingforelectricunbilledservices.RevenuesrecordedbytheCompanyineachyearofthissettlementagreementwillreflectbothbilledandunbilledrevenuesoftheperiod.2.6.5.2.SiteIvesiaoadmda'oProraTheCompanyhasconductedaSiteInvestigationandRemediationprogram(SIR)thepurposeofwhichhasbeentoefficientlyandeffectivelymanageanumberofenvironmentalclean-upactivitiesoveranextendedperiodoftime.Theprincipalactivitiesinvolveinvestigationand,wherenecessary,remediationandmonitoringofmanufacturedgasplantsitesandindustrialwastesites.TheCompanyexpectstocontinuetheseactivities¹11810/WP6.1Page12

throughthetermofthesettlementagreement.Underpreviouselectricandgasrateorders,theCompanyhasbeenpermittedtodefercostdifferencesfromamountsprovidedforinrates.Thistreatmentcontinuesundertheexistinggasratesettlementthrough1999.TheCompanywillapplydeferralaccountingasdescribedherein,tocostdifferencesfromamountsprovidedforinthefinancialforecastpresentedinAppendixCanddescribedbelow.TheamounttheCompanyproposestoincludeinrateshasbeenaffectedbytworecentevents.First,theCompanyenteredintoanamendedOrderonConsentwiththeNewYorkDepartmentofEnvironmentalConservation(NYDEC)onMay12,1997thatprovidesforanannual"costcap"ofapproximately$15milliononexpendituresbytheCompanyfor52sitescoveredbytheOrder.ThecostcapisnotanabsolutelimitontheCompany'sannualortotalspendingonthesesites,butrepresentsanunderstandingbetweentheCompanyandtheNYDECthatitisinthebestinterestsofbothpartiestoprovideforefficientmanagementoftheinvestigationandremediationprocess.However,wheretheNYDECortheCompanybelievesthatpublichealthandsafetyconcernswarrantacceleratedexpenditures,thecostcapwillbeexceeded.Also,totalannualexpendituresmaybeinfluencedbyrequirementsatsitesoverwhichtheCompanyhaslittleornocontrol(forexample,wheretheCompanyisa"potentiallyresponsibleparty").Theamendedorderalsodoesnotestablishthemethodofremediation,whichmayvarysite-by-site,creatinguncertaintyastototalrequiredexpenditures.TheCompanyhasalsobeenactivelypursuinginsurancerecoveriesforenvironmentalremediationactivities.ThroughDecember31,1996,theCompanyhasreachedsettlementswithanumberofinsurancecarriers,resultinginpaymentstotheCompanyof$49.8millionbeforecostsincurredinpursuingrecoveries,whichhaveamountedto$13.4million.Thenetproceedshavebeendeferredfordispositioninthissettlementagreement.Inestablishinganannualallowancefortrue-up,theCompanyproposestoamortizetheproceeds,netofcosts,overatenyearperiod.Theresultingannualelectricnetallowanceisapproximately$10.2million.TheCompanyiscontinuingtopursueadditionalrecoveries,andtotheextentthatadditionalproceedsarereceivedbytheCompanyduringthesettlementperiod,thesewillbedeferred,netofcostsandwillbeusedtooffsetSIRcostsexpectedtobeincurredintheyearsbeyondthissettlementperiod.¹11810/WP6.1Page13

TheCompanywillapplytheaccountingandratemakingforcertainnetgainsofproperty,thesaleoftimber,etc.onsuchlandandanyrelatedland/miningleaserevenuesassetforthinSectionIII,A.oftheGasStipulationandAgreementinCase95-G-1095and95-G-0091.TheCompanywillbepermittedtoconformprospectivelytheaccountingfortheelectricallocableportionoftheproceedstotheoutcomeofanygasproceedingduringthefirstthreeyearsofthissettlement,orproposedifferenttreatmentaspartofapricecapsfilingforyearfour.2.7SFASNO.71APPLICABILITYTheCompanysupportsthissettlementagreementinpartbecausetheagreementisconsistentwiththeprinciplesofSFASNo.71.Thepartiesagreethatduringthetermsofthissettlement,theCompanyshouldberegulatedinawaythatwouldallowittocontinuetheprinciplesofSFASNo.71toitsregulatedoperations(RegCo).The,partiesfurtheragreethatanymaterialchangeintheallocationofriskassetforthinthissettlementagreement,whethermadeduringtheapprovalprocessorduringthetermofthesettlementagreement,couldjeopardizetheapplicationofSFASNo.71,aswellasthefinancialstabilizationandrecoveryoftheCompany.ItistheintentoftheParties,andtheCommissionbyvirtueofitsapprovalofthisAgreement,thattheAgreementmeetstheaccountingrequirementsofStatementofFinancialAccountingStandardsNo.71,throughoutitsterm.2.8RATEFILINGFORPERIODAFTERTERMOFTHISAGREEMENTTheCompanywillbepermittedtofilearatecaseforratestobeeffectivebeginningimmediatelyaftertheconclusionofthefifthyearofthissettlementagreement.IftheCompanyelectsnottofilearatecase,unbundledprices(exclusiveofsurchargesdescribedherein)wouldremainunchanged.¹11810/WP6,1Page14

SECTION3.0NIAGARAMOHAWKGENERATION3.1iNTRODUCTiONANDSUMMARY3.1.1GenerationOwnedbNiaaraMohawkNiagaraMohawkhasagreedtodivestallfossilandhydrogenerationasdescribedbelow.Untilsuchdivestitureiscompleted,thecompanywillfunctionallyseparateitsfossilandhydrogenerationfromitsregulatedactivities.Divestiturewillbeaccomplishedeitherbyanauctionprocessor,ifacceptablebidsarenotreceived,bycreatingalegallyseparategenerationcompanyasdescribedherein.NucleargenerationwillremainpartofRegCo,butwillstayinabusinessunitfunctionallyseparatefromRegCo'stransmissionanddistributionandgasbusinesses.ItwillbesubjecttofurtherstudyanddispositionasdescribedinSection3.3infra.TheratetreatmentofgenerationownedbyNiagaraMohawkisgovernedbytheprovisionsoftheRatePlandescribedherein.However,forinternalaccountingpurposes,andtodefinethegenerationcomponentofunbundledprices,RegCowillenterintocertaintransition"contracts"withitsfossilandhydrobusinessesanditsnuclearbusinessunitgoverningquantitiesandpricesforfossil/hydroandnucleargeneration,respectively.These"contracts"aredesignedtoachievetheratestowhichNiagaraMohawkiscommittedunderthisagreement.Thefossil/hydrocontractshaveaninitialtermof3years,andtheCompanyhasagreedtoexploreanadditional2yearsthroughtheauctiondesign.Thenuclear"contracts"have5yearterms,consistentwiththetermofthissettlement.Whenthefossilandhydrounitsaresoldorspuntoseparateentities,theRegCocontractswillbesoldwiththem.Inthatevent,thecontractsmaygovernthepurchaseofenergybyRegCofromtheseindependentlyownedgeneratorsfortheremainderofthe3,or,ifextended,5-yeartermofthecontracts'.Afterthatpointintime,thepartiesanticipatethatthenewownersoftheformerNMPCgeneratingunitswillselltheiroutputatmarket'TheContractsareintendedtobestructuredasfinancialinstrumentsallowingcustomerstopurchaseenergyfromthemarketimmediately.Page15

prices,eitherintoaspotmarketorunderbilateralcontracts.TheywillhavenoremainingcontractwithorobligationtoRegCoforthesaleofenergyorcapacity.NiagaraMohawkwilldefinethetermsandconditionsofatwoyearextensioninthefossil/hydrocontractaspartoftheauctionplan,whichissubjecttoseparatePSCapproval.IfthePSCdeterminesthatthe2-yearextensionisappropriate,thenthenetauctionproceedsandCTCwillreflecttheincremental/decrementalvalueofthecontractextension.Asthegenerationtransitioncontractsexpireorareterminated,andifanuclearplantisretired,theenergysubjecttothemwillbecomeunhedged.Themarketpricesofunhedgedenergywillbeflowedthroughdirectlytocustomers,unlessotherwisespecifiedherein(SeeSection4.0).3.1.2Genera'oPurchasedfromIPPsContractswithIPPswhoarenotpartiestotheMRAshallcontinueinforceandeffect,subjecttotheirownterms,exceptthatNiagaraMohawkshallcontinuetopursueopportunitiestorestructure,auction,orbuyouttheIPPcontracts.RatetreatmentforsuchadditionalrestructuringorbuyoutsisdiscussedinSection2.6.4herein.PurchasesofgenerationfromIPPswhoarepartiestotheMRAwillbegovernedbytheMRAandcontractsexecutedpursuanttotheMRA.SomeIPPswhoaresignatoriestotheMRAshallhavetheircontractsterminatedasaconsequence.TheseIPPswillhavediscretiontoselltheiroutputtoothers,toselltoNiagaraMohawkatmarketprices,ortoclosetheiroperations,amongotheroptions.OtherIPPswhoaresignatoriestotheMRAshallhavetheircontractsrestatedoramendedasdescribedtherein.3.2GUIDINGPRINCIPLESFORFOSSIL/HYDROGENERATIONAUCTION3.2.1AreemoDivestFoss'I/HdoGeneration~DivstiturNiagaraMohawkwillcommittoholdabroad-basedauctionofitsnon-nucleargenerationassets(theauction)andatitsdiscretionmayincludesomeIPPPowerPurchaseAgreements(inclusionoftheIPPcontractswillPage16

beconsistentwithcontractualrightsorconsentoftheIPPs).Anyhydroprojectsthatarepartofanuclearlicenseandanywindandsolargenerationprojectsdescribedelsewhereinthisagreementwillbeexcludedfromtheauctionanddivestiture.Aftertheauctionand/orspinofftransactionsdescribedhereinarecomplete,NiagaraMohawkanditssubsidiariesagreenottoownanygenerationassetsinNewYorkState,withtheexceptionofanysale/leasebacktransactionsandreorganizationsnecessarytoclosetheMRAandexceptasotherwiseprovidedforinthisagreement.InthecaseofareorganizationtransactionpursuanttotheMRA,NMPCwilleitherleaseanyprojectfacilitiesacquiredinthereorganizationtoathirdpartyoperator,orenterintoamanagementandservicescontractwithsuchathirdpartyapprovedbythePSC,oroperatethefacilityitselfbutonlyforthepurposeofgeneratingasource,orabackupsource,ofsupplyforitsownuseandnotforre-sale.Inaddition,neitherHoldConorRegCowillownanygenerationassetsinsideoroutsideofNewYork,exceptasotherwiseprovidedforinthisagreement.However,anyotheraffiliateofHoldCoisnotrestrictedinanywaybythisagreementfromowninggenerationassetsoutsideNewYork.BecausethePSCwillreviewmergerapplicationsunderthePublicServiceLaw,nothinginthisagreementwilllimittheCompany'sabilitytomergewithorbeacquiredbyanotherentityowninggeneration.Moreover,nothinginthisagreementwilllimittheCompany'sabilitytoformpartnershipsoraffiliationswithentitieswhoowngenerationinNewYorkState,providedthatthosepartnershipsoraffiliationsdonotinvolveownershipofgenerationassets.AnunregulatedaffiliateofHoldComayenterintoarmslengthcontractswithanentityowninggenerationinNewYorkState.Thesale/leasebacktransactions,reorganizations,partnershipsandaffiliationsandarms-lengthcontractsreferredtoaboveareallsubjecttotherestrictionthattheymustnotcreateaconflictbetweentheinterestsofRegCoratepayersandCompanystockholdersbytyingtheprofitabilityoftheCompanytotheprofitabilityofanotherentity'sgenerationbusiness.Anymaterialviolation'oftheaboverestrictionsmayresultin,interalia,anaffiliatebeingprohibitedfromfurthertransactingbusinesswithenduserswithintheRegCoserviceterritoryordivestitureoftheaffiliate,provided,however,thattheCompanyshallbegiventheopportunitytoexplainwhyaviolationhasnotoccurredandtoremedyanysuchallegedviolationinPage17

accordancewiththeproceduresoutlinedinSection9.3.9regardingCorporateStructureandAffiliateTransactions.~uctionNiagaraMohawkcommitstofileadetailedauctionplanwithin30daysofthePSCOrderapprovingthePowerChoiceSettlementAgreement.ThedetailedauctionplanwillundergoCommissionreview,withanopportunityforcommentbyotherparties,andapproval.Winningbiddersintheauctionwillbeselectedwithin11monthsofplanapproval.NiagaraMohawkwilluseitsbesteffortstotransfertitlewithin9monthsoftheselectionofwinningbidders,contingentonNiagaraMohawkandthebuyer(s)receivingallnecessaryregulatoryapprovalstoeffectuatethetransaction(s)~Theauctionprocesswillincludeascreeningstagetoestablishminimumstandardsforqualifiedbidders,andoneormorebiddingstages.Theauctionfeaturesmayincludethesaleoftheportfolioinitsentirety,inanycombination,orasindividualplantsorsites.(Likelysub-groupingsare:(a)coalplants,(b)Albany,(c)Oswego,(d)1-3hydroplantcombinations,(e)othergeneration,and(f)anyIPPcontractsincludedintheauction)~Aftercompletionofthetransactionsresultingfromtheauctionprocessasdescribedherein,nofossilorhydroassetsincludedintheauctionandreceivingpositivebidswillremainpartofNiagaraMohawk.NiagaraMohawkretainstherighttorejectthefollowingtypesofbidsforanyassetorgroupofassets:(1)Anbidstatarelessthnzero:.Therejectedbidwillcapthelevelofmitigatedstrandedcostsforassetswhosebidswererejected.TheassetswhosebidsarerejectedwillremainpartofRegCo.(2)Bisthtertrthanzerothataredeemedtoolow:NiagaraMohawkreservestherighttorejectanyandallbidsthatitdeemstoolow.Ifitrejectsallbidsforanassetorgroupofassets,thenitcommitstoformasubsidiaryconsistingoftheassetswithnon-negativebids,andspintheassetstoalegallyseparategeneratingcompany.Thegreateroftherejectedbid(s)ortheaveragetradingvalueofthestockofthespunentityforthe30tradingdaysafterthestockispubliclytraded,willdeterminethemarketvalueoftheassetsforthepurposeofmitigatingstrandedcosts.NothinginthisagreementprecludestheCommissionfromorderinganalternativePage18

totherejectedbidapproachinitsreviewandapprovaloftheCompany'sauctionplan.TotheextentthattheIPPcontractsaregroupedwithothergenerationassets,NiagaraMohawkwaivesitsrighttorejectthebidsforthatgroup.3.2.2Non-NucleaGeneraonSaleIncentiveNiagaraMohawkwillreceiveanincentivebasedonthenetproceeds(grosssalespricelessauctioncosts(externalthirdpartycosts))oftheauctionasanincentivetoobtainthemaximumvalueinthesaleofitsgenerationassets,andtooffsetinpartthestrandedcostsbeingabsorbedbyitsshareholdersaspartofthissettlement.TheincentivewillberecoveredasdescribedinSection2.4.3.NiagaraMohawkwillhavetherighttousetheincentiveinanymanneritseesfitsolongasitisconsistentwiththisagreement.Theincentivewillnotapplytobidsrejectedasdescribedabove.Theincentivewillbecalculatedasfollows:(a)Forallfossil/hydroassetssold,exceptfortheOswegoSteamStation,theCompanywillreceiveanincentiveequaltothefollowingpercentageofnetauctionproceeds:0%oftheproceedsbetween0and$250million12%oftheproceedsbetween$250and$500million18%oftheproceedsbetween$500and$750million10%oftheproceedsabove$750million(b)FortheOswegoSteamStation:TheCompanywillreceiveanincentiveequaltothefollowingpercentageofnetauctionproceeds:o0%oftheproceedsbetween$0and$100milliono5%oftheproceedsabove$100millionPage19

3.2.3LaborIssuesAssociatedwihDivestiture3.2.3.1LaborContractIssuesThepartiesrecognizethattheCompanyandtheIBEWLocal97,AFL-CIO,areboundbyacollectivebargainingagreementeffectiveMarch1,1996throughMay31,2001,whichincludesaprovisionatArticleIIentitled"Territory."ArticleIIprovidesthat:1.TheterritorycoveredbythisagreementshallincludeallthefranchiseterritoryoftheCompany.2.ThisagreementshallbindthesuccessorsoftheCompanybymergerorconsolidationastotheprovisionsandterritorycoveredbythisagreement.Fortheuroseoreservinandrtectinworkoortunitiesadobsecuritfrthebaraininunititisareedtht:Anabsolutereconditiontothesaleleasetransferortakeoverbsaletransferleaseassinmentcorortereoraniationreeivershioranktccinofhentirortionoranrttherefisthatnurhasertranseelessassineeetchallareandecomearttoandboundballthetermsnditinndobl'tiofthiBQMUDnicreseradditionalworkofcotinirermaeatuordtorincn'unctionwitthCma'sexistinfcilitiesorfrmatransferofworkcsiondbthloinorrtiallosinofanratinreviosloveedbthisarmtsabePage20

deemedbaraininunitworkandshallbefullcoveredbthetermscnditionsandobliationsofthisareement.(a)NothinginthisSettlementAgreementaddsto,subtractsfrom,orotherwisemodifiesanyrights,duties,orobligationssetforthinthatcollectivebargainingagreement,exceptasotherwiseindicatedbelow.(b)TheCompanyagreestoprovideacopyofthecollectivebargainingagreementtoanypartythatindicatesaninteresttobidinanyauctionoftheCompany'sgenerationassets.3.2.3.2RetrainingandSeveranceCostsTheauctionofgenerationassetscouldhaveanimpactonCompanyemployees.Toaddressthisprospect,upto$10millionofincrementalretrainingcostsandseverancepayment,outplacement,voluntaryearlyretirementprogramandrelatedcosts,ifany,incurredin1999-2002willbeprovidedforanddeferredbytheCompanyforlaterrecovery.Theseactivitiesarelimitedtodirectconsequencesofthedispositionoffossil/hydrogenerationassets,includingthebumpingprocessassetforthinthecollectivebargainingagreement.Althoughthedeferralisnotdefinedinreferencetospecificlevelsofmanagementorrepresentedemployees,itistheunderstandingofthepartiesthatapproximately75%oftheexistingemployeesinfossil/hydrogenerationarecoveredbythecollectivebargainingagreement.Theactualcostsincurred,uptothe$10millioncap,willbepaidforthroughareductioninthenetproceedsoftheauctionthatwilldeterminestrandedcoststoberecovered.3.2.4UnhededEerandheCTCforFoss'IHdroAssetsThenetsalesproceedslesstheincentivewillbeusedtoretirethecapitalstructure.Consummationofthesalepursuanttoanapprovedauctionwillestablishthelevelofstrandedcostrecoveryfortheassetssold.NiagaraMohawkwillbeentitledtoareasonableopportunitytocollect,intheCTC,orwhereapplicable,exitfees,allremainingstrandedcostsfromthenon-nuclearassetssoldintheauction.Page21

Whenthefossil/hydroassetsaresoldorspun,andwhenRegCo'scontractwiththefossil/hydroassetsexpires,thequantityofenergythatwaspreviouslypurchasedfromthoseassetswillbecomeunhedged.ThecontributiontotheCTCassociatedwiththefossil/hydroassetswillbecomeafixedamountreflectingthedifferencebetweenthebookcostoftheassetsandthemarketproceedsreceivedforthem(asadjusted,whenapplicable,forthegenerationauctionincentiveandforretrainingandseverancecosts).Theriskassociatedwiththemarketpriceoftheunhedgedenergywillbeshiftedtocustomersexceptasotherwiseprovidedherein.3.3GUIDINGPRINCIPLESFORNUCLEARASSETS3.3.1SudtoDetermineFuureDisositionThenuclearassetsheldbyNiagaraMohawkwillremainpartofRegCoasaseparatebusinessunituntiltheyareeithertransferredordivested.NiagaraMohawkwillcontinuetopursueStatewidesolutionsforitsnuclearassetsthroughdiscussionsinformationofNYNOCandinanygenericproceedingsestablishedbytheCommission.Statewidesolutionsfornuclearplantswillbeexploredbeforeotherpotentialsolutions.TheproposedsolutionsforNiagaraMohawk'snuclearplantsarecontingentonthefollowing:treatmentofthenuclearplantsmeetsallrequirementsoftheNRC,andthereisconsistentregulatorytreatmentforsaleandcostrecoveryforalltheco-tenantsofNMP2.AbsentaStatewidesolution,NiagaraMohawkcommitstofileadetailedplan,analyzingtheproposedsolutionsforitsnuclearassets,within24monthsofthisSettlementAgreement.Theplanwillconsiderthefeasibilityofauction,transfer,and/ordivestitureofNiagaraMohawk'snuclearassets.ThedetailedplanwillundergoanappropriatelevelofCommissionreviewandapprovaltobeconcludedonanexpeditedbasis.3.3.2ecoveofStrandedCostsSubjecttoprice-capconsiderationsdiscussedherein,nuclearwillremainsubjecttocost-basedregulationincludingarateofreturnforthefiveyearPage22

termofthisagreementoruntilthenuclearplantsaredivestedoranotherstatewidesolutionisdeveloped.RegCowillbeallowedannualdeferralsduringthetermofthissettlementforchangesincostsforcategorieswhicharebeyondmanagement'scontrolasdescribedinSection2.6.1.Customerswillnotbeallowedtonegotiateonetimebuyoutsforallnuclearcosts.Subjecttootherprovisionsinthissettlement,sunkcapitalcosts,fuelinventory,andmaterialandsuppliesinventory,andalldecommissioningandshutdowncosts(including08Mrampdown,propertytaxesandinsurance,andfuelandlowlevelwastestorageanddisposal)areconsideredtobeunavoidable.Totheextentthatsuchcostlevelsaredeemedprudent,theywillberecoveredthroughanonby-passablecompetitivetransitioncharge.Accordingly,NiagaraMohawkwillbeentitledtoareasonableopportunitytorecoverallnuclearsunkanddecommissioningcostsallocabletothefive-yearperiodofthesettlementagreement(asdescribedinSections3.3.3,3.3.4and3.4.3)throughtheCTCor,whereapplicable,exitfees,duringthefive-yeartermofthisagreement.Iftheassetsaredivestedwithinthetermofthisagreement,NiagaraMohawkwillbeallowedtorecoverthefulldecommissioningcostsandthereturnofandonthenuclearassetslessthemarketvaluereceivedindivestiturethroughtheCTCor,whereapplicable,exitfees.3.3.3CostTreantifaNucearPlantisSoldTransferedorDivestedAspartofitsplananalyzingthefeasibilityofauction,transferordivestitureofitsnuclearplants(seeSec.3.3.1),theCompanywillproposetreatmentforrecoveryofanyremainingstrandedcostsconsistentwiththeintentthat(a)unhedgedcommodityriskbeshiftedtocustomers,and(b)thattheCTCreflectrevisednuclearcostsfortheCompany(includingrecoveryofsunkcostsnetofsaleproceeds)andanyremainingcostobligationsthatstaywiththecompanysuchasdecommissioningcosts.3.3.4CostTreatmentintheEventofaPlantRetiremenIfNiagaraMohawkdecidestoretireorabandonaplantbeforeasaleorauction,thenitagreestofileaneconomicstudywiththeCommissionthatjustifiesthedecision.TheCommissionwillreviewthestudyonanPage23

expeditedbasis,anddeterminetheprudenceoftheretirementdecisionbeforetheplantisretiredorabandoned.IftheCompanyretiresanuclearplant,thefollowingwillapply:~UntiltheCompanyannouncesitsintenttoretireaplant,itwillberesponsibleforreplacementpowercostsasoutlinedinSec.3.4.3.~OnthedatethattheCompanyannouncesthatitplanstoretiretheplant,iftheplantisnotthenoperating,theCompanywillbeginpassingthroughtocustomers(throughtheCommodityAdjustmentCharge)thedifferencebetweenthespotmarketpriceofenergyandthenuclearplant'savoidedfuelcosts.Suchpassthroughwillbeintheformoftemporaryrates,subjecttorefund,asdescribedbelow.Onthatsamedate,thedifferencebetweenthelevelofnuclear08Manddecommissioningcostsembeddedinratesandtheactuallevelof08Manddecommissioningcostsincurredwillbedeferredonamonthlybasisforlaterrecovery.Inanymonthinwhichsuchdeferralshowsanetcreditandthespotmarketpriceexceedstheplant'savoidedcosts,thecreditwillbeusedtooffsetthepassthrough.IntheeventtheplantisoperatingwhentheCompanyannouncesitsplanstoretiretheplant,thepassthroughdescribedabovewillcommenceonthedatetheplantispermanentlyshutdown.~TheCompanywillprepareandfilewiththeCommissionastudyassessingtheeconomicsofcontinuedoperationversusretirement,andexplainingwhyitbelievesaretirementisprudentandintheratepayers'nterests.Thestudywillincludeaproposaltoaccountfor,deferandrecoverestimatedremainingunfundeddecommissioningcosts.Thecostspassedthroughtocustomersabovewillbesubjecttorefundoradjustment,pendingtheCommission'sfindingthattheretirementwasprudentandthatthecostimpactsarejustified.~UponPSCapprovaloftheretirementdecision,theCTC(competitivetransitioncharge)forthenuclearplantwillberecalculatedconsistentwiththeintent(a)thatunhedgedcommodityriskbeshiftedtocertaincustomers,and(b)thattheCTCreflectrevisednuclearcosts(sunkcostsanddecommissioningcosts(includingrampdownandshutdowncosts),andreducedoperationandmaintenancecosts(includingfuelcostsavings).)ThePSCapprovalwillalsoaddresstheamortization(inexcessof$500,000perchange)scheduleofanydeferralbalanceascreatedinSection2.6.1.Page24

Intheeventofanuclearplantretirement,replacementpowercosts(RPC)(definedhereinasthedifferencebetweenthecostofcommoditypurchasedatmarketpricesandthecostofnuclearfuel),offsetbyanyoperationsandmaintenancecostreductions,shouldbeflowedthroughtoallcustomersthatpayCTCs.ItistheintentofthepartiesthatcostdeviationsresultingsolelyfromvariationsbetweenactualandforecastmarketpricesbeflowedthroughonlytocustomerswithfloatingCTCs.TheRPCsforcustomerswithfixedCTC'swillbedeterminedbasedonforecastedratherthanactualmarketprices.TheforecastmarketpricesusedforthispurposewillbebasedontheoptionchosenbythecustomerspursuanttoSection4.2.ForecastRPCs,offsetby08Msavingsinyears1through3,forSC3AcustomerswillbedeferredforrecoveryfromSC3Acustomersinyear4andbeyond,subjecttothepricecapssetforthherein.3.4TRANSITIONCONTRACTSWITHGENERATORS3.4.1DesinFeaturesCommontoAlGenerators3.4.1.1TransitionContractOverviewThetransitioncontractsutilizefinancialcontractstructures(financialswaps-Contracts-For-Differences(CFDs)andfinancialcalloptions-swaptions)toallowthecollectionofstrandablecostsforafixedtimeperiod,whilerequiringgeneratorstoparticipateinthemarket.Thefossil/hydroandnuclearcontractsoperateonlyasinternalaccountingdeviceswithinNiagaraMohawkuntil,suchassetsaredivested.Detailsconcerningfinancialcontracts,includingageneraldescriptionoftheprimarydesigncomponentsandthegeneralstructureofthefinancialcontracts,areprovidedinAppendixFandsubsequentsectionsofthisdocument.3.4.1.2PrimaryDesignComponentsFinancialcontractshavethreeprimarydesigncomponents:contractprice,contractquantity,andcontractterm.Page25

~Thecontractpricesweredevelopedusingforecastedcosts.Contractswillhaveatwopartpricingdesignthatincludesafixedcostchargeandavolumetricprice.Fortheswaptions,thefixedcostchargewillbecomethereservationfeeinthecontract.~ThecontractquantitieshavebeendevelopedprimarilythroughtheuseofforecastedgeneratoroutputtoserveexistingNiagaraMohawkretailloadinPromod.Generatorloadsaremeteredatthegeneratorbusbar.~Thetermforthefinancialcontractshavebeenestablishedbasedonthecontractprice,contractquantity,andtotalstrandablecoststobecollected.FinancialcontractsthathavebeennegotiatedbetweenRegCoandgeneratorswillbeginonthedatethattheexistingPowerPurchaseAgreementsofSettlingIPPsareterminated.ThegeneralstructureoffinancialswapsandswaptionsisdescribedinAppendixF.3.4.2NMPCFossiladdroGenerationTransitionContractsTherewillbeseparatefinancialswaptioncontractsforeachNiagaraMohawkfossilunit.ThecontractsareestablishedbasedontheforecastedrevenueforfossilandhydrogenerationthatfitwithinNiagaraMohawk'sretailpricecommitments.Theforecastofenergyoutputtoserveretailloadservesasthebasisforthecontractquantityofthetransitioncontracts.Tables3-1aand3-1bcontaintheaggregateannualcontractquantitiesandcontractpricesandrevenuesforfossilandhydro.Thecontractquantityforhydrogenerationwillbeadjustedannuallytoreflectvariationsinactualwaterflow.Theexpectedoutputless650GWH(i.e.,2299GWH)hasavariablepriceofzero.Theactualoutputless2299GWHispricedatthevariablepricedescribedinTable3-1b.Theforecastofwholesalesalesmarginshasbeenimputedasacreditagainstthegenerationfixedpaymentinthetransitioncontractforeachfossilunit.Three-yeartransitioncontractsweredevelopedforNiagaraMohawkfossilandhydroassets,whichwillbeginonthePowerChoiceimplementationdate.NiagaraMohawkwillevaluatethecost/benefitofextendingthetransitioncontractsfortwoadditionalyearsintheauctionprocess.Page26

Thequantityavailableundertheswaptionwillbelimitedtothecapacityofgenerationassetssoldorspun(adjustedforavailability,maintenanceoutagesandunitminimums,responseratesandcyclinglimitations,etc.).NiagaraMohawk'sfossilandhydrogenerationandthetransmissionanddistributionfacilitiesweredesignedandconstructedasintegratedfacilitieswithinterdependentcontrolandprotectionfunctions.NiagaraMohawkwillprepareaseparationagreement,priortoimplementationofthecontracts,whichdescribespointsofdemarcationandanysharedservicesagreementsbetweenRegCoandtheentitypurchasinggeneration.Table3-1aFossilContractQuantities,ContractPrices,andRevenue19981999ContractQuantity(GWH)3,5323,562VariableContractPriceA($/MWH)$14.90$14.62AnnualFixedPayment($million)$139.6$137.8RetailRevenue'$million)$192.2$189.9TotalRevenue~($million)$291.3$282.1Willvarybyunit.Retailrevenuesarethesumof(1)contractualpaymentsbyRegCotothegeneratorsunderthecontract,and(2)revenuesreceivedbythegeneratorsforphysicalsalesintothespotmarketforthecontractquantities.Totalrevenuesareretailrevenuesplusimputedwholesalemarketrevenues.Page27

Table3-1bHydroContractQuantities,ContractPrices,andRevenue199819992000ContractQuantity(GWH)2,9492,9492,949VariableContractPrice"($/MWH)$10$10$10AnnualFixedPayment($million)$62.4$58.9$60.6RetailRevenue($million)$68.9$65.4$67.1Appliesto650GWHRetailrevenuesarethesumof(1)contractualpaymentsbyRegCotothegeneratorsunderthecontract,and(2)revenuesreceivedbythegeneratorsforphysicalsalesintothespotmarketforthecontractquantities.3.4.3NuclearGenerationTransitionContracsForthefiveyeartermofthisagreementNiagaraMohawkwillhaveatransitioncontract(financialswap)foreachofitsnuclearplantsreflectingitsforecastlevelofgoingforwardcosts.Thisforecastwillbeupdatedforyearsfourandfiveaspartoftheratefiling.NiagaraMohawkwillterminatethetransitioncontractifitretiresaunitduringthetermofthecontract,andtheenergyassociatedwiththeretiredunitwillbecomeunhedged.AllforecastcoststooperatethenuclearunitsareincludedwithintherategoalsinTables4-1and4-2.Aftertheinitialfiveyearperiod,RegCowillmakeafilingtotheCommissionforcontinuedtransitioncostrecoverytreatmentforthenuclearunits.Thecontractquantities,contractprices,andrevenuesforeachunitareshownintheTables3-2aand3-2b.Page28

Table3-2aNM1ContractQuantities,ContractPrice,andRevenue1998199920002001ContractQuantity(GWH)4,5644,0274,5774,027VariableContractPrice($/Mwh)$5.46$4.79$4.71$4.73AnnualFixedPayment($1,000)$235,084$239,240$233,994$247,175Revenue($1,000)$260,003$258,529$255,552$266,223Table3-2bNM2ContractQuantities,PriceandRevenue1998199920002001ContractQuantity(GWH)3,0793,4893,0873,489VariableContractPrice($/Mwh)$4.65$4.87$4.57$4.73AnnualFixedPayment($1,000)$231,124$240,721$239,839$239,038Revenue($1,000)$245,441$257,712$253,947$255,541Note:Yeartoyearvariationsareduetorefuelingandscheduledoutages.3.4.4SettlinIndedentPowerProducersSIPPsAdetaileddescriptionofthecontractsfortheSettlingIPPsisincludedasExhibitAoftheMasterRestructuringAgreementinAppendixA.Anoutlineofthenegotiatedscheduleofaggregatecontractquantities,weightedaveragecontractprices,andcontracttermarecontainedinTable3-3.Variationsincontractcostsduetotheindexingprovisionsofthecontractswillbepassedthroughtocustomersafteryearthree,subjecttotheprovisionsdescribedherein.TheformoftheindividualPage29

contractsremaintobenegotiatedbetweenNiagaraMohawkandtheIPPs.Thedominanttypeofcontractswillbefinancialswapsandswaptions.However,therewillbesomephysicalbilateralcontractsbetweenNiagaraMohawkandsomeoftheIPPs.Table3-3SettlingIPPContractQuantities,ContractPrice,andRevenue1998199920002001200220032004200520062007200820092010201120122013ContractQuantity(GWH)4,9934,9935,0435,0835,0897,1088,1189,1319,1399,1518,3538,353353353353353ContractPrice($/Mwh)$45.13$45.56$42.91$44.90$46.17$50.18$52.60$54.51$56.93$60.24$60.99$61.11$40.70$41.90$43.20$44.50TotalRevenue($1,000)$225,357$227,484$216,399$228,215$234,965$356,645$427,012$497,760$520,238$551,219$509,440$510,424$14,367$14,791$15,250$15,7093.5OTHERINDEPENDENTPOWERPRODUCERS(IPPs)Table3Pshowsthecurrentforecastofpaymentstothe109IPPcontractsthatarenotpartofthebuyoutgroup.ThecontractquantitiesandpricesrepresenttheforecastedamountsintheexistingPowerPurchaseAgreements(PPAs).Page30

RegCowillupdatetheleveloftransitioncostrecoveryforapproximately109IPPPPAsintheratefilingadjustingforratesinyearsfourandfiveofthisAgreementconsistentwithSection2.6.4ofthisAgreement.Theforecastcontractquantities,contractprices,andrevenuesinaggregateareshowninTable3-4.Table3QOtherlPPContractQuantities,ContractPrice,andRevenue1998199920002001ContractQuantity(GWH)3,8393,8393,8393,839TotalContractPrice($/Mwh)$64$66$68$64TotalRevenue($1,000)$246,530$255,059$261,913$246,207Page31

SECTION4.0ELECTRICPRICES4.1dOVERVIEWOFBUNDLEDANDUNBUNDLEDPRICESInaccordancewiththeschedulecontainedinSection8,overthelifeofthisagreementallNiagaraMohawkcustomerswillcometohavetheoptionofselectingtheirownenergysupplier.ServicesandpriceswillbeunbundledforallcustomerswhohavetheoptionofchoosingtheirownretailsuppliereveniftheyelecttocontinuetakingenergyservicefromNiagaraMohawk.Theunbundlingofservicesandpriceswillmakeavailabletocustomerswhoareeligibleforretailaccesscostinformationforgeneration,transmission,customerserviceanddistributionservices.AnessentialpredicateforunbundlingistheestablishmentofaCompetitiveTransitionCharge(CTC).BoththebundledandunbundledpricescalledforunderthisAgreementwillbeimplementedthroughthefilingoftariffswiththeappropriateregulatoryagencies.TheCompanywillcontinuetoworkwiththepartiesandresolveanyoutstandingissuessoastofileunbundledpricesonaminimumof30dayspriortothePowerChoiceImplementationdate.1.1.1~BddAppendixD4setsforththeproposedpricesforthemajorserviceclassificationsforthetermofthisagreementandshallbecomeeffectiveonthePowerChoiceImplementationDate.4.1.1.1ResidentialandCommercialClassPriceLevels'hecalculationscontainedinAppendixDassumeaPowerChoiceimplementationdateofJanuary1,1998.IfthePowerChoiceimplementationislaterthanJanuary1,1998,thenthepricesshowninTables4-1and4-2andAppendixDwillapplytothefirst,secondandthirdyearsofthesettlementagreement,exceptforthetableinAppendixDwhichreflectsthemarketpriceforecast.Forthosemarketpriceforecasts,thecalendaryearamountswillbeproportionatelyweightedtoarriveatthemarketpriceforecastforthesplitrateyear(e.g.iftheimplementationdateslipstoApril1,1998,thefirstyear'smarketpricewillbeequalto9/12ofthe1998priceand3/12ofthe1999price).Page32

Table4-1summarizestheprojectedclass-averagepricesforServiceClassifications1,2and3,includingtheeffectsoftheSystemBenefitsChargeandcurrentlyplannedgrossreceiptstaxreductions.TheCompanyexpectsthat1997priceswillgenerallybe'consistentwith1995prices.If1997resultsvary,thepercentagereductionsmaychangebutthepricelevelswillnot.TABLE4-1AVERAGEELECTRICITYPRICESFORTHEYEARS1998-2000BYCUSTOMERCLASS(C)SC1SC1BSC1CSC2NDSC2DSC3Cents/KWh%Change(B)Cents/KWh%ChangeCents/KWh%ChangeCents/KWh%ChangeCents/KWh%ChangeCents/KWh%Change1997(A)12.7248.5579.62816.49211.94510.43199812.623-0.79%8.5570.00%9.626-0.02%16.37-P74%11.8530.77%10.222-1.99%199912.503174%8.557PPP%9.626-0.02%16.224-1.63%11.747-1.66%10.198-2.22%200012.286-344%8.557PPP%9.626002%15.968-3.18%11.562-3.21%10.103314%(A)Basedon1995FreezePricesappliedtoCompany's1997SalesForecast.(B)Percentagereductionsareascalculatedbasedon1997projectedprices.Actualpercentagereductionsmayvarybasedonactual1997results.(C)InclusiveofSBCandGRT.Page33

4.1.1.2IndustrialandLargeCommercialPriceLevelsTable4-2summarizestheCompany'sestimatesoftheindividualclassratelevelsthatwouldresultfromthissettlementincludingtheeffectsoftheSystemBenefitsChargeandcurrentlyenactedgrossreceiptstaxreductions.Table4-2AverageElectricityPricesfortheSC3A/SC4(>2MW)/EDPrograms/SC111997199819992000%ChangeQmhLkSh(A)Qmhl!QMhQmhL~WQmhlkKhfmm~7SC3A/SC4/7.98ERIR/EDRSpecialContracts7.845.995.7724.95%-26.40%EDZR7.99TotalClass(B)7.936.286.03.005.84-62.44%2638%(A)Valuesarefulltariffbasedon1995FreezePricesandCompany'sHoursUseRateDesignappliedtoActual1996BillingData(B)Individualcustomerreductionsmayvaryfromtheclassaverage.IncludesSBCandGRTBytheyear2000,NiagaraMohawkwillsupplyanddeliverpowertolargercommercialandindustrialcustomers(S.C.No.3A,largeS.C.No.4andS.C.No.11)ataforecastedclassweightedaverageprice(includingERIR,EDRandEDZRdiscounts)ofapproximately$0.0585perKWh(basedoncurrentloadandpriceforecasts)inclusiveofallcurrentlyenactedNewYorkStategrossreceiptstaxreductions.Ifthecurrentlyenactedgrossreceiptstaxreductionsarerepealed,thesepriceswill-increaseaccordingly.Thecompanyhasallocatedcertainfunds($17.1millionin1998,$17.8millionin1999and$18.3millionin2000)toincremental,uncommittedS.C.No.11andEDZR/EDR/ERIRdiscountsasameans-ofachievingitspricegoals.ThesefundsareinadditiontothosefundsnecessarytoPage34

developthephase-inplanforexistingEDZRcustomersasdescribedinSection4.12.Totheextentthatthepricegoalsarenotmetandtheseincrementaluncommitteddiscountsarenotultimatelyissued,thecompanyshallflowbackeithertheunuseddiscountsoranamountnecessarytoachievethepricegoals,whicheverisless,toS.C.No.3Acustomers.Shouldimplementationofthisprovisionbecomenecessary,itwillbeaccomplishedviaaonetimepass-backinitiatedduringthe12-monthperiodimmediatelyfollowingyearthreeofthisagreement.Comparisonsbetweenannualpricegoalsandactualbillingexperienceshallberecordedfollowingeachofthefirstthreeyearsofthisagreement,withcarryingchargesappliedtotheequivalentrevenuediscrepancies(plusorminus)inderivinganaccumulatedthreeyearnetdiscrepancy.Thenetrevenuediscrepancysodeterminedwillbecomparedtotheremaininguncommittedincrementaldiscounts(asmayexist).Totheextentthatthepricegoalsarenotmet,thelesserofthesetwoquantitiesshallbecometheamounttobepassedbacktoS.C.No.3Acustomers.Thelevelofyear4and5uncommittedincrementaldiscountswillbedeterminedintheproceedingsettingratesforyears4and5,butinnoeventwilltheCompanyproposeorrecommenduncommittedincrementaldiscountlevelsforyears4and5lessthanthelevelofanyexcessuncommittedincrementaldiscountssodeterminedafteryear3.ShouldtheCompanyforecastthatactualincrementaldiscountswillexceedtheincrementaluncommitteddiscountfundsdiscussedabove,theCompanywillnotifytheParties,andtheCompanyoranyPartywillhavetherighttopetitiontheCommissionforratemakingtreatmenttofundadditionaldiscountsthatmaybeneededforbusinessretentionandrevitalizationpurposes.MhodoloforArrivlnatBundledPrices4.1.2.1.Calculationof"Base"1997RatesBeforeDecreasesThestartingpointforestablishingthebundledretailpricesthatwillapplyforthedurationofthisagreementistheretailbaseratesthatbecameeffectiveApril27,1995adjustedtocapturesurcharges.Tocapturetheeffectofexternalsurchargemechanismsthatwereineffectatthattime,NiagaraMohawkrolledintobaseratesallsurchargebalancesthatexistedasofDecember31,1995.Surchargesappliedvolumetrically(e.cC.,FAC,DIRAM,IPPbuyoutsandfuelamortization)weretranslatedintoannualratesperKWhandaddedtotheenergycomponentsofbaserates;surchargesappliedonanetbaseraterevenuebasis(e.cC,,NERAM,MERIT,RegulatoryDeferralandExtensionofSuspension)weretranslatedintoclassspecificfactorsandappliedtothenetbaseraterevenuecomponentsofbaserates.Theresultingprices,whenappliedtoPage35

anindividualcustomer's1995usage,wouldproducethesameelectricbillamountsaswouldbeproducedbytheapplicationofbaseratesandindividualsurchargesfactors.Theadjustedpriceswereappliedto1997salestoproduce1997revenuesand1997class-averageprices.4.1.2.2.ApplicationofPercentageDecreasesforSC1,2,&3Giventheclass-averagepricesdevelopedabove,thepricereductionswereimplementedforresidential(S.C.No.1),smallcommercial(S.C.No.2,andS.C.2Demand(S.C.2D))customersusingthefollowingfive-stepprocedure:(1)TheCompanywillreducepricesforthesecustomersbyapproximately2.2%overthreeyearsfollowingtheeffectivedateoftariffsimplementingtheSettlementAgreementprices(the"PowerChoice"ImplementationDate)'.(2)Class-Average1997pricesweremultipliedbyprojected1998salestoestimate1998revenuesandclass-averagepricesundertheprecedingyear'srates.Theseaveragerateswerereducedbyapproximately0.7%toget1998class-averageprices.(3)Class-average1998pricesweremultipliedbytheforecastsalesfor1999toestimate1999revenuesandclass-averagepricesundertheprecedingyear'srates.Theseaveragerateswerereducedbyapproximately0.7%againtoderive1999class-averageprices.(4)Classaverage1999pricesweremultipliedbytheforecastsalesfor2000toestimate2000revenuesandclassaveragepricesundertheprecedingyear'srates.Theseaveragerateswerereducedbyapproximately0.8%toderive2000class-averageprices.(5)AdditionalsavingsinNewYorkStateGrossReceiptsTaxwillbeapplied,asrealized,pursuanttoSubsection4.1.4.Smallerlargegeneralservice(S.C.No.3)customersandsmallercustomerstakingaportionoftheirelectricrequirementsfromNYPA(S.C.No.4customersunder2MW)wouldreceiveanapproximate2.2%phasedinreductionoverthreeyears(composedofapproximately2.0%in1998,anadditional0.1%in1999andanadditional0.1%in2000).ThesecustomerswillalsoreceivethephasedinreductionsinNewYorkState5AsfurtherdescribedinSection2,tariffsimplementingtheSettlementAgreementpricescannotbecomeeffectiveuntilcertainconditionshavebeensatisfied.Page36

grossreceiptstax,astheyarerealized,asspecifiedinSection4.1.4below.4.1.2.3.CalculationofSC-3ARatesAsdescribedinSection4.1.1.2andillustratedonTable4-2,S.C.No.3Arateshavebeendesignedtoachievetargetedprices.4.1.3RelationstoDaileaPilotNiagaraMohawkisimplementingapilotretailaccessprogramforcommercialfarmersandfoodprocessorsincompliancewiththeCommission'sJune23,1997OrderEstablishingRetailAccessPilotProgramsandSeptember18,1997orderconcerningcompliancefilings(the"PilotProgramOrders").'helostmarginsassociatedwiththeDairyleapilotprogramwillcounttowardsratedecreasesoutlinedinSection4.1.2.SuchlostmarginswillbeallocatedtoparticipatingclassesaccordingtotheestimatesshowninTable4-3.Table4-3ProjectedCostofDairyleaPilotLostMarinSC1$172,800SC1B$11,600SC1C$490,000SC2ND$11,000SC2D$118,000SC3$395,400SC3A5227~5IO$1,470,300-'Lostmarginestimateassumeslessthan100%participation.With100%participation,thelostmarginwouldbeapproximately$5million.6CaseNo.96-E-0948,aProamforFarmaFodProceivnEstaiaeciustoeCCPage37

4.1.4PlanedReductionsAssociatedwithGrossReceitsTaxReformNewYorkStatehasenactedlegislationtoreduceitsgrossreceiptstax(GRT)byaphased-in1%beginninginOctober1998.TheseGRTreductionswillbeappliedasrealized.4.1.5PotentiaSecuritizationSavinsTotheextentthatitisnototherwiseprohibitedbylegislation,thebenefitsofsecuritizationshouldbeusedtofurtherreducepricestoS.C.No.1,S.C.No.2andS.C.No.3customers.TheCompanyandStaffrecommendthattheCommissionconsiderallocatingaportionofsuchsavingsforenergyefficienciesandcleantechnologies.4.2CTCANDMARKETPRICEHEDGING4.2.1OverviewFormostcustomers,theCTCfloatsinverselywiththemarketpriceinordertoguaranteethefixedtotalpricelevelsinYears1-3.TheCommodityAdjustmentCharge(CAC)isthemechanismthataccomplishesthisvariationintheCTC.CustomerswillhavetheoptionofafixedCTC,asdescribedinsection4.2.5below.Ingeneral,asmoreofNiagaraMohawk'ssupplyportfoliobecomesunhedged,moreofthemarketpriceriskofenergyispassedontocustomers.4.2.2GeneralCalculationandApplicationExceptasotherwiseprovidedinthisagreement,allcustomers,regardlessoftheirenergysupplier,willbeassessedanon-bypassableCTCtocovertheirstrandablecostallocation.Duringthefirstthreeyearsofthisagreement,theCTC.foreachserviceclassificationwillbederivedbydeductingfromtheCompany'sbundledretailprices,i)anEnergyCommodityCharge,ii)atransmissioncharge,andiii)acustomerserviceanddistributioncharge.Duringyears4-5,theCTCmaynotbereducedtototallyoffsetincreasesintransmissionordistributionprices.InPage38

addition,theCTCwillbesubjecttocertainadjustmentmechanisms,deferralsandincentivesasdescribedinSection4.3.AsdescribedinSubsection4.2.3,theCTCwillbeafunctionofthemarketpriceofelectricity.Thisapproachwillproducealocation-specificCTC.4.2.3CommodityAdjustmentChargeACommodityAdjustmentChargewillbeimplementedtoadjusttheCTCforthosecustomerswithfloatingCTCs.ThiswillgenerallyincludecustomersservedunderS.C.No.1,S.C.No.2Demand(S.C.No.2D),S.C.No.2Non-Demand(S.C.No.2ND),S.C.No.3,andS.C.No4(customers<2MWonly).TheCTCforeachserviceclassificationreflectsalocationspecificestimateofthemarketpriceofelectricenergyandcapacity.TheCommodityAdjustmentChargewillbeimplementedbylocation,voltagedeliverylevel,loadfactorandserviceclassificationinordertoreconciletheactualmarketpricewiththeforecastofmarketpricesuponwhichtheCTCisinitiallyset.CustomersservedonS.C.No.3A,S.C.No.4(greaterth'an2MWonly),S.C.No.11,andcertainothercustomers(describedinSection4.2.5)willnotbesubjecttotheCommodityAdjustmentCharge.4.2.4.SignificanceofHedgedandUnhedgedEnergyTheCompanyhashedgedalargeportionofitstransitioncoststhroughthecontractsdescribedinSection3.ExceptasotherwiseprovidedinSection4.2.5,theCompanyisbearingtheriskoftheamountofunhedgedenergyintheforecast,exceptforanychangesinpricesassociatedwithunhedgedenergyresultingfromanuclearplantretirement(whichshallbeaddressedasprovidedinSection3.3.4).Overtime,asdescribedindetailinSection3.2forfossil/hydroassets,andSection3.3fornuclearassets,anincreasingproportionofenergypurchasedbyRegCowillbecomeunhedged.ThepartiesagreethattheCTCinyearsfourandfiveshouldbedesigned:(1)torecoverallowablestrandedcostsand(2)topassthroughtocertaincustomersthemarketpriceofunhedgedenergy.Intheeventofanuclearretirementwithinthefirstthreeyearsofthisagreement,therelatedunhedgedenergyeffectsontheCTCarediscussedinSection3.3.4.Page39

4.2.5CTCOptionsandMarketPriceForecastTheCompanywillmakeavailablefixedCTCoptionsasdescribedbelow.TheoptionsdescribedbelowdonotprecludeadjustmentstotheCTCthatmayotherwisebeprovidedforinthisagreement.IftheCompanyshouldretireanuclearunit,energypricesandtheCTCwillbeadjustedinamannerconsistentwithSection3.3.4.4.2.5.1ForS.C.No.3AandS.C.No.4(>2MW)customers:ThirtydayspriortothePowerChoiceimplementationdate,SC¹3AandSC¹4customersgreaterthan2MWwillhaveachoiceofthreepricingoptions.Followingthisonetimethirtydayselectionperiod,theonlyofferavailabletoS.C.¹3Acustomerswillbethedefault(option1)programdescribedbelow.Tariffsforeachoftheseoptionswillbeavailableat,leastsixtydayspriortothePowerChoiceImplementationDate,subjecttoCommissionapproval~ExistingSC¹11customerswithexpiringcontractswillhavethechoiceofeithertakingthestandardtarifforextendingtheirSC¹11contractsonthesametermsandconditionsthroughthetermofthissettlementagreement.SuchSC¹11customerschoosingthestandardtariffwillonlybeallowedtochooseoption1.TheimplementationoftheseoptionswillbeinconjunctionwiththeCompany'shoursusedesignandindividualcustomerloadprofiles.(1)Option1(Default):FixedCTCandFloatingCommodityPriceComputeCTCtoreflectthe"revised"marketpriceforecastinAppendixD,page28.Theestimateofthemarketpriceforecastvariesbyregion,serviceclass,loadfactorandvoltagelevel.TheFloatingCommodityPricewillbetheEnergyCommodityChargediscussedinSection4.4.1.AppendixDcontainsthemarketpriceforecast(alsocalledenergybackoutrate)foreachserviceclassificationandvoltagelevel~AppendixDwillbeadjustedforthefinalratePage40

yearasdiscussedinSection4.1.1.Thesepricesaremeasuredatthecustomermeter.Marketpricesforyearsfourandfivewillbereforecastedinyearthree.(2)Option2a:FixedCTCandFixedCommodityChargeThisoptionwillbedesignedwiththe"original"marketpriceforecast(containedinAppendixDatpage27),suchthatifallSC-3Acustomerschoosethisoption,therategoalwillbemet.CustomerscommittocontracttopurchaseforecastquantityofelectricityfromNiagaraMohawkforthefiveyearperiod.(3)Option2b:CustomerswhoselectOption2acanpurchasetherighttoexitthecontractonsixmonthsnotice.ThepurchasepriceoftheoptiontoexitwillbeprovidedbytheCompanyaspartofitstarifffiling.Thefeewouldbepaidduringthefive-yearperiodregardlessofwhethertheoptiontoexitthecontractisexercised.(4)PriortoDecember1,1997,theCompanymustelectoneofthefollowingalternatives.a)Aftercustomershavechosenoption2aor2b,theCompanywillsolicitandawardbidsfortherightandobligationtoprovidethecommoditytocustomersthatchooseOption2aor2b,butonlysubjecttocustomerapproval;orb)TheCompanywilloffera5-yearfixedCTC,FloatingCommodityPriceOption(inadditiontothe3-yearfixedCTCFloatingCommodityPriceOption,above)whichshallbebaseduponthe"original"marketpriceforecastunderlyingOptions2aand2b,above.(5)Forallcustomerswhochooseanalternativesupplierandreturn,theyreturntotheFloatingCommodityPriceandthefixedCTCoptionoriginallyselectedbythecustomer.Ifacustomer'sSC-11contractexpiresandtheydonotchoosePage41

torenewit,thentheyreturntothedefaultofafloatingcommoditypriceandafixedCTC.4.2.5.2ForS.C.Nos.1,2,3customers:(1)Option1:FixedCTCandFloatingCommodityPriceandFixedCTCAnamountofenergyupto75percentoftheamountofforecastedenergynecessarytoserveSC-3AcustomerschoosingOption2(flixedCTCandfixedcommoditycharge)willbemadeavailableforthoseSC-1,2and3customerswhohaveretailaccess.CustomerswhochoosethisoptionwillhavetheirCTCbasedonthe"revised"marketpriceforecast,adjustedforregionandloadshapeasshowninAppendixD,page28.Forcustomerswhochooseanalternativesupplierandreturn,theyreturntothedefaultofOption2,floatingCTCandfloatingcommodityprice.(2)Option2(Default):FloatingCTCandFloatingCommodity.TheCTCisadjustedtoreflectthelevelofunhedgedenergyafteradjustmentstoreflectcustomerschoosingthefixedCTCandfloatingcommodityoptiondescribedabove.(3)ThepartieswillcontinuetopursuemechanismstoincreasetheavailabilityoffixedCTCsforSC1,2,and3customersinYears3andbeyond.AnyfinalresolutionofthisissuewillnotnegatetheCompany'sobligationtocoverunhedgedenergyinyearsonethroughthree.4.2.6AdjustmentstotheCTCinYearsFourandFiveTheCTCwillbeadjustedtoreflectanewmarketpriceforecastforyearsfourandfive.TheCTCmayalsobeadjustedinyearsfourandfiveduetogeneration-relateddeferrals,recoveryofagenerationsaleincentive(Section2.4.3),andifanuclearplantisretired,soldordivested(SectionPage42

3.3).Inaddition,variationsbetweentheactualandforecastedcostoftheindexingprovisionsofcertainIPPcontracts,asdescribedinSection2.4,willbepassedthroughthe.CommodityAdjustmentChargebeginninginyearfour.4.2.7AlcanandSithe/IndependenceAlcanand/orSithe/Independence'sstrandedcostresponsibilitywithttservicetoAlcanwillbehandledinaccordancewiththeOrderissuedandeffective11-3-94inCaseNo.94-E-0136.Accorigy,d'nIAlcanand/orSithe/IndependencewillnotbeassessedaCTCaccessfeeorexitfeeforAlcanloadservedbySithe/independence,exceptasprovidedforinCaseNo.94-E136.TheCompanyreservestherighttopetitiontheCommissionforchangesinthoseobligationsinaccordancewiththeOrderinthatcase.4.3SURCHARGEANDRECONCILIATIONMECHANISMS4.3.1SurchareMechanismsThatWillBeAbolishedUponthe/owerChoiceImplementationDate,thefollowingsurchargemechanismswillbeabolished:Rule29:Ad'ustmentinAccordanceWithChangesinTheCostofFuel(inclusiveoftheFAC,fuelamortizations,andDIRAM),excepain,',tthatthedfdFACfuelbalanceatthePowerChoiceImplementationDatewillbeflowedthroughtocustomersoverthenexttwocompletemonthly'geerreubillincyclesfollowingthePowerChoiceImplementationDate.Rule43:AdjustmentofChargesPursuanttotheMeasuredEquityReturnIncentiveTerm(MERIT)Rule44:AdjustmentofChargesPursuanttotheNiagaraMohawkElectricRevenueAdjustmentMechanism(NERAM)Rule46:AdjustmentofChargesPursuanttotheRegulatorySurchargeMechanismRule47:AdjustmentofChargesPursuanttotheExtensionofSuspensionPeriodSurchargeMechanismPage43

4.3.2MunicialGrossecetsTaxSurchareForthetermsofthisAgreementandbeyond,thesurchargeforPSCNo.207Rule32-IncreaseinRatesApplicableinMunicipalityWhereServiceisSupplied,morecommonlyreferredtoasGrossReceiptsTax(GRT),willcontinuetobeappliedasasurchargeduetovariancesintaxratesbymunicipaltaxingauthorities.4.3.3NYPAHdrooweBenefitReconciliationANewYorkPowerAuthority(NYPA)HydropowerBenefitReconciliationMechanismforresidentialservicewillbeestablished.Undercertaincontractsforthesaleoflow-costhydropowertoNiagaraMohawk,thepricebenefitsofthatpoweraretobepassedontotheCompany'sresidentialcustomers.AsaresultoftheeliminationoftheFAC,anewreconciliationmechanismmustbeestablishedtoensurethatNiagaraMohawkcanfulfillthisrequirement.Because1995FACsurchargebalanceswererolledinto1995baserates,asdescribedinSubsection4.1.2,theresultingresidentialpricesreflectNYPAhydropowerbenefitsthataccruedin1995.Accordingly,theCompanywillperformanannualreconciliationcomparingactualbenefitsreceivedin1998andsubsequentyearswiththosethatwerereceivedin1995.Thevarianceresultingfromthereconciliation(creditordebit)willbeappliedasanannualizedreconciliationfactorduringthe12monthsfollowingcompletionofthereconciliation.Forresidentialcustomerswhoareineligibleforretailaccess,areconciliationfactorwillbeappliedtotheiroverallbill.Forresidentialcustomerswhohaveachoiceofpowersuppliers,areconciliationfactorwillbeappliedtotheCTC.Duetoreportinglag,the1998calendaryearreconciliationcannotbeperformeduntilFebruary1999,whichwilldelaytheapplicationoftheannualizedreconciliationfactoruntilMarch1999.4.3.4SseBenefitsChaeAsfurtherdescribedinSection7,aSystemBenefitsCharge(SBC)willbeimplementedaspartofcustomerserviceanddistributioncharges,althoughstipulatedasadistinctlyseparatecharge,forallcustomerserviceclassifications(withtheexceptionofEconomicDevelopmentZonepower,S.C.No.11contracts(exceptasspecificallyallowedbycontract)andcertainNYPAallocations)inordertorecovercostsassociatedwithPage44

publicpolicyprograms.Table44showstheprojectedSBCrecoveriesfor1998-2000.Table4-4ProjectedSBCRecoveries1998199920001~BasePublicPolicyPrograms($000)15,00015,00015,0002.SalesForecast(Mwh)subjecttoSBCrecoveries24,174,39824,472,67124,650,7533.SBCCharge(Line1)/(Line2)($/KWh).000620.000613.0006094.3.5DeferralsThecostcategorieseligiblefordeferralsaredescribedinSection2.6.Startinginyearfour,deferralswillbecollectedthroughappropriateratemechanisms,dependinguponthenatureofthecost,i.e.,generation-relateddeferralssuchaschangesinnuclearcostswillbecollectedthroughasurchargetoallcustomerswhopayaCTC,distribution-relateddeferralswillbecollectedthroughadistributionsurcharge.CustomerswhodonotpaytheCTCwillnotpaygenerationrelateddeferrals.4.3.6RecoveofGeneraioSaleIncentiveAsdescribedinSection3.2.2,theCompanywillreceiveanincentiveforthesaleoffossilandhydroassets.AllcustomerswhopaytheCTCor,whereapplicable,exitfeeswillpaythegenerationincentivethroughasurcharge.CustomerswhodonotpaytheCTCwillnotpaythegenerationincentive.Table4-5summarizesalloftheadjustmentmechanismsdescribedinSections4.2and4.3andtheirapplicabilitytoserviceclassifications.Page45

Table4-5SurchargesandReconciliationMechanismsS.C.No.1/1B/1CS.C.No.2D/2NDS.C.No.3(SmallS.C.No.4)andS.C.No.7S.C.No.3A(IncludingLargeS.C.No.4)S.C.No.11GrossReceiptsTaxYesYesYesYesYesNYPAHydropowerBenefitYesNoNoCommodityAdjustmentChargeYes***Yes***Yes**NoSBCYesYesYes~***Yes*'*~Deferrals"/GenerationIncentiveYesYesYe~+kktYes*****ContractSpecific**Appliestoyears4-5only***Assumesdefaultoptionischosen***ExceptasprovidedforcertainNYPAcustomersinSection4.14andTable4-6Page46

4.4UNBUNDLEDSERVICESANDPRICES4.4.1UnbundledEnerCommodiChareToensurethatcustomersreceivecorrectpricesignals,itisimportanttoestablishareliableproxyforthegenerationcommoditypriceembeddedinNiagaraMohawk'sbundledretailrates.PriortothetimetheISOtariffbecomeseffective,theactualmarketpriceofelectricitywillbebaseduponNiagaraMohawk'sCommissionapprovedmethodologyfordeterminingmarginalcost.ThisdocumentisonfilewiththeCommission(entitledTechnicalAdministrativeRulesandProcedures("TARPS"))andisassociatedwithS.C.No.11andthenowexpiredS.C.No.8.Thesepriceswillbedelineatedbyhour,monthandvoltagelevelforeachclass.Inaddition,theCompanywilladjusttheTARPSprices,onarevenueneutralbasis,toreflectdifferencesinpricesforthewestern,centraland'asternregions.If,priortotheeffectivenessofanISOtariff,theNewYorkPowerPool(NYPP)beginstocalculateandpublishlocation-specificmarginalpricesofpower,NiagaraMohawkreservestherighttoemploythosepricesinsteadoftheTARPSvalues.IftheTARPspricesareusedintheCompany'sunbundledprices,theCompanywill,afterconsultingwiththeparties,developrulesand/orproceduresdesignedtooverseeandaudittheCompany'sdevelopmentoftheTARPprocess..TheCompanywillsubmittheserulesand/orprocedurestotheCommissionforreview.OncetheISOtariffbecomeseffective,assumingafullyfunctioningISOandaviablemarket,thecommodityvaluerepresentedinretailtariffswillbebaseduponlocationalpricespostedbytheISO.TheCTCinherentlyreflectsaforecastofcommodityprices.AportionofthedifferentialbetweenforecastedandactualcommoditypriceswillbereconciledandrefundedtoorrecoveredfromcustomerswithfloatingCTC'sthroughtheCommodityAdjustmentCharge.TherewillbenoprudencereviewassociatedwithRegCo'senergyorcapacitypurchasesduringtheperiodofthisrateSettlementAgreement.Asdescribedabove,commoditypriceswillbecappedbythespotmarketprice.RegCoisfreetoenterintolongertermcontracts,otherthanthosedescribedinSection3.0,forcapacityandenergy,butwillbearthefullrisksofsuchcontracts(i.e.,willkeepanysavingsorabsorbanylossesPage47

duringthefiveyearperiod).IfRegCoentersintoacontractforenergyandcapacitywhosedurationislongerthanfiveyears(i.e.,whosedurationextendsbeyondthetermofthisSettlementAgreement),thecostassociatedwiththatcontractwillbesubjecttothenormalrevenuerequirementsreviewthatoccursinthenextratecaseRegCofilesforratesbeyondthefifthyear.IfRegCodoesnotenterintoanylonger-termcontract,therewillbenoprudencereviewassociatedwithitsnothavingenteredintolonger-termcontracts.4.4.2UnbundledTransmissionChaesNiagaraMohawk'sretailaccesstariffwillbefiledwiththeCommissionandtheFERCandcoverallcomponentsoftheretailaccesstariffdescribedherein.ThetransmissioncomponentofsuchretailaccesstariffswillbeprovidedunderNiagaraMohawk'sOpenAccessTransmissionTariff("OATT").NetworkservicechargesundertheOATTarecalculatedastheFERCapprovedannualrevenuerequirementmultipliedbythecustomer'sloadratioshare(the12-monthrollingaverageofthecustomerMWloaddividedbythetotaldemandontheTransmissionSystematthetimeofthemonthlytransmissionpeak).ToeasetheadministrativeburdenofapplyingthisformulatocalculateandbillthetransmissionchargesapplicabletoeachcustomerundertheOATT,anddecreasingthedistributionchargebythatvalue,NiagaraMohawkproposestoimplementaprocedurewherebythetotaldeliverycharge(transmissionanddistribution)doesnotrequireanindividual,customer-specificOATTvalue.Thatis,thetotaldeliverychargewillbedesignedtorecoverboththetransmissionanddistributionrevenuerequirementsusingPSCrulesfortheassignmentofcostsevenastransmissionserviceisprovidedunderthetermsandconditionsoftheOATTapplicabletoeachcustomer.NiagaraMohawkwillseekfromtheFERCawaivertoimplementthisadministrativesimplification.4.4.3UnbundledDlsrlbutionCaresDistributionservicesincludepowerdeliveryservicesotherthantransmissionservices,andencompassnotonlylocal"wires"servicesbutalsometering,billing,collections,andcustomerservicetelephone.Distributionpricesarecost-based.Distributionpricesfor1998wereestimatedtorecoverfullythecostsassociatedwithdistributionservices,Page48

andallocatedtorateclassesandratecomponentsbasedontheCompany'slatestcostofservicestudies.DistributionservicepricesfortheyearstwothroughfivewillbeincreasedaccordingtothePriceCapplandescribedinSection4.4.4andthepricegoalsdescribedinSection4.1.4.4.4PriceCaPlanforTransmissionandDistributionServicesApricecapplanfortheCompany'stransmissionanddistributionserviceswillapplyforyears2through5ofthissettlement.4.4.4.1T&DRateIncreasesTheCompanymayincreaseitspricesfortransmissionanddistributionservicesuptoacapineachyearexceptasotherwiseprovidedherein.ThecapwillbebasedontheprojectedincreaseinthecostofprovidingtransmissionanddistributionservicesassetforthinthefinancialforecastinAppendixC.4.4.4.2CTCOffsetstoIncreasedT&DPricesExceptasprovidedinSection4.14,inyears2and3,anyincreaseinT&DpriceswillbeexactlyoffsetbyadecreaseintheCTCchargesforthoseyearsinordertosatisfytheoverallbundledpricetargetsoutlinedinSections4.5through4.8.Inyears4and5,therewillbenoexplicitoffsettotheCTCforincreasesinT&Dprices.4.4.4.3PriceGapforYears4and5AsdescribedinSection2.4.1.2,pricesinyearsfourandfivecanbeincreasedbyanamountnottoexceed1%oftheall-inpriceexcludingthecommodity(e.g.inclusiveoftransmission,distributionandforecastedCTCcharges).Thepricecapexcludesrecoveryofdeferralsandthegenerationsaleincentive.ThepricecapalsoexcludesthevariationsincontractcostsduetotheindexingprovisionsofIPPindexedcontracts(SeeSection2).Thefilingtoproposeanincreaseunderthecaportorecoverdeferredcostsortorecoverthegenerationsaleincentivewilladdressthedesignoftheraterecoverymechanism.Page49

4.4.5AvailabiliofUnbundledPricesforInformationalPurosesPriortothetimeacustomerbecomeseligibleforretailaccess,NiagaraMohawk,uponrequest,willprovidethecustomerwithunbundledpricedataforthecustomer'suse.4.4.6Relat'onshitoGenerationSearationAreallocationofcostsbetweenthetransmission/distributionandCTCcomponentsofunbundledpricesmaybenecessaryasaresultofasale,spinoffortransferofgenerationassets.Totheextentthisreallocationisnecessary,itwillbedoneonaclass-averagerevenueneutralbasis.4.4.7GustoerServiceBackuCreditThecustomerservicebackoutcreditisdescribedinSection5.Oncethecreditisdesigned,customerswhoselectanalternatesupplierwillreceiveanappropriatecreditfortheparticularCompanyservicesprovidedbytheESCO,andaminimumcreditregardlessoftheservicesoffered.4.5RESIDENTIALPRICINGDESIGNS4.5.1ServiceClassificaonNo.1-SandardesidentialRate4.5.1.1FlatRateStructureThedesignwillremainaflatratestructureconsistingofasingleenergyratewithacustomercharge.4.5.1.2Phased-InRebalancing.ofCustomerandEnergyChargeThecustomerchargewillbephasedintoachievea$17.44levelintheyear2000withadditionalchangestobeconsideredinyears4and5.TheCompanyandStaffsharetheobjectiveofcontinuingtomovevolumetricchargestowardmarginalenergycosts.TheincreaseincustomerchargerevenuewillbeoffsetbyanequalreductionintheenergychargerevenuestoensurethattherebalancingofPage50

customerandenergychargeisrevenueneutralonaclass-averagebasis.Phased-inDiscountfromInitialPriceLevelsAsdescribedinSection4.1,overthethreeyearsbeginningwiththePowerChoiceImplementationDate,tariffratereductionswillbephased-insoastoultimatelyproduceanapproximate2.2percentreductioninclassaverageprices.(AsdescribedinSection4.1.4,additionalsavingsassociatedwithcurrentlyplannedreductionsinNewYorkgrossreceiptstaxeswillbeappliedasrealized).Thesereductionswillbeappliedtotheenergyrate.ThepricingdesignsandresultingbillimpactsareillustratedinAppendixD.4.5.2ServiceClass'ca'onNos.1Bd1C-ResdenialTimeef-UsRatesCurrentlytheCompanyhastwoTime-of-Use(TOU)offeringsforresidentialcustomers.ServiceClassificationNo.1Bisavoluntaryoffering;approximately3700customerstakeserviceunderthisrate.ServiceClassificationNo.1Cisamandatoryrateforallresidentialandfarmcustomerswhoconsumegreaterthan30,000KWhannually.Thereareapproximately12,000customersservedunderS.C.No.1C.AsofthePowerChoiceImplementationDate,S.C.No.1Bwillbeclosedtonewsubscribersotherthansubscriberswhowillusegeothermaltechnology.ExistingS.C.1BcustomerswillhavetheoptionofremainingundertheexistingprogramorchangingtoS.C.No.1service.NopricereductionswillbeappliedtotheS.C.No.1Bclass.AsofthePowerChoiceImplementationDate,S.C.No.1Cwillnolongerbemandatory.S.C.No1CwillbecometheoptionalTOUofferingforresidentialcustomers.CustomersservedunderthisserviceclassificationwillhavetheoptionofremainingundertheexistingprogramorchangingtoS.C.No.1~NopricereductionswillbeappliedtotheS.C.No.1Cclass.Page51

4.5.3ServiceClassificationNo.1H-0tionalResidentialRateThisoptionconsistsofhighercustomerchargeandalowerflatenergycharge.OnthePowerChoiceImplementationDate,S.C.No.1Hwillbeclosedtonewsubscribers.ExistingS.C.No.1Hcustomerswillhavetheoptionofremainingundertheexistingprogramuntilthebeginningofyear4ofthisagreementatwhichtimetheywillbetransferredtoS.C.No.1.ThesecustomerswillhavetheoptiontomigratetoS.C.No.1atanytimepriortoyear4ofthisagreement.NopricereductionswillbeappliedtotheSCNo.1Hrate.4.5.4.CTCTheCTCwillberecoveredvolumetricallyinaccordancewiththeactualusageofeachresidentialcustomer.4.6COMMERCIALPRICINGDESIGNS4.6.1ServiceClassificationNo.2ND-SmallGeneralServiceRates4.6.1.1FlatRateUnderS.C.No.2ND,thedesignwillremainaflatratestructureconsistingofasingleenergyratewithacustomercharge.4.6.1.2Phased-inRebalancingofCustomerandEnergyChargesThecustomerchargewillbephasedintoachievea$23.95levelintheyear2000withadditionalchangestobeconsideredinyears4and5.TheCompanyandStaffsharetheobjectiveofcontinuingtomovevolumetricchargestowardmarginalenergycosts.Theincreasesincustomerchargerevenueswillbeoffsetbyanequalreductionintheenergychargerevenuestoensurethattherebalancingofcustomerandenergychargeisrevenueneutralonaclass-averagebasis.Page52

4.6.1.3Phased-inDiscountfromInitialPriceLevelsAsdescribedinSection4.1,overthethreeyearsbeginningwiththePowerChoiceImplementationDate,ratereductionswillbephased-insoastoproduceanapproximate2.2percentreductioninclassaverageprices.(AsdescribedinSection4.1.4,additionalsavingsassociatedwithcurrentlyplannedreductionsinNewYorkgrossreceiptstaxeswillbeappliedasrealized).Thesereductionswillbeappliedtotheenergyrates.ThepricingdesignsandresultingbillimpactsareillustratedinAppendixD.4.6.2ServiceClassicationNo.2D-SmallGeneralServiceRatesUponthePowerChoiceImplementationdate,thedesignofNiagaraMohawk'sSmallGeneralDemandService(S.C.2Demand(S.C.No.2D))willbealteredasdescribedbelow:4.6.2.1Phased-lnRebalancingofCustomerandEnergyChargesThecustomerchargeforS.C.No.2Dwillbephased-intoachievea$63.49levelintheyears2000withadditionalchangestobeconsideredinyears4and5.TheCompanyandStaffsharetheobjectiveofcontinuingtomovevolumetricchargestowardmarginalenergycosts.Theincreasesincustomerchargerevenueswillbeoffsetbyequalreductionsintheenergychargerevenuestoensurethattherebalancingofcustomerandenergychargesisrevenueneutralonaclass-averagebasis.TheexistingdemandchargeforS.C.No.2Dwillremainunchangedforthefirstthreeyearsofthisagreement.4.6.2.2Phased-inDiscountfromInitialPriceLevelsAsdescribedinSection4.1,overthethreeyearsbeginning,withthePowerChoiceImplementationDate,ratereductionswillbephased-insoastoproduceanapproximate2.2percentreductioninclassaverageprices.(AsdescribedinSection4.1.4,additionalsavingsassociatedwithcurrentlyplannedreductionsinNewYorkgrossreceiptstaxeswillbePage53

appliedasrealized).Thesereductions:willbeappliedtotheenergyrate.ThepricingdesignsandresultingbillimpactsareillustratedinAppendixD.4.6.3CTCTheCTCwillincludeperKW(whereapplicable)andperKWhchargesappliedto100percentofactualdemandandusagequantitiesofeachcommercialcustomerforthebillingperiod.4.7LARGEGENERALSERVICE(S.C.NOS.3,3A,4AND5)PRICINGDESIGNSPricesforNiagaraMohawk'sS.C.No.3,S.C.No.3A,andS.C.No.4(customerswhoalsotakepowerfromNYPA),willbestructuredasdecliningblockratesasdescribedbelow.UnbundledpriceswillincludeaCTCifapplicable.4.7.1S.CNo.3LarGeneralSeice<2MWandSmallerS.C.No.4Customers<2INWPricesforcustomerstakingserviceunderS.C.No.3andcustomerstakingserviceunderS.C.No.4whosedemand(exclusiveoftheportionofdemandservedbyNYPA)islessthan2megawattswillbedevelopedasfollows:4.7.1.1RateDesignPriceswillincludeacustomercharge,ademandcharge,areactivedemandchargeandenergychargesbasedontwoblocks.Theblockswillbeestablishedbasedontheusageaboveandbelow450hoursofuseofthepeakdemand(61.6%loadfactor).Thisdesignisreferredtoasan"hoursuse"design.ThepricingdesignsandresultingbillimpactsareillustratedonAppendixD.4.7.1.2InitialPriceLevelsAsdescribedinSubsection4.1,theclassaveragepricesforS.C.No.3andsmallerS.C.No.4customerswillbereducedbyapproximately2.2percent.ThereductionwillbePage54

reflectedinthetailblockenergyprice.(AsdescribedinSection4.].4,additionalsavingsassociatedwithcurrentlyplannedreductionsinNewYorkgrossreceiptstaxeswillbeappliedasrealized)~4.7.1.3CTCTheCTCwillincludeperKWandperKWhchargesappliedto100percentofactualdemandandusagequantitiesforeachcustomerduringthebillingperiod.4.7.2S.C.No.3ALareGeeralServiceINadatoTmeofUseiDemandandLaeS.C.No.4Customers~>2MWPricesforcustomerstakingserviceunderS.C.No.3AandcustomerstakingserviceunderS.C.No.4whosedemand(exclusiveoftheportionofdemandservedbyNYPA)isgreaterthan2megawattswillbedevelopedasfollows:4.7.2.1RateDesignPriceswillincludeacustomercharge,ademandcharge,areactivedemandchargeandenergychargesbasedondecliningblocks.EffectiveuponthePowerChoiceImplementationDate,twoblockswillbeestablishedbasedontheusageaboveandbelow250hoursofuseatthepeakdemand(34.2%loadfactor).Oneyearlater,athirdblockwillbeestablishedat400hoursofuse(54.8%loadfactor).Thisdesignisreferredtoasan"hoursusendesign.ThepricingdesignsandresultingbillimpactsareillustratedonAppendixD.4.7.2.2InitialPriceLevelsPricereductionsaredesignedtobephased-induringthethreeyearsfollowingthePowerChoiceImplementationDatesuchthattheaverageprice,basedoncurrentforecasts,intheyear2000forallcustomersunderS.C.Nos.3A,11,andlargeS.C.No.4(includingERIR,EDR,andEDZRdiscounts)willbe$.0585perKWhinclusiveofallcurrentlyPage55 0

enactedNewYorkStategrossreceiptstaxreductions.Ifthecurrentlyenactedgrossreceiptstaxreductionsarerepealed,thepriceswillincreaseaccordingly.4.7.2.3RebalancingofDemandChargesWhilethedemandchargeforS.C.No.4iscurrentlybasedonthepeakdemandoccurringwithinthebillingperiod,thedemandchargeunderS.C.No.3Aisbasedentirelyonthecustomer'smaximumdemandduringpeakhours.NiagaraMohawkwillfiletariffrevisionstoestablishademandchargebasedonthecustomer'smaximumdemandduringallhourstocovertransmissionanddistributioncosts.Theon-peakdemandchargehasbeenreducedtooffsettherevenueincreasesresultingfromthischange.4.7.2.4CTCTheCTCwillincludeperKW(basedonthemaximumdemandoccurringduringpeakhours)andperKWhchargesappliedto100percentofactualdemandandusagequantitiesforthebillingperiod.4.7.3S.C.No.5Combiation25&60CclePowerTheCompanycurrentlyprovidescombination25cycleand60cyclepowertoapproximately7customers.TheCompanywillfreezetheexisting25cycleS.C.No.5rates(whichwereapprovedinApril1995)andholdthemconstantforthetermofthisAgreement.TheCompanywillreducetheratesfor60cycleservicetothosecontainedinS.C.No.2,S.C.No.3orS.C.No.3A,dependingonthesizeofthecustomer.TheCustomerwillthenbeeligibletoreceiveunbundled60cycleelectricserviceaccordingtotheotherwiseapplicableserviceclassification.4.7.4Pro'ectednduriaricesTheweightedaveragepricehasbeencomputedbysummingtheforecastedrevenuesassociatedwiththeS.C.No.3A,"large"S.C.No.4,S.C.No.11(thosequalifyingforS.C.No.3A)anddividing.bythePage56

forecastedkilowatt-hoursassociatedwiththesameclasses.(ThiswillincludealleconomicdevelopmentriderswiththeexceptionofrevenuesandsalesassociatedwithEDPcustomers).TheCompanyplanstoadministerthephased-inpricereductionsinamannersimilartothatcontainedinTable4-2.4.8CUSTOMERSWITHS.C.NO.11CONTRACTSANDECONOMICDEVELOPMENTPROGRAMSTheCompanywillhonorallexistingS.C.No.11contractsthroughtheirnormalexpiration.UponimplementationoftheISO,theCompanywillrevisethedefinitionandcalculationofmarginalcostundertariffto:1)incorporatetheprices,termsandconditionsoftheISOtariffand2)calculateandadministerasystem-wideweightedaveragemarginalcostconsistentwiththeexistingS.C.No.11tariffforthebillingofS.C.No.11contractsenteredintopriortoJuly23,1997.IntheeventthatanexistingCustomer'sS.C.No.11contractexpiresduringthetermofthisagreement,attheCustomer'srequestandupon60dayspriornotice,theCompanywillextendtheS.C.No.11contractonthesametermsandconditionsfortheremainingtermofthisagreement,oruntiltheCompanyfilesforarateincreaseorotherwisepetitionstheCommissionpostyearfive,afterwhichsuchcontractshallexpireunlessotherwisespecificallyagreedtobetweentheCompanyandCustomer.TheCompanywillofferEDRandERIRcustomersachoiceoftheirexistingrider,theotherwiseapplicabletariffrate,orifeligible,retailaccess.TheCompanywillnotpetitiontheCommissiontomodifyorcancelitscurrentS.C.No.11,ERIRorEDRtariffsuntilanadequatereplacementtariffisdevelopedthatmeetstheeconomicdevelopmentobjectivesoftheexistingtariffs.TheCompanywillcontemporaneouslyfileitsreplacementtariffwithitspetitiontocancelormodifyitscurrentSC-11,ERIRandEDRtariffs.TheCompanywillcontinuetoworkwiththepartiestodesigntheS.C;No.11replacementtariffwiththeobjectivethattherevisedtariffwillbefiledassoonaspossible,butinnoeventlaterthanDecember31,1997.Page57

UndernocircumstanceswilltheCompanyrequirethatacustomerpurchasethecommodityfromtheCompanyinordertoqualifyforanS.C.No.11contract.TheCompanywillnotbeprecludedfromproposingotherprogramsofgeneralapplicabilitytoaddresseconomicdevelopmentissues.4.9OPTIONALTARIFFSFORNON-RESIDENTIALCUSTOMERSTheCompanywillceasesigningCustomerstotheOptionalTariffScheduleseffectivewiththePowerChoiceImplementationDate.CustomerscurrentlyservedontheOptionalPricingScheduleswillbegiventheoptiontocontinuetoreceivetheiroptionalprovisionsuntilsuchcustomersbecomeeligibleforretailaccessafterwhichoptionalpricingscheduleswillbeeliminated;provided,however,thattheoptionalrateswillcontinuetobechangedtoreflectchangesinthemarginalcostofelectricity.CustomerswhochoosetoretaintheiroptionalprovisionspriortotheireligibilityforretailaccesswillbesubjecttotheratesineffectonApril27,1995fortheContractLoadportionoftheirbill.4.10CUSTOMERSSELLINGPOWERTONIAGARAMOHAWKUNDERS.C.NO.6(a)SeparateS.C.No.6buybackratesshallbedeterminedforLoadAreas1,2,3,and4.NiagaraMohawk'spaymentsfordeliveriesfromIndependenceStationshallbetheapplicablerates(assetforthinparagraphsbandcbelow)forArea2.(b)CommencingJanuary1,1998untilthedatetheMasterRestructuringAgreement("MRA")isconsummatedasdefinedinSection10.2ofthatagreement("ConsummationDate"),thebuybackratesshallbethetime-differentiatedpricebymonth.Appendix0setsforththepricestobeusedinthetariff.Area3pricesareequaltoArea2pricesplusonemill.(c)CommencingwiththeMRAConsummationDate,thebuybackratesforeachLoadAreashallbethetime-differentiatedprices,setforthbymonthinAppendixDhereto.TheratessetforthinAppendixDshallremainineffectuntilDecember31,1998.(d)CommencingnolaterthanAugust1,1998,thepartiesshallconvenetechnicalconferencesto,(i)(assumingthereisanoperatingISO/PEonAugust1,1998)determinetheappropriatenessofusingtheISOmarketdatatoset1999SC6buy-backrates,andthespecificmarketdatafromPage58

theISO/PEwhichshouldbeusedtocalculateamarket-basedbuybackratethatisconsistentwithPURPA,or(ii)administrativelyredeterminetheS.C.No.6ratesfortherateyearcommencingJanuary1,1999ifatransitiontomarket-basedrateswillnotoccuronJanuary1,1999.(e)If,aftersuchtechnicalconferences,thepartiesdonotreachaconsensusastotheappropriateratesormechanismforsettingthe1999S.C.No.6rates,thenonorbeforeOctober1,1998,thepartieswilljointlyrequesttheassistanceofasettlementjudgetoresolvetheseissues.Ifafterareasonableperiodofinterventionbythesettlementjudge,anS.C.No.6rateormechanismhasnotbeenreachedbyconsensusoftheaffectedparties,anypartymayrequestevidentiaryhearingsfollowedbybriefsandarecommendeddecisiontotheCommissionthatwillenabletheCommissiontoissueanorderonthe1999S.C.No.6ratespriortoJanuary1,1999.AnyS.C.No.6ratefilingshallbesubjecttodiscoveryundertheCommission'sRulesandtopubliccommentundertheStateAdministrativeProceduresAct.4.11CUSTOMERSTAKINGSERVICEUNDERS.C.NO.7(SALE,BACKUP,MAINTENANCEANDSUPPLEMENTALENERGYANDCAPACITYTOCUSTOMERSWITHON-SITEGENERATIONFACILITIES)ANDEXITFEESFORCUSTOMERSWHOBYPASSTHECOMPANY'SDELIVERYSERVICE.4.11.1RationaleTheintentionoftheExitFeeandtheCTCprovisionsofSC¹7istodiscourageuneconomicbypassoftheCompany'sservicesandchargesincaseswheresuchbypassisnoteconomicfromsociety'sstandpointandwouldthereforeshiftcoststootherstakeholders.4.11.2AllcabiiThefollowingtablesetsforththeapplicabilityoftheExitFeeandSC¹7inspecificcircumstances.Inaddition,applicabilityofexitfeesforNYPAallocationswillbedeterminedinaccordancewithSection4.14andTable4-6ofthisSettlement.Forcircumstancesnotincludedinthistable,orcontemplatedherein,thecompanywillbepermittedtopetitiontheCommissiontoassessanExitFeeorapplySC¹7inaccordancewiththeintentionsofthisSection4.11.Page59

ExitFeeandSC7AlicabilitCircumstance~EitFeeSC7Municipalization,includingcaseswherethemunicipaldisconnectsfromtheCompany'sdeliverysystem.YesNo2.Customerremainsinthesamelocation,disconnectsfromtheCompany'sdeliverysystemandconnectstoanotherutility'sdeliverysystemsuchasthatofanotherutilityorIPP.YesNo3.Selfgenerationwithbackupfromthecompany'sdeliverysystem.Yes4.Selfgenerationwherethecustomerdisconnectsfromtheinterconnectedsystemorisnotconnectedtotheinterconnectedsystem.NoNo5.CustomersthatreceivedanSC¹11Contractpriorto7/23/97basedonashowingofaviablecogenerationthreatuptotheelectriccapacityofthedemonstratedviablecogenerationproject.No6.Customersthatrelocateorclosetheiroperation.NoExitFee(a)ExitFeeCalculationMethodologyPage60

TheCompanywillusea"revenueslost"exitfeemethodologysimilartothatproposedbytheFERCinOrder888.Theexitfeewouldbecalculatedonaone-timebasis.However,theCompanyiswillingtoentertainlevelizedannualpaymentsorotheroptionsthatmaybenegotiatedbetweentheCompanyandthecustomer,subjecttoadequatesecurity.The"revenueslost"formulaisequaltothenetpresentvalue(attheCompany'sweightedaveragecostofcapital)overYyearsof:(R-E)Where,Rshallequaltheannualestimatedrevenuefromthecustomerusingthebundledpricedesignscontainedinthesettlementagreement.Therewillbenocreditfortransmissionrelatedrevenues,asproposedinFERCOrder888,sincethecustomerwillnotbeusingtheCompany'sdeliverysystem.EistheCompany'sestimateoftheannualrevenuesthatitcanreceivebysellingthereleasedcapacityandassociatedenergy.AsinFERCOrder888,thecustomerwillhavetheoptiontomarketaportionofthereleasedcapacityandassociatedenergy.YisthenumberofyearsrequiredfortheCompanytorecoveritsfullstrandedcosts.SinceYisdependentuponanumberoffactors,includingthetimingofthedeparture,theCompanywilladdressYonacase-by-casebasis.Inaddition,theCompanywillchargedepartingcustomersfortheirallocationofnucleardecommissioningcoststhroughtime.(b)AccountingforExitFeesTheCompanyagreeswiththeconceptthatanyexitfeesreceivedshouldbedeferredtoaffectstrandedcosts.TheCompanywillworkwiththepartiestodevelopthespecificaccounting,andsubsequentamortization,ofthedeferralforexitfees.TotheextentthatexitfeesarereceivedduringthetermofthissettlementthatresultinareductioninrevenuesotherwiseexpectedtobecollectedbytheCompanythroughtheCTC,thepartiesagreethataportionPage61

oftheexitfeecanberecognizedduringthetermoftheSettlementtoholdtheCompanyharmless.S.C.No.7EffectivewiththePowerChoiceImplementationDate,S.C.No.7willbeclosedtonewsubscribers.4.11.4.1ExistingCustomersExistingcustomersshallbesubjecttotheS.C.No.7pricesineffectonJuly23,1997,aswellasanyapplicablesurchargesasidentifiedonTable4-5.AtsuchtimeasallorthemajorityoftheCompany'sFossilandHydrounitsaredivestedandthecommodityportionofbackup,supplementalandmaintenanceserviceareavailableonacompetitivebasis,theratesforexistingS.C.No.7usersshallbechangedtothosedescribedin4.11.4.2below.TheCompanyagreestouseitsbesteffortstoacquireancillaryservicesfromthecompetitivemarketatthetimeofdivestiture.TheCompany,however,willnotberequiredtocreatenewsystemstoallowfortheprocurementofsuchservicesonacompetitivebasis.4.11.4.2NewSubscribersandExistingS.C.No.7CustomersFollowingDivestitureoftheCompany'sFossilandHydroAssetsNewtariffleavesshallbeaddedwhichwillapplytoallnon-residentialcustomerswithon-sitegeneration(exceptasprovidedforundercircumstanceno.5ofSection4.11.2)andexistingcustomerswithon-sitegenerationwhoarenotcurrentlyservedunderS.C.No.7.Inaddition,thesenewtariffleavesshallapplytoexistingS.C.No.7customersatalaterdateasprovidedinSection4.11.4.1~Thesetariffleavesshallprovideforrateswhichinclude:i)acombinationofanaccesschargeandanenergychargeforthebaselinePage62

customerload("CL")and,ii)theratescontainedinthecustomer'sotherwiseapplicableserviceclassification(orS.C.No.11.,ifqualified)foranyloadwhichexceedstheCL,where:TheCLshallbebasedonthecustomer'sloadinahistoricperiod.TheaccesschargeforloadatorbelowtheCLshallbeequaltothecustomer'scontributiontotheCompany'sfixedcostsduringthehistoricperiod.TheaccesschargeshallbesubjecttoadjustmentforsurchargesasidentifiedonTable4-5.TheenergychargeforloadatorbelowtheCLshallequalthecommoditycostundertheotherwiseapplicabletariff,ifthecommodityispurchasedfromtheCompany.4.12ECONOMICDEVELOPMENTZONERIDER(EDZR)ThePartieswillcontinuetoworkondevelopingarateplanthatwillresultincurrenteconomicdevelopmentzoneratesthatareequaltofullmarginalcommodityanddistributioncost(excludingtheSBC)andfulltransmissioncostbytheendofthefiveyearsettlementperiodforcustomerstakingserviceunderthecurrentrider.TherateplanwillbedevelopedassoonaspossiblebutinnoeventlaterthanDecember31,1997.lndevelopingtheEDZRrateplanthefollowingprinciplesshallgovern:(a)Non-contestablecustomerswillbephasedintofullmarginalcostsonanacceleratedschedulethattakesintoaccountthelevelofrateimpactsonindividualcustomers.(b)Contestableloadswillbephasedinoverthefullfiveyearsofthesettlementperiod.(c)Foralimitednumberofcustomersthatmayneedspecialeconomicdevelopmentconsiderations,theCompanywillworkwiththepartiestoaddressthesespecialcases.Page63

FornewEDZRcustomersornewgrowth,the.tariffratewillbeequaltofullmarginalcommodityanddistributioncost(excludingtheSBC)andfulltransmissioncost.4.13PRICINGDESIGNSFORSERVICECLASSIFICATIONSUNDERPSCNO.214-ELECTRICITYNiagaraMohawk'spricesforoutdoorlightingservicesaresetforthinPSCNo.214-Electricity(formerlyPSCNo.213-Electricity).ServiceClassificationNos.1,2,3and6underPSCNo.214representprivateareaandstreetlighting.TheCompanyisproposingarebalancingofthefacility-specificandvolumetriccharges.Theproposedfacilitychargeshavebeensetatmarginalcostascalculatedunderthecurrentlong-runincrementalcostofservicestudies.Theproposedvolumetriccomponentoftheseserviceclassificationshasbeenincreasedtooffsetthedecreaseinfacilityspecificchargestoensurethattherebalancingisrevenueneutral.ThepricesfortheseserviceclassificationsareattachedinAppendixD.TheCompanywillphaseinthesepricechangesoverthefirstthreeyearsofthisagreement.ServiceClassificationNo.4ofPSCNo.214-TrafficSignals,isenergyanddelivery-onlyrelated.ThechargeforthisclassiTicationdoesnotincludethecostofowningormaintainingfacilitiesandthereforehasnotbeenchanged.TheresultingvolumetricchargesunderPSCNo.214willbeunbundledwhencustomersbecomeeligibleforretailaccess.4.14APPLICATIONOFUNBUNDLEDPRICESTONYPAALLOCATIONS(a)NYPAEconomicDevelopmentPowerAllocationsTheCompanyagreestomaintainforexistingEDPallocationsitsexistingtariffratesforthefirstthreeyearsofthesettlement.FornewallocationstheCompanywilluseitsunbundledrateschedulesandthesaleswillbeconductedasadirectsalefromNYPA.(b)NYPARuralandDomestic(R8D)HydroCreditThebenefitsoftheR8Dhydrocreditwillflowthroughtoconsumersinaccordancewiththe1990Contract.NMPCandNYPAagreetoworkinPage64

goodfaithtomodifyasappropriate,the1990Contracttoreflectthechangesinindustrystructure.(c)Table4-6delineatesthetreatmentofNYPAallocations.A"yes"underacolumnheadingmeansthechargeidentifiedinthecolumnheadingappliestotheallocation.A"no"meansthechargesshallnotapply.Table4-6ApplicationofUnbundledPricestoNYPAAllocations(3)Transmission&DistributionExitFeesDistributionSupplyCTCRelatedQp~ltedSBCReplacementPower445MW(4)nonononoExpansionPower(1)250MW(4)nonononoEDP<46MWEDP>46MWHLFF(4)(4)noyesnonoyesyesnoyesScheduleA8First50MWReplacement(2)(4)nonononoHLFFabove(4)ScheduleA8First50MWReplacement(2)yesyesyesyes(d)NotestoTable4-6:(1)ExceptdeliveriesofEPallocatedpursuanttoparagraph13(b)ofSection1005ofthePublicAuthoritiesLawforrevitalizationpurposeswillbesubjecttotheCTCifandtotheextentthatthePage65

amountofanyallocationwhenaddedtothethenexistingEPsalesinNMPCserviceareaexceeds210MW.ScheduleAasprovidedforintheAgreementAmongNiagaraMohawkCorporation,NewYorkPowerAuthorityandDepartmentofPublicServiceResolvingandSettlingCertainDisputes,datedMay22,1997.Thefirst50MWofreplacementreferstoaprovisionoftheMay22,1997agreementthatallowsthePowerAuthoritytoreplacecertainHLFFallocationpriortothePowerChoiceImplementationDate.Allrightsandresponsibilitiescontainedinthe"May22,1997Agreement"shallremainlegallybindinginaccordancewithitsterms,andnothingcontainedinthePowerChoiceSettlementorthisSectionshallbeconstruedtooverrule,explainorotherwisemodifytheMay22,1997Agreementexceptthatintheeventofanyconflictbetweentheprovisionsofparagraph5oftheMay22,1997Agreemententitled"DeliveryofExpansionandReplacementPower"andtheprovisionsofthisSection4.14andTable4-6relatingtoExpansionandReplacementPower,theprovisionsofthisSection4.14andTable4-6shallprevail.ThefollowingabbreviationsapplytoTable4-6:ExpansionPower("EP");EconomicDevelopmentPower("EDP");HighLoadFactorPower("HLF");ReplacementPower("RP").DeliveryserviceforallNYPAReplacement,Expansion,EDPandHLFPowertransmittedanddeliveredbyNMPCaregovernedbyexistingagreementsand/orauthorities,providedhoweverthatnothinghereinshallbeconstruedasanadmissionoragreementbyNMPCorNYPAoranyotherpartythatdeliveryservicesprovidedtonewEP,RPorothercustomersormodificationsofdeliveryservicesprovidedtoexistingEP,RPorothercustomersshallorshallnotbeprovidedunderNMPC'sOpenAccessTransmissionTarifffiledwiththeFederalEnergyRegulatoryCommissionandaseparateagreementforlocaldistributionservices,andprovidedfurtherthatnothingcontainedhereinshallberegardedasa'waiverbyNMPCofitsratechangerightsunderanyexistingagreementbetweenNMPCandNYPAexceptasexpresslyspecifiedherein.Page66

4.15ANNUALTARIFFFILINGSTheCompanywillfiletariffamendmentstoimplementtheinitialratesandtermsofthisagreementassoonaspracticableaftertheconditionsdescribedinSection2havebeensatisfied.Duringthetermofthisagreement,theCompanymaymakeannualtarifffilingstobeeffectiveoneachanniversaryofthePowerChoiceImplementationDate.Theseannualfilingswillbemadeapproximately120dayspriortotheireffectivedateandwillreflectthetermsofthisagreementincludingthepricingdesignchanges,deferrals(years4-5only),thegenerationsaleincentive(years4-5only)andtransmission/distributionpriceescalation.4.16RATEFLEXIBILITY4.16.1GeneralDuringthetermofthisAgreement,theCompanywillhavetherighttoseekratechangesthatarerevenue-neutralonaclassaveragebasis.SuchrateproposalswillbefiledwiththeCommissionandsubjecttoregulatoryapproval.Thetypeofchangesthatmaybeproposedinclude:b.C.e.changesinserviceclasssegmentationbyconsumptionlevels,loadfactors,end-usepurposes,oranyotherdistinguishingfactors;reallocationofrevenuewithinclassesbetweendemand,energyandcustomercharges;reallocationofrevenueamongcustomergroupsbasedoncost-of-serviceandcompetitiveanalyses;additions,deletionsorotherchangestorateblocksorratingperiods;andchangestoestablishuniformtransmissionanddistributionratesacrossrateclassificationsoffset,ifnecessary,bychangestotheCTC.ThisAgreementwillnotprecludetheCompanyfromproposingpricingchangesinresponsetocompetitivedevelopments.Page67

4.16.20tlonalRatesandServicesTheinitialservicescontainedinthisagreementwouldbeavailabletoallqualifiedcustomersforthetermofthisagreement.TheCompanymay,additionally,proposeoptionalratesand/orservicesatanytime.Tariffsforsuchratesand/orserviceswouldbecomeeffective30daysaftertheyarefiled.4.17MISCELLANEOUSTARIFFAMENDMENTSTheCompanywillmakeamendmentstoitstarifftoreflectthefollowingissues:4.17.1AreaioofDemandandCustomerCharesSincethepricescontainedinthisAgreementforserviceclassificationsthatincludedemandandcustomerchargeshavebeencalculatedbasedonhistoricalnon-coincidentcustomerdemands,theaggregationofcustomersinthoseserviceclasseslikelywouldresultintheshiftingofcoststoothercustomersortotheCompany.ESCosaccordinglywillnotbepermittedtoaggregatecustomers'oadsandpaydemandandcustomerchargesbasedontheircoincidentdemands.Thebenefitsofloaddiversityhavealreadybeenreflectedinthecalculationofthesecharges.ItisnottheintentofthisSection4.17.1toprohibitESCosfromaggregatingthecommodityforcustomerseligibleforretailaccess.4.17.2LwVolaeBassCustomersmaybereconnectedtoadeliverypointatahighervoltagelevelatnoadditionalcosttothecustomerifintheCompany'ssolejudgment,suchreconnectionwillalleviatereliabilityorsafetyproblems;provided,however,thattheCompanymaypermitsuchreconnectioninothercircumstancesifthecustomeragreestopay1)thedifferentialindistributionchargesandCTC,and2)theincrementalreconnectioncosts.Page68

SECTION5.0CUSTOMERSERVICEBACKOUTCREDITThedetailsofacustomerservicebackoutcreditwillbeestablishedbyDecember31,1997throughcontinuednegotiationsamongtheparties,basedonagreementonthefollowinggeneralprinciples:5.1GROSSREVENUEEXPOSURETheCompany'sgrossrevenueexposureattributabletothecustomerservicebackoutcreditwillbelimitedasfollows:Year1Year2Year3$6M$10M$14MTheCompanymaydeferforfuturerecoverypursuanttoSection2.4.3and2.6one-halfofeachdollaroflostrevenue.IfthelimitsofCompanyliabilityanddeferralsoutlinedabovearereached,thebackoutcreditwillbecapped,eitherbynumbersofcustomers,amountofload,orothermethod.5.2DESIGNPRINCIPLES(1)SeveralcategoriesofthebackoutcreditwillbeestablishedsothatdifferentamountswillbebackedoutdependingonwhichservicesaretakenoverbytheESCo.However,therewouldbeaminimumcreditthatwillbebackedoutregardlessoftheservicesoffered.(2)Thecreditcouldbecalculatedvolumetricallyorpercustomer.(3)Therewillbedifferentlevelsofthebackoutratebyserviceclass.Page69

(4)TheCompanywillprovideastudyofavoidablecustomerservicecostsbyJune1999.UponpetitionofanypartyaftertheendofYear2ofthisagreement,theCommissioncanrevisitthecustomerservicebackoutcredit,includingtheappropriatelevelofanycreditoralternatemechanismsforhandlingthemovementofcustomerstoothersuppliers(SeeSection8.2.8).Inanyevent,theCompany'sgrossrevenueexposureinyear3shallnotexceedthecapssetforthabovein5.1.5.3RELATIONSHIPTOAGENERICPROCEEDINGIfthereisafinalPSCOrderoranorderwhichhasnotbeenstayedpendingappealinaGenericProceedingregardingcustomerservicescurrentlyprovidedbyregulatedutilitieswhichshouldbemadecompetitiveand/orthemethodfordeterminingavoidedcostsassociatedwiththoseservices,thatOrdershallsupersedethisagreement.WhetherornotthereisaGenericOrderregardingcustomerservices,theCompany'sgrossrevenueexposureinyears1-3shallnotexceedthecapsin5.1.InyearsfourandfivethebackoutshallnotexceedtheCompany'savoidedcostsunlesstheincrementalexposureisoffsetbyotherrevenuesources(e.g.deferrals).IfthereisnoGenericOrderregardingcompetitivecustomerservices,theCompany'sstudy,includingcommentsofotherpartiesthereon,willprovidethebasisfordeterminingtheCompany'savoidedcustomerservicecostsinyears4and5.ThisAgreementdoesnotlimitanyParty'srightstochallengeorotherwisepetitionforrelieffromanyproposedpolicyintheGenericProceeding.Page70

SECTION6.0SERVICEQUALITYINCENTIVETherewillbeaservicequalityincentivewhosetotalvalueis30basispointsor$6.6million,where1basispointforbothelectricandgaswillbevaluedat$220,000after-tax,or$338,000before-tax,forthepurposesofthisagreement.Alloftheamountsreflectedbelowareafter-taxdollars.6.1CUSTOMERSERVICEPERFORMANCEFor1998andbeyond,theCustomerServicePerformanceincentiveisequaltoamaximumof$3.3millionperyear.ThemeasuresofcustomerserviceperformancedescribedinthisSection6.1supersedetheprovisionsofSectionVill,CustomerServiceGuaranteessetforthintheStipulationandAgreementapprovedbytheCommissioninNiagaraMohawkCases96-G-1095and96-G-0091,OpinionNo.96-32(December19,1996).6.1.1PSCComlaintateThePSCComplaintRateisthe12-monthcomplaintrate,measuredateachyearend.Thetargetsareaveragemonthlyratesoftotalcomplaintsper100,000customers,includingcollection-relatedcomplaints.Themaximumpenaltyis$1,100K.RateInterval<1010.0-10.911.0-11.912.0andaboveax.PenaltwitinScaledInterval$0$220K$660K$1,100K6.1.2CororateRsdentlalTrasat'onSatisfactionIndexTheCorporateResidentialTransactionSatisfactionIndexisthecumulativeindexof4quarterlysurveysofcustomerswhohavehadtransactionswiththeCompany.Itexcludescollectionstransactions.Themaximumpenaltyis$1,100K.Page71

CSIInterval8005CSI78.0<CSI<80.076.0<CSI<78.0CSI<76.0Max.PenaltwithiScaledInterval-$0$220K$660K$1,100K6.1.3LowIncomeCustomerAssistanceProramALowIncomeCustomerAssistanceProgram(LICAP)performanceincentivemechanismwillbenegotiatedpriortoDecember31,1997.Themechanismwillincludeenrollmentsandenergyservicetargets.Themaximumpenaltyis$1,100K.6.2STATEMENTOFINTENTThereisagreementinprincipletoconsiderwhetheraprogramofindividualcustomerserviceguaranteesmayinpartorwhollyreplacethebroad-basedpenaltymeasuresadoptedabove,includingwithinthetimeframeofthisagreement.TheCompanywillcontinuetoworkwithStaffonthedevelopmentofcustomerserviceguaranteesasamechanismforinsuringahighlevelofcustomerservice.Specificallyandinitially,theCompanyandStaffhaveamutualinterestinimprovingcustomerconvenienceandsatisfactionwithschedulingofappointments.6.3SERVICERELIABILITYINCENTIVEThemaximumpenaltyforservicereliabilityperformanceis$3,300K.6.3.1Sstemlnterrut'oFreuencSIThemaximumpenaltyforSystemInterruptionFrequency(SIF)performanceis$1,320K.Targetsarethenumberofoutagespercustomer,excludingmajorstorms.SIFI0.93<SIFSIF<0.93~Pnalt$1,320K$0Page72

6.3.2GustoerInterrutionDurationCIDThemaximumpenaltyforCIDperformanceis$1,320K.Thetargetsaretheaveragehoursperinterruption,excludingmajorstorms.CIDInterval2.07<CIDCID<2.07~Penalt$1,320K$06.3.36~6iThemaximumpenaltyforPowerQualityis$660K.Targetswillbeupdatedannuallybasedonmostrecentfouryeardata.Targetsdisplayedbelowarefor1997.Inte~glPenalte3~1'IKV294<Momentaries247<Momentaries<294Momentaries<247$220K$110K$023-69KV848<Momentaries743<Momentaries<848Momentaries<743$220K$110K$0~332095<Momentaries1951<Momentaries<2095Momentaries<1951$220K$110K$06.4ACCOUNTINGMECHANISMAnypenaltiesaccruedwillbeusedtooffsetcostdeferrals.Page73

SECTION7.0SYSTEMBENEFITSCHARGEPROGRAMS7.1SYSTEMBENEFITSCHARGE7.1.1ProramsandFundinLevelsThepartiesagreethattheSystemBenefitsCharge(SBC)appliesasfollows:TheSBCcoversprogramsrelatedtodemand-sidemanagement(DSM),ResearchandDevelopment(R8D),andlowincomeenergyefficiency.2.Spendinglevelswillbesetat$15million(approximately1995spendinglevels)foryears1through3withanequalamountremovedfrombaserates,i.e.,spendinglevelsareincludedwithinthepricing(rate)goalsinTables4-1and4-2.3.ThecontinuationoftheSBCandappropriatefundinglevelswillberevisitedinaproceedingforyear4notwithstandingtheassumptionsinAppendixC.ActivitiesthatareintegraltoRegCobusinessfunctionswillnotbefundedthroughtheSBC.Theseinclude,forexample,activitieswhicharepartofabundledpackageofservicesthatallowRegCotomaintaincustomersatisfactionandserviceincludingoutreach,information,education,dialogue,andcustomerconsultationprogramsandotheractivitythatarenotwithinthescopeoftheSystemBenefitChargeassetbytheCommissionandthethirdpartyadministrator.5.UnexpendedSBCfundswillbeaccumulatedforfutureSBCprogramuse.6.NewprogramsthattheCommissionordersorexpansionofexistingprogramsthatwouldincreasespendingabovethe$15milliontargetwillbepassedthroughtocustomersoutsideofthepricecaps.Page74

7.1.2State-WideThirdPaAdministratorTheCompanywillproposetheuseofastate-wide,thirdpartyadministratorforDSMandR&DprogramspendingconsistentwithPSCpolicyontheSBCandtheotherPSCapprovedutilitysettlementagreements.TheCompanywillworkwiththepartiestoaccomplishthetransitionfromtheCompany-administeredprogramstoathirdpartyadministratorasrapidlyaspossible,recognizingthefundingthathasbeencommittedtocertainprojects.RegCoandunregulatedaffiliateswillbeallowedtobidtoimplementvariousDSMandR8Dprojects.Untilathirdpartyadministratorisestablished,theCompanywillfileaPublicPolicyPlanannuallyforCommissionapproval.IndevelopingthePublicPolicyPlan,thecompanywillestablishaPublicPolicyAdvisoryPanel,comprisedofrepresentativesfromvariousconstituenciestoprovideadviceandguidancetoprogramdevelopment.NothinginthisagreementwillprohibittheStatewideadministratorfromallocatingasignificantportionofthetotalSBCrevenuesderivedfromNiagaraMohawkcustomerstobedisbursedwithinNiagaraMohawk'sserviceterritorythroughcompetitivestandardperformancecontractswhichprovideforstipulatedpricingforenergyefficiency,consistentwithanygenericguidelinesforSBCexpendituresseparatelydevelopedfromthisproceedingbythePSC.7.1.3LowIncomeGustoerAssistanceProramLICAPTheenergyefficiencyportionoftheLICAPprogramwillbefundedthroughtheSBC.7.2MISCELLANEOUS:(i)TheCompanywillcontinuetodevelopdetailedannualforecastsoftransmissionanddistribution("T8D")capitalbudgetrequirementsandwillidentifyforeachmajorT8Dproject(i.e.,projectsof$2.5millionormore),thelocation,reasonforproject,scopeofproject,projectedcapitalcosts,appropriateloadandotherdata.TheCompanywillalsoperformloadmonitoringconsistingofmonitorsatasignificantsampleofthetransmissionandareasubstationsPage75

scheduledforexpansion/upgradeinthefive-gearT&Dcapitalplan.TheCompanywillevaluateandimplementcost-effectivemeasuresasalternativestomajorT&DprojectsthatdefermajorT8DsystemprojectsthroughtheuseoftechnologiesorservicesthatcouldreducepeakT&Dloads.Forsuchcost-effectiveprojects,considerationwillbegiventotechnologiesorservicesthatminimizetheenvironmentalimpactsofelectricityusageincludingdemandsideandothernewcosteffectivetechnologies(suchaswind,solaranddistributedgeneration)wherepracticable.TheCompanywillcontinuetoseektominimizecostsandenvironmentalimpactsforT8DprojectsthatarenotmajorT8Dprojects.TheCompanywillincludetestimonyinitsnextratecasediscussingalternativestotransmissionanddistributioncapitalspending,includingonsitegenerationanddemandsidemanagementprogramsandtherelationshipbetweencurrentratestructures,energyefficiencyalternativesanddistributionrevenuesandprofits.PlumStreetEnterprisesoranysuccessorcompaniesshalloffertoallitsretailelectriccommercialandindustrialcustomersfor-profitenergyefficiencyservices;andwillmakeagoodfaithefforttomarketfor-profitenergyefficiencyservicesorproductsforallofitsresidentialandsmallcommercialcustomers.PlumStreetEnterprisesoranysuccessorcompanieswillofferagreenpricingprogramdesigned,incooperationwithinterestedparties,asaprofitmakingenterprisetoaggregatedemandofcustomersinterestedinreceivingelectricpowerfromrenewableenergyresources(e.g.wind,solarandbiomass).NMPCagreestodonate5,000SO,allowancestotheAdirondackCouncilforretirement.NiagaraMohawkagreestodonatetotheStateofNewYork,infee,1000+acresofhighintrinsichabitatvaluelandssurroundingDeadCreek,TownofPiercefieldwithintheAdirondackParkandcommitstonegotiateingoodfaithwiththeStateofNewYorkforthesaleofaconservationanddevelopmentrighteasementfortheremaining2400+acressurroundingDeadCreek(TownofPiercefield).TheCompanycommitstonegotiateingoodfaithwiththeStateofNewYorkforthesaleofaconservationanddevelopmentrightPage76

easementfor1000+acresthatareonthewestsideofCarryFallsReservoir.NMPGagreestooffertotheStateofNewYorkfeeinterestto600+acresontheeastsideofCarryFallsReservoirforasetprice'of$258.00peracrewhichrepresentsa50%donationofourappraisalvalue.(Thisamountstoadonationof$155,000invalue.)TheCompanycommitstoalsomakingtheoffercontainedinsections7.1(v)through7.1(x)intheRaquetteRiverrelicensingnegotiations.InconsiderationofreachingamutuallysatisfyingsettlementoftheRaquetteRiverrelicensingnegotiations,theCompanycommitstodonatetoNewYorkStatefeeinterestto600+acresontheeastsideofCarryFallsReservoir.TheCompanycommitstodonatetotheStateofNewYorkinfeeaportionoflandatthesoutherntipofCarryFallsbeingaparcelorparcelsoflandsofapproximately200acres+,lessanylandsnecessaryforNiagaraMohawk'sFERCProjectpurposes.(Thisamountstoadonationof$92,000invalue.)NiagaraMohawkcommitstonegotiateingoodfaithwiththeStateofNewYorkforthesaleofaconservationanddevelopmentrightseasementfor2200+acresoflandonthenorthernsideofRainbowFallsReservoir.NiagaraMohawkcommitstonegotiateingoodfaithwiththeStateofNewYorkforthesaleoffeeinterestinthe135+acresontheeasterlyandwesterlysidesofStarkReservoir.NiagaraMohawkcommitstonegotiateingoodfaithwiththeStateofNewYorkforthesaleofaconservationanddevelopmentrightseasementfor1639+acresoflandsurroundingBlakeReservoir.NiagaraMohawkcommitstonegotiateingoodfaithwiththeStateofNewYorkforthesaleofaconservationanddevelopmentrightseasementfora1943+acresoflandonFiveFallsandSouthColtonReservoir.TheCompanywilldevelop10MWofwindpowergenerationand1.6MWofphotovoltaicgenerationthatwillbefundedthroughavailablethirdpartyfunds/grantsandtheSBCfundingprovidedforinthisagreement(SeeSection7.1.1).TheSBCfundingwillbebasedonthedebtserviceofthecostofthefacilitiesinexcessofPage77

thirdpartyfunding,subjecttoanamortizationschedulewithinthefiveyearsoftheAgreement.Anyelectricityproducedfromthesefacilitieswillbesoldtoathirdpartymarketerforresaleunderacompetitivebiddingprocessdesignedtoattractpurchasersengagedingreenpricingoffersintheretailmarket.Attheendofthefifthyear,theCompanywillseekbidstosellthesefacilitiestothemarket.AnyproceedsfromthesaleoftheelectricityandthesaleofthefacilitieswillgotofundfutureSBCprojects.T&DfacilitiesconstructedtoconnecttheseprojectstothesystemwillbeamortizedovertheprojectedlifeoftheprojectsandrecoveredaspartoftheprojectcostduringthefirstfiveyearsofthisAgreementandaspartofT&Drevenuerequirementsafterthefirstfiveyears.Nothinginthisparagraphshalllimitthethirdpartyadministrator'sabilitytooverridethisprovision.(xii)AportionoftheSBCwillbeusedtofundexistinglong-termecologicalmonitoringprogramssuchastheAdirondackLakeSurvey(ALS).ThepartiesexpectthattheseactivitieswillbefundedbytheStatewideSBCadministratorinproportiontocontributionsfromeachutility.Intheeventthatotherutilities'BCfundsarenotavailable,thenfundingsufficienttocontinuetheALSshallbemadeavailablefromtheSBCestablishedinthisagreement(nottoexceed5%ofavailablefunds).Nothinginthisparagraphshalllimitthethirdpartyadministrator'sabilitytooverridethisprovision.(xiii)TheCompanywillcontinuetoofferinformationtoallcustomersregardingavailableenergyefficiencyservices(e.g.,billstuffersandreferralstocompaniesofferingenergyauditsandotherservices)andfacilitatecustomeraccesstoenergyefficiencyproductsandservicesavailableinthemarketbythirdpartyproductvendorsandserviceproviders(e.g.,byarrangingmanufacturers'ebates).Theseactivitiesshallbecarriedoutinamannerwhichdoesnotgivepreferentialtreatmenttoanyenergyserviceprovider.(xiv)TheCompanywillsupportlegislationorstateagencyrulemakingwhichwouldupgradeNewYorkStatebuildingcodestomeetthe1995ModelEnergyCodesandASHRAEStandard90.1.TheCompanybelievesthattheimplementationofsuchlegislationorstateagencyrulemakingshouldconsidertheeconomicimpacttotheStateofNewYorkofthebuildingcodes.Page78

(xv)TheCompanywillsupporttheinclusionofenvironmentalprotectionprovisionsinfederalutilityrestructuringlegislation,insofarascongressionalconsiderationofsuchprovisionsdoesnotundulydelayprogresstowardcreatingaderegulatedandopencompetitivemarketforelectricityintheUnitedStates.Withregardtosuchenvironmentalmeasures:a)TheCompanywillsupportestablishmentofanationalsystembenefitstrust(nationalwirescharge),withtheunderstandingthatsuchatrustwouldnotbeconstitutedinamannerwhichwouldcompetitivelydisadvantagecompaniesinastatethathasestablishedaparallel,state-levelsystembenefitscharge.b)TheCompanywillsupportnationwide"environmentalcomparability"requirementforfossilgeneratingunitsfornitrogenoxides(NOx)emissions(i.e.,auniformgenerationperformancestandardimplementedincombinationwithanemissions"capandtrade"program),withtheunderstandingsuchastandardwouldapplyuniformlythroughouttheentireUnitedStatesandwiththeunderstandingsuchastandardwouldbephasedinsothatitsimpositionwouldnotunreasonablydevaluecurrentfossilgenerationassets.c)TheCompanywillsupportnationalenvironmentaldisclosurerequirementsforemissionsthatwouldapplytoallenergyretailers,withtheunderstandingsuchdisclosurerequirementswouldbepracticalandnotunreasonablyburdensometoadminister.NiagaraMohawkrecognizesthatinacompetitivemarket,someretailersmaychoosetogobeyondtheminimumrequirementswithrespecttocharacterizingtheenvironmentalaspectsoftheenergytheyprovide.d)TheCompanywillsupportacleanenergyportfoliostandardthatrequiresallvendorstohaveaminimumamountofrenewablesandothernon-emittingorultralowemitting(e.g.,fuelcells)energysourcesintheirgeneratingmixandthatavoidsunintendedandundesirableeconomicincentives;i.e.,theCompanywillsupportastandardthatwouldpreventPage79

anybypassoftherequirementandutilizesarenewableenergycreditspurchaseprovision.(xvi)TheCompanyandStaffagreethatcustomerchoicewouldbeenhancedbytheavailabilityofenvironmentalinformationconcerningthepowerbeingprovidedtothem.Toeffectuatesuchdisclosure,theCompanyandStaffagreetoworkwithloadservingentitiesandotherstodevelopandimplement,wherefeasible,meaningfulandcost-effective,anapproachtoprovidingcustomerswithfuelmixandemissioncharacteristicsofthegenerationsourcesreliedonbytheloadservingentity.Suchanapproachwouldfacilitateinformedcustomerchoice,promoteresourcediversityandimproveenvironmentalquality.(xvii)Totheextenttheaccountingforsuchrevenuesisnototherwiseprovidedherein,allrevenuesderivedfromsaleswillbeaccountedforinaccordancewiththeUniformSystemofAccounts.Page80 Clg SECTION8.0RETAILACCESS8.1CONDITIONSNECESSARYFORRETAILACCESSInadditiontootherconditionsdescribedinthisagreement,retailchoicedependsuponpropermeteringandappropriatebillingandsettlementprocedures.8.1.1~PAsdescribedinSection8.3,itisessentialthatpropermetering,meterreadingandbillingbeperformedtoinsuretheintegrityofthenewretailaccesssystem.Inaddition,thepartiesagreethatcustomerswillpayallincrementalcostsassociatedwiththeserequirementsasprovidedbyNiagaraMohawk.8.1.2BilliandSettlementProceduresConsistentwithMarkeBillingandsettlementproceduresthatareconsistentwiththedemandsofthemarketmustbeestablished.NiagaraMohawkwillprepareitssettlementandbillingsystemtoaccommodateretailaccesswithinawholesaleelectricitymarketandbulkpowertransmissionsystemoperatedbyanindependentsystemoperatorandoneormorepowerexchanges.ThebillingandsettlementsystemdescribedinSection8.3supportingtheretailaccessschedulewillbedesignedanddevelopedtofunctionwithinthemarketstructureproposedbythemembersystemsoftheNewYorkPowerPoolintheirJanuary31,1997FERCfiling.'heFERCproceedingtoreviewthisfilingisinprogressandthetimingofadecisionisthereforeuncertain.UntiltheISOandtheothernewmarketinstitutionsareinoperation,RegcowilldevelopmethodstofacilitatewholesalesettlementwithmarketersandESCoswithintheframeworkoftheNewYorkPowerPool.Whenthenewinstitutionsareinplace,Regcowillmodifyitssettlement7~ee,"ComprehensiveProposaltoRestructuretheNewYorkWholesaleElectricMarket,"FERCDocketER-97-1523-000.Page81

approachestoensureconsistencywiththenewmarl<etenvironment.Intheeventthatkeyfeaturesofthemarketstructurearemodifiedsubstantiallyfromthoseproposedinthefiling,theCompanyreservestherighttopetitiontheCommissionforapprovaltoadjustthescheduleforretailaccesstopermitcorrespondingchangestobeincorporatedintothebillingandsettlementsystems.Keyfeaturesinclude,butarenotlimitedto,thetwosettlementsystem,locationalbasedmarginalpricingandtheISOOpenAccessTransmissionTariff.8.2RETAILACCESSTIMETABLERetailaccessforcustomersinNiagaraMohawk'sserviceterritorywillbeofferedonascheduleshowninTable8-1.Asdescribedbelow,customerswillreceiveaccessinseveralphases.8.2.1Farm&FoodProcessorDleaPIoOnFebruary25,1997thePublicServiceCommissionissuedanorder'oNiagaraMohawkandthreeotherutilitiestodevelopretailaccessprogramsforcommercialfarmsandfoodprocessors.Inresponsetothatorder,onApril11,1997NMPCfileditsproposal',includingadrafttariff.OnJune23,1997,theCommissionissuedanorder"toimplementtheprogram,requiringatarifffilingbyAugust4,1997andthecommencementofretaildeliveriesbyNovember1,1997.OnSeptember18,1997theCommissionissuedanadditionalorderdirectingcertainchangestotheAugusttarifffiling."TheCompany'splantointroduceretailaccesshasbeendesignedtoaccommodatetheFarm8FoodProcessor(F&FP)pilotprogram.Table8-1includestheF8FPprogramforillustrativepurposesonly.IfimplementationoftheF8FPprogramisdelayedduetorehearing,OrderConcerningRetailAccessProposals,PSCcases94-E-0948and94-E-0385.'ProposalofNiagaraMohawkPowerCorporationforaRetailAccessPilotProgramforCommercialFarmsandFoodProcessors,PSCcases94-E-0948and94-E-0385."OrderEstablishingRetailAccessPilotPrograms,case96-E-0948."OrderConcerningComplianceFilings,case96-E-0948Page82

litigation,orothercauses,thetimetableforretailaccessforothercustomerswillnotbeaffected.ReflectingtheCommission'sdesireforexpeditedimplementation,theF&FPproposalutilizesmethodsthatNiagaraMohawkdoesnotnecessarilyproposetousewhenretailaccessisextendedtoitsothercustomers.TheCompanydoesnotviewthemethodsusedforthepilotasprecedent-settingorbindinginanyway.CustomersparticipatingintheF8FPprogramwillbeofferedtheoptiontoberemovedfromthepilotandservedunderthefullretailaccessprogramwhenothercustomersoftheirrateclass,size,andvoltagedeliverybecomeeligibleforretailaccess.ItistheintentofthePartiesthatthisagreementandtheDairyleaPilotfulfillstheobligationoftheCompanyincases94-E-0385etal.and95-E-0924.8.2.2~Gou1Group1consistsofallcustomersinrateclassSC-3Aservedattransmissionvoltages(greaterthan60kV),pluscustomersinrateclassSC-4servedattransmissionvoltageswithdemandsservedbyNiagaraMohawkof2MWormore.ThetimingofretailchoiceforthesecustomerswillbenolaterthanonemonthafterthePowerChoiceImplementationDate.8.2.3~Gou2Group2consistsofallremainingSC-3AandSC-4customerswithpeakdemandsof2MWormore.ThetimingofretailchoiceforthesecustomerswillbenolaterthansevenmonthsafterthePowerChoiceImplementationDate.8.2.4gi~roi3Group3consistsofallremainingcustomersservedattransmissionandsubtransmissionvoltagelevels(22kVandabove)~ThisgroupwillbecomeeligiblenolaterthanMay1,1999.Page83

~Grou4Group4consistsofallremainingresidentialcustomersnotalreadyparticipatingintheFarmandFoodProcessorpilotprogram.RetailaccessfortheseresidentialcustomerswillbeginnolaterthanApril2,1999,andwillbecompletednolaterthanDecember31,1999.Allpartiesagreetoworkonagoodfaithbasisduring1998todeveloparesidentialphase-inplan,whichincludesprocessesandproceduresthatachieveassmoothandworkableatransitionaspossible,takingintoaccountdifferentwaystoresolvethePOLRobligation,andthedesiretominimizefinancialimpactontheCompany,ensurecustomersatisfaction,andaddresstheneedsofmarketersandESCos.TheplanwillbecompletedbyDecember31,1998.Aspartoftheresidentialretailaccessphase-inplan,theCompanycommitstodeveloping,inconsultationwithotherparties,andimplementinganoutreachandeducationprogramtohelpresidentialcustomersunderstandandactupontheirrighttochoosetheirenergysupplier.TheCompanyreservestherighttoconductapilotofretailaccessinadefinedgeographicarea,but,ifitchoosestodoso,thepilotwillnothavetheeffectofdelayingthescheduleforresidentialcustomers,norwillitdelaythepossibilityforearlieraccessforresidentialcustomers.8.2.6~Grou5Group5consistsofallremainingnon-residentialcustomersexceptfor25cyclecustomers.ThesecustomerswillreceiveretailaccessnolaterthanAugust1,1999.IftheCompanychoosestoconductanareapilot,thisdatewillnotbeaffected,norwillthepilotdelaythepossibilityofearlieraccessforthisgroupofcustomers.8.2.7CusoersWithSecialContractsUnlessotherwiseprovidedforintheircontracts,customerswithspecialcontractswillbecomeeligibleforretailaccesswhenthelaterofthefollowingoccurs:(a)thecustomergroupstowhichtheybelongbecomeeligible(asshowninTable8-1),or(b)theircontractsexpire.8.2.8MonitorinProrssThrouhTieOverthelonger-term,allpartiesagreetoworktogetheronagoodfaithbasisduring1998and1999toevaluatetheresponseofcustomerstotPage84

retailaccess,bothhereandinotherareas,todeterminewhetherthetransitionprocessisworkingwellorshouldbemodified.Alternativesthatcouldbeconsideredincludebutarenotnecessarilylimitedto:(i)alternativewaysofsatisfyingthePOLRresponsibility,(ii)whetherafixedCTCoptionshouldbeofferedtoalargernumberofcustomers,(and,inparticular,whetherafixedCTCisneededforresidentialcustomers),(iii)whetheramandatoryballotingprocessshouldbeemployedtorequirecustomerstochoosetheirsupplier,and(iv)themandatoryassignmentofcustomerstoalternatesuppliers.Thepartieswillalsoconsiderwhetheraviablecompetitivemarketexists,includingafullyfunctioningISO.8.2.9C~tiThedatesforinitiatingaccessforresidentialandsmallnon-residentialcustomersarenotformallylinkedtohavinganoperationalstatewideIndependentSystemOperator(ISO).However,theCompanyretainstherighttopetitiontheCommissiontoalterthescheduleiftheISOthatisultimatelyimplementeddifferssubstantiallyfromtheproposalfiledwithFERConJanuary31,1997bythemembersoftheNewYorkPowerPool,andifimplementingtherevisedISOproposalonthecurrentschedulewouldlikelycauseseriousimplementationproblems(suchasmajorcostshiftingormassconfusion).Inaddition,thedatesforretailaccessforcustomersingroups3,4and5arecontingentupontimelyreceiptofregulatoryapprovalsfromthePSC.(Adelayofseveralmonthsshouldnotaffecttheresidentialandsmallnon-residentialaccesstimetableunlesssuchadelayaffectstheabilityoftheCompanytoimplementtheMRAandtheoverallsettlement.)8.3RETAILACCESSSETTLEMENTMETHODToenableretailaccesswithinitsserviceterritory,RegCowilldevelopabillingandsettlementsystemthatwillprovidethefollowingfeatures.ThesefeatureswillbemodifiedasnecessarytocomplywithanyCommissionordersregardingbillingandmeteringinarestructuredmarketenvironmentbutthisAgreementdoesnotlimitanyParty'srightstochallengeorotherwisepetitionforrelieffromanyproposedpolicyintheGenericProceeding.oRegCowillbillcustomerstakingservicefromitstransmissionanddistributionsystemsforservicesprovidedbytheCompany.oESCoswillhavetheoptionofbillingtheircustomersdirectlyfortheservicestheyprovide,orrequestingRegCotoprovidebillingservicesforthemforafee.Page85

ESCoswillbeabletoarrangephysicalbilateralpurchaseswithwholesalesuppliers,andRegCowillhandletheschedulingofthesetransactionswiththeNYPPorISO,asthecasemaybeatdifferentpointsintime.ESCoswillbeabletopurchasepowerfromthespotmarkets,asadministeredbypowerexchangesand/ortheISO,andRegCowillprovideanyESCointerfacesthatmaynototherwisebeaccommodatedbytheseinstitutions.oAllchargesincurredbyRegCoasaconsequenceofitsroleinprovidinginterfacesforESCoswithpowerexchangesortheISOshallbepassedalongtotheESCosresponsibleforthosecosts.Thisincludesanychargesorcostsforlosses",transmissionservices,ancillaryservices,balancing,uplift,transmissioncongestionrents,etc.oRegCowillmeterordeterminethroughloadshapemethodsallcustomerloadsbyhour,location,andvoltageforthepurposesofdeterminingtotalloadforeachESCobythosecategories.LoadsforcustomersreceivingpowerdirectlyfromRegCowillbedeterminedinthesamemethodtoensurethatnocross-subsidizationoccurs.oRegCowillbepermittedtoincludereasonablechargesfortheservicesitprovidesintheadministrationoftheretailaccesssystem.ThesechargeswillbeincludedinthetariffsfiledbytheCompany,implementingthetermsofthisSettlementAgreement.Figure8-1illustratestheapproachRegCointendstotakeinperformingthesefunctions.ShouldthestatewideISOand/orpowerexchanges,whenoperational,providesettlementservicesthatenableESCostointeractdirectlywiththoseinstitutions,RegCowillmodifyordiscontinueuseofthosefeaturesofthissettlementsystemasappropriate.8.3.1FoecastiaScheduiReueentsESCosortheiragentswillberequiredtosubmittoRegCoatleastadayinadvance(ormultipledaysinadvanceforweekendsandholidays)hourlybilateralscheduleddeliveriesincludingthesourceofgenerationsupplyandlocationoftheloadbeingsupplied.WhenthepowerexchangesandtheISOareoperational,ESCoswillalsoberequiredtoprovidehourlyloadforecasts,andspecifywhatportionoftheirforecastedloadsshouldbeservedfromtheday-aheadenergymarket.RegCowill"Lossesincludeadjustmentsfortransmissionanddistributionlosses,theAofservice,etc.Page86

accommodateloadmanagementbidsprovidedbyESCostotheextentpossiblewithinthebiddingprovisionsofthepowerexchangesandtheISO.8.3.2eerinReuirentsInordertofacilitateretailaccess,allcustomersinclassesSC-3andabovewillberequiredtohaveameterwhosecapabilitiesareatleastequivalenttoasingledirectionalmeterwitharecordercapableofregisteringhourly(orshorter)integratedreadings(intervalmetering),whetherornottheychooseanalternatesupplier.Theincrementalcostsofmeteringwillbebornebythesecustomers.AllothercustomerswillbepermittedtocontinuetoutilizeexistingkWhmeters.Forsettlementpurposes,RegCowilluseloadshapesapplicabletothecustomer'sclasstoestimatehourlyusage.SinceloadshapeshavenotbeenusedinRegCo'sareaforthispurpose,thecompanyreservestherighttomodifythespecifictechniquesasnecessarytoattainreasonableandaccurateresults.Customerclassesmaybesubdividedifdeemednecessarytoensurethatrepresentativeloadshapesareapplied.Anycustomernototherwiserequiredtohaveintervalmeteringmayrequestthatintervalmeteringbeinstalledprovidedthatthecustomerbearstheincrementalcostsofsuchmetering.RegCowilladjustitsmethodologyfortheapplicationofloadshapesand/orintervalmetersasnecessarybasedonexperience,andinconformancewithCommissionordersresultingfromtheongoingmeteringandbillingeffortsintheCompetitiveOpportunitiesProceeding.IntheeventthatmeteravailabilityorinstallationresourcesresultinsomecustomersintheSC-3classnothavinghourlymeteringatthetimetheyotherwisewouldbecomeeligibleforretailaccess,accesswillbepermittedandloadshapesutilizedonaninterimbasisuntilthemeteringisinplace.8.3.3ServcesNotCoveredbtheSettlementSsteCertainservicesacquiredbyESCoswillnotbeincludedinthesettlementsystem.RegCowillnotbeinvolvedinpaymentsbetweenESCosandgeneratorsforbilateraltransactionsbetweenthem.TheISOmayhaveinstalledreserverequirementsthatallloadservingentitiesmustfulfill;RegCodoesnotintendtoserveasabrokerfortheacquisitionofinstalledcapacityforESCos(althoughESCoswillbefreetoseparatelynegotiateforpurchaseofinstalledcapacityfromNiagaraMohawkoritssubsidiaries,ifdesired).Ingeneral,RegCodoesnotintendtoincludeinitssettlementPage87

systemanyserviceforwhichappropriatebillingandpaymentmethodsareavailabledirectlybetweensupplierandESCo.8.3.4NondiscriminatoTreatmentofCustomersRegCowillimplementthecurtailmentproceduresofNYPPortheISO(asapplicable)consistentwithitsexistingtransmissionarrangementsandwillnotdiscriminatebetweenthosebilateraltransactionsservingESCocustomersandthoseservingRegCocustomers.RegCowillconformtoalloperatingcriteriaandguidelinesestablishedbytheISOandthePSC.RegCowillnotdiscriminateinanywayinprovidingreliableservicetocustomersthatreceiveenergysupplyfromRegCoorthosethataresuppliedfromESCos.CustomersofRegCoandcustomersofESCoswillbesubjecttothesameemergencyloadcurtailmentprovisions.8.3.5AuditofheSettlemenFnctioToensurethatthesettlementfunctionsperformedbyRegCotofacilitateretailaccessarebeingperformedinaccordancewithappropriateproceduresthattreatallmarketparticipantsequitably,auditsofthesefunctionsmaybeperformedunderthedirectionofthePSC.ThescopeoftheseauditsshallbelimitedtothosefunctionsandproceduresrelatedtothedeterminationandassessmentofchargestotheESCosobtainingretailaccessthroughRegCo.AllauditsshallbeperformedeitherbytheStaffofthePSC,orbyanindependentauditingfirmwithanationalpracticeselectedbythePSC.AnyincrementalcostsassociatedwiththeauditingofthesettlementfunctionsthatareincurredbyRegCoshallbebornebyallESCosservingretailloadthroughRegCo'sretailaccessframework,andRegCoitself,inproportiontothetotalenergyservedbytheseentitiesinthethree-monthperiodprecedingthecommencementoftheaudit.IncrementalcostsshallincludeauditorcostsinvoiceddirectlytoRegCo,auditorcostsinvoicedseparatelytoRegCobythePSC,andanyRegCocostsincurredspecificallyinresponsetoauditrequirements.AlldataprovidedforauditpurposestothePSCortoanotherauditorshallberegardedasconfidentialandshallnotbedisclosedtoanymarketparticipant,ortothegeneralpublic,unlesssuchdataisalreadyaccessibletothepublicthroughseparatelyestablishedregulationsorproceduresexceptasotherwisedecidedbytheCommissionoritsrecordsPage88

accessofficer.Auditreportsandfindings,excludingconfidentialdata,shallbemadeavailabletoallmarketparticipantsandthegeneralpublic.8.4ReciprocityAssurancesFullretailaccessinNiagaraMohawk'sserviceterritorymayoccurbeforecomparableaccessisavailableinotherelectricutilities'erviceterritories.OtherenergyserviceprovidersmaygainaccesstocustomersinNiagaraMohawk'sserviceterritorybeforeNiagaraMohawkisabletogaincomparableaccesstocustomersinotherelectricutilities'erviceterritories.Ifthereissuchadisparityinthecompanies'elativedegreesofaccess,NiagaraMohawkisconcernedthatitcouldexperiencesubstantialfinancialdisadvantage.However,aspartofthissettlement,theCompanyagreestherewillbenorestrictionsoncommoditysalestoretailcustomersunlesstheCompanypetitionstheCommissionforreliefandtheCommissionapprovestherestriction.Page89

Table8-1RetailAccessPhase-InScheduleandStatisticsGroupFarm&FoodProcessorPilotNumberofCustomersTimingofRetailChoiceMillions%ofTotalRevenueMwhSales%ofTotalCumulative%ofTotalCommercialFarms'oodProcessors'&FPPilotTotal22,23758922,82611/1/9741.81.444.01.485.92.8384,025479,000863,0251.31.73.03.0Group1TransmissionlevelSC-3AandSC4customers'8t+1mo.348.011.24,590,14416.019.0Group2Allremainingcustomers>2MW158t+7mo.213.76.92,517,2708.827.8Group3Allremainingtransmissionandsubtransmissionlevelcustomers42295/1/9968.82.2800,8792.830.6Group4AllremainingresidentialcustomersGroup5Allremainingnon-residentialcustomers'otals1,402,657149,7061,575,674Phasedin,4/2/99through12/31/991,200.138.81,179.238.13,095.6100.09,440,92010,482,29628,694,53432.936.5100.063.5100.0100.0Page90

NotesonTable8-1Statisticsarebasedon1998forecastdata.RevenueestimatesreflectBaseRatefor1998.Customerswithspecialcontractswillnotbecomeeligibleuntilexpirationoftheircontracts.Thetableestimatesdonotreflectpossibledelayedeligibilityduetospecialcontracts.t=ThePowerChoiceImplementationDateRoughestimatesbasedonfullparticipationofallcustomerscurrentlyshowninCompanyrecordsasfarms.Actualparticipationislikelytobelower;however,theCompanydoesnothavesufficientdatatomoreaccuratelypredictactualeligibilityorparticipationpriortoprogramimplementation.2.AssumeseligibilityandparticipationofallcustomerswithSICcodesof2000to2099;specialcontractrates,economicdevelopmentdiscounts,oroptionalpricingschedulesmaymakesomecustomersineligible.3.SC-4customersmustalsohave2MWofNMPCdemandtoqualify.Transmissionlevelisabove60kV.4.Subtransmissionlevelis22kVandabove.5.Excludes25cyclecustomers.Page91

Figure8-1:RetailSettlement&BillingOne-ortwo-billsystemwithESColoadaggregationandloadshapesBillingparameters(rates,deliverycharges,etc.)RegCoCustomerBillingSystemIdentifyESCoandRegCocustomersESCocustomerdataBillforimbalancePaymentGeneratorsInvoicePaymentStatewidePE/ISO~LBMPpricing~OATI(TransmissionServiceCharge,uplift,congestionrents,etc.)PaymentsRegCoservicetemtogPaymentNewRetailLoadsbAccessProcedurehour.ESColoadaggregationvoltageNewRegCoRetailSettlementProcedureESCocustomer-specificdata;Invoicefor:balancing,ESCocustomerhourlyusage,uplift8otherPE/ISOchargesNote:BilateralsmustbescheduledinadvancewithPE/ISOthroughRegCoInvoicesforenergyanddeliverycharges,asapplicable2RegCoCustomersPaymentESCoCustomersInvoice'SCo*PamentHourly,monthly,&bimonthlymeterreadingsInvoicesforbilateraltransactionsRegCo'sESCofunctiontreatedthesameasotherESCosforthispurpose'Foroptionalone-billapproach,RegCohandlescustomerbillingforESCo2Altemativeone-billapproaches,withESCoshandlingbillingforRegCo,willbeaccommodatedasnecessarytocomplywithanyCommissionordersregardingbillingandmeteringinarestructuredmarketenvironmentbutthisAgreementdoesnotlimitanyParty'srightstochallengeorotherwisepetitionforlieffromanyproposedpolicyintheGenericProceeding.

SECTION9.0CORPORATESTRUCTUREANDAFFILIATERULES9.1PROPOSEDCORPORATESTRUCTURENiagaraMohawkshallseparateitsexistingoperations,asindicatedbeloworasdescribedinanypetitionfiledbyNiagaraMohawkwithinoneyearoftheapprovalofthissettlementproposingtheformationofaholdingcompanyinsubstantiallythesamestructuredescribedbelow:HoldCo:TheHoldComaybe,attheCompany'soption,alegallydistinctentitythatdirectlyownsnostateorfederaljurisdictionalassetsand,therefore,isunregulatedorafunctionallyseparateunitservingthesamepurposesofaholdingcompany.Receto:RegCoshallbeawhollyownedsubsidiaryofHoldCoorautilityparentowninginwholeorinpartoneormoreregulatedand/orunregulatedsubsidiaries.TheRegCoshallcarryonthefullrangeofNiagaraMohawk'sregulatedtransmissionandelectricandgasdistributionservices.Totheextentnotcarriedonthroughastatewidenuclearoperatingcompanyandsubjecttotheotherprovisionsofthissettlementregardingnuclearassets,NiagaraMohawk'snuclearoperationsmayremainapartofRegCo.PlumStreetEnterrse/UnreItedAffiliates:NiagaraMohawkmayformunregulatedorlightlyregulatedaffiliates,whichmaybeowned,inwholeorinpart,byHoldCoormaybeasubsidiaryofautilityparentundereitherproposedcorporatestructure.IfNiagaraMohawkseekstoformsubsidiariesofRegCo,itwillbesubjecttoallapplicableregulatoryrequirementsincludingSection107and69ofthePublicServiceLaw.TransitinGenCo:NiagaraMohawkmayformallsubsidiariesnecessarytoeffectuatethefossilandhydroassetauctioncontemplatedinthissettlement.Priortothatauction,NiagaraMohawkmaymaintainitscurrentfunctionalunbundlingofitsfossilandhydrogenerationbusiness.Page92

9.2RULESGOVERNINGAFFILIATETRANSACTIONS9.2.10~1*ti9.2.1.1SeparationandLocationRegCo,HoldCo,andtheHoldCo'sothersubsidiarieswilleachbeoperatedasseparateentitiesandwillmaintainseparatebooksandrecordsofaccount.HoldCo'sunregulatedsubsidiariesandRegCowilloperatefromphysicallyseparatebuildings.RegCoandHoldComayoccupythesamebuilding.9.2.1.2BoardofDirectorsMembershipandFiduciaryDutyAmajorityoftheRegCoBoardofDirectorswillbeOutsideDirectors(i.e.,neitheranofficernordirectorofHoldCooranyHoldCounregulatedaffiliate).InanycalendaryearRegCowilllimitdividendspaidtoHoldCoasfollows:Yi'aas1998199920002001200220032004200520062007andbeyond$50million$75million$100million$100million$100million$80million$60million$40million$20million$0DividendLimitation:NetIncomeAvailableforCommonDiv'dendPlThecalculationofnetincomewillexcludeanyone-time,non-cashaccountingcharges,andthedividendlimitationwillexcludeanyone-timedividendstoHoldCoattributabletomajortransactionssuchasassetsales,thePage93

transferofgeneratingassetsassociatedwithHoldCoandsubsidiaryformationasnecessarytoimplementthetermsofthissettlement,orsecuritization.Notwithstandingtheabove,iftheCompanyfilesforratesforyears2003,2004,2005,2006,or2007,themeasureforthedividendlimitationwillbereassessedinthecontextoftheratefiling.9.2.1.3CostAllocationAppropriatecostallocationprocedureswillbefollowedbyHoldCoanditsaffiliatestoassuretheproperallocationonafullydistributedbasis,toHoldCo,RegCo,PSEorotheraffiliatesofthecostsofanyHoldCopersonnel,propertyorservicesusedbyRegCoorotheraffiliatesorHoldCo.AcompletemanualofcostallocationguidelineswillbedevelopedandfiledwiththeDirectoroftheOfficeofAccountingandFinanceoftheDepartmentofPublicService.Allamendmentsandsupplementstotheseguidelineswillbefiledthirtydayspriortotheeffectivedateofsuchamendmentsandsupplements.Thecosttodeveloptheseguidelines,accounting,auditingandmonitoringsystemsforaffiliateswillbepaidbyshareholders.9.2.2TransferofNon-GenerationAssetsTransfersofnon-generationassets(orrightstousesuchassets)fromRegCotoanaffiliatewillbepricedatthehigherofbookvalueorfairmarketvalue.9.2.3TnsferofServicesRegComayprovidetariffedandcorporateservices(suchascorporategovernance,administrative,legalandaccounting)toHoldCoandHoldCo'sothersubsidiaries.Theprovisionofcorporateservicesshallbesubjecttoawrittencontractthat,asapplicable,identifiesthepersonnel,assets,andserviceswhichwillbeprovided.Theserviceswillbeprovidedonafullyloadedcostbasis.SuchservicesmaybeprovidedbyRegCosolongasRegCo'stotalassetsareequaltoorgreaterthan85%oftheconsolidatedtotalassetsofHoldCo.Page94

AtsuchtimeasRegCo'stotalassetsarelessthan85%oftheconsolidatedtotalassetsofHoldCo,corporateservicesmaynotbeprovidedbyRegCotoHoldCoanditsothersubsidiaries;however,HoldComayprovidecorporateservicestoRegCoanditsothersubsidiariesatanytimeprovidedthatsuchservicesarepricedatnothigherthanfullyloadedcostandarepursuanttoawrittencontractthat,asapplicable,identifiesthepersonnel,assets,andservicestobeprovided.RegCowillnotpurchaseanyotherproductsorservicesfromHoldCooritsunregulatedaffiliatesunlessthesearepurchasedasaresultofafairandopencompetitivebiddingprocess.TotheextentthattheCompanydoesnotmovethefunctiontoRegCo,theexistingEnergyServicesandGasServicescontractswithPlumStreetwillbesubjecttoafairandopencompetitivebiddingprocessbyDecember31,2000,orattherenewalorexpirationdatesofthecurrentagreements,whicheverisearlier.AnysuchcontractwillbefiledwiththePublicServiceCommissioninaccordancewithPublicServiceLawSection110.TheCompanywillmeetwithStafftodeterminewhich,ifany,functionsshouldreturntoRegCo.Furthermore,anygenericorderregardingtheprovisionoftheseserviceswillsupersedethisagreement.TheRegCo,theHoldCoandtheunregulatedaffiliatesmaybecoveredbycommonproperty/casualtyandotherbusinessinsurancepolicies.ThecostsofsuchpoliciesshallbeallocatedamongtheRegCo,theHoldCoandtheunregulatedaffiliatesinanequitablemannerasdefinedinthecostallocationmanual.9.2.4SeclalServicesTheCompanythroughRegCowillnotprovideoroffertoprovideservicestocustomersthatarenormallyprovidedbyEnergyServicesCompanies(ESCos)suchasenergyaudits,energyefficiencyequipment,etc.withoutpriorCommissionapprovalexceptasprovidedforinSection7.2(xiii).TheCompanywillbeallowedtoprovideoperation,maintenanceandconstructionservicestocustomer'sequipmentatacustomer'sexplicitrequestthatisrelatedtoenergydeliveryservices(Rule28ofP.S.C.207).AnysuchservicesprovidedbytheCompanywillbesubjecttothefollowing:(1)Undernocircumstanceswillsuchcustomer-requestedservicesprovidedbyRegCotoindividualcustomersimposeacostonotherutilityratepayers.Customerswillbechargedfullyloadedratesfortheseservices.Page95

(2)TheCompanywillprovidethesesewicesonafirst-come,first-servedbasistocustomerswhorequestthemonnon-discriminatorytermsandconditions,i.e.,similarlysituatedcustomerswouldbechargedthesamerates.(3)TheCompanywillmakecustomersawareifthereareotherentitiesthatmaybeabletoprovidetherequestedservices.(4)Theutilitywillmaintainrecordsrelativetoallsuchservices,includingscopeofwork,copiesofcustomerrequestsincludingacknowledgmentthatthecustomerwasawareofalternatesuppliers,revenuesreceived,anyprofitsmadeasaresultofprovidingtheservices,andidentifyinganydirectorindirectbenefitstootherratepayersthattheCompanyestimateswasderivedfromtheprovisionoftheservice.(5)TheCompanywillprovidetheCommissioninYear3ananalysisoftheimpactoftheCompanyprovidingsuchserviceandtheCommissionwillthendecideiftheCompanywillbeallowedtocontinuetheprovisionofsuchservices.(6)RegCowillnothireanyadditionalemployeesorpurchaseadditionalequipmentinordertoprovidetheseservices.TotheextenttheCompany'scurrentorplannedprovisionoftheservicesdescribedaboverequiresCommissionauthorizationpursuanttoPublicServiceLawSection107,thatauthorizationisinthepublicinterestandinapprovingthissettlement,theCommissiontherebygrantsthatauthorizationforthetermofthissettlement.9.2.5~R9.2.5.1SeparationofEmployeesandOfficersRegCoandtheunregulatedsubsidiarieswillhaveseparateoperatingemployees.Operatingofficers(i.e.,thoseofficersprovidingotherthancorporateservices)ofRegCowillnotbeoperatingofficersofanyoftheunregulatedsubsidiaries.OfficersofHoldComaybeofficersofRegCooranunregulatedaffiliate,providedthataHoldCoofficermaynotbeanofficerofbothRegCoandanunregulatedaffiliate.Page96

9.2.5.2EmployeeTransfersIfaRegCoemployeeacceptsapositionwithanunregulatedsubsidiary,heorshewillberequiredtoresignfromRegCounlessthereisaconflictwiththecollectivebargainingagreementinwhichcasethecollectivebargainingagreementwouldcontrol.Anysuchemployeeshallbeprohibitedfromcopyingortakinganynon-publiccustomerorcompetitivelysensitivemarketinformationfromRegCo.EmployeesmaybetransferredfromRegCotoanaffiliate.TransferredemployeesmaynotbereemployedbyRegCoforaminimumofoneyearaftertransfer.EmployeesreturningtoRegComaynotbetransferredagaintoanunregulatedaffiliateforaminimumofoneyear.RegCowillfileannualreportstotheCommission,beginning45daysaftertheendofthefirstcalendarquarterfollowingformationofHoldCoshowingtransfersbetweenRegCoandunregulatedaffiliatesbyemployeename,formercompany,formerposition,newcompany,newposition,andsalaryorannualizedbasecompensation.TherewillnotbeanytemporaryemployeetransfersbetweenRegCo,HoldCoandanyHoldCounregulatedaffiliates.9.2.5.3EmployeeLoansinanEmergencyTheforegoingprovisionsinnowayrestrictanyaffiliatefromloaningemployeestoRegCotorespondtoanemergencythatthreatensthesafetyorreliabilityofservicetoconsumers.9.2.5.4CompensationforTransfersAnemployeetransfercreditequalto25%oftheemployee'ssalarywillbeappliedtoreduceanystrandedcosts.Thisfeewillapplyforalltransfersexceptfor(i)theinitialtransferofRegCoemployeestoHoldCoonorwithinthe30daysaftertheformationofHoldCo,(ii)thetransferofRegCoemployeesfromoneregulatedsubsidiarytoanotherregulatedsubsidiary,(iii)thetransferofRegCoemployeestoanaffiliateiftheirfunctionisnolongerregulated,(iv)anyrepresentedorotheremployeecoveredbyacollectivebargainingagreementtargetedbyalayoffintheoneyearfollowingtheimplementationdateofPowerChoice,and(v)thetransferofemployeesinvolvedintheperformanceofcorporateservicestoHoldCowhenRegConolongerconstitutesmorethan85%ofHoldCo'sassetsaspersection9.2.3.Page97

TransferchargesforemployeestransferredtaPlumStreettodatearereflectedinratelevels.9.2.5.5EmployeeCompensationandBenefitsThecompensationofRegCoemployeesmaynotbetiedtotheperformanceofanyoftheunregulatedsubsidiaries,provided,however,thatstockoftheHoldComaybeusedasanelementofcompensationandthecompensationofcommonofficersoftheHoldCoandRegComaybebasedupontheoperationsoftheHoldCoandRegCo.EmployeesofHoldCo,RegCoandtheunregulatedsubsidiariesmayparticipateincommonpensionandbenefitplans.9.2.5.6LegalRepresentationTheaffiliatesofHoldCootherthanRegCoandCanadianNiagarashallhavetheirownChiefLegalOfficer/GeneralCounsel,whoshallreporttotheaffiliate'smanagementandnotbeanemployeeorofficerofRegCo.ThesamelawfirmmayrepresentRegCoandanyaffiliateonanymatterotherthantransactionsbetweenRegCoandthataffiliate.OnanymatternotinvolvingsuchanintracorporatetransactioninwhichtheinterestsofRegComaybeadversetotheinterestsofanaffiliate,RegCowilltakeappropriatestepstoensurethatRegCo'sinterestsarevigorouslyandindependentlyprotected(suchsteps,bywayofexampleandnotlimitation,couldincludehavingseparateattorneysifasinglelawfirmisusedandcreatingaChinesewallbetweensuchattorneys)~Withrespecttoallmattershandledbyoutsidecounsel,HoldCoanditsaffiliatesshallinstructoutsidecounseltotakeallreasonablestepstoensurethenon-publiccustomerandcompetitivelysensitiveinformationinthepossessionofRegCoisnotcommunicatedtoanaffiliate.9.2.6Maintai'nFinanciallnteriNiagaraMohawkwillagreetothefollowingfinancialrestrictions:(i)RegCoassetswillnotbeusedascollateralforaffiliatedebt;and(ii)debtandequityrequirementswillbeestablishedforRegCothroughtheregulatoryprocess.RegCowillnotprovideanyfinancialassistancetoitsaffiliatesthroughloans,loanguarantees,lettersofcreditorothercommitments.Page98

NothingintheserestrictionswillpreventNiagaraMohawkfromtransferringfundsfromitsOpinacaffiliatetoanyotheraffiliateatanytimewithoutCommissionauthorization.9.2.7AccesstoBooksRecordsandReortsStaffwillhavefullaccess,onreasonablenotice,andsubjecttoresolutionofconfidentialityandprivilege(e.g.,attorneyclient,attorneyworkproduct,selfcritical)issues,to:1)thebooksandrecordsofHoldCoandtheHoldComajorityownedsubsidiaries;and2)thebooksandrecordsofallotherHoldCosubsidiariestotheextentnecessarytoauditandmonitoranytransactionswhichhaveoccurredbetweentheRegCoandsuchsubsidiaries.9.2.8~ReortinAnnually,RegCowillfilereportson:Transfersofassets,costallocations,employeetransfersandemployeesincommonbenefitplans.Quarterly,HoldCowillfilealistofallSECfilingswiththeCommission.9.3STANDARDSOFCOMPETITIVECONDUCTThefollowingstandardsofcompetitiveconductshallgovernRegCo'srelationshipwithanyunregulatedaffiliates.9.3.1UseofCororateNameandRoaltesTherateplaninthissettlementshallbeinlieuofanyandall"royalty"paymentsthatcouldormightbeassertedtobepayablebyanyaffiliateorimputedtotheRegCoorcreditedtoRegCocustomersatanytime,includingaftertheexpirationofthissettlement.Therearenorestrictionsonanyaffiliateusingthesamename,tradenames,trademarks,servicenames,servicemarksoraderivativeofanameoftheHoldCoorRegCo,orinidentifyingitselfasbeingaffiliatedwiththeHoldCoorRegCo.PromotionalmaterialmayidentifytheaffiliateasbeingaffiliatedwithRegCoorHoldCo.Page99

9.3.2SalesLeadsRegCowillnotprovidesalesleadsinvolvingcustomersinitsserviceterritorytoanyaffiliate.9.3.3CustomerInuiresIfacustomerrequestsinformationaboutsecuringanyserviceorproductofferedbyESCos,theRegComayprovidealistofallknownESCosoperatingintheareawhichmayincludeitsunregulatedaffiliate.9.3.4NoAdvantaeGainedbDealwithAffilaeRegCowillrefrainfromgivinganyappearancethatRegCospeaksonbehalfofanaffiliateorthatanaffiliatespeaksonbehalfoftheRegCo.RegCowillnotparticipateinanyjointpromotionormarketingwithitsaffiliates.TheRegCowillnotrepresenttoanycustomer,supplierorthirdpartythatanadvantagemayaccruetosuchcustomer,supplierorthirdpartyintheuseoftheRegCo'sservicesasaresultofthatcustomer,supplierorthirdpartydealingwithanyaffiliate.RegCo'saffiliateswillnotrepresenttoanycustomer,supplierorthirdpartythatanadvantagemayaccruetosuchcustomer,supplierorthirdpartyintheuseoftheaffiliateservicesasaresultofthatcustomer,supplierorthirdpartydealingwithRegCo.TheseprovisionsdonotrestricttheuseofthenameofHoldCoorRegCoassetforthinSection9.3.1.9.3.5NoeDAllsimilarlysituatedcustomers,includingESCosandcustomersofESCos,whetheraffiliatedorunaffiliated,willpaythesameratesfortheRegCo'sutilityservices.Ifthereisdiscretionintheapplicationofanytariffprovision,RegComustnotofferitsaffiliatemorefavorabletermsandconditionsthanithasofferedtoallsimilarlysituatedcompetitorsoftheaffiliate.Page100

FERCJurisdictionTransactionssubjecttoFERC'sjurisdictionwillbegovernedbyFERC'sordersorstandardsasapplicable.CusoerInformationRegCowillprovide24monthsofacustomer'sdatatothatcustomeroritsauthorizedESCoatnocharge,exceptasprovidedbylawconsistentwiththeCommissionordersintheGenericProceedingrelatedtoMeteringandBilling(94-E-0952).Additionalcustomerbillinginformationwillbeprovidedtoacustomerforareasonablefeetobeestablishedpursuanttoatariff.IftheCompanyreleasesotherinformation,itwilldosoforafeeandonanon-discriminatorybasis.0erInfomationOthercustomerormarketinformationintheCompany'spossessionwillbereleasedasnecessary,asauthorizedorrequiredunderFERCandPSCregulations,subjecttoprotectionofconfidentialinformationandrecoveryofattendantcosts.RegCowillnotdisclosetoanyaffiliateanymarketinformationrelativetoitsserviceterritory,whichisnototherwisepublic,thatithasnotdisclosedcontemporaneouslyonanequalbasistoallpotentialcompetitorsofitsaffiliate.pmateesAnycompetitororcustomerofRegCoorcompetitorofanyHoldCosubsidiarywhobelievesthatRegCoorHoldCooritssubsidiarieshasviolatedtheseprinciplesmayfileacomplaintwiththePSCandserveacopyontheCompanywhichshallrespondinwritinginfourteenbusinessdays,withacopytothePSC.Thereafter,thecomplainantandtheCompanyshallmeettoresolvethecomplaintinformally.IfnoresolutioncanbereachedwithinthirtydaysafterRegCo'sresponse,eitherpartymaynotifytheSecretaryofthePSC.TheSecretaryshallsendacopyofsuchnoticetotheotherparty,andshallpromptlyaddressthecomplaintpursuanttotheCommission'scomplaintprocedures.IftheCommissiondetermines,pertheprocedureoutlinedaboveorasaresultofitsowninvestigation,thattheRegCoorHoldCohasviolatedthesePage101

standards,itshallprovidetheRegCo/HoldCoanopportunitytoremedysuchconductorexplainwhysuchconductisnotaviolation.IftheRegCo/HoldCofailstoremedysuchconductwithinareasonabletimeafterreceivingsuchnotice,theCommissionmaytakesuchremedialactionforwhichithasauthorityunderthePublicServiceLaw.9.4MISCfLLANEOUS9.4.1AIlcabillofSettlementStandardsofConductThestandardsofconductsetforthinthisAgreementwillapplyinlieuofanyexistinggenericstandardsofconduct(~e,theinterimgasstandardsestablishedinCase93-G-0932)andinlieuofanyfuturegenericstandardsofconductestablishedbytheCommissionduringthetermofthisAgreement.BeforetheCommissionmakesanychangestothesestandards,eitherthroughagenericorspecificCompanyproceeding,itwillconsidertheCompany'sspecificcircumstances,includingitsperformanceundertheexistingstandards.9.4.2k~ltiSeniormanagementofRegCoandHoldCowillmeetannuallywithseniorCommissionStafftodiscusstheCompany'splansrelatedtocapitalattractionandfinancialperformance.9.4.3TraininandCeficatlonHoldCoandRegCoshallconducttrainingontheseprinciplesforofficers,directorsandseniormanagers.Theofficers,directorsandseniormanagersofHoldCo,RegCo,andunregulatedaffiliatesshallcertifyfamiliaritywiththeseprincipleswithinforty-fivedaysofPSCapproval.Newofficers,directorsandseniormanagementshouldsimilarlycertifyfamiliaritywithin45daysaftertakingtheirpositions.Onanannualbasis,designatedofficersshouldprovidecertificationtothePSCofthecompanies'dherencetothesestandards.Page102

9.4.4TelerqlrTherateplanandstandardsofconductinthissettlementshallconstitutesettlementoftheissuesthathavearisenwithregardtoorresultingfromtheso-called"Telergy"venture,includingthoseidentifiedinCaseNo.96-M-0138pertainingtoadequatecompensationfortheuseofNiagaraMohawk'srights-of-way,anduseof"Telergy"CallingCards.9.5MERGERSANDACQUISITIONS9.5.1RecoveofPremumPursuanttoapetitionfiledjointlyorindividuallybytheCompany,NiagaraMohawkshallhavetheflexibilitytoretain,onacumulativebasis,allsavingsassociatedwiththeacquisitionormergerwithanotherutilityforaperiodoffiveyearsfromthedateofclosingofanysuchmergeroracquisitionuptotheamountofacquisitionpremiumpaidoverthelesserofbookvalueorfairmarketvalueofassetsmergedoracquired.SavingsinexcessofthatrecoverywillbedisposedofbyorderoftheCommission.9.552RelationshitoDivestiureBecausethePSCwillreviewmergerapplicationsunderthePublicServiceLaw,nothinginthisagreementwilllimittheCompany'sabilitytomergewithorbeacquiredbyanotherentityowninggeneration.9.5.3AlicabiliofthisAreementPostMererTheprovisionsofthisagreementshallcontinueinanymergedentity.9.5.4~B*dlld9StaffandtheCommissionwillgiveexpeditedreviewandtreatmenttoanypetitionbyRegCoorHoldCoinconnectionwithamergerwithanotherutility.Page103

SECTION10.0SUPPLIEROFLASTRESORTOBLIGATIONANDIMPLEMENTATION10.1OBLIGATIONTOSERVEThePublicServiceLawrequiresregulatedutilitiestoprovidesafeandadequateelectricserviceatjustandreasonablerates.RegCowillmaintainanobligationtoprovidetheelectricitycommoditytoallcustomersduringthetermofthissettlement,asfurtherdescribedinSection4.0.TheCompanyagreestoworkwithotherparties,inthecontinuingproceedingsinCase94-E-0952andotherforumsasappropriate,todevelopadefinitionoftheobligationtoservethatisconsistentwithacompetitivegenerationmarketandacompetitiveenergyservicesmarket.10.2IMPLEMENTATION10.2.1EnerServiceProvidersMarketersandBroesNiagaraMohawkwillacceptfinancialriskfortheperformanceofenergyservicecompaniesiftheCompanyisallowedtoemployreasonablestandardsofoperationalconductandacceptablestandardsofcommercialcreditworthiness.TotheextentthatNiagaraMohawkhasincurredcoststoprovideenergytobalanceanESCo'scustomersloads,itwillcollectitscostsfordoingsofromthatESCoand/orfromcustomersasprovidedforbelow.NiagaraMohawk'sESCowillhavethesamerequirementsasotherESCos.AsdiscussedinSection8.3RegCowillbillcustomersdirectlyfortransmissionanddistributionservices.AnESCOwillhavetheoptionofbillingcustomersforitsservicesdirectly(twobillmodel)orhavingRegCobillonitsbehalf(onebillmodel).Undertheonebillmodel,issuesconcerningoperationalconductandcreditworthinesscanbeaddressedinthecommercialtermsestablishedunderservicelevelcontractswiththeESCos.Therefore,noadditionalcreditorsecurityrequirementsshallapply.Page104

Withrespecttothetwobillmodel,theCompanyhasagreaterlevelofbusinessriskfrombalancingservices.Thisbusinessriskcanbemitigatedbyestablishmentofreasonablestandardsofoperationalperformanceandcreditworthiness.Thefollowingproceduresaddresstheseoperationalbusinessrisks:ESCosarerequiredtomaintainacreditrequirementwiththeCompanyorprovideadequatesecurityinlieuofsuchcreditrequirement,inanamountthatisequaltoorgreaterthanthesummationofthekilowatthoursofallcustomersundereachESCo'sservice,multipliedbytheCompany'shighestmonthlyaverageonpeakenergybuybackrateduringtheprecedingtwelvemonthperiod(thecurrentrateunderS.C,6is$.02333perkilowatthour).TheCompanyreservestherighttorevisetherateasappropriatetoreflectchangesintariffprovisions.Thiscreditrequirementwillbeupdatedonacontinuousbasis.Acustomer'skilowatthoursummationforcreditrequirementpurposesonly,willbedeterminedbycomputingthetwohighestmonthlybillingcyclekilowatthourconsumptionsorthehighestbi-monthlybillingcyclekilowatthourconsumptionsoverthepriortwelve-monthperiodfortheeligiblecustomers.Ifapriortwelve-monthperioddoesnotexist,thekilowatthoursummationwillbedeterminedbycomputingthetwohighestkilowatthourconsumptionsorthehighestbi-monthlykilowatthourconsumptionsoverthepriortwelve-monthperiodforan"averagecustomer"ofthesamerateclassandvoltageleveloftheeligiblecustomer.TheapplicationoftheseESCocreditworthinessstandardswillbeaccomplishedbyperformingtheevaluationasdescribedmorefullyinSection10.2.3.2ofthissettlement.AninterimimbalancebillingmaybepresentedtotheESCowithpaymentduewithin21daysofreceiptofthebillingwhenactualdeliveriesfallbelow75%oftherequiredscheduleddeliveriesduringasevendayperiod.IfpaymentfromtheESCoisnotreceived,theCompanymayinstituteanexpeditedproceedingwiththePSCtorevokeorsuspendtheESCo'seligibility,andtoproposeatransitionplantoconverttheESCo'scustomerstoanPage105

alternativesupplier.TheCompanyexpectsadecisiononthispetitiontobecompletedwithin23daysofsuchfiling.TotheextentthatthePSCdoesnotrespondtothepetitionrequestoralterstheconversiondateoftheESCo'scustomers,beyondsixtydaysfromthebeginningoftheperiodthatgeneratedtheinterimimbalancebillor23daysfromthefilingofthepetitionwiththePSC,whicheverisgreater,theCompanywillnotbeatriskoflossassociatedwithimbalanceservicesforthosecustomersfromthisdatethroughtheconversiondatesetforthinthePSCdecision.TheCompanywouldseektorecoversuch'lossesfirst,fromanyremainingsecurityfromtheESCo,secondthroughthetransitionplanfortheESCo'scustomersasapprovedbythePSC,andlastlyfromratepayersingeneral,consistentwithdeferralprovisionscontainedinSection2.0RatePlanofthissettlement.TheCompanywillcontinuetouseitsbesteffortstopursuerecoveryofalllossesfromtheESCoandtotheextentadditionalrecoveriesareachieved,suchrecoverieswillbeoffsetagainstdeferrals.TheseprocedureswillberevisedasnecessaryupontheestablishmentofafullyoperationalISOandPowerExchange.10.2.2Gustoer0eratlonsProceduresTofacilitatetheCompany'soperationsundertherateplan,provisionsofPart11,Part13,Part140andPart273of16NYCRRandtherequirementsforaplainlanguagebillformatadoptedinCase28080,OrdrReirinGasandElectricUtilitiestoF'eviseBilinFormt(Oct.31,1985),arewaivedtotheextentthatanysuchprovisionsareinconsistentwiththeCompany'sabilityto:institutenon-discriminatoryprocedureswhichrequireanapplicanttoprovidereasonableproofoftheapplicant'sidentityasaconditionofservice;b.modifyitsbillcontentandformatinresponsetoindustryrestructuring;provided,however,theCompany'sbillswillcontainthefollowing:Page106

anexplanationofhowbillsmaybe.'paidtotalchargesdueduedateunitpriceofenergyconsumedorotherappropriateitemizationofcharges(includingsalestaxesandotherinformativetaxitemization)completenameandaddressofcustomeruniqueaccountnumberorcustomernumberassignedtothecustomermeterreadingsperiodoftimeassociatedwitheachproductorservicenameofentityrenderingbilllocalortoll-freetelephonenumbercustomersmaycallwithinquiriesplainlanguagebasisofcalculationsofbilledamountslatepaymentchargesthatapplyestimatedreads,ifapplicablepostingofcashreceiptstopreviousbalancec.includenon-tariffeditemsinabill;provided,however,thatcustomerpaymentsarecreditedfirsttotariffeditemsandservicecannotbeterminatedforfailuretopaynon-tariffeditems.NiagaraMohawkwillbepermittedtodisclosetootherserviceproviders:whetherornotadepositcouldberequestedfromthecustomersbyNiagaraMohawkduetodelinquency,asdefinedin16NYCRRSection11.12(d)(2)orin16NYCRRSection13.1(b)(13),orforanyreasonprovidedin16NYCRRSection13.7(a)(1);whetherornotacustomercouldbedeniedservicebyNiagaraMohawkduetounpaidbillsonanexistingorprioraccount;or,whetheracustomer'sservicecouldbeterminatedbyNiagaraMohawkprovidedthat:suchinformationistobeusedbyotherserviceprovidersonlyforthepurposesofdeterminingwhetherunregulatedenergyserviceswillbeprovidedtothecustomer,whetheradepositwillbecollectedfromsuchcustomer,orforotherpurposesapprovedbytheCommission;and,Page107

suchinformationrequestismadebyaserviceproviderinresponsetoabonafiderequestfromthecustomertotheserviceproviderforelectricserviceorwithothercustomerconsent.TheCompanywillbepermittedtoacceptcreditcardpaymentsforutilityservice,provided,however,thatanycostsimposedonNiagaraMohawkassociatedwiththereceiptofpaymentbycreditcardaretobeconsideredamongthegeneralcostsofdoingbusinessandwillnotbeaseparateadditionalchargetothecustomerswhosepaymentsaremadebycreditcard.10.2.3CreditandCollectonMaers10.2.3.1CustomerCreditworthinessChangetoParts11and13oftheCommission'sRegulationsareexpectedtobemadeandnecessaryfortheCompanytomitigateitsrisksofbeingthesupplieroflastresort.InCase96-M-0706,forexample,theCompanyproposeschangestotheRegulations,including(1)requiringpaymentinfullofsecuritydepositspriortoinitiationofserviceforsomecustomers;(2)requiringalternatepaymentplansforcertainapplicantsandforcustomerswhohavedefaultedondeferredpaymentagreements(DPA);(3)requiringcompletedapplicationsforservice;(4)increasingminimumDPApaymentsanddownpayments;(5)revisingthestandardsfordeterminingfinancialneed;(6)allowingutilitiestodenyserviceundercertaincircumstancestothosewhohavebreachedDPAs;and(7)reducingthedurationofDPAs.TheCompanyplanstopursuechangesasdescribedaboveaspartofthegenericproceedingcoveringtheseissues,however,itreservestherighttopetitionforfurtherwaiverofsuchrulesasnecessary.Page108

ESCoCreditworthinessEvaluationNiagaraMohawkwillestablishcreditlimitsorsecurityrequirementsforallenergysupplierspriortotheirservingcustomersonNiagaraMohawk'ssystembyapplying,onaconsistent,non-discriminatorybasis,thesamefinancialevaluationstandardsitcurrentlyemploysindeterminingcreditworthinessofenergysuppliersprovidingsupplyservicestoitsgastransportationcustomers(SeeAppendixG).Energysupplierswillbenotifiedoftheestablishedcreditlimitwithintwoweeksofreceiptofacompletedcreditapplicationaccompaniedbythetwomostcurrentyearsofauditedfinancialstatements.Creditlimitsmustbemaintainedandwillbereviewedcontinually.Ifanentityisassignedacreditlimitthatisnotsufficienttomeettherequirementsofthissection,itmaymeettherequirementsbypayinganyoutstandingbalancesduetoNiagaraMohawkandprovidingsecurityintheformof(1)anadvancedeposit;(2)anirrevocableletterofcreditinsuchform,anddrawnuponsuchbank,asaresatisfactorytoNiagaraMohawk;(3)asecurityinterestincollateralsatisfactorytoNiagaraMohawk;or(4)aguarantee,informacceptabletoNiagaraMohawk,byanotherentitywhichisassignedacreditlimitadequatetomeettherequirementsofthissection(e.g.,parentalguarantee)~SuchsecuritymustbeinanamountatleastsufficienttocoverthedifferencebetweenthecreditlimitassignedtotheentitybyNiagaraMohawkandthecreditlimitrequiredbythissection.Intheeventthelevelofcreditindicatessecurityisnolongerrequired,andinconjunctionwithacreditworthinessevaluation,suchsecuritywillbereturnedinkind,withintwoweeksofsuchdetermination.SecuritydepositsheldbyNiagaraMohawkPowerCorporationforenergysupplierswillaccrueinterestattheCommission's"OtherCustomerCapitalRate."IfNiagaraMohawkisunabletoestablishacreditlimitbasedoninformationavailablePage109

fromacceptablefinancialreportingagenciesorcommercialcreditreportingorganizations,andthefinancialstatementsnotedabove,anenergysuppliermustprovidesuchsupplementalfinancialandcreditinformationasNiagaraMohawkmaydeemnecessary.Thismayincludeinformationastotheenergysupplier'slegalstructure;itsofficers,partners,orproprietors;tradereferences;recentfinancialstatements;andsuchothercreditinformationasmightreasonablyberequiredintheexerciseofduediligencebyapotentialcreditoroftheenergysupplier.10.2.4TerinationDecislosRegCowillserveasthesupplieroflastresort,thusitwillmakeallserviceterminationdecisionsassociatedwithnon-paymentofamountsowedtotheCompany.Itsterminationdecisionswillcontinuetobeguidedbyregulation.RegCowillnotchargeforacustomer'sinitialswitchfromRegCotoanalternativeenergysupplier.IfacompetitiveESCowantstodiscontinueelectricservice,itwillnotifythecustomerandRegCooftheterminationinwritingatleast21daysbeforethecustomer'nextcyclemeterreadingdate.IfacustomerwantstodiscontinueservicefromanESCo,itwillnotifytheESCoandRegCooftheterminationinwritingatleast21daysbeforethecustomer'snextmeterreadingdate.If,afterreceivingtheESCo'swrittenterminationnotice,orsendingitsownwrittenterminationnotice,thecustomerhasnotcontactedRegCoorsomeotherESCoduringthe21dayperiod,servicewouldthereafterbeprovidedbyRegCo.RegCowillchargecustomersaswitchingchargethatfullyreflectsallincrementalcostsasprovidedundertariffs.RegCoalsowillchargecustomerswhoreturntoRegCoforcommodityserviceratesforenergysupplyaccordingtotheratesfortheirapplicablerateclass.Anyotherchargesassociatedwiththediscontinuanceand/orreconnectionofservicewillbebornebytheESCo.RegComayrecoverthosechargesfromtheESCobyacquiringacommensurateamountoftheESCo'ssecurityandreceivingareplacementamountofsecurityfromtheESCo.Page110

RegCo'srevenuesourcesmaybeinjeopardytotheextentwelfarereformonthestateandfederallevelslimitspublicassistanceandHomeEnergyAssistanceProgrambenefitsthatcustomersnowusetopaytheirutilitybills.RegComayincurarevenueshortfallfromthosesourcesthatisnotcurrentlybeingmitigated.Tomitigatethatshortfall,RegCohastherighttopetitionforrecoveryoflossesconsistentwiththetreatmentofdeferralsasdescribedinSection2.0,RatePlanofthissettlement.Page111

SECTION11.0REGULATORYCHANGESANDAPPROVALS11.1ELIMINATIONOFCERTAINREGULATORYREQUIREMENTS11.1~1ReulatoReortinReuirementsNiagaraMohawkwillcontinueitsparticipationintheReportingRequirementsWorkingGroupofCase94-E-0952-CompetitiveOpportunitiesProceeding-PhaseII.ThereportingrequirementsthatmaybeestablishedinCase94-E-0952byafinal,CommissionorderoranorderwhichhasnotbeenstayedpendingappealwillapplyduringthetermofthisAgreement.11.1.2TreatmetofutureRefundsTheCompanyissubjecttoongoingexaminationsbyfederalandstatetaxauthorities.Noamountshavebeenprovidedforinthefinancialforecastforresolution,eitherresultinginarefundorliability,oftheseexaminations.Totheextentthatrefundsorpayments,includinginterestandpenaltiesandnetofanydeferredtaxes,individuallyexceed$500,000,theCompanywilldefersuchrefundorpaymentfordispositioninratesafterthetermofthesettlementagreement.Whenavailable,newdeferreddebitswillbenettedagainstnewdeferredcreditsarisingduringthetermofthissettlementagreement.Inaddition,theCompanyexpectstoreceiveataxbenefitresultingfromtheoffsetofthecommonstock,equity,andcashitwillprovideundertheMRAagainsttaxamountspaidinpastandfuture'years,asdescribedinSection2.3.4.Duringthetermofthissettlement,thetreatmentdescribedabovecoversallrefundsandtaxbenefitsthatmightotherwisehavebeenpassedbacktocustomers.Thus,inapprovingthissettlement,theCommissiontherebyapprovesthetreatmentofallsuchrefundsandthetotalamountofthetaxbenefitdescribedPage112

above.TheCompanywillnotberequiredtofileanyformalnoticeoftaxrefundsunder.Section89.3oftheCommission'sRegulations(16NYCRRSection89.3).NohearingswillbeheldpursuanttoSection113(2).However,theCompanywillprovideStaffwithdocumentationandsupportingworkpapersofanysuchtaxrefundsonatimelybasis.ThissettlementconstitutesfullcompliancewiththeprovisionsofSection113(2)andtheCommission'sRegulations.11.2REGULATORYAPPROVALS11.2.1CommercializationofPoductsandTechnoloiesDeveloedasaResultofResearchadDevelomenDuringthetermofthisAgreement,NiagaraMohawkwillnotdeferandtrueupitscostofinvestmentinresearchanddevelopment(R&D)activities.NorwilltheCompanydeferandtrueupanyroyaltyrevenueitreceivesfromcommercializationofproductsandtechnologiesthatemergefromsuchR8Dactivities.TheCompany'saffiliatesmayinvestincommercializationofR8DproductsandtechnologiesdevelopedbyRegCoconsistentwithaffiliaterulesgenerallyandwithSec.9.2.2specifically.Ifanaffiliateelectstoinvest,itwillfairlycompensateRegCo,assumethebusinessrisk(s)andwillbeentitledtothebenefitsassociatedwiththatinvestment.11.2.2PSLSectios69ad0royaloftheSaleLeasinorFinancinofBuildiFcilitesNiagaraMohawkintendstoimplementanOccupancyCostReductionInitiative("OCRI").Thepurposeofthisinitiativeistoreducethetotaloccupancycostto,andrevenuerequirementsof,NiagaraMohawk,whileincreasingcorporateflexibilityandenhancingoperationalefficiency.OnekeyobjectiveofOCRIwillbetorealigntheCompany'sassetbasetomaximizeflexibilityandminimizecapitalcommitmentastheneedsoftheCompanychange.NiagaraMohawkwishestoachievethisobjectivebydisposingofleastcost-effectivespace;bringingallfacilitiestofully-utilizedstatus;andextractingcapitalfromsurplusassets.Page113

AnnexedheretoasAppendixHisalistofNiagaraMohawkfacilitiesthathavebeenidentifiedaspotentialcandidatesforsale,leasing,orsaleleasebacktransactions.Foreachfacility,AppendixHsetsforthitsassociatednetbookvalue.DuringthetermofthisAgreement,NiagaraMohawkwillobservethefollowingproceduresinconnectionwiththesale,leasing,orsale-leasebackofitsAppendixHfacilities:Ifandwhenafacilityisnolongerneededtoprovideelectricandgasservices,theCompanywillevaluatethebestutilizationordispositionofthefacility,including,butnotlimitedto,saletoNMHoldingsorsaleorleasetoathirdparty.11.2.2.2IntheeventNiagaraMohawkdecidestosellorleaseafacility,theCompanymayutilizebrokersorotherserviceproviderstoidentifyprospectivebuyersortenants.NiagaraMohawkwilluseeveryefforttoobtainthehighestmarketvalueforthefacilitybaseduponindependentappraisalsandmarketconditions.AnysalewillrequirethepriorapprovalofNiagaraMohawk'sBoardofDirectors.AnyleasewillrequiretheapprovalofaNiagaraMohawkofficer.11.2.2.3UndernocircumstanceswillthesaleorleaseofafacilitypreventNiagaraMohawkfromprovidingelectricandgasservicestoitscustomers,orfromotherwisebeingabletodischargeitspublicserviceresponsibilitiesandtomeetitselectricandgasloadrequirements.-11.2.2.4Totheextenttheaccountingforsuchrevenuesisnototherwiseprovidedforherein,allrevenuesderivedfromsaleswillbeaccountedforinaccordancewiththeUniformSystemofAccounts.11.2.2.5AllcontractdocumentswillincludeprovisionslimitingNiagaraMohawk'sliabilities,suchasenvironmentalliabilities.Inthecaseofleasetransactions,tenantswillalsoberequired,~intrJaa,tomaintaininsurancePage114

coverage,protectNiagaraMohawkproperty,andobserveallNiagaraMohawkrulesandregulationsregardingtheuseofthepremises.Anyinitialleasetermshallnotexceedfive(5)years.11.2.2.6Anysale-leasebacktransactionwillberevenueneutralorwillreducerevenuerequirements.TotheextentimplementationoftheOCRIrequiresCommissionauthorizationunderPublicServiceLawSections69and70,thatauthorizationisinthepublicinterestforthesale,leaseorfinancingoffacilitiesof$3millionorless.Inapprovingthissettlement,theCommissiontherebygrantsthatauthorizationforthetermofthissettlement.Sale,leaseorfinancingoffacilitiesinexcessof$3millionwillbesubjecttoaseparatepetition.11.2.3Conversionof25CcleCustomersInitsWesternRegion,severaloftheCompany'scustomersmaintainequipmentthatrequires25cycleelectricityratherthanthe60cyclepowertheCompanyprovideselsewhereonitssystem.TheCompanywilleliminate25cycleservicetoallsuchcustomersonDecember31,2007.Priortothattime,intheeventoffailureofsignificant25cycleequipment,e.g.,transformers,frequencychangers,theCompanywillnotrepairorreplacesuchequipmentunlessitsecuresagreementsfromtheaffectedcustomer(s)topaythecostofsuchrepairorreplacement.Page115

SECTION12.0LOWINCOMECUSTOMERASSISTANCEPROGRAM(LICAP)RegCowillseek,atthelowestpossiblecost,toassistlow-incomecustomerswhoareunabletopayfullyfortheirelectricandgasusage,andtotherebyminimizeuncollectibleaccountsexpense.Aspartofitsprovideroflastresortresponsibilities,RegCowillpursuetheseobjectivesbyexpandingtheavailabilityofNiagaraMohawk'sLowIncomeCustomerAssistanceAfford/AbilityPlantoalllow-incomecustomerswhodonotreceivepublicassistanceandwho,onthebasisofobjectivecriteria,areunabletopaytheirfullenergybills.BasedonresearchconductedintheFallof1995,itisestimatedthatapproximately29,000customerswillbeeligibleforservicesundertheexpandedAfford/AbilityPlan.RegCoexpectstohaveenrolledapproximately9,000customersbytheendof1997andtohaveenrolledalleligiblecustomersby2002withtheprogramcontinuingthroughtheendofthisAgreement.RegCowillalsoofferAfford/AbilityPlanservicesonapilotbasistoanumberofcustomerswhoreceivepublicassistanceandhaveaccountsthatareinarrears,butwhoseaccountsarenotpaiddirectlybycountydepartmentsofsocialservices.IftheresultsindicatethatAfford/AbilityPlanservicesaremorecosteffectivethancurrentproceduresforobtainingdirectcountypaymentofutilitybills,RegCowillfurtherexpandtheAfford/AbilityPlantoincludepublicassistancecustomers.12.1ELIGIBILITYCRITERIACurrenteligibilitycriteriafortheAfford/AbilityPlanincludereceiptofFederalHomeEnergyAssistanceProgram("HEAP")grants,anegativecashflow(asdeterminedusingDepartmentofSocialServicesForm3596),andahistoryofbrokenpaymentagreements.GiventhefutureuncertaintyoftheHEAPprogram,RegComayberequiredtoimplementalternativemethodsofidentifyingandverifyingeligiblecandidatesforAfford/AbilityPlanservices.12.2PROGRAMDESCRIPTIONTheAfford/AbilityPlaninvolvesthreesteps.First,basedonthecustomer'sfinancialcircumstancesasmeasuredbyobjectivestandards,theutilitywillagreetoacceptpartialpaymentforfutureenergyuse.Second,thecustomermustagreetoparticipateinanenergyusemanagementprogramdesignedtoreduceoverallusage.ProgramPage116

servicesincludeweatherization,attendanceatanenergyservicesworkshop,anelectricapplianceretrofitanalysis(including,whereappropriate,refrigeratorreplacement)andanin-homeenergyserviceeducationpacket.Toensurecost-effectiveness,specificenergyusemanagementserviceswillbeprovidedtocustomersonthebasisofthecustomer'sprevioususageandlocation;Whiletheinvestmentpercustomerwillvaryaccordingtothepackageofservicesprovided,thetotalannualprogramcostforenergyusemanagementserviceswillapproximateNiagaraMohawk'sexpenditurefortheformerUtilityLowIncomeEnergyEfficiencyProgram.Third,attheendofeachyear,theutilitywillforgiveapercentageofarrearagesforthoseAfford/AbilityPlancustomerswhohavemadealltheiragreedmonthlypayments.ContinuedparticipationintheAfford/AbilityPlanwillrequireannualrecertification.Itisaconditionofrecertificationthatthecustomerhasmadeallagreedpartialpaymentsduringthepreviousyear.12.3PROGRAMFVNDINGThecostoftheenergyefficiencyservicesoutlinedabovewillbefundedthroughtheSBC.ThecostsassociatedwitharrearsforgivenessforyearsonethroughthreeundertheprogramwillbeabsorbedbytheCompanyexceptasotherwiseprovidedforunderSection2.6.2.ThecostsofanyotherlowincomeprogramsthatmayberequiredbyanynewlegislationorregulationorofadditionalAfford/AbilityPlanservicesthatmaybeofferedasaresultofthepilotstudywillalsobefundedthroughSBC.TheAfford/AbilityPlanwillbeevaluatedonanongoingbasistoensurethattheprogramremainscosteffective.TheCompanywillbudgetexpendituresundertheLICAPProgramtobe$4.377millionin1998,$4.952millionin1999and$5.598millionin2000.Yearfourandfivebudgetswillbeestablishedintheproceedingsthatwillsetratesforyearsfourandfive.Page117

SECTION13.0MISCELLANEOUS13.1FORCEMAJEUREIfacircumstanceoccurswhich,inthejudgmentoftheCompany,threatenstheCompany'seconomicviability,includingitsabilitytoaccesscapitalmarketsatreasonablerates,oritsabilitytomaintainsafeandadequateservice,theCompanywillbepermittedtopetitiontheCommissionforrelieffromthetermsofthisAgreement,includingfilingforanincreaseinitsprices.13.2COMMISSIONAUTHORITYNothinginthisAgreementshallbeconstruedtolimittheCommission'sauthoritytoreducetheCompany'sratesshoulditdetermine,inaccordancewiththeprovisionsofthePublicServiceLaw,thattheestablishedratesareinexcessofjustandreasonableratesfortheCompany'selectricservice.13.3PROVISIONSNOTSEPARABLE:EFFECTOFCOMMISSIONMODIFICATIONThepartieshavenegotiatedandacceptedthisagreement~totowitheachprovisioninconsiderationfor,insupportof,anddependentontheothers.IftheCommissiondoesnotapprovethisagreementinitsentirety,withoutmodification,anysignatorymaywithdrawitsacceptanceofthisagreementbyservingwrittennoticeontheotherparties,andshallbefreetopursueitspositioninthisproceedingwithoutprejudice.IftheCommissionapprovesthisSettlementAgreementormodifiesitinamanneracceptabletotheparties,thepartiesintendthatthissettlementthereafterbeimplementedinaccordancewithitsterms.IfamaterialmodificationisthereafterauthorizedorrequiredbytheCommissionthatisunacceptabletoanypartytothisSettlementAgreementadverselyaffectedbysuchmodification,then,inadditiontoanyotherremediesapartymayhave,suchpartymaywithdrawfromtheagreementandwillnotbeboundthereaftertoitsprovisions.Page118

13.4PROVISIONSNOTPRECEDENTThetermsandprovisionsofthisAgreementapplysolelytoandarebindingonlyinthecontextofthepurposesandresultsofthisAgreement.NoneofthetermsandprovisionsofthisAgreementandnoneofthepositionshereinbyanypartymaybereferredto,citedorrelieduponbyanyotherpartyinanyfashionasprecedentinanyotherproceedingbeforethisCommissionoranyotherregulatoryagencyorbeforeanycourtoflawexceptinfurtheranceofthepurposesandresultsofthisAgreement.13.5DISPUTERESOLUTIONIntheeventofanydisagreementovertheinterpretationofthisSettlementortheimplementationofanyoftheprovisionsofthisSettlement,whichcannotberesolvedinformallyamongtheParties,suchdisagreementshallberesolvedinthefollowingmannerunlessotherwiseprovidedherein:ThePartiesshallpromptlyconveneaconferenceandingoodfaithshallattempttoresolvesuchdisagreement.IfanysuchdisagreementcannotberesolvedbytheParties,anyPartymaypetitiontheCommissionforreliefonadisputedmatter.13.6WITHDRAWALFROMLITIGATIONInconsiderationfortheforegoing,theCompany,uponfinalapprovalofthisSettlementbytheCommission,agreestopetitiontheAppellateDivisionoftheSupremeCourtforpermissiontowithdrawasapartytotheappealintheArticle78proceedingbroughttochallengeOpinion96-12,EnercCyAssociationv.PuliServiceCommision(Sup.Ct.AlbanyCo.IndexNo.5830-96).TheCompany'swithdrawalasapartytotheEnerAsoiationcaseshallbeeffectedthroughStipulationsofWithdrawal,mutuallyagreedtobytheCompanyandtheCommission.UntiltheaforementionedpetitionwithrespecttotheErAociat'oncaseisgranted,theCompanywilldiscontinueitslitigationactivitiestotheextentthatitisabletodosowithoutprejudicingitsrightsintheArticle78proceeding.13.7CONSTRUCTIONOFTERMSThisSettlementAgreementwaswrittentoreflectformationofalegallyseparateHoldCo.IntheeventthattheHoldCoisnotalegallyseparatePage119

entity,thetermsandconditionsofthisSettlementshallbereadtogivefulleffecttotheirmeaningandintent.13.8STEAMHOSTISSUESThepartiestothisAgreementrecognizetheneedforcertainoftheSIPPsandcompanies("theSteamHostsActionGroup"or"SHAG")thathavecontractswiththoseSIPPSregardingsteam/thermalarrangementsinthepost-MRAperiodtoconductnegotiationstoreachasatisfactorysettlementofissuesrelatedtochangesinSIPPoperationsasaresultoftheMRA.ThepartiestothisAgreementacknowledge,amongotherpriorities,theimportancetotheeconomyoftheStateofNewYorkofaddressingsteam/thermalissuesasexpeditiouslyaspossible.Thefollowingparties-EmpireStateDevelopmentbytheDepartmentofEconomicDevelopment,theJobDevelopmentAuthorityandtheEmpireStateDevelopmentCorporation(UrbanDevelopmentCorp.),NiagaraMohawkPowerCorporation,NewYorkPowerAuthority,MultipleIntervenors,theSHAG,andtheSIPPS,JointSupportersandtheNationalAssociationofEnergyServiceCompanies-specificallyagree,inagoodfaitheffort,topursuediligentlywaystominimizeanyeconomicoroperationaldifficultiesduetochangesinSIPPsteamproductionwhichcouldoccurasaresultoftheMRAandtootherwisereachamutuallysatisfactorysettlementoftheissues.NopartytothisAgreementshallbedeemedtowaive(including,butnotlimitedto,inconnectionwiththeCommission'sreview'ofthisAgreement),anyrighttorecommendtotheCommission,ortoopposeanysuchrecommendationortotakeanyotherposition(including,butnotlimitedto,withrespecttoCommissionjurisdiction),thattheCommissionundertakeanyspecificcourseofactionregardingtheresolutionofthesenegotiationsbetweensuchSIPPsandSHAG,exceptthatallpartiesspecificallywaiveanyrighttochallengetheprudenceoftheMRA,andthecontractsexecutedpursuantthereto.Page120

SECTION14.0TERMOFTHISAGREEMENTExceptasotherwiseprovidedherein,thetermofthisAgreementshallbefiveyearsfromthePowerChoiceImplementationDate.Page121

raMohaarorporationStaffoftheOepartmentofPublicService(Signaturescontinuedonthefollowingpages)

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NiagaraMohawkPowerCorporationCaseNos.94-'E-009Sand94-E-0099StoftheDepartmentofPuervice

NiagaraMohawkPowerCorporationCaseNos.94-2-0098and94-E-0099SettlingIndependentPowerProducers

1P/14/9710:11~518405q015READANDLANIADO~~~IPPNYQOO0NiagaraMohawkPowerCorporationCaseNos.94-E-0098and94-E-0099lnependentPowerProdrsNY,Inc.

NiagaraMohawkPowerCorporationCaseNos.94-E-0098and94-E-0099Sithe/IndependencePowerPaers,L.P.

NiagaraMohawkPowerCorporationCaseNos.94.-E-0098and94-E-0099MultipleIntervnors

NiagaraMohawkPowerCorporationCaseNos.94-E-0098and94-E-0099SteamHostActinGro

WOBKAUTHORITY

/5;l.,NewkStateDepartmentofEconomicDevelopmentyu/~EpireStateDevelopmentorporation/d/'dF7JobDevelopmentAuthority

16/13/199715:58518-473-8347PAGE83NewYozStateDepartmentoEconomic'DevelopmentEmpireStateDeveopmentCorpozation8'o.DevelopmentCoxity

0%VII'2C8SettlementDocumentVolume2-AppendicesNiagaraMohawkPowerCorporationPSCCaseNos.94-E-0098and94-E-0099Qctober10,1997

POWERCHOICESETTLEMENTPROPOSALOctober6,1997APPENDICESA-MasterRestructuringAgreementB-RecoveryofCostsAssociatedwithTerminationofGasTransportationandPeakShavingAgreementsC-NiagaraMohawkPowerCorporationFive-YearFinancialForecastD-ElectricPricesE-BalancesofDeferredDebitsandCreditsNotYetReflectedinRatesF-GeneralStructureofFinancialSwapsandSwaptionG-CreditWorthinessEvaluationH-ListofFacilitiesThatArePotentialCandidatesforSale,LeaseorSaleLeasebackTransactions

APPENDIXAMASTERRESTRUCTURINGAGRKKMKNTBYANDBETWEENNIAGARAMOHAWKPOWERCORPORATIONANDINDEPENDENTPOWERPRODUCERS

MASTERRESTRUCTURINGAGREElVG<NTBYANDBETWEENM[AGARAMOHAWKPOWERCORPORATIONANDINDEPENDENTPOWERPRODUCERSJULY9,1997

MASTERRESTRUCTURINGAGREEMENTTABLEOFCONTENTSPageCITALSootwwtttotwwwttwttwwwowwwwewtNwNN~+tttttwowttwwtwowttwwotwtwwwwtwtwtottwttwtwtwtowowowwwtttooooolREEFINITIONSwtwwoowweoootNowwtNwtltN1oooewtwNwooooowtweoeooowoowoootooowowwowwwtwwtww\wwttwtttwwDwoooool2.RUCTURINGoowooowtooooooooooooowwoowwowwooowowwooooooooootowwowooooootoREST~wtoottotttt~eoeoooooooeooo82.l.TERMINATINGPPAS22.AMENDEDPPAs.2.3.REsrATEDCONIRAcrs2.4.FIXEDPRICESWAPCONTRACTS2.5.NORCON.2.6.OxBow2.7.NEGOTIATIONS2.&.DELIVERYOFCONTRACTSTOESCROWAGENT.2.9.CONIACTADIUSIMENT..........~eoeoe8~ooto~10~o~~.1013.143.ALLOCABLECONSIDERATION;SHORT-TERMNOTES;ALLOCATION...........,..............153.1.ALLOCABLECONSIDERATION.3.2.SHORT-TERMNOTES>ADDITIONALCASHPAYMENT.3.3.DEUVERYOFALLOCABLECONSIDERATION,SHORT-TERMNOTESANDADDmoNALCAsHPAYMENTToDEPoslTARY.34.AUOCAIION.3.5.NON-DILUTION.3.6.PRIVATEPLACEMENT;REGISTRATIONOFCOMPANYSHARES.3.7.SHAREHOLDER'SAGREEMENT3.8.BOARDoFDIREcroas.15.15......15.16.1920224.REPRESENTATIONSANDWARRANTIESOFTHECOMPANY......................................234.l.ORGANIZATION;STANDING.4.2.EXECUIION;AUTHORITY;ENFORCEABILITY.4.3.NoCONFUCTS..4.4.LITIGATION.4.5.CAPITALIZAIION.4.6.VALlDISSUANCEOFCOMPANYSHARES..4.7.SECREPORTSANDFINANCIALSTATEMENTS........-.4.8.ABSENCEOFCERTAINCHANGESOREVENTS............4.9.NMPCRESTRUCTURING..e~oe..26..26.....2424~eeeooe24255.REPRESENTATIONSANDWARI~I'IESOFEACHIPP..........................,.....................275.1.ORGANIZATlON;STANDING.5.2.EXECUnoN;AUTHORITY;ENFORCEABILITY....5.3.NoCONFLICTS.....5.4.LmGAIION...............5.5.CERTAINTRANSFERS.5.6.ACQUISITIONOfCOMPANYSHARES..5.7.FORMOFALLOCATION,CONTRACTSALLOCATION.2727..27.272828.......29 6.CONDUCTANDTRANSACTIONSPRIORTOTHECONSUMMATIONDATE......,.................296.1.DEBTSECURITIES.6.2.SALE/LEASEBACK;TAX-FREEEXCHANGES.6.3.PROXYSTATEMENT.6.4.NMPCRESTRUCIURING.6.5.HART-SCOTT-RODlNOACTNOTlFICATION.6.6.REGULATORYAPPROVALS...6.7.COOPERATIONWITHRESPECTToREGULATORYAPPROVALS.6.8.COOPERATIONWITHRESPECTTOIPPffNRDPARTYCONSENTSANDNMPCfhaRDPARTYRELEASES..6.9.PERFGRMANcEUNDERExlsTINGPPAs6.10.STAYOFLITIGATION.6.11.CONDUCTOFBUSINESS.6.12.PUBUcDISCLOSURE.6.13.FURTHERASSURANCES.6.14.NOACCUMULATION.6.15.TAxRULINGS........................................2930.3131.3333343636383939..40..40..407.INTENTIONALLYLEFTBLANK.~tHO1~OIHHOWIIHttott~0tHIIOHH\WOOO10i1004ttI~~10&A4I8.CONDITIONSTOEACHIPP'SOBLIGATIONSONTHECONSUMMATIONDATE.............41S.l.REPRESENTATIONSANDWARRANIIES.82.PERFORMANCE.8.3.REPRESENTATIONLEVIER;SECRErARY'SCERTIFICATE;OPINIONOFTHECOMPANY'SCOUNSEL8.4.REGlJLATORYAPPROVALS.8.5.NoININCIION,ACTIONORPROCEEDING..8.6.NOMATERIALADVERSEEVENT.8.7.CONTRACTS8.8.GENERALRELEASE;WITHDRAWALOFLITIGATION.8.9.INTENIIONALLYLEFTBLANK.8.10.THIRDPARTYCONTRACTS;IPPAPPROVALS.8.11.GASMmGA11ON.8.12.REGISTRATIONOFCOMPANYSHARES.8.13.PAYMENTOFFEES...41...4141414242..4242..4343449.CONDITIONSTOTHECOMPANY'SOBLIGATIONSONTHECONSUMMATIONDATE....449.1.REPRESENTATIONSANDWARRANIIES..9.2.PERFORMANCE.9.3.REPRESENTATIONLETTER;SECRETARY'SCERTIFICATE;OPINIONOFIPP'SCOUNSEL.9.4.REGULATORYAPPROVALS.9.5.NoINJUNCHON,ACTIONORPROCEEDING.9.6.CONTRACTS..9.7.NMPC/AQRDPARTYCONSENTSANDNMPC/THIRDPARTYRELEASES..9.8.GENERALRELEASE;WIIHDRAWALOFLITIGATION....9.9.BOARDANDSHAREHOLDERAPPROVALS.9.10.NMPCFINANCING.10.SATISFACTIONOFCONDITIONS;CONSUMMATION..10.1.NOTlCEOFSATISFACTIONORWAIVEROFCONDITloNS10.2.CONSUMMA11ONDATE....45..45...45..45..45..46.......46........46..47.47~NHH@ON01%41%&147....47.49Il7440 10.3.DELIVERIESBYTHECOMPANY..................................10.4.DELIVERIESBYTHEIPPS10.5.DELIVERIESBYTHEDEPOSITARYANDTHEESCROWAGENT.~~..49.....50501IREGULATORYANDOTHERMA7fERStttoootot<<ooototttooooottt<<ooottoo<<tattoo+<<toootoo<<o<<ootttoo<<o<<tt<<ot<<ot<<t.5011.1.MAINTENANCEOFQFSTATUS112.COMPETITIVETRANSITIONCHARGE;RETAILBYPASS11.3.CONSISTENTTAXREPORTING....,......~~to~50~~~o525212.TERMINATIONOFAGREEMENT..~<<ooo<<tttooo<<<<ottto<<o<<too<<o<<<<otottttooootttoo<<ooooto<<oo5312.1.EVENTSOFTERMINATlONOFTHEAGREEMENTINITSENTIREIY.122.EVENTSOFTERMINATIONWITHRESPECTToONEORMOREOFTHEIPPS12.3.EXPIRATION..12.4.EFFECTOFTERMINATION.12.5.EFFEcroNExlslINGPPAs.12.6.BANKRUPTCYTERMINATION.....53...54~~t55.56.57.5813.NOTICES~tttttttttttttttttttttttt<<tttt<<<<ttttt<<o<<\<<t<<<<<<tooooooottttoototttooootott5814.MISCELLANEOUS<<ttttt<<tt<<<<t<<<<ttttttt<<<<t<<t<<<<t<<t<<ttt14.1.ENIIREAGREEMENT.14.2.AMENDMENTSANDWAIVERS..............,............14.3.SUCCESSORSANDASSIGNS14A.GOVERNINGLAW.14.5.SEVERABILIIY.14.6.CAFIIONS14.7.COUNTERPARTS.........................................................14.8.FEES.14.9.EXPENSES.14.10.ATTORNEYS'EES..14.11.REMEDIES.14.12.SURVIVAL.14.13.SEVERALOBLIGATIONS....................................14.14.CONFIDENTVLLfIY....14.15.NOPREJUDICE...~ottttt~~oo60.60...........,.....60.60..~,60.61.61~~~~~~~~~6I...............6I...........6262..........................62.............................62.....................63.......................63..........65SCHEDULESSCHEDULEASCHEDULE2.1SCHEDULE2.2SCHEDULE2.3SCHEDULE3.5SCHEDULE3.7SCHEDULE4.5SCHEDULE4.8SCHEDULE5.4SCHEDULE6.6CSCHEDULE6.10ASCHEDULE6.10BSCHEDULE6.11NAMESANDNOIICEADDRESSESOFIPPSEXISIINGPPASToBETERMINATEDPURSUANTToSECIION2.1EXISIINGPPAToBEAMENDEDPURSUANTToSECIION22EXISTINGPPASTOBEAMENDEDANDfORRESTATEDPURSL'AVTTOSECIION2.3CERTAINEXCLUSIONSFROMANTI-DILUTIONPROVISIONSIPPSPONSORENTHlESTOENTERINTOSHAREHOLDER'SAGREEMENTNMPCCAPITALIZATIONCERTAINCHANGESOREVENTSCERTAINDISCLOSEDLmGATIONMATIERSToBEINCLUDEDINPSCAPPROVALLITIGATIONANDREGULATORYPROCEEDINGSToBESTAYEDBYTHEPARTIESCERTAINLITIGATIONANDREGULATORYPROCEEDINGS(INVOLVING6tCENTISSUES)CERTAINPERMITTEDCONDUCTII7440 SCHEDULE8.8SCHEDULE9.10LIIIGA1IONANDPROCEEDINGSTOBEWlTHDRAWNBYTHEPARTIESNMPCFINANCINGEXHIBITSEXHIBITAEXHIBIT2.1EXHIBIT3.6EXHIBIT3.7EXHIBIT5.7EXHIBIT8.3AEXHIBIT83CEXHIBIT9.3AEXHIBIT93CEXHIBIT14.14TERMSANDCONDITIONSOFAMENDEDPPAANDRESTATEDCONTRACTSFORMOFTERMINATIONAGREEMENTFORMOFREGISTRATIONRIGHTSAGREEMENTFORMOFSHAREHOLDER'SAGREEMENTBLANKFORMSOFALLOCATION,CONTRACTSALLOCATIONANDCONTRACTADJUSlMENTALLOCATIONFORMOFNMPCREPRESENTATIONLETTERFORMOFOPIMONOFNMI'CSCOUNSELFORMOfIPPREPRESENTA11ONLETIERFORMOFOPINIONOFIPP'SCOUNSELFORMOfTHIRDPARTY'ON-DISCLOSIJREAGREEMENTII7440 MASTERRESTRUCTURINGAGREEMENTTHISMASTERRESTRUCTURINGAGREEMENTisenteredintoonJuly9,1997(the"Agreement")byandbetweenNIAGARAMOHAWKPOWERCORPORATION,aNewYorkcorporation("NMPC"orthe"Company"),andtheseveralindependentpowerproducersidentifiedassuchonthesignaturepagesandonScheduleAhereto(the"IndependentPowerProducers"or"IPPs").RECITALS(A)TheCompany,amongotherthings,isaregulatedutilityengagedinthebusinessofgenerating,transmittinganddistributingelectricpowertocustomersintheStateofNewYork;(B)TheIndependentPowerProducersareownersandoperatorsofco-generationandsmallpowerproductionfacilities;(C)TheCompanypreviouslyhasenteredintotwenty-nine(29)separatepowerpurchaseagreementswiththeIPPs(referredtohereinas"ExistingPPAs");(D)TheCompanyhasoveredtoamend,amendandrestateorterminatetheExistingPPAs,uponandsubjecttothetermsandconditionscontainedherein;and(E)TheIPPsarenotwillingtoamend,amendandrestateorterminateeachoftheExistingPPAs,exceptuponandsubjecttothetermsandconditionscontainedherein.NOW,THEREFORE,inconsiderationoftheforegoingpremisesandforothergoodandvaluableconsideration,thereceiptandadequacyofwhichisherebyacknowledged,thePartiesherebyagreeasfollows:1.DEFINITIONSForpurposesofthisAgreement(includinganyExhibitorSchedulehereto,unlessotherwisedefinedtherein),thetermssetforthbelowshallhavethefollowingmeanings:"AdditionalCashPament"shallhavethemeaningsetforthinSection3.2."Affiliate"shallmean,withrespecttoanyParty,anyotherpersonorentitywhichcontrols,iscontrolledby,orisundercommoncontrolwith,suchParty,whereintheterm"control"shallmeanthepowertodirectthemanagementandpoliciesbyorofsuchPartythroughownershipofvotingsecurities,bycontractorotherwise.

"AfliliateIPPs"shallmean,withrespecttoanyIPP,anyotherIPPwhichisanAffiliateofsuchIPP.n~Areementoor"MasterRestrnctnrinAreement"shallmeanthisMasterRestructuringAgreement,includingtheExhibitsandScheduleshereto,asamendedandineffectfromtimetotime."AllocableConsideration"shallhavethemeaningsetforthinSection3.1."Allocation"shallhavethemeaningsetforthinSection3.4."AmendedPPA"shallhavethemeaningsetforthinSection2.2.Cd*"hdlyll*llI'U*C'*dd*C&,dd."BaseSharePrice"shallhavethemeaningsetforthinSection3.5(a).hdlydyd*g3d,gdUdwhichbanksintheStateofNewYorkareauthorizedorrequiredtobeclosed.nigh~*'dlh*3'fhl3*I3.1(3."ClassAPPAs"shallmeanthoseExistingPPAswithrespecttowhichanIPPwillreceiveaportionoftheAllocableConsideration,butnottheAmendedPPAoraRestatedContract."ClassBPPAs"shallmeanthoseExistingPPAswithrespecttowhichanIPPwillreceiveaRestatedContract(s)(butnottheAmendedPPA),whetherornotsuchIPPwillreceiveaportionoftheAllocableConsideration."ClassDPPA"shallmeantheExistingPPAwithrespecttowhichthe!PPpartytheretowillreceiveaportionoftheAllocableConsiderationandwillreceivetheAmendedPPA.share."Code"shallmeantheInternalRevenueCodeof1986,asamended."CommonStock"shallmeantheCompany'scommonstock,$1.00parvalueperR~Coman"or"NMPC"shallmeanNiagaraMohawkPowerCorporation,aNewYorkcorporation."C~hh"Illh*&**Igfhi3*I3.1(33.

"CorntitiveTransitionChare"shallmeanacharge,howeverdesignated,forrecoveryofstrandablecosts."ConditionsDeterminationDate"shallmeanthedatewhichisthelatertooccurof(i)December1,1997and(ii)ninety(90)daysafterthePSCApprovalDate,exceptasotherwiseprovidedinSection2.7(b)."Consummation"shallhavethemeaningsetforthinSection10.2."ConsummationDate"shallhavethemeaningsetforthinSection10.2."ContractAd'ustment"shallhavethemeaningsetforthinSection2.9.3.4(a)."ContractAd'ustmentAllocation"shallhavethemeaiungsetforthinSection"ContractYear"shallhavethemeaningsetforthinExhibitA."Contracts"shallhavethemeaningsetforthinSection2.8."ContractsAllocation"shallhavethemeaningsetforthinSection3.4(a)."Curtailment"shallmeananycurtailmentofelectricityundertheprovisionsof18C.F.R.$292.304(f)(1997),oranysubsequentorsimilarruleorregulationadoptedbythePSCortheFERC,oranyruleororderofthePSC,theFERC,oranyotherGovernmentalAuthorityinterpretingorapplyingthoseprovisionsorauthorizingtheCompanytoreserveanyrightsunderthoseprovisions."DebtReistrationStatement"shallhavethemeaningsetforthinSection6.1(b)."DebtSecurities"shallhavethemeaningsetforthinSection6.1."DesitAreement"shallhavethemeaningsetforthinSection3.3."~Deosits"shallmeansuchbankortrustcompanyasmaybeselectedbythePartiestoactastheDepositaryhereunder."DLJ"shallmeanDonaldson,Lufkin&JenretteSecuritiesCorporation."DRIPPlan"shallmeantheCompany'sDividendReinvestmentandStockPurchasePlan.

"EffectiveTime"shallmean11:59:59p.m.ontheConsummationDate."EI'IIA&.Gp,S.H*&9*Id.L.L.P."EscrowAcement"shallhavethemeaningsetforthinSection2.8,"~&h**"IIIU*p**'IEI9A93939,dd.hdt&*&*9h*d**'*Hlp*dateofthisAgreementbetweentheCompanyandtheseveralIPPs,aslistedonSchedules2.1,2.2and2.3hereto."E'G*"hUIAp'Il,3998,***9Ud*dlSections2.7(b)and12.3(b)."EWG"shallhavethemeaningsetforthinSection11.1(b)."FERC"shallmeantheFederalEnergyRegulatoryCommission."FixedPriceSwaContracts"shallhavethemeaningsetforthinSection2.4."GasIPPs"shallmeanthoseIPPswhichproducepowerusingprimarilynatural"GasMitiationThirdP"shallmeananaturalgassupplierornaturalgastransporterwithwhomanyGasIPPhasacontractoragreementasofthedateofthisAgreementandanycounterpartyunderanyhedgingorotherfinancialinstrumentexistingasofthedateofthisAgreementwithrespecttothesupplyortransportationofnaturalgasunderanysuchcontractoragreement,withrespecttowhichanyGasIPPdesiresthatitsobligationsthereunderbereleased,satisfiedoramendedinconnectionwiththetransactionscontemplatedbythisAgreement."GovernmentalAuthori"shallmeananyfederal,state,municipalorlocalgovernmentalauthority,department,commission,board,agency,bodyorofficial,whetherexecutive,legislative,administrative,regulatoryorjudicial,includingbutnotlimitedtotheFERCandthePSC."Hart-Scott-RodinoAct"shallmeantheHart-Scott-RodinoAntitrustImprovementsActof1976,asamended."IndendentPowerProducers"or"IPPs"shallmeantheseveralindependentpowerproducersidentifiedassuchonthesignaturepagesandonScheduleAhereto.IfthisAgreementshallbeterminatedinaccordancewiththetermshereofwithrespectto oneormorebutlessthanalloftheIPPs,then,exceptwithrespecttoanyprovisionshereofwhichexpresslyorbytheirtermssurviveanyterminationofthisAgreement,uponanysuchterminationsuchterminatedIPPshallceasetobean"IPP"forpurposesofthisAgreement."IndexedSwaContracts"shallhavethemeaningsetforthinExhibitA."~iPPi"idii*&*ig*ihiSiiiii."IPPReulatoAroyal"shallhavethemeaningsetforthinSection6.6(b)."IPPReresentatives"shallmeanWP&Co.,theIPPs'pecialCounseland'theIPPs'ocalRegulatoryCounsel."IPPStatusNotice"shallhavethemeaningsetforthinSection10.1(c)."IPP/ThirdPConsent"shallhavethemeaningsetforthinSection8.10."IPPs'ocalReulatoCounsel"shallmeanReadandLaniado,LLP."IPPs'ocalReulatoCounselFeeLetter"shallhavethemeaningsetforthinSection14.9."IPPs'ialCounsel"shallmeanAkin,Gump,St'rauss,'Hauer&Feld,L.L.P.14.9."IPPs'cialCounselFeeLetter"shallhavethemeaningsetforthinSection"MaterialAdverseEffect"shallmean,withrespecttoanyParty,either(i)amaterialandadverseeQectonthebusiness,properties,operationsorcondition(financialorotherwise)ofsuchPartyanditssubsidiaries,takenasawhole,or(ii)amaterialandadverseeffectonsuchParty'sabilitytoenterintoandperformitsobligationsunderthisAgreementoranyotheragreementstobeexecutedbysuchPartypursuanthereto."NMPCReulatoAroyal"shallhavethemeaningsetforthinSection6.6(a)."NMPCRestructurin"shallhavethemeaningsetforthinSection6.4."NMPCStatusNotice"shallhavethemeaningsetforthinSection10.1(b).6.8(b)."NMPC/ThirdPAreement"shallhavethemeaningsetforthinSection "NMPC/ThirdPartConsent"shallhavethemeaningsetforthinSection4.2."NMPC/ThirdPRelease"shallhavethemeaningsetforthinSection6.8(b).uNorCon"shallmeanNorConPowerPartners,L.P."NorConAeernent"shallhavethemeaningsetforthinSection2.5."NYPSL"shallmeantheNewYorkPublicServiceLaw,asamended."NYSE"shallmeantheNewYorkStockExchange."Oxbow"shallmeanOxbowPowerofNorthTonawanda,NewYork,Inc."OxbowAreement"shallhavethemeaningsetforthinSection2.6."Party~ies"shallmeantheCompanyandtheseveralIPPs.IfthisAgreementshallbeterminatedinaccordancewiththetermshereofwithrespecttooneormorebutlessthanalloftheIPPs,then,exceptwithrespecttoanyprovisionshereofwhichexpresslysurviveanyterminationofthisAgreement,uponanysuchterminationsuchterminatedIPPshallceasetobea"Party"hereunder."PowerPutContract"shallhavethemeaningsetforthinExhibitA."~pro'ect"shallmeaneachlPP'sgenerationandproductionfacilities,includingtheproperty,plantandequipmentandassociatedrealpropertyandfixtures.S**uhllh*6*S**SCi~6**)63."PSC"shallmeantheNewYorkStatePublicServiceCommission."PpscpI"hllh*6*g**6hl6**I66))."PSCAroyalDate"shallmeanthedateonwhichthePSCissuestheordercontainingthePSCApproval."~hgCh'*'hglh*6*'*Ihl6*I6)."PVHCA"shallmeanthePublicUtilityHoldingCompanyActof1935,asamended."PURPA"shaBmeanthePublicUtilityRegulatoryPoliciesActoft97g,asamended.

"QF"shallhavethemeaningsetforthinSection11.1.FMonitorinProram"shallmeananyprogramoftheCompany,whetherauthorized,implementedorproposed,designedtomonitoranyIPP'sstatusunderPURPAasaqualifyingcogenerationorsmallpowerproductionfacilityorunderNYPSLasaco-generationfacility,includinganyrighttodemandorreceiveinformationfromanyIPP,thirdpartyorGovernmentalAuthority."ReasonableBestERorts"shallmean,withrespecttoanyParty,suchParty'diligentpursuanceofthecourseofactionorresultstatedasdeterminedbysuchPartyitselfingoodfaith,butshallnotrequiresuchPartytopayanysumorotherconsiderationorincurorassumeanyliabilityorobligationthatisnototherwiseexpresslyrequiredtobe.paid,incurredorassumedpursuanttothisAgreement,excluding(i)normalandcustomaryincidentaloutwf-pocketcostsandexpensesand(ii)attorneys'ees(except,withrespecttoanyIPP,attorneys'eesrequiredtobepaidbytheCompanypursuanttotheIPPs'pecialCounselFeeLetterortheIPPs'ocalRegulatoryCounselFeeLetter).3.6(b)."ReistiationRihtsAement"shallhavethemeaningsetforthinSection"RelatoArovals"shallmeanthePSCApprovalandallotherconsents,approvals,qualifications,orders,authorizations,extensions,waivers,exemptionsandotheractionsorinactionsoftheFERC,thePSCoranyotherGovernmentalAuthority(includingexpirationsofapplicablewaitingperiodsundertheHart-Scott-RodinoAct)asmayberequiredbyapplicablelawordesiredbyanyPartywithrespecttothisAgreementandtheconsummationofthisAgreementandthetransactionscontemplatedhereunder,includingbutnotlimitedtotheexecution,deliveryandperformanceoftheContracts.Forpurposeshereof"RegulatoryApprovals"shallnotincludeanySECapprovalswhichmayberequiredinconnectionwiththeShelfRegistrationStatement,DebtRegistrationStatementorProxyStatement."RestatedContract"shallhavethemeaningsetforthinExhibitA."R~"hllh*R*'g*fhlg*I2."SEC"shallmeantheSecuritiesandExchangeCommission.'R~ECR*"hllflfgCp2'IRpPIh.gfthefiscalyearendedDecember31,1996,asamendedbyForm10-KAfiledwiththeSEConMay1,1997,(ii)theCompany'sCurrentReportonForm8-KdatedMarch10,1997,(iii)theCompany'sProxyStatementfiledwiththeSEConApril7,1997,(iv)theCompany'sFormU-3A-2filedpursuanttoPUHCAonApril2,1997,(v)theCompany's QuarterlyReportonForm10-QforthefiscalquarterendedMarch31,1997,and(vi)allsubsequentfilings,uptotheConsummationDate,requiredtobemadebytheCompanyundertheExchangeActoranyothersecuritieslawsapplicabletotheCompany."SecuritiesAct"shallmeantheSecuritiesActof1933,asamended."ScheduledDate"shallhavethemeaningsetforthinSection10.2."ShareholdersAreement"shallhavethemeaningsetforthinSection3.7."ShelfReistrationStatement"shallhavethemeaningsetforthinSection3.6."Short-TermNotes"shallhavethemeaningsetforthinSection3.2,"SolidFuelIPPs"shallmeanthoseIPPswhichproducepowerusingprimarilycoalorwastefuels."TerminatinPPAs"shallhavethemeaningsetforthinSection2.1."TerminationAement"shallhavethemeaningsetforthinSection2.1."Underwriters"shallhavetheineaningsetforthinSection6.1(c)."WP&Co."shallmeanWassersteinPerella&Co.,Inc."WP&Co.FeeLetter"shallhavethemeaningsetforthinSection14.8.2.RESTRUCTURINGSubjecttothetermsandconditionsofthisAgreement,effectiveasoftheConsummationDate,thePartiesshallenterintothefollowingtransactions(referredtohereincollectivelyasthe"Restructuring"):2.1.TerminatinPPAs.TheCompanyandeachIPPwhichisapartytoanExistingPPAlistedonSchedule2.1hereto(a"TerminatingPPA")shallenterintoanagreement,substantiallyintheformannexedasExhibit2.1(a"TerminationAgreement"),pursuanttowhich,effectiveasoftheEffectiveTime,allrights,dutiesandobligationsoftheCompanyandsuchIPPundereachsuchTerminatingPPAandunderanyassociatedgastransportationandpeakshavingagreementand,iftheIPPsoelects,interconnectionagreementandexistinginterconnectionarrangements,betweentheCompany(oranyAffiliateoftheCompany)andsuchIPPshallbeterminated,released anddischarged,andcontainingsuchothertermsandconditionsastheCompanyandeachsuchIPPinaymutuallyagree.2.2.AmendedPPAs.TheCompanyandtheIPPwhichisapartytotheExistingPPAlistedonSchedule2.2heretoshallenterintoanamendmenttosuchExistingPPA(the"AmendedPPA"),asdescribedinExhibitAhereto,includingtherelatedAttachmentstoExhibitA,eG'ectiveasoftheEffectiveTime,2.3.RestatedContracts.TheCompanyandeachIPPwhichisapartytoanExistingPPAlistedonSchedule2.3heretoshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstoenterintoaRestatedContract,asdefinedinExhibitAhereto.EachRestatedContractshallbeanamendmentand/orrestatementofeachsuchExistingFPA,shallbedatedasofthedateofeachsuchExistingPPAandthetermsofsuchamendmentand/orrestateinentshallbeeffectiveasoftheEffectiveTime.Asapartofsuchprocess,theIPPswhicharepartiestotheExistingPPAslistedonSchedule2.3heretoshallusetheirReasonableBestEffortstoenterintoRestatedContractswhichwillincludeoptionprovisionswithrespecttoanaggregateof500GWhofelectricityperannumoveratermofuptosixContractYearsforperiodswithineachyearthataremutuallyagreedupon;providedsuchoptionprovisionsincludeaterm,periods,contractquantities,contractpricesandothertermsandconditionswhichareacceptabletotheapplicableIPF,andprovided,further,thatnoIPPwillbeobligatedtoincludesuchoptionprovisionsifsuchprovisions,insuchIPP'sjudgment,arenoteconomicallyneutralincomparisontotheContractAllocationofsuchapplicableIPPbeforegivingeffecttosuchoptionprovisions.WithrespecttoeachIPPenteringintoaRestatedContract,asapplicable,(a)theCompanyshallcontinuetoprovidelocalgastransportationunderitsexistingagreementswithsuchIPP(and,ifrequestedbysuchIPP,theCompanyshallconductgoodfaithnegotiationsconcerningtheamendmentofsuchgastransportationagreements,and,ifrequestedbytheCompany,theIPPshallconductgoodfaithnegotiationstoamendsuchexistingagreementstoinsurethattheCompanyhasareasonableabilitytointerruptsuchtransportationduetosystememergencies),(b)peakshavingobligationsonthepartofsuchIPPshallbeeliminated,effectiveasoftheConsummationDate,withoutpenaltytotheIPPorcompensationtotheCompanyandwithoutreducingthevalueoftheAllocableConsiderationorinanywayaffectingtheRestatedContracts,(c)minimumtakeanddemandchargesinexistinggastransportationagreementsbetweentheCompanyandsuchIPPshallremaininfullforceandeffect(subjecttothegoodfaithnegotiationsdescribedinclause(a)above)and(d)ifsuchIPPhaseliminateditspeakshavinganangementswiththeCompanyandwillhavegassupplyandtransportationarrangementsaftertheConsummationDate,itshalluseReasonableBestEffortstoassisttheCompanytoarrangeforreplacementofpeakshavingservices.2.4.FixedPriceSwaContracts.TheCompanyalsoshallexecuteanddelivertotheEscrowAgent,forthebenefitofandatthedirectionofalloftheIPPsortheirrespectivedesignees,aseriesofFixedPriceSwapContractsasdefinedinandin accordancewiththetermsandconditionssetforthinExhibitAhereto,includingtherelatedAttachmentstoExhibitA(the"FixedPriceSwapContracts").TheFixedPriceSwapContractsshallbeinsuchdenominationsandwithsuchcounterpartiesastheIPPsshalldesignatetotheCompanynotlaterthaneight(8)BusinessDayspriortotheConsummationDate,providedthateachsuchcounterpartyshall(i)beanIPP,(ii)beaGasMitigationThirdPartyor(iii)meettherequirementsforan"ApprovedAssignee"(assuchtennisdefinedinSection2ofthetermsheetattachedasAttachmentA-11toExhibitA)ofanIPPoraGasMitigationThirdParty.2.5.NorCon.TheCompanyandNorConshallconductseparategoodfaithnegotiationstoenterintoanagreement(the"NorConAgreement")regardingtheamendment,amendmentandrestatement,otherrestructuringorterminationofNorCon'sExistingPPA.TheCompanyandNorConagreetocommencesuchnegotiations,atainiituallyagreeablelocation(s),promptlyfollowingthedateofthisAgreementandtomeetnotlessfrequentlythanweeklyduringthefirstmonthfollowingthedateofthisAgreementandthereafterastheCompanyandNoiConmaymutuallyagree.AlthoughthereisnoobligationontheCompany'sparttoagreetoanyfurtherconsiderationtoNorCon,shouldtheCompanyandNorConmutuallysodetermine,NorConmayreceiveconsiderationpursuanttotheNorConAgreementwhichisinadditiontotheportionoftheAllocableConsiderationandtheRestatedContractsallocatedtoNorConintheAllocation(the"NorConAllocation").AnysuchadditionalconsiderationshallnotaffecttheAllocation,increaseorreducetheAllocableConsiderationpayabletoanyotherIPP(i.e.,theAllocableConsiderationlesstheNorConAllocation),norinanywayaffecttheShort-TermNotesorAdditionalCashPayment,asapplicable,orthetermsoftheAmendedPPAsorRestatedContractstobereceivedbyanyotherIPPortheFixedPriceSwapContracts.IntheeventthattheCompanyandNorConshouldagreethatNorCon'sExistingPPAshallbeaTerminatingPPA,thenthecontractquantityandtheinstalledcapacityundertheRestatedContractseachshallbereducedbythecontractquantityandtheinstalledcapacityundertheRestatedContractsallocatedtoNorConpursuanttotheoriginalAllocation,andtheaggregatecontractadjustmentidentifiedonAttachmentA-3toExhibitAshallbereducedbytheportionoftheContractAdjustmentallocatedtoNorConpursuanttotheoriginalAllocation,ifany,andinsucheventsuchreductionshallnotaffectthetermsandconditions,includingcontractprice,ofanyoftheRestatedContractstobeenteredintobyanyotherIPPs.IntheeventtheCompanyandNorConareunabletoagreeinwritingontheadditionalconsideration,ifany,tobereceivedbyNorConwithinseventy-five(75)daysafterthedateofthisAgreement(whichdatemaybeextendedwiththemutualagreementoftheCompanyandNorCon),then(i)thisAgreementshallterminatewithrespecttoNorCon,withtheeffectdescribedinSection12.4(b),andexceptasotherwiseprovidedinSection6.9(d),and(ii)theprovisionsofSection12.5shallapplywithrespecttoNorCon'sExistingPPA.2.6.Oxbow.TheCompanyandOxbowshallconductseparategoodfaithnegotiationstoenterintoanagreement(theOxbowAgreement")regardingthe10 terminationofOxbow'sExistingPPApursuanttoSection2,1~AlthoughthereisnoobligationontheCompany'sparttoagreetomodifytheformofconsiderationtoOxbow,shouldtheCompanyandOxbowmutuallysodetermine,OxbowmayreceiveconsiderationpursuanttotheOxbowAgreementwhichisinlieuoftheportionoftheRestatedContractsallocatedtoOxbowintheAllocation(the"OxbowAllocation").AnysuchsubstituteconsiderationshallnotaffecttheAllocation,increaseorreducetheAllocableConsiderationpayabletoanyotherIPP(i.e.,theAllocableConsiderationlesstheOxbowAllocation),norinanywayaffecttheShort-TermNotesorAdditionalCashPayment,asapplicable,orthetermsoftheAmendedPPAsorRestatedContractstobereceivedbyanyotherIPPortheFixedPriceSwapContracts.IntheeventthattheCompanyandOxbowshouldagreethatOxbow'sExistingPPAshallbeaTerminatingPPA,thenthecontractquantityandtheinstalledcapacityundertheRestatedContractsshallbereducedbyofthecontractquantityandtheinstalledcapacityundertheRestatedContractsallocatedtoOxbowpursuanttotheoriginalAllocation,andtheaggregatecontractadjustmentidentifiedonAttachmentA-3toExhibitAshallbereducedbytheportionoftheContractAdjustmentallocatedtoOxbowpursuanttotheoriginalAllocation,ifany,andinsucheventsuchreductionshallnotaffectthetermsandconditions,includingcontractprice,ofanyoftheRestatedContractstobeenteredintobyanyotherIPPs.IntheeventtheCompanyandOxbowareunabletoconcludenegotiationsandagreeonthesubstituteconsideration,ifany,tobereceivedbyOxbow,withinseventy-five(75)daysafterthedateofthisAgreement(whichdatemaybeextendedwiththemutualagreementoftheCompanyandOxbow),then(i)thisAgreementshallterminatewithrespecttoOxbow,withtheeffectdescribedinSection12.4(b)and(ii)theprovisionsofSection12.5shallapplywithrespecttoOxbow'sExistingPPA.OxbowagreestoprovideitsContractsAllocationtotheCompanywithinfifteen(15)daysafterthedateofthisAgreement.2.7.N~eotietions.(a)AllnegotiationstobeconductedbytheCompanyandanyIPPpursuanttothisArticle2shallbecomnencednotlaterthanimmediatelyfollowingthePSCApprovalDate.Notwithstandingtheforegoing,anyIPPmayelectinitssolediscretiontocommenceitsownnegotiationswiththeCompanypriortothePSCApprovalDate.IfanIPPsoelects,thedatesforthenegotiationmeetingsshallbescheduledbytheCompanyandsuchIPPwithinseven(7)daysafterthedateofsuchrequest.IfanIPPmakesarequesttherefor,arepresentativeofDLJandlorarepresentativeofWP&Co.shallattendandparticipateinanyorallnegotiationsbetweentheCompanyandsuchIPP.IftheCompanyandanyIPPshallconcludenegotiationsandagreeonafinalformoftherespectiveTerminationAgreement,AmendedPPA,RestatedContract(s),NorConAgreementorOxbowAgreement,asthecasemaybe,thentheCompanyandsuchIPPshalleachinitialandexchangecounterpartsofsuchfinalformandgivenoticethereoftotheIPPs'pecialCounsel,butnoPartyshallbeboundtheretoorobligatedtherebyexceptasprovidedinSection2.8.Inaddition,theCompanyanda committeeofIPPsdesignatedbynoticetotheCompanywithinfourteen(14)daysafterthedateofthisAgreementshalluseReasonableBestEffortstocommenceandconcludenegotiationsandagreeonafinalformoftheFixedPriceSwapContractsaspromptlyaspossible,andtheCompanyandthechairmanofsuchcommitteeofIPPsshallinitialsuchfinalformtoindicatethatsuchformhasbeenagreeduponbytheCompanyandonbehalfofallIPPsandshallgivenoticethereoftotheIPPs'pecialCounselonorbeforetheConditionsDeterminationDate,butnoPartyshallbeboundtheretoorobligatedtherebyexceptwithrespecttotheCompanyasprovidedinSection2.8.(b)IftheCompanyandanyIPPshallnothavesooneragreedonthefinalformoftheirrespectiveContract(s)(excludingforthesepurposestheFixedPriceSwapContractsand,ifthisAgreementisterminatedwithrespecttoNorConorOxbowpursuanttoSections2.5or2.6,respectively,theNorConAgreementandOxbowAgreement,respectively),theCompanyshallgiveallIPPsnoticeofsuchfact(includingtheidentityoftheIPPswhichhavenotagreedonthefinalformoftheirrespectiveContract(s))notlaterthanthedatewhichisten(10)BusinessDayspriortotheConditionsDeterminationDate(a"CompanyNotice").TheCompanyNoticeshallincludetheCompany'sdeterminationofwhether(x)theCompanyintendstoterminatethisAgreementpursuanttoSection12.1(d)intheeventtheCompanyandallsuchIPPsidentifiedinsuchnoticeareunabletoagreeonthefinalformoftheirrespectiveContract(s)onorbeforetheConditionsDeterminationDate,(y)theCompanyiswillingtoconsummatethetransactionscontemplatedhereby(subjecttotheotherconditionstotheCompany'sobligationscontainedinthisAgreement)withouttheinclusion.ofthoseIPPswhichareunabletoagreeonthefinalformoftheirrespectiveContract(s)onorbeforetheConditionsDeterminationDate,or(z)theCompanyelectstoextendtheConditionsDeterminationDateandtheExpirationDateforaperiodofthirty(30)days.(i)IftheCompanyshallnotifytheIPPsthatitwillterminatethisAgreementpursuanttoSection12.1(d)ontheConditionsDeterminationDateintheeventtheCompanyandallsuchIPPsideritifiedinsuchnoticeareunabletoagreeonthefinalformoftheirrespectiveContract(s)onorbeforetheConditionsDeterminationDate(a"sub-clause(x)notice")andtheCompanyandallsuchIPPsidentifiedinsuchnoticeareunabletoagreeonthefinalformoftheirrespectiveContract(s)onorbeforetheConditionsDeterminationDate,thenthisAgreementshallterminateinitsentiretyontheConditionsDeterminationDatepursuanttoSection12.1(d).IftheCompanyshallnotifytheIPPsthatitiswillingtoconsummatethetransactionscontemplatedhereby(subjecttotheotherconditionstotheCompany'sobligationscontainedinthisAgreement)withouttheinclusionofthoseIPPswhichhavenotagreedonthefinalformoftheirrespectiveContract(s)asofthedateofsuchnotice(a"sub-clause(y)notice"),thentheprovisionsofclause(ii)belowshallbeapplicable.IftheCompanyelectstoextendtheConditionsDeterminationDateandtheExpirationDateforaperiodofthirty(30)days(a"sub-clause(z)notice"),oriftheIPPsshallelecttoextendthe12 ConditionsDeterminationDateandtheExpirationDatepursuanttoclause(ii)below,thennotlaterthanten(10)BusinessDayspriortotheextendedConditionsDeterminationDatetheCompanyshallgiveallIPPsafurtherCompanyNoticepursuanttosub-clause(x),(y)or(z)above,providedthattheCompany'srighttoextendtheConditionsDeterminationDatepursuanttoasub-clause(z)noticeshallbelimitedsuchthattheaggregatenumberofdaysbywhichtheConditionsDeterminationDateandtheExpirationDatemaybeextendedbytheCompanypursuanttosub-clause(z)andbytheIPPspursuanttoclause(ii)belowshallbesixty(60)days(the"maximumextensionperiod").Notwithstandingtheforegoing,iftheCompanyshallgiveasu&clause(x)noticeandpriortotheConditionsDeterminationDatetheCoinpanyshallnotifytheIPPsthatithasagreedonthefinalformoftheirrespectiveContract(s)'withoneormoreoftheIPPswithwhichitpreviouslywasunabletoagree,thentheCompanyshallhavetherighttoconvertitssub-clause(x)noticetoeitherasubclause(y)noticeorasub-clause(z)notice;intheeventtheCoinpanygivesasub-clause(y)noticepursuanttothissentence,theConditionsDeterminationDateautomaticallyshallbeextendeduntilthefifth(5)BusinessDayfollowingthegivingofsuchnotice,subjecttofurtherextensionpursuanttoclause(ii)below(and,further,insuchevent,the604aymaximumextensionperioddescribedaboveshallbeincreasedbyanysuchfive(5)BusinessDayPeriod).(ii)IftheCompanyshallatanytimegivetheIPPsasubclause(y)noticepursuanttothisSection2.7(b)thatitiswillingtoproceedtoconsummatethetransactionscontemplatedhereby(subjecttotheotherconditionstotheCompany'sobligationscontainedinthisAgreement)withouttheinclusionofthoseIPPswhichareunabletoagreeonthefinalformoftheirrespectiveContract(s)ifsuchIPPshavenotagreedonthefinalformoftheirrespectiveContract(s)onorbeforetheConditionsDeterminationDate,asthesamemaybeextendedfromtimetotimepursuanttoclause(i)above,then,withinfive(5)BusinessDaysfollowingthereceiptofsuchnotice,allIPPsshalldeterminewhethertheIPPsdesiretoextendforaperiodofthirty(30)days(subjecttothemaximumextensionperiod)theConditionsDeterminationDateandtheExpirationDate.Ifeightypercent(80%)oftheIPPsdonotsoelecttoextendtheConditionsDeterminationDateandtheExpirationDatepursuanttothisSection2.7(b)(ii)onorbeforeten(10)BusinessDaysaherreceiptoftheCompany'ssub-clause(y)notice(orifnosuchextensionmaybeelectedbecauseofthemaximumextensionperiod),thenthisAgreementshallterminateontheConditionsDeterminationDatewithrespecttoanyIPPsidentifiedinsuchnoticewhichareunabletoagreeonthefinalformoftheirrespectiveContract(s)onorbeforetheConditionsDeterminationDate.2.8.DeliveofContractstoEscrowAeent.OntheConditionsDeterminationDate,theCompanyandeachIPPshallexecutetheagreedfinalformoftherespective TerminationAgreement,AmendedPPA,RestatedContract(s),NorConAgreementorOxbowAgreement,asthecasemaybe,andtheCompanyshallexecutetheFixedPriceSwapContracts(allsuchagreementsandcontracts,collectively,the"Contracts"),andthepartiestheretoshalldeliverallexecutedcounterpartsoftheContractstotheEscrowAgent.OncedeliveredtotheEscrowAgent,theContractsmaynotthereafterbeamended,exceptbyawrittenamendmentexecutedbythepartiestheretoanddepositedwiththeEscrowAgent.ThedeliveryoftheContractstotheEscrowAgentshallbeirrevocable,subjectonlytothesatisfactionorwaiveroftheconditionssetforthinSections8and9hereofinaccordancewiththetermsthereof,andtotheprovisionsofSection12.4.Uponthesatisfactionorwaiverofsuchconditions,ontheConsummationDate,theEscrowAgentshallbeauthorizedandinstructedtodelivercounterpartsoftheContractstoeachoftherespectivepartiesthereto,whereupontheContracts(subjecttoanyconditionsasmaybecontainedtherein)shallbeinfullforceandeffectasoftheEffectiveTime.UponanyterminationofthisAgreementinitsentiretyinaccordancewiththetermshereof,oranyterminationofthisAgreementwithrespecttoanyindividualIPP(s)inaccordancewiththetermshereof,anyContractstheretoforedeliveredtotheEscrowAgentbyanyoftheParties,orbytheCompanyandanyterminatedIPP(s),asthecasemaybe,shallbevoidabinitioandshallbedestroyedbytheEscrowAgent.EachofthePartiesagreestoexecuteanddeliver,aspromptlyaspossiblefollowingthedateofthisAgreement,suchescrowagreementasmaybereasonablyrequestedbytheEscrowAgentoranyotherPartyheretosettingforththerightsandobligationsofthePartiesandtheEscrowAgent,consistentariththetermsandconditionsofthisAgreement,withrespecttotheContractstobedeliveredtotheEscrowAgentpursuanttothisSection2.8,andtheagreementsandotherdocumentstobedeliveredtotheEscrowAgentpursuanttoSections10.3and10.4(the"EscrowAgreement").TheEscrowAgreementshallcontaincustomaryprovisions,includingcustomaryexculpatoryandindemnificationprovisionsinfavoroftheEscrowAgent.2.9.ContractAd'ustment.Notlaterthanthirty(30)dayspriortotheanticipatedConditionsDeterminationDate,theIPPsshalldemonstratetotheCompanythattheannualaggregateContractAdjustmentsetforthonAttachmentA-3toExhibitA("ContractAdjustment"),asthesamemaybeadjustedpursuanttoSections2.5,2.6,2.7or12.4(b),willberealizedbytheCompanyupontheconsummationofthetransactionscontemplatedhereby,whetherbyreductionoftheaggregatecontractpriceundertheRestatedContractsorFixedPriceSwapContracts,byreductionoftheAllocableConsideration,Short-TermNotesorAdditionalCashPayment(asapplicable),oranycombinationthereof,or,ifmutuallyagreedtobytheParties,inanyothermanner.14 3.ALLOCABLECONSIDERATION;SHORT-TERMNOTES;ALLOCATION3.1.AllocableConsideration.TheCompanyshall,ontheConsummationDate,payand/ordelivertotheDepositaryonbehalfoftheIPPsortheirrespectivedesignees,thefollowing(referredtohereinasthe"AllocableConsideration"):(a)Threebillionfivehundredfifty-fivemilliondollars($3,555,000,000)inimmediatelyavailablefunds(the"CashPayment");and(b)Forty-sixmillion(46,000,000)newly-issued,fully-paidandnonassessableshares("CompanyShares")ofCommonStockoftheCompany,whichnumberofCompanySharesshallbesubjecttoadjustmentinaccordancewithSection3.5hereof.3.2.Short-TermNotesAdditionalCashPament.TheCompany,ontheConsummationDate,shallalsodelivertotheDepositary,forthebenefitofandatthedirectionofalloftheIPPsortheirrespectivedesignees,either,attheCompanysoption,(i)noteobligationsissuedbytheCompanyintheaggregateprincipalamountoffiftymilliondollars($50,000,000)(the"Short-TermNotes")or(ii)thesumoffiftymilliondollars($50,000,000)inimmediatelyavailablefunds(the"AdditionalCashPayment").TheCompanyshallgivetheIPPsnoticeifitelectstodelivertheAdditionalCashPaymentinlieuoftheShort-TermNotes,notlaterthantheConditionsDeterminationDate.TheShort-TermNotes,ifapplicable,shallmatureninety(90)daysaftertheConsummationDateandshallhaveayieldwhichisatleastequivalenttocommercialpaperissuedbycomparableissuersatthetimeoftheConsummationDateandsuchothertermsasmaybeagreedamongthePartiesnotlaterthantheConditionsDeterminationDate.TheShort-TermNotesshallnotbesubjecttoanyrestrictionsontransfer.3.3.DeliveofAllocableConsiderationShort-TermNotesandAdditionalCashPaenttoDesi.TheCashPayment,CompanySharesandShort-TermNotesorAdditionalCashPayment,asapplicable,eachshallbeirrevocablydeliveredbytheCompanyontheConsummationDatetotheDepositary,whichshallholdtheCashPaymentandCompanySharesforthebenefitofandatthedirectionoftheseveralIPPswhoarepartiestothisAgreementasoftheConsummationDateintherespectiveamountssetforthintheAllocationandshallholdtheShort-TermNotesorAdditionalCashPayment,asapplicable,forthebenefitofandatthedirectionoftheIPPswhoarepartiestothisAgreementasoftheConsummationDate.TheCashPayment,CompanySharesandShort-TermNotesorAdditionalCashPayment,asapplicable,shallbepaidordeliveredwithoutanysetoff,deductionorclaimwhatsoever.TheCashPaymentand,ifapplicable,theAdditionalCashPaymentshallbepaidbywiretransferoffederalfundstotheaccountoftheDepositary,whichaccountshallbesetforthinanoticetotheCompanygivennotlaterthanfive(5)BusinessDayspriortotheConsummationDate.The15 CompanySharesshallbeissuedincertificatedform(withtherestrictivelegenddescribedinSection3.6and,ifapplicable,therestrictivelegenddescribedintheShareholder'sAgreement)inthenamesoftheIPPsintherespectiveamountssetforthintheAllocation,orinthenamesoftherespectivedesigneesofsuchIPPsinsuchamountsordenominationsastherespectiveIPPsmaydetermine,ineachcaseasshallbesetforthinanoticetotheCompanygivennotlessthaneight(8)BusinessDayspriortotheConsummationDate;anydesigneeoftheIPPwhichshallreceiveanyCompanySharespursuanttothisAgreementshall,simultaneouslywiththegivingofsuchnotice,providetheCompanywitharepresentationlettercontainingsubstantiallythesamerepresentationssetforthinSection5.6ofthisAgreement.UnlessotherwisesetforthinanoticetotheCompanygivennotlaterthanfive(5)BusinessDayspriortotheConsummationDate,theShort-TermNotes(ifapplicable)shallberegisteredtoandissuedinthenameoftheDepositary,asagentfortheIPPs,subjecttosubsequentre-registrationandre-issuancetotheseveralIPPsortheirrespectivedesigneesinsuchdenominationsastheDepositarymayrequestandwhichtheCompanyshallexecute,attheCompany'sexpense,withinthree(3)BusinessDaysafterreceiptofanysuchrequest.EachofthePartiesagreestoexecuteanddeliver,aspromptlyaspossiblefollowingthedateofthisAgreement,suchdeposit,escroworsimilaragreementasmaybereasonablyrequestedbytheDepositaryoranyotherPartyheretosettingforththerightsandobligationsofthePartiesandtheDepositary,consistentwiththetermsandconditionsofthisAgreement,withrespectto(a)theAllocableConsiderationandShort-TermNotesorAdditionalCashPayment,asapplicable,tobedeliveredtotheDepositarypursuanttothisSection3.3and(b)theAllocationandthecertificationsofinformationcontainedintheAllocationrequiredtobegivenbytheDepositarypursuanttotheprovisionsofthisAgreement(the"DepositAgreement").TheDepositAgreementshallcontaincustomaryprovisions,includingcustomaryexculpatoryandindemnificationprovisionsinfavoroftheDepositary.3A.Allocation.(a)Eachof(i)theAllocableConsideration,(ii)thecontractquantityandcontractpriceundertheAmendedPPA,(iii)theaggregatecontractquantitiesofelectricityandaggregatecapacityforatermoftenContractYearsandweightedaveragecontractpricesforthefirsttwoContractYearsundertheRestatedContractsand(iv)theContractAdjustmenthavebeenallocatedbyandamongtheseveralIPPsinaccordancewithanallocationseparatelyagreedtobytheIPPsanddepositedbytheIPPswithWP&Co.andinasealedenvelopewiththeEscrowAgentonorbeforethedateofthisAgreement(clauses(i),(ii),(iii)and(iv)arereferredtohereinasthe"Allocation",clauses(ii)and(iii)onlyarereferredtohereinasthe"ContractsAllocation"andclause(iv)onlyisreferredtohereinasthe"ContractAdjustmentAllocation").PromptlyfollowingtheexecutionoftheDepositAgreement,theEscrowAgentshalldelivertheAllocationtotheDepositary.IftheDepositAgreementisnotexecutedbythePartiesandtheDepositarywithinthirty(30)daysafterthedateofthisAgreement,theEscrowAgent16 rshall,unlessotherwisedirectedinwritingbythePartiestodelivertheAllocationtoasuccessorescrowagent,destroytheAllocation.UponsuchdeliverytotheDepositaryorsuccessorescrowagentordestructionoftheAllocation,asthecasemaybe,theEscrowAgentshallhavenofurtherobligationwithrespecttotheAllocation,andtheEscrowAgentshallhavenoobligationwithrespecttotheAllocationexceptassetforthinthisSection3.4(a).Subjecttothefollowingsentence,theCompanyagreesthattheAllocationshallnotbesubjecttochallengeormodificationbytheCompany,andthattheCompanyshallnotinitiate,encourageorsupportanysuchchallengeorattemptedmodificationbyanyGovernmentalAuthorityorotherthirdparty.TheIPPsmaymodifytheAllocationonlywiththepriorwrittenconsentofallIPPs;exceptthat(i)theCompanyandanyIPPmaymutuallyagreetoincreaseorreducetheAllocableConsiderationorcontractquantityandcontractpriceundertheAmendedPPAoraRestatedContracttobepaidtoorreceivedbysuchIPPand(ii)anyIPPmay,initssolediscretion,adjustthecomponentsoftheAllocableConsiderationallocatedcollectivelytosuchIPPanditsAf51iateIPPsasamongsuchIPP'sandAQiliateIPP'sExistingPPAs;provided,however,inanysuchcasesuchadjustment(x)shallnotaffectanyothernon-AffiliateIPP'sallocationoftheAllocableConsiderationorcontractquantityandcontractpriceundertheAmendedPPAoraRestatedContractand(y)shallnotreducetheCashPaymentandCompanySharespayablewithrespecttoClassAPPAstolessthantwobilliondollars($2,000,000,000)(excepttotheextentthatsuchamountisreducedasaresultoftheterminationofthisAgreementwithrespecttoanyIPPswhicharepartiestoClassAPPAs).ForpurposesoftheforegoingdeterminationofwhethertheCashPaymentandCompanySharespayablewithrespecttoClassAPPAsisatleast$2,000,000,000pursuanttoanyprovisionofthisAgreement,theCompanySharesshallbevaluedattheBaseSharePrice.TheaffectedIPPshallnotifytheDepositaryandWP&Co.ofanysuchpermittedadjustment,whereupontheAllocationshallbeamendedaccordingly.TheDepositaryshallmaintainascheduleofallsuchadjustmentstotheAllocation.(b)NeithertheAllocation,noranyportionthereofnoranyinformationcontainedthereinshallbefurnishedordisclosedtotheCompanyoranyGovernmentalAuthority,exceptthat:(i)anyindividualIPPshallbe&eetodiscloseitsownportionoftheAllocation(x)totheCompany,(y)toanyGovernmentalAuthorityor(z)toanythirdparty;andNorConandanyotherindividualIPPwhichelectstocominenceitsownnegotiationswiththeCompanypriortothePSCApprovalDateshalldisclosetotheCompanyitsownportionoftheContractsAllocationnotlaterthanfive(5)BusinessDayspriortothecommencementofsuchnegotiations,providedthattheCompanyiswillingtocommencenegotiationsregardingnon-economictermswithanyIPPpriortoreceivingtheContractsAllocation.17 (ii)theIPPsshallcauseWP&Co.tofurnishinwritingtotheCompany(andeachIPP)immediatelyfollowingtheexecutionofthisAgreement:(x)aschedulesettingforth(A)thenumberofIPPs(consideredonanaggregatebasiswithanyIPPswhichareAftiliatesofsuchIPPs)which,pursuantto,theAllocation,willacquirepursuanttoSection3.1(b)lessthan1,903,906CompanyShares;1,903,906ormorebutlessthan3,807,812CompanyShares;3,807,812ormorebutlessthan5,711,718CompanyShares;5,711,718ormorebutlessthan7,615,624CompanyShares;7,615,624ormorebutlessthan9,519,531CompanyShares;and9/19,531ormorebutlessthan10,650,000CompanyShares,respectively,asofthedateofthisAgreernen,whichtogethershallconstitutealloftheIPPsacquiringCompanySharespursuanttoSection3.1(b),and(B)theaggregateamount,ifany,oftheAllocableConsiderationallocatedtoClassAPPAsandcollectivelytoClass8PPAsandtheClassDPPA,respectively,asofthedateofthisAgreement(itbeingagreedthattheportionoftheCashPaymentandCompanySharesallocatedtoClassAPPAspursuanttotheAllocationasofthedateofthisAgreementshallnotbelessthantwobilliondollars($2,000,000,000));(y)acertificationthatthecontractquantityofelectricityandcapacityforatermoftenContractYearsundertheRestatedContractsallocatedtoeachClassBPPAontheContractsAllocationwhenaddedtogetherwillequaltheaggregatequantityofelectricity(roundedtothenearestGWh)andcapacityundertheRestatedContractsonAttachmentA-3toExhibitAandthatthecontractpriceforatermoftenContractYearsundertheRestatedContractsallocatedtoeachClassBPPAontheContractsAllocationwhenweightaveragedwillyieldtheweightedaverageprice(roundedtothenearestpennyperMWh)undertheRestatedContractsunderthecolumns"weightedaverageprice"and"exampleofweightedaverageprice"onAttachmentA-3toExhibitA;and(z)acertificationthattheContractAdjustmentallocatedtoeachClassBPPAontheContractAdjustmentAllocationwhenaddedtogetherwillequaltheamountsunderthecolumn"aggregatecontractadjustment"(roundedtothenearest$1,000)setforthonAttachmentA-3toExhibitA.(iii)theIPPsshallcauseWP&Co.tofurnishinwritingtotheCompanywithinthree(3)BusinessDaysafterthePSCApprovalDateaschedulesettingforththeContractsAllocation;and18 (iv)theIPPsshallcauseWP&Co.tofurnishinwritingtotheCompany,ontheConsummationDate,aschedulesettingforththeaggregateamount,ifany,oftheCashPaymentandCompanySharesallocatedtoClassAPPAs,ClassBPPAsandClassDPPA,respectively,asoftheConsummationDate(itbeingagreedthattheportionoftheCashPaymentandCompanySharesallocatedtoClassAPPAsshallnotbelessthan$2,000,000,000,excepttotheextentthatsuchamountisreducedasaresultoftheterminationofthisAgreementwithrespecttoanyIPPswhicharepartiestoClassAPPAs).TheCompanymay,incoordinationwithsuchIPPorWP&Co.,confirmwiththeDepositaryanyinformationdisclosedbyanyIPPor%P&Co.,respectively,totheCompanypursuanttothisclause(b).AnyinformationdisclosedtotheCompanypursuanttothisSection3.4(b)shallbesubjecttotheconfidentialityprovisionsofSection14.14.(c)SubjecttoSection6.2,theinformationcontainedintheAllocationwhichisfurnishedtotheCompanypursuanttoSection3.4(b)shallbeutilizedbythePartiesforalltaxreportingpurposes(subjecttoanyadjustmentsmutuallyagreedbetweentheCompanyandanyindividualIPPintheAmendedPPA,anyRestatedContract,orotherwise).3.5.Non-Dilution.ItisunderstoodthatthenumberofCompanySharestobeissuedanddeliveredbytheCompanypursuanttoSection3.1(b)representsapproximately24.16%oftheCompany'sfully-dilutedCommonStockoutstandingasofSeptember30,1996,aftergivingeffecttotheissuanceoftheCompanySharespursuanttoSection3.1(b).Accordingly,ifatanytimebetweenSeptember30,1996andtheConsummationDatethereshallhaveoccurredanyofthefollowing(itbeingunderstoodthatthereshallbesequentialadjustmentsforeachtransactiondescribedbelow):(a)any(i)issuanceofsharesofCommonStockforaconsiderationpersharewhichislessthan$8.70(the"BaseSharePrice"),thenthenumberofCompanySharestobeacquiredbytheIPPspursuanttoSection3.1(b)shallbeincreasedbytheamountequaltothenumberofsharesofCommonStockissuedforaconsiderationlessthantheBaseSharePrice,multipliedbythedifferencebetweentheBaseSharePriceandtheissueprice,andthendividingtheproductbytheBaseSharePrice;or(ii)issuanceofoptions,wiuTantsorrightstopurchasesharesofCommonStockforaconsiderationpershareofCommonStockwhichislessthantheBaseSharePrice,ortheissuanceofothersecuritiesoftheCompany(oranysubsidiaryoftheCompany)convertibleintoCommonStockataconversionpricepershareofCommonStockwhichislessthantheBaseSharePrice,thenthenumberofCompanySharestobeacquiredbytheIPPspursuanttoSection3.1(b)shallbeincreasedbytheamountequaltothenumberofsharesofCommonStockdeliverableupontheexerciseorconversionofsuchoptions,warrants,rightsorother securities,multipliedbythedifferencebetweentheBaseSharePriceandtheexerciseorconversionprice,andthendividingtheproductbytheBaseSharePrice;(b}anychangeinthenumberofsharesofCommonStock(oroptions,warrantsorrights,orothersecuritiesoftheCompanyexercisable,exchangeableorconvertibleintoCommonStock)asaresultofareclassification,combination,exchange,subdivision,stocksplit(includingareversestocksplit),stockdividendordistribution,recapitalization,merger,issuertenderorexchangeoffer,orothersimilartransaction,thenthenumberofCompanySharestobeacquiredbytheIPPspursuanttoSection3.1(b)shallbeappropriatelyandequitablyadjusted;or(c)any(i)reorganization(otherthanasprovidedinsubsection(b)above),(ii)inergerorconsolidationoftheCompanywithorintoanothercorporationinwhichtheCompanyisnotthesurvivingentity,orareversetriangularmergerinwhichtheCompanyisthesurvivingentitybutthesharesoftheCompany'scapitalstockoutstandingimmediatelypriortothemergerareconvertedbyvirtueofthemergerintootherpiaperty,whetherintheformofsecurities,cashorotherwiseor(iii)saleortransferoftheCompany'spropertiesandassetsas,orsubstantiallyas,anentiretytoanyotherperson,then,asapartofsuchreorganization,merger,consolidation,saleortransfer,lawfulprovisionshallbemadesothattheIPPsshallthereafterbeentitledtoreceivethenumberofsharesofstockorothersecuritiesorpropertyofthesuccessorcorporationorcorporationsresulting&omsuchreorganization,merger,consolidation,saleortransferthattheIPPsmouldhavebeenentitledtoreceiveinsuchreorganization,consolidation,merger,saleortransferiftheConsummationDatehadoccurredandtheCompanyShareshadbeenacquiredbytheIPPsimmediatelybeforesuchreorganization,merger,consolidation,saleortransfer.Notwithstandingtheforegoing,thereshallbenoadjustmentpursuanttothisSection3.5foranysharesofCommonStockissuedwithrespecttoanyofthetransactionsdescribedonSchedule3.5hereto.AnyadditionalsharesofCommonStockdeliveredbytheCompanypursuanttothisSection3.5shallbereceivedbytheIPPs,prorata,basedontheCompanySharesallocatedtoeachoftheIPPspursuanttotheAllocation.3.6.PrivatePlacement'eistrationofComanShares.(a)TheissuanceoftheCompanySharestotheIPPshereundershallbeeffectedasaprivateplacementpursuanttoSection4(2)oftheSecuritiesAct.ThecertificatesevidencingtheCompanySharesshallbearalegendinsubstantiallythefollowingform:THESECURITIESEVIDENCEDHEREBYHAVENOTBEENREGISTEREDUNDERTHEUNITEDSTATESSECURITIESACTOF1933,ASAMENDED("SECURITIESACT"),ANDMAYNOTBE20 OFFERED,SOLD,PLEDGEDOROTHERWISETRANSFERREDEXCEPT(1)PURSUANTTOANEFFECTIVEREGISTRATIONUNDERTHESECURITIESACT,(2)INACCORDANCEWITHRULE144UNDERTHESECURITIESACTOR(3)INACCORDANCEWITHANOTHERAPPLICABLEEXEMPTIONFROMTHEREGISTRATIONREQUIREMENTSOFTHESECURITIESACT.Uponissuance,theCompanySharesshallnotbesubjecttoanyrestrictionsontransferotherthanasmayberequiredbythefederalsecuritieslawsand,ifapplicable,asmaybesetforthintheShareholder'sAgreement.TheCompanyshalluseitsReasonableBestEffortstocausetheCompanySharestoberegisteredforsale&omtimetotimebytheIPPs(ortheirassigns)onashelfregistrationstatementonFormS-3(the"ShelfRegistrationStatement"),whichShelfRegistrationStatementshall(i)bedeclaredeffectivebytheSEConorpriortotheConsummationDate,(ii)remaineffectiveforaperiodoftwo(2)yearsfollowingtheConsummationDateand(iii)permitasanintendedmethodofdistributionoftheCompanyShares(amongothers)anunderwrittenofferingbyanunderwriterselectedbytheholdersoftheCompanySharesthatisreasonablysatisfactorytotheCompany.TheCompanycovenantsandagreesthat,asofitseffectivedateandasoftheConsummationDate,noneoftheShelfRegistrationStatement,anydocumentincorporatedbyreferencetherein,anyprospectusincludedthereinorfiledwiththeSEC,oranyamendmentthereoforsupplementthereto,shallcontainanyuntruestatementofamaterialfactoromittostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading.(b)InconnectionwiththepreparationandfilingoftheShelfRegistrationStatementundertheSecuritiesAct,theCompanyshallgivetheIPPs'pecialCounseltheopportunitytoparticipateinthepreparationof(including,butnotlimitedto,reviewing,commentingonandattendingallmeetingswithunderwriters,ifany,wiithrespectto)theShelfRegistrationStatement,eachprospectusincludedthereinorfiledwiththeSEC,eachamendmentthereoforsupplementthereto,andwillprovidetheIPP'sSpecialCounseltheopportunitytocommentonthedescriptionofthetransactionscontemplatedhereundertobecontainedinthecurrent,quarterlyorannualreportfiledbytheCompanyinconnectionwiththeconsummationofthetransactionscontemplatedhereunder,andwillmakeavailableforinspectionbytheIPPs'pecialCounselandanyattorney,accountantorotheragentretainedbyanyIPP,alldocumentsincorporatedbyreferencetherein,allpertinentfinancialandotherrecords,pertinentcorporatedocumentsandpropertiesoftheCompany,asshallbereasonablynecessarytoenableeachIPPtoconductareasonableinvestigationwithinthemeaningoftheSecuritiesAct,andshallcausetheCompany'sofficers,directorsandemployeestosupplyallinformationwhichanyIPPmayreasonablyrequestforpurposesofsuchinvestigation;providedthatanyrecords,informationordocumentsthataredesignatedbytheCompanyinwritingasconfidential(andwhicharenotgenerallyavailabletothepublic,havenotbecomeavailabletosuchpersononanonconfidentialbasis&omasourcewhichhasrepresented21 tosuchpersonthatsuchsourceisentitledtodisclosesameorwhichwasknowntosuchpersononanonconfidentialbasispriortoitsdisclosurebytheCompany)shallbekeptconfidentialbysuchpersonunlessdisclosureofsuchrecords,informationordocumentsisrequiredbycourtoradministrativeorderoranyGovernmentalAuthorityhavingjurisdiction.TheCompanyshaBpermittheIPPs'pecialCounseltoreviewandcommentontheShelfRegistrationStatementandeachsuchprospectus,amendmentorsupplement,asthecasemaybe,areasonableperiodoftimepriortothefilingofsamewiththeSEC,shallnotfilesameinaformtowhichsuchcounselreasonablyobjectswithinfive(5)BusinessDaysofthereceiptthereof,andshallprovidetheIPPs'pecialCounselwithcopiesofallcorrespondencefromorwiththeSECincidentaltotheShelfRegistrationStatementoranysuchprospectus,amendmentorsupplement.AllexpensesincidenttotheregistmtionoftheCompanySharesincluding,withoutlimitation,allregistration,qualificationandfilingfees,"bluesky"feesandexpenses,printingandrelatedexpenses,feesandexpensesoflistingtheCompanySharesontheNYSE,feesandexpensesofcounselandindependentcertifiedpublicaccountantsoftheCompanyandfeesandexpensesoftheIPPs'pecialCounselshallbebornebytheCompany.Inaddition,ontheConsummationDate,theCompanyandeachIPPreceivingCompanySharespursuanttotheAllocation(oritsdesignee)shallenterintoaregistrationrightsagreementintheformannexedasExhibit3.6hereto("RegistrationRightsAgreement").3.7.Shareholder'sAment.OntheConsummationDate,eachIPPlistedonSchedule3.7hereto(unless,asaresultofanyreallocationofCompanySharespriortotheConsummationDateorasaresultofanydesignationofthirdpartiespursuanttoSections3.3.and5.6toreceiveCompanySharesontheConsummationDate,suchIPP,togetherwithitsAffiliateIPPs,membersofitsSponsorGroupanditsExcludedAffiliates(assaidlattertwocapitalizedtermsaredefinedintheShareholder"sAgreement),shallacquireontheConsummationDateCompanySharesrepresentinglessthantwopercent(2%)oftheoutstandingCommonStockoftheCompany)shallcausethecorrespondingentityorentitieslistedonSchedule3.7toenterintoashareholder'sagreementwiththeCompanyintheformannexedasExhibit3.7hereto(each,a"Shareholder'sAgreement").IfanyIPPnotlistedonSchedule3.7,asaresultofanyreallocationofCompanySharespriortotheConsummationDate,shallreceive,togetherwithitsAffiliates,CompanySharesrepresentingtwopercent(2%)ormoreoftheoutstandingCommonStockoftheCompany,thensuchIPPshallnotifytheCompanyandshallidentifysuchsponsor.entitiesasmaybeappropriate(consistentwiththesponsorentitieslistedonSchedule3.7)toenterinto,andsuchIPPandsponsorentitiesshallenterinto,aShareholder'sAgreeinentwiththeCompanyontheConsummationDate.IfanydesigneeofoneormoreIPPswithrespecttotheCompanySharesinaccordancewithSections3.3and5.6shallreceiveCompanySharesrepresentingmorethanfourandnine-tenthspercent(4.9%)oftheoutstandingCommonStockoftheCompany,thensuchdesigneeshallenterintoaShareholder'sAgreementwiththeCompanyontheConsummationDate,unlesstheCompanyshallotherwiseagree.TheIPPshallcauseanysuchdesigneewithrespecttoCompanySharesinaccordancewithSections3.3and5.6(ifnotanAffiliateoftheIPP)22 toprovidearepresentationlettertotheCompany(whichshallsurvivetheConsummationDate)representingthat,togetherwithitsAffiliates,suchdesigneeshallnot,immediatelyfollowingtheConsummation,bethebeneficialowner(withinthemeaningofRule13d-3undertheExchangeAct)ofmorethannineandnine-tenthspercent(9.9%)oftheoutstandingCommonStockoftheCompany.IfanyExcludedAffiliate(asdefinedintheShareholder'sAgreement)receivesCompanySharespursuanttothisAgreementontheConsummationDatethen,forpurposesoftheShareholder'sAgreement,suchCompanySharesshallbetreatedasiftheyweretransferredtotheExcludedAffiliatefollowingtheConsummationDate.3.8.BoardofDirectors.PromptlyaAerthedateofthisAgreement,theCompanyandtheIPPsshalljointlyselectanationallyrecognizedexecutivesearchfirm,whosefeesandexpenseswillbepaidbytheCompany,todevelopalistofindividualsunaffiliatedwiththeCompanyoranyIPPwhoarequalifiedtoserveasdirectorsoftheCompany.BoththeCompanyandtheIPPsmayproposepotentialdirectorstothesearchfirm,butthesearchfirmshalldecidewhichindividualswillbeincludedonthesearch6rm'slist.Oncethesearchfirm'slisthasbeenpreparedandpresentedsimultaneouslytotheCompanyandtheIPPs,theCompanyandtheIPPsshallmutuallyagreeuponafinallistoften(10)individualswhoaremutuallyacceptabletotheCompanyandtheIPPs.TheCompanyshallselecttwo(2)individuals&omthefinallisttoserveontheBoardofDirectorsoftheCompany,effectiveimmediatelyfollowingtheConsummationDate.Eachsuchindividualshallstandforreelectionforathree(3)yeartermattheCompany'snextannualmeetingofshareholders.EachsuchindividualshallbeproposedandsupportedbytheCompanyforelectiontotheBoard.IntheeventeithersuchindividualshallbeunabletoserveorcontinuetoserveontheBoard,suchindividual'sreplacementshallbeselectedbytheCompanyRomthefinallist.TheprovisionsofthisSection3.8shallsurvivetheConsummationDateuntilfullyperformed.4.REPRESENTATIONSANDWARI~TIESOFTHECOMPANYTheCompanyherebyrepresentsandwarrantstoeachIPP,asfollows:4.1.Oranization.Standin.TheCompanyisacorporationdulyorganized,validlyexistingandingoodstandingunderthelawsoftheStateofNewYork,andhasallrequisitecorporatepowerandauthoritytoownitspropertiesandassetsandtocarryonitsbusinessinthemannernowconductedand,subjecttoreceiptoftheNMPCRegulatoryApprovals,asproposedtobeconductedinaccordancewiththisAgreementandtheContracts.TheCompanyisdulyqualifiedtotransactbusinessandisingoodstandingineachjurisdictionexceptwherethefailuresotoqualifywouldnothaveaMaterialAdverseEffectontheCompany.23 4.2.ExecutionAuthoritEnforceabili.Subjectineachcaseto(i)receiptoftheNMPCRegulatoryApprovalsandapplicablefederalandstatesecuritieslawsandtherulesoftheNYSE,(ii)receiptofrequiredconsentstothetransactionscontemplatedbythisAgreementbythethirdpartieswhosenamesaredisclosedinanoticegivenbytheCompanytoallIPPswithinthirty(30)daysafterthedateofthisAgreement,whichnoticeshallnotincludeNMPC/ThirdPartyReleases(each,an"NMPCffhirdPartyConsent"),(iii)receiptoftheNMPC/ThirdPartyReleasesand(iv)approvalofthisAgreementandthetransactionscontemplatedherebybytheCompany'sBoardofDirectorsand,totheextentrequired,bytheCompany'sshareholders,(a)theCompanyhasallrequisitecorporatepowerandauthoritytoexecuteanddeliverthisAgreementandallotheragreementstobeexecutedbyitpursuanthereto,andtocarryouttheprovisionsofthisAgreementinaccordancewiththetermshereof,andallotheragreementstobeexecutedbyitpursuanthereto,including,butnotlimitedto,thepowerandauthoritytoissueandselltheCompanySharesandShort-TermNotes,andtoenterintoandperformtheContracts;(b)thisAgreementhasbeenandallotheragreementstobeexecutedbytheCompanypursuantheretowillbe,dulyandvalidlyexecutedanddeliveredbytheCompany;and(c)thisAgreementconstitutes,andallotheragreementstobeexecutedbytheCompanypursuantheretowillconstitute,validandlegallybindingobligationsoftheCompany,enforceableagainsttheCompanyinaccordancewiththeirrespectiveterms,4.3.NoConflicts.Subjectto(i)receiptoftheNMPCRegulatoryApprovals,(ii)receiptoftheNMPCfThirdPartyConsents,(iii)receiptoftheNMPCfIMrdPartyReleasesand(iv)approvalofthisAgreementandthetransactionscontemplatedherebybytheCompany'sBoardofDirectorsand,totheextentrequired,bytheCompany'sshareholders,theexecution,delivery,andperformancebytheCompanyofthisAgreement,anyotheragreementstobeexecutedbytheCompanypursuanthereto,andtheconsummationofthetransactionscontemplatedherebyandthereby,willnotresultinaviolationordefaultofanyprovisionofitsCertificateofIncorporationorBy-Laws.4.4.~Littation.ExceptassetforthinSchedules6.10Aand6.10BorintheSECReports,asofthedateofthisAgreementthereisnoaction,suit,arbitration,orotherlegaloradministrativeproceedingpendingor,tothebestknowledgeoftheCompany,anyinvestigationpendingoranyaction,suit,arbitration,orotherlegaloradministrativeproceedingorinvestigationthreatenedagainsttheCompanyoranyofitssubsidiarieswhich(a)questionsthevalidityofthisAgreement,theagreementstobeexecutedbytheCompanypursuantheretoortherightoftheCompanytoenterintothisAgreementorsuchotheragreements,ortoconsummatethetransactionscontemplatedherebyortherebyor(b)ifadverselydetermined,wouldbelikelytohaveaMaterialAdverseEAectontheCompany.TheCompanyisnotapartytoorsubjecttoanyorder,writ,injunction,decree,judgmentorotherrestrictionofanyGovernmentalAuthoritywhichhasorisreasonablylikelytohaveamaterialadverseeffectontheCompany'sabilitytoenterintoandperformitsobligationsunderthisAgreementoranyotheragreementstobeenteredintobytheCompanypursuanthereto.24 45.55ll5.hhdl*45*5hfi)5h'dlI'fd*Company,(ii)thenumberofsharesofCommonStockissuedandoutstandingand(iii)thenumberofsharesofCommonStockissuableupontheexerciseofanyoptions,warrantsorrights,oruponconversionorexchangeofanyothersecuritiesoutstanding,ineachcaseasof(x)September30,1996and(y)June27,1997.TheCompanyisnotobligatedtorepurchase,redeemorotherwiseacquireanysharesofitscapitalstock,otherthanassetforthinSchedule4.8.4.6.ValidIssuanceofComanShares.TheCompanySharestobeacquiredbytheIPPshereunder,whenissued,soldanddeliveredinaccordancewiththetermsofthisAgreementfortheconsiderationexpressedherein,willbedulyandvalidlyissued,fullypaid,andnonassessable,willbe&eeofrestrictionsontransferotherthanrestrictionsontransferrequiredbyfederalsecuritieslawsand,ifapplicable,asmaybesetforthintheShareholder'sAgreement,andwillbedulylistedontheNYSE.TheCompanySharestobeacquiredbytheIPPshereunderarenotandwillnotbesubjecttoanypreemptiverightsorrightsoffirstrefusal,AssumingthetruthandaccuracyofeachIPP'srepresentationssetforthinSection5.6(or,withrespecttoanydesigneeofanIPP,suchdesignee'srepresentationssetforthinarepresentationlettercontainingsubstantiallythesamerepresentationssetforthinSection5.6),theoffer,saleandissuanceoftheCompanySharespursuanttothisAgreement(i)willnotrequireregistrationundertheSecuritiesActand(ii)willnotrequireregistrationorqualificationundersuchofthe"bluesky"orsecuritieslawsofthejurisdictionsintheUnitedStates(orwillbeincompliancetherewith)asshallbeapplicabletotheoffer,saleandissuanceoftheCompanyShares(subjecttothelasttwosentencesofSection5.6andsubjectfurthertothelimitationthattheCompanymakesnorepresentationorwarrantywithrespecttoanyofferbyanyIPPtoanydesigneeofsuchIPPascontemplatedbySections3.3and5.6),andneithertheCompanynoranyauthorizedagentactingonitsbehalfwilltakeanyactionhereafterthatwouldrequiresuchregistration.4.7.SECRertsandFinancialStatements.SinceJanuary1,1995,theCompanyhasmadeallfilingsrequiredtobemadebyitundertheExchangeActandanyothersecuritieslawsapplicabletotheCompanyandi'sotherwiseeligibletofilearegistrationstatementonFormS-3coveringtheofferingandsaleoftheCompanySharesandtheDebtSecurities.Asoftheirrespectivedatesor,ifamended,asofthedateofsuchamendinent,theSECReportscompliedinallmaterialrespectswiththerequirementsoftheExchangeAct,andtherulesandregulationsoftheSECthereunder.Asoftheirrespectivedatesor,ifamended,asofthedateofsuchamendment,theSECReportsdidnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementstherein,inlightofthecircumstancesunderwhichtheyweremade,notmisleading.ThefinancialstatementsoftheCompanyincludedintheCompany'sAnnualReportonForm10-KforthefiscalyearendedDecember31,1996andtheCompany'sQuarterlyReportonForm10-QforthefiscalquarterendedMarch31,1997complyastoforminallmaterialrespectswith25 applicableaccountingrequirementsandthepublishedrulesandregulationsoftheSECwithrespectthereto,havebeenpreparedinaccordancewithgenerallyacceptedaccountingprinciplesasstatedinsuchfinancialstatementsappliedonaconsistentbasisduringtheperiodcoveredandfairlypresent,inallmaterialrespects,thefinancialpositionoftheCompanyasofthedatethereofandtheresultsofoperationsandchangesinfinancialpositionoftheCompanyfortheperiodthenendedsubject,inthecaseofunauditedstatements,tonotesandnormalyear-endauditadjustments,noneofwhichshallbematerialinamountoreffect.4.8.AbsenceofCertainChanesorEvents.ExceptassetforthintheSECReportsorinSchedule4.8,betweenDecember31,1996andthedateofthisAgreementtherehasnotbeennorhastheCompanyincurred:(a)anydamage,destructionorloss,whetherornotcoveredbyinsurance,materiallyandadverselyaffectinganymaterialportionofitsassets;(b)anysatisfactionordischargeofanymateriallien,claimorencumbranceorpaymentofanymaterialobligationbytheCompany,exceptintheordinarycourseofbusiness;(c)anymaterialchangeto,orcancellationof,amaterialcontract,agreement,leaseorcommitmentbywhichtheCompanyoranyofitsmaterialassetsisboundorsubject;(d)otherthanintheordinarycourseofbusiness,anymaterialchangeorincreaseinanycompensationarrangementoragreementwithanyofficer,directororexecutiveemployeeoftheCompany,includinganygrantofstockappreciationrights;(e)anysaleorotherdispositionofanymaterialportionoftheCompany'sassets;(f)anymortgage,pledge,securityinterestorliencreatedbytheCompany,withrespecttoanymaterialportionofitsassets;(g)anymaterialchangeinthemannerofkeepingtheCompany'sbooks,accountsorrecordsortheaccountingpracticesthereinreflected;(h)asofthedateofthisAgreement,anymergerorconsolidationoftheCompanywithorintoanyotherentity,oranyissuance,saleorotherdispositionofanysharesoftheCompany'scapitalstock;or(i)anydeclaration,settingaside,orpaymentorotherdistributionincashorpropertyinrespectofanyoftheCompany'scapitalstock,oranydirectorindirectredemption,purchase,orotheracquisitionofanyofsuchstockbytheCompany,otherthanpursuanttotheoperationoftheDRIPPlanorasrequiredbythetermsoftheCompany'spreferredstock.I4.9.NMPCRestructurin.AsofthedateofthisAgreement,theCompanyhasdisclosedtotheIPPsallmaterialplansandproposalsconcerningtheNMPCRestructuringwhichhavebeendisclosedtoanyGovernmentalAuthorityorapprovedbytheBoardofDirectorsoftheCompanyandwhichcouldreasonablyhaveamaterialadverseeffectonanyIPPortheRestructuring,includingbutnotlimitedtotheContractsoranyoftheconsiderationtobereceivedbytheIPPshereunder.AsofthedateofthisAgreement,theCompanyhasnotbeenauthorizedbyitsBoardofDirectors,noristheCompanyseekingsuchauthorization,tofileapetitionundertheBankruptcyCodeorotherwisetocommence,authorizeoracquiesceinthecommencementofaproceedingunderanybankruptcyorsimilarlawfortheprotectionofcreditors,ortomakeageneralassignmentoranygeneralarrangementorcompromiseforthebenefitofcreditors,nor76 hastheCompanymade,commenced,authorizedoracquiescedinthecommencementofanysuchproceedingorassignmentorhadanysuchpetition,proceedingorassignmentconunencedagainstit.5.REPRESENTATIONSAND%AEG~TIESOFEACHIPPEachIPP(severallyandnotjointly)herebyrepresentsandwarrantstotheCompany,asfollows:5.1.OranizationStandin.TheIPPisacorporation,partnershiporotherentitydulyorganized,validlyexistingandingoodstandingunderthelawsofitsstateofincorporationorformation,and,subjecttoreceiptoftheIPPRegulatoryApprovals,hasallrequisitecorporateorpartnershippowerandauthority,asthecasemaybe,toownitspropertiesandassetsandtocarryonitsbusinessinthemanner-nowconductedandasproposedtobeconductedinaccordancewiththisAgreementandtheContracts.5.2.ExecutionAuthori.Enforceabili.Subjectineachcasetoreceiptof(i)theIPPRegulatoryApprovals,(ii)theIPPffhirdPartyConsentsand(iii)theIPPApprovals,(a)theIPPhasallrequisitecorporateorpartnershippowerandauthority,asthecasemaybe,toexecuteanddeliverthisAgreementandallotheragreementstobeexecutedbyitpursuanthereto,andtocarryouttheprovisionsofthisAgreementinaccordancewiththetermshereof,andallotheragreementstobeexecutedbyitpursuanthereto,including,butnotlimitedto,thepowerandauthoritytoenterintoandperformtheContractstowhichitisaparty;(b)thisAgreementhasbeen,andallotheragreementstobeexecutedbytheIPPpursuantheretowillbe,dulyandvalidlyexecutedanddeliveredbytheIPP;and(c)thisAgreementconstitutes,andallotheragreementstobeexecutedbytheIPPpursuantheretowillconstitute,validandlegallybindingobligationsoftheIPP,enforceableagainsttheIPPinaccordancewiththeirrespectiveterms.5.3.NoConflicts.Subjecttoreceiptof(i)theIPPRegulatoryApprovals,(ii)theIPP/ThirdPartyConsentsand(iii)theIPPApprovals,theexecution,delivery,andperformancebytheIPPofthisAgreement,anyotheragreementstobeexecutedbytheIPPpursuanthereto,andtheconsummationofthetransactionscontemplatedherebyandthereby,willnotresultinaviolationordefaultofanyprovisionofitsCertificateofIncorporationorBy-Lawsorpartnershipagreement,asapplicable.5.4.'Litiation.ExceptassetforthinSchedules5.4,6.iOAand6.10B,asofthedateofthisAgreementthereisnoaction,suit,arbitration,orotherlegaloradministrativeproceedingpendingor,tothebestknowledgeoftheIPP,anyinvestigationpendingoranyaction,suit,arbitration,orotherlegaloradministrativeproceedingorinvestigationthreatenedagainsttheIPPwhich(a)questionsthevalidityofthisAgreement,theagreementstobeexecutedbytheIPPpursuantheretoortherightofthe27 IPPtoenterintothisAgreementorsuchotheragreements,ortoconsummatethetransactionscontemplatedherebyortherebyor(b)ifadverselydetermined,wouldbelikelytohaveamaterialandadverseeffectontheIPP'sabilitytoenterintoandperformitsobligationsunderthisAgreementoranyotheragreementstobeexecutedbytheIPPpursuanthereto.TheIPPisnotapartytoorsubjecttoanyorder,writ,injunction,decree,judgmentorotherrestrictionofanyGovernmentalAuthoritywhichhasorisreasonablylikelytohaveamaterialandadverseeffectontheIPP'sabilitytoenterintoandperformitsobligationsunderthisAgreementoranyotheragreementstobeexecutedbytheIPPpursuanthereto.5.5.CertainTransfers;AsofthedateofthisAgreement,theIPPdoesnothaveanyagreementorunderstandingwithanyotherIPPto(i)re-allocateortransfertosuchotherIPP(excludingforthesepurposesanyAQiliateIPPofsuchIPP),whetherbeforeoraftertheConsummationDate,anyportionoftheCashPaymentorCompanySharesallocatedtotheIPPpursuanttotheAllocationor(ii)assignortransferaRestatedContractorAmendedPPAtoanyIPPwhoseExistingPPAisaClassAPPA.5.6.AcuisitionofComanShares.IftheIPP,pursuanttotheAllocation,willacquireanyCompanySharespursuanttoSection3.1(b):(a)theCompanySharestobeacquiredbysuchIPPshallbeacquiredforitsownaccountandwithoutaviewtotheresaleordistributionthereoforshallbeissued(inwholeorinpart)todesigneesofsuchIPP,consistingofpartnersandshareholders(atanytier),Affiliates,lenders,steamhostsorGasMitigationThirdParties(providedanysuchdesigneeshallprovidetheCompanywithalettercontainingsubstantiallythesamerepresentationssetforthinthisSection5.6and,ifapplicable,designatingasuitablepurchaserrepresentative,whichlettershallbereasonablysatisfactorytotheCompanyanditscounsel);provided,however,thattheforegoingshallnotprecludetheIPPfromtransferringorsellingtheCompanySharestobeacquiredbyitinthemannerdescribedinclauses(c)(i),(ii)or(iii)below;(b)suchIPPiseither(x)an"accreditedinvestor"assuchtermisdefinedinRule501(a)ofRegulationDundertheSecuritiesActor(y)ifnotan"accreditedinvestor",eitheraloneorwithitspurchaserrepresentative,hassuchknowledgeandexperienceinfinancialandbusinessmattersthatitiscapableofevaluatingthemeritsandrisksofitsinvestmentintheCompanyShares,withinthemeaningofRule506(b)(2)(ii)ofRegulationDundertheSecuritiesAct;and(c)suchIPPunderstandsthatthesaleoftheCompanySharestosuchIPPhasnotbeenregisteredundertheSecuritiesActoranyapplicablestatesecuritieslawsand,therefore,theCompanySharescannotbetransferred,sold,pledgedorotherwisedisposedof,except(i)pursuanttotheShelfRegistrationStatementoranothereffectiveregistrationstatementundertheSecuritiesActandincompliancewiththeprospectusAeliveryrequirementundertheSecuritiesAct,(ii)inaccordancewithRule144undertheSecuritiesActaftertheapplicabletimeperiodspecifiedthereinor(iii)inaccordancewithanotherexemption&orntheregistrationrequirementsoftheSecuritiesAct.Forpurposeshereof,theIPPs'urchaserrepresentative,ifany,isWP&Co.oranotherequivalentinvestmentbanker.Notlaterthanten(10)BusinessDayspriortothe28 ConsummationDate,theIPPshallgiveanoticetoWP&Co.statingthenumberofnon-accreditedinvestorstowhichsuchIPPshalldesignatethatanypartoftheCompanySharestobeacquiredbysuchIPPpursuanttoSection3.1(b)shallbeissuedontheConsummationDate.TheIPPacknowledgesthatsuchnumberofnon-accreditedinvestors,togetherwiththenumberofnon-accreditedinvestorstowhichanyotherIPPshalldesignatethatanypartofitsCompanySharestobeacquiredbyanysuchotherIPPpursuanttoSection3.1(b)shallbeissuedontheConsummationDate,shallnotexceedthirty-five(35).Notwithstandingtheforegoing,withouttheCompany'sconsent,nopersonmaybeadesigneeofanIPPwithrespecttoanyCompanySharesiftheacquisitionofCompanySharesbysuchpersonwould(i)requiretheCompanytoqualifyasaforeigncorporationorasadealerinsecuritiesinanyjurisdictioninwhichitisnotsoqualiGed,(ii)subjecttheCompanytotaxationinrespectofdoingbusinessinanyjurisdictioninwhichitisnotsosubjector(iii)requiretheCompanytomakefilingswithanystatesecuritiescommissionersotherthannoticefilings.TheIPPagreestogivetheCompanynoticeoftheidentityofanyproposeddesigneeassoonaspracticableinordertopermittheCompanytomakeadeterminationpursuanttotheprecedingsentence.5.7.FormofAllocationContractsAllocation.AnnexedasExhibit5.7areblankformsoftheAllocation,ContractsAllocationandContractAdjustmentAllocationdepositedwiththeEscrowAgentand%P&Co.priortothedateofthisAgreement,whichforms,asdeliveredtotheEscrowAgentandWP&Co.,donotandwillnotincludeanyformulas,notations,conditionsorotherqualificationswithrespecttothedeterminationoftherespectiveamounts,quantitiesorpricesallocatedtotheIPP(withtheexceptionoftheNorConAllocation,acopyofwhichhasbeendeliveredtotheCompanysimultaneouslywiththeexecutionofthisAgreement).6.CONDUCTANDTRANSACTIONSPRIORTOTHECONSUMMATIONDATE6.1.DebtSecurities.(a)TheCompanyhasadvisedtheIPPsofitsintentiontofinancethepaymentofuptothreebilliontwohundredmillion($3,200,000,000)dollarsoftheCashPaymentbyissuingdebtsecuritiesoftheCompany("DebtSecurities")inanunderwrittenpublicofferingregisteredwiththeSECtobeconsummatedonorpriortotheConsummationDate(the"PublicOffering").ThePartiesagreethatthesuccessfulconsummationofthePublicOfferingisofmaterialimportancetothesuccessfulconsummationoftheRestructuringpursuanttothisAgreementandthatthetermsandconditionsoftheDebtSecuritiesissuedthereinareofmaterialimportancetotheIPPsintheircapacitiesasholdersofCompanySharesand/orShort-TermNotes,andaspartiestotheContracts.ThetermsandconditionsoftheDebtSecuritiesshallbedevelopedbytheCompanyinconjunctionwiththeUnderwriters.TheCompanyagreesthatthematerial29 termsandconditionsoftheDebtSecuritiesshallbesubjecttotheapprovalofamajorityofacommitteeconsistingequallyofrepresentativesoftheCompany,SterlingPowerPartners,Ltd.andEastSyracuseGeneratingCompany,L.P.providedthat(i)suchcommitteeshallnotbeentitledtodemandspecifictermsandconditionsand(ii)theapprovalofsuchcommittee,ifunanimouslyrecommendedbytheUnderwriters,shallnotbeunreasonablywithheld.TheCompanyagreesthat(x)theaggregateprincipalamountoftheDebtSecuritiesissuedinconnectionwiththePublicOfferingshallnotexceedthreebilliontwohundredmillion($3,200,000,000)dollars,(y)theDebtSecuritiesshallbepricedtotradeinitiallyatparand(z)unlessapplicablesecuritizationlegislationisenactedintheStateofNewYorkandtheDebtSecuritiesaresecuritizedpursuantthereto,theDebtSecuritiesshallbegeneralunsecuredobligationsoftheCompany.(b)TheCompanycovenantsandagreesthat,asofitseffectivedateandasoftheConsummationDate,noneoftheregistrationstatementpreparedbytheCompanyinconnectionwiththeofferingoftheDebtSecurities(the"DebtRegistrationStatement"),anydocumentincorporatedbyreferencetherein,anyprospectusincludedthereinorfiledwiththeSEC,oranyamendmentthereoforsupplementthereto,shallcontainanyuntruestatementofamaterialfactoromittostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading.TheCompanyshallprovidetheIPPs'pecialCounselwithalldraftsoftheDebtRegistrationStatementandanysuchprospectus,amendmentorsupplement,asthecasemaybe,whichareprovidedtotheUnderwritersareasonableperiodoftimepriortothefilingofsamewiththeSEC,'andshallprovidetheIPPs'pecialCounselwithcopiesofallcorrespondence&omorwiththeSECincidentaltotheDebtRegistrationStatementoranysuchprospectus,amendmentorsupplement.(c)IftheDebtSecuritiesaretoreceiveacreditratingoflessthaninvestmentgrade,theDebtSecuritiesshallbeunderwrittenby(i)DLJ,actingasleadmanager,(ii)WP&Co.,actingasaco-manager,and(iii)bysuchadditionalinvestmentbankingfirmsselectedbytheCompany,actingasco-managers(collectively,the"Underwriters").ThePublicOfferingshallbeartheusualandcustomaryfeesandexpenses,consistentwithhigh-yieldfinancingsofsimilartype,whichfeesandexpensesshallbebornesolelybytheCompany.DLJandWP&Co.shallhavetherighttoattendallmaterialpresentationstoratingagenciesandinvestorsinconnectionwiththePublicOffering.6.2.Sale/LeasebackTax-FreeExchanes.UpontherequestofanyIPPmadewithinsixty(60)daysaAerthedateofthisAgreementcontainingaspecificproposalbysuchIPPwithrespectthereto,theCompanyshallconductgoodfaithnegotiationsanduseitsReasonableBestEffortstomodifythetransactionscontemplatedbythisAgreementwithrespecttosuchIPPinamutuallyacceptablemannerinordertoeffecttheRestructuringthrough(a)saleandleasebackarrangementsoftheProjectfacilitiesofsuchIPPor(b)atransactionthatqualifiesasa"reorganization"underSection368(a)ofthe30 Code(andanycorrespondingprovisionofapplicablestateorlocallaw),provided,however,thattheCompanywillnotbeobligatedtomodifythetransactionscontemplatedbythisAgreementwithrespecttosuchIPPif(i)intheCompany'sreasonablejudgment,suchmodificationwouldhaveamaterialadverseeffectonthetimingoftheRestructuringcontemplatedbythisAgreement,theanticipatedtaxeffectontheCompanyoftheRestructuring,theimplementationoftheNMPCRestructuring,ortheCompany'sabilitytocompletethesaleoftheDebtSecuritiesontermsreasonablysatisfactorytoit,orwouldrequiretheCompanytoincuradditionalcostsorliabilities,includingcontingentliabilities(netofthevalueofanyassetassumed),otherthannormalandcustomaryincidentalout-of-pocketcostsandexpensesandattorneys'eesor(ii)asaresultthereof,IPPswouldreceive(intheaggregate),withrespecttoClassAPPAs,aportionoftheCashPaymentandCompanySharesoflessthan$2,000,000,000(excepttotheextentthatsuchamountisreducedasaresultoftheterminationofthisAgreementwithrespecttoanyIPPswhicharepartiestoClassAPPAs).6.3.~PS*.I*i'UU*p*pidfl'gf6*proxystatementtobedistributedinconnectionwiththespecialmeetingoftheCompany'sshareholderstobecalledtoconsiderforapprovalcertainofthetransactionscontemplatedbythisAgreementundertheExchangeAct(the"ProxyStatement"),theCompanyshallprovidetheIPPs'pecialCounselvrithalldraftsoftheProxyStatementandeachamendmentoftheProxyStatement,ineachcasewhichareprovidedtotheUnderwriters,areasonableperiodoftimepriortothefilingofsamewiththeSEC,andshallprovidetheIPPs'pecialCounselwithcopiesofallcorrespondencefromorwiththeSECincidentaltotheProxyStatementandanysuchamendment.TheCompanycovenantsandagreesthat,asofitsdistributiondate,noneoftheProxyStatementoranyamendmentthereof,oranydocumentincorporatedbyreferencetherein,shallcontainanyuntruestatementofamaterialfactoromittostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleading.Subjecttoapplicablefiduciaryduties,theProxyStatementshallcontainastatementoftheCompany'sBoardofDirectorsrecommendingapprovalofthisAgreementandthetransactionscontemplatedhereundertotheCompany'sshareholders.6.4.NMPCRestructurin(a)ThePartiesacknowledgetheexistenceoftheCompany'sproposedcorporaterestructuringanddisaggregationinconnectionwithitsPo~erChoiceproposal(the"NMPCRestructuring")andagreethattheRestructuringcontemplatedbythisAgreementisanintegralandsubstantialpartoftheNMPCRestructuring.TheCompanyshalldisclosetotheIPPsallmaterialplansandproposalsconcerningtheNMPCRestructuringwhicharedisclosedtoanyGovernmentalAuthority(includingbutnotlimitedtoPSCstaff)orapprovedbytheBoardofDirectorsoftheCompany,andwhichcouldreasonablyhaveamaterialadverseeffectonanyIPPortheRestructuring,includingbutnotlimitedtotheContractsoranyoftheconsiderationtobereceivedby31 theIPPshereunder.ExceptasexpresslysetforthinthisAgreement,eachIPPshallbefreetoopposeorchallengeanyaspectoftheNMPCRestructuringwhichsuchIPPdeemstobeadversetotheinterestsofsuchIPPoritsAffiliates.(b)Ifatanytime,whetherbeforeoraftertheConsummationDate,theCompanyrestructuresitscorporatestructureorassets,includingbycreatinganynewentitiesthatholdsignificantassets,whetherinconnectionwiththeNMPCRestructuringorotherwise,theninnoeventshalltheIPPsortheirassigns,intheirrespectivecapacitiesasholdersofCommonStockorShort-TermNotesoraspartiestotheContracts,betreatedlessfavorablyinanymaterialrespectthanothersimilarly-situatedholdersofCommonStockorShort-TermNotesorpartiestocomparableagreements(includingcomparableagreementsbetweentheCompanyand/oritsAf5liates)aretreatedintheircapacitiesassuch.Inaddition,intheeventofanysuchrestructuring,eachoftheContractswillbeassignedtoandassumedbytheentityorentitiesowningallorsubstantiallyalloftheCompany'selectrictransmissionanddistributionassetsor,ifseparated&omtheCompany'selectrictransmissionassetspursuanttotherestructuring,theCompany'selectricdistributionassets,providedthat,upontheeffectivedateoftherestructuring,(i)theassumingentity'sperformanceundertheContractsshallbeunconditionallyguaranteed,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytotheIPP(oritsassign)underanysuchContract,byeachoftheotherentitiesarisingoutoftherestructuring,includinganyentity(ies)spun-offtotheCompany'sshareholdersoranyAffiliateoftheCompanyholdingsignificantassetsheldbytheCompany(oranysubsidiaryoftheCompany)priortotherestructuring,unlesstheassumingentity'slong-tennunsecureddebtcreditratingissuedbyMoody'sInvestorsService,Standard&Poor'sCorporationoranothernationallyrecognizedratingagencyisatleastasfavorableastheCompany'slong-termunsecureddebtcreditratingimmediatelypriortotheeffectivedateoftherestructuring,and(ii)iftheassumingentityisnottheentitywhichwillcollect6omcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApproval,theassumingentity'sperformanceundertheContractsshallbeunconditionallyguaranteed,pursuanttoaguanuiteeinformandsubstancereasonablysatisfactorytotheIPP(oritsassign)underanysuchContract,bytheeiitity(ies)whichwillcollectfromcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApproval.Intheeventofanysuchrestructuring,theIPP(oritsassign)underanysuchContract(s)shallhavetherighttoreplaceitsContract(s),asapplicable,withpowerpurchaseand/orhedgingcontractualarrangementssubstantiallyequivalenttothosethatareenteredintobetweentheentity(ies)holdingthetransmissionand/ordistributionassetsoftheCompanyorwhichwillcollectfromcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApprovalandtheentity(ies)holdingthenon-nucleargeneratingassetsoftheCompany,whetherornotsuchassetsarespunwfftotheCompany'sshareholders(a"GencoContract"),providedthattheterm,priceandquantityundersuchIPP'sContract(s)shallnotbealteredthereby,unlessanyofsuchtermsaremateriallyand32 expresslyconditionedbycertainprovisionsintheGencoContract,inwhichcaseappropriateandequitableadjustmentsinsuchtermsshallbemutuallyagreedupon.6.5.Hart-Scott-RodinoActNotification.EachIPPoritsdesigneewithrespecttoCompanySharesshallmakeitsowndeterminationofwhetherit(oranyofitsAffiliates)isrequiredtofiletheNotificationandReportFormforCertainMergersandAcquisitionspursuanttotheHart-Scott-RodinoActinconnectionwiththetransactionscontemplatedbythisAgreement.AnyIPPordesigneethatdeterminesit(oranyofitsAffiliates)issorequiredshallfilesuchNotificationandReportForminatimelymanner,andshallgivenoticethereoftotheCompany.ThePartiesshallmakeallrequiredfilingsandshallcooperatewitheachotherinconnectionwithsuchfilingsandanyresponsesthereto.TheCompanyshallpayallfilingfeesrequiredtobepaidundertheHart-Scott-RodinoActinconnectionwiththeacquisitionoftheCompanyShareshereunder,asandwhentheapplicablefilingsaremade;theCompany'sobligationtopayanysuchfeeincurredbyanIPPpriortheretoshallsurvivetheConsummationDateoranyterminationofthisAgreement(eitherinitsentiretyorwithrespecttosuchIPP).6.6.ReulatoArovals.(a)TheCompanyshalluseReasonableBestEffortstoseekandobtain,onorbeforetheExpirationDate,eachRegulatoryApprovalwhichissetforthinanoticegiventotheIPPs'pecialCounselpromptlyafteritdeterminesthatsuchRegulatoryApprovalisdesiredorrequired,specifyingtheneedthereforandthenaturethereofinreasonabledetail(collectively,the"NMPCRegulatoryApprovals").AllNMPCRegulatoryApprovalsshallbesoughtintheorderandinthemannerwhichtheCompany,afterconsultationwiththeIPPRepresentatives,believeswillbemostlikelytoresultinreceiptoftheNMPCRegulatoryApprovalspriortotheExpirationDate.(b)EachIPPshalluseReasonableBestEffortstoseekandobtain,onorbeforetheExpirationDate,eachRegulatoryApprovalapplicabletosuchIPPwhichissetforthinanoticegiventotheCompanypromptlyafteritdeterminesthatsuchRegulatoryApprovalisdesiredorrequired,specifyingtheneedthereforandthenaturethereofinreasonabledetail(collectively,the"IPPRegulatoryApprovals").AllIPPRegulatoryApprovalsshallbesoughtintheorderandinthemannerwhicheachIPP,,afterconsultationwiththeIPPRepresentativesand,withrespecttoanyfilingstobemadetothePSCortheFERC(excludinganyfilingspertainingtoanIPP'sstatus,rightsorobligationsasaQForEWGoranyofsuchIPP'srightsorobligationspursuanttoPURPA),afterconsultationwiththeCompany,believeswillbemostlikelytoresultinreceiptoftheIPPRegulatoryApprovalspriortotheExpirationDate.(c)NotwithstandinganythingtothecontrarycontainedinSections6.6(a)or6.6(b),theCompanyshalluseitsReasonableBestEffortstosubmitthisAgreement,togetherwithallotherrequisitedocuinentsandinstruments,tothePSC33 withinfourteen(14)daysfollowingthedateofthisAgreement,forpurposesofobtainingthePSC'sapprovalandordersolelywithrespecttothematterssetforthinSchedule6.6Chereto(suchapprovalandorderbeingreferredtohereinasthe"PSCApproval").(d)IntheeventthatthisAgreementand/oranyofthetransactionscontemplatedherebycouldreasonablysubjectanyIPP,itspartnersorAftiliates,individuallyorcollectively,tobecomesubjecttoanyregulationorjurisdictionofanyGovernmentalAuthorityfromwhichtheywerepreviouslyexempt(includingbutnotlimitedtoSECorFERCregulationunderPUHCA,PSCregulationunderNYPSL,andFERCregulationundertheFederalPowerAct),then(i)suchIPPandtheCompanyshallusetheirReasonableBestEffortstoseekandobtainappropriateexemptionsorwaiverspriortotheConsununationDate(providedtheCompanyshallnotberequiredtouseitsReasonableBestEffortstoassistanIPPinobtaininganexemption&omPUHCAwithrespecttosuchIPP'sand/orsuchIPP'sAf5liates'wnershipof10%ormoreoftheCommonStockoftheCompany,ifapplicable),(ii)ifsuchexemptionsorwaiverscannotbeobtained,suchIPPandtheCompanyshallusetheirReasonableBestEffortstoconformthisAgreementand/orthetransactionscontemplatedherebypriortotheConsummationDateinamannermutuallysatisfactorytosuchIPPandtheCompanyandtheotherPartiesheretoasmaybenecessaryinorderforsuchIPP,itspartnersorAffiliates,toavoidbecomingsubjecttosuchregulationorjurisdictionand(iii)ifsuchexemptionsorwaiverscannotbeobtainedandifthisAgreementand/orthetransactionscontemplatedherebycannotbesoconformed,theprovisionsofSection12.2(c)(iii)shallbeapplicable.6.7.CoorationwithrescttoReulatoArovals.(a)FromthedateofthisAgreementuntiltheearliertooccurof(x)theEffectiveTime,(y)theterminationofthisAgreementinitsentiretyor(z)withrespecttoanyindividualIPP,theterminationofthisAgreementwithrespecttosuchIPP,thePartiesshallcooperatewitheachotherinpreparingandfilinganyandaHsubmissionstotheFERC,PSC,SECandotherGovernmentalAuthoritiesinordertoobtainanyRegulatoryApprovals.TheParties,inconjunctionwiththeIPPRepresentativesandDLI,shaHformacommitteetoprepareandmakeajointpresentationtothePSCand/orthePSCstaff(ifthePSCsopermits)inconnectionwiththesubmissionofthisAgreementtothePSCpursuanttoSection6.6(c).TheCompanyshallconsultwiththeIPPRepresentativesonaregularbasisindevelopingoverallregulatorystrategies,andshallprovidetheIPPRepresentativeswithadraftcopyofeachfilingforNMPCRegulatoryApprovalstobemadebytheCompanywiththePSC,FERC,SECoranyotherGovernmentalAuthorityinconnectionwiththeRestructuring,areasonableperiodoftimepriortotheanticipatedfilingofsame,andshallinformtheIPPRepresentativesofanymaterialchangestherein.TheCompanyshallatalltimeskeeptheIPPRepresentativesfullyapprisedofthestatusofallapplicationsforNMPCRegulatoryApprovals,includingwithrespecttoallmaterialdiscussionswithGovernmental34 Authorities(includingPSCstafI),andshallprovidetheIPPswithcopiesofallcorrespondencegiventoorreceivedfromanyGovernmentalAuthorityinconnectiontherewith.EachIPPshallprovidetheCompanywithadraftcopyofeachfilingtobemadebysuchIPPconcerningNMPCRegulatoryApprovalsareasonableperiodoftimepriortotheanticipatedfilingofsame,shallinformtheCompanyofanymaterialchangestherein,andshallatalltimeskeeptheCompanyfullyapprisedofallapplicationsmadebysuchIPPconcerningNMPCRegulatoryApprovals,includingwithrespecttoallmaterialdiscussionswithGovernmentalAuthorities(includingPSCstaff)concerningNMPCRegulatoryApprovals.ExceptasexpresslysetforthinthisAgreement,nothingcontainedhereinshalllimitorrestrictanyIPPfromopposingorchallenginganyapplicationforanNMPCRegulatoryApprovalwhichsuchIPPdeemstobeadversetotheinterestsofsuchIPPoritsAffiliates,andnothingcontainedhereinshalllimitorrestricttheCompany&omopposingorchallenginganyapplicationforanIPPRegulatoryApprovalwhichtheCompanydeemstobeadversetoitsinterests.NothingcontainedinthisAgreementshallrequireanyIPPtodisclosetheAllocation,anyportionthereoforanyinformationcontainedthereintoanyGovernmentalAuthorityexceptassetforthinSection3.4.(b)TheCompany,uponrequestandattheexpenseofanyrequestingIPP,andeachIPP,uponrequestandattheexpenseoftheCompany,shalluseReasonableBestEffortstoassisttheotherPartytoobtainanyRegulatoryApprovalthatisrequiredtobeobtained,provided,however,that(i)aPartythatisexemptfromregulationorjurisdictionofanyGovernmentalAuthorityasofthedateofthisAgreementshallnotberequiredtotakeanystepsinassistancetoanotherPartythatcouldreasonablysubjectit,itspartnersorAffiliatestotheregulationorjurisdictionofanyGovernmentalAuthority&omwhichitortheywerepreviouslyexempt,(ii)noPartyshallberequiredpursuanttothisSection6.7tosupportanypositiontakenbyanyotherPartyexceptasmayotherwisebeexpresslysetforthinthisAgreementand(iii)theCompanyshallnotberequiredtouseitsReasonableBestEffortstoassistanIPPinobtaininganexemptionRomPUHCAwithrespecttosuchIPP'sand/orsuchIPP'sAffiliates'wnershipof10%ormoreoftheCommonStockoftheCompany,ifapplicable.(c)ThePartiesshallendeavortomaintaintheconfidentialityofanyinformationthatoneormorePartiesdeemcommerciallysensitive(whichthePartiesagreeshallinclude,withoutlimitation,thedesignationofwhichExistingPPAsaresetforthonSchedules2.1,2.2and2.3hereof,respectively),andshallcooperateinseekingtradesecretprotectionorotherappropriateconfidentialtreatmentforcommerciallysensitiveinformationthatissubmittedtoanyGovernmentalAuthorityinthecourseofobtaininganyRegulatoryApproval.AnyPartyseekingtomaintainconfidentialityofsuchinformationshallnotifytheotherPartiesofsuchdesireupondeliveryofsuchinformation.35 6.8.CoorationwithrescttoIPP/ThirdPartConsentsandNMPCfThird~PltI(a)UponanIPP'srequest,theCompanyagreestouseitsReasonableBestEfforts,inatimelymanner,toassisttheIPP(including,withoutlimitation,byprovidingrelevantconsents,representationsandwarranties)toamend,restructure,assignorterminateitsexistingthirdpartyagreements,includingbutnotlimitedtofuelsupply,transportation,financing,lease,operationsandsteamsupplyagreements,relatingtoorarisingoutofsuchIPPsProjectorExistingPPAorthetermination,amendmentoramendmentandrestatement,asthecasemaybe,ofsuchIPP'sExistingPPA,ineachcaseinamannerthat(i)willenablesuchIPPtoobtaintheIPP/ThirdPartyConsentsrequiredordesiredtobeobtainedbysuchIPPand(ii)willaccommodatethetermsofthisAgreementwithoutreducingitseconomicvaluetosuchIPPandotherwiseinamannerreasonablysatisfactoiytosuchIPP.(b)UpontheCompany'srequest,eachIPPagreestouseitsReasonableBestEfforts,inatimelymanner,toassisttheCompany(including,withoutlimitation,byprovidingrelevantconsents,representationsandwarranties)inconnectionwiththeCompany'seffortstoobtainawaiver,release,amendmentorterminationoftheCoinpany'sobligationsunderexistingthirdpartyagreementswithlenders,suppliersandotherthirdpartieswhichtheCompanypreviouslyhasenteredintoattherequestoronbehalfofanyIPPandwhichrelatetoorariseoutofsuchIPP'sProjectorExistingPPA(each,an"NMPCfH6rdPartyAgreement")andwhichwaiver,release,amendmentorterminationisdesiredbytheCompanytobeobtainedinconnectionwiththetermination,amendmentoramendmentandrestatement,asthecasemaybe,ofsuchIPP'sExistingPPAascontemplatedbythisAgreement.EachIPPagreestoperformadiligentreviewofitsfilesandprovidetotheCompany,withinthirty(30)daysafterthedateofthisAgreement,ascheduleofallNMPCfMrdPartyAgreementsdisclosedbysuchreview,buttheIPPshallhavenoliabilitytotheCompanyoranythirdpartyintheeventsuchreviewdoesnotdiscloseallNMPC/ThirdPartyAgreementswithrespecttowhichtheCompanymaydesiretoobtainawaiver,release,amendmentorterminationasaresultofthetransactionscontemplatedhereby.Anywaiver,release,amendmentorterminationrequiredtobeobtainedwithrespecttoanyNMPC/ThirdPartyAgreementisreferredtohereinasan"NMPCfChirdPartyRelease."6.9.PerformanceunderExistinPPAs.(a)FromthedateofthisAgreementuntiltheearliertooccurof(x)theEffectiveTime,(y)theterminationofthisAgreementinitsentiretyor(z)withrespecttoanyindividualIPP,theterminationofthisAgreementwithrespecttosuchIPP,thePartiesagreeandstipulatethattheExistingPPAsshallcontinuewiththesameforceandeffectasifthisAgreementhadnotbeenexecutedbyanyParty,andtheParties(respectively)shallcontinuetoperformallobligations,covenantsandagreements requiredtobeperformedbythempursuanttothetermsoftheExistingPPAs,providedthatnoIPP,regardlessofthetermsofitsExistingPPA,shallbesubjectto(i)anyCurtailmentor(ii)anyclaimthatelectricityproducedanddeliveredtotheCompanybysuchIPPexceedstheestimatesofenergyinmegawatt-hoursandcapacityinmegawattssetforthinitsExistingPPA.(b)FromthedateofthisAgreementuntiltheearliertooccurof(x)theEffectiveTime,(y)theterminationofthisAgreementinitsentiretyor(z)withrespecttoanyindividualIPP,theterminationofthisAgreementwithrespecttosuchIPP,theCompany(i)shallnotinitiateorcontinueanyrequestforregulatoryauthorizationoranyregulatoryproceedingwithrespectto,andifauthorizedtodoso(whetherbeforeorafterthedateofthisAgreement)willnotimplementorenforce,anyCurtailment,adequateassurances(includingfirmsecurity)orotherregulatoryinitiativewhichisreasonablylikelytohaveamaterialadverseeffectonanyIPPortheRestructuring,includingbutnotlimitedto-theContractsoranyoftheconsiderationtobereceivedbyanyIPPhereunderand(ii)shallnotimplementorcontinuetoimplementanyQFMonitoringProgramastoanyIPP.(c)NotwithstandingtheprovisionsofSection6.9(a)and(b),intheeventthatthePSCrnandatesthattheCompanyimplementorenforceanyCurtailmentwithrespecttoanyIPPthatisaPartytothisAgreement,theCompanyagreesthatitshalljointlyseek,withanysuchaffectedIPP,aPSCand,ifnecessary,judicialstayofsuchCurtailment,onthegroundsthattheCurtailmentwouldresultinsubstantialinjurytotheIPPand,totheextentitcouldaffecttheconsummationof'thetransactionscontemplatedbythisAgreement,theParties.Inaddition,eachoftheCompanyandanysuchaffectedIPPshallbe&eetoassertanyothergroundsitdeemsappropriateinordertoopposetheCurtailment.TheCompanyshallopposeanyeffortofthePSCtomandateCurtailmentswithrespecttoanyIPPwhichisaPartytothisAgreement.If,notwithstandingtheCompany'sandsuchIPP'sjointefforts,thePSCoracourtofcompetentjurisdictionrnandatessuchCurtailment,thennothingcontainedinthisAgreementshallprohibittheCompany&omimplementingorenforcingsuchCurtailmenttotheminimumextentrequiredbysuchmandate,providedthattheforegoingshallnotbedeemedtowaiveanyrightssuchIPPmayhaveunderthisAgreement,pursuanttolaworotherwisetorestrict,limitoropposetheimplementationorenforcementofsuchCurtailment.NothingcontainedinthisSection6.9(c)shallbedeemedtoauthorizetheCompanytoimplementorenforceanyCurtailmentwithrespecttoanyExistingPPAtotheextentsuchExistingPPAprohibitsorlimitstheCompanyIromimplementingorenforcingsuchCurtailment.(d)Notwithstandingtheprovisionsofsub-clause(z)ineachofSection6.9(a)and(b)andinSection6.10(b),ifthisAgreementshallterminatewithrespecttoNorConpursuanttoSection2.5,theprovisionsofSections6.9(a)and(b)shallcontinuetoapplytoNorCon(subjecttosuMlauses(x)and(y)thereof)untilDecemberI,1997,andtheprovisionsofSection6.10(b),insofarastheymaypertaintoCurtailment,shall37 continuetoapplytoNorCon(subjecttosub-clauses(x)and(y)thereof)untilDecember1,1997.6.l0.S~fLii(a)PromptlyfollowingthedateofthisAgreement,eachPartyshalluseReasonableBestEffortstostaythependinglitigationandregulatoryproceedingslistedinSchedules6.10Aand6.10B,ifapplicabletosuchParty,withsuchstaystoremainineffectuntiltheearliertooccurof(x)theEffectiveTime,(y)theterminationof.thisAgreementinitsentiretyor(z)withrespecttoanyindividualIPP,theterminationofthisAgreementwithrespecttosuchIPP.WithrespecttothoseproceedingslistedinSchedule6.10B,eachPartyshall(i)useReasonableBestEffortstostaythependingproceedingsand(ii)whetherornotsuchstayisgranted,ifanyPartydesirestocontinueitsparticipationinsuchproceedingasaresultofthelastsentenceofthisSection6.10(a),eachPartyshalluseReasonableBestEfFortstoobtainanorderfromthecourtineachsuchproceedingstatingthatthedispositionofsuchproceedingwillnothaveanymaterialadverseimpactontheExistingPPAsorontheclaimsassertedbytheCompanywithrespecttotheExistingPPAsinsuchproceedings.TheParties,aspromptlyaspracticableaQerthedateofthisAgreement,shalldeterminetheappropriatejudicialorregulatorybodiestowhichtoapply,andthetextofthenecessarynotices,motionsorapplicationstobefiled,inordertoeffectuatethestaysand/orobtaintheorderscontemplatedbytheprovisionsofthisSection,andpromptly,shallfilethesamewithsuchbodies.Notwithstandingwhetheranysuchlitigationorproceedingsshallbestayed,therightsandobligationsofthePartiespursuanttothisAgreementshallnotbeaffectedbyanyjudgment,ruling,order,decisionorotheractionwhichmaybeissuedorrenderedinanysuchlitigationorproceedingbetweenthedateofthisAgreementandtheConsummationDateexceptasotherwiseprovidedinSections8.5and9.5,andnoPartyshallseektoenforcesuchjudgment,ruling,order,decisionorotheractionagainstanyotherParty.TheobligationsofthePartiespursuanttothisSection6.10(a)shallbesubjecttotheconditionthatnoPartyshallberequiredtotakeanyactionorsufferanyinaction,thatwouldleadtoforfeiture,lossofrights,impositionofsanctionsorpenalties,orotherwisecauseamaterialadverseimpactonitsprospectsforsuccesswithrespecttoanysuchlitigationorregulatoryproceedingwithrespecttoitselforthirdparties;butanyactionnecessarytoavoidanysuchresultshalltothemaximumextentpossibleavoidanymaterialadverseimpact(includingtheincurrenceofanycostorexpense)uponanyotherParty.(b)FromthedateofthisAgreementuntiltheearliertooccurof(x)theEffectiveTime,(y)theterminationofthisAgreementinitsentiretyor(z)withrespecttoanyindividualIPP,theterminationofthisAgreementwithrespecttosuchIPP(i)theCompanyshallrefrainfromcommencinganynewlitigationorregulatoryproceedingtheoutcomeofwhichcouldhaveamaterialadverseeffectonanyIPPoranyIPP'srightsorobligationsunderitsExistingPPA,includingthepurchaseofpowerthereunder,(ii)each38 IPPshallrefrainfromcommencinganynewlitigationorregulatoryproceedingpotentiallyadverselyaffectingtheCompanyortheCompany'srightsorobligationsundertheExistingPPAs,includingthepurchaseofpowerthereunder,exceptthatanIPPmaycommenceanysuchlitigationorproceeding,orassertanyclaim,inresponsetoanyactionorproceeding,includingbutnotlimitedtoanyproceedingwithrespecttoCurtailment,initiated(whetherbeforeorafterthedateofthisAgreement)bytheCompanyoranyGovernmentalAuthorityandexcept,further,thateachPartymaycommenceanylitigationorproceeding,orassertanyclaim,arisingoutofanybreachofthisAgreementorofanyExistingPPAorotheragreementrelatingtothedeliveryofpowerunderanExistingPPA,and(iii)eachPartyaccordinglyagreestowaiveanystatuteoflimitationsforsuchperiodthatwouldotherwisebarsuchproceedingsunlesscommencedduringsuchperiod.(c)TheParties,withinthirty-five(35)daysafterthedateofthisAgreement,alsoshalldeterminetheappropriatejudicialandregulatorybodiestowhichtoapply,andthetextofthenecessarynotices,motionsorapplicationstobefiled,inordertoeffectuatethedismissalsandwithdrawalscontemplatedbytheprovisionsofSections8.8(b)and9.8(b),whicharetobedeliveredandsubsequentlyfiledpursuanttosuchSectionsasoftheConsumnationDate.6.11.ConductofBusiness.ExceptasexpresslypermittedbythisAgreementorsetforthinSchedule6.11,&omthedateofthisAgreementuntiltheConsuinmationDate,theCompany(a)shallconductthebusinessandoperationsoftheCompanyinaccordancewithpastpracticeandintheordinarycourseofbusiness;(b)shallnotenterintoanytransactionorperform(orfailtoperform)anyactwhichwouldconstituteamaterialbreachoftherepresentations,wairanties,covenantsandagreementsoftheCompanycontainedherein,whetherasofthedateofthisAgreementorasoftheConsummationDate;(c)shallnotmakeanyamendmentormodificationoftheCertificateofIncorporationorBy-LawsoftheCompanywhichwouldbereasonablylikelytohaveamaterialandadverseeffectonanyrightsoftheIPPspursuanttothisAgreementoranyagreementtobeenteredintopursuanthereto;(d)shallnoteffectanyissuance,saleorotherdispositionofanysharesoftheCompany'scapitalstock;(e)shallnotmakeanydeclaration,settingaside,orpaymentorotherdistributionincashorpropertyinrespectofanyoftheCompany'scapitalstock,oranydirectorindirectredemption,purchase,orotheracquisitionofanyofsuchstockbytheCompany;and(f)shallnotmakeanymaterialchangeorincreaseinanycompensationanangementoragreement(includingbutnotlimitedtoanygrantofstockappreciationrights)withanyofficer,directororexecutiveemployeeoftheCompanyoutsidetheordinarycourseofbusiness.Inaddition,theCompanyshallpromptlynotifytheIPPsofanyhappeningoreventwhichhas,orwhichisreasonablylikelytoresultin,aMaterialAdverseEffectontheCompany.6.12.PublicDisclosure.ExceptasotherwiseprovidedinthisAgreement,fromthedateofthisAgreementuntiltheConsummationDateorsoonerterminationofthis39 Agreementinitsentirety,noPartytothisAgreementshalldirectlyorindirectlymakeorcausetobemadeanypublicannouncementorissueanypublicnoticeinanyformwithrespecttothisAgreementorthetransactionscontemplatedhereby,withouttheconsentoftheotherPartiesexceptifintheopinionofsuchParty'scounselitisrequiredbythesecuritieslawsoftheUnitedStatesortherulesoftheNYSEoranyothersecuritiesexchangeormarketonwhichthesecuritiesofsuchPartyoritsAffiliatesarequotedortradedtomakesuchdisclosure.ThePartiesagree,totheextentpracticable,toconsultwitheachotherregardinganysuchpublicannouncementinadvancethereof.6.13.FurtherAssurances.Subjecttothetermsandconditionshereinprovided,eachofthePartiesheretoagreestouseitsReasonableBestEffortstotakepromptly,orcausetobetakenpromptly,allactionsandtodopromptly,orcausetobedonepromptly,allthingsnecesmy,properoradvisableunderapplicablelawstoconsummateandmakeeffectivethetransactionscontemplatedbythisAgreement,andtosatisfyalloftheconditionstotheconsummationofthetransactionscontemplatedbythisAgreementtobesatisfiedbysuchParty,includingusingitsReasonableBestEffortstoobtainallnecessaryconsents,approvals,qualifications,orders,authorizations,extensions,waivers,exemptionsandotheractionsorinactions&omallapplicableGovernmentalAuthorities,thirdparties,boardsofdirectors,shareholdersandpartners,andeffectingallnecessaryregistrationsandfilings.6.14.s**li.mtiPP*dI**VfUd*fthisAgreementuntiltheearliertooccurof(x)theEffectiveTime,(y)theterminationofthisAgreementinitsentiretyor(z)theterminationofthisAgreementwithrespecttosuchIPP,itshallnot,directlyorindirectly,aloneorinconcertwithothers,exceptfortheacquisitionoftheCompanySharespursuanttothisAgreement,acquire,oftertoacquireoragreetoacquire,bypurchase,giftorotherwise,beneficialownership(withinthemeaningofRule13d-3undertheExchangeAct)ofanyoftheCompany'soutstandingCommonStock.EachIPPcovenantsandagreesthatsuchIPP,togetherwithanyAffiliatesofsuchIPP(totheknowledgeofsuchIPP,~thoutanydutyofinquiry,withrespecttoanyAffiliatesofsuchIPP),shallnot,ontheConsummationDate,bethebeneficialowner(withinthemeaningofRule13d-3undertheExchangeAct)ofmorethanfivepercent(5%)ofthethenoutstandingCommonStockoftheCompany(assumingthenumberofsharesofCommonStockoutstandingasoftheConsummationDateisnotlessthan190,390,600shares)exceptforacertaingroupofAffiliateIPPswhoshallbethebeneficialownersofnotmorethanfiveandsix-tenthspercent(5.6%)ofthethenoutstandingCommonStockoftheCompany.6.15.T~axRulins.TheCompanyagreestopermittheIPPs'pecialCounsel,andeachIPPagreestopermittheCompany'staxcounsel,toreviewMdcommentonallrequestsforfederal,stateorlocaltaxrulingstobemadeinconnectionwiththeRestructuring,andtoprovidetosuchotherParty'scounselcopiesofalltaxrulingrequestsareasonableperiodoftimepriortothesubmissionofsame.TheCompany40 herebyconsentstotheIPPsseekingsuchtaxrulingswithinthemeaningof,andagreestopaythefees'andexpensesoftheIPPs'pecialCounselinconnectionwithanysuchtaxrulingrequestspursuantto,theIPPs'pecialCounselFeeLetter.7.INTENTIONALLYLEFTBLANKS.CONDITIONSTOEACHIPP'SOBLIGATIONSONTHECONSUMMATIONDATETheobligationsofeachIPP(severallyandnotjointly)toconsummatetheRestructuringandmakethedeliveriesspecifiedinSection10tobemadebyitontheConsummationDatearesubjecttothesatisfactiononorbeforetheConsummationDate(or,ifotherwisesetforthinSection10.1(c),theConditionsDeterminationDate)ofeachofthefollowingconditions,thewaiverofwhichshallnotbeeffectiveagainstanyIPPunlesssuchIPPgivesitsconsentinwritingtheretoorsuchwaiverisdeemedtobegivenpursuanttoSection10.1(c):8.1.ReresentationsandWarranties.TherepresentationsandwaixantiesoftheCompanycontainedinSection4shallbetrueinallmaterialrespectsonandasofthe'onsummationDatewiththesameeffectasthoughsuchrepresentationsandwarrantieshadbeenmadeonandasoftheConsummationDate(oronthedatewhenmadeinthecaseofanyrepresentationorwarrantywhichexpresslyrelatestoanearlierdate).8.2.Performance,TheCompanyshallhaveperformedandcompliedinallmaterialrespectswithallagreements,obligations,covenantsandconditionscontainedinthisAgreementthatarerequiredtobeperformedorcompliedwithbyitonorbeforetheConsummationDate.8.3.ReresentationLetter'ecre'sCertificate'inionoftheComan'sCounsel.TheIPPshallhavereceivedontheConsummationDate(a)arepresentationletterexecutedbytheCompanyinsubstantiallytheformannexedasExhibit8.3A,(b)acertificateoftheSecretaryoftheCompanycertifying(i)theCertificateofIncorporationandBy-LawsoftheCompany,(ii)theresolutionsoftheBoardofDirectorsandshareholdersoftheCompanyauthorizingthetransactionscontemplatedbythisAgreementand(iii)theincumbencyofanyofficersoftheCompanyexecutingthisAgreementoranyagreementstobeexecutedbytheCompanypursuanthereto,informandsubstancereasonablysatisfactorytosuchIPP,and(c)anopinion,fromSullivan&CromwellandlorSwidler&Berlin,outsidecounselfortheCompany,datedtheConsummationDate,insubstantiallytheformannexedasExhibit8.3C.8.4.ReulatoArovals.TheIPPshallhavereceivedonorbeforetheConsummationDateeachIPPRegulatoryApprovaland,iftheIPPwillbenefittherefrom orbeaffectedthereby,anyNMPCRegulatoryApprovalsetforthintheNMPCStatusNotice,inaformreasonablyacceptabletotheIPP,andeachsuchRegulatoryApprovalshallbeinfullforceandeffectandeither(i)shallbefinalandnon-appealableor(ii)ifnotfinalandnon-appealable,shallnotbesubjecttothepossibilityofappeal,revieworreconsiderationwhich,intheopinionoftheIPP,isreasonablylikelytobesuccessfuland,ifsuccessful,wouldhaveaMaterialAdverseEffectonsuchIPP.8.5.NoIn'unctionActionorProceedin.(a)NocourtorGovernmentalAuthorityofcompetentjurisdictionshallhaveenacted,issued,promulgated,enforcedorenteredanylaw,statute,ordinance,rule,regulation,judgment,decree,injunctionorotherorder(whethertemporary,preliminaryorpermanent)thatisineffectontheConsummationDateandwhichrestrains,enjoinsorotherwiseprohibitsconsummationofthetransactionscontemplatedherebyand(b)noclaim,action,suit,investigationorotherproceedingbroughtbyaGovernmentalAuthorityorthirdpartyconcerningthetransactionscontemplatedbythisAgreementshallbependingwhichintheopinionofsuchIPPisreasonablylikelytobesuccessfulandwhich,ifadverselydetermined,wouldgrantrelieffromoragainstsuchIPPwhichisreasonablylikelytohaveaMaterialAdverseEffectonsuchIPP.8.6.NoMaterialAdverseEvent.BetweenSeptember30,1996andtheConsutntnationDate,thereshallnothaveoccurredanyeventorcondition(includingbutnotlimitedtoanyactionorinactionofanyGovernmentalAuthority)whichhashadormayreasonablybeexpectedtohaveaMaterial'AdverseEffectontheCompany(provided,however,thatneither(i)theimpactoftheExistingPPAsnor(ii)thetransactionscontemplatedbythisAgreementshallconstituteaMaterialAdverseEQectontheCompany).8.7.Contracts.TheCompanyandtheIPPshallhaveexecutedanddeliveredtotheEscrowAgenttherespectiveTerininationAgreement,AmendedPPA,RestatedContract(s),NorConAgreementorOxbowAgreement,asapplicable,inaccordancewithSection2.8,onorbeforetheConditionsDeterminationDate.8.8.GeneralReleaseWithdrawalofLitiation.(a)TheIPPshallhavereceivedfromtheCompanyontheConsummationDateageneralrelease,informandsubstancereasonablysatisfactorytotheIPP,ofallclaims,liabilitiesorobligationsoforagainsttheIPPwhichtheCompanyhad,hasormayhavewithrespecttofacts,circumstancesoroccurrencesexistingonorarisingatanytimethroughandincludingtheEffectiveTimearisingoutoforinconnectionwithsuchIPP'sExistingPPA,exceptclaims,liabilitiesorobligations(i)arisingoutoforinconnectionwiththisAgreement,(ii)arisingoutoforinconnectionwithanylitigation,regulatoryproceedingsorpleadingswhicharenottobedismissedandwithdrawn(oreffectivelywithdrawn)bytheCompanypursuanttoSection8.8(b)and(iii)42 unlessdismissedorwithdrawnpursuanttoSection8.8(b),arisingoutoforinconnectionwithanypaymentduetotheCompany,whetherornotdisputed,foranyservicesprovidedbytheCompanypursuanttotheExistingPPAoranyrelatedgastransportation,peakshaving,interconnectionorotherrelatedagreementbetweentheCompanyandtheIPP,providedthatifsuchpaymentrelatestoanyperiodmorethansixty(60)dayspriortothedateofthisAgreementtheCompany'sentitlementtosuchpaymentshallhavebeensetforthinawritinggiventotheIPPonorbeforeJune1S,1997.ThePartiesacknowledgeandagreethatailclaims,liabilitiesandobligationsrelatingtotracking,adjustmentoradvancepaymentaccountprovisionsunderanyExistingPPAshallbeextinguishedasoftheEffectiveTime(andsuchextinguishmentshallbereflectedinthegeneralrelease).(b)Inaddition,theIPPshallhavereceived&omtheCompany(i)anoriginalcounterpartofastipulationorotherappropriatedocument(s),informandsubstancereasonablysatisfactorytotheIPP,suf5cienttodismissorwithdrawastotheIPP(exceptasotherwiseprovidedinthefootnotesthereto)thelitigation,proceedingsandpleadings,asthecasemaybe,listedonSchedule8.8withrespecttosuchIPPand(ii)withrespecttotheproceedingslistedonSchedule6.10B,anoriginalcounterpartofastipulationorotherappropriatedocument(s),informandsubstancereasonably~satisfactorytotheIPP,suf5cienttoeffectivelywithdrawsuchproceedingsastotheIPP,ineachcasebytheCompany,withprejudiceandwithnocostsawarded,asoftheConsummationDate.FollowingtheConsummationDatetheCompanyshalltakepromptly,orcausetobetakenpromptly,allactionsandtodopromptly,orcausetobedonepromptly,allthingsnecessary,properoradvisableasmayberequestedbytheIPPtofileallsuchdocumentsandfullyeffectuateallsuchdismissalsandwithdrawals.8.9.IntentionallyLeftBlank.8.10.ThirdPContractsIPPArovals.TheIPP(a)(i)shallhaveobtainedasatisfactoryamendment,restructuring,assignmentorterminationof,orconsentsorapprovalswithrespectto,orreleasesfrom,itsexistingthirdpartyagreements,includingbutnotlimitedtofuelsupply,transportation,6nancing,lease,operationsandsteamsupplyagreements,relatingtoorarisingoutofsuchIPP'sExistingPPAorthetermination,amendmentoramendmentandrestatement,asthecasemaybe,ofsuchIPP'sExistingPPAand(ii)withrespecttoanyIPPwhichisnotenteringintoaTerminationAgreement,shallhaveenteredintonewthirdpartyagreementswithfuelsuppliers,transporters,lenders,lessors,powerandfuelmarketersandotherthirdparties,inthecaseofboth(i)and(ii)inamannerthat(x)willenablesuchIPPtorestructureitsProjectonaneconomicbasisreasonablysatisfactorytosuchIPPand(y)willaccommodatethetermsofthisAgreementwithoutreducingtheeconomicvalueofthetransactionscontemplatedbythisAgreementtosuchIPPandotherwiseinamannerreasonablysatisfactorytosuchIPP(each,an"IPPffhirdPartyConsent")and(b)shallhaveobtainedallothernecessaryorappropriateapprovals,includingcorporateandpartnership43 approvalsoftheIPPanditspartnersofthetransactionscontemplatedbythisAgreement(each,an"IPPApproval").8.ll.~G88'iI.Th*IPPIdlhhlfI8dddl8hilll*andobligationsofallGasIPPstoallGasMitigationThirdPartieshavebeenreleased,satisfiedoramendedorwillbereleased,satisfiedoramendedasoftheConsummationDate,inamannerthat(x)willenablesuchIPPtorestructureitsProjectonaneconomicbasisreasonablysatisfactorytosuchIPPand(y)willaccommodatethetermsofthisAgreementwithoutreducingitseconomicvaluetosuchIPPandotherwiseinamannerreasonablysatisfactorytosuchIPP.8.12.ReistrationofComanShares.VithrespecttotheCompanyShares,(a)theShelfRegistrationStatement(inaccordancewiththetermssetforthinSection3.6)shallhavebeendeclaredeffectivebytheSEC,shallbeeffectiveasoftheConsummationDate,nostoporderorsimilarproceedingrelatingtotheShelfRegistrationStatementshallbependingorthreatened,andthereshallbenohappeningoreventwhichrequirestheCompanytoamendorsupplementtheShelfRegistrationStatement(unlesssuchamendmentorsupplementhasbeenfiled)orwhichotherwisepreventsthesalebytheIPPofanyCompanySharespursuanttotheShelfRegistrationStatementasofandaftertheConsummationDate(and,infurtherancethereof,theCompanyshallfilenotlaterthanthenextBusinessDayfollowingtheConsuinmationDateitsCurrentReportonForm8-KdisclosingtheconsummationoftheRestructuring),(b)theCompanyshallhavetakensuchactionasshallbenecessarytoqualify,ortoobtainanexemptionfor,thesaletotheIPPspursmmttothisAgreementoftheCompanySharesundersuchofthesecuritieslawsofjurisdictionsintheUnitedStatesasshallbeapplicabletothesaleoftheCompanySharespursuanttotheShelfRegistrationStatementand(c)theCoinpanySharesshallhavebeendulylistedontheNYSE.8.33.~PIP.Th*f**d*pfWP&G.,&*IPP'pIGCounselandtheIPPs'ocalRegulatoryCounselincurredthroughandincludingtheConsummationDatethattheCompanyhasagreedtopaypursuanttotheWP&Co.FeeLetter,theIPPs'pecialCounselFeeLetterandtheIPPs'ocalRegulatoryCounselFeeLetter,respectively,andthefeesandexpensesoftheDepositaryincurredthroughandincludingtheConsummationDate,shallhavebeenpaidinfu11atorpriortotheConsummationDate.9.CONDITIONSTOTHECOMPANY'SOBLIGATIONSONTHECONSUMMATIONDATETheobligationsoftheCompanytoconsummatetheRestructuringandmakethedeliveriesspecifiedinSection10tobemadebyitontheConsummationDatewithrespecttoeachIPP(severallybutnotjointly)aresubjecttothesatisfactiononorbefore44 theConsummationDate(or,ifotherwisesetforthinSection10.1(b),theConditionsDeterminationDate)ofeachofthefollowingconditions,thewaiverofwhichshallnotbeeffectiveagainsttheCompanyunlesstheCompanygivesitsconsentinwritingtheretoorsuchwaiverisdeemedtobegivenpursuanttoSection10.1(b):9.1.ReresentationsandWarranties.TherepresentationsandwarrantiesofsuchIPPcontainedinSection5shallbetrueinallmaterialrespectsonandasoftheConsummationDatewiththesameeffectasthoughsuchrepresentationsandwanantieshadbeenmadeonandasofthedateoftheConsummationDate(oronthedatewhenmadeinthecaseofanyrepresentationorwarnuitywhichexpresslyrelatestoanearlierdate).92.Performance.SuchIPPshallhaveperformedandcompliedinallmaterialrespectswithallagreements,obligations,covenantsandconditionscontainedinthisAgreementthatarerequiredtobeperformedorcompliedwithbyitonorbeforetheConsummationDate.9.3.ReresentationLetterSecre'sCertificate0inionofIPP'sCounsel.TheCompanyshallhavereceivedontheConsummationDate(a)arepresentationletterexecutedbysuchIPPinsubstantiallytheformannexedasExhibit9.3A,(b)acertificateoftheSecretaryofsuchIPP(orthemanaginggeneralpartnerofsuchIPP)certifying(i)theresolutionsoftheBoardofDirectorsandshareholdersofsuchIPP(orsuchmanaginggeneralpartner)orpartnersofsuchIPPauthorizingthetransactionscontemplatedbythisAgreementand(ii)theincumbencyoftheofficersofsuchIPPexecutingthisAgreementoranyagreementstobeexecutedbysuchIPPpursuanthereto,informandsubstancereasonablysatisfactorytotheCompany,and(c)anopinionoropinionsfromcounselforsuchIPP(whichmaybesuchIPP'sin-housecounsel),datedtheConsummationDate,insubstantiallytheformannexedasExhibit9.3C.9.4.ReulatoArovals.TheCompanyshallhavereceivedonorbeforetheConsummationDateeachNMPCRegulatoryApprovaland,iftheCompanywillbenefittherefromorbeaffectedthereby,anyIPPApprovalsetforthinanyIPPStatusNotice,inaformreasonablyacceptabletotheCompany,andeachsuchRegulatoryApprovalshallbeinfullforceandeffectandeither(i)shallbefinalandnon-appealableor(ii)ifnotfinalandnon-appealable,shallnotbesubjecttothepossibilityofappeal,reviewor'reconsiderationwhich,intheopinionoftheCompany,isreasonablylikelytobesuccessfuland,ifsuccessful,wouldhaveaMaterialAdverseEffectontheCompany.9.5.NoInunctionActionorProceedin.(a)NocourtorGovernmentalAuthorityofcompetentjurisdictionshallhaveenacted,issued,promulgated,enforcedorenteredanylaw,statute,ordinance,rule,regulation,judgment,decree,injunctionorotherorder(whethertemporary,preliminaryorpermanent)thatisineffectontheConsummationDateandwhichrestrains,enjoinsorotherwiseprohibitsconsummationof thetransactionscontemplatedherebyand(b)noclaim,action,suit,investigationorotherproceedingbroughtbyaGovernmentalAuthorityorathirdpartyconcerningthetransactionscontemplatedbythisAgreementshallbependingwhichintheopinionoftheCompanyisreasonablylikelytobesuccessfulandwhich,ifadverselydetermined,wouldgrantrelieffromoragainsttheCompanywhichisreasonablylikelytohaveaMaterialAdverseEffectontheCompany.9.6.Contracts.TheCompanyandsuchIPPshallhaveexecutedanddeliveredtotheEscrowAgenttherespectiveTerminationAgreement,AmendedPPA,RestatedContract(s),NorConAgreementorOxbowAgreement,asapplicable,inaccordancewithSection2.8,onorbeforetheConditionsDeterminationDate.9.7.NMPCfMrdPConsentsandNMPC/ThirdPReleases.TheCompanyshallhavereceived(a)theNMPCfIMrdPartyConsents,informandsubstancereasonablysatisfactorytotheCompanyand(b)theNMPC/ThirdPartyReleaseswithrespecttosuchIPP,informandsubstancereasonablysatisfactorytotheCompany,provided,however,thatanNMPCfAurdPartyReleaseshallbedeemedtohavebeenreceivedbytheCompanyintheeventsuchIPPshallelect,initssolediscretion,toprovidetheCompanywithanindemnity,informandsubstancereasonablysatisfactorytotheCompany,againstanyclaimsofthethirdpartyundertheNMPCffhirdP'artyAgreementresultingGomthetermination,amendmentoramendmentandrestatement,asthecasemaybe,ofsuchIPP'sExistingPPA.9.8.GeneralReleaseWithdrawaIofLitiation.(a)TheCompanyshallhavereceived&omtheIPPontheConsummationDateageneralrelease,informandsubstancereasonablysatisfactorytotheCompany,ofallclaims,liabilitiesorobligationsoforagainsttheCompanywhichtheIPPhad,hasormayhavewithrespecttofacts,circumstancesoroccurrencesexistingonorarisingatanytimethroughandincludingtheEffectiveTime,arisingoutoforinconnectionwithsuchIPP'sExistingPPA,exceptclaims,liabilitiesorobligations(i)arisingoutoforinconnectionwiththisAgreement,(ii)arisingoutoforinconnectionwithanylitigationorregulatoryproceedingswhicharenottobedismissedandwithdrawnbytheIPPpursuanttoSection9.8(b)and(iii)unlessdismissedorwithdrawnpursuanttoSection9.8(b),arisingoutoforinconnectionwithanypaymentduetotheIPP,whetherornotdisputed,foranypowerorservicespurchasedbytheCompanypursuanttotheExistingPPAoranyrelatedgastransportation,peakshaving,interconnectionorotherrelatedagreementbetweentheCompanyandtheIPP,providedthatifsuchpaymentrelatestoanyperiodmorethansixty(60)dayspriortothedateofthisAgreement,theIPP'sentitlementtosuchpaymentshallhavebeensetforthinawritinggiventotheCompanyonorbeforeJune15,1997.ThePartiesacknowledgeandagreethatallclaims,liabilitiesandobligationsrelatingtotracking,adjustmentoradvance paymentaccountprovisionsunderanyExistingPPAshallbeextinguishedasoftheEffectiveTime(andsuchextinguishmentshallbereflectedinthegeneralrelease).(b)Inaddition,theCompanyshallhavereceivedfromtheIPPanoriginalcounterpartofastipulationorotherappropriatedocument(s),informandsubstancereasonablysatisfactorytotheCompany,sufficienttodismissorwithdrawastotheCompanybytheIPP(exceptasotherwiseprovidedinthefootnotesthereto)the.litigation,proceedingsandpleadings,ifany,asthecasemaybe,listedonSchedule8.8withrespecttosuchIPP,withprejudiceandwithnocostsawarded,asoftheConsummationDate.FollowingtheConsummationDatetheIPPshalltakepromptly,orcausetobetakenpromptly,allactionsandtodopromptly,orcausetobedonepromptly,aHthingsnecessary,properoradvisableasmayberequestedbytheCompanytofileallsuchdocumentsandfullyeffectuateallsuchdismissalsandwithdrawals.9.9,BoardandShareholderArovals.ThisAgreementandthetransactionscontemplatedherebyshallhavebeenapprovedby(a)theCompany'sBoardofDirectorsand,(b)totheextentrequired,bytheCompany'sshareholders.9.10.NMPCFinancin.TheCompanyshallhaveconsummated(a)thePublicOfferingoftheDebtSecuritiesand(b)theotherfinancingtransactionssetforthonSchedule9.10hereto,ontermsreasonablysatisfactorytotheCompany.10.SATISFACTIONOFCONMTIONS;CONSUMMATION10.1.NoticeofSatisfactionorWaiverofConditions.(a)TheCompanyshallnotifytheIPPs'pecialCounsel,andeachIPPshallnotifytheCompanyandtheIPPs'pecialCounsel,(i)notlessfrequentlythanmonthly,ofthesatisfactionofanyoftheconditions'totheobhgationsofsuchPartypursuanttoSections8or9ofthisAgreementand/or(ii)promptly,intheeventsuchPartyshallreceivenoticeorinformation&omanyGovernmentalAuthorityorthirdpartyindicatingthattheconditionstotheobligationsofsuchPartypursuanttoSections8or9ofthisAgreementcannotbe,orarenotreasonablylikelytobe,satisfiedonorbeforetheExpirationDate.(b)Onorwithinthree(3)BusinessDaysbeforetheConditionsDeterminationDate,theCompanyshallgiveanoticetoeachIPP(the"NMPCStatusNotice")settingforth:(i)adescriptionofeachNMPCRegulatoryApprovalwhichtheCompanyhasobtainedorisseekingtoobtainpursuanttotheprovisionsofSection6.6(a)or(c),includingthenameoftheGovernmentalAuthority,the47 specificfindings,approvalsandauthorizationsobtainedorsoughttobeobtained,allnoticesgivenorreceivedandallactionstakeninconnectiontherewith,andthestatusthereof,togetherwitharepresentationandwarrantyoftheCompanythattothebestknowledgeoftheCompanytheNMPCRegulatoryApprovalsdescribedthereinaretheonlyRegulatoryApprovalsrequiredasofsuchdatewithrespecttotheconsummationoftheCompany'sobligationshereunder;(ii)whethertheconditionstotheCompany'sobligationssetforthinSections9.7(NMPCffhirdPartyConsentsandNMPC/ThirdPartyReleases)havebeensatisfied.IntheeventanyconditionsetforthinSection9.7hasnotbeensatisfiedbytheConditionsDeterminationDate,thentheCompany,pursuanttotheNMPCStatusNotice,either(x)shallbedeemedtohavewaivedanysuchcondition(exceptthatanysuchwaivershallnotbedeemedawaiverofanyconditioninSection9.9(b)orSection9.10)or(y)shallelecttoterminatethisAgreementpursuanttoSection12.1(e);(iii)thestatusof(x)theShelfRegistrationStatementwithrespecttotheCompanyShares,(y)theDebtRegistrationStatementwithrespecttothePublicOQeringoftheDebtSecuritiesandtheotherfinancingtransactionssetforthonSchedule9.10and(z)theProxyStatementandtheshareholderapprovaltobeobtainedthereby;and(iv)whether,tothebestoftheCompany'sknowledge,thereisanyreasonwhyanyotherconditiontoeithertheCompany'soranyIPP'sobligationspursuanttoSections8or9willnotbesatisfiedonorbeforetheExpirationDate(excludinganyconditionthesatisfactionofwhichissolelywithinthecontrolofanyIPP).(c)Onorwithinthree(3)BusinessDaysbeforetheConditionsDeterminationDate,eachIPPshallgiveanoticetotheCompanyandtheIPPs'pecialCounsel(an"IPPStatusNotice")settingforth:(i)adescriptionofeachIPPRegulatoryApprovalwhichtheIPPhasobtainedorisseekingtoobtainpursuanttotheprovisionsofSection6.6(b),includingthenameoftheGovernmentalAuthority,thespecificfindings,approvalsandauthorizationsobtainedorsoughttobeobtained,allnoticesgivenorreceivedandallactionstakeninconnectiontherewith,andthestatusthereof,togetherwitharepresentationandwarrantybytheIPPthattothebestknowledgeofsuchIPPtheIPPRegulatoryApprovalsdescribedthereinand,atsuchIPP'soption,intheNMPCStatusNoticearetheonlyRegulatoryApprovalsrequiredasofsuchdatewithrespecttotheconsummationoftheIPP'sobligationshereunder;48 (ii)whethertheconditionstotheIPP'sobligationssetforthinSections8.l0(IPP/ThirdPartyConsents;IPPApprovals)and8.11(GasMitigation)havebeensatisfied.IntheeventanyconditionsetforthinSection8.10or8.11hasnotbeensatisfiedbytheConditionsDeterminationDate,thentheIPP,pursuanttotheIPPStatusNotice,either(x)shallbedeemedtohavewaivedanysuchconditionor(y)shallelecttoterminatethisAgreementpursuanttoSection12.2(c)asoftheConditionsDeterminationDate;(iii)whether,tothebestoftheIPP'sknowledge,thereisanyreasonwhyanyotherconditiontoeithertheCompany'sorsuchIPP'sobligationspursuanttoSections8or9willnotbesatisfiedonorbeforetheExpirationDate(excludinganyconditionthesatisfactionofwhichissolelywithinthecontroloftheCompanyoranyotherIPP).(d)Withinten(10)daysaAertheConditionsDeterminationDate,theCompanyeither(x)shallbedeemedtohavewaivedtheconditionsetforthinSection9.9(a)or(y)bynoticegivenonorbeforesuchdateshallelecttoterminatethisAgreementpursuanttoSection12.1(e),effectiveasofthedateofsuchnotice.10.2.ConsummationDate.TheconsummationoftheRestructuringandotherthtransactionscontemplatedbythisAgreement(the"Consummation")shalltakeplactepaceaeofficesofAkin,Gump,Strauss,Hauer&Feld,L.L.P.,590MadisonAvenue,NewYork,NewYork.Withinfifteen(15)daysaAertheConditionsDeterminationDate,thePartiesshallmutuallyagreeonascheduletoachievetheConsummationbyadatecertain(the"ScheduledDate")andthereafterthePartiesshallusetheirReasonableBestEffortstoachievetheConsummationbytheScheduledDate.TheConsummationshalloccuronthelatertooccurof(i)theScheduledDateand(ii)thethird(3")BusinessDayfollowingthesatisfactionorwaiverofalloftheParties'onditionssetforthinSections8and9,orshalltakeplaceatsuchotherplaceoronsuchotherdateasthePartiesmaymutuallYagree.InnoeventshalltheConsummationoccursoonerthanDecember31,1997orlaterthantheExpirationDate.ThedateonwhichtheRestructuringandothertransactionscontemplatedbythisAgreementactuallyareconsummatedisreferredtohereinasthe"ConsummationDate."10.3.DeliveriesbtheComan.(a)OntheConsummationDate,theCompanyshalldelivertotheDepositary,onbehalfoftheIPPs,(i)theCashPayment,inthemannerdescribedinSection3.3;(ii)theCompanyShares,inthemannerdescribedinSections3.3and3.6;and(iii)theShort-TermNotesorAdditionalCashPayment,asapplicable,inthemannerdescribedinSection3.3.

(b)OntheConsummationDate,theCompanyshalldelivertotheEscrowAgent,onbehalfoftheIPPs,allotheragreements,instruments,certificates,resolutions,opinionsandotherdocuments(includingbutnotlimitedtothegeneralreleasesandthedismissalsandwithdrawalsoflitigations,regulatoryproceedingsandpleadingscontemplatedbySection8.8(b))requiredtobedeliveredbytheCompanyonorbeforetheConsummationDatepursuanttothisAgreement,eitherintherespectiveformannexedasanExhibittothisAgreement,ifapplicable,orinformandsubstancereasonablysatisfactorytoeachIPPandtheIPPs'pecialCounsel.10.4.DeliveriesbtheIPPs.OntheConsummationDate,eachIPP{asapplicable)shalldelivertotheEscrowAgent,onbehalfoftheCompany,allotheragreements,instruments,certificates,resolutions,opinionsandotherdocuments"(includingbutnotlimitedtothegeneralreleasesandthedismissalsandwithdrawalsoflitigationsandregulatoryproceedingscontemplatedbySection9.8(b))requiredtobedeliveredbysuchIPPonorbeforetheConsummationDatepursuanttothisAgreement,eitherintherespectiveformannexedasanExhibittothisAgreement,ifapplicable,orinfomiandsubstancereasonablysatisfactorytotheCompanyanditscounsel.10,5.DeliveriesbtheDesiandtheEscrowAent.QntheConsummationDate,thePartiesshallexecuteanddelivertotheDepositaryandtheEscrowAgentsuchauthorizationsandinstructionsasmayberequiredtocausetheDepositaryandtheEscrowAgenttodeliver(i)counterpartsoftheContracts,the.Shareholder'sAgreement,theRegistrationRightsAgrccmcntandall.otheragreements,instruments,certificates,resolutions,opinionsandotherdocumentsdeliveredbythePartiestotheEscrowAgentpursuanttothisAgreeinent(excludingtheAllocation)tothe.CompanyandtherespectiveIPPs,asapplicable,and(ii)theCashPayment,CompanyShares,Short-TermNotesand/orAdditionalCashPayment,asapplicable,deliveredbytheCompanytotheDepositarypursuanttothisAgreement,totherespectiveIPPsortheirdesignecs.11.REGULATORYANDOTHERMATTERS11.1.MaintenanceofFStatus.(a)EachIPP(whetherornotitistoenterintotheAmendedPPAorRestatedContract)shallhavetheright,butnottheobligation,toobtainand/ormaintainitsstatusasastateand/orfederalqualifyingfacility("QF")underNewYorklaw(includingcompliancewithNYPSL$2(2-a))and/orPURPA,respectively,buttheCompany'sobligationsundereachContractshallcontinueasamatterofcontractrightregardlessofwhethertheIPPmaintainsitsstateorfederalQFstatus.FollowingtheConsummationDate,theCompanyshallnotimplementorcontinuetoimplementanyQFMonitoringProgramwithrespecttoanyIPP.Notwithstandingtheforegoing,failureto50 complywiththerequirementsapplicabletostateand/orfederalQFstatusunderNewYorklaw(includingcompliancewithNYPSL$2(2-a))shallhavenoadverseeffectonthelPFortheCompany'scontinuingperformanceunderanyContract.(b)IntheeventanIPP(whetherornotitistoenterintotheAmendedPPAorRestatedContract)wishestoqualifyorperformasanExemptWholesaleGenerator("EWG")underSection32ofPUHCAandtheFERC'sregulationspromulgatedthereunder,asthesamemaybeamended,modifiedorrestatedfromtimetotime,whetherbeforeoraftertheConsuinmationDate,theCompanyshallcooperatewith(including,withoutlimitation,byprovidingconsentsandaffidavits),andshallnottakeanyactiontooppose,impedeorsubvert,suchIPP'seffortstoobtainappropriateregulatoryexemptionsandapprovals,includingmarket-basedrateapproval.(c)EachIPPshallhavetherighttohavetheCompanywheeltheoutputofitsProjecttothirdpartiespursuanttoapplicablelaw,ortheCompany's,orothercompanies',dulyfiledtransmissionanddistributiontariffsorschedules.(d)ExcepttotheextentthatthecontractpriceundertheAmendedPPAorRestatedContractisormaybebasedthereon,fromandaftertheConsummationDate(i)eachIPPshallwaiveany'statutoryrightitmayhaveunderSection66mofNYPSLpursuanttowhichsuchIPPmaydemanda6gperKWhminimumpowerpurchaseratefromtheCompanyand(ii)eachIPPshallwaive,foritselfandforthesuccessorsandassignsofitsrespectiveProject,withrespecttoitsProject,anystatutoryrightitmayhaveunderPURPAorNYPSLtorequiretheCompanytoenterintoapowerpurchasecontractorotherwisetaketheoutputofsuchIPP'sProject,provided,however,thatpriortotheendoftheProxy-MarketPricePeriodtheCompanyagrees,attheIPP'srequest,toactasagentforeachIPP(or,ifnecessarytoeffectuatesuchsalestotheNewYorkPowerPool,bypurchaseandresaleofeachIPP'scapacityandenergy,atnocosttotheCompany),forthesaleonuptoamonthlybasis,ofeachsuchProject'scapacityandenergytotheNewYorkPowerPooloranythirdparty,ineachcaseonanondiscriminatorybasiswithrespecttotheCompany'soranythirdparty'scapacityandenergy,atnocosttosuchIPP.TheCompanyagreestouseitsReasonableBestEffortstoeffectsuchsalesonthemostfavorableterms,includingprice,totheIPP,givingconsiderationtothequantity,termandmarketconditionsprevailingatthetimeofsale.ForpurposesofthisSection11.1(d),theProxy-MarketPricePeriodshallhavethemeaningsetforthinExhibitA,exceptthattheProxy-MarketPricePeriodshallcommenceasoftheEffectiveTime,thelastsentenceofthedefinitioncontainedinExhibitAshallnotbeapplicable,andthisprovisionshallapplywhetherornotsuchIPPistoenterintotheAmendedPPAoraRestatedContract.Further,nothinghereinshallbeconstruedtoconstituteawaiverbyanyIPPofanyotherrightsitmayhaveunderPURPA,NYPSLorapplicablelaw,includingrightswithrespecttoback-upservices,interconnection,reactivepowerorsimilarrights,whetherornotacontractisrequiredordesirable.51 11.2.ComtitiveTransitionChare'etailBass.(a)EachIPPcovenantsnottotakeanyactiontooppose,impedeorsubverttheCompany'sentitlementtorecoverCompetitiveTransitionChargesfromanypartyotherthananIPPanditsAffiliates(exceptintheircapacitiesasretailcustomers),includingthelevel,designordurationofsuchcharges,andtheimpositionofsuchchargesonbackuppowerservices(includingservicestoself-generators);provided,however,thateachIPPreservestherighttochallengeanyproposalthatdiscriminatesagainstonesourceofgenerationrelativetoanotherorplacesanyIPPoritsAffiliatesatacompetitivedisadvantageascomparedtoothergeneratorsorsuppliers.EachIPPagreesnottosupportinanyregulatoryorjudicialproceedinganyeffortbyacustomeroftheCompanytoavoidpaymentofaCompetitiveTransitionCharge.TheprovisionsofthisSectionshallnotapplytoanyIPPfollowing(x)theterminationofthisAgreementinitsentiretyor(y)theterminationofthisAgreementwithrespecttosuchIPP.(b)EachIPPagreesthat,betweenthedateofthisAgreementandtheearliertooccurof(x)theEffectiveTime,(y)theterminationofthisAgreementinitsentiretyor(z)theteiminationofthisAgreementwithrespecttosuchIPP,itwillnot(otherthantotheCompanyoranyAffiliateoftheCompany)provideelectricpowerdirectlyorindiiectlytoanexistingretailcustomeroftheCompanylocatedintheCompany'sretailserviceterritoryortoapersonorentitywhichdirectlyorindirectlyprovides'electricpowertoanysuchretailcustomer,unlesspursuanttoanagreementapprovedbythePSC.TheprovisionsofthisSection11.2(b)shallnotapplyto(i)salesbyanyIPPpermittedasofthedateofthisAgreement,(ii)thesaleofelectricitybyanyIPPtoautility,includingtheCompany,(iii)theprovisionbyanyIPPofitsinternalauxiliaryloador(iv)anysalesbyanypowermarketingorretailenergyservicesAQiliateofanyIPP.11.3.ConsistentTaxRertin.TheCompanyandeachapplicableIPPagreethatthetermsandconditionstobecontainedineachRestatedContractandFixedPriceSwapContractareandshallbetheresultofarms-lengthnegotiations.TheCompanywillnottreattheRestatedContractsorFixedPriceSwapContractsinamannerthatisinconsistentwiththecharacterofsuchRestatedContractsorFixedPriceSwapContracts,asthecasemaybe,forincometaxandreportingpurposesasbonafidehedgingordeliveryagreementsandwillnotclaimadeductionorlossforincometaxpurposesinrespectofsuchRestatedContractsorFixedPriceSwapContractspriortoataxableyearinwhich(i)paymentspursuanttosuchRestatedContractsorFixedPriceSwapContractsarepaidoraccruepursuanttothetermsthereofor(ii)suchRestatedContractsorFixedPriceSwapContractslapse,terminateorarecanceled,unlessrequiredtodosopursuanttoa"determination"withinthemeaningofSection1313(a)oftheCode.52 12.TERMINATIONOFAGggEMKNT12.1.EventsofTerminationoftheAreementinitsEntire.ThisAgreementmaybeterminated,andthetransactionscontemplatedherebymaybeabandoned,atanytimepriortotheConsummationDate:(a)bythemutualwrittenconsentofalltheParties,orpursuanttoSection2.7(b);(b}bytheIPPs,actingunanimously,iftheCompanybreachesinanymaterialrespectanyofitscovenantsoragreementscontainedinthisAgreement,oranyofitsrepresentationsorwamintiescontainedinthisAgreementisinaccurateinanymaterialrespectwhenmade,andsuchbreachormisrepresentationisnotcuredtothereasonablesatisfactionoftheIPPs,actingunanimously,withinten(10)daysaherthedatenoticeofsuchbreachormisrepresentationisgiventotheCompany(or,ifsuchbreachormisrepresentationisnotreasonablycapableofcurewithinsuchten(10)dayperiodbutiscapableofcure,suchlongerperiodasmaybereasonablynecessarytoeffectsuchcure,nottoexceedthirty(30}daysintheaggregate,providedthatduringtheperiodofsuchextensiontheCompanyusesReasonableBestEffortstoeffectsuchcure);(c)bytheCompany,ifalloftheIPPsbreachinanymaterialrespectanyoftheirrespectivecovenantsoragreementscontainedinthisAgreement,oranyofeirrespectiverepresentationsorwarrantiescontainedinthisAgreementisinaccurateinanymaterialrespectwhenmade,andsuchbreachormisrepresentationisnotcuredtothereasonablesatisfactionoftheCompanyformorethanten(10)daysafterthedatenoticeofsuchbreachormisrepresentationisgiventoallIPPs(or,ifsuchbreachormisrepresentationisnotreasonablycapableofcurewithinsuchten(10)dayperiodbutiscapableofcure,suchlongerperiodasmaybereasonablynecessarytoeffectsuchcure,nottoexceedthirty(30)daysintheaggregate,providedthatduringtheperiodofsuchextension,theIPPsuseReasonableBestEffortstoeffectsuchcure);(d)bytheCompany,iftheCompanydetermines,initssolediscretion,that,asaresultoftheterminationofthisAgreementwithrespecttooneormorebutnotnecessarilyalloftheIPPs,thebenefitsanticipatedtobereceivedbytheCompanyasaresultofthetransactionscontemplatedbythisAgreementhavebeenmateriallyandadverselyaffected(providedthatanynoticeofterminationsolelyasaresultoftheterminationofthisAgreementwithrespecttoNorConand/orOxbowpursuanttoSections2.5or2.6,respectively,shallbemadenotlaterthanten(10)BusinessDaysafterreceiptoftheDepositary'scertificationpursuanttoSection12.4(b)followingtheterminationofthisAgreementwithrespecttoNorConand/orOxbow,asthecasemabeandprovided,further,thattheCompanymaynotterminatethisAgreementpursuanttoecasemaythisSection12.1(d)followingdeliverybytheCompanyofasub-clause(y)noticepursuanttoSection2.7(b),unlessanyoftheIPPswhicharenotidentifiedinsuchsuh-53 clause(y)noticeshallthereafterhavebeenterminatedfromthisAgreementpriortotheConsummationDate;or(e)bytheCompany,iftheCompanydetermines,intheCompany'ssolediscretion,thatanyoftheconditions(whichhavenotpreviouslybeenwaived)totheCompany'sobligationssetforthinSection9arenotreasonablylikelytobesatisfied(andtheCompanyisnotwillingtowaivesame)onorbeforetheExpirationDate,providedthattheCompanymaynotterminatethisAgreementpursuanttothisSection12.1(e)priortotheConditionsDeterminationDate,exceptthattheCompanymayterminatethisAgreementpriortotheConditionsDeterminationDateifthePSCApprovalhasbeendeniedorifnoPSCactionhasbeentakenasofadateatwhichitisnolongerpossiblefortheConsummationtooccurbytheExpirationDate.12,2.EventsofTerminationwithrescttoOneorMreoftheIPPs.ThisAgreementmaybeterminatedbyorwithrespecttoanyoneormorebutnotnecessarilyalloftheIPPs,andthetransactionscontemplatedherebymaybeabandonedbyorwithrespecttoanyoneormorebutnotnecessarilyalloftheIPPs,atanytimepriortotheConsummationDate:(a)bythemutualwrittenconsentoftheCompanyandanyoneormoreIPPsorpursuanttoSections2.5,2.6or2.7(b)hereof;provided,however,thatinthecaseofanyterminationpursuanttothisSection12.2(a),thisAgreementshallbeterminatedwithrespecttosuchterminatingorterminatedIPP(s)only;(b)byanyoneormoreIPPs,actingsingly,iftheCompanybreachesinanymaterialrespectanyofitscovenantsoragreementscontainedinthisAgreementoranyofitsrepresentationsorwarrantiescontainedinthisAgreementisinaccurateinanymaterialrespectwhenmade,andsuchbreachormisrepresentationisnotcuredtothereasonablesatisfactionofsuchIPP(s)withinten(10)daysaAerthedatenoticeofsuchbreachormisrepresentationisgiventotheCompany(or,ifsuchbreachormisrepresentationisnotreasonablycapableofcurewithinsuchten(10)dayperiodbutiscapableofcure,suchlongerperiodasmaybereasonablynecessarytoeffectsuchcure,nottoexceedthirty(30)daysintheaggregate,providedthatduringtheperiodofsuchextensiontheCompanyusesReasonableBestEffortstoeffectsuchcure);provided,however,thatinthecaseofanyterminationpursuanttothisSection12.2(b),thisAgreementshallterminatewithrespecttosuchterminatingIPP(s)only;(c)byanyoneormoreIPPs,actingsingly,ifanysuchIPPdetermines,insuchIPP'ssolediscretion,(i)thatanyoftheconditions(whichhavenotpreviouslybeenwaived)tosuchIPP'sobligationssetforthinSections8arenotreasonablylikelytobesatisfied(andsuchIPPisnotwillingtowaivesame)onorbeforetheExpirationDate,(ii)thattheNMPCRestructuring,asimplementedorproposedtobeimplementedbytheCompanyatanytime,hashadorisreasonablylikelytohaveamaterialadverseeffecton5a suchIPPwithrespecttothetransactionscontemplatedhereby,(iii)thatappropriateexemptionsorwaiversfromtheregulationorjurisdictionofanyGovernmentalAuthorityresultingfromthisAgreementoranyofthetransactionscontemplatedherebywithrespecttosuchIPP,itspartnersorAffiliates,individuallyorcollectively,fromwhichitortheywerepreviouslyexempt,includingbutnotlimitedtoSECorFERCregulationunderPUHCA,PSCregulationundertheNYPSL,andFERCregulationundertheFederalPowerAct,arenotreasonablylikelytobeobtainedonorbeforetheExpirationDate,andthisAgreementisnotconformedpriortotheConsummationDateinamannermutuallysatisfactorytothePartiesasmaybenecessaryinorderfortheIPP,itspartnersorAffiliates,toavoidbecomingsubjecttosuchregulationorjurisdiction,(iv)thatsuchIPPis,orisreasonablylikelytobe,subjecttoanyCurtailmentwithrespecttoitsExistingPPA(whetherauthorizedtodosobeforeorafterthedateofthisAgreement),or(v)thatsuchIPPisunabletoeffecttheRestructuringinamannercontemplatedbySection6.2;oruponanymergerorconsolidationoftheCompanywithorintoanyotherentity(exceptaspermittedbySchedule6.11);provided,however,thatinthecaseofanyterminationpursuanttothisSection12.2(c),thisAgreementshallterminatewithrespecttosuchteiminatingIPP(s)only;or(d)bytheCompany,ifanyIPPbreachesinanymaterialrespectanyofitscovenantsoragreementscontainedinthisAgreementoranyofitsrepresentationsorwammtiescontainedinthisAgreementisinaccurateinanymaterialrespectwhenmade,andsuchbreachormisrepresentationisnotcuredtothereasonablesatisfactionoftheCompanyformorethantcn(10)daysafternoticeofsuchbreachormisrepresentationisgiventoallIPPs(or,ifsuchbreachormisrepresentationisriotreasonablycapableofcurewithinsuchten(10)dayperiodbutiscapableofcure,suchlongerperiodasmaybereasonablynecessarytoeffectsuchcure,nottoexceedthirty(30)daysintheaggregate,providedthatduringtheperiodofsuchextensiontheIPPusesReasonableBestEffortstoeffectsuchcure);provided,however,thatinthecaseofanyuncuredbreachbylessthanalloftheIPPs,theCompanymayterminatethisAgreementwithrespecttoanysuchbreachingIPP(s)only.12.3.~Exiration.(a)ThisAgreementshallbeterminated,andthetransactions.contemplatedherebyshallbeabandoned,withoutfurthernoticeorconsent,ifforany'eason(includingbutnotlimitedtothenon-satisfactionandnon-waiverofanyoftheconditionssetforthinSections8and9hereof)theConsummationDatehasnotoccurredonorpriortotheExpirationDateunless,bymutualwrittenconsentofalltheParties,thePartieselecttoextendtheExpirationDate.(b)NotwithstandingtheprovisionsofSection12.3(a),iftheCompanyandlessthanalltheIPPsdesiretoextendtheExpirationDate(otherthanasprovidedinSection2.7(b),whichshallgovernanyextensionpursuanttothatSection),this55 Agreementshallnotbeterminatedandshallinsteadbeextendedbythemutualwritten.consentofsuchParties;insuchevent,thisAgreementshallbedeemedtobeterminated(withtheeKectdescribedinSection12.4(b))withrespecttoanyIPPwhichdoesnotdesiretoextendtheExpirationDate.12.4.EAectofTermination.(a)IntheeventthatthisAgreementshallterminateinitsentiretypursuanttoSection12.1,12.2or12.3(a),then(i)thisAgrecmcntshallforthwithterminateandhavenofurthereffect,(ii)anyContractstheretoforeexecutedbytheCompanyandanyIPPsshallbevoidabinitioand,iftheretoforedeliveredtotheEscrowAgent,shallbedestroyedbytheEscrowAgentand(iii)noPartyshallhaveanyfurtherobligationorliabilityhereunder(exceptwithrespecttoanyprovisionshereofwhichbytheirtermsexpresslysurviveanyterminationofthisAgreemcnt).(b)IntheeventthatthisAgreementshallterminatewithrespecttooneormorcbutlessthanalloftheIPPspursuanttoSection2.5,2.6,2.7(b),12.2or12.3(b),then(i)thisAgreementshallterminateforthwithandhavenofurthereffectwithrespecttoanysuchIPP(cxceptwithrespecttoanyprovisionshereofwhichexpresslysurviveanyterminationofthisAgreement),(ii)theAllocableConsiderationandthecontractquantityundertheAmendedPPA'hallbereducedbytheportionoftheAllocableConsiderationandthecontractquantityundertheAmendedPPAallocatedtosuchIPPpursuanttotheoriginalAllocation,(iii)theAllocableConsideration,thecontractquantityofenergyandthecontractquantityofinstalledcapacityundertheRestatedContractsshallbcreducedbytheportionoftheAllocableConsideration,thecontractquantityofenergyandthecontractquantityofinstalledcapacityundertheRestatedContractsallocatedtosuchIPPpursuanttotheoriginalAllocation,(iv)theaggregateContractAdjustmentshallbereducedbytheportionoftheContractAdjustmentallocatedtosuchIPPpursuanttotheoriginalAllocation,ifany,(v)anyContractstheretoforeexecutedbysuchIPPshallbevoidabinitioand,iftheretoforedeliveredtotheEscrowAgent,shallbedestroyedbytheEscrowAgentand(vi)theCompanyshallnothaveanyfurtherobligationorliabilitytosuchIPPhereunderandsuchIPPshallnothaveanyfurtherobligationorliabilitytotheCompanyoranyotherIPPhereunder(exceptwithrespecttoanyprovisionshereofwhichexpresslysurviveanyterminationofthisAgreement).Insuchevent,theDepositaryshallcertifytotheCompanyandtheotherIPPstheportionoftheAllocableConsideration,thecontractquantity,theinstalledcapacityandthecontractadjustment,asapplicable,undertheAmendedPPAortheRestatedContractswhichpursuanttotheoriginalAllocation(withoutregardtoanyamendmentthereof,ifany)hadbeenallocatedtotheIPPsoterminated.Forpurposeshereof,anyreductionintheAllocableConsiderationduetotheterminationofthisAgreementwithrespecttoanindividualIPPshallmeanareductioninboththeCashPaymentandCompanySharesallocatedtosuchindividualIPPpursuanttotheAllocation.ExceptasexpresslysetforthinthisSection12.4(b),theterminationofthisAgreementwithrespecttooneormorebut56 lessthanalloftheIPPsshallnotincreaseorreducetheportionoftheAllocableConsiderationpayabletotheremainingIPPs,norinanywayaffecttheShort-TermNotesorAdditionalCashPayment,asapplicable,orthetermsandconditions,includingcontractprice,oftheContracts,norinanywayaffectanyothertermsofthisAgreementwithrespecttoanyotherIPP,allofwhichtermssbaHcontinueinfullforceandeffect.(c)TheterminationofthisAgreementinitsentiretypursuanttoSection12.1,12.2or12.3(a),ortheterminationofthisAgreementpursuanttoSection2.5,2.6,2.7(b),12.2or12.3(b)withrespecttooneormorebutlessthanalloftheIPPs,shallnotrelievetheCompanyofanyliabilitytoany!PP,oranyIPPofanyliabilitytotheCompany,fordamagesdirectlyresultingfromthebreachinanymaterialrespectofanycovenantorobligationofsuchParty,oranyinaccuracyinanymaterialrespectofanyrepresentationorwarnmtyofsuchParty,ineachcaseoccurringpriortosuchtermination;andanysuchterminationshaHnotbedeemedtobeawaiverofanyavailableremedyforanysuchbreachormisrepresentation.NotwithstandinganyotherprovisioncontainedinthisAgreementtothecontrary,providedsuchPartyusesitsReasonableBestEffortswithrespecttothepursuanceofanycourseofactionorresultstatedhereinasrequiringtheuseofReasonableBestEffortsbysuchParty,suchPartyshallnothaveanyliabilitytoanyotherPartyforanyfailuretoachievesuchcourseofactionorresult.Innoeventshall(i)anyIPPhaveanyliabilitytoanyotherIPPhereunderor(ii)anyPartyhaveanyliabilityforconsequential,specialorotherindirectdamagesresultingfromanybreachormisrepresentation.TheprovisionsofthisSection12.4(c)shallsurviveanyterminationofthisAgreement(eitherinitsentiretyorwithrespecttolessthanalloftheIPPs).12.5.EfFectonExistinPPAs.IntheeventofterminationofthisAgreementastoanyIPPforanyreasononorpriortotheConsummationDate,notwithstandinganyotherprovisionofthisAgreement,thePartiesagreeandstipulatethattheExistingPPAofsuchIPPshallcontinuewiththesameforceandeffectasifthisAgreementhadnotbeenexecutedbysuchIPP,andthatnothingcontainedhereinshallinanywayreduce,mitigateormodifytheamountortypesofclaims,whetherassertedorunassertedonthedateofthisAgreement,thatsuchIPPmayhavewhichariseoutoforarerelatedtoitsExistingPPA,andallrightsandobligationsofthePartieswithrespecttosuchExistingPPAshallinnomannerbeaffectedorcompromisedbythetermsofthisAgreement.Withoutlimitingtheforegoing,thePartiesacknowledgeandagreethatnoneof(i)theexecutionanddeliveryofthisAgreementoranyagreementexecutedortobeexecutedpursuant'eretobytheParties,(ii)thesubmissionofthisAgreementoranyagreementexecutedortobeexecutedpursuantheretotoanyGovernmentalAuthorityforitsreviewand/orapprovalor(iii)anyoftheParties'iscussions,negotiationsoractionsoccurringinanticipationof,orsubsequentto,theexecutionofthisAgreementoranyagreementexecutedortobeexecutedpursuantheretoshall(excepting,withrespecttoanyindividualIPP,theactualconsummationoftheRestructuringandothertransactionscontemplatedbythisAgreementpertainingtosuchIPP'sExistingPPA),constituteorbedeemedorassertedtoconstituteanamendmentormodificationto,oratermination, cancellation,rejection,invalidation,suspensionorwaiverof,anyprovision,term,condition,right,obligationorrequirementcontainedinorapplicabletoanyExistingPPAoranyothercontract,instrumentordocumentrelatingthereto.12.6.BankrutcTermination.IntheeventthattheCompany,atanytimeonorbeforetheConsumnationDate,makesageneralassignmentoranygeneralarrangementorcompromiseforthebenefitofcreditors,filesapetitionundertheBankruptcyCodeorotherwisecommences,authorizesoracquiescesinthecommencementofaproceedingunderanybankruptcyorsimilarlawfortheprotectionofcreditors,orhasapetitioncommencedagainstit,then(i)thisAgreeinentshallterminateforthwith,withtheeffectdescribedinSection12A(a),and(ii)theprovisionsofSection12.5shallapplywithrespecttotheExistingPPAsThePartiesagreeandstipulatethatthisAgreementisacontractto(i)extenddebtfinancingtoorforthebenefitoftheCompany,(ii)extendfinancialaccommodationstoorforthebenefitoftheCompanyand(iii)issueoneormoresecuritiesoftheCompany.Asaconsequence,thePartiesfurtheragreeandstipulatethattheprovisionsofSections365(c)(2)and(e)(2)(B)oftheBankruptcyCode,amongothers,wouldbeapplicableandbindingonthePartiesintheeventtheCompanybecomesadebtorundertheBankruptcyCode.13.NOTICESUnlessotherwiseprovided,anynotice,consent,approval,authorization,waiverorothercommunicationrequiredorpermittedunder'thisAgreementshallbegiveninwritingandshallbedeemedeffectivelygivenuponpersonaldeliverytothePartytobenotified,onthenextBusinessDayaAerdeliverytoanationallyrecognizedovernightcourierservice,uponconfirmationofreceiptofafacsimiletransmissionorfivedaysafterdepositwiththeUnitedStatesPostOffice,byregisteredorcertifiedmail,postageprepaid,andaddressedtothePartytobenotifiedattheaddressorfacsimilenumberindicatedbelowforsuchParty,oratsuchotheraddressassuchPartymaydesignateuponwrittennoticetotheotherParties(exceptthatnoticeofchangeofaddressshallbedeemedgivenuponreceipt).NoticesmaybegiventotheCompanyonbehalfofanyorallIPPsbytheIPPs'pecialCounsel.(a)InthecaseoftheCompany:NiagaraMohawkPowerCorporation300ErieBoulevardWestSyracuse,NY13202Facsimile:(315)428-3406Attn:WilliamF.Edwards58 withacopyto:DonaldsonLufkin&JenretteSecuritiesCorporation272ParkAvenueNewYork,NY10172Facsimile:(212)892-7272Attn:MichaelRangerandwithacopyto:Sullivan&Cromwell1701PennsylvaniaAvenue,N.W.Washington,DC20006Facsimile:(202)293-6330Attn:JanetT.GeldzahlerSwidler&Berlin3000KStreet,N.W.,Suite300Washington,DC20007Facsimile:(202)424-7643Attn:StevenJ.Agresta(b)InthecaseoftheIPPs,attheaddressessetforthonScheduleAwithacopyto:WassersteinPerella&CoInc.31West52~StreetNewYork,NY10019Facsimile:(212)969-7971Attn:KennethA.Buckfireandwithacopyto:Akin,Gump,Strauss,Hauer&Feld,L.L.P.590MadisonAvenueNewYork,NY10022Facsimile:(212)872-1002Attn:StevenH.Scheinman59 14.MISCELLANEOUS14.1.EntireAreement.ThisAgreement,theExhibitsandSchedulesannexedhereto,andthedocumentsandagreementsreferredtohereinortobeexecutedanddeliveredpursuanthereto,constitutetheentireagreementamongthePartieswithrespecttothesubjectmatterhereof,supersedeallprioragreementsandunderstandings,writtenororal,amongthePartieswithrespectthereto,andnoPartyshallbeliableorboundtoanyotherPartyinanymannerbyanypromises,conditions,warranties,representations,orcovenantsexceptasspecificallysetforthhereinortherein.Notwithstandingtheforegoing,neitherthisAgreement,theExhibitsandScheduleshereto,northedocumentsandagreementsreferredtohereinortobeexecutedanddeliveredpursuantheretoshallbe'eemedtosupersede,terminate,amendormodifyanyexistingwrittenagreementbetweentheCompany(oranyAffiliateoftheCompany)andanyIPP,unlesssuchexistingwrittenagreementisexpresslysuperseded,terminated,amendedormodifiedpursuanttothetermsofthisAgreement.TheprovisionsofthisSection14.1notwithstanding,thetermsofthatcertainAgreementtoProtectConfidentialInformationandDiscussionsexecutedby,amongothers,theCompany,onJune10,1996shallsurviveinaccordancewiththeirtermswithrespecttoallinformationdisclosedthereunderpriortothedateofthisAgreement.14.2.AmendmentsandWaivers,AnytermofthisAgreementmaybeamendedandtheobservanceofanytermofthisAgreementmaybewaived(eithergenerallyorinaparticularinstanceandeitherretroactivelyorprospectively),onlybyaninstrumentinwritingandsignedbythePartyagainstwhomsuchamendmentorwaiverissoughttobeenforced;providedthattheprovisionsofSection14.14(c)maybeamendedbytheIPPswithouttheconsentoftheCompany.14.3.SuccessorsandAssins.Exceptasotherwiseexpresslyprovidedherein,thetermsandconditionsofthisAgreementshallinuretothebenefitofandbebindingupontherespectivesuccessorsandpermittedassignsoftheParties.Exceptasotherwiseexpresslyprovidedherein,therightsandobligationsofthePartiespursuanttothisAgreementmaynotbeassigned(otherthanbyoperationoflaw).NothinginthisAgreement,expressorimplied,isintendedtoconferuponanypersonorentityotherthanthePartiesheretoortheirrespectivesuccessorsandassignsanyrights,remedies,obligations,orliabilitiesunderorbyreasonofthisAgreement,exceptasmaybeexpresslyprovidedinthisAgreement.144.G~iL.LG*AA*.IIdfgg*dfdfgdIdgrightsandobligationsofthepartieshereunder,andallamendmentsandsupplementshereofandallwaiversandconsentshereunder,shallbeconstruedinaccordancewithandgovernedbythedomesticsubstantivelawsoftheStateofNewYorkvrithoutgiving60 effecttoanychoiceoflaworconflictsoflawprovisionorrulethatwouldcausetheapplicationofthedomesticsubstantivelawsofanyotherjurisdiction.14.5.S~everabiiit.ifanyprovisionsofthisAgreementasappliedtoanypartortoanycircumstanceortoanyPartyshallbeadjudgedbyacourttobeinvalidorunenforceable,thesameshallinnowayaffectanyotherprovisionofthisAgreement,theapplicationofsuchprovisioninanyothercircumstancesortoanyotherPartyorthevalidityorenforceabilityofthisAgreement,andthePartiesaffectedtherebyshalluseReasonableBestEffortstonegotiateingoodfaithtomakesuchequitableadjustmentstothisAgreementasmaybeappropriate,soastoeffecttheoriginalintentofsuchPartiesascloselyaspossibleinamutuallyacceptablemanner.14.6.~Cations.Thetableofcontents,headingsandcaptionsusedinthisAgreementareusedforconvenienceonlyandarenottobeconsideredinconstruingorinterpretingthisAgreement.Unlessotherwisespecified,allreferenceshereinto"Sections"refertoSectionsinthisAgreement.14.7.Co~teretarts.ThisAgreementmaybeexecutedinnvoormorecounterparts,each-ofwhichshallbedeemedanoriginal,butallofwhichtogethershallconstituteoneandthesameinstrument.14.8.Fees.Exceptfor(i)DLJ,thefeesandexpensesofwhichtheCompanyhasagreedtopay,pursuanttoaseparateagreement,and(ii)WP&Co.,thefeesandexpensesofwhichtheCompanyhasagreedtopaypursuanttoaseparateagreementdatedMay15,1996,asamendedasofthedatehereof(asamended,the"WP&Co.FeeLetter"),eachPartyrepresentsthatitneitherisnorwillbeobligatedforanyinvestmentbankingfee,commissionorsimilarfeeinconnectionwiththetransactionscontemplatedbythisAgreement.TheCompanyagreestoindemnifyandholdharmlesseachIPPfromanyliabilityforanycommissionorcompensationinthenatureofaninvestmentbankingfee,commissionor,similarfee,andassociatedexpenses(andthecostsandexpensesofdefendingagainstsuchliabilityorassertedliability)whichis(x)payabletoDLJ,(y)payabletoWP&Co.pursuanttotheWP&Co.FeeLetteror(z)forwhichtheCompanyoranyoftheCompany'sofficers,employeesorrepresentativesotherwiseis'responsible.EachIPP(severallyandnotjointly)agreestoindemnifyandholdharmlesstheCompany6omanyliabilityforanycommissionorcompensationinthenatureofaninvestment~bankingfee,commissionorsimilarfee,andassociatedexpenses(andthecostsandexpensesofdefendingagainstsuchliabilityofassertedliability)for,whichsuchIPPoranyofsuchIPP'srespectiveofficers,employeesorrepresentativesisresponsible,otherthananysuchfeeorexpensewhichis(x)payabletoDLJ,(y)payabletoWP&Co.pursuanttotheWP&Co.FeeLetteror(z)forwhichtheCompanyoranyoftheCompany'sofficers,employeesorrepresentativesotherwiseisresponsible.TheprovisionsofthisSection14.8shallsurvivetheConsummationDateandanyterminationofthisAgreement(eitherinitsentiretyorwithrespecttolessthanalloftheIPPs).Byits executionhereof,eachIPPherebyagreestothetermsoftheamendmenttotheWP&Co.FeeLetterdatedasofthedatehereof.14.9.~Exnses.IrrespectiveofwhethertheConsummationDateshalloccurorwhetheranyRegulatoryApprovalisobtained,andexceptasotherwiseexpresslyprovidedhereinortherein,eachPartyshallpayallcostsandexpenses(including,butnotlimitedto,legalandaccountingfeesandexpenses)thatitincurswithrespecttothenegotiationandexecutionofthisAgre.'mentandanyotheragreementstobeexecutedpursuanthereto,andtheperformanceofanycovenantstobeperformedbysuchPartyandsatisfactionofanyconditionstobesatisfiedbysuchPartywhicharecontainedhereinortherein.Notwithstandingtheforegoing,(i)pursuanttoanagreementdatedJanuary31,1997(the"IPPs'pecialCounselFeeLetter"),theCompanyshallpaycertainfeesandexpensesoftheIPPs'pecialCounsel,(ii)pursuanttoanagreementdatedJune30,1997(the"IPPs'ocalRegulatoryCounselFeeLetter"),theCompanyshallpaycertainfeesandexpensesoftheIPPs'ocalRegulatoryCounseland(iii)theCompanyshallpayallfeesandexpensesoftheDepositarywithrespecttothetransactionscontemplatedbythisAgreement.TheprovisionsofthisSection14.9shallsurvivetheConsuinmationDateandanyterminationofthisAgreement(eitherinitsentiretyorwithrespecttolessthanalloftheIPPs).I4.LO.*'I.Fyiyi~*d'nterpretthetermsofthisAgreementoranyotheragreementordocumenttobeexecutedordeliveredpursuanthereto,theprevailingPartyshallbeentitledtoreasonableattorneys'ees,costsanddisbursementsinadditiontoanyotherrelieftowhichsuchPartymay'beentitled.14.11.Remedies.Incaseanyoneormoreofthecovenantsand/oragreementssetforthinthisAgreementshallhavebeenbreachedbyanyPartyhereto,thePartyorPartiesentitledtothebenefitofsuchcovenantsoragreementsmay,exceptasmayotherwisebeexpresslyprovidedinthisAgreement,proceedtoprotectandenforcetheirrightseitherbysuitinequityand/orbyactionatlaw,including,butnotlimitedto,anactionfordamagesasaresultofanysuchbreachand/oranactionforspecificperformanceofanysuchcovenant.oragreementcontainedinthisAgreement.Exceptasotherwiseprovidedherein,therights,powersandremediesofthePartiesunderthisAgreementarecumulativeandnotexclusiveofanyotherright,powerorremedywhichsuchPartiesmay.haveunderanyotheragreementorlaw.Nosingleorpartialassertionorexerciseofanyright,powerorremedyofaPartyhereundershallprecludeanyotherorfurtherassertionorexercisethereof.14.12.Survival.ExceptassetforthintherepresentationletterstobedeliveredbythePartiespursuanttoSections8.3(a)and9.3(a},andexceptasmaybesetforthinanyoftheContracts,therepresentationsandwarrantiesoftheCompanycontainedinSection4,andtherepresentationsandwarrantiesofeachIPPcontainedinSection5,shallnot62 survivetheConsummationDate,providedthatanyrights,obligationsorhabilitiesexistingpursuanttolaw(including,withoutlimitation,pursuanttotheSecuritiesAct)shallsurviveuntiltheexpirationofanyapplicablestatuteoflimitations.%ithoutlimitingthesurvivalofanyotherprovisionofthisAgreementwhichmayexpresslyorbyitstermssurvivetheConsummationDate,theprovisionsofSections3.8,6.4,6.7(c),8.8,9.8,11and14ofthisAgreementshallsurvivetheConsummationDateuntilfullyperformed.14.13.SeveralObliations.TheobligationsoftheIPPscontainedinthisAgreementareseveralandnotjoint.NoIPPshallberesponsiblefortheperformanceorfailureonthepartofanyotherIPPtoperformitsobligationscontainedinthisAgreement.14,14.C~ad(a)EachPartyagreesthatitwillnot,atanytimebeforeoraftertheConsummationDate,divulge,disclose,use,publishorinanyothermannerreveal,directlyorindirectly,byanymeanswhatsoever,toanyperson,firmorcorpomtion(i)anyconfidentialorproprietaryinformationofanyotherPartyobtainedbysuchParty&omtheotherParty,whetherorallyorinwriting,atanytime,includingpriortothedateofthisAgreement,duringthecourseoforasaresultofthenegotiation,executionorperformanceofthisAgreement,anyotheragreement,documentorinstrumentrelating'eretooranyofthetransactionscontemplatedherebyortherebyandknownbysuchPartytobeconfidentialorproprietaryinformationor(ii)anyofthetermsorconditionsofthisAgreement,anyotheragreement,documentorinstrument.relatingheretooranyofthetransactionscontemplatedherebyorthereby,ortheprogress,statusorscheduleofanydiscussionsornegotiationsrelatingheretoorthereto.IntheeventthatanyPartyisrequestedorbecomeslegallycompelled(byoralquestions,interrogatories,requestforinformationordocuments,subpoena,criniinalorcivilinvestigativedemandorsimilarprocess)todiscloseanysuchconfidentialorproprietaryinformation,suchPartywillprovidetheotherPartywithpromptwrittennoticesothattheotherPartymayseekaprotectiveorderorotherappropriateremedyand/orwaivecompliancewiththeprovisionsofthisSection,andsuchPartywillcooperatewiththeotherPartyinanyefforttheotherPartyundertakestoobtainaprotectiveorderorotherremedy.Intheeventthatsuchprotectiveorderorotherremedyisnotobtained,orthattheotherPartywaivescompliancewiththeprovisionsofthisSection,suchPartywillfurnishonlythatportionoftheinformationwhichislegallyrequiredandwilluseReasonableBestEffortstoobtainreliableassurancethatconfidentialtreatmentwillbeaccordedtheinformation,provided,however,ifsucheffortsinvolveanyexpensetheotherParty,ifithasreceivedpriornoticethereof,willreimbursesuchPartyforsame.TheprovisionsofthisSectionshallnotprecludeanyPartyfrommakingadisclosureofanyinformationifintheopinionofsuchParty'scounselsuchdisclosureisrequiredbythesecuritieslawsoftheUnitedStatesortherulesoftheNYSEoranyothersecuritiesexchangeormarketonwhichthesecuritiesofsuchParty(oritsAffiliates)arequotedortraded,providedthatsuchParty63 shalldiscloseonlythatportionoftheinformationwhichisrequiredtobedisclosedand,totheextentpracticable,thedisclosingPartyshallconsultwiththePartywhichprovidedsuchinformationinadvanceofmakinganysuchdisclosure.(b)NotwithstandingtheprovisionsofSection14.14(a),noPartyheretoorrepresentativethereofshallbeprecluded&om,andeachPartyagreesthatitshallnotassertanybreachorviolationofthisAgreementwithrespecttoorasaresultof,thefurnishingofanyconfidentialorproprietaryinformationto(i)anyconsultant,advisororotherthirdpartyretainedbyanyPartytopreparereports,studies,analysesormemorandaor(ii)anyfuelsupplier,transporter,lender,steamhostorotherthirdparty,ineachcaseinconnectionwithsuchParty'seffortstoobtainanyIPPfIMrdPartyConsent,NMPC/fhirdPartyConsentorNMPClMrdPartyRelease.EachPartyshall,priortothedisclosureofanyinformationtoanypersonpursuanttothisSection14.14(b),executeandcausesuchpersontoexecuteaThirdPartyNon-DisclosureAgreementsubstantiallyintheformannexedheretoasExhibit14.14.(c)WithoutlimitinginanymannertheforegoingprovisionsofthisSection14.14,eachIPPagreeswitheachotherIPPthatsuchIPPwillonlydivulge,disclose,useorinanyothermannerrevealanyconfidentialorproprietaryinformationofanyotherIPPor.AffiliateofanyotherIPPregardingthisAgreement,anyotheragreement,documentorinstrumentrelatinghereto,orthetransactionscontemplatedherebyorthereby,whichwasorisobtainedatanytime,includingpriortothedateofthisAgreement,duringthecourseoforasaresultof.thenegotiation,executionorperformanceofthisAgreement,anyotheragreement,documentorinstrumentrelatinghereto,oranyofthetransactionscontemplatedherebyorthereby(collectively,"Confidential1PPInformation"),toitsAffiliatesandtothoseofitsanditsAffiliates'espectivedirectors,officers,shareholdersandpartners(atanytier),andtheirrespectiveemployees,financialadvisors,attorneys,accountantsandconsultants("IPPParticipants"),whoneedtoknowtheConfidentialIPPInformationforpurposesofparticipatinginthetransactionscontemplatedbythisAgreementoranyotheragreement,documentorinstnimentrelatinghereto,andwhoareinformedbysuchIPPoftheconfidentialnatureoftheConfidentialIPPInformationandwhoshallagreetobeboundbyandtoactonlyinaccordancewiththetermsandconditionsofthisSection14.14(c).Notwithstandingtheforegoing,intheeventthatanyIPP'sIPPParticipantisaConflictedPerson(ashereinaAerdefined),suchIPPshall(x)notpermitsuchConflictedPersonto.participateinthenegotiationorperformanceofanyagreement,documentorinstrumentrelatingheretooranyofthetransactionscontemplatedherebyorthereby,(y)segregateallfiles,workpapers,reports,analyses,dataorotherdocumentsbased,inwholeorinpart,onanyConfidentialIPPInformationandshallnotallowanyConflictedPersontohaveaccessthereto,and(z)notcommunicateorexchangeanyConfidentialIPPInformationtoorwithanysuchConflictedPerson,except,withrespecttoeachof(x),(y)and(z)above,totheextentnecessaryforsuchlPPtoobtainitsownIPPfIMrdPartyConsentsorIPPApprovals,ifany,fromsuchConflictedPerson.A"ConflictedPerson"shallmean,64 collectively,anyIPPParticipantthatisafinancialinstitution,steamhost,fuelsupplierorfueltransporterandwhichisorhasamaterialinterestinaperson(orAffiliateofsuchperson)RomwhomanyIPPisrequiredtoobtainanIPP/ThirdPartyConsentorIPPApproval&omsuchIPPParticipant.EachIPPshallberesponsibleforanyfailurebysuchIPP'sIPPParticipanttocomplywiththetermsofthisSection14.l4(c).(d)'ReprovisionsofthisSection14.14shallbeinoperativeastoanyinformationwhich(i)isorbecomesgenerallyavailabletothepublicotherthanasaresultofanybreachofthisSectionbyanypersonsubjectheretooritsrepresentatives,(ii)becomesavailabletoapersonsubjectheretoonanonconfidentialbasis&omasource(otherthananyotherpersonsubjectheretooritsrepresentatives)whichhasrepresentedtosuchpersonsubjectheretothatsuchsourceisentitledtodiscloseitor(iii)wasknowntosuchpersonsubjectheretoonanonconfidentialbasispriortoitsdisclosuretosuchpersonsubjectheretobyanyotherpersonsubjectheretooritsrepresentatives.(e)EachPartyacknowledgesthatunauthorizeddisclosureofinformationmayresultinliabilityforjudicialjudgmentsincluding,butnotlimitedto,monetarydamages,andthatanyPartyharmedbysuchdisclosureisentitledtopursueanylegalandequitableremediesintheeventofanunauthorizeddisclosure.EachPartyherebywaivesanyobjectionstotheimmediateissuancebyacourtofcompetentjurisdictionofinjunctiveorotherequitablereliefbarringthefurtherdisclosureoruseofanyinformationintheeventofanunauthorizeddisclosure.(f}TheprovisionsofthisSection.14.14shallsurvivetheConsummationDateandanyterminationofthisAgreement(eitherinitsentiretyorwithrespecttolessthanalloftheIPPs):l4.15.NP*'h.Th*P8*U'*U'g***hb*d'nthecontextoflitigationsettlementnegotiations.Allevidentiaryrules,whetherfederalorstate,applicabletotherightsandclaimsoftheParties,includingbutnotlimitedtoRule408oftheFederalRulesofEvidence,shallbeapplicable.ThePartiesagreeandstipulatethatthisAgreementandanywrittenororalstatementmadeinconnectionwiththisAgreementbyaPartyoritsrepresentativesweremadeincompromisenegotiations,andifassertedtobeevidenceof(i)furnishingorofferingorpromisingtofurnishor(ii)acceptingoroFeringorpromisingtoaccept,avaluableconsiderationincompromisingorattemptingtocompromiseaclaimwhichwasdisputedastoeithervalidityoramount,arenotadmissibletoproveliabilityfororinvalidityofsuchclaimsortheiramounts.fSIGNATURESAPPEARONFOLLOWINGSIGNATUREPAGESl65

MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESINWITNESSWHEREOF,thepartiesheretohaveenteredintothisMasterRestructuringAgreementasofthedatefirstabovewritten.NiagaraMohawkPowerCorporationBy:Name:w1Title:ChairmanoftheBoardandChiefExecutiveOfficerAmericanRef-FuelCompanyofNiagara,L.P.By:Name:RichardOliverTitle:VicePresident-DevelopmentOnondagaCogenerationLimitedPartnershipBy:GeddesCogenerationCorporation,ItsGeneralPartnerBy:Name:DavidC.BrauerTitle:VicePresident MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESINWITNESSWHEREOF,thepartiesheretohaveenteredintothisMasterRestructuringAgreementasofthedatefirstabovewritten.NiagaraMohawkPowerCorporationBy:Name:Title:AmericanRef-FuelCompanyofNiagara,L.P.By:Name:RichardOliverTitle:VicePresident-DevelopmentOnondagaCogenerationLimitedPartnershipBy:GeddesCogenerationCorporation,ItsGeneralPartnerBy:Name:DavidC.BrauerTitle:VicePresident MASTERRESTRUCTURINGAGREEMENTSICNATUREPAGESINWITNESSWHEREOF,thepartiesheretohaveenteredintothisMasterRestructuringAgreementasofthedatefirstabovewritten.NiagaraMohawkPowerCorporationBy:Name:Title:AmericanRef-FuelCompanyofNiagara,L.P.By:Name:RichardOliverTitle:VicePresident-DevelopmentOnondagaCogenerationLimitedPartnershipBy:GeddesCogenerationCorporation,ItsGeneralPartnerBy:Name:DavidC.BrauerTitle:VicePresident MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESProjectOrangeAssociates,L.P.By:NCPSyracuse,Inc.,ItsGeneralPartnerBy:NCPEnergy,Inc.,ItsAttorney-in-FactName:DavidC.BrauerTitle:VicePresidentFultonCogenerationAssociates,aNewYorklimitedpartnershipBy:ANRVentureFultonCompany,ItsManagingGeneralPartnerBy:Name:MarkP.BarryTitle:VicePresidentCogenEnergy.TechnologyL.P,By:CogenEnergyTechnology,Inc.,ItsGeneralPartnerBy:Name:JohnE.GuinnessTitle:President MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESProjectOrangeAssociates,L.P.By:NCPSyracuse,Inc.,ItsGeneralPartnerBy:NCPEnergy,Inc.,ItsAttorney-in-FactBy:Name:DavidC.BrauerTitle:VicePresidentFultonCogenerationAssociates,aNewYorklimitedpartnershipBy:ANRVentureFultonCompany,ItsManagingGeneralPartnerName:MarkP.BarryTitle:VicePresident(ORE~a~a~~CogenEnergyTechnologyL.P.By:CogenEnergyTechnology,Inc.,ItsGeneralPartnerBy:Name:JohnE.GuinnessTitle:President bZASTERRESTRUCYUggqoAGREEMEgySIGNAYURZPAGESProjectOrangeAssociates,L.P.By:NCPSyracuse,Inc.,ItsGeneralPartnerBy:NCPEnergy,Inc.,ItsAttorney-in-FactBy:Name:DavidC.BrauerTitle:VicePresidentFultonCogenerationAssociates,aNewYorklimitedpartnershipBy:ANRVentureFultonCompany,ItsManagingGeneralPartnerBy:Name:MarkP.BarryTitle:VicePresidentCogenEnergyTechnologyL.P.By:CogenEnergyTechnology,inc.,ItsGeneralPartnerzA6BF'ame:JohnE.GumnessTitle:President MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESLyonsdaleEnergyLimitedPartnership,aDelawareLimitedPartnershipBy:MooseRiverEnergy,Inc.,ItsManagingGeneralPartnerName:Mr.YojiroOkazakiTitle:PresidentEncogenFourPartners,L.P.By:EDCFourInc.,ItsGeneralPartnerBy:Name:MelvinE.WentzTitle:PresidentNorConPowerPartners,L.P.By:NorthernConsolidatedPower,IncItsGeneralPartnerBy:Name:J.DouglasDivineTitle:VicePresident-StrategicPlanning MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESLyonsdaleEnergyLimitedPartnership,aDelawareLimitedPartnershipBy:MooseRiverEnergy,Inc.,ItsManagingGeneralPartnerBy:Name:Mr.YojiroOkazakiTitle:PresidentEncogenFourPartners,L.P.By:EDCFourInc.,ItsGeneralPartner~Z.WName:MelvinE.%entzTitle:PresidentNorConPowerPartners,L.P.By:NorthernConsolidatedPower,Inc.,ItsGeneralPartnerBy:Name:J.DouglasDivineTitle:UicePresident-StrategicPlanning MASTERRESTRVCTVRINGAGREEMENTSIGNATUREPAGESLyonsdaleEnergyLimitedPartnership,aDelawareLimitedPartnershipBy:MooseRiverEnergy,Inc.,ItsManagingGeneralPartnerBy:Name:Mr.YojiroOkazakiTitle:PresidentEncogenFourPartners,L.P.By:EDCFourInc.,ItsGeneralPartnerBy:Name:MelvinE.WentzTitle:PresidentNorConPowerPartners,L.P.By:NorthernConsolidatedPower,Inc.,ItsGeneralPartnerBy:Name:.DouasDivineTitle:VicePresident-StrategicPlanning MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESIndeck-IlionLimitedPartnershipBy:IndeckEnergyServicesofIlion,Inc.,ItsGeneralPartnerBy:Name:ThomasM.CamponeTitle:PresidentIndeck-YerkesLimitedPartnershipBy:IndeckEnergyServicesofYerkes,Inc.,ItsGeneralPartnerBy:Name:ThomasM.CamponeTitle:PresidentIndeck-OleanLimitedPartnershipBy:IndeckEnergyServicesofOleon,Inc.,ItsGeneralPartnerBy:Name:ThomasM.CamponeTitle:President MASTERRESTRUCTUMNGAGREEMENTSIGNATUREPAGESIndeck-OswegoLimitedPartnershipBy:lndeckEnergyServicesofOswego,IncItsGeneralPartnerBy:Name:ThomasM.CamponeTitle:PresidentBlackRiverLimitedPartnershipBy:JonesBlackRiverServices,Inc.,ItsManagingGeneralPartnerBy:Name:WilliamA.GarnettTitle:PresidentLG&EWestmorelandRensselaer,aCaliforniageneralpartnershipBy:LG&EPowerISIncorporated,AGeneralPartnerBy:Name:Title:

MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESIndeck-OswegoLimitedPartnershipBy:IndeckEnergyServicesofOswego,Inc.,ItsGeneralPartnerBy:Name:ThomasM.CamponeTitle:PresidentBlackRiverLimitedPartnershipBy:JonesBlackRiverServices,Inc.,ItsManagingGeneralPartnerBy.Name:WilliamA.GarnettTitle:PresidentLG&EWestmorelandRensselaer,aCaliforniageneralpartnershipBy:LG&EPower15Incorporated,AGeneralPartnerBy:Name:Title:

MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESIndeck-OswegoLimitedPartnershipBy:IndeckEnergyServicesofOswego,Inc.,ItsGeneralPartnerBy:Name:ThomasM.CamponeTitle:PresidentBlackRiverLimitedPartnershipBy:JonesBlackRiverServices,Inc.,ItsManagingGeneralPartner"By:Name:WilliamA.GarnettTitle:PresidentLG&EWestmorelandRensselaer,aCaliforniageneralpartnershipBy:LG&EPower15Incorporated,AGeneerBy:Name:Title:PxNCHg MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESBy:Westmoreland-Rensselaer,L.P.,AGeneralPartnerBy:WEI-Rensselaer,Inc.AGeneralPartnerBy:Name:Title:OxbowPowerofNorthTonawanda,NewYork,Inc.By:Name:BernardH.CherryTitle:PresidentSaltCityEnergyVenture,L.P.By:SaltCityEnergy,LLC,ItsGeneralPartnerBy:Name:EdwardBarnoTitle:Member MASTERRESTRUCXUIGNGAGRIMMENTSIGNATUREPAGESBy:Westmoreland-Rensselaer,L.P.,AGeneralPartnerBy:WEI-Rensselaer,Inc.AGeneralPannerBy:Name:Title:ItOxbowPowerofNorthTopawanda,NewYork,Inc.iName.BernardH.CherryTitle:PresidentSaltCityEnergyVenture,L;P.By:SaltCityEnergy,LLC,ItsGeneralPartnerBy:Name:EdwardBaxnoTitle:Member MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESBy:Westmoreland-Rensselaer,L.P.,AGeneralPartnerBy:WEI-Rensselaer,Inc.AGeneralPartnerBy:Name:Title:OxbowPowerofNorthTonawanda,NewYork,Inc.By:Name:BernardH.CherryTitle:PresidentSaltCityEnergyVenture,L.P.By:SaltCityEnergy,LLC,ItsGeneralPartners:8Name:EdwardBarnoTitle:Member MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESAG-Energy,L.P.By:AG-Energy,lnc.,ItsGeneralPartnerName:tevenD.BurtonTitle:Secretary>GeneralCounselSenecaPowerPartners,L.P.By:SenecaPowerCorporation,ItsGeneralPartnerByName:StevenD.BurtonTitle:Secretary<GeneralCounselSterlingPowerPartners,L.P.By:SterlingPower,Ltd.,ItsGeneralPartnerBy:Name:StevenD.BurtonTitle:Secretary<GeneralCounsel MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESPowerCityPartners,L.P.By:PowerCityGenerating,Inc.,ItsGeneralPartner8Name:StevenD.BurtonTitle:SecretaryhGeneralCounselPEANPartners,L.P.By:P&NEnergySystems,Inc.,ItsGeneralPartnerB:tevenD.BurtonTitle:SecretaryhGeneralCounselSelkirkCogenPartners,L.P.By:JMCSelkirk,Inc.,ManagingGeneralPartnerBy:Name:GeorgeJ.GrunbeckTitle:VicePresident MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESPowerCityPartners,L.P.By:PowerCityGenerating,Inc.,ItsGeneralPartnerBy:Name:StevenD.BurtonTitle:SecretaryhGeneralCounselP&NPartners,L.P.By:P&NEnergySystems,Inc.,ItsGeneralPartnerBy:Name:StevenD.BurtonTitle:SecretaryhGeneralCounselSelkirkCogenPartners,L.P.By:JMCSelkirk,Inc.,ManagingGeneralPartnerBy:Name:George.GbeckTitle:VicePresident lgASTERRE<STRUCTURINGAGREEMENTSIGNATUREPAGESEastSyracuseGeneratingCompany,L.P.By:Name:GeorgeJ.GnbTitle:VicePresidentKamine/BesicorpCarthageL.P.By:KamineCarthageCogenCo.,Inc.,ItsGeneralPartnerBy:Name:HaroldN.KamineTitle:PresidentBy:BetaCarthage,Inc.,ItsGeneralPartnerBy:Name:MichaelJ.DaleyTitle:VicePresidenthSecretaryhTreasurerKamine/BesicorpSouthGlensFallsL.P.By:KamineSouthGlensFallsCogenCo.,Inc.,ItsGeneralPartnerBy:Name:HaroldN.KamineTitle:President MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESEastSyracuseGeneratingCompany,L.P.By:Name:GeorgeJ.GrunbeckTitle:VicePresidentKamine/BesicorpCarthageL.P.By:KamineCarthageCogenCo.,Inc.,GeneralPerBy.Name:HaroldN.KamineTitle:President,By:BetaCarthage,Inc.,ItsGeneralPartnerBy:v',HName:MichaelJ.DalyTitle:VicePresidenthSecretaryhTreasurerKamine/BesicorpSouthGlensFallsL.P.By:KamineSouthGlensFallsCogenCo.,Inc.,ItsGeneralPartnerBy:Name:HaroldN.KamineTitle:President MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESBy:BetaSouthGlensFalls,Inc.,ItsGeneralPartnerBy:Name:MichaelJ.DaleTitle:VicePresident<SecretaryhTreasurerKamine/BesicorpNaturalDamL.P.By:KamineNaturalDamCogenCo.,Inc.,ItsGeneralPartnerBy:N.aroldN.KamineTitle:PresidentBy:BetaNaturalDam,Inc.,ItsGeneralPartnerBy:Name:MichaelJ.DaleyTitle:VicePresident>Secretary)TreasurerKamine/BesicorpSyracuse,L.P.By:KamineSyracuseCogenCo.,Inc.,ItsGeneralPartnerBy:Name:HaroldN.KamineTitle:President MASTERRESTRUCTURINGAGREEMENTSIGNATUREPAGESBy:BetaSyracuse,Inc.,ItsGeneralPartnerByiName:MichaelJ.DaleyTitle:VicePresidenthSecretary>TreasurerKamine/BesicorpBeaverFalls,L.P.By:KamineBeaverFallsCogenCo.,Inc.,ItsralPartnerBy:Name:HaroldN.KamineTitle:PresidentBy:BetaBeaverFalls,Inc.,ItsGeneralPartnerBy:UPName:MichaelJ.DaleyTitle:VicePresident)Secretary(TreasurerUnitedDevelopmentGroup-Niagara,L.P.'By:UnitedDevelopmentGroup-Niagara,Inc.,ItsGeneralPartnerBy:Name:%.JohnFairTitle:President tMASTERRESTRUCTVRINGAGREEMENTSIGNATUREPAGESBy:BetaSyracuse,Inc.,ItsGeneralPartnerBy:Name:MichaelJ.DaleyTitle:VicePresident>Secretary<TreasurerKamine/BesicorpBeaverFalls,L.P.By:KamineBeaverFallsCogenCo.,Inc.,ItsGeneralPartnerBy:Name:HaroldN.KamineTitle:PresidentBy:BetaBeaverFalls,Inc.,ItsGeneralPartnerBy:Name:MichaelJ.DaleyTitle:VicePresident>SecretaryhTreasurerUnitedDevelopmentGroup-Niagara,L.P,By:UnitedDevelopmentGroup-Niagara,Inc.,ItsGeneralPartnerBy:Name:W.JohnFairTitle:President SCHEDULEANamesandNoticeAddressesofIPPsIPPNoticeAddressAmericanRef-FuelCompanyofNiagara,L.P.AirProducts&Chemicals7201HamiltonBoulevardAllentown,PA18195Facsimile:610-706-6765Attn:JimButzAmericanRef-FuelCompany777N.EldridgeHouston,TX77079Facsimile:713-584-8626Attn:TylerScofieldOnondagaCogenerationLimitedPartnershipProjectOrangeAssociates,L.P.doGPUInternational,Inc.OneUpperPondRoadParsippany,NJ07054Facsimile:201-2634977Attn:WendyGreengroveFultonCogenerationAssociatesdoANRVentureFultonCompanyNineGreenwayPlaza,16FloorHouston,TX77046Facsimile:713-297-1556Attn:MarkBarryCogenEnergyTechnologyL.P.1902RiverRoadCastleton-on-Hudson,NY12033Facsimile:518-732-4006Attn:FrankLymanTowerEast,Suite30320600ChagrinBoulevardShakerHeights,OH44122Facsimile:216-921-2558Attn:JohnGuinness fPPNoticeAddressLyonsdaleEnergyLimitedPartnershipc/oDiamondEnergy633West5StreetSuite2800LosAngeles,CA90071Facsimile:213-892-1332Attn:BoBuchynskyEncogenFourPartners,L.P.c/oEnserchDevelopmentCorporation1817WoodStreetSuite550WestDallas,TX75201Facsimile:214670-2974Attn:TimothyO.CurleyNorConPowerPartners,L.P.c/oCalEnergyCompany302S.36StreetOmaha,NE68131Facsimile:402-231-1668Attn:DouglasDivineIndeck-IlionLimitedPartnershipindeck-gerkesLimitedPartnershipIndeck-OleanLimitedPartnershipIndeck-OswegoLimitedPartnershipIndeckEnergyServices,Inc.1130LakeCookRoadFacsimile:847-520-9883BuffaloGrove,IL60089Attn:StevenDowdyBlackRiverLimitedPartnershipc/oJonesCapitalCorporationJ.A.JonesDriveCharlotte,NC28287Facsimile:704-553-3037Attn:JohnWoodcockLG&EWestmorelandRensselaerc/oLG&EPower,Inc.12500FairLakeCircle,N350Fairfax,VA22033-3804Facsimile:703-968-5458Attn:AnneGleason-RocheNI7ll3 IPPNoticeAddressOxbowPowerofNorthTonawanda,NewYork,Inc.1601ForumPlaceWestPalmBeach,FL33401Facsimile:561-640-8847Attn:BernardH.CherrySaltCityEnergyVenture,L.P.56IndustrialDriveSyracuse,NY13204Facsimile:315487M77Attn:EdwardBarnoAG-Energy,L.P.SenecaPowerPartners,LP.SterlingPowerPartners,L.P.PowerCityPartners,LJ.P&NPartners,L.P.c/oSitheEnergies,Inc.450LexingtonAvenue37FloorNewYork,NY10017Facsimile:212450-9025Attn:StevenBurtonSelkirkCogenPartners,L.P.EastSyracuseGeneratingCompany,L.P.c/oUSGeneratingCo.7500OldGeorgetownRoadBethesda,MD2081M161Facsimile:301-7184906Attn:JeFMcParlandSteveHermanc/oUSGeneratingCo.OneBowdoinSquareBoston,MA02114-2910Attn:GeorgeGrunbeckPeterMeier~Kamine/BesicorpCarthageL.P.Kamine/BesicorpSouthGlensFallsL.P.Kamine/BesicorpNaturalDamL.P.Kanune/BesicorpSyracuseL.P.Katnine/BesicorpBeaverFallsL.P.c/oK:unineDevelopmentCorp.1545Rt.206Suite300Bedminster,NJ07921-2567Facsimile:908-719-8774Attn:MarkSlifkinNI7Il3 IPPNoticeAddressdoBesicorpGroup,Inc.1151FlatbushRoadKingston,NY12401Facsimile:914-336-7172Attn:MichaelJ.DaleyUnitedDevelopmentGroup-Niagara,L.P.1401MainStreetSuite1115Columbia,SC29211Facsimile:803-799-8039Attn:W.JohnFairNl7ll3 SCHEDULE2.1ExistingPPAstobeTerminatedpursuanttoSection2.lCONFIOENTlhL

SCHEDULE2.2ExistingPPAtobeAmendedpursuanttoSection2.2CONFlOENTNL

SCHEDULE2.3ExistingPPAstobeAmendedand/orRestatedpursuanttoSection2.3CONFIOENTIAL

SCHEDULE3.5CertainExclusionsfromAnti-DilutionProvisionsCommonStockmaybeissuedpursuantto:theCompany'sDividendReinvestmentandStockPurchasePlantheAmendedandRestatedMergerAgreementbetweenSyracuseSuburbanGasCompany,Inc.andtheCompanydatedMarch13,1992theEmployeeSavingsFundPlanforRepresentedEmployeesofNiagaraMohawkPowerCotporationtheEmployeeSavingsFundPlanforNon-RepresentedEmployeesofNiagaraMohawkPowerCorporationtheCompany's1992StockOptionPlanN20073

SCHEDULE3.7IPPSponsorEntitiestoEnterIntoShareholder'sAgreementIPPIndeck-IlionLimitedPartnershipIndeck-YerkesLimitedPartnershipIndeck-OleanLimitedPartnershipIndeck-OswegoLimitedPartnership~~SE~IndeckEnergyServices,Inc.AG-Energy,L.P.SenecaPowerPartners,L.P.SterlingPowerPartners,L,P.PowerCityPartners,L.P.P&NPartners,L.P.-SitheEnergies,Inc,EastSyracuseGeneratingCompany,I..P.U.S.GeneratingCo.Kamine/BesicorpCarthageL.P..Kamine/BesicorpSouthGlensFallsL,P.Kamine/BesicorpNaturalDamL.P.Kamine/BesicorpSyracuseL.P.Kamine/BesicorpBeaverFallsL.P.KamineDevelopmentCorp.andBesicorpGroup,Inc.¹12704

Schedule4.5NiagaraMohawkPowerCorporationCapitalization4Sg)Authorizedcapital:CommonStock,Slparvalue,CumulativePreferredStock,S1'00parvalueCumulativePreferredStock,$25parvalueCurnulativcPrefcrcnccStock,$25parvalue185,000,000shares3,400,000shares19,600,000shares8,000,000shares4$(ti)CommonStockIssuedandOutstanding:AsofSeptember30,1996AsofJune27,1997144/65+14shares144/90,619shares4Egii)CommonStockIssuable:IssuablcinconnectionwiththeacquisitionofSyracuseSuburbanGasCorporation-AsofSeptember30,1996AsofJune27,199754,137shares28,732sharesIssuableunderthe1992StockOptionPlan-AsofSeptember30,1996AsofJune27,1997322,875shares322,875shares

SCHEDULE4.8CERTAINCHANGESOREVENTS(d)TheCompanyhas:authorizedthefundingofarabbitrustintheeventofprospecfivechangesofcontrolchangedperiodforvestingoflifetimemedicalbenefitfromtenyearstoeightyearsforseniorofficersprovidedcertainseniorofficerswithlifeinsuranceprovidingdeathbeneflttwoandone-halftimesannualsalaryagreedtopurchaseoneseniorofficer'shouseatappraisedvalue(h)CommonStockhasbeenissuedpursuantto:theCompany'sDividendReinvestmentandStockPurchasePlantheAmendedandRestatedMergerAgreementBetweenSyracuseSuburbanGasCompany,Inc.andtheCompanydatedMarch13,1992theEmployeeSavingsFundPlanforRepresentedEmployeesofNiagaraMohawkPowerCorporationtheEmployeeSavingsFundPlanforNon-RepresentedEmployeesofNiagaraMohawkPowerCorporation(i)CommonStockhasbeenpurchasedbytheCompanypursuantto:theAmendedandRestatedMergerAgreementBetweenSyracuseSuburbanGasCompany,Inc.andtheCompanydatedMarch13,1992theEmployeeSavingsFundPlanforRepresentedEmployeesofNiagaraMohawkPowerCorporationtheEmployeeSavingsFundPlanforNon-RepresentedEmployeesofNiagaraMohawkPowerCorporation

SCHEDULE5.4CertainDisclosedLitigationWestmorelandCoalCompanyandWestmorelandEnergy,Inc.,AffiliatesofWestmorelandRensselaerL.P.,ageneralpartnerofLG&EWestmorelandRensselaer,aCaliforniageneralpartnershipandoneoftheIPPshereunder,aredebtorsinpossessioninaproceedingunderChapter11oftheBankruptcyCode(JointCaseNo.96-26092MSK,etal.)intheUnitedStatesBankruptcyCourtfortheDistrictofColorado,andassuchtheapprovaloftheBankruptcyCourtmayberequiredforofLG&EWestmor'elandRensselaertoconsummatethetransactionscontemplatedbythisAgreement,N20415

SCHEDULEggCMatterstobeIncludedinPSCApprovalThePSCApprovalshall:(i)findtheRestructuringandtheAgreementandtheobligationsincurredbyNMPCthereundertobeprudent;(ii)authorizetheissuanceofsharesofstock,bonds,andanyothersecuritiesrequiredtobeissuedpUrsuanttotheAgreement;(iii)approveNMPC'sfullrecoveryinratesofallcoststhatNMPCwillincurinconnectionwiththeRestructuringandasaresultofperformanceofitsobligationsundertheAgreement,includingadeterminationthatsuchcostswereprudentlyincuned;(iv)authorizeNMPCtoestablisharegulatoryassetforthefullamountoftheunamortizedcostsassociatedwithimplementationoftheAgreement;(v)authorizeNMPCtoestablishanon-bypassableCompetitiveTransitionCharge,which,togetherwithcostsrecoveredinbaserates,willprovideforthefullrecoveryofallcosts,includingstrandablecosts,thatareincurredoverthetermofthedebtanticipatedtobeincurredinconnectionwiththisAgreement;and(vi)authorizeNMPCtoperformanyotheractrequiredto'beperformedpursuanttotheAgreementforwhichPSCapprovalisrequiredorauthorizeanyotheractastowhichPSCapprovalisrequired.Ol2704

SCHEDULE610ALitigationandRegulatoryproceedingstobeStayedbythePartiesFederalCourtCases1.EncogenFourPartnersL.P.v.NiagaraMohawkPowerCorp.,DocketNo.96-9642(2dCir.)2.Indeck-lllionLP.&PowerCityPartnersv.AVPSC&NiagaraMohawkPowerCorp.,No.95-CV-0143(N.D.N.Y.)3.NiagaraMohawkPowerCorp.v.UnitedStatesDep'tofEnergy,CaseNo.95-CV-952(D.D.C.;motionforsummaryjudgmentgrantedFeb.23,1996),appealdocketed,No.96-5246(D.C.Cir.Aug.6,1996)4.¹iagaraMohawkPowerCorp.v.UnitedStatesDep'tofEnergyv.SterlingPowerPartners,etal.,CaseNo.96-5082(D.C.Cir.)-consolidatedwithcaseNo.96-5246(caseP1above)intheD.C.Circuit5.NorConPowerPartners,LP.v.NiagaraMohawkPowerCorp.,CaseNo.96Civ.2947(S.D.N.Y.)6.NorConPo~erPartners,LP.v.NiagaraMohawkPowerCorp.,DocketNo,96-7283(2dCir.)NewYorkStateCourtCases7.NiagaraMohawkPowerCorp.v.SterlingPower,Ltd.,IndexNo.95-29818.Ag-Energy,LP.,PowerCityPartners,L.P.,SenecaPowerPartners,LP.&SterlingPowerPartners,LP.v.¹ragaraMohawkPowerCorp.,IndexNo.111207/95"'.BlackRiverLP.v.¹iagaraMohawkPowerCorp.,DocketNos.CA97-0036&CA97-0087(4thDep't)10.SterlingPowerPartners,LP.v.NiagaraMohawkPowerCorp.,IndexNo.94-110354"'hisproceedingwaswithdrawnonApril14,1997,butissubjecttoreinstatementaAeradecisioninthcNorConproceeding(case¹3above).ThepartiesagrccthattheEncogencasecanbcreinstatedbyNMPCsolelyastoEncogeninthccvcntthatEncogenisnotaPartytotheAgreementontheConsummationDate."Astothiscase,thcpartiestheretoagreetousctheirReasonableBestEffortstoamveataconsentedsettlementbcforctheConsummationDate.Inthceventasettlementisnotreached,thcpartiestheretoagreethatthestayistobeliftedasoftheConsummationDateandthecasewillresume.Intheeventasettlementisreached,thepartiestheretoshalldismissandwithdrawthiscaseasoftheConsummationDate."'stothiscase,thepartiesthereto.agrcetousctheirReasonableBestEffortstoanivcataconsentedsettlementbeforethcConsummationDate.Intheeventasettlementisnotreached,thcpartiestheretoagreethatthestayisto¹l2704

11.SterlingPowerPartners,LP.,SenecaPowerPartners,L.p.,powerCityPartners,L.P.CkAg-Energy,L.P.v.NiagaraMohawkPowerCorp.,IndexNo.106895/94(1stDep't)NYPSCProceedings12.NiagaraMohawkPowerCorp.-PetitionforApprovalofCurtailmentProcedures,NYPSCCaseNo.92-E-0814(combinedwithProceedingonMotionoftheCommissiontoEstablishConditionsGoverningCurtailmentClausesinContractsforOn-SiteGeneration,NYPSCCaseNo.88-E481)13.NiagaraMohawkPowerCorp.-PetitionforClarificationofCertainAspectsoftheMonitoringandComplianceRequirementsoftheCommission's80M8'OutputLimitation,NYPSCCaseNo.96-E-102014.¹iagaraMohawkPowerCorp.-PetitionforanOrderRequiringFirmSecurityforCertainPowerSupplyContracts,or,Alternatively,CancelingSuchContracts,NYPSCCaseNo.95-E-116215.NiagaraMohawkPowerCorp.-PetitionforClarificationoftheConditionsSetForthintheCommission'sOrderdatedDecember9,1987ApprovingContractNo.514withLyonsdalePowerLimitedPartnership(20MWDocket),NYPSCCaseNo.95-E-1177beIIRedasoftheConsummationDateandthccasewillresume.lnthceventasettlementisreached,thcpartiestheretoshalldismissandwithdrawthiscaseasoftheConsummationDate.tel2104

SCHEDULE6.lOBCertainLitigationandRegulatoryProceedings(Involving6wentIssues)FederalCourtCases1.NiagaraMohawkPowerCorp.v.FERC,CaseNos.95-1222,etal.(D.C.Cir.)2.NiagaraMohawkPowerCorp.v.FERC,CivilActionNo.95-CV-634(N.D.N.Y.)012704

SCHEDULE6.11CERTAINPERMITTEDCONDUCITheCompanymaymergeorconsolidatewithanyofitsaffiliatesoranyotherentity.TheCompanymayamenditsCertificateofIncorporationtoauthorizeadditionalcommonstockandmakeanyamendmentsnecessarytorestructureoramendthetermsoftheCompany'spreferredstockTheCompanymayissue,sellorotherwisedistributeitscapitalstockpursuantto:theCompany'sDividendReinvestmentandStockPurchasePlan;theAmendedandRestatedMergerAgreementBetweenSyracuseSuburbanGasCompany,Inc.andtheCompanydatedMarch13,1992;theEmployeeSavingsFundPlanforRepresentedEmployeesofNiagaraMohawkPowerCorporation;theEmployeeSavingsFundPlanforNon-RepresentedEmployeesofNiagaraMohawkPowerCorporation;theCompany's1992StockOptionPlan;anytransactionsundertakenaspartofaplantorestructure,oramendthetermsof,theCompany'spreferredstock;andtheCompanyshallbepermittedtoissueuptoafurther1,000,000sharesofCommonStockintheordinarycourseofbusiness.TheCompanymaydeclare,setaside,payormakeanyotherdistributionincashorpropertyinrespectofanyoftheCompany'scapitalstock,oranydirectorindirectredemption,purchase,orotheracquisitionofanyofsuchstockpursuantto:theCompany'sDividendReinvestmentandStockPurchasePlan;theAmendedandRestatedMergerAgreementBetweenSyracuseSuburbanGasCompany,Inc.andtheCompanydatedMarch13,1992;theEmployeeSavingsFundPlanforRepresentedEmployeesofNiagaraMohawkPowerCorporation;theEmployeeSavingsFundPlanforNon-RepresentedEmployeesofNiagaraMohawkPowerCorporation;theCompany's1992StockOptionPlan;

thetermsoftheCompany'sPreferredStock;andanytransactionsundertakenaspartofap1antorestructure,oramendthetermsof,theCompany'spreferredstock.

SCHEDULE8.8LitigationandProceedingstobeWithdrawnbythePartiesFederalCourtCasesl.EncogenFourPartnersLP.v.NiagaraMohawkPowerCorp.(Encogen),DocketNo.96-9642(2dCir.)'.Indeck-IllionLP,&PowerCityPartnersv.NYPSC&NiagaraMohawkPowerCorp.,No.95-CV4143(N.D.N.Y.)3.NiagaraMohawkPowerCorp.v.UnitedStatesDep'tofEnergy,CaseNo.95-CV-952(D.D.C.;motionforsummaryjudgmentgrantedFeb.23,1996),appealdocketed,No.96-5246(D.C.Cir.Aug.6,1996)4.NiagaraMohawkPowerCorp.v.UnitedStatesDep'tofEnergyv.SterlingPowerPartners,etal.,CaseNo.96-5082(D.C.Cir.)-consolidatedwithcaseNo.96-5246(caseQlabove)intheD.C.Circuit.5.NorConPowerPartners,LP.v.NiagaraMohawkPowerCorp.,CaseNo.96Civ.2947(S.D.N.Y.)6.NorConPowerPartners,LP.v.¹iagaraMohawkPowerCorp.,DocketNo.96-7283(2dCir.)NewYorkStateCourtCases7.NiagaraMohawkPowerCorp.v.SterlingPower,Ltd.,IndexNo.95-29818.Ag-Energy,LP.,PowerCityPartners,L.P.,SenecaPowerPartners,LP.&SterlingPowerPartners,L.P.v.NiagaraMohawkPowerCorp.,IndexNo.111207/95"9.BlackRiverL.P.v.NiagaraMohawkPowerCorp.,DocketNos.CA97-0036&CA97-0087(4thDep't)10.SterlingPowerPartners,LP.v.NiagaraMohawkPowerCorp.,IndexNo.94-110354ThisproceedingwaswithdrawnonApril14,1997,butissubjecttoreinstatementafteradecisionintheNorConproceeding(caseQ3above).Thepartiestheretoagreethatthe&cogencasecanbereinstatedbyNMPCsolelyastoEncogenintheeventthatEncogenisnotaPartytotheAgreementontheConsummationDate.Astothiscase,thepartiestheretoagreetousetheirReasonableBestEffortstoamveataconsentedsettlementbeforetheConsummationDate.Inthceventasettlementisnotreached,thepartiestheretoagreethatthcstayistobeliRedasoftheConsummationDateandthecasewillresume.Intheeventasettlementisreached,thepartiestheretoshalldismissandwithdrawthiscaseasoftheConsummationDate.AstothLscase,thepartiestheretoagreetousetheirReasonableBestEffortstoarriveataconsentedsettlementbeforethcConsummationDate.Inthceventasettlementisnotreached,thepartiestheretoagreethatthestayistoN12704

11.SterlingPowerPartners,L.P.,SenecaPowerPartners,L.p.,powerCityPartners,L.P.dcAg-Energy,L.P.v.NiagaraMohawkPowerCorp.,[ndexNo.10689SI94(1stDep't)FERCProceedings12.¹ragaraMohawkPowerCorp.,FERCDocketNos.EL95-45-0000,QF90-154-005NYPSCProceedings13.NiagaraMohawkPowerCorp.-PetitionforApprovalofCurtailmentProcedures,NYPSCCaseNo.92-E-0814(combinedwithProceedingonMotionoftheCommissiontoEstablishConditionsGoverningCurtailmentClausesinContractsforOnCiteGeneration,NYPSCCaseNo.88-E-081)14.NiagaraMohawkPowerCorp.-PetitionforClarificationofCertainAspectsoftheMonitoringandComplianceRequirementsoftheCommission's80M8'OutputLimitation,NYPSCCaseNo.96-E-102015.NiagaraMohawkPowerCorp.-PetitionforanOrderRequiringFirmSecurityforCertainPowerSupplyContracts,or,Alternatively,CancelingSuchContracts,NYPSCCaseNo.95-E-116216.NiagaraMohawkPowerCorp.-PetitionforClarificationoftheConditionsSetForthintheCommission'sOrderdatedDecember9,1987ApprovingContractNo.514withLyonsdalePowerLimitedPartnership(20MWDocket),NYPSCCaseNo.95-E-1177Pleadings17.AllpleadingsfiledbyNMPCinIndeck-OleanLP.-OleanCogenerationFacility,FERCDocketNos.EL95-11-0000,QF90-[54-004beliAedasofthcConsummationDateandthccasewillresume.lntheeventasettlementisreached,thepartiestheretoshalldismissandwithdrawthiscaseasoftheConsummationDate.012704

SCHEDULE9.10NMPCFINANCINGFinancingtransactionsnecessarytotheCompany'sconsummationofthetransactionscontemplatedintheMasterRestructuringAgreement(the"Company'sConsummation")mayinclude:obtainingamendments,waiversorconsentswithrespectto,orthereplacementof:the$125,000,000RevolvingCreditAgreement,the$255,000,000TermLoanAgreement,theAmendedandRestatedLetterofCreditandReimbursementAgreementwithMorganGuaranteeTrustCompanyofNewYork,theAmendedandRestatedLetterofCreditandReimbursementAgreementwithToronto-DominionBank,theAmendedandRestatedLetterofCreditandReimbursementAgreementwithCanadianImperialBankofCommerce,theMasterCreditorAgreement;andtheFirstMortgageBondIndenture,eachdatedasofMarch20,1996,togetherwithallInterestRate.CapAgreements,LettersofCreditandotheragreementsofevendatetherewiththattogetherconstitutetheCompany'sseniorbankfinancing.theCompany's'tradereceivablesfinancingfacilitywithNMReceivablesCorp.,CorporateReceivablesCorporation,Citibank,NA.andCiticorpNorthAmerica,Inc.obtainingfinancingforalltransactioncostspayablebytheCompanyarising&omtheCompany'sConsurxunationoranyconditionsprecedentthereto,including,butnotlimitedto,feesandexpensesarisinginconnectionwiththePublicOfferingoftheDebtSecurities,theissuanceoftheCommonStock,andtherestructuringoramendmentofthetermsofthepreferredstock.obtainingarestructuringof,oramendmentofthetermsof,theCompany'spreferredstock.obtainingallotherfinancing,includingbridgefinancing(includingbutnotlimitedtoborrowingtheamountofanytaxrefundsdueasaresultoftheCompany'sConsummation),necessary,intheCompany'sreasonablejudgment,toeffecttheCompany'sConsummationoranyconditionsprecedentthereto.

EXHIBITATERMSOFAMENDEDPOWERPURCHASEAGREEMENTS,RESTATEDCONTRACTSANDFIXEDPRICESWAPCONTRACTSNMPCandtheIPPswhicharepartiestotheExistingPPAslistedonSchedule2,2totheMasteringRestructuringAgreementhaveagreedtoamendtheirExistingPPAsandNMPCandtheIPPswhicharepartiestotheExistingPPAslistedonSchedule2.3totheMasterRestructuringAgreementhaveagreedtoconductgoodfaithnegotiationsandusetheirReasonableBestEffortstoenterintoRestatedContracts(assuchtermisdefinedbelow),allinaccordancewiththematerialtermsandconditionssetforthbelow.NMPChasalsoagreedtoenterintocertainfixedpriceswapcontracts(the"FixedPriceSwapContracts"),whicharedescribedbelow.Capitalizedtermsusedherein,includingtheAttachmentshereto,whicharenototherwisedefinedhereinshallhavethemeaningsgiventosuchtermsintheMasterRestructuringAgreement.GeneralThisExhibitAincludesthefollowingAttachmentsheretowhichsetforthspecificmattersrelatingtothegeneraldescriptioncontainedherein:Att'achmentA-IAttachmentA-2AttachmentA-3AttachmentA-4AttachmentA-5AttachmentAWAuachmentA-7AttachmentA-8AuachmentA-9AttachmentA-10AttachmentA-11AttachmentA-12-PntcntionallyOmitted]AmcndcdPPAwiththeSolidFuelIPP(quantitiesandprices)IndexedSwapContractswithGasIPPs(quantitiesandprices)CalculationofPaymentsunderIndexedSwapContractsNnthGasIPPsPricingAssumptionsforIndexedSwapContmctswithGasIPPsTermshectforIndexedSwapContractswithGasIPPsPowerPutContractswithGasIPPs(quantitiesandprices)TermsheetforPowerPutContractswithGasIPPsOptionProvisionsforRestatedContractswithGasIPPsFixedPriceSwapContracts(quantitiesandprices)TermsheetforFixedPriceSwapContractsAdditionalTerms,ConditionsandProvisionsforAmendedPPAandRestatedContractsSolidFuelIPPNMPCandtheSolidFuelIPPpartytotheExistingPPAlistedonSchedule2.2totheMasterRestructuringAgreementshall'amendsuchExistingPPAeffectiveasoftheEffectiveTimetoreflectthequantityofelectricityingigawatthours("GWh")whichNMPCshallpurchaseundersuchAmendedPPAandthepricewhichNMPCshallpaythereforindollarspermegawatthour("$/MWh")foreachContractYear(assuchtermisdefinedbelow)oftheAmendedPPAasissetforthinAttachmentA-2hereto.The'.~'.",ti'-."PVA:-hÃ-L:!;"~.i~<<""i>"."i:"'".'.oftheadditionalterms',editionsandsl90!4 provisionssetforthinAttachmentA-12hereto,unlesstheSolidFuel[ppandNMpC.otherwisemutuallyagree.ForpurposesofthisExhibitA,"ContractYear"shallmeantheperiodcommencingat11:59:59p.m.ontheConsummationDate(the"EffectiveTime"),andendingat11:59:59p.m.onthefirstanniversaryofthelastdayofthemonthinwhichtheConsummationDateoccursandeachsuccessive12-monthperiodthereaftertotheextentapplicable.GasIPPsNMPCandeachGasIPPwhichisapartytoanExistingPPAlistedonSchedule2.3totheMasterRestructuringAgreementshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstoenterintoaRestatedContract(s)whichamendsand/orrestateseachsuchGasIPP'sExistingPPA.SuchRestatedContractsshallbedatedasofthedateofeachsuchGasIPP'sExistingPPAandthetermsofsuchamendmentand/orrestatementshallbeeffectiveasoftheEffectiveTimeandshallbeintheformofanindexedswapcontract(the"IndexedSwapContract")andapowerputcontract(the"PowerPutContract"),oracash-settledforwardorswapcontract,anoptioncash-settledforwardorswapcontract,apowersupplyagreement,anenergycontractoratollingcontract,orothercontractoranycombinationthereof,whichmaybesimultaneousorsequentialandshallcontainsuchtermsandconditionsasaremutuallyagreed(collectively,the"RestatedContracts").AnysuchRestatedContract(otherthantheIndexedSwapContracts(whichshallbeforatermoftenContractYears)andthePowerPutContracts(whichshallbeforthetermspecifiedinAttachmentA-8))maybeforaternofuptotenContractYears.EachRestatedContract,.regardlessoftheformofsuchRestatedContract(otherthantheIndexedSwapContractsorthePowerPutContracts)shallincludealloftheadditionalterms,conditionsandprovisionssetforthinAttachmentA-12hereto,unlesstheapplicableGasIPPandNMPCotherwisemutuallyagree.SetforthbelowisageneraldescriptionofthetermsandconditionsoftheIndexedSwapContractandthePowerPutContract.ThefollowingAttachmentsarerelevanttotheseagreements:AttachmentA-3(quantitiesandpricesforIndexedSwapContracts);AttachmentA-4(formulaforpaymentsunderIndexedSwapContracts);AttachmentA-5(pricingassumptionsforIndexedSwapContracts);AttachmentA-6(termsheetforIndexedSwapContracts);AttachmentA-7(quantitiesandpricesforPowerPutContracts);AttachmentA-8(termsheetforPowerPutContracts);AttachmentA-9(optionprovisionsforRestatedContracts);andAttachmentA-12(additionaltermsforRestatedContracts).

IndexedSwaContract.ThisformofRestatedContractwillgenerallybebasedonthetermsandconditionssetforthinAttachmentA-6hereto.EachIndexedSwapContractshallbecomeeffectiveasoftheEffectiveTimeandmatureperiodically(each,a"SettlementDate")eachcalendarmonth(each,a"SettlementPeriod")throughoutatermoftenContractYears.TheIndexedSwapContractwillprovideforaseriesofmonthlypayments(i.e.actualphysicalsalesorpurchasesofelectricityshallnotberequired)whichshallbecalculatedbyreferenceto(i)aproxymarketprice(the"Proxy-MarketPrice",assuchtermisdefinedinAttachmentA-6,andwhichpriceshallbeidenticalforallIndexedSwapContractsandPowerPutContracts)duringtheperiod(the"Proxy-MarketPricePeriod",assuchtermisdefinedinAttachmentA4)priortotheestablishmentofacompetitivemarketpricethroughtheimplementationofaNewYorkIndependentSystemOperatorandPowerExchange(the"ISO/PE"),and(ii)amarketprice(the"MarketPrice",assuchtermisdefinedinAttachmentAupontheestablishmentoftheISO/PE.Accordingly,oneachSettlementDate(x)ifandtotheextentthecontractpriceexceededtheProxy-MarketPriceortheMarketPriceplus,ifapplicabletheMarketCapacityPrice(assuchtermisdefinedinAttachmentA+,asthecasemaybe,duringanyapplicabletimeintervalforwhichtheGasIPPandNMPCwerecontractuallycommitted(an"Interval",assuchtermisdefinedinAttachmentA-6),NMPCshallowetheGasIPPthedifferencebetween(A)thecontractpricemultipliedbythecontractquantityofelectricityinmegawatthours("MWh")foreachIntervaloccurringduringtheSettlementPeriod,and(B)suchProxy-MarketPriceorMarketPrice,.'sthecasemaybe,multipliedbythecontractquantityofelectricityinMWhforeachIntervaloccumngduringtheSettlementPeriodpluscommencingupontheestablishmentoftheISO/PEandonlyiftherethenexistsaseparatemarketforcapacity,theMarketCapacityPricein$/MWfortheSettlementPeriodmultipliedbytheweightaveragedcapacityassociatedwiththecontractquantityofelectricityforeachIntervaloccumngduringsuchSettlementPeiiod,and(y)ifandtotheextenttheProxy-MarketPriceortheMarketPrice,asthecasemaybe,exceededthecontractpriceduringanyapplicableInterval,theGasIPPshalloweNMPCthedifferencebetween(A)suchProxy-MarketPriceorMarketPrice,asthecasemaybe,multipliedbythecontractquantityofelectricityinMWhforeachIntervaloccurringduringtheSettlementPeriodpluscommencingupontheestablishmentoftheISO/PEandonlyiftherethenexistsaseparatemarketforcapacity,theMarketCapacityPricein$/MWfortheSettlementPeriodmultipliedbytheweightaveragedcapacityassociatedwiththecontractquantityofelectricityforeachIntervaloccumngduringsuchSettlementPeriod,and(B)thecontractpricemultipliedbythecontractquantityofelectricityinMWhforeachIntervaloccumngduringtheSettlementPeriod.OneachSettlementDate,thepaymentobligationsdueundertheIndexedSwapContractforeachIntervaloccurringduringtheSetter.m~".<Period.:sha!l.h.,~en~Wa~~i"it"-<l90I4 eachother,andthepartyowingthegreateramountshallmakeanetpaymenttotheotherparty.~TheformulaforcalculatingtheamountofpaymentstobemadeundertheIndexedSwapContractissetforthonAttachmentA4hereto.~ThecontractpricesundertheIndexedSmpContractsshallbefixedduringthefirsttwoContractYearsofthetennoftheIndexedSwapContracts.Thereafter,thecontractpricesshallbe.indexedandcalculatedinaccordancewithanindexingformulasimilartoeitherofthosesetforthinAppendix6-3toAttachmentA-6hereto.DuringthenegotiationofeachIndexedSwapContract,eachGasIPPshallproposeacontractpriceindexingformula.IftheGasIPPdemonstratesto%P8cCo.andDLJthatsuchpricingformula,whencalculatedusingtheassumptionssetforthinAttachmentA-5hereto,resultsinacontractpriceforeachofthethirdthroughthetenthContractYearswhichisequaltotheannualcontractpricessetforthintheallocationforsuchGasIPPintheContractAllocation,suchpricingformulashallbedeemedacceptabletoNMPC.~SubjecttoadjustmentinaccordancewithSections12.4(b),2.5and2.6,asapplicable,oftheMasterRestructuringAgreement,theaggregatequantityofelectricity.inGWh,the.aggregateinstalledcapacityinmegawatts("MW")andtheweightedaveragecontractpricein$/MVhforthefirsttwoContractYearsoftheIndexedSwapContractsaresetforthinAttachmentA-3hereto.SubjecttoadjustmentinaccordancewithSections12.4(b),2.5and2.6,asapplicable,oftheMasterRestructuringAgreement,AttachmentA-3alsosetsforththeaggregatequantityofelectricity,theaggregateinstalledcapacityandanexample,basedontheassumptionssetforthinAttachmentA-5hereto,oftheweightedaverageindexedcontractpricesforContractYearstheethroughtenoftheIndexedSwapContracts.~ForpurposesoftheIndexedSwapContracts(i)priortotheestablishmentoftheISO/PEandthereafteratanytimewhennoseparatemarketforcapacityexists,thepricefortheapplicablecapacityshallequalzero,and(ii)followingtheProxy-MarketPricePeriodandonlyiftherethenexistsaseparatemarketforcapacity,theapplicablecapacitywillbeadjustedonabasisconsistentwiththestructureofsuchseparatemarket.Nl90l4 partiestoAgreementwiii'nciudNI90I4PowerPutContract.ThisformofRestatedContractwillgenerallybebasedonthetermsandconditionssetforthinAttachmentA-8.EachPowerPutContractshallbecomeeffectiveasoftheEffectiveTimeandshallprovideforaseriesofputoptionswhichshallexpireperiodicallyonamonthlybasis(each,a"SettlementPeriod")throughoutatermequaltotheProxy-MarketPricePeriod(assuchtermisdefinedinAttachmentA-8).AttheoptionoftheGasIPP,theGasIFPshallhavetherighttoput(i)energytoNMPCuptothecontractquantityofelectricity(includingenergysubjecttoovergenerationprovisions),and(ii)capacityassociatedwiththecontractquantityofelectricity,ineachcase,foreachapplicabletimeintervalforwhichtheGasIPPandNMPCwerecontractuallycommitted(an"Interval",assuchtermisdefinedinAttachmentA-8)duringtheSettlementPeriod,andNMPCshallbeobligatedtotakeandpayforsuchenergyandcapacityfromtheGasIPP,attheProxy-MarketPrice(assuchtermisdefinedinAttachmentA-8,andwhichshallbeidenticalforallPowerPutContractsandIndexedSwapContracts)priortotheestablishmentoftheISO/PEandattheMarketPriceand,ifapplicable,theMarketCapacityPrice,upontheestablishmentoftheISO/PE.IftheGasIPPdeterminesnottoexerciseitsrightstoputenergyandcapacitytoNMPC,suchGasIPPmaysellitsenergyorcapacitytothirdparties,providedsuchGasIPPhasfirstofferedtosellenergyandassociatedcapacityuptothecontmctquantityofelectricitytoNMPCatthePioxy-MarketPriceortheMarketPrice(assuchtermisdefinedinAttachmentA-8),and,ifapplicable,theMarketCapacityPrice(assuchtermisdefinedinAttachmentA-8),asthecasemaybe,andNMPChasdeclinedtheopportunitytopurchasesuchenergyandcapacity.Energyand.associatedcapacityinexcessofthecontractquantityofelectricityforanyIntervalshallnotbesubjecttothePowerPutContractand,attheoptionoftheGasIPP,maybesoldtothirdparties.SubjecttoadjustmentinaccordancewithSections12.4(b),2.5and2.6,asapplicable,oftheMasterRestructuringAgreement,themaximumaggregatequantity(subjecttooveigenerationprovisionsandoptionprovisions(asdescribedbelow),ifany)ofelectricityinGWhandthemaximumaggregateinstalledcapacity,inMWunderthePowerPutContractsduringtheProxy-MarketPricePeriodforeachoftenContractYears(orsuchlesserperiodoftimeiftheProxy-MarketPricePeriodendspriorthereto)aresetforthinAttachmentA-7hereto.PriortotheestablishmentoftheISO/PEandthereafteratanytimewhennoseparatemarketforcapacityexists,thepricefortheapplicablecapacityunderthePowerPutContractsshallequalzero,excepttotheextentincludedintheProxy-MarketPrice.DuringthenegotiationoftheRestatedContracts,theGasIPPswhicharetheExistingPPAslistedonSchedule2.3totheMasterRestructuringshallusetheirReasonableBestEffortstoenterintoRestatedContractswhiche'optioiip'rvv'isionswith'i'expectioana'ggregateof500GWhofelectricityper5 annumoveratermofuptosixContractYearsforperiodswithineachyearthataremutuallyagreedupon;providedsuchoptionprovisionsincludeaterm,periods,contractquantities,contractpricesandsuchothertermsandconditionswhichareacceptabletotheapplicableGasIPPandprovided,further,thatnoGasIPPwillbeobligatedtoincludesuchoptionprovisionsinitsRestatedContract(s)ifsuchprovisions,insuchGasIPP'sjudgment,arenoteconomicallyneutralincomparisontotheContractAllocationofsuchapplicableGasIPPbeforegivingeffecttosuchoptionprovisions.AttachmentA-9heretosetsforthcertaininformationrelatingtotheseoptionprovisions.FixedPriceSwaContractsNMPCshallalsonegotiate,executeanddelivertotheDepositaryanumberofFixedPriceSwapContracts,whichshallbesubstantiallysimilartotheIndexedSwapContracts,exceptthattheFixedPriceSwapContractswillbebasedonfixedpricesforelectricityandfixedquantitiesofelectricity.TheFixedPriceSwapContractsshallbecomeeffectiveasoftheEffectiveTime,withpaymentstooccurthereunderduringtheperiodcommencingJanuary1,2003andendingDecember31,2009.PaymentsundertheFixedPriceSwapContractsshallbecalculatedbasedonthedifferencebetweenthecontractpriceandtheProxy-MarketPrice(assuchtermisdefinedinAttachmentA-11)ortheMarketPriceand,ifapplicable,theMarketCapacityPrice(assuchtermsaredefinedinAttachmentA-ll),asthecasemaybe,multipliedbythecontractquantityofelectricityforeachInterval.TheFixedPriceSwapContractswillbebasedonthetermsandconditionssetforthinAttachmentA-11hereto.TheaggregatequantityofelectricityinGWh,theaggregatecapacityinMWandthecontractpricein$/MWhapplicabletheretoforeachapplicableyearoftheFixedPriceSwapContractsaresetforthinAttachmentA-'10heieto.ForpurposesoftheFixedPriceSwapContracts(i)priortotheestablishmentoftheISO/PEandthereafteratanytimewhennoseparatemarketforcapacityexists,thepricefortheapplicablecapacityshallequalzero,and(ii)followingtheProxy-MarketPricePeriodandonlyiftherethenexistsaseparatemarketforcapacity,theapplicablecapacitywillbeadjustedonabasisconsistentwiththestructureofsuchseparatemarket.AttherequestoftheIPPs,NMPCandtheIPPsshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstoenterintophysicaldelivery.contractsbasedontheannualquantitiesofelectricityinGWh,theaggregatecapacityinMWandtheannualcontractpricesin$MWhsetforthinAttachmentA-10hereto,inlieuofalloraportionoftheFixedPriceSwapContracts,providedthatinnoeventshallanIPPpartytoanExistingPPAlistedonSchedule2.1totheMasterRestructuringAgreement(a"TerminatingPPA"),beacounterpartytoanysuchphysicaldeliverycontract.lI90l4 ATTACHMENTA-1)IntentionallyOmitted]0l90l4 ATTACHMENTA-2AMENDEDPPAWITHSOLIDFUELIPP'ONTRACTYEAR210121314151617QUANTITY(GWh)353353'53353353353353353353353353353353353353353176PRICE'$/MWh)28.5029.4030.3031.2032.1033.1034.1035.1036.1037.2038.3039.5040.7041.9043.2044.5045.84ITheAmendedPPAwillcontainprovisionswithrespecttocapacitythatareconsistentwiththecapacityprovisionscontainedintheExistingPPAbetweenNMPCandthcSolidFuelIPP.2SuchpricesshallreplaceandbesubstitutedforthepricesreflectedinAttachment1tothcExistingPPA.,betweenNMPCandtheSolidFuelIPP.sl90I4s ATTACHMENTA-3SWAPCONTRACTSWITHGASIPPSDUEUNGCONTRACTYEARS1AND2CONTRACTYEARAGGREGATEINSTALLEDCAPACITY(MW)i606.15606.85AGGREGATEQUANTITY(GWh)4,640WEIGHTEDAVERAGEPRICE($/MWh)'8.554&,83AGGREGATECONTRACTADJUSTMENT($000s)'9,981)(9,448)WEIGHTEDAVERAGEPRICEAFTERADJUSTMENT(S/MWh)'6.4046.79SWAPCON'I%ACTSWITHGASIPPSUIUNGCONTRACTYEARS3THROUGH10AGGREGATEINSTALLEDAGGREGATECONTRACTCAPACITYQUANTITYEXAMPLEOFWEIGHTEDAVERAGEPRICE($/MWh)'GGREGATECONTACTADJUSTMENT($000s)'XAMPLEOFWEIGHTEDAVERAGEPRICEAFARADJUSTMENT($/MWh)'0611.85616.75'16.95619.55620.45621.75623.05624.454,6904,7304,7364,7554,7654,7784,7864,798.45.8247.4050.5352.7254.5555.955&.3362.93(9,199)(6,975)(15,665)(14,903)(14,474)(13,992)(13,574)(13,050)43.8645.9247.2249.5951.5153.0255.4960.21ISuchiastalledcapacityissubjecttobothseasonalvariationsaaddegradationandrepresentstheaggregateinstalledcapacitywhichNMPCisentitledtoclaimfromtheGasIPPsthatarepartiestoRestatedContractsduringtheProxy-MarketPricePeriodforpurposesofreportingtotheNearYorkPowerPool.PriortothcestablishmeatofthcISO/PEandthereafteratanytimewhennoseparatemarketforcapacityexists,thepricefortheapplicablecapacityshallequalzero.FollowingtheProxy-MarketPricePeriodandonlyiftherethenexistsaseparatemarketforcapacity,thcapplicablecapacitywillbeadjustedonabasisconsistentwiththcstructureofsuchscparatcmarket.2Rcprcsentsafixedpricebcforcgivingeffecttotheaggregatecontractadjustment.3Rcflcctstheaggregatecontractadjustmentagreedto.4Rcprescntsthecontractpriceafterapplyinganindexingformulaandbeforegivingeffecttotheaggregatecontractadjustment.SReflectstheeconomicimpactoftheaggrcgatccontractadjustmcntonthcweightedaverageprice(itbeingunderstoodthattheaggregatecontractadjustmentmaybeprovidedtoNMPCasanannualadju.mc"<as.sn.~4jpsltn:attr;itr,.reatracr..p~c~i"rvPA1ualGasIPPRestatedContractsoras."-"-'thctwiscmutuallyagreed).ai9oi49 ATTACHMENTA4CALCULATIONOFPAYMENTSUNDERINDEXEDSWAPCONTRACTSWITHGASIPPSOneachSettlementDate,thepaymentsowingwithrespecttotheprecedingcalendarmonthshallbebasedonthedifferencebetween(a)thecontractpriceduringeachIntervalmultipliedbythecontractquantityofelectricityforsuchInterval,and(b)(i)theProxy-MarketPriceorMarketPrice,asapplicable,duringeachIntervalmultipliedbythecontractquantityofelectricityforsuchInterval,plus(ii)upontheestablishmentoftheISO/PEandonlyiftherethenexistsaseparatemarketforcapacity,theMarketCapacityPricein$/MWfortheapplicableSettlementPeriodmultipliedbytheweightaveragedcapacityassociatedwiththecontractquantityofelectricityforeachIntervaloccurringduringsuchSettlementPeriod.OntheSettlementDate,NMPCshallbeobligatedtopaysuchdifferencetotheGasIPPiftheamountdescribedinclause(a)aboveisgreaterthantheamountdescribedinclause(b)above,andtheGasIPPshallbeobligatedtopaytheabsolutevalueofsuchdifferencetoNMPCiftheamountdescribedinclause(b)aboveisgreaterthantheamountdescribedinclause(a)above.Suchpaymentsshallbecalculatedinaccordancewiththefollowingformula:Payment=Z(Pc'Qi)-(Z(Psi~Qi)+Ci~Zihi%here:Pc-contractpriceQi-contractquantityofelectricityperIntervalfortheSettlementPeriodPsttheProxy-MarketPriceorMarketPrice,asapplicable,perIntervalC-MarketCapacityPricein8/MWfortheSettlementPeriod'inumberofhoursperIntervalmultipliedbythenumberofIntervalsintheSettlementPeriodICshallbczeropriortotheestablishmentofthcISO/PEandthercaf'teratanytimewhennoscparatcmarketforcapacityexists.FollowingthcProxy-MarketPricePeriodandonlyiftherethenexistsa~s"~uRe'.ot".<~t:i;2e'::..yp44e"ofthis.formula:willbeadjusted-ona'basisconsistentwiththesuueturcofsuchseparatemarket.0t90I4IO

~~iI~~~II'~~~~~~I~~I~~'I~~~'~~I~'~~~~~II'~II~':I~I~~I~~~I'~~~r~~~~~~II~~~~~~~~~~~~I~II~~~~~~~~~I~I~I ATTACHMENTA4TERMSHEETFORINDEXEDSWAPCONTRACTSWITHGASIPPSSetforthbelowisatermsheetforaSchedulewhichwillbeattachedtoandbemadeapartofaMasterAgreementforIndexedSwapContracts.TheMasterAgreementfortheIndexedSwapContractswillbebasedonanISDAstandardformofMasterAgreement,whichisaformthatisfrequentlyusedforswapcontracts.InthecaseofRestatedContractsthatareforwardcontractscontemphtingbothphysicaldeliveriesandfinancialcash-settlementpayments,theMasterAgreementtobeusedwillbebasedonastandardformwhichisfrequentlyusedforforwardcontractsintheelectricindustryorsuchotherfoanofagreementthatismutuallyacceptabletotheparties.AllMasterAgreementswillsetforthgeneraltermsandconditions,includingrepresentationsandwarrantiesaudeventsofdefault.TERMSHEETFORSCHEDULEtotheMasterAgreementforIndexedSwapContractsbetweenNiagaraMohawkPowerCorporation("NMPC").and(uIPPn)1.(a)PaymentonSettlementDate.ITHEOBLIGATIONSINCUIGtEDPURSUANTTOTHISSCHEDULESHALLREQUIRECASHPAYMENTSANDSHALLINNOEVENTBEINTERPRETEDTOREQUIRETHEPURCHASEORSAKE.OFELECTRICITY.(i)SubjecttoSection1(a)(ii)ofthisSchedule,ontheSettlementDate,NMPCshallbeobligatedtopaytoIPPtheFixedPaymentandIPPshallbeobligatedtopaytoNMPCtheFloatingPayment.SuchpaymentobligationsshallbepaidonanetbasispursuanttoSectionofthisAgreementonthePaymentDate.Hl90l4(ii)PaentDiuteMechanism:IfIPP,ingoodfaith,disputesanypartofanyNoticeofanetpayinentobligation,IPPshallprovideawrittenexplanationofthebasisforsuchdisputeandtheundisputedportionofthenetpaymentobligationssetforthinsuchNoticeshallbepaidbythepartyobligatedtopaysuchamountsnolaterthantheapplicablePaymentDate.AnyadjustmentunderthisSection1(a)(ii)shallbearinterestattheprimerateforU.S.currencyaspublished&omtimetotimeunder"MoneyRates"in77re8'allStreetJournal,fromandincludingthePaymentDateanysuchunderpaymentoroverpaymentwasoriginallyduetobutexcludingthedateonwhichsuchunderpaymentoroverpaymentisfinallysettledbythepartieshereto,orintheeventthepartiesheretoareunabletosettlesuchmatter,suchmattershallbes."tl>el..~vCPi.49~ep"..".4",g'~tieaallv~~n:..~-.-..~.;

publicaccountingfirmmutuallyselectedbytheparties,whosedeterminationshallbefinalandbindingonthepartiesheretoandwhosefeesandexpensesshallbebornebythepartyfoundtobeatsubstantialfaultbysuchindependentpublicaccountingfirm.NoNotice(orpaymentobligationthereunder)shallbesubjecttothisSection1(alii)unlessanoticeofdisputeisgivenwithrespecttheretowithintwoyearsofthePaymentDateapplicabletosuchNotice.(b)RelatedDefinitionsandProvisions.P~D*:yhPy*D*hdlt2IItltth*yldyIdcalendarmonth,providedsuchdayisaBusinessDay,andifsuchdayisnotaBusinessDayonthefirstBusinessDayfollowingsuch25day,or(ii)the15~dayafterthereceiptbyIPPofNotice&omNMPC,providedsuchdayisaBusinessDay,andifsuchisnotaBusinessDay,ontheGistBusinessDayfollowingsuch15~day.Notwithstandingtheforegoing,intheeventthatfollowingtheProxy-MarketPricePeriodISO/PEproceduresrequirealternatedatesforpayments,suchalternatepaymentdatesshallautomaticallybedeemedtobeincorporatedin,andshallsupersede,thepaymentdatessetforthherein..ISO/PE:ShallmeanaNewYorkIndependentSystemOperatorandPowerExchange.NMPCPaentObliation:NMPCshallbeobligatedtopaytoIPPanamountequaltotheproductoftheNotionalQ'uantityofelectricityduringtheapplicableIntervalmultipliedbytheContractPriceortheIndexedContractPrice,asthecase.maybe,applicabletosuchInterval(the"NMPCPaymentObligation").D~dy*yh*y'Dyy*ID**I*dhdltequaltothesumof(i)theFixedPaymentforthepriorInterval(whichshallbezerofortheInitialInterval),and(ii)theNMPCPaymentObligationforthecurrentInterval.IPPPaentObliation:IPPshallbeobligatedtopaytoNMPCanamountequaltotheproductoftheNotionalQuantityofelectricity.duringtheapplicableIntervalmultipliedbytheProxy-MarketPriceortheMaiketPrice,asthecasemaybe,applicabletosuchInterval(the"IPPPaymentObligation").FloatinPat:TheFloatingPaymentforthecurrentIntervalshallbeanamountequaltothesumof(i)theFloatingPaymentforthepriorInterval(whichshallbezerofortheInitialInterval),(ii)theIPPPaymentObligationforthecurrentInterval,and(iii)ifapplicable,theMarketCapacityPricein$/MWfortheperiod&omtheInitialIntervaltotheSettlementDatemultipliedbytheweightaveragedcapacityassociatedwiththeNotionalQuantityofelectricityforeachIntervalRomtheInitialIntervaltotheSettlementDate.ContractPrice:ShallmeanforthefirsttwoContractYearsoftheTermofthisAgreement$/MWhand$/MWh,respectively.<l90l4 IndexedContractPrice.ShallmeanbeginningonthefirstdayofthethirdContractYearoftheTermofthisAgreementandcontinuingthereafter,thepricecalculatedinaccordancewithanindexingformulasimilartothosesctforthin~AL)cndix6-3tothisSchedule(thc"IndexedContractPrice").ContractYear:ShallmeantheperiodcommencingatI1:59:59p.m.ontheConsummationDateandendingat11:59:59p.m.onthefirstanniversaryofthelastdayofthemonthinwhichtheConsummationDateoccursandeachsuccessive12-monthperiodthereaftertotheextentapplicable.SettlementDate:ShallbethelastdayofthecalendarmonthspecifiedintheConfirmationdeliveredinaccordancewiththetermsoftheMasterAgreement.interval:Shallbe(i)Ihour,pmvidedthatintheeventthatfollowingthePmxy-MarketPricePeriodiSO/PEpmceduresrequiretheuseofanalternatetimeperiod,suchalternatetimeperiodshaQautomaticaHybedeemedtobeincorporatedin,andshallsupersede,the1hourperiodsetforthherein,or(ii)suchtimeperi(4asNMPCandIPPshallmutuallyagreeupon;providedthatsuchmutuallyagreedupontimeperiodmayonlybemodifieduponthepriorwrittenconsentofNMPCandIPP.InitialInterval:ShallbetheIntervalspecificdintheConfirmationdeliveredinaccordancewiththetermsoftheMasterAgreement.Notice:AfternettingtheFixedPaymentandtheFloatingPayment,NMPCshallpmvide)PPwithnotice(each,a"Notice")ofsnynetpaymentobligationresultingtherefromonorbeforethe10dayofthefirstcalendarmonthfollowingtheSettlementDate;providedthatintheeventthatfollowingthcProxy-MaiketPricePeriodISO/PEproceduresrequireanalternatedateforpaymentnotices,suchalternatenoticedateshallautomaticallybedeemedtobeincorporatedin,andshallsupersede,thenoticedatesetf6I*'.6AN'UII6'Uly'*ffaUUU'.16'greement.N~Wi:UANII6*2'yf*l'ly2'qqt6whichIPPandNMPCarecontractuallycommitted,assetforthonthetablecontainedin~A'2UAUPro-MarketPrice:Shallmean(i)priortotheestablishmentoftheISO/PE,NMPC'sshort-tennavoidedenergyandcapacitycostsatthevoltageleveloftheIPP'sProject'sbusbar,asstatedinitstariffapprovedbythePSCprovidingforthepurchaseofpowerfromPURPAqualifyingfacilities,whichtariffiscurrentlydesignatedasS.C.-6,asthesamemaybeineffectfromtimetotime,oranysuccessortarifftheretoorsuchotherpriceasmaybeagreeduponbyNMPCandIPPduringtheindividualnegotiations,and(ii)onthefirstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEisestablished,theMarketPriceand,ifapplicable,theMarketCapacityPrice;provided,however,thatatsuchtimethepartiesshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstomutuallydeterminewhethertocontinuethepricingreferencedinclatisc.ci)aW+c,ft,awsitiinilvp~up.e~~!tionalperiodof.time.~The.Proxy---*MarketPriceshallnotbereducedoroffsetbyanycoststhatNMPCmayincur,including,gl90I4l4 witIioutlimitation,costsforancillaiyservices,transmissionservicesortransitioii(orstranded)costs.Prox-MarketPricePeriod:ShallmeantheperiodcommencingonthedateofthisAgreementandendingonthefirstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEhasbeenfullyestablishedandsuccessfullyfunctioning,providedthefollowingconditionshavebeensatisfiedforeachoftheprevioussixmonths:(i)aminimumof65%(whichpercentageshallincludetheaggregatecontractquantitiesofenergyduringsuchperiodunderallphysicaldeliveryRestatedContractswithGasIPPsandallphysicaldeliveryContractsbetweenNMPCandanyIPPpartytotheMasterRestructuringAgreemententeredintoinlieuofFixedPriceSwapContracts,regardlessofwhethertheIPPspartiestheretoactuallyeffectedsuchsalesandallsalesonuptoamonthlybasisofenergy(otherthansalesthroughtheISO/PE)bytheIPPspartiestotheMasterRestructuringAgreementwhichareeffectuatedbyNMPCactingasagentforanysuchIPP)oftheenergysalesandpurchaseswithintheUpstateMarkethavebeentransactedthroughtheISO/PEinthedayaheadmarketbaseduponthedayaheadpricingmechanismadoptedbytheFERCfortheISO/PEintheUpstateMarket;and(ii)onlyifaseparatemarketforcapacitythenexists,amitiimumofSO'/o(whichpercentageshallincludetheaggregatecapacityassociatedwiththeaggregatecontractquantitiesofenergyduringsuchperiodunderallphysicaldeliveiyRestatedContractswithGasIPPsandallphysicaldelivnyContractsbetweenNMPCandanyIPPpartytotheMasterRestructuringAgreemententeredintoinlieuofFixedPriceSwapContracts,tegardlessofwhethertheIPPspartiestheretoactuallyeffectedsuchsalesandallsalesonuptoamonthlybasisofcapacity(otherthansalesthroughtheISO/PE)bytheIPPspartiestotheMasterRestructuringAgreementwhichareeffectuatedbyNMPCactingasagentforanysuchIPP)ofthecapacitysalesandpurchaseswithin"theUpstateMarkethavebeentransactedthroughtheISO/PEcapacityauction.Notwithstandingtheforegoing,ifNMPCandIPPmutuallyagree,theProxy-MarketPricePeriodmaybeextendedorterminatedeveniftheconditionssetforthintheimmediatelyprecedingsentencehavenotbeensatis6ed.tl*Mk:ShdlIt'y(AH*Ibdih*regionscurrentlyservedbyNMPC,NewYorkStateElectric&GasCorporation,RochesterGas&ElectricCorporationandCentralHudsonGas&ElectricCorporation(collectively,the"Utilities"),and(ii)wholesalesalestransactionsbyanyoftheUtilitiestothirdpartiesoutsidetheregionscunentlyservedbysuchUtility,excludinganysuchsaleswhichareeffectuatedpursuanttocontractshavingatermofatleastoneyearexistingasofthedateoftheMasterRestructuringAgreementtotheextentsuchcontractsareineffectthereafter.MarketPrice:ShallmeancommencingonthefirstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEisestablished,thedayaheadlocationalbasedmarketprice("LBMP")paidtosellersforenergy,attheIPP'sProject'sbusbarortheregioninwhichtheIPP'sProject'sbusbarislocated,specifiedandpublishedbytheISO/PE;provided,however,thatatsuchtimethepartiesshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstomutuallydeterminewhetherto continuethepricingreferredtoinclause(i)ofthedefinitionofProxy-MarketPriceforamutuallyagreeduponadditionalperiodoftime.MarketCaaciPrice:ShallequalzeropriortotheestablishmentoftheISO/PEandthereafteratanytimewhennoseparatemarketforcapacityexits.CommencingonthefirstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEisestablishedandonlyiftherethenexistsaseparatemarketforcapacity,theMarketCapacityPriceshallmeanthemarketpricepaidtosellersforcapacity,attheregioninwhichtheIPP'sProject'sbusbarislocated,establishedbytheISO/PEcapacityauction;provided,however,thatatsuchtimethepartiesshallconductgoodfaithnegotiationsandusetheirReasonableBestEFortstomutuallydeterminewhethertocontinue'hepricingreferredtoinclause(i)ofthedefinitionofProxy-MarketPriceforamutuallyagreeduponadditionalperiodoftime.FollowingtheProxy-MarketPricePeriodandonlyiftherethenexistsaseparatemarketforcapacity,thepartiesshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstoadjusttheapplicablecapacityonabasisconsistentwiththestructureofsuchseparatemarket.Term:ThetermofthisAgreementshallcommenceat11;59:59p.m.ontheConsummationDateandendat11:59:59p.m.onthetenthanniversaryofthelastdayofthemonthinwhichtheConsununationDateoccurs.2.~i.UWNMPC.tPPyaf*thisAgreementinwholeorinpart,withouttheconsentofNMPC(a)ascollateralsecurityforpurposesofsecuringindebtedness,or(b)toanyapprovedassigneeortransferee(an"ApprovedAssignee").AnApprovedAssigneeshallbe(i)anypersonhavingalong-tennunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchrating&omanothernationallyrecognizedratingagency;(ii)anyAffiliateofIPP;provided(x)suchAf61iatehasalong-termunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchrating&omanothernationallyrecognizedratingagency,or(y)suchAf61iatehasanetworthcalculatedinaccordancewithgenerallyacceptedaccountingprinciples("NetWorth"),thatisequaltoorgreaterthantheNetWorthoftheentitymakingsuchassignmentortransferonthedateofsuchassignment,ortransfer,or(z)IPPunconditionallyguarantees,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytoNMPC,theobligationsofsuchAffiliateinconnectionwithsuchassignmentortransfer;(iii)anyoftheotherGasIPPspartytoaRestatedContractwithNMPCortheirrespectiveAffiliates;provided(x)suchotherGasIPPorsuchAffiliatehasalong-termunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchrating&omanothernationallyrecognizedratingagency,or(y)suchotherGasIPPorsuchAffiliatehasaNetWorththatisequaltoorgreaterthantheNetWorthoftheentitymakingsuchassignmentortransferonthedateofsuchassignmentortransfer,or(z)IPP(inthecaseofanassignmentortransfertoanother'GasIPP)orsuchotherGasIPP(inthecaseofanassignmentortransfertoanyofit~Affiliates)unconditionallyguarantees,pursuant'oapuaranteeinformandsubstancereasonablysatisfactorytoNMPC,theobligationsofsuchotherCiasIPPor'l90I4l6 suchAffiliate,asthecasemaybe,inconnectionwithsuchassignmentortransfer;or(iv)anyotherpersonwhohasaNetWorththatisequaltoorgreaterthantheNetWorthoftheentitymakingsuchassignmentortransferonthedateofsuchassignmentortransfer,providedthatevidenceofsuchqualifyingNetWorthisreasonablydemonstiatedtoNMPC.IPPmaysplitandassigntheNotionalQuantitiesofelectricityandIntervalstoApprovedAssignees,eachinrespectofalesserNotionalQuantityand/or!ntervalsthanthefullamountsthereofhereunder,providedthat(a)eachsuchassignmentisfor50,000MWhofelectricityperyearoranyintegralmultiplesthereofandtotheextentthattheremainingunassignedbalanceoftheNotionalQuantityofelectricityhereunderforanysuchyearislessthan50,000MWh,thenforsuchremainingbalance,(b)eachsuchassignmentisforaperiodofatleastoneyear,and(c)thesumofallassignedandretainedNotionalQuantitiesofelectricityandIntervalsdoesnotexceedthetotalNotionalQuantitiesofelectricityandIntervalshereunder.AttherequestoftheIPFduringtheindividualnegotiationsandduringthetermofthisAgreement,NMPCandtheIPPshallusetheirReasonableBestEffortstomutuallyagreeuponreasonablealternativestotheassignmentqualificationscontainedintheimmediatelyprecedingsentence.Excepttotheextentexpresslyprovidedinanyapplicableguarantee,uponanysuchassignmentortransfer,IPPshallbereleasedandhavenofurtherobligationstoNMPGhereunderwithrespecttotheassignedortransferredNotionalQuantitiesand/orIntervals.3.AssiamentbNMPC.NMPC.shallnotassignitsrightsandobligationshereunderexceptasexpresslyauthorizedunderthisSection3.I\(a)NMPCRestructurin.IntheeventthatNMPC.restructuresitscorporatestructureorassets,includingbycreatinganynewentitiesthatholdsigni6cantassets,whetherinconnectionwiththeNMPCRestructuringorotherwise,uponnoticetotheIPP(oritsassigneehereunder)thisAgreementwillbeassignedtoandassumedbytheentityorentitiesowningallorsubstantiallyallofNMPC'selectrictransmissionanddistributionassetsor,ifseparatedRomNMPC'selectrictransmissionassetspursuanttosucharestructuring,NMPC'selectricdistributionassets,providedthat,upontheeffectivedateoftherestructuring(i)suchassignee'sperformanceunderthisAgreementisunconditionallyguaranteed,pursuanttoaguaainteeinformandsubstancereasonablysatisfactorytoIPP(oritsassigneehereunder),byeachoftheotherentitiesarisingoutoftherestructuring,includinganyentityspunwfftoNMPC'sshareholdersoranyAf51iateofNMPCholdingsigniGcantassetsthatwereheldbyNMPC(oranysubsidiaryofNMPC)priortotherestxuctuxing,unlesssuchassigneehasalong-termunsecureddebt+editratingissuedbyMoody'sInvestorsService,Standard&Poor'sCorporationoranothernationallyrecoyuzedratingagencythatisatleastasfavorableasNMPC'slong-termunsecureddebtcreditratingimmediatelypriortotheeffectivedateoftherestructuring,and(ii)ifsuchassigneeisnottheentitywhichwillcollectBorncustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApproval,suchassignee'sperformanceunderthisAgreementisunconditionallyguaranteed,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytotheIPP(oritsll90l4 assigneehereunder),byeachoftheentitieswhichwillcollectfromcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApproval.(b)ThirdPAssiament.UponnoticetotheIPP(oritsassigneehereunder),NMPCmayassignitsrightsandobligationsunderthisAgreement.toanythirdparty("NMPCAssignee")(exceptthosepartiesreferencedinSection3(a)above)providedthattheNMPCAssigneehas(i)receivedalong-termunsecureddebtcreditratingbyMoodysInvestorsServiceorStandard8cPoor'sCorporationofatleastinvestmentgradeortheequivalentofsuchratingfromanotherpationallyrecognizedratingagency,asofthedateofconsummationoftheassignment;or(ii)furnishedIPPwithsuchcollateralsecurityasmaybereasonablyacceptabletotheIPPinordertolimittheIPP'screditriskinconnectionwithsuchassignment.4.FurtherAssurances.Subjecttothetermsandconditionscontainedherein,upontherequestfromtimetotimeofeitherpartyhereto,theotherpartyshallpromptlyexecuteanddeliveroruseitsReasonableBestEffortstocausetobeexecutedanddelivered,suchconsents,approvalsandotherinstruments,including,withoutlimitation,assignmentsofthisAgreementascollateral,estoppelcertificatesandutilitycertificates,informandsubstancereasonablysatisfactorytobothpartiesandtheirrespectivecounseltoimplementanyfinancingorothermaterialbusinesstransactionundertakenbytherequestingparty.5,ualiinFaciliMonitorinandStatus.(a)NMPCshallhavenocontractualrightandshallwaiveanyotherrightwhichitmighthaveunderstateorfederallawtodemandinformationfromtheIPP,oranyotherperson,includingbutnotlimitedtoanyGovernmentalAuthority,withrespecttosuchIPP'sstatus:asastateand/orfederalqualifyingfacility("QFStatus").(b)NMPCacknowledgesandagreesthattheIPPisnotrequiredtomaintainageneratingfacilitypursuanttothetermshereof.fortheperformanceofitsobligationshereunder.Notwithstandingtheforegoing,theIPPshallhavetheright,butnottheobligation,initssolediscretiontoobtainand/ormaintainitsQFStatusunderNewYorklaw(includingcompliancewithNYPSLg2(2-a))andlorPURPA,respectively.NMPC'srightsandobligationshereundershallcontinueasamatterofcontractualrightregardlessofwhethertheIPPmaintainsitsQFStatus.AnyfailurebytheIPPtocomplywiththerequirementsapplicabletoQFStatusunderNewYorklaw(includingcompliancewithNYPSLg2(2-a))shallhavenoadverseimpactontheIPPunderthisAgreement.IntheeventtheIPPwishestoqualifyorperformasanExemptWholesaleGeneratorunderSection32ofPUHCAandFERC'sregulationspromulgatedthereunder,asthesamemaybeamended,modifiedorrestated&omtimetotime,NMPCshallcooperatewith(including,withoutlimitation,byprovidingconsentsandaffidavits),andshallnottakeanyactiontooppose,impedeorsubvert,theIPP'seffortstoobtainappropriateregulatoryexemptionsandapprovals,includingmarket-basedrateapproval.ExcepttotheextentthatthecontractpricesunderthisAgreementareormaybebasedthereon,duringthetermofthisAgreementtheIPP(i)shallwaiveanystatutoryrightitmayhaveunderSection66-cofNYPSLpursuanttowhichtheIPPmavdemanda,6)perKWhminimumpowerpurchaserateRomHlvo.'t',and(ii)shallwaive,foritselfandforthesuccessorsNI90I4IS andassignsofitsProject,withrespecttosuchProject,anystatutoryrightitmayhaveunderPURPAorNYPSLtorequireNMPCtoenterintoapowerpurchasecontractorotherwisetaketheoutputoftheIPP'sProject;provided,however,thatuntiltheendoftheProxy-MarketPricePeriodNMPCagrees,attheIPP'srequest,toactasagentfortheIPP(or,ifnecessarytoeffectuatesuchsalestotheNewYorkPowerPool,bypurchaseandresaleoftheIPP'scapacityandenergy,atnocosttoNMPC),forthesaleonuptoamonthlybasis,oftheIPP'sProject'scapacityandenergytotheNewYorkPowerPooloranythirdparty,ineachcaseonanondiscriminatorybasiswithrespecttoNMPC'soranythirdparty'scapacityandenergy,atnocosttotheIPP.NMFCagreestouseitsReasonableBestEfforttoeffectsuchsalesonthemostfavorableterms,includingprice,totheIPPgivingconsiderationtothequantity,termandmarketconditionsprevailingatthetimeofsale,NothingcontainedhereinshallbeconstruedtoconstituteawaiverbytheIPPofanyotherrightsitmayhaveunderPURPA,NYPSLorapplicablelaw,includingrightswithrespecttoback-upservices,interconnection,reactivepowerorothersimilarrights,whetherornotacontractisrequitedordesirable.6.CertaiaAmendments.IntheeventthatNMPCrestructuresitscorporatestructureorassets,includingbycreatinganynewentitiesthatholdsignificantassets,whetherinconnectionwiththeNMPCRestructuringorotherwise,IPP(oritsassigneehereunder)shallhavetherighttoreplacethisAgreement,asapplicable,withpowerpurchaseand/orhedgingcontractualarrangementssubstantiallyequivalenttothosethatareenteredintobetweentheentity(ies)holdingthetransmissionand/ordistributionassetsofNMPCorwhichwillcoHect&omcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApprovalandtheentity(ies)holdingthenon-nucleargeneratingassetsofNMPC,whetherornotsuchassetsarespun-offtoNMPC'sshareholders(a"GencoContract"),providedthattheterm,priceandquantityunderthisAgreementshallnotbealteredthereby,unlessanyofsuchtermsaremateriallyandexpresslyconditionedbycertainprovisionsintheGencoContract,inwhichcaseappropriateandequitableadjustmentsinsuchtermsshallbemutuallyagreeduponbyNMPCoritsassignee,asthecasemaybe,andtheIPP.Nl90I4l9 APPENDIX6-1FORMOFNOTICEftobesupplied]~~41901420 APPENDIX6-2ContractQuantityContractYearPeriodh(KWh)Period8(KWh)PeriodC(Kwh)PeriodD(KWh)PeriodN(KWb)ContractPrice(SMWb}10PeriodstobedividedinIntervals.)~so~'De>a~<<l90I4 APPENDIX6-3INDEXINGFORMULAETheindexingformulaesetforthbelowareindicativeofanindexingformulathatshallbeusedoneachSettlementDatetoadjustthecontractpricefortheprecedingmonthbeginningonthefirstdayofthethirdContractYearofeachIndexedSwapContract:~Toown"ContractPriceFormulaICP=CP~[(x%'(GClGco))+(y%'(INFIINFo))+(z/o'(TBD/TBDo))]-$5/MWh'here:ICP=indexedcontractpriceCP=thecontractpriceinthereferenceyearx=weightingfactorassignedtopriceofgasGC=averagepriceofgasfortheapplicableperiodGco=referencepriceofgasy=weightingfactor.assignedtoinflationINF=averageinflationfortheapplicableperiodINFQ=referenceinflationfactorz=weightingfactorassignedtoadditionalfactorTBD=averageoftheotherfactor[tobedetermined-examplecouldbeelectricitypoolprice]TBDo=referenceotherfactorTheaveragepriceofgas(GC)usedintheaboveformulashall,attheoptionoftheGasIPP,bedeterminedbyoneofthefollowinggaspriceindices:(i)theNYMEKGasPriceIndexatHenryHub;(ii)theCNGsouthpoolAppalachianIndexpublishedbyInsideFERCandNaturalGasJYeelc(iii)theWeightedAverageCommodityCostofGas("WACCOG")publishedbyNaturalFuelGasDistributionCorporation(iv)theIThe"-$5/MWh"sh~;'m..i:J'gv.t:"-4-':".<".";+.";."'r'~~i'"."~'.";~t~yoftheteachContract"'.~~YearofeachIndexedSwapContract.NI90I422 NiagaraBorderSpotPricefornaturalgas(DeliveredtoPipeU.S.I)publishedby.NaturalGasWeekinitsCanadianPriceReport;or(v)anotherregularlypublishedgaspriceindex,provided,ineachcase,suchgaspriceindexmeetsthefollowingrequirements:(a)suchgaspriceindexshallbeatradableandliquidmarketindex;and(b)suchgaspriceindexshallpresentbasisdifferentialriskstotheGasIPPwhichareacceptabletosuchGasIPP,ifcomparedwiththeactualgaspurchasepricesforsuchGasIPPatthelocaldistributioncompanydeliverypointortheGasIPP'splantburnertip,asthecasemaybe.Thereferenceinflationfactor(INFO)andtheaverageinflationfortheapplicableperiod(INF)usedintheaboveformulashall,attheoptionoftheGasIPP,bebasedonorgenerallyconsistentwith(i)ProducerPriceIndicespublishedbytheU.S.DepartmentofLabor,BureauofStatistics,(ii)ConsumerPriceIndicespublishedbytheU.S.DepartmentofLabor,BureauofStatistics,(iii)inflationforecastindicespublishedbyDataResourcesIncorporated/McGraw-Hill,or(iv)suchotherregularlypublishedindicesrelatingtoinflation,"Bottom-u"ContractPriceFormulaThebottom-upformulationisbasedonrecognizablefixedandvariablecostsandmargins,withwhichsuchGasIPPandNMPCmanagersarealreadyfamiliar.Thisformulationalsoallowstheinclusionofafixedscheduleofcostincreasesordecreases,forexampleinconnectionwithascheduleoffuturefixedpaymentswhichanticipateamajoroverhaulandthendecline,orstepwiseincreases,for'xample,inpropertytaxes,orinaccordancewithaPILOTagreementoranabaternentagreementetc.Thisformulationisbasedonatraditionalbuild-upoffixedandvariablecostsandmarginsincluding:Fixedcosts:FixedOperationsandMaintenanceCosts~DebtService(ifany)~GEcAincludinginsuranceandtaxesotherthanincometaxes~Auxiliaryboilercosts~MarginIl901423 VariableCosts:~Variableoperationsandmaintenance~Start-upandshutdowncosts~Heatrateandfuelcost~MarginItisnotintendedthatGasIPPwillberequiredtoprovideNMPCwithsuchlineitemsofcostormargin.TheintentisthattheGasIPPwillprovidefactorswhicharecomposedofsuchlincitemsorpartsofsuchlineitemsorgroupingsofthesameasmaybeselectedbyeachGasIPP.ThefactorsselectedbyeachGasIPPshallbeindexedusingtheformulationbelow.OneachSettlementDate,thecontractpriceshallbeadjustedfortheprecedingmonth,usingthefollowingformula:Price/MWh=(CPAX~II+(CPBX~JI+(CPCX~Kl+-(CPXXLl)+Cl+C2+-CN-$5/Mls'OJO.KOLOCPA,CPB,CPGandCPX,aredefinedportionsoftheabovefixedandvariablecostsandmargin's,astheGasIPPmayelect,andwhicharebase-yearcostsexpressedinS/MWh.IO,JO,KO,LOare.base-yearvaluesoftheindicesselectedbysuchGasIPPAndI1,Jl,KlandLlaretheapplicableinflatedvaluesofthoseindices,usedincalculatingtheadjustmentsinthecontractprice.AndCl,C2,CNareafixedscheduleofcostvaluesexpressedin$/MWh,whichmayincreaseand/ordecrease,whicharedisplayedandfixedatthetimeofenteringintotheIndexedSwapContract.=5.;r-"'"tlat'.:'~-.imagedto"-$2.50MWh"beginningonthefirstday'6t5ttaaCcatrCfYearofeachMexedSwapContract.ll90t424 ATTACHMENTA-7POWERPUTCONTRACTSWITHGASIPPSCONTRACTYEAR10APPROXIMATEAGGREGATEINSTALLEDCAPACITY(M%)'06.15606.85611.85616.75616.95619.55620A5621.75623.05624.45APPROXIMATEAGGREGATEQUANTITY(G%h)4,6404,6404,6904,7304,7364,7554,7654,7784,7864,798ISuchinstalledcapacityissubjecttobothseasonalvariationsanddegradationandrcprescntstheaggrcgatcinstalledcapacitywhichNMPCisentitledtoclaimfromtheGasIPPsthatarcpartiestoRestatedContractsduringthcProxy-MarketPricePeriodforpurposesofreportingtothcNcwYorkPowerPool.PriortotheestablishmentoftheISO/PEandthereafteratanytimewhennoseparatedt.t~:.',-'-..z~:ki"",.rists,theprice.forcapacityshall'equal'zero',exdepl~tl;'etc'at->ztudM'..-<-"-=t-rtheProxy-MarketPrice.25 ATTACHMEYEA-8TERMSHEETFORPOWERPUTCONTRACTSWITHGASIPPSSetforthbelowisatermsheetfor.ScheduleswhichwillbeattachedtoandmadepartofaMasterAgreementforPowerPutContracts.TheMasterAgreementwillbebasedonastandardformofMasterAgreementwhichis&equentlyusedforpowerputcontracts.TheMasterAgreementwillsetforthgeneraltermsandconditions,includingrepresentationsandwarrantiesandeventsofdefault.EFFECTIVEDATEANDTERMTheAgreementwilltakeeffectasoftheEffectiveTime.TheeffectivenessoftheprovisionsinrespectoftheputoptioncontainedinSchedule1belowshallexpireattheendofthe.Proxy-MarketPricePeriod,butinnoeventlaterthan10ContractYearsRomtheConsummationDate.TheeffectivenessoftheprovisionscontainedinSchedule2belowshallexpire10ContractYearsGomtheConsummationDate,unlessotherwiseprovidedinSchedule2below.SCHEDULE1-PUTOPTION.DELIVERYANDACCEPTANCEOFELECTRICITYEnerandCaaciSub'ecttoPut0tions.TherightoftheIPPtoputenergyandcapacitytoNMPChereundershallbelimitedtoenergyandassociatedcapacityoftheIPP'sProject,subjecttotheIPP'srightstoassignthisAgreementpursuanttotheassignmentprovisionscontainedherein.TheIPPshallnotobjecttoNMPC'sinclusionofallcapacityassociatedwiththecontractquantityofelectricitypursuanttotheterms.hereofascapacityavailabletoNMPCforregulatorypurposes.dP'i~.AU*p'U*IPPd*tPPIllh*Ih*'RhiHaybasis,toput(i)energytoNMPCuptothespecifiedcontractquantityofelectricity(includingenergysubjecttotheOvergenerationAmount(assuchtermisdefinedherein)),and(ii)capacity,whichcapacityissubjecttobothseasonalvariationanddegradation,associatedwiththecontractquantityofelectricity,ineachcase,foreachInterval(assuchtermisdefinedherein)duringtheimmediatelysucceedingSettlementPeriod,andNMPCshallbeobligatedtotakeandpayforsuchenergyandcapacityfromtheIPPattheProxy-MarketPriceortheMarketPriceand,ifapplicable,theMarketCapacityPrice,asthecasemaybe.Energyandassociatedcapacityinexcessofthecontractquantityofelectricity',fi..<~n,induc~'."'..",h..'!,",r..l.".~~je~.~.!i:;p~~ntand;.,~NI901426 attheoptionoftheIPP,maybesoldtothirdpartieswithoutanobligationtooffersuchenergyandcapacitytoNMPC.NoticeofFutExerciseandLenthofExercisePeriod.TobeagreeduponbyNMPCandtheIPPduringtheindividualnegotiations.PamentNoticesandPamentDates.TheIPPshallprovideNMPCwithnotice(each,a"Notice")ofanypaymentsdueforenergyand/orcapacityputtoNMPCduringtheprecedingcalendarmonthonorbeforethe10~dayofthecalendarmonth,unlesstheIPPandNMPCotherwiseagreeduringthecourseoftheindividualnegotiations.Paymentsshallbedue(each,a"PaymentDate")onthelaterof(i)the25dayofthecalendarmonthinwhichsuchnoticeisgiven,or(ii)the15dayafterdeliverybytheIPPtoNMPCofsuchnotice.Intheeventsuch25or15dayisaSaturday,Sundayorlegalholiday,thecorrespondingpaymentshallbedueonorbeforethefirst'businessdayfollowingsuch25~or15~day,asthecasemaybe.PaentDisutes.IfNMPC,ingoodfaith,disputesanypartofanyNoticeofapaymentobligation,NMPCshallprovideawrittenexplanationofthebasisforsuchdisputeandtheundisputedportionofthenetpaymentobligationssetforthinsuchNoticeshallbepaidbythepartyobligatedtopaysuchamountsnolaterthantheapplicablePaymentDate.AnyadjustmentunderthisSectionshallbearinterestattheprime'rateforU.S.currencyaspublished&omtimetotimeunder"MoneyRates"inThe8'allStreetJournal,&omandincludingthePaymentDateanysuchunderpaymentoroverpaymentwasoriginallyduetobutexcludingthedateonwhichsuchunderpaymentoroverpaymentisfinallysettledbythepartieshereto,orintheeventth'epartiesheretoareunabletosettlesuchmatter,suchmattershallbesettledbyanindependentnationallyrecognizedpublicaccountingfirmmutuallyselectedbytheparties,whosedeterminationshallbefinalandbindingonthepartiesheretoandwhosefeesandexpensesshallbebornebythepartyfoundtobeatsubstantialfaultbysuchindependentpublicaccountingfirm.NoNotice(orpaymentobligationthereunder)shallbesubjecttothisSectionunlessanoticeofdisputeisgivenwithrespecttheretowithintwoyearsofthePaymentDateapplicabletosuchNotice.NMPCRihtofFirstRefusal.IftheIPPdeterminesnottoexerciseitsrightstoputenergyandcapacitytoNMPC,suchIPPmaysellanyenergyorcapacity.associatedwiththecontractquantityofelectricitytothirdparties,providedsuchIPPhasfirstofferedtosellsuchenergyandcapacitytoNMPCandNMPChasdeclinedtheopportunitytopurchasesuchenergyandcapacity.ThenoticeperiodforsuchoffersandthelengthoftimewhichNMPChastorespondtheretoshallbeagreeduponbytheIPPandNMPCduringtheindividualnegotiations.

CERTAINDEFINEDTERlvlSAhfDPROVISIONSOverenerationAmount:Shallmeananamountofenergyinexcessofthecontractquantityofelectricity;providedsuchamountofexcessenergyshallnotexceed5%ofthecontractquantityofelectricityfortheapplicableInterval(the"OvergenerationAmount").TheIPPshallhavetherighttoputtheOvergenerationAmounttoNMPChereunderattheProxy-MarketPriceortheMarketPrice,asthecasemaybe.interval:-ShallmeaniboucorsuchothertimeperiodasNMpcandtheippshallmutuallyagreeupon,providedthatsuchmutuallyagreedupontimeperiodmayonlybemodifieduponthepriorwrittenconsentofNMPCandtheIPP.ContractYear:Shallmeantheperiodcommencingat11:59:59p.m.ontheConsummationDateandendingat11:59:59p.m.onthefirstanniversaryofthelastdayofthemonthinwhichtheConsummationDateoccursandeachsuccessive12-monthperiodthereaftertotheextentapphcable.Pro-MarketPrice:Shallmean(i)priortotheestablishmentoftheISO/PE,NMPC'sshort-teanavoidedenergyandcapacitycostsatthevoltageleveloftheIPP'sProject'sbusbar,asstatedinitstariffapprovedbythePSCprovidingforthepurchaseofpowerIromPURPAqualifyingfacilities,whichtariffiscurrentlydesignatedasS,C.-6,asthesamemaybeineffectGomtimetotime,oranysuccessortarifftheretoorsuchotherpriceasmaybeagreeduponbyNMPCandIPPduriiigtheindividualnegotiations,and(ii)ontheGrstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEisestablished,theMarketPriceand;ifapplicable,theMarketCapacityPrice;provided,however,thatat'suchtimethepartiesshallconductgood.faithnegotiationsandusetheirReasonableBestEffortstomutuallydeterminewhethertocontinuethepricingreferencedinclause(i)aboveforamutuallyagreeduponadditionalperiodoftime.TheProxy-MarketPriceshaHnotbereducedoronsetbyanycoststhatNMPCmayincur,including,withoutlimitation,costsforancillaryservices,transmissionservicesortransition(orstranded)costs.~~Pro-MarketPricePeriod;ShallmeantheperiodcommencingonthedateofthisAgreementandendingontheQrstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEhasbeenfullyestablishedandsuccessfullyfunctioning,providedthefollowingconditionshavebeensatisfiedforeachoftheprevioussixmonths:(i)aminimumof654/o(whichpercentageshallincludetheaggregatecontractquantitiesofenergyduringsuchperiodunderallphysicaldeliveryRestatedContractswithGasIPPsandaHphysicaldeliveryContractsbetweenNMPCandanyIPPpartytotheMasterRestructuringAgreemententeredintoinlieuofFixedPriceSwapContracts,regardlessofwhethertheIPPspartiestheretoactuallyeffectedsuchsalesandallsalesonuptoamonthlybasisofenergy(otherthansalesthroughtheISO/PE)bytheIPPspartiestotheMasterRestructuringAgreementwhichareeffectuatedbyNMPCactingasagentforanysuchIPP)oftheenergysalesandpurchaseswithintheUpstateMarkethavebeentransactedthroughtheISO/PEinthedayaheadmarketbaseduponthedayaheadpricinggnaw:ig~gi~~.adonteA.by<be~~R<,~ortheISO/PEintheUpstateMarket;and(ii)~~.'v',~".separatemarketforcapacitythenexists,aminimumof50'/0(whichpercentageshalltgl90l428 includetheaggregatecapacityassociatedwiththeaggregatecontractquantitiesofenergyduringsuchperiodunderallphysicaldeliveryRestatedContractswithGasIPPsandallphysicaldeliveryContractsbetweenNMPCandanylpPpartytotheMasterRestructuringAgreemententeredintoinlieuofFixedPriceSwapContracts,regardlessofwhethertheIPPspartiestheretoactuallyeffectedsuchsalesandallsalesonuptoamonthlybasisofcapacity(otherthansalesthroughtheISO/PE)bytheIPPspartiestotheMasterRestructuringAgreementwhichareeffectuatedbyNMPCactingasagentforanysuchIPP)ofthecapacitysalesandpurchaseswithintheUpstateMarkethavebeentransactedthroughtheISO/PEcapacityauction.Notwithstandingtheforegoing,ifNMPCandIPPmutuallyagree,theProxy-MarketPricePeriodmaybeextendedorterminatedeveniftheconditionssetforthintheimmediatelyprecedingsentencehavenotbeensatisfied.IJ*Mk*:ShdlII'*lyte)U*i**'*'lldtheregionscurrentlyservedbyNMPC,NewYorkStateElectric&GasCorporation,Rochester,Gas&ElectricCorporationandCentralHudsonGas&ElectricCorporation(collectively,the"Utilities"),apd(ii)wholesalesalestransactionsbyanyoftheUtilitiestothirdpartiesoutsidetheregionscurrentlyservedbysuchUtility,excludinganysuchsaleswhichareeffectuatedpure~ittocontractshavingatermofatleastoneyearexistingasofthedateoftheMasterRestructuringAgreementtotheextentsuchcontractsareineffectthereafter.MarketPrice:ShallmeancommencingonthefirstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEisestablished,thedayaheadlocationalbasedmarketprice("LBMP")paidtosellersforenergy,attheIPP'sProject'sbusbarortheregioninwhichtheIPP'sProject'sbusbarislocated,specifiedandpublishedbytheISO/PE;provided,however,thatatsuchtimethepartiesshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstomutuallydeterminewhethertocontinuethepricingreferredtoinclause(i)ofthedefinitionofProxy-MarketPriceforamutuallyagreeduponadditionalperiodoftime.MarketCaaciPrice:ShallequalzeropriortheestablishmentoftheISO/PEandthereafteratanytimewhennoseparatemarketforcapacityexists.Commencingonthefirstdayofthemonthfollowingthecalendarmonthinwhichthe'ISO/PEisestablishedandonlyiftherethenexistsaseparatemarketforcapacity,theMarketCapacityPriceshallmeanthemarketpricepaidtosellersforcapacity,attheregioninwhichtheIPP'sPmject'sbusbarislocated,establishedbytheISO/PEcapacityauction;provided,however,thatatsuchtimethepartiesshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstomutuallydeterminewhethertocontinuethepricingreferredtoinclause(i)ofthedefinitionofProxy-MarketPriceforamutuallyagreeduponadditionalperiodoftime.~~NI90l429 SCHEDULE2,-ADDITIONALAGREEMENTSREUIREDPAYMENTSFORCHANGESINCOSTSReuiredNettinPamentsforCostChanes.OneachSettlementDate,NMPCshallbeobligatedtopaytotheIPP(totheextentthatsuchnumberispositive)andtheIPPshallbeobligatedtopayNMPC(totheextentthatsuchnumberisnegative'andinsuchcasetheabsolutevalueofsuchnumber)(x)thedifferencebetween(A)anyincreaseascomparedtothecostsundertheIPP'scontractualanangementswithNMPCasofJanuary1,1997duringtheassociatedSettlementPeriodin(i)NMPClocaldistributionsystemgastransportationandfixedandvariablechargesandretainagesactuallyincurredbytheIPP,and(ii)electricalinterconnectioncostsandcostsassociatedwithindustryreliabilitystandardsactuallyincurredbytheIPP,and(B)anydecreasesascomparedtothecostsundertheIPP'scontractualarrangementswithNMPCasofJanuary1,1997duringtheassociatedSettlementPeriodinthosecostslistedin(i)and(ii)above,and(y)anyincreaseascomparedtothecostsundertheIPP'scontractualarrangementswithNMPCasofJanuary1,1997duringtheassociatedSettlementPeriodincostsincurredbytheIPPcausedbychangesinfederal,stateorlocallaws,rulesorregulations;providedthatthisclause(y)shallonlybeeffectiveduringtheProxy-MarketPricePeriodandanyperiodsthereafterduringwhichlikeadjustmentsincostsarealsorecoveredbyanyentitythatownsanyofNMPC'snon-nucleargeneratingassets.CertainOtherCostAdditions.OneachSettlementDate,NMPCshallbeobligatedtopaytotheIPPanyincreaseascomparedtothecostsundertheIPP'scontractualarrangementswithNMPCasofJanuary1,1997inelectricaltransmissioncostsoraccessorothercharges,whichareactuallyincurredbytheIPPduringtheassociatedSettlementPeriodwhilephysicallydeliveringelectricityto(x)NMPCduringtheProxy-MarketPricePeriodor(y)anISO/PEfollowingtheProxy-MarketPricePeriod;providedthatthisclause(y)shallonlybeeffectiveduringtheperiodswhenlikeincreasesincostsorchargesarethenalsorecoveredbyanyentitythatownsanyofNMPC'snon-nucleargeneratingassets.ReactivePowerUoltaeSurtServicesandLine-LossChares.NMPCandtheIPPacknowledgethatthecontractpricesundertheIndexedSwapContractrelatingtotheAgreementdonotincludechargesforreactivepower,voltagesupportservicesorlinelosses.IntheeventNMPCtariffsrequiretheIPPtopayNMPCforreactivepowerorline-lossesduringperiodswhentheIPP'sgeneratingfacilitiesaregeneratingelectricity,thecontractpricesundertherelatedIndexedSwapContractoneachapplicableSettlementDatewillbeequitablyincreasedinanamountequaltoallreactivepowerchargesand/orline-losschargesorcostsactuallyincurredbysuchIPPduringtheassociatedSettlementPeriod.Inaddition,intheevent(i)underanyISOtariffanIPPisrequiredtoprovidevoltagesupportservices,asdefinedbysuchISOtariff,NMPCshallpaytotheIPPoneachSettlementDateanyandallvoltagesupportservicepaymentsmadebytheISOtoNMPCintheassociatedSettlementPeriodwhichareattributabletothevoltagesupportservicesprovidedbytheIPP,and(ii)theISOchargestheIPPforanyline-losses,thecontractpricesunder~h.r.I~tedIrdexed...~r-..~.C"rtract"."<>~~'ably.>>-,<<l90I430 increasedinanamountequaltoallsuchline-losschargesactuallyincurredbysuchIPPduringtheassociatedSettlementPeriod.PamentNoticesandPamentDates.AfternettingtheamountsowingpursuanttothepaymentprovisionsofthisSchedule2,theIPPshallprovideNMPCwithnotice(each,a"Notice")ofanynetpaymentsobligationresultingtherefromonorbeforethe10dayofthefirstcalendarmonthfollowingtheSettlementDate.PaymentsinconnectionwithsuchNoticeshallbedue(each,a"PaymentDate"),onthelaterof(i)the25dayofthecalendarmonthinwhichsuchNoticeisgiven,or(ii)the15dayafterdelivetybytheIPPtoNMPCofsuchNotice.Intheeventsuch25~or15dayisaSaturday,Sundayorlegalholiday,thecorrespondingpaymentshallbedueonorbeforethefirstbusinessdayfollowingsuch25or15*day,asthecasemaybe.ThepartyowinganysuchpaymentassoindicatedinsuchNoticeshallmakesuchpaymenttotheotherparty,subjecttothepaymentdisputeprovisionsetforthbelow.PaentDisuteMechanism:IfNMPC,ingoodfaith,disputesanypartofanyNoticeofanetpaymentobligation,NMPCshallprovideawrittenexplanationofthebasisforsuchdisputeandtheundisputedportionofthenetpaymentobligationssetforthinsuchNoticeshallbepaidbythepartyobligatedtopaysuchamountsnolaterthantheapplicablePaymentDate.AnyadjustinentunderthisSectionshallbearinterestattheprimerateforU.S.currencyaspublished&omtimetotimeunder"MoneyRates"inThe8'allStreetJournal,RomandincludingthePaymentDateanysuchunderpaymentoroverpaymentwasoriginallyduetobutexcludingthedateonwhichsuchunderpaymentoroverpaymentisfinallysettledbythepartieshereto,orintheeventthepartiesheretoareunabletosettlesuchmatter,suchmattershallbesettledbyanindependentnationallyrecognizedpublicaccountingfirmmutuallyselectedbytheparties,whosedeterminationshallbefinalandbindingonthepartiesheretoandwhosefeesandexpensesshallbebornebythepartyfoundtobeatsubstantialfaultbysuchindependentpublicaccountingfirm.NoNotice(orpaymentobligationthereunder)shallbesubjecttothisSectionunlessanoticeofdisputeisgiven'withrespecttheretowithintwoyearsofthePaymentDateapplicabletosuchNotice.OTHERPROVISIONSD~li*P'.NMtC1llpI'ly6devp'hipelectricitypursuanttosuchIPP'sExistingPPAorsuchIPP'sexistinginterconnectionagreementwithNMPCoratanyotherinterconnectiononNMPC'ssystem.AllocationofCertainResnsibilities.AllocationsofresponsibilityandotherarrangementsmadeundersuchIPP'sExistingPPAand/orexistinginterconnectionagreementsformaintainingserviceandequipmentoneachsideofthedeliverypointandforresponsibilitytothirdpartiesshallcontinueineQect.TechnicalReuirements.ProvisionsofExistingPPAsand/orexistinginterconnectionagreementsestablishingoperatingparameterlimitswithrespecttosuchmattersasvoltage,frequency,phase,relayset-pnints.etc.,shallrema!qipygect.,4l90l4

~Meterin.Electricityshallhe'measuredasprovidedundertheExistingPPAs.ExistingPPAprovisionswithrespecttosuchmattersaslocation,access,ownership,costresponsibility,metermaintenance,inspectionandtesting,financialadjustmentforfaultymeters,useofduplicatemeters,etceashallcontinuetoapply.AssinmentbIPP.UponnoticetoNMPC,IPPmayassignortransfertheAgreementinwholeorinpart,withouttheconsentofNMPC(a)ascollateralsecurityforpurposesofsecuringindebtedness,or(b)toanyapprovedassigneeortransferee(an"ApprovedAssignee").AnApprovedAssigneeshallbe(i)anypersonwho(x)(A)acquirestheIPP'splant,or(B)hasaplantwithtechnicalcapabilitythatisequaltoorgreaterthanthetechnicalcapabilityoftheIPP'splant,and(y)has(A)along-tennunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchrating6omanothernationallyrecognizedratingagency,or(B)anetworthcalculatedinaccordancewithgenerallyacceptedaccountingprinciples("NetWorth"),thatisequaltoorgreaterthantheNetWorthoftheentitymakingsuchassignmentortransferonthedateofsuchassignmentortransfer,providedthatevidenceofsuchqualifyingNetWorthisreasonablydemonstratedtoNMPC;or(ii)anyAffiliateoftheIPP;provided(x)suchAffiliatehasalong-termunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchratingGomanothernationallyrecognizedratingagency,or(y)suchAffiliatehasaNetWorththatisequaltoorgreaterthantheNetWorthoftheentitymakingsuchassignmentortransferonthedateofsuchassignmentortransfer,or(z)IPPunconditionallyguarantees,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytoNMPC,theobligationsofsuchAf5liateinconnectionwithsuchassignmentortransfer.'PPmaysplitandassignthequantitiesofelectricityandIntervalstoApprovedAssignees,eachirirespectofalesserquantityand/orIntervalsthanthefullamountsthereofhereunder,providedthat(a)eachsuchassignmentisfor50,000MWhofelectricityperyearoranyintegralmultiplesthereofandtotheextentthattheremainingunassignedbalanceofthequantityofelectricityhereunderforanysuchyearislessthanS0,000MWh,thenforsuchremainingbalance,(b)eachsuchassignmentisforaperiodofatleastoneyear,and(c)thesumofallassignedandretainedquantitiesofelectricityandIntervalsdoesnotexceedthetotalquantitiesofelectricityandIntervalshereunder.AttherequestoftheIPPduringtheindividualnegotiationsandduringthetermoftheAgreement,NMPCandtheIPPshallusetheirReasonableBestEffortstomutuallyagreeuponreasonablealternativestotheassignmentqualificationscontainedintheimmediatelyprecedingsentence.Excepttotheextentexpresslyprovidedinanyapplicableguarantee,uponanysuchassignmentortransfer,IPPshallbereleasedandhavenofurtherobligationstoNMPChereunderwithrespecttotheassignedortransferredquantitiesand/orIntervals.AssinmentbNMPC.NMPCshallnotassignitsrightsandobligationshereunderexceptasexpresslyauthorizedunderthisSection(a)NMPCRestructurin.IntheeventthatNMPCrestructuresitscorporatestructureorassets,includingbycreatinganynewentitiesthatholdsignificantassets,."hi.,'."er..'.ntLo;inc;.i;-.:'.-',i-2':.'-.?a=st;~ngorotherwise,uponneolicee'totheIPP"'NI90l432 (oritsassigneehereunder)theAgreementwillbeassignedtoandassumedbytheentityoi'ntitiesowningallorsubstantiallyallofNMPC'selectrictransmissionanddistributionassetsor,ifseparatedfromNMFC'selectrictransmissionassetspursuanttosucharestructuring,NMPC'selectricdistributionassets,providedthat,upontheeffectivedateoftherestructuring(i)suchassignee'sperformanceunderthisAgreementisunconditionallyguaranteed,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytotheIPF(oritsassigneehereunder),byeachoftheotherentitiesarisingoutoftherestructuring,includinganyentityspunwfftoNMPC'sshareholdersoranyAffiliateofNMFCholdingsignificantassetsthatwereheldbyNMPCprior(oranysubsidiaryofNMPC)totherestructuring,unlesssuchassigneehasalong-termunsecureddebtcreditratingissuedbyMoody'sInvestorsService,Standard&Poor'sCorporationoranothernationallyrecognizedratingagencythatisatleastasfavorableasNMPC'slong-termunsecureddebtcreditratingimmediatelypriortotheeffectivedateoftherestructuring,and(ii)ifsuchassigneeisnottheentitywhichwillcollectfromcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApproval,suchassignee'sperformanceunderthisAgreementisunconditionallyguaranteed,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytotheIPP(oritsassigneehereunder),byeachoftheentitieswhichwillcollectfromcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApproval.(b)ThirdPAssient.UponnoticetotheIPP(oritsassigneehereunder),NMPCmayassignitsrightsandobligationsunderthisAgreementtoanythirdparty("NMPCAssignee")(exceptthosepartiesreferencedinSectionU(a)above)providedthattheNMPCAssigneehas(i)receivedalong-termunsecureddebtcreditratingbyMoody'sInvestorsServiceorStandard&Poor'sCorporationofatleastinvestmentgradeortheequivalentofsuchrating&omanothernationallyrecognizedratingagency,asofthedateofconsummationoftheassignment;or(ii)furnishedtheIPPwithsuchcollateralsecurityasmaybereasonablyacceptabletotheIPPinordertolimittheIPP'screditriskinconnectionwithsuchassignment.FurtherAssurances.Subjecttothetermsandconditionscontainedherein,upontherequestkomtimetotimeofeitherpartyhereto,theotherpartyshallpromptlyexecuteanddeliveroruseitsReasonableBestEffortstocausetobeexecutedanddelivered,suchconsents,approvalsandotherinstruments,including,withoutlimitation,assignmentsoftheAgreementascollateral,estoppelcertificatesandutilitycertificates,informandsubstancereasonablysatisfactorytobothpartiesandtheirrespectivecounseltoimplementanyfinancingorothermaterialbusinesstransactionundertakenbytherequestingparty.0l90I433 Curtailment.(a)NMPCagreesthatitsobligationtoacceptandpayforelectricityasprovidedhereinshallinnoeventbesubjecttoanycurtailmentofelectricityundertheprovisionsofl8C.F.R.g292.304(f)(1997),oranysubsequentorsimilarruleorregulationadoptedbythePSCortheFERC,oranyruleororderofthePSC,theFERC,oranyotherGovernmentalAuthorityinterpretingorapplyingthoseprovisionsorauthorizingNMPCtoreserveanyrightsunderthoseprovisions.(b)NMPC'sacceptanceofandobligationtopayforelectricityproducedbytheIPPmayfromtimetotimebesuspendedforanyperiodsoftimeduringwhich,forreasonsofnecessarymaintenance,repair,systememergency,safetyorsimilaractions,NMPC'stransmissionsystemistemporarilyphysicallyunabletoacceptsuchelectricity.NMPCshallgivereasonablenoticeunderthecircumstancesoftheneedforsuchdisconnectiontotheIPP,uponreceiptofwhichtheIPPshallcarryouttherequiredactionwithoutdelay.Duringanysuchperiodofsuspension,NMPCshalluseitsbesteffortstorestoreNMPC'scapabilitytoacceptdeliveryofelectricityaspromptlyaspossible.NMPCwilluseitsbesteffortstoscheduleanyplannedoutagesuponconsultationwiththeIPFandcommensuratewiththeIPP'sscheduleforplannedmaintenanceorotheroutages.NMPCshallbearanycostsincurredbyitinconnectionwithanysuchdisconnectionorreconnection.AlldeliveriesofpowerwhicharesubjecttoanysuchsuspensionmayberescheduledattheoptionoftheIPP.CertainAmendments.IntheeventthatNMPCrestructuresitscorporatestructureorassets,includingbycreatinganynewentitiesthatholdsignificantassets,whetherinconnectionwiththeNMPCRestructuringorotherwise,theIPP(or-itsassigneehereunder)shallhavetherighttoreplacetheAgreement,asapplicable,withpowerpurchaseand/orhedgingcontractualarrangementssubstantiallyequivalenttothosethatareenteredintobetweentheentity(ies)holdingthetransmissionand/ordistributionassetsofNMPCorwhichwillcollectRomcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApprovalandtheentity(ies)holdingthenon-nucleargeneratingassetsofNMPC,whetherornot'suchassetsarespun-offtoNMPC'sshareholders(a"GencoContract"),providedthattheterm,priceandquantityundertheAgreementshaHnotbealteredthereby,unlessanyofsuchtermsaremateriallyandexpresslyconditionedbycertainprovisionsintheGencoContract,inwhichcaseappropriateandequitableadjustmentsinsuchtermsshallbemutuallyagreeduponbyNMPCoritsassignee,asthecasemaybe,andtheIPP.ualiinFaciliMonitorinandStatus.(a)NMPCshallhavenocontractualrightandshallwaiveanyotherrightwhichitmighthaveunderstateorfederallawtodemandinformationGomtheIPP,oranyotherperson,includingbutnotlimitedtoanyGovernmentalAuthority,withrespecttosuchIPP'sstatusasastateand/orfederalqualifyingfacility("QFStatus").NI9014 (b)TheIPPshallhavetheright,butnottheobligation,initssolediscretiontoobtainand/ormaintainitsQFStatusunderNewYorklaw(includingcompliancewithNYPSLg2(2-a))and/orPURPA,respectively.NMPC'srightsandobligations,includingwithoutlimitationitsobligationtopayforelectricityproducedbytheIPPassetforthhereunder,shallcontinueasamatterofcontractualrightregardlessofwhethertheIPPmaintainsitsQFStatus.AnyfailurebytheIPPtocomplywiththerequirementsapplicabletoQFStatusunderNewYorklaw(includingcompliancewithNYPSLg2(2-a))shallhavenoadverseimpactontheIPPunderthisAgreement.IntheeventtheIPPwishestoqualifyorperformasanExemptWholesaleGeneratorunderSection-32ofPUHCAandFERC'sregulationspromulgatedthereunder,asthesamemaybeamended,modiftedorrestatedfromtimetotime,NMPCshallcooperatewith(including,withoutlimitation,byprovidingconsentsandaQidavits),andshallnottakeanyactiontooppose,impedeorsubvert,theIPP'seffortstoobtainappropriateregulatoryexemptionsandapprovals,includingmarket-basedrateapproval.ExcepttotheextentthatthecontractpricesunderthisAgreementareormaybebasedthereon,duringthetermoftheAgreementtheIPP(i)shallwaiveanystatutoryrightitmayhaveunderSection66-cofNYPSLpursuanttowhichtheIPPmaydemanda6gperKWhminimump'owerpurchaserateGomNMPC,and(ii)shallwaive,foritselfandforthesuccessorsandassignsofitsProject,withrespecttosuchProject,anystatutoryrightitmayhaveunderPURPAorNYPSLtorequireNMPCtoenterintoapowerpurchasecontractorotherwisetaketheoutputoftheIPP'sProject;provided,however,thatuntiltheendoftheProxy-MarketPricePeriodNMPCagrees,attheIPP'srequest,toactasagentfortheIPP(or,ifnecessarytoeffectuatesuchsalestotheNewYorkPowerPool,bypurchaseandresaleoftheIPP'scapacityandenergy,atnocosttoNMPC),forthesaleonuptoamonthlybasis,oftheIPP'sProject'scapacityandenergytotheNewYorkPowerPooloranythirdparty,'ineachcaseonanondiscriminatorybasiswithrespecttoNMPC'soianythirdparty'scapacityandenergy,atnocosttotheIPP.NMPCagreestouseitsReasonableBestEffortstoeffectsuchsalesonthemostfavorableterms,includingprice,totheIPPgivingconsiderationtothequantity,termandmarketconditionsprevailingatthetimeofsale.NothingcontainedhereinshallbeconstruedtoconstituteawaiverbytheIPPofanyotherrightsitmayhaveunderPURPA,NYPSLorapplicablelaw,includingrightswithrespecttoback-upservices,interconnection,reactivepowerorothersimilarrights,whetherornotacontractisrequiredordesirable.RelocationofPowerLines.Intheeventitbecomesnecessary-forNMPCtorelocateorrearmngeitstransmissionsystemtowhichtheIPPisconnected,NMPCshalladvisetheIPPatleastoneyearinadvanceinwriting.IfsuchrelocationorrearrangementisorderedorrequiredbyaGovernmentalAuthority,NMPCshallgivepriorwrittennoticetotheIPPequalintimetothenoticegiventoNMPCbysuchGovernmentalAuthority.NMPCshallconsultwiththeIPPonthenewfacilitiesthatNMPCshallproposetoreestablishtheconnection.SuchnewfacilitiesshallbereasonablysatisfactorytotheIPPand,ataminimum,shallprovidetheIPPwithatleastasmuchoutputcapacityaswiththepriorconnectionfacilities.NMPCshallbearthefullcostandexpenseofreestablishingtheconnectiontotheIPP.NMPCshalluseitsbesteffortstominimizethedurationofanydisruptiontotheIPP'sserviceduringtherelocationorrearrangementofNMPC'slNl90I435 transmissionfacilities.Notwitbstandinganythingtothecontrarycontainedherein,theprovisionsofthisSectionshallnotapplytotheabandonmentofpowerlines.~~ling.TheIPPshallhavetherighttohaveNMPCwheelsomeoralloftheoutputofitsProjecttothirdpartiespursuanttoapplicablelaw,orNMPC's,orothercompanies',dulyfiledtransmissionanddistributiontariffsorschedules.**hh'*(a)lntheeventeitherpartyheretoisrenderedunable,whollyorinpart,byForceMajeuretocarryoutitsobligationsundertheAgreement,otherthantheobligationtomakepaymentsofamountsduehereunder,itisagreedthatuponnotice,withreasonablyfullparticularsofsuchForceMajeuregivenbysuchpartytotheotherpartyinwritingwithinareasonabletimekameaftertheoccurrenceofthecausereliedupon,thentheobligationorobligationshereunderofthepartygivingsuchnotice,sofarastheyareafFectedbysuchForceMajeure,shallbesuspendedduringthecontinuanceofaninabilitysocaused.Suchcauseshall,asfaraspossible,beremediedwithallreasonabledispatch.(b)Theterm"ForceMajeure"asusedhereinmeansactsofGod,strikes,lockouts,actsofpublicenemies,wars,blockades,insurrections,riots,epidemics,landslides,lightning,systememergencies,earthquakes,fires,storms,Goods,washouts,arnis,explosions,breakageoraccidenttomachinery,equipmentortransmissionordistributionlines;providedthatthetermForceMajeuredoesnotmeanorincludeanycausewhichbytheexerciseofreasonablediligenceofthepartyclaimingsuspensioncouldbeovercome.PersonsBoundandBenefited.TheAgreementshallbindandbenefitassignsandothersuccessors.G*'gh*g**hglh*g*Hhyg*hi*Ifg*Yg,irrespectiveofconflictsoflawrules.tl901436 ATTACHMENTA-9OPTIONPROVISIONSFORRESTATEDCONTRACTSWITHGASIPPS'ONTRACTYEARAGGREGATEOPTIONQUANTITY(GWh)500500500500WEIGHTEDAVERAGEAVOIDEDOPTIONPRICE($/MWh)'4.0723.8524.7126.1927.2928.51lThistablerepresentstheaggregatequantitiesandweightedaverageavoidedpricesfortheoptionpre<<aeonswl'4cd/o<<clijiÃ<<w.'~-".~~~2RepresentscstimatcsproposedbyNMPC.>l90I437 ATTACHMENTA-10FIXEDPRICESWAPCONTRACTS(4)YEAR2003200420052006200720082009AGGREGATECAPACITY(MW)'28.3.342.5456.6456.6456.6913.2913.2AGGREGATEQUANTITY(GWh)3,0004,0004,0008,0008,000PRICE(SjMWh)54.5856.5158.0160.4862.3061.9962.06lRepresentstheaggregate~ityduringallperiodswithineachrelevantyearwhichissubjecttotheFixedPriceSwapContracts.PriortotheestablishmentoftheISO/PEandthereafteratanytimewhennoseparatemarketforcapacityexists,thepricefoi'heapplicablecapacityshallequalzero.FollowingtheProxy-MarketPricePeriodandonlyifthereexistsaseparatemarketfor.;.;eel.,-.=appiicabiccapacitywillbeadjusted'caabasist.-is!='.aderiL's'":"s;u.b""b~separatemarket.sl90I438 ATTACHMENTA-11TERNISHEETFORFIXEDPRICESWAPCONTRACTSSetforthbelowisatermsheetforaSchedulewhichwillbeattachedtoandbemadeapartofaMasterAgreementfortheFixedPrice'wapContracts.TheMasterAgreementfortheFixedPriceSwapContractswillbebasedonanISDAstandardformofMasterAgreement,whichisaformthatis&equentlyusedforswapcontracts.TheMasterAgreementvrillsetforthgeneraltermsandconditions,includingrepresentationsandwarrantiesandeventsofdefault.TERMSHEETFORSCHEDULEtotheMasterAgreementforFixedPriceSwapContractsbetweenNiagaraMohawkPowerCorporation("NMPC")and"Counterparty")(a)PaymentonSettlementDate.THEOBLIGATIONSINCURREDPURSUANTTOTHISSCHEDULESHALLREQUII&CASHPAYMENTSANDSHALLINNOEVENTBEINTERPRETEDTOREQUIRETHEPURCHASEORSALEOFELECTRICITY.(i)SubjecttoSection1(a)(ii)ofthisSchedule,ontheSettlementDate,NMPCshallbeobligatedtopaytoCounterpartytheFixedPaymentandCounterpartyshallbeobligatedtopaytoNMPCtheFloatingPayment.SuchpaymentobligationsshallbepaidonanetbasispursuanttoSectionofthisAgreementonthePaymentDate.4I90I4(ii)PamentDisuteMechanism:IfCounterparty,ingoodfaith,disputesanypartofanyNoticeofanetpaymentobligation,CounterpartyshallprovideawrittenexplanationofthebasisforsuchdisputeandtheundisputedportionofthenetpaymentobligationssetforthinsuchNoticeshallbepaidbythepartyobligatedtopaysuchamountsnolaterthantheapplicablePaymentDate.AnyadjustmentunderthisSection1(a)(ii)shallbearinterestattheprimerateforU.S.currencyaspublished&omtimetotimeunder"MoneyRates"inTheFallStreetJournal,fromandincludingthePaymentDateanysuchunderpaymentoroverpaymentwasoriginallyduetobutexcludingthedateonwhichsuchunderpaymentoroverpaymentisfinallysettledbythepartieshereto,orintheeventthepartiesheretoareunabletosettlesuchmatter,suchmattershallbesettledbyanindependentnationallyrecognizedpublicaccountingfirmmutuallyselectedbytheparties,whosedeterminationshallbefinalandbindingonthepartiesheretoandwhosefeesandexpensesshallbebornebythepartyfoundtobeatsubstantialfaultbysuchinde@~heitopal!cac<:o>>niirpe.,f~r>>i.,No"i~!ic~.~~~."39 paymentobligationthereunder)shallbesubjecttothisSectionl(a)(ii)unlessanoticeofdisputeisgivenwithrespecttheretowithintwoyearsofthePaymentDateapplicabletosuchNotice.(b)RelatedDefinitionsandProvisions.P*2*:PP*Py*DhllhgIfflyg22hyflcalendarmonth,providedsuchdayisaBusinessDay,andifsuchdayisnotaBusinessDayonthefirstBusinessDayfollowingsuch25~day,or(ii)the15~dayafterthereceiptbyCounterpartyofNoticeGomNMPC,providedsuchdayisaBusinessDay,andifsuchisnotaBusinessDay,onthefirstBusinessDayfollowingsuch15~day.Notwithstandingtheforegoing,intheeventthatfollowingtheProxy-MarketPricePeriodISO/PEproceduresrequirealternatedatesforpayments,suchalternatepaymentdatesshallautomaticallybedeemedtobeincorporatedin,andshallsupersede,thepaymentdatessetforthherein.ISO/PE:ShaUmeanaNewYorkIndependentSystemOperatorandPowerExchange.NMPCPantOblation:NMPCshallbeobligatedtopaytoCounterpartyanamountequaltotheproductoftheNotionalQuantityofelectricityduringtheapplicableIntervalmultipliedbytheContractPriceapplicabletosuchInterval(the"NMPCPaymentObligation").PiDPIhy'P*fD*I*Dtglhequaltothesumof(i}theFixedPaymentforthepriorInterval(whichshallbezerofortheInitialInterval),and(ii)theNMPCPaymentObligationforthecurrentInterval.CountePaentObliation:CounterpartyshallbeobligatedtopaytoNMPCanamountequaltotheproductoftheNotionalQuantityofelectricityduringtheapplicableIntervalmultipliedbytheProxy-MarketPriceortheMarketPrice,asthecasemaybe,applicabletosuchInterval(the"CounterpartyPaymentObligation").P~l'*:yhPD'Pyfg*IDhglh*amounthequaltothesumof(i)theFloatingPaymentforthepriorInterval(whichshallbezerofortheInitialInterval),(ii)theFloatingPaymentforthecurrentInterval,and(iii)ifapplicable,theMarketCapacityPricein$/MWfortheperiod&omtheInitialIntervaltotheSettlementDatemultipliedbytheweightaveragedcapacityassociatedwiththeNotionalQuantityofelectricityforeachInterval&omtheInitialIntervaltotheSettlementDate.ContractPrice:ShallmeanforeachyearoftheTermofthisAgreementcommencingwithJanuaryI,2003,$/MWh,$/MWh,$/MWh,$/MWh,$/MWh,$/MWhand$/MWh,respectively.P.yI/l90I440 SettlementDate:ShallbethelastdayofthecalendarmonthspecifiedintheConfirmationdeliveredinaccordancewiththetermsoftheMasterAgreement.Interval:Shallbe(i)Ihour;providedthatintheeventthatfoltoviingtheProxy-MarketPricePeriodISOiPEproceduresrequiretheuseofanalternatetimeperiod,suchalternatetimeperiodshallautomaticallybedeemedtobeincorporatedin,andshallsupersede,the1hourperiodsetforthherein,or(ii)suchtimeperiodasNMPCandCounterpartyshallmutuallyagreeupon;providedthatsuchmutuallyagreedupontimeperiodmayonlybemodifieduponthepriorwrittenconsentofNMPCandCounterparty.InitialInterval:ShallbetheIntervalspecifiedintheConfirmationdeliveredinaccordancewiththetermsoftheMasterAgreement.Notice:AlternettingtheFixedPaymentandtheFloatingPayment,NMPCshallprovideCounterpartywithnotice(each,a"Notice")ofanynetpaymentobligationresultingthere&omonorbeforethe10dayofthefirstcalendarmonthfollowingtheSettlementDate;providedthatintheeventthatfollowingtheProxy-MarketPricePeriodISO/PEproceduresrequirean'alternatedateforpaymentnotices,suchalternatenoticedateshallautomaticallybedeemedtobeincorporatedin,andshallsupersede,thenotice3*fhl**'hN3**hhlh3'dly'*ffashdhthisAgreement.N~if':Shdlt3y.**'3'33~32dhhh*followingcontractquantitiesofelectricity(inGWh)forwhichCounterpartyandNMPCarecontractuallycommitted:2,000,3,000,4,000,4,000,4,000,8,000and8,000,respectively.Pro-MarketPrice:Shallmean(i)priortotheestablishmentoftheISO/PE,NMPC'sshort-termavoidedenergyandcapacitycostsatthetransmissionlevel,asstatedinitstariffapprovedbythePSCprovidingforthepurchaseofpower&omPURPAqualifyingfacilities,whichtariffiscurrentlydesignatedasS.C.-6,asthesamemaybeineffectfromtimetotime,oranysuccessortarifftheretoorsuchotherpriceasmaybeagreedupon'byNMPCandIPPspriortotheexecutionanddeliveryoftheFixedPriceSwapContracts,and(ii)onthefirstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEisestablished,theMarketPriceand,ifapplicable,theMarketCapacityPrice;provided,however,thatatsuchtimethepartiesshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstomutuallydeterminewhethertocontinuethepricingreferencedinclause(i)aboveforamutuallyagreeduponadditionalperiodoftime.TheProxy-MarketPriceshallnotbereducedoroffsetbyanycoststhatNMPCmayincur,including,withoutlimitation,costsforancillaryservices,transmissionservicesortransition(orstranded)costs.Prox-MarketPricePeriod:ShallmeantheperiodcommencingonthedateofthisAgreementandendingonthefirstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEhasbeenfullyestablishedandsuccessmlyfunctioning,providedthefollowingconditionshavebeensatisfiedforeachoftheprevioussixmonths:(i)ami",imue~f.65'yp.<v.lush.ib'""."i)tate~",.<3'."".",'!>~=..theaggregatecontractquantitiesof-..--Nr0l90I4 energyduringsuchperiodunderallphysicaldeliveryRestatedContractswithGasIPPsandallphysicaldeliveryContractsbetweenNMFCandanyIPPpartytotheMasterRestructuringAgreemententeredintoinlieuofFixedPriceSwapContracts,regardlessofwhethertheIPPspartiestheretoactuaByeffectedsuchsalesandallsalesonuptoamonthlybasisofenergy(otherthansalesthroughtheISO/PE)bytheIPPspartiestotheMasterRestructuringAgreementwhichareeffectuatedbyNMPCactingasagentforanysuchIPP)oftheenergysalesandpurchaseswithintheUpstateMarkethavebeentransactedthroughtheISO/PEinthedayaheadmarketbaseduponthedayaheadpricingmechanismadoptedbytheFERCfortheISO/PEintheUpstateMarket;and(ii)onlyifaseparatemarketforcapacitythenexists,aminimumof50%(whichpercentageshallincludetheaggregatecapacityassociatedwiththeaggregatecontractquantitiesofenergyduringsuchperiodunderallphysicaldeliveryRestatedContractswithGasIPPsandallphysicaldeliveryContractsbetweenNMPCandanyIPPpartytotheMasterRestructuringAgreemententeredintoinlieuofFixedPriceSwapContracts,regardlessofwhethertheIPPspartiestheretoactuallyeffectedsuchsalesandallsalesonuptoamonthlybasisofcapacity(otherthansalesthroughtheISO/PE)bytheIPPspartiestotheMasterRestructuringAgreementwhichareeffectuatedbyNMPCactingas'gentforanysuchIPP)ofthecapacitysalesandpurchaseswithintheUpstateMarkethavebeentransactedthroughtheISO/PEcapacityauction.Notwithstandingtheforegoing,ifNMPCandCounterpartymutuallyagree,theProxy-MarketPricePeriodmaybeextendedorterminatedeveniftheconditionssetforthintheimmediatelyprecedingsentencehavenotbeensatisfied..IJ*M*:ShelII*'ly(0a*regionscurrentlyservedbyNMPC,NewYorkStateElectric&GasCorporation,RochesterGas&ElectricCorporationandCentralHudsonGas&ElectricCorporation(collectively,the"Utilities"),and(ii)wholesalesalestransactionsbyanyoftheUtilitiestothirdpartiesoutsidetheregionscurrentlyservedbysuchUtility,excludinganysuchsaleswhichareeffectuatedpursuanttocontractshavingatermofatleastoneyearexistingasofthedateoftheMasterRestructuringAgreementtotheextentsuchcontractsareineffectthereafter.MarketPrice:ShallmeancommencingonthefirstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEisestablished,the.dayaheadlocationalbasedmarketprice("LBMP")paidtosellersforenergy,attheSithe/IndependenceProject'sbusbarortheregioninwhichsuchbusbarislocated,specifiedandpublishedbytheISO/PE;provided,however,thatatsuchtimethepartiesshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstomutuallydeterminewhethertocontinuethepricingreferredtoinclause(i)ofthedefinitionofProxy-MarketPriceforamutuallyagreeduponadditionalperiodoftime.MarketCaaciPrice:ShallequalzeropriortotheestablishmentoftheISO/PEandthereafteratanytimewhennoseparatemarketforcapacityexists.CommencingonthefirstdayofthemonthfollowingthecalendarmonthinwhichtheISO/PEisestablishedandonlyiftherethenexistsaseparatemarketforcapacity,theMarketCapacityPriceshallmeanmarketpricepaidtosellersforcapacity,at.theregioninwhich'he'.~.~"'ic~-i<<".denceProject's'usbarislocated;establish!c~by"-."iSG/PI-:-'i-"~'caiy"'-"4l90l442 auction;provided,however,thatatsuchtimethepartiesshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstomutuallydeterminewhethertocontinuethepricingreferredtoinclause(i)ofthedefinitionofProxy-MarketPriceforamutuallyagreeduponadditionalperiodoftime.FollowingtheProxy-MarketPricePeriodandonlyiftherethenexistsaseparatemarketforcapacity,thepartiesshallconductgoodfaithnegotiationsandusetheirReasonableBestEffortstoadjusttheapplicablecapacityonabasisconsistentwiththestructureofsuchseparatemarket.Term:ThetermofthisAgreementshallcommenceasoftheEffectiveTimewithpaymentstooccurhereunderduringtheperiodcommencingJanuary1,2003,andendingDecember31,2009.2.AssinmentbCountea.UponnoticetoNMPC,CounterpartymayassignortransferthisAgreementinwholeorinpart,withouttheconsentofNMPC(a)ascollateralsecurityforpurposesofsecuringindebtedness,or(b)toanyapprovedassigneeortransferee(an"ApprovedAssignee").AnApprovedAssigneeshallbe(i)anypersonhavingalong-termunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchrating&omanothernationallyrecognizedratingagency;(ii)anyAffiliateofCounterparty;provided(x)suchAffiliatehasalong-termunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchrating&omanothernationallyrecognizedratingagency,or(y)suchAffiliatehasanetworthcalculatedinaccordancewithgenerallyacceptedaccountingprinciples("NetWorth"),thatisequaltoorgreaterthantheNetWorthoftheentitymakingsuchassignmentortransferonthedateofsuchassignmentortransfer,or(z)Counterpartyunconditionallyguarantees,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytoNMPC,theobligationsofsuchAffiliateinconnectionwithsuchassignmentortransfer,(iii)anyoftheGasIPPspartytoaRestatedContractwithNMPCortheirrespectiveAffiliates;provided(x)suchGasIPPorsuchAf5liatehasalong-termunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchratingGomanothernationallyrecognizedratingagency,or(y)suchGasIPPorsuchAffiliatehasaNetWorththatisequaltoor~terthantheNetWorthoftheentitymakingsuchassignmentortransferonthedateofsuchassignmentortransfer,or(z)Counterparty(inthecaseofanassignmentortransfertoaGasIPP)orsuchGasIPP(inthecaseofanassignmentortransfertoanyofitsAffiliates)unconditionallyguarantees,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytoNMPC,theobligationsofsuchGasIPPorsuchAffiliate,asthecasemaybe,inconnectionwithsuchassignmentortransfer;or(iv)anyotherpersonwhohasaNetWorththatisequaltoorgreaterthantheNetWorthoftheentitymakingsuchassignmentortmnsferonthedateofsuchassignmentortransfer,providedthatevidenceofsuchqualifyingNetWorthisreasonablydemonstratedtoNMPC.CounterpartymaysplitandassigntheNotionalQuantitiesofelectricityandIntervalstoApprovedAssignees,eachinrespectofalesserNotionalQuantityand/orIntervalsthanthefullamountsthereofhereunder,providedthat(a)eachsuchassignmentisfor50,000MWhofelectricityperyearoranyintegralmultiplesthereofandtotheextentthattheremainingunassignedbalanceoftheNotionalquantityofelectricityhereunderforanysuchyearislessthar50,000'M'w'h,inenfor"'l90I443 suchremainingbalance,(b)eachsuchassignmentisforaperiodofatleastoneyear,and(c)thesumofallassignedandretainedNotionalQuantitiesofelectricityandIntervalsdoesnotexceedthetotalNotionalQuantitiesofelectricityandIntervalshereunder.Attherequestof(x)theIPPspriortotheexecutionanddeliveryoftheFixedPriceSwapContracts,and(y)attherequestofCounterpartyduringthetermofthisAgreement,NMPCandtheIPPsorCounterparty,asthecasemaybe,shallusetheirReasonableBestEffortstomutuallyagreeuponreasonablealternativestotheassignmentqualificationscontainedintheimmediatelyprecedingsentence.Excepttotheextentexpresslyprovidedinanyapplicableguarantee,giponanysuchassignmentortransfer,CounterpartyshallbereleasedandhavenofurtherobligationstoNMPChereunderwithrespecttotheassignedortransferredNotionalQuantitiesand/orIntervals.3.AssimentbNMPC.NMPCshallnotassignitsrightsandobligationshereunderexceptasexpresslyauthorizedunderthisSection3.(a)NMPCRestructurin.IntheeventthatNMPCrestructuresitscorporatestructureorassets,includingbycreatinganynewentitiesthatholdsignificantassets,whetherinconnectionwiththeNMPCRestructuringorotherwise,uponnoticetoCounterparty(oritsassigneehereunder)thisAgreementwillbeassignedtoandassumedbytheentityorentitiesowningallorsubstantiallyallofNMPC'selectrictransinissionanddistributionassetsor,ifseparatedRomNMPC'selectrictransmissionassetspursuanttosucharestructuring,NMPC'selectricdistributionassets,providedthat,upontheeffectivedateoftherestructuring(i)suchassignee'sperformanceunderthisAgreementisunconditionallyguaranteed,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytoCounterparty(oritsassigneehereunder),byeachoftheotherentitiesarisingoutoftherestructuring,includinganyentityspunwfftoNMPC'sshareholdesoranyAffiliateofNMPCholdingsignificantassetsthatwereheldbyNMPC(oranysubsidiaryofNMPC)priortotherestructuring,unlesssuchassigneehasalong-termunsecureddebtcreditratingissuedbyMoody'sInvestorsService,Standard&Poor'sCorporationoranothernationallyrecognizedratingagencythatisatleastasfavorableasNMPC'slong-termunsecureddebtcreditratingimmediatelypriortotheeffectivedateoftherestructuring,and(ii)ifsuchassigneeisnot-theentitywhichwillcollect&omcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApproval,suchassignee'sperformanceunderthisAgreementisunconditionallyguaranteed,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytotheCounterparty(oritsassigneehereunder),byeachoftheentitieswhichwillcollect&omcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApproval.(b)ThirdPAssient.UponnoticetoCounterparty(oritsassigneehereunder),NMPCmayassignitsrightsandobligationsunderthisAgreementtoanythirdparty("NMPCAssignee")(exceptthosepartiesreferencedinSection3(a)above)providedthattheNMPCAssigneehas(i)receivedalong-termunsecureddebtcreditratingbyMoody'sInvestorsServiceorStandard&Poor'sCorporationofatleastinvestmentgradeortheequivalentofsuchrating&omanothernationallyrecognizedratingagency.asofthedateofconsummationoftheassignment;or(ii)furnishedCounterpartywithsuchcollateralsecurityasmaybereasonablyacceptabletothe4190I444 Counte5artyinordertolimittheCounterparty'screditriskinconnectionwithsuchassignment.4.FurtherAssurances.Subjecttothetermsandconditionscontainedherein,upontherequestfromtimetotimeofeitherpartyhereto.theotherpartyshallpromptlyexecuteanddeliveroruseitsReasonableBestEffortstocausetobeexecutedanddelivered,suchconsents,approvalsandotherinstruments,including,withoutlimitation,assignmentsofthisAgreementascollateral,estoppelcertificatesandutilitycertificates,informandsubstancereasonablysatisfactorytobothpartiesandtheirrespectivecounseltoimplementanyfinancingorothermaterialbusinesstransactionundertakenbytherequestingparty.5.CertainAmendments.IntheeventthatNMPCrestructuresitscorporatestructureorassets,includingbycreatinganynewentitiesthatholdsignificantassets,whetherinconnectionwiththeNMPCRestructuringorotherwise,Counterparty(oritsassigneehereunder)shallhavetherighttoreplacethisAgreement,asapplicable,withpowerpurchaseand/orhedgingcontractualarrangementssubstantiallyequivalenttothosethatareenteredintobetweentheentity(ies)holdingthetransmissionand/ordistributionassetsofNMPCorwhichwillcollect&omcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApprovalandtheentity(ies)holdingthenon-nucleargeneratingassetsofNMPC,whetherornotsuchassetsarespun-offtoNMPC'sshareholders(a"GencoContract"),providedthattheterm,priceandquantityunderthisAgreementshallnotbealteredthereby,unlessaiiyofsuchtermsaremateriallyandexpresslyconditionedbycertainprovisionsintheGencoContract,inwhichcaseappropriateandequitableadjustinentsins'uchtermsshallbemutuallyagreeduponbyNMPCoritsassignee,asthecasemaybe,andCounterparty.Nl90I445 APPENDIX11-1FORMOFNOTICE[tobesupplied]N1901446 ATTACHMENTA-12ADDITIONALTERMS,CONDITIONSANDPROVISIONSFORTHEAMENDEDPPAANDRESTATEDCONTRACTSUnlesstheapplicableIPPandNMPCmutuallyagreeotherwise,(i)theAmendedPPAshallalsobeamendedtoincludeallofthefollowingprovisions,whichshallsupersedeandreplaceintheirentirety,theprovisions,ifany,withrespecttothesubjectmatterthereofcontainedintheExistingPPA,and(ii)eachRestatedContract(otherthanIndexedSwapContractsandPowerPutContracts)shallincludeallofthefollowingprovisions:tThefollowingprovisionistobeincludedintheAmendedPPAandinRestatedContractsthatprovideforphysicaldeliveriesofelectricity.]AssientbIPP.UponnoticetoNMPC,IPPmayassignortransferthisAgreementinwholeorinpart,withouttheconsentofNMPC(a)ascollateralsecurityforpurposesofsecuringindebtedness,or(b)toanyapprovedassigneeortransferee(an"ApprovedAssignee").AnApprovedAssigneeshaBbe(i)anypersonwho(x)(A)acquirestheIPP'splant,or(B)hasaplantwithtechnicalcapabilitythatisequaltoorgreaterthanthetechnicalcapabilityoftheIPP'splant,and(y)has(A)along-termunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchratingRomanothernationallyrecognizedratingagency,or(B)anetworthcalculatedinaccordancewithgenerallyacceptedaccountingprinciples("NetWorth"),.that.isequaltoorgreaterthantheNet%orthoftheentitymako>gsuchassignmentortransferonthedateofsuchassignmentortransfer,providedthatevidenceofsuchqualifyingNetWorthisreasonablydemonstratedtoNMPC;or(ii)anyAf6liateoftheIPP;provided(x)suchAffiliatehasalong-termunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchrating&omanothernationallyrecognizedratingagency,or(y)suchAffiliatehasaNetWorththatisequaltoorgreaterthantheNetWorthoftheentitymakingsuchassignmentortransferonthedateofsuchassignmentortransfer,or(z)IPPunconditionallyguarantees,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytoNMPC,theobligationsofsuchAf61iateinconnectionwithsuchassignmentortransfer.IPPmaysplitandassignthequantitiesofelectricityandIntervalstoApprovedAssignees,eachinrespectofalesserquantityand/orIntervalsthanthefullamountsthereofhereunder,providedthat(a)eachsuchassignmentisfor50,000MWhofelectricityperyearoranyintegralmultiplesthereofandtotheextentthattheremainingunassignedbalanceofthequantityofelectricityhereunderforanysuchyearislessthan50,000MWh,thenforsuchremainingbalance,(b)eachsuchassignmentisforaperiodofatleastoneyear,and(c)thesumofallassignedandretainedquantitiesofelectricityandIntervalsdoesnotexceedthetotalquantitiesofelectricityandIntervalshereunder.AttherequestofthelPPduringtheindividualnegotiationsandduringthetermofthisAgreement.NMPCandtheIPPshallusetheirReasonableBe~tFAnrts.tom!ihip'!i~pg~o.puponreasonablealternativestotheassignmentqualificationscontainedinthe0i90I447 immediatelyprecedingsentence.Excepttotheextentexpresslyprovidedinanyapplicableguarantee,uponanysuchassignmentortransfer,IPPshallbereleasedandhavenofurtherobligationstoNMPChereunderwithrespecttotheassignedortransferredquantitiesand/orIntervals.PhefollowingprovisionistobeincludedinRestatedContractsthatdonotprovideforphysicaldeliveriesofelectricity.]AssinmentbIPP.UponnoticetoNMPC,IPPmayassignortransferthisAgreementinwholeorinpart,withouttheconsentofNMPC(a)ascollateralsecurityforpurposesofsecuringindebtedness,or(b)toanyapprovedassigneeortransferee("ApprovedAssignee").AnApprovedAssigneeshallbe(i)anypersonhavingalon-ermunsecureddebtcreditratmgofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchrating&omanothernationallyrecognizedratingagency;(ii)anyAf5liateofIPP;provided(x)suchAffiliatehasalong-termunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchratingRomanothernationallyrecognizedratingagency,or(y)suchAffiliatehasanetworthcalculatedinaccordancewithgenerallyacceptedaccountingprinciples("NetWorth"),thatisequaltoorgreaterthantheNetWorthoftheentitymakingsuch.assignmentortransferonthedateofsuchassignmentortransfer,or(z)IPPunconditionallyguarantees,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytoNMPC,theobligationsofsuchAfniateinconnectionwithsuchassignmentortransfer;(iii)anyoftheotherGasIPPspartytoaRestatedContractwithNMPCortheirrespectiveAKliates;provided(x)suchotherGasIPPorsuchAffiliatehasalong-termunsecureddebtcreditratingofnolessthaninvestmentgradeissuedbyMoody'sInvestorsServiceorStandard&Poor'sCorporationortheequivalentofsuchratingRomanothernationallyrecognizedratingagency,or(y)suchotherGasIPPorsuchAf5liatehasaNetWorththatisequaltoorgreaterthantheNetWorthoftheentitymakingsuchassignmentortransferonthedateofsuchassignmentortransfer,or(z)IPP(inthecaseofanassignmentortransfertoanotherGasIPP)orsuchotherGasIPP(inthecaseofanassignmentortransfertoanyofitsAffiliates)unconditionallyyuuantees,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytoNMPC,theobligationsofsuchotherGasIPForsuchAf51iate,asthecasemaybe,inconnectionwithsuchassignmentortransfer;or(iv)anyotherpersonwhohasaNetWorththatualtiseqtoorgreaterthantheNetWorthoftheentitymakingsuchassignmentortransferonthedateofsuchassignmentortransfer,providedthatevidenceofsuchqualifyingNetWorthisreasonablydemonstratedtoNMPC.IPPmaysplit.andassignthecontractquantitiesofelectricityandIntervalstoApprovedAssignees,eachinrespectofalessercontractquantityand/orIntervalsthanthefullamountsthereofhereunder,providedthat(a)eachsuchassignmentisfor50,000MWhofelectricityperyearoranyintegralmultiplesthereofandtotheextentthattheremainingunassignedbalanceofthequantityofelectricityhereunderforanysuchyearislessthan50,000MWh,thenforsuchremainingbalance,(b)eachsuchassignmentisforaperiodofatleastoneyear,and(c)esumofallassignedandretainedcontractquantitiesofelectricityandIntervalsdoesnotexceedthetotalcontractog~tities.nf.e3e;~ci~,gad,<rht~~i~!ot.ero.under:Atth-~-"requestoftheIPPduringtheindividualnegotiationsandduringthetermofthisgl90l44it Agreement,HMPCandtheIPPshallusetheirReasonableBestEffortstomutuallyagreeuponreasonablealternativestotheassignmentqualifications=containedintheimmediatelyprecedingsentence.Excepttotheextentexpresslyprovidedinanyapplicableguarantee,uponanysuchassignmentortransfer,IPPshallbereleasedandhavenofurtherobligationstoNMPChereunderwithrespecttotheassignedortransferredcontractquantitiesand/orIntervals.AssinmentbNMPC.NMPCshallnotassignitsrightsandobligationshereunderexceptasexpresslyauthorizedunderthisSection(a)NMPCRestructurin.IntheeventthatNMPCrestructuresitscorporatestructureorassets,includingbycreatinganynewentitiesthatholdsignificantassets,whetherinconnectionwiththeNMPCRestructuringorotherwise,uponnoticetotheIPP(oritsassigneehereunder)thisAgreementwillbeassignedtoandassumedbytheentityorentitiesowningallorsubstantiallyallofNMPC'selectrictransmissionanddistributionassetsor,ifseparatedGemNMPC'selectrictransmissionassetspursuanttosucharestructuring,NMPC'selectricdistributionassets,providedthat,upontheeffectivedateoftherestructuring(i)suchassignee'sperformanceunderthisAgreementisunconditionallyguaranteed,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytotheIPP(oritsassigneehereunder),byeachoftheotherentitiesarisingoutoftherestructuring,includinganyentityspunwfftoNMPC'sshareholdersoranyAffiliateofNMPCholdingsignificantassetsthatwereheldbyNMPCprior(oranysubsidiaryofNMPC)totherestructuring,unlesssuchassigneehasalong-teiinunsecureddebtcreditratingissuedbyMoody'sInvestorsService,Standard&Poor'sCorporationoranothernationallyrecognizedratingagencythatisatleastasfavorableasNMPC'slong-termunsecureddebtcreditratingimmediatelypriortotheeffectivedateoftherestructuring,and(ii)ifsuchassigneeisnottheentitywhichwillcollect&omcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApproval,suchassignee'sperformanceunderthisAgreementisunconditionallyguaranteed,pursuanttoaguaranteeinformandsubstancereasonablysatisfactorytothe!PP(oritsassigneehereunder),byeachoftheentitieswhichwillcollect&omcustomerstheCompetitiveTransitionChargeapprovedbythePSC,pursuanttothePSCApproval.(b)ThirdPAssient.UponnoticetotheIPP(oritsassigneehereunder),NMPCmayassignitsrightsandobligationsunderthisAgreementtoanythirdparty("NMPCAssignee")(exceptthosepartiesreferencedinSectionQ(a)above)providedthattheNMPCAssigneehas(i)receivedalong-termunsecureddebtcreditratingbyMoody'sInvestorsServiceorStandard&Poor'sCorporationofatleastinvestmentgradeortheequivalentofsuchrating&omanothernationallyrecognizedratingagency,asofthedateofconsummationoftheassignment;or(ii)furnishedtheIPPwithsuchcollateralsecurityasmaybereasonablyacceptabletotheIPPinordertolimittheIPP'screditriskinconnectionwithsuchassignment.UFurtherAssurances.Subjecttothetermsandconditionscontainedherein,upontherequestfromtimetotimeofeitherpartyhereto,theotherpartyshallpromptlyexecuteanddeliveroruseitsRe~sollablcBestFPorlst~".a~i~etoi.~va~!!t~d~nddelivered,such"'onsents,approvalsandotherinstruments,including,withoutlimitation,assignmentsoflll90l449 thisAgreementascollateral,estoppelcertificatesandutilitycertificates,informandsubstancereasonablysatisfactorytobothpartiesandtheirrespectivecounseltoimplementanyfinancingorothermaterialbusinesstransactionundertakenbytherequestingparty.Curtailment.(a)NMPCagreesthatitsobligationtoacceptandpayforelectricityasprovidedhereinshallinnoeventbesubjecttoanycurtailmentofelectricityundertheprovisionsof18C.F.R.$292.304(f)(1997),oranysubsequentorsimilarruleorregulationadoptedbythePSCortheFERC,oranyruleororderofthePSC,theFERC,oranyotherGovernmentalAuthorityinterpretingorapplyingthoseprovisionsorauthorizingNMPCtoreserveanyrightsunderthoseprovisions.IPP(b)NMPC'sacceptanceofandobligationtopayforelectricityproducedbthmay&omtunetotimebesuspendedforanyperiodsoftimeduringwhich,forereasonsofnecessarymaintenance,repair,systememergency,safetyorsimilaractions,MPC'stransmissionsystemistemporarilyphysicallyunabletoacceptsuchelectricity.NMPCshallgivereasonablenoticeunderthecircumstancesoftheneedforsuchdisconnectiontotheIPP,uponreceiptofwhichtheIPPshallcarryouttherequiredactionwithoutdelay.Duringanysuchperiodofsuspension,NMPCshalluseitsbesteffortstorestoreNMPC'scapabilitytoacceptdeliveiyofelectricityaspromptlyaspossible.CwilluseitsbesteffortstoscheduleanyplannedoutagesuponconsultationwiththeIPPandcommensuratewiththeIPP'sscheduleforplannedmaintenanceorotheroutages.NMPCshallbearanycosts.incurredbyitinconnectionwithanysuchisconnectionorreconnection.Alldeliveriesofpower.whicharesubjecttoanysuchsuspensionmayberescheduledattheoptionoftheIPP.UCertainAmendments,IntheeventthatNMPCrestructuresitscorporatestructureorassets,includingbycreatinganynewentitiesthatholdsignificantassets,whetherinconnectionwiththeNMPCRestructuringorotherwise,theIPP(hereunder)shallhavetherighttoreplacethisAgreement,asapplicable,withpowerpurchaseand/orhedgingcontractualarrangementssubstantiallyequivalenttothosethatareenteredintobetweentheentity(ies)holdingthetransmissionand/ordistributionassetsofNMPCorwhichwillcollectRomcustomerstheCompetitiveTransitionChargeapprovedbythePSCpursuanttothePSCApprovalandtheentity(ies)holdingthenon-nucleargeneratingassetsofNMPC,whetherornotsuchassetsarespunwfftoNMPC'sshareholders(a"GencoContract"),providedthattheterm,priceandquantityunderthisAgreementshallnotbealteredthereby,unlessanyofsuchtermsaremateriallyandexpresslyconditionedbycertainprovisionsintheGencoContract,inwhichcaseappropriateandequitableadjustmentsinsuchtermsshallbemutuallyagreeduponbyNMPCoritsassignee,asthecasemaybe,andtheIPP.PhefollowingprovisionistobeincludedintheAmendedPPAandinRestatedContractsthatprovideforphysicaldeliveriesofelectricity.]NI90I450 (J~O'NMPCk1dgthqipfI'p~iyproducedbytheIPPmayvarybasedonfactorsexternaltotheIPP.NMPCshallberequiredtopurchasefromtheIPP,atthesamepricewhichNMPCisthenrequiredtopaypursuanttothetermsofthisAgreementforcontractquantitiesofelectricity,anamountofenergyinexcessofthecontractquantityofelectricity;providedsuchamountofexcessenergydoesnotexceed5%ofthecontractquantityofelectricityfortheapplicabIeInterval.ualiinFaciliMonitorinandStatus.(a)NMPCshallhavenocontractualrightandshallwaiveanyotherrightwhichitmighthaveunderstateorfederallawtodemandinformationGemtheIPP,oranyotherperson,includingbutnotlimitedtoanyGovernmentalAuthority,withrespecttosuchIPP'sstatusasastateand/orfederalqualifyingfacility("QFStatus").(b)TheIPPshallhavetheright,butnottheobligation,initssolediscretiontoobtainand/ormaintainitsQF-StatusunderNewYorklaw(includingcompliancewithNYPSL'$2(2-a))and/orPURPA,respectively.NMPC'srightsandobligations,includingwithoutlimitationitsobligationtopayforelectricityproducedbytheIPPassetforthhereunder,shallcontinueasamatterofcontractualrightregardlessofwhethertheIPPmaintainsitsQFStatus.AnyfailurebytheIPPtocomplywiththerequirementsapplicabletoQFStatusunderNewYorklaw(includingcompliancewithNYPSLg2(2-a))shallhavenoadverseimpactontheIPPunderthisAgreement.IntheeventtheIPPwishestoqualifyorperformasanExemptWholesaleGeneratorunderSection32ofPUHCAandFERC'sregulationspromulgatedthereunder,asthesamemaybeamended,modi6edorrestatedfromtimetotime,NMPCshallcooperatewith(including,withoutlimitation,byprovidingconsentsandafBdavits),andsha11nottakeanyactiontooppose,impedeorsubvert,theIPP'seffortstoobtainappropriateregulatotyexemptionsandapprovals,includingmarket-basedrateapproval.ExcepttotheextentthatthecontractpricesunderthisAgreementareormaybebasedthereon,duringthetermofthisAgreementtheIPP(i)shallwaiveanystatutoryrightitmayhaveunderSection6&cofNYPSLpursuanttowhichtheIPPmaydemanda6gperKWhminimumpowerpurchaserate&omNMPC,and(ii)shallwaive,foritselfandforthesuccessorsandassignsofitsProject,withrespecttosuchProject,anystatutoryrightitmayhaveunderPURPAorNYPSLtorequireNMPCtoenterintoapowerpurchasecontractorotherwisetaketheoutputoftheIPP'sProject;provided,however,thatuntiltheendoftheProxy-MarketPricePeriodNMPCagrees,attheIPP'srequest,toactasagentfortheIPP(or,ifnecessarytoeffectuatesuchsalestotheNewYorkPowerPool,bypurchaseandresaleoftheIPP'scapacityandenergy,atnocosttoNMPC),forthesaleonuptoamonthlybasis,oftheIPP'sProject'scapacityandenergytotheNewYorkPowerPooloranythirdparty,ineachcaseonanondiscriminatorybasiswithrespecttoNMPC'soranythirdparty'scapacityandenergy,atnocosttotheIPP.NMPCagreestouseitsReasonableBestEffortstoeffectsuchsalesonthemostfavorableterms,includingprice,totheIPPgivingconsiderationtothequantity,termandmarketconditionsprevailingatthetimeofsale.NothingcontainedhereinshallbeconstruedtoconstituteawaiverbytheIPPofany.'>".ingb'..='::'w>.+vunder.PURPA;NYPSLorapplicabldlaw,A~lbuliig'nghf'"oui'l90I4SL respecttoback-upservices,interconnection,reactivepowerorothersimilarrightswhetherornotacontractisrequiredordesirable.RelocationofPowerLines.lntheeventitbecomesnecessaryforNMPCtorelocateorrearrangeitstransmissionsystemtowhichtheIPPisconnected,NMPCshalladvisetheIPPatleastoneyearinadvanceinwriting.IfsuchrelocationorrearrangementisorderedorrequiredbyaGovernmentalAuthority,NMPCshallgivepriorwrittennoticetotheIPPequalintimetothenoticegiventoNMPCbysuchGovernmentalAuthority.NMPCshallconsultwiththeIPPonthenewfacilitiesthatNMPCshallproposetoreestablishtheconnection.SuchnewfacilitiesshallbereasonablysatisfactorytotheIPPand,ataminimum,shallprovidetheIPPwithatleastasmuchoutputcapacityas'withthepriorconnectionfacilities.NMPCshallbearthefullcostandexpenseofreestablishingtheconnectiontotheIPP.NMPCshalluseitsbesteffortstominimizethedurationofanydisruptiontotheIPP'sserviceduringtherelocationorrearrangementofNMPC'stransmissionfacilities.Notwithstandinganythingtothecontrarycontainedherein,theprovisionsofthisSectionshallnotapplytotheabandonmentofpowerlines.~~Wheeho.'theIPPshaBhavetherighttohaveNMPCwheelsomeoraiioftheoutputofitsProjecttothirdpartiespursuanttoapplicablelaw,orNMPC's,orothercompanies',dulyfiledtransmissionanddistributiontariffsorschedules.(Jl'hl'*(a)Intheeventeitherpartyheretoisrenderedunable,whollyorinpart,byForceMajeuretocarryoutitsobligationsunderthisAgreement,otherthantheobligationtooiakepaymentsofamountsduehereunder,itisagreedthatuponnotice,withreasonablyfullparticularsofsuchForceMajeuregivenbysuchpartytotheotherpartyinwritingwithinareasonabletimeGameaftertheoccurrenceofthecausereliedupon,thentheobligationorobligationshereunderofthepartygivingsuchnotice,sofarastheyareaffectedbysuchForceMajeure,shallbesuspendedduringthecontinuanceofaninabilitysocaused.Suchcauseshall,asfaraspossible,beremediedwithallreasonabledispatch.(b)Theterm"ForceMajeure"asusedhereinmeansactsofGod,strikes,ockouts,actsofpublicenemies,wars,blockades,insuirections,riots,epidemics,'landslides,lightning,systememergencies,earthquakes,fires,storms,floods,washouts,arrests,explosions,breakageoraccidenttomachineiy,equipmentortransmissionordistributionlines;providedthatthetermForceMajeuredoesnotmeanorincludeanycausewhichbytheexerciseofreasonablediligenceofthepartyclaimingsuspensioncouldbeovercome.0l901452 EXHIBIT2.1-FormofTerminationAgreement012704

Exhibit2.1TERMINATIONAGREEMENTTHISTERMINATIONAGREEMENT(the"TerminationAgreement")enteredllltoOn199,byandbetweenNIAGARAMOHAWKPOWERCORPORATION,aNewYorkcorporation("NMPC"orthe"Company"),andI(the"IPP")(NMPCandtheIPPeacharereferredtohereinasa"Party"andcollectivelyasthe"Parties").CapitalizedteimsusedhereinandnototherwisedefinedhereinshallhavethemeaningsascribedtosuchtermsintheMasterRestructuringAgreement(ashereinafterdefined).(A)TheCompanyandtheIPParepartiesto,amongotheragreements,acertainpowerpurchaseagreementdescribedonSchedule1hereto(referredtohereinas"ExistingPPA")pursuanttowhichtheCompanypurchasespowerproducedbytheIPP'sco-generationfacilitylocatedin,NewYork(the"Project");and(B)TheCompanyandtheIPP,amongothers,haveenteredintoacertainMasterRestructuringAgreement,datedasofJuly9,1997(the"MasterRestructuringAgreement"or"MRA"),pursuanttowhich,amongotherthings,theCompanyandtheIPPhaveagreedtoterminatetheExistingPPAandcertainotherrelatedagreementsbetweentheCompany(oritsAffiliates)andtheIPP.NOW,THEREFORE,inconsiderationoftheforegoingpremisesandforothergoodandvaluableconsideration,thereceiptandadequacyofwhichisherebyacknowledged,thePartiesherebyagreeasfollows:1.TerminationofthePPADocuments.EachofthePartiesherebyagreesthateffectiveasoftheEffectiveTime,withoutanyfurthernoticeoractiononthepartoftheCompanyortheIPP,andexceptassetforthinSection2hereof,(a)theExistingPPAandeachfgastransportationandpeakshavingagreementand,atIPP'soption,interconnectionagreementandinterconnectionanangements]listedonSchedule2hereto(theExistingPPAandsuchotherdocuments,collectively,the"PPADocuments")shallbeirrevocablyterminatedandrescinded;(b)allrightsandprivilegesgranted,accruingor'nuringtoeachPartypursuanttothePPADocumentsshallbeirrevocablyrelinquishedandsurrendered;(c)allobligationsanddutiesowedorrequiredbythePPADocumentstobeperformedfororonbehalfofonePartybyanyotherPartytheretoshallbeirrevocablywaivedandreleased;and(d)eachPartytothePPADocumentsanditsrespectivepredecessorsandsuccessorsininterest,agents,directors,officers,partners,trustees,employeesandaffiliates,shallbeirrevocablyreleasedandforeverdischargedfromallmannerofactions,causesofaction,suits,debts,sumsofmoney,accounts,reckonings,'obcdatedasofConsummationDate.NI3235 bonds,bills,covenants,contracts,controversies,agreements,judgments,claimsanddemandswhatsoeverinlaworinequity,knownorunknown,whichanyotherPartyeverhad,nowhasorhereaftercan,shallormayhave,baseduponorbyreasonofanymaatte,causeorthingrelatedtoorarisingoutofthePPADocuments.EachofthePartiesherebyagreesthat(i)anyrequirementfornotice(whetherwrittenororal)withrespecttotheterminationofanyofthePPADocumentsisherebyirrevocablywaivedbytherespectivePartiestothePPADocumentsand(ii)anyotherrequirementorconditionprecedenttotheterminationofanyofthePPADocumentswhichiscontainedinanyofthePPADocumentsisherebyirrevocablywaivedorshallbedeemedtohavebeensatisfied,asthecasemaybe.2.ContinuinRihtsandObliations.Notwithstandingtheforegoing,thefollowingrightsandobligationsshallsurvivetheterminationofthePPADocuments:(a)TheIPPshallhavetheright,butnottheobligation,toobtainand/ormaintainitsstatusasastateand/orfederalqualifyingfacility("QF")underNewYorklaw(includingcompliancewithNYPSL52(2-a))and/or-PURPA,respectively.(b)TheCompanyshallnotimplementanyQFMonitoringProgramwithrespecttotheIPP.(c)IntheeventtheIPPwishestoqualifyorperformasanExemptWholesaleGeneratorunderSection32ofPUHCAandtheFERC'sregulationspromulgatedthereunder,asthcsamemaybeamended,modifiedorrestatedfromtimetotime,theCompany,uponrequestandattheexpenseoftheIPP,shallcooperatewith(including,withoutlimitation,byprovidingconsentsandaffidavits),andshallnottakeanyactiontooppose,impedeorsubvert,theIPP'seffortstoobtainappropriate'egulatoryexemptionsandapprovals,includingmarket-basedrateapproval.(d)TheIPPshallhavetherighttohavetheCompanywheeltheoutputofitsProjecttothirdpartiespursuanttoapplicablelaw,ortheCompany's,orothercompanies',dulyfiledtransmissionanddistributiontariffsorschedules.(e)TheIPPshallwaiveanystatutoryrightitmayhaveunderSection~ofNYPSLpursuanttowhichtheIPPmaydemanda6cperKwhminimumpowerpurchaseratefromtheCompanyandtheIPPshallwaive,foritselfanditssuccessorsandassignsoftheProject,withrespecttotheProject,anystatutoryrightitmayhaveunderPURPAorNYPSLtorequiretheCompanytoenterintoapowerpurchasecontractorotherwisetaketheoutputoftheProject,provided,however,thatpriortotheendoftheProxy-MarketPricePeriod.(assuchtermisdefinedinExhibitAtotheMRA)theCompanyagrees,attheIPP'srequest,toactasagentfortheIPP(or,ifnecessarytoeffectuatesuchsalestotheNewYorkPowerPool,bypurchaseandresaleoftheIPP'scapacityandenergy,atnocosttotheCompany),forthesaleonuptoamonthlybasis,oftheProject'scapacityandenergytotheNewYorkPowerPoolorany013235 thirdparty,ineachcaseonanondiscriminatorybasiswithrespecttotheCompany'soranythirdparty'scapacityandenergy,atnocosttotheIPP.TheCompanyagreestouseitsReasonableBestEffortstoeffectsuchsalesonthemostfavorableterms,includingprice,totheIPP,givingconsiderationtothequantity,termandmarketconditionsprevailingatthetimeofsale.Further,nothinghereinshallbeconstruedtoconstituteawaiverbytheIPPofanyotherrightsitmayhaveunderPURPA,NYPSLorapplicablelaw,includingrightswithrespecttoback-upservices,interconnection,reactivepowerorothersimilarrights,whetherornotacontractisrequiredordesirable.(f)Exceptasexpresslyprovidedherein,theIPPshallhaveallrightsandobligationspursuanttoapplicablelaw.(g)Nothingcontainedhereinshallconstituteawaiverorreleaseofanyclaims,liabilitiesorobligations(i)arisingoutoforinconnectionwiththisTerminationAgreement,(ii)arisingoutoforinconnectionwithanylitigationorregulatoryproceedingswhicharenottobedismissedandwithdrawn(oreffectivelywithdrawn)bytheCompanyortheIPPpursuanttoSections8.8(b)and9.8(b)oftheMRAand(iii)unlessdismissedorwithdrawnpursuanttotheSection8.8(b)or9.8(b)oftheMRA,arisingoutoforinconnectionwithanypaymentduetotheIPPwhetherornotdisputed,foranypowerorservicespurchasedbytheCompany,oranypaymentduetotheCompanywhetherornotdisputed,foranyservicesprovidedbytheCompany,pursuanttotheExistingPPAoranyrelatedgastransportation,peakshaving,interconnectionorotherrelatedagreementbetweentheCompanyandtheIPP,providedthatifsuchpaymentrelatestoanyperiodmorethansixty(t30)daysprior,tothedateoftheMRAtheIPP'sortheCompany's,asthecasemaybe,entitlementtosuchpaymentshallhavebeensetforthinawritinggiventotheCompanyortheIPP,asthecasemaybe,onorbeforeJune15,1997.TheCompanyandtheIPPacknowledgeandagreethatinaccordancewithSection1hereofallclaims,liabilitiesandobligationsrelatingtotracking,adjustmentoradvancepaymentaccountprovisionsunderanyExistingPPAshallbeextinguishedasoftheEffectiveTime3.EntireAment.ThisTerminationAgreement,togetherwiththeMasterRestructuringAgreement,constitutestheentireagreementbetweenthePartieswithrespecttothesubjectmatterhereof,andsupersedesallprioragreementsandunderstandings,writtenororal,betweenthePartieswithrespectthereto.4.AmendmentsandWaivers.AnytermofthisTerminationAgreementmaybeamendedandtheobservanceofanytermofthisTerminationAgreementmaybewaived(eithergenerallyorinaparticularinstanceandeitherretroactivelyorprospectively),onlybyaninstrumentinwritingandsignedbythePartyagainstwhomsuchamendlnentorwaiverissoughttobeenforced.Nl3235 5.SuccessrsandAssins.Exceptasotherwiseexpresslyprovidedherein,OletermsandconditionsofthisTerminationAgreementshallinuretothebenefitofandbebindingupontherespectivesuccessorsandassignsoftheParties.NothinginthisTerminationAgreement,expressorimplied,isintendedtoconferuponanypersonorentityotherthanthePartiesheretoortheirrespectivesuccessorsandassignsanyrights,remedies,obligations,orliabilitiesunderorbyreasonofthisTerminationAgreement,exceptasmaybeexpresslyprovidedinthisTerminationAgreement.6.G~il.TgT'Ag.'gggTGGhereofandtherightsandobligationsofthePartieshereunder,andallamendmentsandsupplementshereofandallwaiversandconsentshereunder,shallbeconstruedinaccordancewithandgovernedbythedomesticsubstantivelawsoftheStateofNewYorkwithoutgivingeffecttoanychoiceoflaworconflictsoflawprovisionorrulethatwouldcausetheapplicationofthedomesticsubstantivelawsofanyotherjurisdiction.7.S~everabili.IfanyprovisionsofthisTerminationAgreementasappliedtoanypartortoanycirctunstanceshallbeadjudgedbyacourttobeinvalidorunenforceable,thesameshallinnowayaffectanyotherprovisionofthisTerminationAgreement,theapplicationofsuchprovisioninanyothercircumstancesorthevalidityorenforceabilityofthisTerminationAgreement.6g.~Cations.TheheadingsandcaptionsusedinthisTerminationAgreementareusedforconvenienceonlyandarenottobeconsideredinconstruingorinterpretingthisTerminationAgreement.9.~C""*.TgAglgmorecounterparts',eachofwhichshallbedeemedanoriginal,butallofwhichtogethershallconstituteoneandthesameinstrument.INWITNESSWHEREOF,thepartiesheretohaveenteredintothisTerminationAgreementasofthedatefirstabovewritten.NiagaraMohawkPowerCorporationBy:Its.PPP)By:Its.ffl3235 EXHIBIT3.6FormofRegistrationRightsAgreement0l2704

Exhibit3.6REGISTRATIONRIGHTSAGREEMENTTHISREGISTRATIONRIGHTSAGREEMENTenteredintoon199(the"Agreement")byandbetweenNIAGARAMOHAWKPOWERCORPORATION,aNewYorkcorporation("NMPC"orthe"Company")andtheseveralindependentpowerproducersidentifiedassuchonthesignaturepagesandonScheduleAhereto(the"IPPs")and("theIPPDesignees")"(NMPC,theIPPsandtheIPPDesigneesareeachreferredtohereinasa"Party"andcollectivelyasthe"Parties").RECXTALS(A)PursuanttoaMasterRestructuringAgreement,datedasofJuly9,1997(the"MasterRestructuringAgreement"),theCompanyhasissued[forty-sixmillion(46,000,000)"']shares(the"CompanyShares")ofcommonstock,$1.00parvaluepersharc,oftheCompany("CommonStock"),totheIPPsortheIPPDesigneesonthedatehereof;(8)TheCompanyhasfiledwiththeSECaShelfRegistrationStatementonFormS-3(asamendedthroughthedatehereof,the"RegistrationStatement")coveringtheresalebytheHolders(ashereinafterdefined),Romtimetotime,oftheRegistrableSecurities(ashereinafterdefined),whichRegistrationStatementhasbeendeclaredeffectivebytheSEConorbeforethedatehereofandiscurrentlyineffect;(C)TheIPPsdesiretheCompanytomaintaintheeffectivenessoftheRegistrationStatementandcooperatewiththeIPPsinconnectionwithanysaleorofFering,includinganyunderwrittenpublicoffering,oftheCompanyShares,andtheCompanyhasagreedtosame,inaccordancewiththetermsandconditionshereof;and(D)ItisaconditiontotheconsuinmationofthetransactionscontemplatedbytheMasterRestructuringAgreementthattheCompanyandtheIPPsshallhaveenteredintothisAgreement.NO%',THEREFORE,inconsiderationoftheforegoingpremisesandforother'goodandvaluableconsideration,thereceiptandadequacyofwhichisherebyacknowledged,thePartiesherebyagreeasfollows:TobedatedasofConsummationDate."AdddesigneesofIPPsofCompanySharespursuanttoMRA."'ubjecttoadjustmentpursuanttoSection3.5and12.4(b)oftheMRA.4I3538 DEFINITIONS1.1ForpurposesofthisAgreement,thetermssetforthbelowshallhavethefollowingmeanings:"Afhliate"shallmean,withrespecttoanyParty,anyotherpersonorentitywhichcontrols,iscontrolledby,orisundercommoncontrolwith,suchParty,whereintheterm"control"shallmeanthepowertodirectthemanagementandpoliciesbyorofsuchPartythroughownershipofvotingsecurities,bycontractorotherwise,andanyotherpersonwhichisapartner(generalorlimited)orshareholderofanyPartyorpartner(generalorlimited)orshareholderofsuchpartnerorshareholder."BlackoutPeriod"shallhavethemeaningsetforthinSection2.1(a).'SHE*d9"hdll*9'2hl[).~H*IIffd*"hdll*9'fH.2().amended.'*~g*h*"hdl9SH*hg*hfldll,"Hoider"shallmeananyiPPoriPPDesigneewhichreceivesanyoftheCompanySharespursuanttotheMasterRestructuringAgreementandanyAfnliateorInstitutionalPledgeeofanysuchIPPorIPPDesigneewhichisasubsequentholderofRegistrableSecuritieswhoseRegistrableSecuritieshavenotbeensoldtothepublic.pursuanttoaneffectiveregistrationstatementorRule144oftheSecuritiesActafterthedatehereof.Hld*"IIII9'gfh2(l."InstitutionalPledee"shallmeananylendinginstitutiontowhichanyoftheRegistrableSecuritiesmaybepledged."~Reister","~reistered"and"~reistration"shallrefertoaregistrationeffectedbypreparingandfilingaregistrationstatementorstatementsorsimilardocumentsincompliancewiththeSecuritiesActandpursuanttoRule415underthe'ecuritiesActoranysuccessorruleproviding'forofferingsecuritiesonacontinuousbasis("Rule415")andthedeclarationororderingofeffectivenessofsuchregistrationstatementordocumentbytheSEC."ReistrableSecurities"shallmean(i)theCompanySharesissuedbytheCompanytoanyIPPordesigneeofanIPPpursuanttotheMasterRestructuringAgreementand(ii)anyothersharesofCommonStockoranyothersecurityconvertibleorexchangeableintoorexercisabletosharesofCommonStockissuedinrespectoftheCompanySharesuponorasaresultofanystocksplit,stockdividend,rggnhinatioptrtgl3538 reclassification,orthroughmerger,consolidation,reorganizationorrecapitalization,orbyanyothermeans;provided,however,thatRegistrableSecuritiesshallnotincludeanyCompanyShareswhichpreviouslyhavebeensoldtothepublic.pursuanttoaneffectiveregistrationstatementorRule144oftheSecuritiesActaAerthedatehereof."SEC"shallmeantheSecuritiesandExchangeCommission."SecuritiesAct"shallmeantheSecuritiesActof1933,asamended.12CapitalizedtermsusedhereinandnototherwisedefinedhereinshallhavethemeaningsascribedtosuchtermsintheMasterRestructuringAgreement.2.OBLIGATIONSOFTHECOMPANY2.1ReistrationStatement.InconnectionwiththeregistrationoftheRegistrableSecurities,oranysaleoftheRegistrableSecurities,pursuanttotheRegistrationStatement,theCompanyshall:(a)keeptheRegistrationStatementeffectivepursuanttoRule415atalltimesuntiltheearlierof(i)suchtimeasalloftheRegistrableSecuritieshavebeendisposedofinaccordancewiththeintendedmethodsofdispositionsetforthintheRegistrationStatementand(ii)suchdateasistwo.(2)yearsaAerthedatehereof(theperiodendingonsuchtimeordate,theEffectivenessPeriod");provided,however,thatif,atanytimeaftersixty(60)daysfollowingthedateofthisAgreement,theCompanyanditscounseldetermineingoodfaiththatmaintainingtheeffectivenessoftheRegistxationStatementwouldrequiredisclosureofnon-publicmaterialinformationnotinthebestinterestsoftheCompanytodisclose,thentheCompany,onetimeonlyduringanytwelve(12)monthperiod,anduponnoticetotheHolders,mayrequiretheHoldersnottomakeanysaleofRegistrableSecuritiespursuanttotheRegistrationStatementuntilsuchdateassuchnon-publicmaterialinformationisdisclosed(theperiodcommencingonthedateofsuchnoticeandendingonthedateofsuchdisclosure,the"BlackoutPeriod"),providedthatinnoeventshallanyBlackoutPeriodexceedsixty(60)daysinanytwelve(12)monthpericxLIftheCompanyprovidestheIPPs'pecialCounselwithaproposedschedulefordisclosureofitsannouncementsofitsquarterlyandyearendresults.atleastthirty(30)dayspriortoanysuchannouncement,anyHolderdesiringtosellRegistrableSecuritiespursuanttotheRegistrationStatementduringthefourteen(14)dayperiodpriortothedateofanysuchscheduledannouncementoccumngduringtheEffectivenessPeriodshallgivetheCompanytwo(2)BusinessDays'riornoticeofsuchproposedsale.TheCompanyrepresentsandvnmantstoeachHolderthat,otherthanduringanyBlackoutPeriod,(x)theRegistrationStatement(includinganyamendmentsorsupplementstheretoandanyprospectusesorpreliminaryprospectusescontainedtherein),atthetimeitwasGistfiledwiththeSEC,atthetimeitwasdeclaredeffectivebytheSEC,asofthedatehereof,andatalltimesduringwhichitisrequiredtobeeffectivehereunder(andeachsuchamendmentandsupplementatthetimeitisfiledwiththeSECandatalltimesduringwhichitisavailableforuseinconnectionwiththeofferandsale oftheRegistrableSecurities)doesnotandshallnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleadingand(y)theprospectusorpreliminaryprospectususedinconnectionwiththeRegistrationStatementandanyamendmentorsupplementtheretodoesnotandshallnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementstherein,inlightofthecircumstancesinwhichtheyweremade,notmisleading;(b)promptlyprepareandfilewiththeSECsuchamendments(includingpost~ffectiveamendments)andsupplementstotheRegistrationStatementandtheprospectususedinconnectionwiththeRegistrationStatementasmaybenecessarytokeeptheRegistrationStatementeffectiveandtheprospectuscurrent,includinganyamendmentorsupplementwithrespecttoanunderwrittenofferingofRegistrableSecuritie'sandincludinganyamendmentorsupplementtoreflectanytransferofRegistrableSecuritiestoanyAfBliateorInstitutionalPledgeeofaHolderwhichwillhavetherighttobenamedasasellingshMeholderintheRegistrationStatement,atalltimesduringtheEffectivenessPeriod,and,during.suchperiod,complywiththeprovisionsoftheSecuritiesActapplicabletotheCompanyinordertopermitthedispositionbytheHoldersofallRegistrableSecurities;(c)furnish.promptlytotheIPPs'pecialCounselandleadunderwriter(s),ifany,(i)onecopyoftheRegistrationStatementandanyamendmentthereto,eachprospectusandeachamendmentorsupplementtheretoincludingallfinancialstatemengandschedules,and,totheextentsorequested,alldocumentsincorporatedbyreferencetherein,andallexhibitsthereto(includingthoseincorporatedbyreferencetherein),(ii)eachletterwrittenbyoronbehalfoftheCompanytotheSECorthestaffoftheSECandeachitemofcorrespondencereceived&omtheSECorthestaffoftheSECrelatingtosuchRegistrationStatementand(iii)suchnumberofcopiesofaprospectusandallamendmentsandsupplementstheretoandsuchotherdocuments,astheIPPs'.SpecialCounseloranyHoldermayreasonablyrequestinordertofacilitatethedispositionoftheRegistrableSecuritiesownedbysuchHolder,(d)useitsbesteffortsto(i)registerandqualifytheRegistrableSecuritiesunderthesecuritiesor"bluesky"lawsofsuchjurisdictionsaseachHoldermayreasonablyrequest,(ii)prepareandfileinthosejurisdictionssuch,amendments(includingpost-effectiveamendments)andsupplementstosuchregistrationsandqualificationsasmaybenecessarytomaintaintheeffectivenessthereofatalltimesduringtheEffectivenessPeriod,(iii)takesuchotheractionsasmaybenecessarytomaintainsuchregistrationsandqualificationsasmaybenecessarytomaintaintheeffectivenessthereofatalltimesduringtheEffectivenessPeriod,and(iv)takeallotheractionsreasonablynecessaryoradvisabletoqualifytheRegistrableSecuritiesforsalebytheHoldersinsuchjurisdictions(providedthattheCompanyshallnotberequiredinconnectiontherewithorasaconditiontheretotoqualifygenerallytodobusinessorfileaNI3$3S generalconsenttoserviceofprocessinanyjurisdictionwhereitwouldnototherwiseberequiredtoqualifybutforthisSection2.1(d));(e)promptlynotifyeachHolderofthehappeningofanyevent,(i)asaresultofwhichtheprospectusincludedintheRegistrationStatement,asthenineffect,includesanuntruestatementofamaterialfactoromitstostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleadinginlightofthecircumstancesthenexistingor(ii)whichrequirestheCompanytoamendorsupplementtheRegistrationStatementduetothereceiptbytheCompanyofneworadditionalinformationaboutaHolderoritsintendedplanofdistributionofitsRegistrableSecurities;and,insuchevent,theCompany,subjecttoSection2.1(a),shaBpromptlysupplementoramendtheRegistrationStatementtocorrectsuchuntruestatementoromissionortoreflectsuchneworadditionalinformation,sothat,asthereafterdeliveredbyanyHoldertoanypurchaserofsuchsecurities,suchprospectus,assupplementedoramended,shaBnotincludeanuntruestatementofamaterialfactoromittostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementsthereinnotmisleadinginthelightofthecircuinstancesunderwhichtheyweremade;andpromptlyfurnishtoeachHolderandleadunderwriter(s),ifany,anumberofcopiesofsuchsupplementtooranamendment.ofsuchprospectusasanyHolderorsuchleadunderwriter(s)mayreasonablyrequest;(f)promptlynotifyeachHolderandtheleadunderwriter(s),ifany,oftheissuancebytheSECofanystoporderorothersuspensionofeffectivenessoftheRegistrationStatementortheinitiationofanyproceedingsforthatpurpose.TheCompanywiBuseitsbesteffortstopreventtheissuanceofanystoporderand,ifanystoporderisissued,toobtaintheliftingthereofattheearliestpossibletime;(g)permittheIPPs'pecialCounseltoparticipate,totheextentapplicabletotheperiodfollowingthedateofthisAgreement,inthepreparationof(including,butnotlimitedto,reviewing,commentingonandattendingallmeetingswithunderwriters,ifany,withrespectto)theRegistrationStatement,eachprospectusincludedthereinorfiledwiththeSEC,andeachamendmentthereoforsupplementthereto,andshallpermittheIPPs'pecialCounseltoreviewandcommentonsuchRegistrationStatement,prospectus,amendmentorsupplement,asthecasemaybe,areasonableperiodoftimepriortothefilingofsamewiththeSEC,andshallnot,duringtheEffectivenessPeriod,fileanysuchdocumentinaformtowhichtheIPPs'pecialCounselreasonablyobjectswithinthree(3)BusinessDaysofthereceiptthereof;(h)makegenerallyavailabletoitssecurityholdersassoonaspmcticable,butnotlaterthanninety(90)daysafterthecloseoftheperiodcoveredthereby,anearningstatement(informcomplyingwiththeprovisionsofRule158undertheSecuritiesAct)coveringatwelve(12)monthperiodbeginningnotlaterthanthefirstdayoftheCompany'sfiscalquarternextfollowingtheeffectivedateoftheRegistrationStatement;413538 (i)makeavailable(atreasonabletimesandplaces)forinspectionbyanyunderwriterparticipatinginanydispositionoftheRegistrableSecurities,andanyattorney,accountantorotheragentretainedbyanyHolderoranysuchunderwriter,includingbutnotlimitedtotheIPPs'pecialCounse],alldocumentsincorporatedbyreferenceintheRegistrationStatement,eachprospectusincludedtherein,andeachamendmentthereoforsupplementthereto,allpertinentfinancialandotherrecords,pertinentcorporatedocumentsandpropertiesoftheCompany,asshallbereasonablynecessarytoenableeachHolderorunderwritertoconductareasonableinvestigationwithinthemeaningoftheSecuritiesAct,andcausetheCompany'sofficers,directorsandemployeestosupplyallinformationwhichanysuchHolder,underwriter,attorney,accountantorotheragentmayreasonablyrequestforpurposesofsuchinvestigation,providedthatanyrecords,informationordocumentsthataredesignatedbytheCompanyinwritingasconfidential(andwhicharenotgenerallyavailabletothepublic,havenotbecomeavailabletosuchpersononanonconfiidentialbasisfromasourcewhichhasrepresentedtosuchpersonthatsuchsourceisentitledtodisclosesameorwhichwasknowntosuchpersononanonconfidentialbasispriortoitsdisclosurebytheCompany)shallbekeptconfidentialbysuchpersonunlessdisclosureofsuchrecords,informationordocumentsisrequiredbycourtoradministrativeorderoranyGovernmentalAuthorityhavingjurisdiction;(j)useitsbesteffortstomaintainthelistingoftheRegistrableSecuritiesontheNewYorkStockExchange(the"NYSE")andonanyothersecuritiesexchangeonwhichsimilarsecuritiesissuedbytheCompanyarethenlisted;(k)cooperatewitheachHolderandtheleadunderwriter(s),ifany,tofacilitatethetimelypreparationanddeliveryofcertificates(notbearingany.restrictivelegends)representingRegistrableSecuritiesandenablesuchcertificatestobeinsuchdenominationsoramountsasanyHolderandtheleadunderwriter(s),ifany,mayreasonablyrequestandregisteredinsuchnamesassuchHolderandtheleadunderwriter(s),ifany,mayreasonablyrequest.TheCompanyshallgiveappropriateinstructionstotheCompany'stransferagenttocausethetransferagenttodelivercertificatesrepresentingtheRegistrableSecuritieswithoutanyrestrictivelegendsuponreceiptoftheHolder'scertificationthatsuchRegistrableSecuritieshavebeensoldpursuanttotheRegistrationStatementandshallcausetheCompany'slegalcounseltodelivertothetransferagentanopinionincustomaryformasrequiredtoremovesuchrestrictivelegendsprovidedthatifsuchsaleshaveoccurredotherthanpursuanttoanunderwrittenofferingsuchcounselmayreasonablyrequiresuchcertificationsandopinionofcounsel&omHolders;(1)causelegalcounselselectedbytheCompanytodelivertotheHoldersandtheunderwriters,suchopinionsasmaybecustomaryinconnectionwithanyunderwrittensaleofRegistrableSecuritiespursuanttotheRegistrationStatement,informandsubstancereasonablyacceptabletotheHoldersandtheunderwriters,ifany;4!3538 (m)duringtheEffectivknessPeriod,theCompanyshallnotbidfororpurchaseanyCommonStockoranyrighttopurchaseCommonStockorattempttoinduceanypersontopurchaseanysuchsecurityorrightifsuchbid,purchaseorattemptwouldinanywaylimittherightoftheHolderstosellRegistrableSecuritiesbyreasonofthelimitationsofRegulationMundertheExchangeAct;(n)takeallotherreasonableactions(includingenteringintocustomaryagreements)necessarytoexpediteandfacilitatedispositionbytheHoldersofRegistrableSecuritiespursuanttotheRegistrationStatement;and(o)useitsbesteffortstocomplywithallapplicabler'ulesandregulationsoftheSECinconnectionwithanyofferorsaleofRegistrableSecuritiesundertheRegistrationStatement.2.2UnderwrittenOfferin.(a)TheCompanyacknowledgesthattheintendedplanofdistributionsetforthintheRegistrationStatementpermitsthesaleofRegistrableSecuritiesintheformofanunderwritteaoffering.TheCompanyandtheIPPsagreethatanysuchunderwrittenofferingshallbeeffectuatedatanytimeupontherequestofaHoldt;rorHoldersdesignatingatleast5,000,000sharesofRegistrableSecuritiestobeincludedinsuchunderwrittenoffering(the"InitiatingHolders").Noticeofanysuchrequest(togetherwithacopythereof)simultaneouslyshallbegivenbytheInitiatingHolder(s)toallotherHolders.Insuchevent,anyotherHolderorHoldersshallhavetherighttojoininsuchrequestbydesignatinginanoticegivenbytheInitiatingHolder(s)totheCompanyandtheInitiatingHolderswithintwenty(20)daysaftersuchnotice&omtheInitiatingHolderisgiven,thenumberofRegistrableSecuritiesheldbysuchHolderwhichsuchHolderdesirestoincludeinsuchunderwrittenoffering(theInitialHoldersandsuchadditionalHolders,collectively,the"ElectingHolders").Amajorityininterest(basedonthenumberofsharesofRegistrableSecuritiesheldbysuchElectingHolders)oftheElectingHoldersshallselectandobtain-anunderwriterorunderwriterstoadministertheoffering,providedtheleadunderwriter(s)arereasonablysatisfactorytotheCompany.Inconnectionwithanyunderwrittenoffering,(i)theCompanywilleffectaroadshowwithsuchCompanypersonnelandcoveringsuchlocationsandamountoftimeasisreasonablyrequestedbytheleadunderwriter(s)fortheoffering;providedthattheCompanyshallnotbeobligatedtoeffectaroadshowformorethanthreeseparateunderwrittenofferings;(ii)theCompanyandtheElectingHolderswillenterintoanunderwritingagreementwiththeleadunderwriter(s)toeffecttheofferandsaleofRegistrableSecurities,containingcustomaryprovisionsincludingwithoutlimitationthoserelatingtoindemnificationandcontributiononthepartoftheCompanyoftheunderwritersandtheElectingHolders;and(iii)theCompanywilluseitsbesteffortstoobtainacomfortletterandupdatesthereof6emtheCompany'sindependentpublicaccountantsaddressedtotheElectingHoldersandtheunderwritersandcoveringsuchmattersofthetypecustomarilycoveredbycoinfortletterswithrespecttounderwritten<<I3538 publicoKringsandinformandsubstancereasonablysatisfactorytotheleadunderwriter(s)andtheIPPs'pecialCounsel.(b)Iftheleadunderwriter(s)advisetheElectingHoldersinwritingthatmarketingfactorsrequirealimitationonthenumberofsharesofRegistrableSecuritiestobeunderwritteninanyunderwrittenoffering,thenumberofsharesofRegistrableSecuritiestobeincludedintheunderwritingshallbeallocatedamongtheElectingHoldersprorataonthebasisofthenumberofsharesofRegistrableSecuritiesheldbysuchHolders.IfaHolderwhohaselectedtobeincludedinsuchunderwritingasprovidedabovedoesnotagreetothetermsofanysuchunderwriting,suchHoldershallbeexcludedtherefrombywrittennotice60mtheleadunderwriter(s)oramajorityininterestoftheremainingElectingHolders.IfsharesaresowithdrawnGomtheunderwritingandifthenumberofsharestobeincludedinsuchunderwritingwaspreviouslyreducedasaresultofmarketingfactorspursuanttothisSection22(b),thentheElectingHolderswhowereunabletoincludethemaximumnumberofsharesofRegistrableSecuritiesrequestedbysuchHolderstobeincludedintheunderwritingshallhavetherighttoincludeadditionalRegistmbleSecuritiesintheunderwritinginanaggregateamountequaltothenumberofsharessowithdrawn,withsuchsharestobeallocatedprorataonthebasisofthenumberofshnesofRegistrableSharesheldbysuchHolders.Inadditiontotheforegoing,sothatanysuchallocationshallnotoperatetoreducetheaggregatenumberofRegistrableSecuritiestobeincludedinsuchunderwrittenoffering,ifanyElectingHolderdoesnotrequestinclusionofthemaximumnumberofsharesofRegistrableSecuritieswhichmayberequestedbyitpursuanttotheabov~ribedprocedure,theremainingportionofitsallocationshallbereallocatedamongthoseElectingHolderswhoseallocationsdidnotsatisfytheirrequestsprorataonthebasisofthenumberofsharesofRegistrableSecuritiesheldbysuchHolders,andthisprocedureshallberepeateduntilallofthesharesofRegistrableSecurities.whichmaybeincludedintheunderwrittenofferingbytheElectingHoldershavebeensoallocated.2.3Rule144Rertin.WithaviewtomakingavailablethebenefitsofcertainrulesandregulationsoftheSECthatmaypermitthesaleoftheRegistrable~Securitiestothepublicwithoutregistration,theCompanyagreestouseitsbesteffortsto:(a)makeandkeeppublicinformationregardingtheCompanyavailableasthosetermsareunderstoodanddefinedinRule144undertheSecuritiesAct;(b)filewiththeSECinatimelymannerallreportsandotherdocumentsrequiredoftheCompanyundertheSecuritiesActandtheExchangeAct;and(c)furnishtoanyHolderforthwithuponwrittenrequestawrittenstatementbytheCompanyastoitscompliancewiththereportingprovisionscontainedinRule144(c)undertheSecuritiesAct,acopyofthemostrecentannualorquarterlyreportoftheCompany,andsuchotherreportsanddocumentssoGledasanyHoldermayreasonablyrequestinavailingitselfofanyruleorregulationoftheSECallowingaHoldertosellanyoftheRegistrableSecuritieswithoutregistration.013538 TheCompanyshallgiveappropriateinstructionstotheCompany'stransferagenttocausethetransferagenttodelivercertificatesrepresentingtheRegistrableSecuritieswithoutanyrestrictivelegendsuponreceiptoftheHolder'scertificationthatsuchRegistrableSecuritieshavebeensoldpursuanttoRule144undertheSecuritiesAct.EachHoldershallcauseitslegalcounseltodelivertothetransferagentfortheRegistrableSecuritiesanopinionincustomaryformasmayberequiredtoremovesuchrestrictivelegendsfollowingasalepursuanttoRule144.3.OBLIGATIONSOFTHEHOLDERS3.1EachHoldershall:(a)upontheCompany'swrittenrequest,furnishtotheCompanysuchinformationregardingtheintendedplanofdistributionofitsRegistrableSecuritiesthatpursuanttoapplicablelawisrequiredtobeincludedintheRegistrationStatementoranyamendmentthereto;(b)uponreceiptofanynotice&omtheCompanyofthehappeningofanyeventofthekinddescribedinSections2.1(a)or2.1(e)hereof,forthwithdiscontinuedispositionofRegistrableSecuritiespursuanttotheRegistrationStatementuntilsuchHolder'sreceiptofthecopiesofthesupplementedoramendedprospectuscontemplatedbySections2.1(a)or2.1(e)hereof,and,ifsodirectedbytheCompany,suchHolderwilldelivertotheCompany(attheCompany'sexpense)allcopies,otherthanpermanentfilecopiestheninsuchHolder'spossession,oftheprospectus.coveringsuchRegistrableSecuritiescurrentatthetimeofreceiptofsuchnotice.IntheeventtheCompanyshallgiveanysuchnotice,andpriortotheexpirationoftheEffectivenessPeriodInitiatingHoldershavegiventheCompanyanoticepursuanttoSection2.2ofanunderwrittenofferingwhichisthenpending,theCompanyshallextendtheEffectivenessPeriodbythenumberofdaysduringtheperiodGumandincludingthedateofthegivingofsuchnoticepursuanttoSections2.1(a)or2.1(e)hereoftoandincludingthedatewheneachHoldershallhavereceivedthecopiesofthesupplementedoramendedprospectuscontemplatedbySections2.1(a)or2.1(e)hereof,N(c)nottransfer,sell,pledgeorotherwisedisposeofanyRegistrableSecuritiesexcept(i)pursuanttotheRegistrationStatementoranothereffectiveregistrationstatementundertheSecuritiesActandincompliancewiththeprospectus-deliveryrequirementundertheSecuritiesAct;(ii)inaccordancewithRule144undertheSecuritiesActaftertheapplicabletimeperiodspecifiedtherein;or(iii)inaccordancewithanotherexemptionfromtheregistrationrequirementsoftheSecuritiesAct;providedthatinthecaseofsubsection(iii)above,suchHolderwillnotifytheCompanyoritsagentandcooperatewithanyreasonablerequesttocausecertificatesevidencingsuchRegistrableSecuritiestobearalegendinsubstantiallythefollowingform:Ni3538 THESECURITIESEVIDENCEDHEREBYHAVENOTBEENREGISTEREDUNDERTHEUNITEDSTATESSECURITIESACTOF1933,ASAMENDED("SECURITIESACT"),ANDMAYNOTBEOFFERED,SOLD,PLEDGEDOROTHERWISETRANSFERREDEXCEPT(I)PURSUANTTOANEFFECTIVEREGISTRATIONUNDERTHESECURITIESACT,(2)INACCORDANCEWITHRULE144UNDERTHESECURITIESACTOR(3)INACCORDANCEWITHANOTHERAPPLICABLEEXEMPTIONFROMTHEREGISTRATIONREQUIREMENTSOFTHESECURITIESACT.(d)notifytheCompanypromptlyaftertheeventofthecompletionofthesalebysuchHolderofallRegistrableSecuritiestobesoldbysuchHolderpursuanttotheRegistmtionStatement.4.EXPENSESAllexpensesincidenttotheCompany'sperformanceoforcompliancewiththisAgreement,including,withoutlimitation,allregistration,qualificationandfilingfees,feesandexpensesofunderwritersifsuchofferingisunderwritten(otherthanunderwritingdiscountsandcommissionsrelatingtothesaleofRegistrableSecuritiesfortheaccountofHolders),feesandexpensesofcompliancewithsecuritiesor"bluesky"laws(includingfeesanddisbursementsofcounselinconnectionwith"bluesky"qualificationsoftheRegistrableSecurities),printingexpenses,messengeranddeliveryexpenses,internalexpenses(including,withoutlimitation,allsalariesandexpensesoftheCompany'sofficersandemployeesperforminglegaloraccountingduties),travel,presentationforumandentertauunentexpensesincidentaltoaroadshow,feesandexpensesincurredinconnectionwiththelistingoftheRegistrableSecuritiesonthe.NYSEoranyothersecuritiesexchangeonwhichsimilarsecuritiesissuedbytheCompanyarethenlisted,feesanddisbursementsofcounselfortheCompanyanditsindependentcertifiedpublicaccountants(includingtheexpensesofanyspecialauditor"comfort"lettersrequiredbyorincidenttosuchperformance),feesandexpensesoftheIPPs'pecialCounsel,securitiesactsliabilityinsurance(iftheCompanyelectstoobtainsuchinsurance),andfeesandexpensesofanyspecialexpertsretainedbytheCompanyinconnectionwithsuchregistrationandfeesandexpensesofotherpersonsretainedbytheCompany.willbebornebytheCompany.5.INDEMNXFICATION5.1IndemnificationbtheCom.TheCompanyagreestoindemnifyandholdharmless,tothefullextentpermittedbylaw,eachHolder,itsofficers,directors,partners,members,legalcounsel,accountantsandagentsandeachpersonwhocontrolssuchHolder(withinthemeaningoftheSecuritiesAct)againstalllosses,claims,damages,liabilitiesandexpenses,jointandseveral(includingreasonablecounselfees)(collectively,"Losses")sufferedorincurredbyanythirdpartypurchaserofRegistrableSecuritieswhichariseoutoforarebaseduponbyanyuntrueorallegeduntruestatementofN[3538l0 materialfactcontainedinanyRegistrationStatement,prospectusorpreliminaryprospectuoranyomissionorallegedomissiontostatethereinamaterialfactrequiredtobestatedthereinornecessarytomakethestatementstherein(incaseofaprospectusorapreliminaryprospectus,inlightofthecircuinstancesunderwhichtheyweremade)notmisleading,exceptinsofarasthesameMccausedby,containedin,orwithrespecttoanymaterialomission,omittedfromanyinformationwithrespecttosuchHolderfurnishedinwritingtotheCompanybysuchHolderexpresslyforusethereinorbysuchHolder'sfailuretodeliveracopyoftheRegistrationStatementorprospectusoranyamendmentsorsupplementstheretoaftertheCompanyhasfurnishedsuchHolderwithasufficientnumberofcopiesofthesame.TheCompanywillalsoindemnifyanyunderwritersandeachpersonwhocontrolssuchunderwriter(withinthemeaningoftheSecuritiesAct)tothesameextentasprovidedabovewithrespecttotheindemnificationoftheHolders.5.2IndemnificationbtheHolders.InconnectionwiththeRegistrationStatement,eachHolder(severa1lyandnotjointly)agreestoindemnifyandholdharmless,tothesameextentandinthesamemannersetforthinSection5.1,theCompanyandeachotherHolder,theirrespectiveoKcers,directors,partners,members,legal-counsel,accountantsandagentsandeachpersonwhocontrolstheCompany(withinthemeaningoftheSecuritiesAct)againstanyLossessweredorincurredbyanythirdpartypurchaserofRegistrableSecuritieswhichariseoutoforarebaseduponanyuntrueorallegeduntruestatementofamaterialfactoranyomissionorallegedomissionofamaterialfactrequiredtobestatedintheRegistrationStatement,prospectusorpreliminaryprospectusoranyamendmentthereoforsupplementtheretoornecessarytomakethestatementstherein(incaseofaprospectusorpreliminaryprospectus,inlightofthecircumstancesunderwhichtheyweremade)notmisleading,totheextent,butonlytotheextent,thatsuchuntruestatementoromissioniscontainedin,orwithrespecttoanymaterialomission,omittedGomanyinformationwithrespecttosuchHoldersofurnishedinwritingbysuchHolderexpresslyforusetherein.InnoeventshalltheliabilityofanyHolderhereunderbegieaterinamountthanthedollaramountoftheprocessreceivedbysuchHolderuponthesaleofsuchHolder'sRegistrableSecuritiesinconnectionwithanyRegistrationStatementgivingrisetosuchindemnificationobligation.5.3ConductofIndemnificationProceedins.Anypersonsentitledtoindemnificationhereunder(each,an"IndemnifiedParty")agreestogivepromptwrittennoticetotheindemnifyingparty(each,an".IndemnifyingParty")afierthereceiptbysuchpersonofanywrittennoticeofthecommencementofanyaction,suit,proceedingorinvestigationorthreatthereofforwhichsuchpersonwillclaimindemnificationorcontributionpursuanttothisAgreement(butthefailuretogivesuchnoticewillnotaKecttherighttoindemnificationorcontributionhereunderunlesstheIndemnifyingPartyisniateriallyprejudicedbysuchfailure)andtheIndemnifyingPartyshallassumethedefensethereof,includingtheemploymentofcounselreasonablysatisfactorytosuchIndemnifiedPartyandpaymentofallreasonablefeesandexpenses(regardlessofwhetheritisultimatelydeterminedthatanIndemnifiedPartyisentitledtoindemnificationhereunder).SuchIndemnifiedPartyshallhavetherighttoemployseparatecounselinanysuchactionandparticipateinthedefensethereof,butthefeesandexpensesofsuchcounselshallbe113538 attheexpenseofsuchIndemnifiedPartyunless(i)theemploymentofsuchcounselshallhavebeenspecificallyauthorizedinwritingbytheIndemnifyingparty,(ii)theIndemnifyingPartyshallhavefailedtoassumethedefenseandemploycounselreasonablysatisfactorytotheIndemnifiedPartyor(iii)thenamedpartiestoanysuchaction(includingany'impleadedparties)includebothsuchIndemnifiedPartyandtheIndemnifyingPartyandsuchIndemnifiedPartyshallhavebeenadvisedbysuchcounselthattheremaybeoneormorelegaldefensesavailabletoitwhicharedifferentfromoradditionaltothoseavailabletotheindemnifyingParty(inwhichcase,theIndemnifyingPartyshallnothavetherighttoassumethedefenseofsuchactiononbehalfofsuchIndemnifiedParty,itbeingunderstood',however,thattheIndemnifyingPartyshaHnot,inconnectionwithanyonesuchactionorseparatebutsubstantiallysimilarorrelatedactionsinthesamejurisdictionarisingoutofthesamegeneralallegationsorcircumstances,beliableforthefeesandexpensesofmorethanoneseparatefirmofattorneys(inadditiontoanylocalcounsel)forallsuchIndemnifiedParties,whichfirmshallbedesignatedinwritingbytheIndemnifiedPartiesandthataHsuchreasonablefeesandexpensesshallbereimbursedastheyareincurred).AnIndemnifyingPartyshallnotsettle,compromiseorconsenttotheentryofanyjudgmentinanyproceedingwithouttheIndemnifiedParty'spriorwrittenconsent,unlessthetermsofsuchsettlement,compromiseorconsentincludeanunconditionalreleaseofeachIndemnifiedPartyGomallliabilityorlossarisingoutofsuchproceeding.5.4Contribution.IfforanyreasontheindemnityprovidedforinthisSection5isunavailableto,orisinsuf5cienttoholdharmless,anIndemnifiedParty,thentheIndemnifyingPartyshallcontributetotheamountpaidorpayablebytheIndemnifiedPartyasaresultofsuchLossesinsuchproportionasisappropriatetoreQecttherelativefaultoftheIndemnifyingPartyontheonehandandtheIndemnifiedPartyontheother.TherelativefaultofsuchIndemnifyingPartyandIndemnifiedPartyshallbedeteaninedbyreferenceto,amongotherthings,whetheranyactioninquestion,includinganyuntrueorallegeduntruestatementofamaterialfactoromissionorallegedomissiontostateamaterialfact,hasbeenmadeby,orrelatestoinformationsuppliedby,suchIndemnifying.PartyorIndemniQedParty,andtheparties'elativeintent,knowledge,accesstoinformationandopportunitytocorrectorpreventsuchaction.TheamountpaidorpayablebyapartyasaresultoftheLossesreferredtoaboveshallbedeemedtoincludesubjecttothelimitationssetforthinSection5.3,anylegalorotherfeesorexpensesreasonablyincurredbysuchpartyinconnectionwithanyinvestigationorproceeding.ThepartiesheretoagreethatitwouldnotbejustandequitableifcontributionpursuanttothisSection5.4weredeterminedbyprorataallocationorbyanyothermethodofallocationwhichdoesnottakeaccountoftheequitableconsiderationsreferredtointheimmediatelyprecedingparagraph.NopersonguiltyofGaudulentmisrepresentation(withinthemeaningof11(f)oftheSecuritiesAct)shallbeentitledtocontributionGomanypersonwhowasnotguiltyofsuchGaudulentmisrepresentation.IfindemnificationisavailableunderthisSection5,theIndemnifyingPartiesshallindemnifyeachindemnifiedpartytothefullextentprovidedinSections5.1and5.2Ni353812 withoutregardtotherelativefaultofsaidIndemnifyingPartyorIndemnifiedPartyoranyotherequitableconsiderationprovidedforinthisSection5.4.6.REMEDIESTheCompanyrecognizesandagreesthattheHoldersofRegistrableSecuritiesshallnothaveanadequateremedyiftheCompanyfailstocomplywiththeprovisionsofthisAgreement,andthatdamageswillnotbereadilyascertainable,andtheCompanyexpresslyagreesthatintheeventofsuchfailureanyHolderofRegistrableSecuritiesshallbeentitledtoseekspecificperformanceoftheCompany'sobligationshereunderandthattheCompanywillnotopposeanapplicationseekingsuchspecificperformance.7.NOTICESUnlessotherwiseprovided,anynotice,consent,approval,authorization,waiverorothercommunicationrequiredorpermittedunderthisAgreementshallbegiveninwritingandshallbedeemedeffectivelygivenuponpersonaldeliverytothePartytobenotified,onthenextbusinessdayafterdeliveiytoanationallyrecognized,overnightcourierservice,uponconfirmationofreceiptofafacsimiletransmissionorfivedaysafterdepositwiththeUnitedStatesPostOffice,byregisteiedorcertifiedmail,postageprepaid,andaddressedtothePartytobenotifiedattheaddressorfacsimilenumberindicatedbelowforsuchParty,oratsuchotheraddressassuchPartymaydesignateuponwrittennoticetothe'otherParties(exceptthatnoticeofchangeofaddressshallbedeemedgivenuponreceipt).(a)InthecaseoftheCompany:NiagaraMohawkPowerCorporation300ErieBoulevardWestSyracus,NY13202Facsimile:(315)428-.3406Attn:WilliamF.Edwardswithacopyto:DonaldsonLufkin&JenretteSecuritiesCorporation277ParkAvenueNewYork,NY10172Facsimile;(212)892-7272Attn:MichaelRangerNI3S38l3 andwithacopyto:Sullivan&Cromwell1701PennsylvaniaAvenue,N.W.Washington,DC20006Facsimile:(202)293-6330Attn:JanetT.Geldzahlerhereto,(b)InthecaseoftheIPPs,attheaddressessetforthonScheduleAwithacopyto:WassersteinPerella&Co.,Inc.31WestS2~StreetNewYork,NY10019Facsimile:(212)969-7971Attn:KennethA.Buckfireandwithacopyto:Akin,Gump,Strauss,Hauer&Feld,L,L.P.590MadisonAvenueNewYork,NY10022Facsimile:(212)872-1002Attn:StevenH.Scheinman8.MISCELLANEOUS8.1EntireAment.ThisAgreement,togetherwiththeMasterRestructuringAgreement,constitutestheentireagreementbetweenthePartiesheretowithrespecttothesubjectmatterhereof,andsupersedesallprioragreementsandunderstandings,writtenororal,betweenthepartieswithrespectthereto.8.2AmendmentsandWaivers.AnytermofthisAgreementmaybeamendedandtheobservanceofanytermofthisAgreementmaybewaived(eithergenerallyorinaparticularinstanceandeitherretroactivelyorprospectively),onlybyaninstrumentinwritingandsignedbythePartyagainstwhomsuchamendmentorwaiverissoughttobeenforced.8.3SuccessorsandAssis.Exceptasotherwiseexpresslyprovidedherein,thetermsandconditionsofthisAgreementshallinuretothebenefitofandbebindingupontherespectivesuccessorsandassignsoftheParties.EachHoldermayassignalloranyportionofitsrightshereintoanytransfereeofRegistrableSecurities4l3538]4 whichiseligibletobea"Holder"asthattermisusedherein.NothinginthisAgreement,expressorimplied,isintendedtoconferuponanypersonorentityotherthanthePartiesheretoortheirrespectivesuccessorsandassignsanyrights,remedies,obligations,orliabilitiesunderorbyreasonofthisAgreement,exceptasmaybeexpresslyprovidedinthisAgreement.4.4A~i~L.7MAg***.gId'g&*egvhIandtherightsandobligationsofthepartieshereunder,andallamendmentsandsupplementshereofandallwaiversandconsentshereunder,shallbeconstruedinaccordancewithandgovernedbythedomesticsubstantivelawsoftheStateofNewYorkwithoutgivingeffecttoanychoiceoflaworconflictsoflawprovisionorrulethatwouldcausetheapplicationofthedomesticsubstantivelawsofanyotherjurisdiction.8.5Seve~bilite,IfanyprovisionsofthisAgreementasappliedtoanypartortoanycircumstanceoranyPartyshallbeadjudgedbyacourttobeinvalidorunenforceable,thesameshallinnowayaffectanyotherprovisionofthisAgreement,theapplicationofsuchprovisioninanyothercircumstancesortoanyotherParty,orthevalidityorenforceabilityofthisAgreement.8.6~Cations.TheheadingsandcaptionsusedinthisAgreementareusedforconvenienceonlyandarenottobeconsideredinconstruingorinterpretingthisAgreement.LyC*.TA'g**7I*dIcounterparts,eachofwhichshallbedeemedanoriginal,butallofwhichtogethershallconstituteoneandthesameinstrument.8.8SeveralObliations.TheobligationsoftheHoldershereinareseveralandnotjoint.NoHoldershallberesponsiblefortheperformanceorfailureonthepartofanyotherHoldertoperformitsobligations.gI353S NWITNESSWHEREOF,thePartiesheretohaveenteredintothisRegistrationRightsAgreementasofthedatefirstabove~mitten.NiagaraMohawkPowerCorporationBy:Its[IPPs/IPPDesignees]By:Its:By:ItsBy:ItsBy:Its:li353816 EXHIBIT3.7FormofShareholder'sAgreement¹l2704

Exhbit3.7SHARBHOLDBR'SAGRBBMB!ff,datedasofbyandbetween.(the"Shareholder"),an'dNiagaraMohawkpower'Corporation(the'Compan~.WHEREAS,simultaneouslywiththeexecutionhereoftheShareholderoramember(s)oftheSponsorGroup(ashereinaiierdeQned)isacquYiingshamsoftheCompany'sCommonStock,parvalueSi00persluue(the"CommonStace),pursuanttoaMasterRestructuringAgreement,datedasof3uly9,1997(the"MRA");WHEREAS,[insertnamesofothersponsorentitiesEstedonSchedule3.7oftheMRA](collectivelywiththeirrespectiveSubsidiaries,the"OtherSponsorGroup+aresimultaneouslyenteringintoShareholder'sAgreements;NOW,THEREFORE,inconsiderationofthepremisesaadagreementshereinsetforth,thepartiesdoherebyagreeasfollowsSECTION1.~1.1Asofthedatehereof,foIlowingtheaequi'sitionofCommonStock'ursuanttotheMRA,theShareholderanditsSubsidiaries(coHectively,the"SponsorGroup")donotowa,inthcaggregate,inexcessof4.9/o[9.9/ofordesigaees]oftheoutstandingCommonStockoftheCompany(assumingforthesepurposesthatthcoutstandingCommonStockofthcCompanyisnotlessthan190,390,600sharesasofthedatehereof).AsusedinthisAgreement,theterm"Subsidiary"means,withrespecttoanyperson,anyotherperson,whetherincorporatedorunincorporated,ofwhichatleastamajorityofthesecuritiesorownershipinterestshayingbytheirtermsor(HIDvotingpowertoelectamajorityoftheboardofdirectorsorotherpersonspaformiagsunilarfunctionsisdirectlyorindirectlyownedorcontrolledbysuchperson.TotheKnowledgeofShareholder,[parententityorentities-secattachedschedule]anditsortheirafBliates(asthatternisdeflaedinRule12b-2undertheSecuritiesExchangeActof1934,asamended(the"ExchangeAct"))who'arenotmembersoftheSponsorGroup(collectiveIy,"ExcludedAfmiates")doaotownanysharesofCommonStockasofthedatehereof.[modifyasappropriate,subjecttoSection6.14ofMRA]AsusedinthisAgreement,theterm"Knowledge"shallbetheknowledgeoftheseniorcorporateofBcers,orcomparableexecutivepersonnel,ofapersoa,andshallnotimplyanydutyofinquiry.FollowingtheacquisitionofsharesofCommonStockpursuanttotheMRA,theStuueholderagreestheSponsorGroupwillnot,directlyorindirectly,aloneorinconcertarithothers,acquire,offertoacquireoragreetoacquire,bypurchase,giRorotherwise,beneflcialownership(ashereinafterdeflaed)ofanyadditionalsharesoftheCompany'sthenoutstandingCommonStockorbeneflcialownershipofanyotherVotingSecuritiesDCLAML'70194l0 (ashereina6erdefincd)oftheCompany.Notwithstandingthcforegoing,thcSponsorGroupmayacquireuptoanadditional5%[%loweredtoamaximumof9.9/o,includinganyCommonStockacquiredpursuanttotheMRAforIPPdesigneewithgreaterthan4.9loatclosing]ofthethenoutstandingVotingSecuritiesymH'dadthatsuchpercentageshaHbereducedbythepercentageofsharesofVotingSecuritiesheld,totheKnowledgeofShareholder,bythcExcludedAf6liatesatthetimeofanyproposedacquisition.Participationinarightsoffering,receiptofstockdividends,andsimilarcorporateeventsnotinitiatedbyanymember'oftheSponsorGroupshallbeexcludedRomtheforegoingIcstzlcflons.1.2NoviolationofSection1.1.shallbedeemedtooccurasaresultoftheacquisitionbytheSponsorGroupofbeneficialownershipofVotingSecuritiesastheresultofanyacquisitionofvotingsecuritiesofanotherperson(a)whosevotingsecuritiesareregisteredunderthcExchangeActor(b)withrespecttowhomthcVotingSecuritiesheldisanimmaterialassetofsuchperson,ineithercasebyamemberoftheSponsorGroupwhichresultsinsuchmemberoftheSponsorGmupindirectlybecomingthebeneficialownerofadditionalVotingSecuritiesoftheCompany,gazing@thatifsuchmemberoftheSponsorGroupacquirescontrolofsuchotherpersonorisotherwiseabletodirectthevotingordispositionoftheadditionalVotingSecurities,suchmemberoftheSponsorGroupshallvotesuchVotingSecuritiesinthemannersetforthinSection1.4.1.3TheShareholderagreestheSponsorGroupwiHnot,directlyorindirectly,aloneorinconcertwithothers(includingtheExcludedAaiates),(a)make,orinanywayparticipatein,anysolicitation"of"proxies"(assuchtamsaredefinedinRulc14a-1ofRegulation14ApromulgatedbytheSecuritiesandExchangeCommission-pursuanttoSection14oftheExchangeAct,disregardingclause(iv)ofRule14a-1((1)2)andincludinganyexemptsolicitationpursuanttoRule14a-2(b)(l))relatingtotheVotingSecurities(exceptastoanyproxiesthatmaybegivenpursuanttoSection1.4);call,orinanywayparticipateinacallfor,anyspecialmeetingofshareholders'oftheCompany;request,ortakeanyactiontoobtainorretainanylistofholdersofanysecuritiesoftheCompany;initiateorproposeanyshareholderproposalorparticipateinthemalCingof,orsolicitshmholdersfortheapprovalof,oncormorcshareholderproposalsre1atingtotheCompany;(b)depositanyVotingSecuritiesinavotingtrustorsubjectthemtoanyvotingagreementoranangements,exceptasprovidedhereinandexceptasamongthemembersoftheSponsorGroup;(c)form,joinorinanywayparticipateinagroupwithrespecttoanyVotingSecurities(oranysecuritiestheownershipofwhichwouldmaketheownerthereofabeneficiaownerofVotingSecurities)(exceptasamongthcmembersoftheSponsorGroup);(d)othenmseacttocontrolthcCompanyorthenuuegement,boardofdirectors,poHciesorafMrsoftheCompanyincluding,withoutlimitation,Oimakinganyo'erorproposaltoacquireanysecuritiesorassetsoftheCompanyoranyofitsaf6Hatesorsolicitingorproposingto.effectornegotiateanyformofmerger,consolidationorshareexchange(a"businesscombination"),restructuring,recapitalizationorotherextraordinarytransactioninvolving,oranychangeincontrolof,theCompany,itsa6iliatesoranyofDCLhNOl:70194.10 theirrespectivesecuritiesorassets(exceptforaproposalfortheacquisitionofanyofthcnon-nucleargeneratingassetsoftheCompanyoritsafBliates("GeneratingAssets")whichwouldnotrequiretheCompanyoranyofitsafBHatestomakeanypublicdisclosurethereof)or(ii)exceptasexpresslyprovidedintheMRA,seekingboardrepresentationortheremovalofanydirectorsormanagementorachangeinthecompositionorsizeoftheboardofdirectorsoftheCompany,or(iii)makinganyrequesttoamendorwaiveanyprovisionofthisAgreementthatwouldrequirethcCompanytomakepublicdisclosurethereoF,(c)discloseanyintent,purpose,planorproposalwithrespecttothisAgreementortheCompany,itsaf61iatesortheboardofdirectors,management,policiesoraffairsorsecuritiesorassetsoftheCompanyoritsafBHatesthatisconditionedon,orwouldrequire,waiver,amendment,nulHficationorinvalidationofanyprovisionofthis.Agreement,ortakeanyactionthatcouldrequiretheCompanyoranyofitsafBHatestomakeanypublicdisclosurerelatingtoanysuchintent,purpose,plan,proposalorcondition;or(Qassist,adviseorencourageanypersonwithrespectto,orseektodo,anyoftheforegoing.Notwithstandingtheforegoing,Qiifanyperson,aloneorinconcertwithothers(otherthanthcExcludedAfBHates),(A)makesanunsolicitedhug5htenderorexchangeofFertoacquircVotingSecuritiesthatwouldresultinbencficialownershipbysuchperson,aloneorinconcertwithothers,ofatleast2P/oofthcCompany'soutstandingVotingSecurities,(B)makesanunsolicited~~proposaltoacquircatleastamajorityoftheVotingSecuritiesorsubstantiallyalloftheassetsoftheCompany,ineithercaseeitherdirectlyorthroughabusinesscombination,andinconjunctiontherewith,mailsaproxystatementtoshareholdersoftheCompanyseekingachangeinthecompositionofthcboardofdirectorsoftheCompanyor(C)atatimewhentheCompanyanditsafBHatesownsubstantiallyalloftheGeneratingAssets,entersintoanagreementwiththeCompanyforthcsaleofsubstantiallyallassetsoftheCompanyora.businesscombinationinwhich(x)theshareholdersoftheCompanypriortothcconsummationofsuchbusinesscombination(excludingthepersonmrdangtheOfferanditsafBHates)wi11,immediatelyfollowingsuchconsurnnmtion,ownlessthanamajorityoftheVotingSecuritiesoftheresultingentityor(y)thedirectorsoftheCompanypriortosuchconsummationwill,immediatelyfollowingsu'chconsummation,constitutelessthanamajorityoftheboardofdirectorsoftheresultingentity(anyof(A),(B)or(C),an"OfFer"),therestrictionscontainedinSections1.1,1.2and1.3ofthisAgreementshallnotapplytotheextentnecessarytoallowanymemberoftheSponsorGrouporanyExcludedAfBliatethereof,ifapplicable,tomakeaproposaltotheboardofdirectorstoacquiretheCompanyonthetermssetforthbelowortoacquireallorsubstantiallyalloftheassetsoftheCompany,andtodisclosesuchproposal,and/ortomake,andconsummate,atenderorexchangeoffertoacquirethcCompany,asthecasemaybe,ifsuchproposaloroffer(x)is(ifapplicable)foratleastthesamepercentageofVotingSecuritiesastheOffer(includinganysecondsteptransactionproposedintheOfFer)and(y)is,inthewrittenopinionofanationallyrecogrCizedinvestmentbankingfirm,takingintoaccountanysecondsteptransactionsintherespectiveoffers,theequalormorefavorable,froma'inancialpointofview,totheholdersofCommonStockthantheOffer,(ii)nothingcontainedhereinshallprohibitthesaleofVotingSecurities,withoutanyactionstosolicit,DCLANOl:70194.l0 induceorencourageanattemptedchangeofcontrolofthcCompany,bytheSponsorGrouporprohibitthepurchaseofCommonStockascontemplatedbySection1.1and(iii)nothingcontainedhereinshallpreventanymemberoftheSponsorGroupf'rombiddingonanda'cquiYinganyGeneratingAssetsoftheCompany(includingthestockofanyafBliates)whichtheCompanyputsupforsaleinacompetitiveprocessifsuchbidsaremadeinaccordancewiththetermsofsuchprocess.Nothingintheforegoingsubsections(d),(e)or(f)isintendedtorestricttheactionsoftheSponsorGroupinacapacityotherthanasholderorpotentialacquirerofCommonStockinamatterwhichisunrelatedtoapotentialchangeofcontroloftheCompany.1AThcShareholderagreestheSponsorGroupshalltakesuchactionasmayberequiredsothatallVotingSecuritiesbcneGciallyowneddirectlyorindirectlybytheSponsorGroupshaHbcpresentforquorumpurposes,inpersonorrepresentedbyproxyatcvciymeetingofholdersofCommonStock,andtheSponsorGroup(a)shaHvoteitsVotingSecuritiesforthcelectionofaHnomineesfordirectorsateachshateho!dermeetingoftheCompanyinthesameproportionasaHotherVotingSecuritiesarevoted(otherthantheVotingSecuritiesheldbythcSponsorGroupandthcOtherSponsor'GroupswhichremainapartytoaShareholderAgreement,asweHasanyVotingSecuritiestransferredbytheSponsorGrouporsuchOtherSponsorGroupstoanyoftheirrespectiveExcludedAf5liatcs)(the"DisinterestedShares")present,inpersonorbyproxy,atsuchmeetingandvotingwithrespecttotheelectionofdirectors,exceptthatifsuchelectionfordirectorsshalloccurwhilethereispendinganOffermadebyanyperson(otherthananExcludedAfBliate),theSponsorGroupmayvoteinitsdiscretion,and(b}mayvoteonaHothermattersinitsdiscretion,1zgzidg,thatwithrespecttoanymattersotherthansalesofsecuritiesorassets,businesscombinations,restructurings,recapitaEzationsandotherextraordinarytraiisactions,thepercentageofVotingSecunticsvotedonaHmattersbytheSponsorGroupinaccordancewiththerecommendationoftheCompany'sboardshallbenolessthanthepercentageofDisinterestedSharessovoted.Notwithstandingtheforegoing,ifamemberoftheSponsorGroupmakesaproposalorofferinresponsetoanOfferdescribedunder(i)(C)'ofthesecondsentenceofSection1.3,allVotingSecuritiesheldbytheSponsorGroupshallbevoted,bothwithrespecttothe06erandtheproposaloroffermadebythememberoftheSponsorGroup,inthesameproportionastheDisinterestedShares.SECTION2.2.1SolongasthesharesofCommonStockheldbytheOtherSponsorGrouporitsrespectiveExcludedAf5liatesremainsubjecttotheprovisionsoftheirrespectiveShareholder'sAgreement(orwouldbesubjectbyvirtueofsuchtransfer),theShareholderagreestheSponsorGroupwillnot,directlyorindirectly,aloneorinconcertwithothers,sellorotherwisetransferinanymanneranyVotingSecuritiestoanymemberofanOtherSponsorcroup,ortoapersonwhichis,totheKnowledgeofthesellingshareholder,anExcludedA6iliateofanymemberofanOtherSponsorGroup.InanyDcLhNOlf0194.i0 privatsaleofVotingSecuritiewhichissubjecttotheprecagngsentence,thesellingmemberoftheSponsorGroupshallobtaintherepresentationofthebuyerthatitisnotanExcludedAfBIiatcofanymemberofanOtherSponsorGroup.SubjecttothclimitationsofSection1.1,thcShareholder,ifitholdsanyVotingSecurities,maysellorotherwise'ransferVotingSecuritiestomembersoftheSponsorGroup,providedthatsuchmembersagreeinwritingtobeboundbytheprovisionshereof.2.2FoHowinganytransferofVotingSccuritiesbytheSponsorGrouptoanyExcludedA6iliateoftheSponsorGroup,thcrestrictionscontainedinSections1.1,1.2,1.3and1.4shaHnolongerbeapplicabletosuchtauLsfencdVotingSecurities,exceptthatthcrestrictionscontainedinSection1AshaHcontinuetoapplytosuchtransferredVotingSecuritieswhileheldbyanExcludedAfBliatewithrespecttoanyactioninitiatedbyanymemberofthcSponsorGmuporanyofitsExcludedAGiliatcsandexceptthatifUotingSecuritiesarctransferredtoanExcludedAf61iatcduringthependencyofaproxysolicitationwithrespecttoUotingSecuritiesbyanypersonotherthantheCompany'sboardofdirectors(includinganannouncementbysuchpersonthatitintendstoengageinaproxysolicitation),aHrestrictionscontainedinSection1AshallbeappHcabletosuchVotingSecuritiesduringthependencyofsuchproxysolicitation.2.3ExceptassetforthinSections2.1and2.2,nothingcontainedinthisAgreementshaHinanywaylimitorrestrictanysaleortransferofVotingSecuritiesbyanymemberoftheSponsorGroupand,exceptassetforthinSections2.1and22,nothingcontainedinthisAgreementshallimposeanyrestrictionsonanyUotingSecuritiessoldortransferredoutsideoftheSponsorGroup.-SECTION3.3.1Eachofthepartiesheretorepresentsandwarrantswithrespecttoitselfthatsuchpartyisdulyauthorizedtoexecute,deliverandperformthisAgreement,thatthisAgreementhasbeendulyexecutedbysuchpartyandthatthisAgreementisavalidandbindingagreementofsuchparty.SECTION4.4.1ThisAgreementshaHterminateGveyears&omthedate'ereoforonsuchearlierdate(the"ReducedOwnershipDate")astheaggregatebeneficialownershipoftheCompany'soutstandingVotingSecuritiesbytheSponsorGroup,inadditiontoanyUotingSecuritiestransferredbytheSponsorGrouptoitsExcludedAfBliates(uptothenumberofsuchUotingSecuritiesstillheldbyaHExcludedAf61iates),islessthan2%,solongassuchpersonsdonotreacquireaggregatebeneficialownershipof2%ormoreoftheCompany'soutstandingVotingSecuritieswithinoncyearoftheReducedOwnershipDate.Iftheaggregatebeneficialownershipofsuchpersonsshallexceed2%withinoneyearoftheReducedOwnershipDate,thisAgreementshallatthetimesuchownershipDCLANO1:VOL94.10 exceedssuchlimitagainbcinfullforceandeffectforthebalanceoftheoriginalterm.IftheShareholderseekstoteraunatethisAgreementasaresultofsuchreducedownership,itshallpromptlyuponrequestbytheCompanyconfirminwritingthebeneficialownershipoftheCompany'sVotingSecuritiesbythcSponsorGroup,aswellasanyVotingSecuritiestransferredbythcSponsorGrouptoanExcludedAfBliate.FollowinganysuchterminationasaresultofreducedownershipthcShareholdershall,ifrequestedbytheCompanyinwriting,confirmsuchbeneficialownership,untiloneyearfollowingtheReducedOwnershipDate,¹twithst'andinganythingtothecontraiycontainedinthisAgreement(a)thisAgreanentshallteraunateatsuchtimeasanyperson,aloneorinconcertwithothers(otherthanthcSponsorGroup,itsExcludedAfBliates,oranyOtherSponsorGrouporitsrespectiveExcludedA6iliatcs),beneficiallyowns25%ormoreoftheVotingSecuritiesand(b)thisAgreementshallternunatcintheeventtheCompanymakesagena31assignmentoranygeneralanangemcntorcompromiseforthcbencfitofcreditors,filesapetitionundertheBankruptcyCode(Title11oftheUnitedStatesCode)orotherwisecommences,authorizesoracquiescesinthecommencementofaproceedingunderanybankruptcyorsimilarlawfortheprotectionofcreditors,orhasapetitioncommencedagainstit4.2ForpurposesofthisAgreement,nia"person"shallmeananyindividual,firm,partnership,association,corporationorotherentityorgmupofsuchpersons;(ii)apersonshallhavebeneficialownership"ofanysecuritiesastowhichsuchpersonmaybedeemedthebcneficialownerpursuanttoRule13d-3undertheExchangeActandshaHinclude,withoutHmitation,anysecuritiessuchpersonhastherighttobecomethebeneficialownerof(whetherornotsuchrightisimmediatelyexercisable)pursuanttoanyagreement,amuigcmentorunderstandingorupontheexerciseofanyexchangeright,conversionright,option,wurantorotherright;and(iii)"VotingSecurities"shallmeansecuritiesthataregenerallyentitledtovoteintheelectionofdirectorsoftheCompany(or,wherereferenceismadetothevotingsecuritieofanotherentitysuchtermshallmeansecuritiesthataregenerallyentitledtovoteintheelectionofdirectors,orcomparablepersons,ofsuchotherentity),4.3TheShareholderacknowledgesandagreesthatirreparabledamagetotheCompanywouldoccurintheevent.anyoftheprovisionsofthisAgreementwerenotperformedinaccordancewiththeirspecifictermsorwereotherwisebreachedandthatsuchdamagewouldnotbecompensableinmoneydamages.ItisaccordinglyagreedthattheCompanyshallbeentitledto,andtheShareholderagreestheSponsorGroupwillnottakeaction,directlyorindirectly,inoppositiontotheCompanysseeking,specificenforcementof,andinjunctiverelieftopreventanyviolationof,thetermshereof,inadditiontoanyotherremedyorreHefavailableatlawor'nequity.4.4TheCommonStockissuedtoanymemberoftheSponsorGrouppursuanttotheMRAwillcontainalegendinsubstantiallythefollowingform:DCLANOi:70I&4.10 "Thesharesofcapitalstockrepresentedbythiscerti6catearesubjecttoaShareholder'sAgreementwhich,amongotherthings,(a)restrictsthesaleortransferofsuchsharesto[anymemberofanOtherSponsorGroupor,ifknowntothesellingshareholder,anyExcludedAfBliateofanOtherSponsorGroup-tobecompleteduponexecution],orcertainoftheirafBliates,and(b)restrictsthevotingofsuchsharesexceptinaccordancetherewith.".UpontheteoauetionofthisAgreement,oruponanytransferofVotingSecuritiestoanyperson(otherthanamenderoftheSponsorGrouporanyExcludedAKiateorasprohibitedbytheGrstsentenceofSection2.1),theCompanyagrees,ifsorequested,tocausetheCompany'stransferagenttoremovethelegend.UponanytransferofVotingSecuritiestoanyExcludedAf61iatepriortoterminationofthisAgreement,theCompanyagrees,ifsorequested,toreplacethelegendtoreQectsolelythevotingrestrictionssetforthinSection2,2.4.5TheShareholderwiHcauseeachmemberoftheSponsorGrouptoobservetheprovisionsofthisAgreement.4.6Allnotices,requestsandothercommunicationstoanypersonnamedhereundershallbeinwriting(includingwire,telecopyorsunilarwriting)andshallbegiventosuchpersonatitsaddressortelecopynumbersetforthbeloworsuchaddressortelecopynumberassuchpersonmayhereafterspecifyforthepurposebynoticetotheotherperson:IftotheCompany:Telecopy:Withacopyto:Telecopy:IftotheShareholder.Telecopy:Withacopyto:Telecopy:DCLAHOl:70194.10 Eachsuchnotice,requestorothercommunicationshallbeeffective(a)ifgivenbytelecopy,whensuchtelecopyistransmittedtothetelecopynumberspeci6edinthissubsectionandtheappropriateconfirmationisreceivedor(b)ifgivenbyanyothermeans,whenactuallyreceivedattheaddressspecifiedinthissubsection,gmziNianoticegivenotherthanduringnormalbusinesshoursoronadayotherthanabusinessdayattheplaceofreceiptshallnotbeefFectiveuntiltheopeningofbusinessonthenextbusinessday.4.7ThisAgreementshallbeconstruedinaccordancewithandgovernedbythelawsoftheStateofNewYork(withoutregardtotheprinciplesofconQictoflawsthereof).4.8ThisAgreementmaybeamended,modifiedorsupplementedonlybywrittenagreementofthepartieshereto.4.9AnyfaBureofanypartytocomplywithanyobligation,covenant,agreementorconditionhaeinmaybewaivedbythepartyentitledtothebenefitofsuchobligation,covenant,agreementorconditiononlybyawritteninstrumentsignedbysuchparty,butsuchwaiverorMuretoinsistuponstrictcompliancewithsuchobligation,.covenant,agreementorconditionshallnotoperateasawaiverof,orestoppelwithrespectto,anysubsequentorotherfailure.WheneverthisAgreementrequiresorpermitsconsent~byoronbehalfofanypartyhereto,suchconsentshallbeeffectiveonlyifgiveninwritinginamannerconsistentwiththerequirementsforawaiverofcompHanceassetforthinthisSection.4.10ThisAgreementandalloftheprovisionshereofshallbebindinguponandinuretothebenefitofthepartiesheretoandtheirrespectivesuccessorsbymergerorotherwisebyoperationoflaw.IntheeventofanNMPCRestructuring(asdefinedintheMRA),thetermsofthisAgreementshallbeappHcabletoanyVotingSecuritiesreceivedbytheSponsorGroupintheNMPCRestructuring,otherthanVotingSecuritiesofanyentitywhichholdsallorsubstantiallyalloftheGeneratingAssets.4.11ThisAgreementmaybeexecutedintwoormorecounterparts,eachofwhichshallbedeemedanoriginal,butallofwhichtogethershallconstituteoneandthesameinstrument.4.12ThisAgreementembodiestheentireagreementandunderstandingofthepartiesheretoinrespectofthesubjectmattercontainedherein.Therearenootherrestrictions,promises,representations,warranties,covenantsorundertalangswithrespecttothesubjectmatterhereof;otherthanthoseexpresslysetforthorreferredtoherein.ThisAgreementsupersedesallprioragreementsandunderstandingsbetweenthepartieswithrespecttosuchsubjectmatter.DCLhNOl:70194.l0 4.13IfanyprovisionofthisAgreementshallbedeemedordeclaredtobeunenforceablc,invalidorvoid,thesameshallnotimpairanyoftheotherprovisionsofthisAgreement.4.14ThepartiesheretoherebyirrevocablysubmittothejurisdictionoftheUnitedStatesDistrictCourt,SouthernDistrictofNcwYork(or,ifthereisnosubjectmatterjurisdictionbeforesuchcourt,theSuprcmcCourtoftheStateofNewYork,NewYorkCounty)overanylegalactionorproceedingarisingoutoforrelatingtothisAgreementandherebyirrevocablyagreethatallclaimsinrespectofanysuchactionmaybeheardanddeterminedinsuchcourt.Thepartiesherebyirrevocablywaive,tothefullestextentpermittedbyapplicablelaw,anyobjectionwhichtheymaynoworhereafterhavetothelayingofvenueofanysuchsuit,actionorproceedingbroughtinsuchcourtoranydefenseofinconvenientforumforthemaintenanceofsuchaction.EachofthepartiesheretoagreesthatajudgmentinanysuchactionorproceoHngmaybeenforcedinotherjurisdictionsbysuitonthejudgmentorinanyothermannerprovidedbylaw.4.15IfanyExcludedAGiliatereceivedCommonStockasadesigneeuponthcconsummationoftheh6~forthepurposesofthisAgreement,suchCommonStockshallbetreatedas8'itwastransferredtotheExcludedAfBliatefollowingtheexecutionhereof.INWITNESS%HEREOP,thepartiesheretohavecausedthisAgreementtobedulyexecutedasofthedayandyearGrstabovewritten.[Shareholder)[Company]DCLAHORE:70194.10 TheundersignedagreetobeboundherebyasmembersoftheSponsorGroup[iftheyaretoreceivesharesofCommonStockpursuanttotheMRA]:DCLANOl:70l9410 Exhibit3.7DCLhNOI:70194.10-ll-

EXHIBIT5.7BlankFormsofAllocation,ContractsAllocationandContractAdjustmentAllocation(attached)Nl2704

ALLOCATIONOFALLOCABLECONSIDERATION<<Developer>>.'Project>>($'000s)'ighlyConfidentialGovernor'sRoundtableDiscussionsAllocationCashCompanyShares($l¹ofshares)<<D>><<E>>'"/rF)<<Company>>By:Title:KennethA.BuckfireDirector,VfassersteinPerella&Co.<<Close>>'n)epurposeofthispageistoenableWphCo.tonpresentthatallIhcIppsagnxlotheirindividualalhxationsofupfruntpayment,andtoallowWpACo.tostatethatthevaluealluvialtocahprupxtinaggn:gateequalstothetotalupfmntconsiderationpayablcbyNiagaraMohawkPowerCorporationpursuanttotheTermsoftheMasterRestructuringAgteetawt.ThcDepositorywillntaLelinaldistributionstothcprojectontheConsutnntationDateequaltothcan)ountsshownabove.fhcattentionswillnotbcbindinguntilthcMasterkesttueturingAgnwmenthas!xnansignedbyallpartiia.Proratashareof46millionsharesassuminganaggn:gatevalueof$4(X)million.tIVassr.'rsteinPerellaZcCo.II'O'A'IAl.unhtlAkAulNAII)X.ll~

INDEPENDENTPOVKRPRODUCERSlCONTRACTSALLOCATIONAmendedPPA/RestatedContractHIGHLYCONFIDENTIALGovernor'sRoundtableDiscussions<cIPP>><cProject>>ContractYearContractMWhContrac<Price($/MWh)Contr,'.tValue($'000s)HctAveageAnnualCapacity(MW)<<FP>>KennethA.BuckfiteDirector,WassersteinPetella4Co.By:lVassersteinPerelladcCo.

IINDEPENDENTPOWERPRODUCERSICONTRACTSALLOCATIONAmerdedPPA/RestatedContract(ContractAdjustment)HIGHLYCONFIDENTIALGovernor'sRoundtableDiscussions<<IPP.><<Preject>>ContrutYearContractMWhContractPrice($/MWh)Con6.factValue($'000s)Contra';YearContractMWhContractPrice($/MWh)ContractValue($'000s)ContractAdjustment<<IPP>>KennethA.BuckfireDirector,WassetsteinPerella4Co.By:Title:(1)Tl.eContractAdjustmentiscalculatedbeforegivingeffecttothe$5/MWhreductioninyears3through9.~adthe$2.5/MWhreductioninyear10forboththeOriginalandtheAdjustedContractSchedules.WassersteinPerelladcCo.

EXHIBIT8.3AFormofNMPCRepresentationLetterN12704

Exhibit8.3AP.ETTERHEADOFNMPC][ConsummationDate]IndependentPowerProducerslistedonScheduleAheretoRe:MasterRestructurinAcementdatedJul917LadiesandGentlemen:InconnectionwiththeconsummationonthisdateofthetransactionscontemplatedbytheMasterRestructuringAgreementdatedJuly9,1997(the"Agreement")betweenNiagaraMohawkPowerCorporation(the"Company")andtheIPPslistedonScheduleAhereto(the"IPPs"),theCompanyherebyrepresentsandwarrantstoeachIPP,asoftheConsummationDate,thatthefollowingstatementsaretrueinallmaterialrespects(allcapitalizedtermsusedandnototherwisedefinedhereinshallhavethemeaningsascribedtothemintheAgreement):1.TheCompanyisacorporationdulyorganized,validlyexistingandin'oodstandingunderthelawsoftheStateofNewYork,andhasallrequisitecorporatepowerandauthoritytoownitspropertiesandassetsandtocarryonitsbusinessinthemannernow.conductedandasproposedtobeconductedinaccordancewiththeAgreementandtheContracts.TheCompanyisdulyqualifiedtotransactbusinessandisingoodstandingineachjurisdictionexceptwherethefailuresotoqualifywouldhavenothaveaMaterialAdverseEffectontheCompany.2.TheCompanyhasallrequisitecorporatepowerandauthoritytoexecuteanddelivertheAgreementandallotheragreementsexecutedortobeexecutedbyitpursuantthereto,andtocarryouttheprovisionsoftheAgreementinaccordancewiththetermsthereof,andallotheragreementsexecutedortobeexecutedbyitpursuantthereto,including,butnotlimitedto,thepowerandauthoritytoissueandselltheCompanySharesandShort-TermNotes,andtoenterintoandperformtheContracts;allcorporateactiononthepartoftheCompany,itsofficers,directorsandshareholdersnecessaryfortheauthorization,executionanddeliveryoftheAgreementinaccordancewiththetermsthereof,andallotheragreementsexecutedortobeexecutedbytheCompanypursuantthereto,theperformance.ofallobligationsoftheCompanythereunder,andtheauthorization,issuance,saleanddeliverybytheCompanyoftheCompanySharesandShort-TermNotes(ifapplicable)pursuantthereto,hasbeentaken;theAgreementandallotheragreementsexecutedbytheCompanypursuanttheretohavebeendulyandvalidlyexecutedanddeliveredbytheCompany;andtheAgreementandallotheragreementsexecutedortobeexecutedbytheCompanypursuanttheretoconstituteorwillconstitutevalidandleeallv.l430lv07 bindingobligationsoftheCompany,enforceableagainsttheCompanyinaccordancewiththeirrespectiveterms.3.Exceptfor(i)thoseRegulatoryApprovalswhichhavebeenobtained,madeorgivenonorbeforethedatehereofand(ii)anyfilingsmadebytheCompanyundertheHart-Scott-RodinoAct,noconsent,approval,qualification,order,orauthorizationorotheractionof,orfilingorregistrationwith,anyGovernmentalAuthorityisrequiredonthepartoftheCompanyinconnectionwiththeCompany'svalidexecution,deliveryorperformanceoftheAgreement,oranyoftheotheragreementsexecutedortobeexecutedbytheCompanypursuantthereto,ortheauthorization,issuance,saleanddeliverybytheCompanyoftheCompanySharesandShort-TermNotes(ifapplicable),which,ifnotobtained,madeorgiven,couldreasonablybeexpectedtohaveaMaterialAdverseEffectontheCompany.4.Theexecution,deliveryandperformancebytheCompanyoftheAgreement,anyotheragreementsexecutedortobeexecutedbytheCompanypursuantthereto,andtheconsummationofthetransactionscontemplatedthereby(a)isnotinviolationordefaultofanyprovisionofitsCertificateofIncorporationorBy-Laws,and(b)isnotinconflictwithanddoesnotconstitute,withorwithoutthepassageoftimeorgivingofnotice,amaterialviolationordefault,orgiverisetoanymaterialobligation,under(i)anymaterialmortgage,indenture,agreement,instrumentorcontracttowhichtheCompanyisapartyorbywhichitoranyofitsmaterialassetsisboundor(ii)anylocal,stateorfederaljudgment,order,writ,decree,statute,ruleorregulationapplicabletotheCompanyoranyofitsmaterialassets.5.ScheduleBheretosetsforth(i)theauthorizedcapitaloftheCompany,(ii)thenumberofsharesofCommonStockissuedandoutstandingand(iii)thenumberofshares.ofCommonStockissuableupontheexerciseofanyoptions,warrantsorrights,oruponconversionorexchangeofanyothersecuritiesoutstanding,asof{notearlierthantenBusinessDayspriortothedatehereof].6.TheCompanySharesacquiredbytheIPPpursuanttotheAgreement,ifany,havebeendulyandvalidlyissued,fullypaid,andarenonassessable,areBeeofrestrictionsontransferotherthanrestrictionsontransferrequiredbyfederalsecuritieslaws,and,ifapplicable,theShareholder'sAgreementandaredulylistedontheNewYorkStockExchange.TheCompanySharesarenotsubjecttoanypreemptiverightsorrightsoffirstrefusal.AssumingthetruthandaccuracyofeachIPP'srepresentationssetforthinSection5.6oftheAgreement(or,'withrespecttoanydesigneeofanIPP,suchdesignee'srepresentationssetforthinarepresentationlettercontainingsubstantiallythesamerepresentationssetforthinSection5.6oftheAgreement),theoffer,saleandissuanceoftheCompanySharespursuanttothisAgreement(i)willnotrequireregistrationundertheSecuritiesActand(ii)willnotrequireregistrationorqualificationundersuchofthe"bluesky"orsecuritieslawsofthejurisdictionsintheUnitedStates(orwillbeincompliancetherewith)asshallbeapplicabletotheoffer,saleandissuanceoftheCompanyShares(subjecttothelimitationthattheCompanymakesnorepresentationorwarrantywithrespecttoanyoQerbyanyIPPtoanydesigneeofsuchIPPascontemplatedbyl430Iv07 Sections3.3and5.6oftheMRA),andneithertheCompanynoranyauthorizedagentactingonitsbehalfwilltakeanyactionhereafterthatwouldrequiresuchregistration.7.SinceJanuary1,1995,theCompanyhasmadeallfilingsrequiredtobemadebyitundertheExchangeActandanyothersecuritieslawsapplicabletotheCompanyandisotherwiseeligibletofilearegistrationstatementonFormS-3coveringtheofferingandsaleoftheCompanySharesandtheDebtSecurities.Asoftheirrespectivedates,or,ifamended,asofthedateofsuchamendment,theSECReportscompliedinallmaterialrespectswiththerequirementsoftheExchangeAct,andtherulesandregulationsoftheSECthereunder.Asoftheirrespectivedates,or,ifamended,asofthedateofsuchamendment,theSECReportsdidnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactrequiredtobestatedthereinornecessarytomakethestatementstherein,inlightofthecircumstancesunderwhichtheyweremade,notmisleading.ThefinancialstatementsoftheCompanyincludedintheCompany'sAnnualReportonForm10-KforthefiscalyearendedDecember31,1996,theCompany'sQuarterlyReportonForm10-QforthefiscalquarterendedMarch31,1997,andinanysubsequentSECReportscomplyastoforminallmaterialrespectswithapplicableaccountingrequirementsandthepublishedrulesandregulationsoftheSECwithrespectthereto,havebeenpreparedinaccordancewithgenerallyacceptedaccountingprinciplesasstatedinsuchfinancialstatementsappliedonaconsistentbasisduringtheperiodcoveredandfairlypresent,inallmaterialrespects,thefinancialpositionoftheCompanyasofthedatethereofandtheresultsofoperationsandchangesinfinancialpositionoftheCompanyfortheperiodthenendedsubject,inthecaseofunauditedstatements,tonotesandnormalyearwndauditadjustments,noneofwhichshallbematerialinamountoreffect.8.TheCompanyhasdisclosedtotheIPPsallmaterialplansandproposalsconcerningtheNMPCRestructuringwhichhavebeendisclosedtoanyGovernmentalAuthorityorapprovedbytheBoardofDirectorsoftheCompanyandwhichcouldreasonablyhaveamaterialadverseeffectonanyIPPortheRestructuring,includingbutnotlimitedtotheContractsoranyoftheconsiderationtobereceivedbytheIPPshereunder.TheCompanyhasnotbeenauthorizedbyitsBoardofDirectors,noristheCompanyseekingsuchauthorization,tofilea,petitionundertheBankruptcyCodeorotherwisetocommence,authorizeoracquiesceinthecommencementofaproceedingunderanybankruptcyorsimilarlawfortheprotectionofcreditors,ortomakeageneralassignmentoranygeneralarrangementorcompromiseforthebenefitofcreditors,norhastheCompanymade,commenced,authorizedoracquiescedinthecommencementofanysuchproceedingorassignmentorhadanysuchpetition,proceedingorassignmentcommencedagainstit.9.TheCompanyherebycertifiesthattheconditionsspecifiedinSection8.2oftheAgreementhavebeensatisfied(unlesswaivedbytheIPPinwriting).l0.TheforegoingrepresentationsandwarrantiesassumethatnopersontakingCommonStockpursuanttotheAgreementwillown,togetherwithitsAffiliates,10%ormoreofl430lv07 theoutstandingCommonStockfollowingConsummation,andtheCompanyshallhavenoliabilityhereunderintheeventsuchassumptionisuntrue.11.TherepresentationsandwarrantiesoftheCompanycontainedhereinshallsurvivetheConsummationDateforaperiodoftwo(2)years.NiagaraMohawkPowerCorporationBy:Name:Title:"l430lv07 EXHIBIT8.3CFormofOpinionofNMPC'sCounselNI2704

Exhibit83CP.ETTERHEADOFNMPC'SCOUNSEL][ConsummationDate]TotheIndependentPowerProducerslistedonScheduleAhereto

DearSirs:

WehaveactedascorporatecounseltoNiagaraMohawkPowerCorporation,aNewYorkcorporation("NMPC"),inconnectionwiththeexecutionanddeliveryoftheMasterRestructuringAgreement,datedasofJuly91997(th"Agreement'),byandamongNMPCandtheindependentpowerproducerslistedonScheduleAhereto,theShareholder'sAgreements,theRegistrationRightsAgreement,theShort-TermNotes,theAmendedPPA,theRestatedContractsandtheFixedPriceSwapContracts(collectively,theSpecifiedRestructuringDocuments").ThisopinioniseliveredtoyoupursuanttoSection8.3(c)oftheAgreement.CapitalizedtermsusedhereinbutnototherwisedefinedhereinshallhavetherespectivemeaningsascribedtosuchtermsintheAgreement.Inconnectiontherewith,wehaveexaminedsuchcorporaterecords,certificatesandotherdocuments,andsuchquestionsoflaw,aswehaveconsiderednecessaryorappropriateforthepurposesofthisopinion.Uponthebasisofsuchexamination,itouropinionthat:1.NMPChasbeendulyincorporatedandisanexistingcorporationingoodstandingunderthelawsoftheStateofNewYork,andhasallrequisitecorporatepowerandauthoritytoownitspropertiesandassetsandtocarryonitsbusinessinthemannernowconducted.2.NMPChasallrequisitecorporatepowerandauthoritytoexecuteanddelivertheSpecifiedRestructuringDocumentsandperformtheobligationsofNMPCthereunder,allcorporateactiononthepartofNMFC,itsof5cers,directors andshareholdersnecessaryfortheauthorization,executionanddeliveryoftheSpecifiedRestructuringDocumentsandtheperfomianceoftheobligationsofNMPCthereunderhasbeentaken;theSpecifiedRestructuringDocumentshavebeendulyexecutedanddeliveredbyNMPC;andtheSpecifiedRestructuringDocumentsconstitutevalidand,legallybindingobligationsofNMPCenforceableagainstNMPCinaccordancewiththetheirrespectiveterms,subjecttobankruptcy,insolvency,&audulenttransfer,reorganization,moratoriumandsimilarlawsofgeneralapplicabilityrelatingtooraffectingcreditors'ights,togeneralequityprinciplesandtolimitationsonrightstoindemnificationandcontributionthereunderwhichmaybeimposedbyapplicablelaw.3.TheCompanyShareshavebeendulyauthorizedandvalidlyissuedandarefullypaidandnonassessable.ThecertificatesrepresentingtheCompanySharesareindueandproperformandhavebeenvalidlyexecuted.4.NoregistrationoftheCompanySharesundertheSecuritiesActisrequiredinconnectionwiththeissuanceoftheCommonSharespursumttotheAgreementandsuchissuancewillnotresultinaviolationoftheregistrationrequirementsoftheblueskyorstatesecuritieslawsoftheStateofNewYork.TheforegoingopinionsarelimitedtothelawsoftheStateofNewYorkand,inthecaseoftheopinionexpressedin(4)above,theFederallawsoftheUnitedStates,andweareexpressingnoopinionastotheeffectofthelawsofanyotherJurisdiction.Inrenderingtheopinionexpressedin(4)above,wehave,withyourapproval,assumedtheaccuracyoftherepresentationsandwarrantiesandcompliancewiththecovenantsoftheCompany,theIPPsandotherinitialacquirorsoftheCompanySharescontainedintheAgreementandthe[insertreferencetoletterswhichwillbedeliveredbytheinitialacquirors,asrequiredbytheAgreement).Wenote,withrespecttosuchopinion,thatweareexpressingnoopinionastowhenandunderwhatcircunistancestheCompanySharesmaybereofferedandresoldbytheinitialacquirorsthereof.Inrenderingtheforegoingopinions,wehavealso,withyourapproval,reliedastocertainmattersoninformationobtainedfromthepublicoQicials,oKcersof:NMPCandothersourcesbelievedbyustoberesponsible,andwehaveassumedthat(a)thepartiestoeachoftheSpecifiedRestructuringAgreements,eachoftheotheragreementsreferredtothereinandeachotheragreementrequiredtobeexecutedpursuanttoanyoftheforegoingagreements(collectively,the"RestructuringAgreements")havereceivedallRegulatoryApprovals,IPPfThirdPartyConsents,NMPCfIMrdPartyConsentsandNMPCffhirdPartyReleasesrequiredtobeobtainedbytheminconnectionwiththeexecution,deliveryandperformanceoftheRestructuringAgreements,(b)theexecution,deliveryandperformanceoftheRestructuringAgreementswillnotcontravene419533 anylaw,ruleorregulationapplicableasaresultofthestatusofanypartytotheRestructuringAgreementsasautility,anowneroroperatorofnuclearpowergeneratingfacilitiesoranyotherformorregulatedentity,(c)theSpecifiedRestructuringAgreementshavebeendulyauthorized,executedanddeliveredbythepartiestheretootherthanNMPC,(d)thecertificatesfortheCompanySharesconformtothespecimenthereofexaminedbyusandhavebeendulycountersignedandregisteredbythetransferagentandregistrarfortheCommonStockand(e)thesignaturesonalldocumentsexaminedbyusaregenuine,assumptionswhichwehavenotindependentlyverified.ATheopinionsexpressedhereinaresolelyforthebenefitoftheIPPsand,withoutourexpresswrittenconsent,neitherouropinionnorthisopinionlettermaybecirculatedorfurnishedtoorrelieduponbyanyotherpersonorentity.Uerytrulyyours,fThisformwillbesubjecttomodificationtoreflectcustomaryandreasonableassumptions,qualiTicationsandlimitationsrequiredbytheindividualopiningcounseL)4I9533

EXHIBIT9.3AFormofIPPRepresentationI.etterPl2704

Exhibit9.3A[LETTERHEADOFIPP][ConsummationDate]NiagaraMohawkPowerCorporation300ErieBoulevardVestSyracuse,NY13202Re:MasterRestructurinAreementdatedJul91997LadiesandGentlemen:InconnectionwiththeconsummationonthisdateofthetransactionscontemplatedbytheMasterRestructuringAgreementdatedJuly9,1997(the"Agreement")betweenNiagaraMohawkPowerCorporation(the"Company"),theundersignedIPP(the"IPP")andtheotherIPPswhoarepartiesthereto,theIPPherebyrepresentsandwamintstotheCompany,asoftheConsummationDate,thatthefollowingstatementsaretrueinallmaterialrespects(allcapitalizedtermsusedandnototherwisedefinedhereinshallhavethemeaningsascribedtothemintheAgreement):1.TheIPPisa[corporation][partnership]dulyorganized,validlyexistingandingoodstandingunderthelawsofitsstateofincorporationorformation,andhasall,requisitepowerandauthority,corporateorother,toownitspropertiesandassetsandtocarryonitsbusinessinthemannernowconductedandasproposedtobeconductedinaccordancewiththisAgreementandtheContracts.2.TheIPPhasallrequisite[corporate][partnership]powerandauthoritytoexecuteanddelivertheAgreementandallotheragreementsexecutedortobeexecutedbyitpursuantthereto,andtocanyouttheprovisionsoftheAgreementinaccordancewiththetermsthereof,andallotheragreementsexecutedortobeexecutedbyitpursuantthereto,including,butnotlimitedto,thepower'andauthoritytoenterintoandperformtheContractstowhichitisaparty;all[corporate][partnership]actiononthepartoftheIPP,itsofficers,directors,stockholdersandpartners,asapplicable,necessaryfortheauthorization,executionanddeliveryoftheAgreement,allotheragreementsexecutedortobeexecutedbytheIPPpursuantthereto,andtheperformanceofallobligationsoftheIPPthereunder,hasbeentaken;theAgreementandallotheragreementsexecutedbytheIPPpursuanttheretohavebeendulyandvalidlyexecutedanddeliveredbytheIPP;andtheAgreementandallotheragreementsexecutedortobeexecutedbytheIPPpursuanttheretoconstituteorwillconstitutevalidandlegallybindingobligationsoftheIPP,enforceableagainsttheIPPinaccordancewiththeirrespectiveterms.Nl430X 3.Exceptfor(i}thoseRegulatoryApprovalswhichhavebeenobtained,madeorgivenonorbeforethedatehereofand(ii)anyfilingsmadebytheIPPundertheHart-Scott-RodinoAct,noconsent,approval,qualification,order,orauthorizationorotheractionof,orfilingorregistrationwith,anyGovernmentalAuthorityisrequiredonthepartoftheIPPinconnectionwiththeIPP'svalidexecution,deliveryorperformanceoftheAgreement,oranyoftheotheragreementsexecutedortobeexecutedbytheIPPpursuantthereto,which,ifnotobtained,madeorgiven,couldreasonablybeexpectedtohaveamaterialadverseeffectontheIPP'sabilitytoenterintoandperformitsobligationsunderthisAgreementoranyotheragreementstobeexecutedbytheIPPpursuanthereto.AnyapplicablewaitingperiodwithrespecttoanyfilingbytheIPPundertheHart-Scott-RodinoActhasexpiredonorbeforethedatehereof.4.Theexecution,deliveryandperformancebytheIPPoftheAgreement,anyotheragreementsexecutedortobeexecutedbytheIPPpursuantthereto,andtheconsummationofthetransactionscontemplatedthereby(a)isnotinviolationordefaultofanyprovisionofitsCertificateofIncorporationorBy-Lawsorpartnershipagreement,asapplicable,and(b)isnotinconfiictwithanddoesnotconstitute,withorwithoutthepassageoftimeorgivingofnotice,amaterialviolationordefault,orgiverisetoanymaterialobligation,under(i)anymaterialmortgage,indenture,agreement,instrumentorcontracttowhichtheIPPisapartyorbywhichitoranyofitsmaterialassetsisboundor(ii)anylocal,stateorfederaljudgment,order,writ,decree,statute,ruleorregulationapplicabletotheIPPoranyofitsmaterialassets.5.IftheIPPhasacquiredanyCompanySharespursuanttotheAgreement:(a)theCompanySharesacquiredbytheIPPhavebeenacquiredforitsownaccountwithoutaviewtotheresaleordistributionthereof,provided,however,thattheforegoingshallnotprecludetheIPP&omsellingtheCompanySharesacquiredbyitinthemannerdescribedinclauses(c)(i),(ii),or(iii)below;(b)theIPPiseither(x)an"accreditedinvestor"assuchtermisdefinedinRule501(a)ofRegulationDundertheSecuritiesActor(y)ifnotan"accreditedinvestor",eitheraloneorwithitspurchaserrepresentative,hassuchknowledgeandexperienceinfinancialandbusinessmattersthatitiscapableofevaluatingthemeritsandrisksofitsinvestmentintheCompanyShares,withinthemeaningofRule506(b)(2)(ii)ofRegulationDundertheSecuritiesAct;and(c)theIPPunderstandsthatthesaleoftheCompanySharestotheIPPhasnotbeenregisteredundertheSecuritiesActoranyapplicablestatesecuritieslawsand,therefore,theCompanySharescannotbetransferred,sold,pledgedorotherwisedisposedof,except(i)pursuanttotheShelfRegistrationStatementoranothereffectiveregistrationstatementundertheSecuritiesActandincompliancewiththeprospectus-deliveryrequirementundertheSecuritiesAct,(ii)inaccordancewithRule144undertheSecuritiesActaftertheapplicabletimeperiodspecifiedthereinor(iii)inaccordancewithanotherexemption'omtheregistrationrequirementsoftheSecuritiesAct.6.TheIPPherebycertifiesthattheconditionsspecifiedinSection9.2oftheAgreementhavebeensatisfied(unlesswaivedbytheCompanyinwriting).NI430Z 7.TherepresentationsandwarrantiesoftheIPPcontainedhereinshallsurvivetheConsummationDateforaperiodoftwo(2)years.tlPP]By:Name:Title;0I4302

EXHIBIT9.3CFormofOpinionofIPP'sCounselNI2704

[LETTERHEADOFIPP'SCOUNSEL]Exhibit9.3C[ConsummationDate]NiagaraMohawkPowerCorporation300ErieBoulevardWestSyracuse,NY13202Re:MasterRestructuringAgreementdated3uly9,1997LadiesandGentlemen:Vfehaveactedascounselto1(th44IPPtt)inconnectionwiththeexecutionanddeliveryoftheMasterRestructuringAgreement,datedasof3uly9,1997(the"Agreement"),byandamongNiagaraMohawkPowerCorporationPowerCorporation,aNewYorkcorporation("NhG<"),thelPPandtheotherindependentpowerproducerslistedonScheduleAthereto,theShareholder'sAgreemeats,theRegistrationRightsAgreement,theAmendedPPA,theRestatedContractsandtheFixedPriceSwapContracts(collectively,the"SpecifiedRestructuringDocuments").ThisopinionisdeliveredtoyoupursuanttoSection9.3(c)oftheAgreement.CapitalizedtermsusedhereinbutnototherwisedefinedhereinshallhavetherespectivemeaningsascribedtosuchtermsintheAgreement.Inconnectionwiththeopinionsexpressedbelow,wehaveexaminedaadarefamiliarwithoriginalsorcopies,certifiedorotherwiseidentifietooursatisfaction,ofthepecifiedRestructuringDocumentsaadsuchotheragreements,certificatesofpublicofficials,certificatesofofficersorrepresentativesoftheIPP[anditsgeneralpartner]aadothers,andsuchotherdocuments,certificatesandcorporateorotherrecordsaswehavedeemednecessaryorappropriateasabasisfortheopinionssetforthherein.opinionthat:Basedontheforegoingandsubjecttothequalificationssetforthherein,itisour1.TheIPPisa[corporation][partnership]dulyorganized,validlyexistingandingoodstandingunderthelawsofitsstateofincorporationorformation,andhasallrequisite[corporate][partnership]poweraadauthoritytoownitspropertiesaadNI4097 NiagaraMohawkPowerCorporationPage2assetsandtocanyonitsbusinessinthemannernowconductedandasproposedtobeconductedinaccordancewiththeSpecifiedRestructuringDocuments.2.TheIPPhasallrequisite[corporate][partnership]powerandauthoritytoexecuteanddelivertheSpecifiedRestructuringDocuments,andperformtheobligationsoftheIPPthereunder;all[corporate][partnership]actiononthepartoftheIPP,itsofficers,directors,stockholdersandpartners,asapplicable,necessaryfortheauthorization,executionanddeliveryoftheSpecifiedRestructuriagDocumentsandtheperformaticeoftheobligationsoftheIPPthereunderhasbeentaken;theSpecifiedRestructuringDocumentshavebeendulyandvalidlyexecutedaaddeliveredbytheIPP;aadtheSpecifiedRestructuringDocumentsconstitutevalidandlegallybindingobligationsoftheIPP,enforceableagainsttheIPPinaccordancewiththeirrespectiveterms,subjecttoapplicablebankruptcy,insolvency,fraudulentconveyance,reorganization,moratoriumandsimilarlawsaffectingcreditors'ightsaadremediesgenerally,andsubjecttogeneralprinciplesofequity,includingprinciplesofcommercialreasonableness,goodfaithandfairdealing(regardlessofwhethereaforcemeatissoughtinaproceedingatlaworiaequity)aadexceptthatrightstoindemnificationandcontributionthereundermaybelimitedbypublicpolicyrelatingthereto.TheforegoingopinionrelatesonlytothelawsoftheStateofNewYork[and,ifotherwise,thestateofincorporationorformationoftheIPP].Vfeexpressaoopinionofthelawofanyotherjurisdiction.Inrenderingtheforegoiagopinions,wehavealso,withyourapproval,reliedastocertainmattersoninformationobtainedfrompublicofficials,officersoftheIPPandothersourcesbelievedbyustoberesponsible,andwehaveassuiaedthat(a)thepartiestoeachoftheSpecifiedRestructuringDocutaents,eachoftheotheragreementsreferredtothereinandeachotheragreementrequiredtobeexecutedpursuanttoanyoftheSpecifiedRestructuringDocumentshavereceivedallRegulatoryApprovals,IPP/ThirdPartyCoaseats,NMPC/ThirdPartyCoasentsandNMPC/ThirdPartyReleasesrequiredtobeobtainedbytheminconnectionwiththeexecution,deliveryandperformaiiceoftheSpecifiedRestructuringDocuments,(b)allparties(otherthantheIPP)totheSpecifiedRestructuringDocumentshavethelegalrightandpowertoenterintotheSpecifiedRestructuringDocumentsandperfonatheirobligationsthereunder,allsuchpartieshavebeendulyauthorizedtoeaterintotheSpecifiedRestructuringDocuinentsandperformtheirobligationsthereunder,andthatallsuchpartieshavedulyexecutedanddeliveredtheSpecifiedRestructuringDocuments,and(c)thesignaturesonalldocumentsexaniinedbyusaregenuine,assumptionswhichwehavenotindependentlyverified.Nl4097 NiagaraMohawkPowerCorporationPage3Thisopinionislimitedtothemattersstatedherein,andnoopinionisimpliedormaybeinferredbeyondthemattersexpresslystated.Weassumehereinnoobligation,andherebydisclaimanyobligation,tomakeanyinquiryafterthedatehereofortoadviseyouofanyfuturechangesintheforegoingorofanyfactsorcircumstancesthatmayhereaftercometoourattention.TheopinionsexpressedhereinaresolelyforthebenefitofNMPCand,withoutourexpresswrittenconsent,neitherouropinionnorthisopinionlettermaybecirculatedorfurnishedtoorrelieduponbyanyotherpersonorentity.Verytrulyyours,P'hisformwillbesubjecttomodificationtoreflectcustomaryandreasonableassumptions,qualificationsandlimitationsrequiredbytheindividualopiningcounsel.]ai409i 0

EXHIBIT14.14FormoI'ThirdPartyNon-DisclosureAgreement012704

Exhibit1414THIRDPARTYNON-DISCIOSUREAGREEMENTThePartiestotheMasterRestructuringAgreementdatedJuly9,1997(the"MRA")betweenNiagaraMohawkPowerCorporation("NMPC")andcertainindependentpowerproducerswhicharesignatoriesthereto(the"IPPs")haveagreedthattheundersignedrecipient("ThirdPartyRecipient")shallbeallowedaccesstocertainconfidentialandproprietaryinformationofthePartiesorpertainingtothetransactionscontemplatedbytheMRAforthelimitedpurposeofassistingtheundersignedDisclosingPartytoobtainaconsent,approval,releaseorotheractioncontemplatedbytheMRA,subject,however,tothetermsandconditionssetforthherein.Asaconditionof,andinconsiderationfor,thegrantingandreceiptofsuchaccesstheundersignedagreeasfollows:1.TheundersignedPartyundertheMRA(the"DisclosingParty")representsthattheThirdPartyRecipient(which,forpurposeshereof,shallmeansuchpersonorentity,itsaf5liates,andtheirrespectiveof5cers,directors,partners,shareholderandemployees)isapersonorentityRomwhomaconsent,approval,releaseorotheractionisormayberequiredtobeotainedinconnectionwiththeMRA,orisafinancialadvisor,attorney,accountantorotherconsultant(collectively,"Representatives")ofsuchpersonorentityretainedforpurposesofassistingsuchpersonorentitywithrespectthereto,andthatdisclosuretotheThirdPartyRecipientisnecessaryordesirabletoadvancethepurposesoftheMRA.Allinformation,whetherwrittenororal(includinganyinformationfurnishedpriortotheexecutionoftheMRA),dincluding,withoutlimitation,anyinformationconcerningthetermsorconditionsoftheMRA,anyotheragreement,documentorinstrumentrelatingtheretooranyofthetransactionscontemplatedthereby,ortheprogress,statusorscheduleofanydiscussionsornegotiationsrelatingthereto,furnishedtotheThirdPartyRecipientbytheDisclosingPartyoranyoftheDisclosingParty'sdirectors,o6icers,partners,employees,agentsorrepresentatives,including,withoutlimitation,financialadvisors,attorneys,accountants,expertsandconsultants,andallreports,analyses,compilations,forecasts,data,studiesorotherdocumentspreparedbytheThirdPartyRecipientcontainingorbased,inwholeorinpart,onanysuchfurnishedinformation,arecollectivelyreferredtohereinasthe"Information".2.TheundersignedThirdPartyRecipientcovenantsandagreesthatallInformationwiBbekeptstrictlyconfidentialandshallnot,withoutthepriorwrittenconsentoftheDisclosingParty,bedisclosedorrevealed,inanymannerwhatsoever,directlyorindirectly,inwholeorinpart,andshallnotbeusedbytheThirdPartyRecipient,directlyorindirectly,inanywayotherthanforpurposesofevaluatingwhethertoprovidetheconsent,approval,releaseorotherthirdpartyactionrequestedbytheDisclosingParty.TheThirdPartyRecipientagreestotransmittheInformationonlytothoseofitsRepresentativeswhoneedtoknowtheInformationforsuchpurposes,whoareinformedbytheThirdPartyRecipientoftheconfidentialnatureoftheInformationandwhoshallexecuteacounterpartofthisAgreementtoindicatetheiragreementtobeboundbyantiioactonlyinaccordance,withthetermsandcod,".itionse-.tlu".

Agreement.TheThirdPartyRecipientshallberesponsibleforanyfailui'etocomplywiththetermsofthisAgreementbyanysuchRepresentatives.3.%'ithoutlimitinginanymannertheforegoingprovisionsofthisAgreement,if(i)theThirdPartyRecipientis,withrespecttoanyIPPwhichisaPartytotheMRA,anaffiliateofsuchIPPoroneofsuchIPP'soritsafIiliates'espectivedirectors,officers,shareholdersorpartners(atanytier),oroneoftheirrespectiveemployees,financialadvisors,attorneys,accountantsorconsultants("IPPParticipants")and(ii)suchIPPParticipantisafinancialinstitution,steamhost,fuelsupplierorfueltransporterwhichisorhasamaterialinterestinapersonorentity(oraffiliateofsuchpersonorentity)RomwhomanyIPPisiequiredtoobtainaconsent,approval,releaseorotheractioncontemplatedbytheMRA,thensuchThirdPartyRecipientacknowledgesandagreesthat(x)itshallnotbepermittedtoparticipateinthenegotiationorperformanceofanyagreement,documentorinstrumentrelatingtotheMRAoranyofthetransactionscontemplatedbytheMRA,(y)allfiles,workpapers,reports,analyses,dataorotherdocumentsbased,inwholeorinpart,onanyconfidentialorproprietaryinformationofanyotherIPP.oraf5liateofanyotherIPPregardingtheMRA,anyotheragreement,documentorinstrumentrelatingthereto,orthetransactionscontemplatedthereby,whichwasorisobtainedat,anytime,includingpriortothedateoftheMRA,duringthecourseoforasaresultofthenegotiation,executionorperformanceoftheMRA,anyother'greement,documentorinstrumentrelatingthereto,oranyofthetransactionscontemplatedthereby(collectively,"ConfidentialIPPInformation")shallbesegregatedandtheThirdPartyRecipientshallnotbeallowedtohaveaccessthereto,and(z)thattheIPPshallnotcommunicateorexchangeanyConfidentialIPPInformationtoorwiththeThirdPartyRecipient,except,withrespecttoeachof(x),(y)and(z)above,totheextentnecessaryforsuchIPPtoobtainitsownconsent,approval,releaseorotheractioncontemplatedbytheMRARomtheThirdPartyRecipient.'.TheprovisionsofthisAgreementshallbeinoperativeastoanyInformationwhich(i)isorbecomesgenerallyavailabletothepublicotherthanasaresultofanybreachoftheseprovisionsbytheThirdPartyRecipientoranyofitsRepresentatives,(ii)becomesavailabletotheThirdPartyRecipientonanonconfidentialbasisandnotincontraventionofapplicablelaw&omasource(otherthanitsRepresentatives)whichhasrepresentedtotheThirdPartyRecipientthatsuchsourceisnotboundbyaconfidentialityorothersimilaragreementorconfidentialrelationshipandisentitledtodiscloseitor(iii)wasknowntotheThirdPartyRecipientonanonconfidentialbasisandnotincontraventionofapplicablelawpriortoitsdisclosuretotheThirdPartyRecipientbythedisclosingparty.5.IntheeventthattheThirdPartyRecipientoranypersontowhomtheThirdPartyRecipientfurnishesanyInformationisrequestedorbecomeslegallycompelled(byoralquestions,interrogatories,requestforinformationordocuments,subpoena,criminalorcivilinvestigativedemandorsimilarprocess)todiscloseanyInformation,theThirdPartyRecipientwillprovidetheDisclosingPartywithpromptwrittennoticesothattheDisclosingPartymayseekaprotectiveorderorotherappropriateremedyand/orwaivecompliancewiththeprovisionshereof,andtheThirdPartyRecipientwillcooperatewiththeDisclosingPartyinanyefforttheDelctcparagraph3ifnotapplicable.N20093 DisclosingPartyundertakestoobtainaprotectiveorderorotherremedy.Intheeventthatsuchprotectiveorderorremedyisnotobtained,orthattheDisclosingParty,initssolediscretion,~waivescompliancewiththeprovisionshereof,theThirdPartyRecipientwillfurnishonlythatportionoftheInformationwhichislegallyrequiredandwillusereasonablebesteKortstoobtainreliableassurancethatconfidentialtreatmentwillbeaccordedtheInformation,provided,however,ifsucheFortsinvolveanyexpensetheDisclosingParty,ifithasreceivedpriornoticethereof,willreimbursetheThirdPartyRecipientforsame.6.TheThirdPartyRecipientacknowledgesthatunauthorizeddisclosureofInformationmayresultinliabilityforjudicialjudgmentsincluding,butnotlimitedto,monetarydamages,andthattheDisclosingPartyshallbeentitledtopursueanylegalandequitableremediesintheeventofanunauthorizeddisclosure.TheThirdPartyRecipientherebywaivesanyobjectionstotheimmediateissuancebyacourtofcompetentjurisdictionofinjunctiveorotherequitablereliefbarringthefurtherdisclosureoruseofanyInformationintheeventofanunauthorizeddisclosure.7.ThisAgreementshallsurvivetheconsummationofthetransactionscontemplatedbytheMRAand/oranyterminationoftheMRAwithrespecttotheDisclosingParty.DisclosingParty:By:Name:Title:Date:ThirdPartyRecipient:By:Name:Title:Date:N20093

APPENDIXBRECOVERYOFCOSTSASSOCIATEDWITHTERMINATIONOFGASTRANSPORTATIONANDPEAKSHAVINGAGREEMENTS

APPENDIXBRECOVERYOFCOSTSASSOCIATEDWITHTERMINATIONOFGASTRANSPORTATIONANDPEAKSHAVINGAGREEMENTSEachofthegasfiredprojectswillterminateitsexistinggaspeakshavingagreementwithNiagaraMohawk.Inaddition,eachofthegasfiredprojectswhichwillnothavearestructuredelectriccontractwillterminateitsgastransportationagreementwithNiagaraMohawk.IfdesiredbytheIPP,theseprojectsmaynegotiateanewtransportationagreementthatreflectstheplanneduseofthespecificproject.Forgasfiredprojectswhichwillhaverestructuredelectriccontracts,thepartiestotheMasterRestructuringAgreementhaveagreedtoworkingoodfaithtore-negotiatenewpeakshavingand,ifrequestedbytheIPP,transportationagreementsasappropriatetoaligntheoperatingcharacteristicsoftheIPPprojectswiththeinterestsoftheCompany'sgasdeliverysystem.TotheextentthattheCompanylosesgastransportationrevenuesorincursadditionalcoststoreplicatetheexistingpeakshavingagreements,theCompanywillrecoverthelostrevenuesoradditionalcostsinaccordancewiththetermsandconditionsspecifiedintheStipulationandAgreementbetweenthepartiesinNiagaraMohawk'sGasRateCaseNos.95-G-1095and95-G-0091.TheStipulationandAgreementdefinesthecostrecoverymechanismsforlostgastransportationrevenuesinSectionI~REVENUEREQUIREMENTandforadditionalpeakshavingcostsinSectionVl.RECOVERYOFCOSTSRELATEDTOUNREGULATEDGENERATION.SectionI.REVENUEREQUIREMENTstipulatesthatratepayersandshareholderswillshareanyannualrevenueshortfallbelowthatprojectedonan80%/20%basis.Thereforeforthoseprojectswhichretainatransportationcontract,NiagaraMohawkwillrecoverannuallythroughitsCommodityCostAdjustment(CCAC)80%ofthedifferencebetweentheprojectedrevenueandtheactualrevenue.Forthoseprojectsthatterminatetheirtransportationcontract,NiagaraMohawkwillrecoverannuallythroughtheCCAC,80%oftheprojectedrevenue.IftheCCACisnotextendedattheendoftheGasRateCaseSettlementterm,orotherwiseterminated,thesecostswillbecollectedthroughamechanismsuchasare-institutedGasAdjustmentClause(GAC)orthroughbaserates.SectionVl~RECOVERYOFCOSTSRELATEDTOUNREGULATEDGENERATIONstatesthatpeakshavingreplacementcostsincurredwillbedeferredtotheConfidentialSettlementDocument

ContingencyReserveAccountuptotheactualcostsorthecostof75,000dt,whicheverisless.Anyofthesecostsnotoffsetbynon-baseratereductionsattheendofthesettlementwillbecollectedfromratepayersbeginningonNovember1,1999.ConfidentialSettlementDocument

APPENDIXCNIAGARAMOHAWKPOWERCORPORATIONFIVE-YEARFINANCIALFORECAST

NiagaraMohawkPowerCorporationOctober10,1997PowerChoiceFilingFinancialForecastSchedulaKumhezSummaryfinancialstatementsElectricsales&revenuesElectricfuelexpense&purchasedpowerGassales,revenues&purchasesDepartmentalexpensesNon-departmentalexpensesOperatingtaxesIncometaxes

NIAGARAMOHAWKPOWERCORPORATIONFINANCIALSTATEMENTSPOWERCHOICEFILINGINCOMESTATEMENTElectricRevenuesGasRevenuesTotalRevenues$3,267,372$3,256,451$3,270,632$3,411,476$3.549,4198453458197316330998472546624384211743038S18239033139121FuelandPurchasedPovvarGasPurchasesDepartmentalExpensesNorvdepanmentafExpensesTaxesOtherThanbvcomeTaxesNudaarDecommissioningTotalOperatingExpensesTotalEBITDADeprecbtionandAmciezaticnDeferredGssCostNudearFuelAmortizabcnAmortizabonofRegubtoryAssetRegubtoryOeferratsandAmorttzaeonsAFUDCDeferredCarryingChargeOthergncome)lDeductionsAmortizationofDebtExpenseOperatingIncomeinterestExpensePra-taxIncomeCurrantIncometaxesfTCAmortizationDeferredIncometaxesNetincomeBeforePreferredStockDividendPreferredStockdiVidendNetIncomeReturnonAverageEquityBALANCESHEET838,23743,513478,2772800324882811,426,436337,98732,378411,300(3,028)(10,032)(305)3,860528727e.eog(8,016)4213S44,50039e?o,356308,085821,37240,389482,4682800325506751~348,324(3.320)29,497411,300(8,787)(9,604)(282)(21~1e97152829310,430(8,016)1593316,018500391Oyv890,118311,290e22.'00237,052479,7062800325881711,.560351,714(1,411)2S,?824'l1,300(4,916)(7,242)(3)(13,027)12682,0146779211,690(8,016)4,978500392061923,580314,533855,13738,842488,8422800326469371,411,93359,52837828,769411,30018,540(8,178)(1$,930)118844426352181,113,490(8,016)666071,09150039964,130320,135858.69036,672498,952280031,,27369,121(110)28,889411,30023,687(10,947)(24,844)11145385275311~18,3&4(8,016)1082651,12850039$145087CashOtherCurrentAssetsExistingDefenedDebiitsRegubtoryAssetfromIPPBuyoutNetWilityPbntTotalAssetsCurrentLbbiMiesExiistingDeferredUabilitiesFMBsSeniorSub.NotesPreferredStockCommonStockRetainedEarningsTotalUabiMiesandCapital367,14$1,838,4493,715,7007503732$137$711,9072,737,9983.493,2793~,0002.310,728778142$13$220.012374,5511,693,2803,304,4007455793$201,3501,605,0852,893,1007423119$343,790389,6291,525,7772,4S1,8007345908$553,548399,1921,442,0732,070,5007335705$138038$12508159$12904$111018$720,6132,698,4813,505,4872,000,000528,8042,310,728744066$718,0382,747,1203.499~42,500,000526,8042,310,728748124$724,7472,709,3993,512,1051,500,0002,310,728803121$732,6592,763,4723.519,1441,000,000528,8042,310,728948211$13048038$12506159$12086904$11801018CASHFLOWOperatingActMSmNetIncomeDepreciationAmoiezationsNuclearFuelDeferredGasCostAFUDCDeferredIncomeTaxesITCAmoitizaeonDeferredCarryingChargesDeciinsectspay.duetoknverIPPpurchasesInocmeTaxRefundAmortizationofRegubtoryAssetRegubtcryAmortizaeonsPaymentofcashtoIPPsFinancingCostsOtherSubtotalCssheovvfromOperabonsInvestingActivities:ConstructionNuclearFuelNuclearDecommbsbruSubtotalCashUsedforInvestingFrnandngActivities:PreferredDividendsIssuanceofSrSubordinatedDebtRetirementofSr.SubordinatedDebtSubtotalCashfromFinancingChangeinCasharxlTCLsBeginningCashandTCfsEndingCashandTCfs$44,889365,97032,3?S28,725(10,032)42,138(8,016)(305)(48,200)411,3(0(3,026)(3.665,000)(100,000)378(298,804)(28,992)8,0033149964(128,561)482393$18,018374,32718,97129,497(3,320)(9,604)15,933(8,016)(282)138,118411,300(8,787)14101(269,413)(28,420)8,003(113,820)333832$220012$47,978379,71712,68228,782(1,411)(7,242)3S,257(8,016)(3)411.300(4,916)eye(264,158)(53,270)e'003(18,662)220012$201350$109,091387,52911,88428,769378(8,1?8)66,607(S,016)411,30018,5401835(273,957)(5,091)8,003142,440?01350$343790$195,128397,12411,14528,889(110)(10,947)108,2SS(8,016)411,30023,68718431140026(301,151)(51,078)8003209,75834379010roglg?1058AMWIFPLOTUSIACUPLANICONSOL9?IFINFORF.WK4

NiagaraMohawkPowerCorporationElectricSales8RevenuesElectricSales(Mwhrs)19981999200020012002SC1SC2SC3SC3N4/5/7/11IndustrialSpecialEconomicDevelPower(EDP)SpecialLighting(PAL)MunicipalRevenuesUnregGeneratorsTotalRetailSales10,241,0904,631,9336,737,77776465594,385,188293,02730,656207,65524,79810,117,6074,558,1326,636,79075486034,385,188293,02730,157207,65524,40210,067,8164,484,8256,519,06973866894,385,188293,02729,706207,65524,00910,316,7724,657,1486,773,37776842174,385,188293,02730,824207,65524,79810,167,3984,599,7766,696,92576156514,385,188293,02730,436207,65524,6243339798433801561340206803419868334373006ElectricRevenues($000)19981999200020012002SC1SC2SC3SC3N4/5/7/11IndustrialSpecialEconomicDevelPower(EDP)SpecialLighting(PAL)MunicipalRevenuesUnregGeneratorsSubtotal(98-07PwrChoiceFrz)DiscountsPricingGoals(incl.ParityMove)DSMRebateRecoverySettlementAdjustmentsRegcoPriceIncreasePriceChangeforGencoSub-TotalRetailRevenueBorderlineDistributionMiscRevenuesTransmissionRevenuesTotalRegcoElectricRevenuesWholesalesalesTotalElectricRevenues$1,254,716563,346687,560582,87060,02914,3945,06550,6703,2533,221,903(118,664)(49,625)200(6,000)$1,260,921572,558699,949595,62160,02914,3945,13950,6703,3073,262,588(122,068)(81,546)200(16,000)$1,285,742584,996714,375606,33860,02914,3945,25350,6703,364$1,267,127577,787706,291600,91560,02914,3945,18750,6703,340$1,276,310581,8277'I0,620603,37360,02914,3945,22350,6703,3643,285,7403,305,8103,325,161(123,269)(125,621)(125,621)(101,416)(101,341)(101,266)(26,000)5,00024,24115,1004,00045,16746,3003,193,7411,90332,79088,4853,316,919232,50035494193,047,8143,043,1743,035,0553,123,1891,9031,9031,9031,90330,05530,67431,34532,05488,50088,50088,52988,5303,168,2723,164,2513,156,8323,245,67699,10092,200113,800165,800326737232564513270632341147610/09/97w:)fplotushacuplanhprodcostholdstufflRATRV101.WK4 0

NiagaraMohawkPowerCorporationElectricFuel&PurchasedPower1998199920012002GWHRSFossil8190.77886.47808.27747.78445.6NineMile1NineMile2TotalNuclear4,564.43,078.77643.14,027.23,489.47516.64,576.93,088.87665.74,564.43,078.74,027.23,489.47516.67643.1HydroTotalNMPC2,949.118,782.92,949.118,352.12,949.118,423.02,949.118,213.42,949.119,037.8IPPPurchasesNiagaraStLawrenceFitzpatrickGilboaTotalNYPAPurchasesNYPPPurchasesOHPurchasesAllOtherPurchasesTotalOtherPurchasesTotalPurchasesTotalFuel8Purchases13,162.66,047.9666.6224.30.06,938.81,257.51,193.9562.73,014.123,115.541898.413,534.16,047.9666.6229.50.06,944.01,325.41,192.1547.23,064.723,542.841894.914,429.96,047.9666.6230.20.06.944.71,080.3930.0519.02,529.323,903.942326.96,047.9666.6229.50.06,047.9666.6229.50.06,944.06,944.0808.8345.0927.41,329.5388.8387.32,125.02,061.825,262.325,082.543295.944300.116,013.516,256.5$ThousandsFossil$130,407$126,815$133,918$138,286$157,493NineMite1NineMile2TotalNuclear24,9241431739,24119,248170083625621,5541411121,3431440919,01616,5123552835752HydroTotalNMPC16964816307116958300173,814193245IPPPurchasesNiagaraStLawrenceFitzpatrickGitboaTotalNYPAPurchases561,14857,0925,1059,3487,88779,432584,04258,4315,2259,5678,07281,295603,04559,9635,3599,8428,29583,459641,65261,4725,49710,0818,49285,542659,86663,1895,65010,3738,72987,941NYPPPurchasesOHPurchasesAllOtherPurchasesTotalOtherPurchasesTotalPurchasesTotalFuel&PurchasesLess:Nucfuelamort(Note1)RegcoFuel8PurchasedPower27,92120/27112,196870,61532,378$83823733,97522,59214,88171,448736,784899,85529,49$87035828,03519,3921538762,814749317918,90028,782$89011821,58721,1488,60610,55832,4478,962952,34928,769993,01928,889$923580$96413051,34151,967778535799774Note1:NuclearfuelamortizationisshownonRegco'sincomestatementbelowEBITDA.Theremainingcashnuclearfuelisspentfuelexpense.w:tfptotushcuptantprodcost$997051B.WK4Page110/0987

NiagaraMohawkPowerCorporationGasSales,RevenuesandPurchases998999000gkOD.~00SC1SC2SC3TransportationSpecialContractsTotal55,449,59123,039,440886,89132,252,385112,619,77055,355,73422,827,207886,89132,520,599112,619,77054,904,78022,176,382886,89132,706,555108,473,60055,098,54922,395,921886,89132,719,897108,473,60055,237,72922,612,911886,89132,719,897108,473,600219148208219574858219931028224210201224248077seees000SC1SC2SC3TransportationSpecialContractsOtherSSGTotalrevsbeforeratereliefCumulativeRateReliefTotalGasRevenuesGasPurchasesGRT$400,465140,1704,19931,31125,0284,79010,498$420,727148,0494,57231,08125,0674,90110,948$403,141141,6684,20631,44822,6643,03310,498645,345326,023619,731633,099304,765309,87930,22828,87029,493645,3456'I6,461616,6583,27016,441$407,762144,0184,24731,31422,3513,07210,498623,26223,992647,254314,91129,804$414,411147,2844,31830,95022,3513,12110,498632,93329,505662,438320,02530,798MarginAssumptions$289094$286096$293727$302539$311615SettlementSettlementSolveforIndexMarginIndexMargin12%ROE@3%@3%10/09/97w:hfplotusMcuplankconsol97<GASSALE.WK4

NIAGARAMOHAWKPOWERCORPORATIONDEPARTMENTALEXPENSES19981999200020012002FossilHydroDiscoTranscoNineMile1NineMile2GasTotal$72,433$74,739$74,465$77,141$79,38423,54924,17524,88825,58026,398355,451361,967368,922375,317382,52097,38999,172101,075102,808104,75786,164101,76979,012107,78384,12955,26545,77057,86148,90461,779110,702113,780115,779117,604119,723$800953$821372$822002$855137$858690

NIAGARAMOHAWKPOWERCORPORATIONNON-DEPARTMENTALEXPENSESCASH19981999200020012002BANKFACILITYAGREEMENTELECTRICBANKFACILITYAGREEMENTGASNM2A&GCOTENANTCREDITOSWEGO6COTENANTCREDITSIRCOSTSELECTRICSIRCOSTSGASSBCPROGRAMSDEMANDSIDEIVIANAGEMENTCOSTSOFACCRECSALEELECTRICCOSTSOFACCRECSALEGAS5,222647(5,985)(201)12,7502,25015,00020011,3002,330$2,610324(6,167)(208)12,7502,25015,00020011,3002,330(6,364)(214)12,7502,25015,00011,3002,330(6,567)(221)12,7502,25015,00011,3002,330(6,731)(227)12,7502,25015,00011,3002,330$43,513$40,38937,052$36,842$36,672NIAGARAMOHAWKPOWERCORPORATION'REGULATORYDEFERRALSANDAMORTIZATIONSNON-CASH19981999200020012002OPEBREGULATORYASSETELECTRICOPEBREGULATORYASSETGASFAS112GASVERPCOSTSGASSIRINSURANCEPROCEEDS-ELECTRICSIRINSURANCEPROCEEDS-GASNUCLEAROUTAGECOSTDEFERRALSREPLACEMENTPOWERLEVELIZATIONNMSUBURBANGASPENSIONTRUEUP-GASPENSIONGAINAMORTIZATIONELECTRICPENSIONGAINAMORTIZATIONGAS53RDLABORWEEKELECTRIC53RDLABORWEEKGASADDITIONALIPPBUYOUTCOSTAMORTIZATIONSETTLEMENTDEFERRAUAMORTIZATION$2,8375802382,296(2,550)(480)4,5003,03738422(7,365)(1,242)6761872,800(9,000)$2,8375802382,296(2,550)(480)(4,500)1,01538422(1,345)6761862,800(11,000$2,837580496(2,550)(480)4,500(952)6761772,80013,000$2,837580(2,550)(480)(4,500)6761772,80017,000$2,837580(2,550)(480)4,5002,80016,000$(3,026)$(8,787)$(4,916$16,540$23,687

NIAGARAMOHAWKPOWERCORPORATIONTAXESOTHERTHANINCOMETAXES19981999200020012002RevenueTaxesElectricGasTotalRevenueTaxesRealestatetaxesPayrolltaxesSalesTax$148,442$149,920$151,140$152,375$153,80930,22828,87029,49329,80430,798178,670178,790180,633.182,179184,607258,410263,188257,249263,456269,81831,23332,26433,32734,42835,4817,9648,2268,4978,7799,046$476277$482468$479706$488842$498952BUDFOREC.WK410I09I97

NIAGARAMOHAWKPOWERCORPORATIONFEDERALINCOMETAXCALCULATION19981999200020012002RegularTaxNetincomebeforetaxRegulatoryAssetAmortizationScheduleMadditionsTotalScheduleMadditionsIPPBuyoutScheduleMdeductionsTotalScheduleMdeductionsTaxableincomeNetoperatinglosscarryforwardNettaxableincomeRegulartaxrateRegularTax414,100697,817414,100697,182414,100708,929414,100711,932414,100738,0841,111,9171,111,2821,123,0291,126,0321,149,9554,127,000652,551646,394643,252642,836651,6954,779,551646,394643,252642,836651,695(3,588,825)501,253569,686664,368810,0'I9501,253569,686664,368810,019$78,809$36,365$89,909$181,172$311,759AlternativeMinimumTaxTaxableIncomebeforeNOLAMTDepreciationAdjustmentAMTIbeforeACEAdjustmentACEAdjustmentI75%AMTIbeforeAMTNOLAMTNOLAMTIAMTRate20%AlternativeMinimumTaxRegularTaxAdditionalMinimumTax(3,528,701)35,243(3,563,944)3,207,550568,09546,600521,495469,346638,32053,810584,510526,059736,59762,118674,479607,031885,77566,576819,199737,279(356,394)52,14958,45167,44881,92020%20%20%20%20%10,43011,69013,49016,384$10,430$11,690$13,490$16,384$(3,588,825)$501,253$569,686$664,368$810,01960,12466,84268,63472,22975,756DeferredTaxesDeferredTaxonNOLDeferredTaxonAmtDeferredTaxonRegulatoryAssetDeferredTaxonRegulatoryAssetReversalAllotherTotalDeferredTaxes232,529$283,507(13,490)(16,384)$(1,256,089)$1,444,450(144,935)1,290175,439$199,390$(10,430)(11,690)(144,935)13,923(144,935)7,497(144,935)4,141(144,935)4,508$42,136$15,933$38,257$66,607$108,265

APPENDIXDELECTRICPRICES

SC1RATEDESIGNSFORTHE3YEARPERIODENDINGDECEMBER31,2000AppendixDPage1of43RATEDESIGN(1998)CUSTOMERPERKWH0-600OVER0.103146,896,107,8530.103142,222,626,689$711,264,564$229,241,7170.097410.09741$671,749,866$216,506,066CURRENT19981998RATESUNITSREVENUERATESREVENUE9.6716,945,453$163,862,53111.96$202,667,618TOTALRATEDESIGN(1999)$1,104,368,812$1,090,923,550CUSTOMERPERKWH0-600OVER1999REVENUE14.8$252,033,0330.097416,930,213,6900.097412,233,618,453$675,072,116$217,576,7740.091220.09122$632,174,093$203,750,675CURRENT1999RATESUNITSREVENUERATES11.9617,029,259$203,669,938TOTALRATEDESIGN(2000)$1,096,318,828$1,087,957,801CUSTOMERPERKWH0-600OVER0.091226,959,066,5210.09122',249,863,206$634,806,048$205,232,5220.085440.08544$594,582,644$192,228,312CURRENT20002000RATESUNITSREVENUERATESREVENUE14.817,088,507$252,909,90417.44$298,023,562TOTAL$1,092,948,474$1,084,834,518SC1FINAL.WK4

AppendixDPage2of43SC1-RESIDENTIALBLOCK01002003004005006007008009001000110012001300140015001600170018001900200022002400260028003000320034003600380040001997REVENUE$10.16$20.99$31.84$42.67$53.51$64.35$75.18$86.03$96.86$107.70$118.54$129.37$140.21$151.05$161.89$172.72$183.56$194.40$205.23$216.08$226.91$248.59$270.26$291.93$313.61$335.28$356.96$378.64$400.30$421.98$443.661998REVENUE$12.56$22.85$33.14$43.43$53.73$64.03$74.32$84.61$94.90$105.19$115A8$125.78$136.07$146.36$156.65$166.95$177.24$187.53$197.83$208.12$218.41$238.99$259.57$280.17$300.75$321.33$341.90$362.49$383.08$403.66$424.25DIFFERENCE$2.40$1.86$1.30$0.76$0.22($0.32)($0.86)($1A2)($1.96)($2.51)($3.06)($3.59)($4.14)($4.69)($5.24)($5.77)($6.32)($6.87)($7.40)($7.96)($8.50)($9.60)($10.69)($11.76)($12.86)($13.95)($15.06)($16.15)($17.22)($18.32)($19A1)PERCENTINCREASE2362%8.86%408178%0.41%-0.50%114%165%-2.02%2.33%2.58%2.77%2.95-3.10%324'34%3.44%-3.53%-3.61%3.68%-3.75%386%396%403%-410%-4.16%-4.27%-4.30%-434%-4.37%SC1FINAL.WK4

AppendixDPage3of43SC't-RESlDENTIAL~BLOK01002003004005006007008009001000110012001300140015001600170018001900200022002400260028003000320034003600380040001998REVENUE$12.56$22.85$33.14$43.43$53.73$64.03$74.32$84.61$94.90$105.19$115.48$125.78$136.07$146.36$156.65$166.95$177.24$187.53$197.83$208.12$218.41$238.99$259.57$280.17$300.75$321.33$341.90$362.49$383.08$403.66$424.251999REVENUE$15.51$25.13$34.75$44.38$54.01$63.63$73.26$82.88$92.51$102.13$111.75$121.38$131.00$140.63$150.25$159.87$169.49$179.11$188.75$198.38$208.00$227.24$24649$265.74$284.99$304.23$323.48$342.74$361.98$381.23$400.48$2.95$2.28$1.61$0.95$0.28($0.40)($1.06)($1.73)($2.39)($3.06)($3.73)($4.40)($5.07)($5.73)($6.40)($7.08)($7.75)($8.42)($9.08)($9.74)($10.41)($11.75)($13.08)($14.43)($15.76)($17.10)($18.42)($19.75)($21.10)($22.43)($23.77)23.49%gg84.86%2.19%052%0.62%1.43%204%252%-2.91%323%350%-3.73%392%-40g424%37%-449%-4.59%-4.68%7%-492%-504%515%524%532%539%545-551%-556%-560%PERCENTDIFFERENCEINCREASESC1FINAL.WK4

AppendixDPage4of43SC't-RESIDENTlAL~BLOC01002003004005006007008009001000110012001300140015001600170018001900200022002400260028003000320034003600380040001999REVENUE$15.51$25.13$34.75$44.38$54.01$63.63$73.26$82.88$92.51$102.13$111.75$121.38$131.00$140.63$'I50.25$159.87$169.49$179.11$188.75$'I98.38$208.00$227.24$246.49$265.74$284.99$304.23$32348$342.74$361.98$381.23$400.48'000REVENUE$18.13$27.08$36.03$44.97$53.94$62.88$71.82$80.77$89.72$98.67$107.61$116.56$125.52$134.46$143.41$152.36$161.30$170.25$179.20$188.16$197.10$214.99$232.89$250.79$268.68$286.58$304.47$322.38$340.26$358.16$376.06DIFFERENCE$2.62$1.95$1.28$0.59($0.07)($0.75)($144)($2.11)($2.79)($3.46)($4.14)($4.82)($5.48)($6.17)($6.84)($7.51)($8.19)($8.86)($9.55)($10.22)($10.90)($12.25)($13.60)($14.95)($16.31)($17.65)($19.01)($20.36)($21.72)($23.07)($24.42)PERCENTINCREASE16.89%776%368%1.33%0.13%-1.18%197%255%3.02%3.39%3.70%397%-4.18%-439%-455%~70-4.83%-4.95%506515%524%539%552%-5.63%5.72%580-5.88%-594%-600%-605%-6.10%SC1FINAL.WK4

SC2NDRATEDESIGNSFORTHE3YEARPERIODENDINGDECEMBER31,2000AppendixDPage5of43RATEDESIGN(1998)CUSTOMERPERKWH0-500OVER0.'I278346,900,6270.1278253,192,664$44,.333,900$32,358,0220.12$41,628,0750.12$30,383,120CURRENT19981998RATESUNITSREVENUERATESREVENUE14.651,189,283$17,422,99617.75$21,109,773TOTALRATEDESIGN(1999)$94,114,918$93,120,968CUSTOMERPERKWHOVERCURRENTRATES0.12352,498,021$42,299,763'.1'I276$39,747,6770.12257,298,398$30,875,8080.11276$29,012,96719991999UNITSREVENUERATESREVENUE17.751,208,452$21,450,02335.5$42,900,046TOTALRATEDESIGN(2000)$94,625,594$111,660,690CUSTOMERPERKWH0-500OVER0.11276355,719,042$40,'I10,8790.11276259,651,088$29,278,2570.105350.10535$37,475,001$27,354,242CURRENT20002000RATESUNITSREVENUERATESREVENUE35.51,219,491$43,291,93153.25$64,937,896TOTAL$112,681,067$129,767,139SC2FINAL.WK4

AppendixDPage6of43SC2-NON-DEMANDMETEREDBL(~K01002003004005006007008009001000110012001300140015001600170018001900200022002400260028003000320034003600380040001997REVENUE$15.39$28.82$42.25$55.68$69.11$82.54$95.97$109.39$122.82$136.25$149.68$163.11$176.54$189.97$203.39$216.82$230.25$243.68$257.11$270.54$283.97$310.82$337.68$364.54$391.39$418.25$445.11$471.97$498.82$525.68$552.541998REVENUE$18.64$31.30$43.96$56.63$69.30$81.96$94.62$107.29$119.95$132.61$145.28$157.95$170.61$183.27$195.94$208.60$221.26$233.92$246.60$259.26$271.92$297.25$322.57$347.91$373.24$398.56$423.89$4a9.22$474.55$499.87$525.21$3.25$2.48$1.71$0.95$0.19($0.58)($1.35)($2.10)($2.87)($3.64)($4.40)($5.16)($5.93)($6.70)($7.45)($8.22)($8.99)($9.76)($10.51)($11.28)($12.05)($13.57)($15.11)($16.63)($18.15)($19.69)($21.22)($22.75)($24.27)($25.81)($27.33)21.12%8614P5%171%0.27%-070%141%-1.92%2.34%-2.67%-2.94%-3.16%-3.36%353%366o/o-3.79%-3.90%A01-4pg-417%4.24%-4.37%-4.47%-45664%-4.71%-4.77%-4.82%<.87'491%-4g5PERCENTDIFFERENCEINCREASESC2FINAL.WK4

AppendixDPage7of43SC2-NON-DEMANDMETERED~BL)~01002003004005006007008009001000110012001300140015001600170018001900200022002400260028003000320034003600380040001998REVENUE$18.64$31.30$43.96$56.63$69.30$81.96$94.62$107.29$119.95$132.61$145.28$157.95$170.61$183.27$195.94$208.60$221.26$233.92$246.60$259.26$271.92$297.25$322.57$347.91$373.24$398.56$423.89$449.22$474.55$499.87$525.211999REVENUE$21.85$33.74$45.61$57.49$69.38$81.26$93.15$105.02$116.90$128.78$140.66$152.56$16443$176.32$188.19$200.07$211.96$223.83$235.73$247.60$259.48$283.24$307.00$330.78$354.54$378.30$402.05$425.82$449.59$473.35$497.12$3.21$2.44$1.65$0.86$0.08($0.70)($147)($2.27)($3.05)($3.83)($4.62)($5.39)($6.18)($6.95)($7.75)($8.53)($9.30)($10.09)($10.87)($11.66)($12.44)($14.01)($15.57)($17.13)($18.70)($20.26)($21.84)($23.40)($24.96)($26.52)($28.09)17.22%7.80%3.75%1.52%0.12%-085'I55%-2.12%2.54%-2.89%-3.18%3.41%362%379%3.96%-4P9-4.20%-4.31%-441%-45p<.57%-4.71%-4.83%-4.92%501%5.08%15%5.21%-5.26%531%5.35%PERCENTDIFFERENCEINCREASESC2FINAL.WK4

AppendixDPage8of43SC2-NON-DEMANDMETEREDBLCK01002003004005006007008009001000110012001300140015001600170018001900200022002400260028003000320034003600380040001999REVENUE$21.85$33.74$45.61$57.49$69.38$81.26$93.15$105.02$116.90$128.78$140.66$152.56$164.43$176.32$188.19$200.07$211.96$223.83$235.73$247.60$259.48$283.24$307.00$330.78$354.54$378.30$402.05$425.82$449.59$473.35$497.122000REVENUE$24.90$35.93$46.94$57.96$68.98$80.00$91.02$102.04$113.05$124.07$135.08$146.12$157.13$168.15$179.16$190.18$201.20$212.22$223.24$234.26$245.27$267.31$289.34$311.39$333.42$355.45$377.49$399.53$421.57$443.60$465.64$3.05$2.19$1.33$0.47($0.40)($1.26)($2.13)($2.98)($3.85)($4.71)($5.58)($6.44)($7.30)($8.17)($9.03)($9.89)($10.76)($11.61)($12.49)($13.34)($14.21)($15.93)($17.66)($19.39)($21.12)($22.85)($24.56)($26.29)($28.02)($29.75)($3148)13.96%6492.92%0.82%-0.58%-1.55%229%2.84%3.29%366%3.97%A.22%63%-4.80%-4.94%-5.08%19%-5.30%5.39%548%-5.62%5.75%-586%-596%.04%-6'11%-617%-6.23%-6.28%.33%PERCENTDIFFERENCEINCREASESC2FINAL.WK4

SC2DRATEDESIGNSFORTHE3YEARPERIODENDINGDECEMBER31,2000AppendixDPage9of431998UNITSBILLS558,910KW14,812,322.7KWH3,828,804,544TRANSFORME266,062.3SUBTOTALPRESENTRATES27.228.490.07691-0.9PRESENTREVENUE15,213,530125,756,620294,473,357(239,456)435,204,051PROPOSEDRATES39.318.490.0738-0.9PROPOSEDREVENUE21,970,752125,756,620282,565,775(239,456)430,053,6911999BILLSKWKWHTRANSFORMESUBTOTAL2000BILLSKWKWHTRANSFORMESUBTOTALUNITS568,00615,055,772.63,891,494,041270,719.6UNITS573,20115,193,257.13,927,043,647273,179.6PRESENTRATES39.318.490.0738-0.9PRESENTRATES51.48.490.07125-0.9PRESENTREVENUE22,328,316127,823,509287,192,260(243,648)437,100,437PRESENTREVENUE29,462,531128,990,753279,801,860(245,862)438,009,282PROPOSEDRATES51.48.490.07125-0.9PROPOSEDRATES63.498.490.06856-0.9PROPOSEDREVENUE29,195,508127,823,509277,268,950(243,648)'34,044,319PROPOSEDREVENUE36,392,531128,990,753269,238,112(245,862)434,375,534

AppendixDPage10of43SC-2DemandKw%Vsage30Days1997KWBill1998Bill1,0081,5122,0162,520$172.51$213.24$253.97$294.69$182.43$221.82$261.19S300.58$992$8.58$7.22$5.895.75%4.02%2.84%,2.00%2,1603+4043205,40015151515$336.98$424.25$511.53$598.80$343.76$428.14$512.53$596.91$6.78$3.89v$100($1.89)2.01%0.92%0.20%432%3,6005,4007+009,00025252525$542.56$688.01$833.48S978.94$545.41$686.06$826.69$96734$2.85($1.95)(8&79)($11.60)0.53%4.NYo4.81%-1.18%5,7608,64011,52014,40040404040$850.92$1,083.66$1316.40$1,549.14$847.90$1,072.91$1+97.94$1,522.96($3.02)($10.75)($18.46)($26.18)435%4.99%-1401.69%8,64012/6017+8021.60060606060$1362.0$$1.611.19$196030$2309.43$1351.20$1,58S.74SI+26.27$2363.81($10.8$)($22.45)($34.03)($45.62)4.86%-139%-1.74%-1.9$/o11,52017,28023,04028,8008080$0$0$1.673.24$2,13S.72$2,604.21$3,069.70$1,654.51S2,104.56$2,554.61$3,004.65($18.73)($34.16)($49.60)($65.05)-1.12%-1.60%-1.90%-2.12%14,40021,60028,80036,000100100100$2,084.40$2,666.26$3348.11$3,829.97S2,057.82$2,620.3$$3,182.94$3,745.50(S26.58)($45.88)($65.17)($84.47)-1.28%-1.72%-2.01%-2.21%

AppendixDPage11of43SC-2DemandK~%Usage30Days1998KWBill1999Bill1,0081,5122,0162/20$182.43$221.82$261.19$300.58$192.07$230.03$267.98$305.94$8.21$6.79$5265.28%3.70%2.60%1.78%2,1603+404/205,40015151515$343.76$428.14S51233$59691$350.01$43135$512.68$594.03$6.25$3.21$0.15($2.88)1.82%075%0.03%<.48/o3,6005,4009,000252525$545.41$686.06$826.69$96734$547.43$683.00$818.56$954.13S2.02($3.06)($8.13)($13.21)%.45%<.98%o-1.37%5,7608,64011,52014,40040404040$847.90$1,072.91$1,297.94$1,522.96$843.58$1,060.47$1,27797$1,494.28($432)($12.44)($20.57)($28.68)51%-1.16%-1.58%o-1.88%8,64012+6017/8021,60060606060$1451.20$1488.74SIP26.27$2,263.81$1~8A2$1,563.78$1,889.13S2,214.48($12.78)($24.96)($37.14)($49.33)1.02%-1.57%-1.93%-2.18%11,52017,28023,04028,80080808080$1,654.51$2,104.56$2,554.61$3,004.65$1,633.27$2,067.08$2,500.89$2,934.69($21.24)($37.48)($53.72)($69.96)-1.28%-1.78%2.10%-2.33%14,40021,60028,80036,000100100100100$2,057.82$2,620.38$3,182.94$3,745.50$2,028.13$2,57038$3,112.64$3,654.89($29.69)($50.00)($70.30)($90.61)-1.44%-1.91%2.21%-2.42%

AppendixDPage12of43SC-2DemandKwhUsage30Days'999KWBill2000Bill1,0081+122,0162,520$192.07$230.03$267.98$305.94$20032$236.57$272.83$309.08$825$6.54$4.85$3.14430%2.84%1.81%1.03%2,1603+404/205,40015151515$350.01$43135$512.68$594.03$353.81$431.49$509.17$586.86$3.80So.l4($3.51)(S7.17)0.03%4.68%1.21%3,6007+009,00025252525$547.43S683.00$818.56$954.13$545.67$675.14$804.61$934.09(S1.76)($7.86)($13.95)($20.04)432%-1.15%-1.70%-2.10%5,7608,64011,52014,4OO404040$843.58$1,060.47$1,27737$1,494.28S1,040.61$1447.76$1,454.91($10.12)($19.86)($29.61)($3937)-1.20%-1.87%-232%-2.63%8,64012,96017,2802!,60060606060S1,238.42$1,563.78$1,889.13$2+14A8$1817.17$1,527.91Sl,838.64$2,14937(S21.25)($35.87)($50.49)($65.11)-1.72%-2.29%-2.Pio-".944o11,52017.28023,04028,80080808080$1,633.27$2,067.08$2,500.89$2,934.69$1,600.88S2,015.20S2,429.51$2,843.82($3239)($51.88),($71.38)($90.87)-1.9F/o-2.51%285%-3.10%14,40021,60028,80036,000100100100100$2,028.13$2,57038$3,112.64$3,654.89$1,984.60$2,502.50$3,020.38$3,538.27($43.53)($67.88)($92.26)($116.62)2.15%2.64%-2.96%-3.19%

FinalRatesesignsPreparedForPowerCholceSettlementAgreementSCCA&SCP(>2Mw)BundledRates(1)FortheFirstThreeYearsofPowerCholceSettlementAgreementBundledCharges(CustomerIDeliveryfCommodityandCompetitiveTransitionCharges)EoergrchargesBlock3{331998CustomerPorKw(2)First250HoursofUseOn-PkOff-PkNext150HoursofUseOn-PkOff-PkAllRemainingHoursofUseOn-PkOff-PkSecondaryDelivery$902.00PrimaryDelivery$902.00SubtransmissionDel.$1,400.00TransmissionDelivery$3,172.00$11.11$9.57$6.90$6.19$0.06202$0.06149$0.05941$0.05678$0.05215$0.05208$0.04968$0.04679$0.04988$0.04963$0.04867$0.04746$0.04025$0.04024$0.03967$0.03899$0.04988$0.04963$0.04867$0.04746$0.04025$0.04024$0.03967$0.038991999SecondaryDeliveryPrimaryDeliverySubtransmissionDel.TransmissionDelivery2000SecondaryDeliveryPrimaryDeliverySubtransmissionDel.TransmissionDelivery$902.00$902.00$1,400.00$3,172.00$902.00$902.00$1,400.00$3,172.00$10.75$9.21$6.54$5.83$10AQ$8.86$6.19$5.48$0.06202$0.06149$0.05941$0.05678$0.06202$0.06149$0.05941$0.05678$0.05215$0.05208$0.04968$0.04679$0.05215$0.05208$0.04968$0.04679$0.04988$0.04963$0.04867$0.04746$0.04988$0.04963$0.04867$0.04746$0.04025$0.04024$0.03967$0.03899$0.04025$0.04024$Q.03967$0.03899$0.03962$0.03747$0.03696$0.03550$0.03962$0.03747$Q.03696$0.03550$0.03272$0.03043$0.03006$0.02878$0.03272$0.03043$0.03006$0.02878Notes:(1)OptionsForServicewillexistPerSettlementAgreementOption1-VariableCommodityChargesandFixedCTCChargesOption2-FixedCommodityandFixedCTCChargesBundledRatesVaryByYearnotbyLocation(2)ThePerKwChargeIncludesDistributionCharges&CompetitiveTransitionChargesTheUnbundledDistributionChargeswillbeassessedtothemaximumdemandoccurringinthebillingperiod.TheCompetitiveTransitionChargewillbeassessedtothemaximumOn-Peakdemandoccurringinthebillingperiod.(3)ThePerKwhChargeIncludesCommodityChargesandCompetitiveTransitionChargesvru{ynesmlPowe{ChEPCIMP2.XLS:ExhibitofBundledDesigns10/7/97:9:12AM

1998UnbundiedPrices(Option1)SC-3A8SC4(>2Mw)WesternDivisionCustomerPerKw(1)VariableCommodityChargesPerMC/LBMPBlock1First250HoursofUseOn-PkOff-PkBlock2Next150HoursOfUseOn-PkOff.PkPerKwhFixedCometltlveTranslllonChargesBlock3AllRemainingHoursOfUseOn.PkOff-PkSecondaryDeliveryPrimaryDeliverySubtransmissionDeliveryTransmissionDeliveryCentralDivisionSecondaryDeliveryPrimaryDeliverySublransmissionDeliveryTransmissionDelivery.EasternDivisionSecondaryDeliveryPrimaryDeliverySubtransmissionDeliveryTransmissionDelivery$902.00$902.00$1,400.00$3,172.00$902.00$902.00$1,400.00$3,172.00$902.00$902.00$1,400.00$3,172.00$11.11$9.57$6.90$6.19$11.11$9.57$6.90$6.19$11.11$9.57$6.90$6.19PerMarketPerMarketPerMarketPerMarket~PerMarketPerMarketPerMarketPerMarketPerMarketPerMarketPerMarketPerMarket$0.03477$0.02897$0.03607$0.03062$0.03416$0.02834$0.03259$0.02639$0.03406$0.02871$0.03532$0.03036$0.03344$0.02808$0.03190$0.02614$0.02910$0.02496$0.03035$0.02679$0.02869$0.02470$0.02728$0.02287$0.02263$0.01707$0.02421$0.01878$0.02342$0.01833$0.02327$0.01859$0.02192$0.01681$0.02346$0.01852$0.02270$0.01807$0.02258$0.01834$0.01696$0.01306$0.01849$0.01495$0.01795$0.01469$0.01796$0.01607$0.02263$0.01707$0.02421$0.01878$0.02342$0.01833$0.02327$0.01859$0.02192$0.01681$0.02346$0.01852$0.02270$0.01807$0.02258$0.01834$0.01696$0.01306$0.01849$0.01495$0.01795$0.01469$0.01796$0.01507Notes:(1)ThePerKwChargeIncludesDistributionCharges&CompetitiveTransitionChargesTheUnbundledDistribulionChargeswillbeassessedtothemaximumdemandoccurringinthebillingperiod.TheCompetitiveTransitionChargewillbeassessedtothemaximumOn-Peakdemandoccurringinthebillingperiod.0>ruUG3coro~x'<<OCPw:thynesmPCIMP2.XLS:Option1HoursUse(98)10/7/97:7:41AM

1998UnbttndledPiices(Option2)SC-3A8SCC(>2Mw)WesternDivisionFixedComm.Charges(2)OnOffCustomerPerKw(1)PeakPeakBlock2Next160HoursOfUseOn.PkOff.PkBlock1First260HoursofUseOn.PkOff-PkPerKwhFixedCompetitiveTransitionChargesBlock3AllRemainIngHoursOfUseOn-PkOff-PkSecondaryDeliveryPrimaryDeliverySubtransmisslonDeliveiyTransmissionDeliveryCentralDivisionSecondaryDeliveryPrimaryDeliverySubtransmlsslonDeliveryTransmissionDelivery$902.00$902.00$1,400.00$3,172.00$902.00$902.00$1,4M.OO$3,172.00$11.11$9.57$6.90$6.19$11.11$9.57$6.90$6.19$0.02796$0.02344$0.02617$0.02172$0.02597$0.02160$0.02488$0.02065$0.03406$0.02871$0.03532$0.03036$0.03344$0.02808$0.03190$0.02614$0.02725$0.02318$0.03477$0.02897$0.02542$0.02146$0.03607$0.03062$0.02525$0.02134$0.03416$0.02834$0.02419$0.02040$0.03259$0.02639$0.02263$0.01707$0.02421$0.01878$0.02342$0.01833$0.02327$0.01859$0.02192$0.01681$0.02346$0.01852$0.02270$0.01807$0.02258$0.01834$0.02263$0.01707$0.02421$0.01878$0.02342$0.01833$002327$0.01859$0.02192$0.01661$0.02346$0.01852$0.02270$0.01807$0.02258$0.01834EasternDivisionSecondaryDeliveryPrimaiyDeliverySubtransmlssionDeliveryTransmissionDelivery$902.00$902.00$1,400.00$3,172.00$11.11$9.57$6.90$6.19$0.03292$0.02719$0.03114$0.02529$0.03072$0.02498$0.02950$0.02392$0.02910$0.02496$0.03035$0.02679$0.02869$0.02470$0.02728$0.02287$0.01696$0.01306$0.01849$0.01495$0.01795$0.01469$0.01796$0.01507$0.01696$0.01306$0.01849$0.01495$0.01795$0.01469$0.01796$0.015070Notes:(1)ThePerKwChargetncludesDistributionCharges&CompetitiveTransitionChargesTheUnbundledDistributionChargeswillbeassessedtothemaximumdemandoccurringlnthebillingperiod.TheCompellliveTransitionChargewillbeassessedtothemaximumOn-PeakdemandoccurringInthebillingperiod.(2)TheCommodityChargesshownaboveareclassaverageprices.EachCustomervillhaveadifferentfixedcommoditychargebasedontheirindividualloadshape.D>QOClM6I~x'<<0vrUiynesmPCIMP2.XLS:Modified72398HoursUse10/7/97:7:47AM

1999UnbundledPrices(Option1)SC-3A8SCC(>2Mw)WesternDivisionCustomerPerKw(1)VariableCommodityChargesPerMC/LBMPBlock1First260HoursofUseOnPkOff-PkPerKwhFixedCometitiveTransillonChargesBlock2Next160HoursOfUsoOn-PkOff-PkBlock3AllRemainingHoursOfUseOn-PkOff-PkSecondaryDeliveryPrimaryDeliverySubtransmlssionDeliveryTransmissionDelivery$902.00$902.00$1,400.00$3,172.00$10.75$9.21$6.54$5.83PerMarketPerMarketPerMarketPerMarket$0.03188$0.02651$0.03337$0.02835$0.03148$0.02607$0.03003$0.02423$0.01974$0.01461$0.02151$0.01651$0.02074$0.01606$0.02071$0.01643$0.00948$0.00708$0.00936$0.00670$0.00904$0.00645$0.00875$0.00622CentralDlvlstonSecondaryDeliveryPrimaryDeliverySubtransmisslonDeliveryTransmissionDelivery$902.00$902.00$1,400.00$3,172.00$10.75$9.21$6.54$5.83PerMarketPerMarketPerMarketPerMarket$0.03110$0.02622$0.03255$0.02806$0.03068$0.02579$0.02926$0.02395$0.01896$0.01432$0.02069$0.01622$0.01994$0.01578$0.01994$0.01615$0.00869$0.00679$0.00853$0.00641$0.00823$0.00617$0.00798$0.00594EasternDivisionSecondaryDeliveryPrimaryDeliverySubtransmlsslonOehveryTransmissionDelivery$902.00$902.00$1,400.00$3,172.00$10.75$9.21$6.54$5.83PerMarketPerMarketPerMarketPerMarket$0.02561$0.02705$0.02544$0.02415$0.02208$0.02411$0.02205$0.02034$0.01347$0.01018$0.01519$0.01227$0.01470$0.01204$0.01483$0.01254$0.00320$0.00265$0.00303$0.00246$0.00299$0.00243$0.00287$0.00233Notes:(1)ThePerKwChargeIncludesDistributionCharges&CompetitiveTransitionChargesTheUnbundledDistributionChargeswillbeassessedtothemaximumdemandoccurringinIhebillingperiod.TheCompetitiveTransillonChargewillbeassessedtothemaximumOn.Peakdemandoccurringlnthebillingperiod.wOynesm'PCIMP2.XLS:Option1HoursUse(99)10/7/97:7:42AMD>fuoCQOQroDO<<OCP

1999UnbundledPrices(Option2)SCCA&SC4(>2Mw)PerKwhFixedCometitiveTransitionChargesWesternDivtslonFixedComm.Charges(2)OnOffCustomerPerKw(1)PeakPeakBlock1First250HoursofUseOn-PkOff.pkBlock2Next150HoursOfUseOn-PkOff.PkBlock3AllRemainingHoursOfUseOn.PkOff-PkSecondaryDeliveryPrimaryDeliverySubtransmlssionDeliveryTransmissionDeliveryCentralDivisionSecondaryDeliveryPrimaryDeliverySubtransmlsslonDeliveryTransmissionDeliveryEasternDlvistonSecondaryDeliveryPrimaryDeliverySubtransmlsslonDeliveryTransmissionDelivery$902.00$902.00$1,400.00$3,172.00$902.00$902.00$1,400.00$3,172.00$902.00$902.00$1,400.00$3,172.00$10.75$9.21$6.54$5.83$10.75$9.21$6.54$5.83$10.75$9.21$6.54$5.83$0.02793$0.02376$0.02606$0.02199$0.02588$0.02188$0.02479$0.02091$0.02866$0.02403$0.02682$0.02226$0.02662$0.02214$0.02551$0.02117$0.03375$0.02787$0.03192$0.02592$0.03149$0.02561$0.03024$0.02452$0.03409$0,02839$0.03543$0.03009$0.03353$0.02780$0.03199$0.02588$0.03336$0.02812$0.03467$0.02982$0.03279$0.02754$0.03127$0.02562$0.02827$0.02428$0.02957$0.02616$0.02792$0.02407$0.02654$0.02227$0.02195$0.01649$0.02357$0.01825$0.02279$0.01779$0.02267$0.01808$0.02122$0.01622$0.02281$0.01798$0.02205$0.01753$0.02195$0.01782$0.01613$0.01238$0.01771$0.01432$0.01718$0.01406$0.01722$0.01447$0.01168$0.00896$0.01141$0.00844$0.01108$0.00818$0.01071$0.00787$0.01096$0.00869$0.01065$0.00816$0.01034$0.00792$0.00999$0.00761$0.00587$0.00485$0.00555$0.00451$O.OO548$0.O0445$0.00526$0.00426Notes:(1)ThePerKwChargeIncludesDlslrlbutlonCharges&CompetitiveTransitionChargesTheUnbundledDlstribugonChargeswillbeassessedtothemaximumdemandoccurringinthebillingperiod.TheCompetitiveTransitionChargewillbeassessedtothemaximumOn.Peakdemandoccurringinthebillingperiod.(2)TheCommodityChargesshownaboveareclassaverageprices.EachCustomerwillhaveadifferentfixedcommoditychargebasedontheirtndivldualloadshape.D>co13tODero>C0p4)w:IhynesmPCIMP2.XLS:Modified72399HoursUse10/7/97:7:48AM

2000UnbundledPrices(Option1)SC-3A&SC4()2)IJ)w)WesternDivisionCustomerPerKw(1)VariableCommodityChargesPerMCILBMPBlock1First250HoursofUseOn.PkOff-PkBlock2Next150HoursOfUseOn-PkOff-PkPerKwhFixedCometltlveTransitionChargesBlock3AllRemainingHoursOfUseOn-PkOlf-PkSecondaryDeliveryPrimaryDeliverySubtransmissionDeliveryTransmissionDeliveryCentralDivisionSecondaryDeliveryPrimaryDeliverySublransmissionDeliveryTransmissionDeliveryEasternDivisionSecondaryDeliveryPrimaryDeliverySubtransmissionDeliveryTranmissionDelivery$902.00$902.00$1,400.00$3,1?2.00$902.00$902.M$1,400.00$3,172.00$902.00$902.00$1,400.00$3,172.M$1040$8.86$6.19$5.48$1040$8.86$6.19$548$1040$8.86$6.19$5.48PerMarketPerMarketPerMarketPerMarketPerMarketPerMarketPerMarketPerMarketPerMarketPerMarketPerMarketPerMarket$0.02923$0.02426$0.03090$0.02626'0.02903$0.02400$0.02768$0.02224$0.02838$0.02394$0.03001$0.02594$0.02816$0.02369$0.02684$0.02194$0.02240$0.01943$0.02402$0.02165$0.02245$0.01962$0.02128$0.01801$0.01709$0.01236$0.01904$0.01442$0.01829$0.01399$0.01836$0.01444$0.01624$0.01204$0.01815$0.01410$0.01742$0.01368$0.01752$0.01414$0.01026$0.00753$0.01216$0.00981$0.01171$0.00961$0.01196$0.01021$0.00683$0.00483$0.00688$0.00461$0.00658$0.00438$0.00640$0.00423$0.00597$0.00451$0.00599$0.00429$0.00571$0.00407$0.00556$0.00393$0.00000$0.000M$0.00000$0.00000$0.00000$0.00000$0.00000$0.00000Notes:(1)ThePerKwChargeincludesDistributionCharges&CompetitiveTransitionChargesTheUnbundledDistributionChargeswillbeassessedtothemaximumdemandoccurringinthebillingperiod.TheCompetitiveTransitionChargowillbeassessedtothemaximumOn.Peakdemandoccurringinthebillingperiod.UWroUCQOrolD~>c'QwthynesmtPCIMP2.XLS:Option1HoursUse(00)10I7/97:7:43AM

2000UnbundledPrices(Option2)SC-3A8SC4(>2Mw)WesternDivisionCustomerPerKw(1)FixedComm.Charges(2)OnOffPeakPeakBlock1First260HoursofUseOn-PkOff.PkBlock2Next160HoursOfUseOn.PkOff-PkPerKwhFixedComelitiveTransilionChargesBlock3AllRemainingHoursOfUseOn.PkOff-PkSecondaryDeliveryPrimaryDeliverySubtransmlsslonDeliveryTransmissionDeliveryCentralDivisionSecondaryDeliveryPrimaryDeliverySubtransmlsslonDeliveryTransmissionDeliveryEasternDivisionSecondaryDeliveryPrimaryDeliverySubtransmlss!onDeliveryTransmissionDelivery$902.00$902.00$1,400.00$3,172.00$902.00$902.00$1,400.00$3,172.00$902.00$902.00$1,400.00$3,172.00$10AO$8.86$6.19$5AS$10.40$8.86$6.19$5A8$10AO$8.86$6.19$5AS$0.02863$0.02436$0.02671$0.02254$0.02653$0.02242$0.02541$0.02143$0.02937$0.02463$0.02749$0.02282$0.02729$0.02269$0.02614$0.02170$0.03459$0.02857$0.03272$0.02657$0.03227$0.02625$0.03100$0.02513$0.03339$0.02779$0.03478$0.02954$0.03288$0.02726$0.03137$0.02536$0.03265$0.02752$0.03400$0.02926$0.03212$0.02699$0.03064$0.02509$0.02743$0.02358$0.02877$0.02551$0.02714$0.02343$0.02578$0.02166$0.02125$0.01589$0.02292$0.01770$0.02214$0.01725$0.02205$0.01756$0.02051$0.01562$0.02214$0.01742$0.02138$0.01698$0.02132$0.01729$0.01529$0.01168$0.01691$0.01367$0.01640$0.01342$0.0f646$0.01386$0.01099$0.00836$0.01076$0.00789$0.01043$0.00763$0.01009$0.00735$0.01024$0.00809$0.00998$0.00761$0.00967$0.00736$0.00936$0.0070S$0.00502$0.00415$0.00475$0.00386$0.00469$0.00381$0.00450$0.00365Notes:(1)ThePerKwChargeIncludesDistributionCharges&CompetitiveTransitionChargesTheUnbundledDistributionChargeswillbeassessedtothemaximumdemandoccurringInthebillingperiod.ThoCompetitiveTransitionChargewillbeassessedtothemaximumOn-Peakdemandoccurringinthebillingperiod.(2)TheCommodityChargesshownabovearecfassaverageprices.EachCustomerwillhaveadifferentfixedcommoditychargebasedontheirindividualloadshape.0>ruo(QO(oco~x.0QCPw:thynesmtPCIMP2.XLS:Modified72300HoursUse10/7/97:7:48AM

1998-2000BundledPricesForSC-3andQualifyingSC-4Customers(100<NMKw<2,000)WesternDivisionCustomerPerKwKwhChargesBASEDONUse<=450HoursUse>450HoursSecPriSubTrans$258.00$432.41$546.97$567.61$14.78$12.53$8.51$8.15$0.06224$0.06086$0.05842$0.05782$0.04477$0.04421$0.04314$0.04294CentralDivisionSecPriSubTrans$258.00$432.41$546.97$567.61$14.78$12.53$8.51$8.15$0.06224$0.06086$0.05842$0.05782$0.04477$0.04421$0.04314$0.04294EasternDivisionSecPriSubTrans$258.00$432.41$546.97$567.61$14.78$12.53$8.51$8.15$0.06224$0.06086$0.05842$0.05782$0.04477$0.04421$0.04314$0.04294Notes:TheaboveschedulereflectsbundledRetailPricesForSC-3andQualifyingSC-4sRetailPriceswillnotbeunbundledforclasseswithoutDirectAccess0>O(OOIMgX0whhynesm)PCIMP2.XLS:Modified72398HoursUse10/7/97:9:08AM

fnAGARAMDHAwKpowERcoRpoRAfloNDEVELOPMENTOFPSC207SCSBUYBACKRATESENERGYsndCAPACITYAres1~PREIlRAATTACHMENTOAppendixDPage21of43EunnlnfLFnktsGanersfcnTtsnfnlssknSfasnsOnpeskOff.PeakAversneJsn953Fa0683Mar@83AprM3MIP98$JtnOS$JATOS3Auy985Sep653Dc&8$Nov685Deo983Amus/3423423423423423423423423423IW423423035036ond0.360.360.360.360.360.360360380360.360.640.640.640.640.640.640.6l0.640.640.540.640.6415.8914A9f55016.7923.7217.4416A2f83822.4822341L5817.1815A317.7215.661IA6fM319A3160415.8716.68fTJI2200915.481IJI16.79159615.1714.8917.11212216.6218.9317.3819.7621.0316.77lb.5217ATOnpeskOlf-PeekAverageJsnbdFeb.gbMer46Apr46Msy95An95JddbAu965SapnbOcf68Nav.gdDao48Amus/4254254284284284254284284284284284.28428f639flJflfSJIS179124ASf7JISf9/Nf69323.1d23.0419.1617.7219.01f82716.1514.9117.8720.0416.5l16.3717201L3820.72f59615.3117nf17A9156515.3617.6421.5817.1417.461TJ/2203521.65173016.311L0220.6819222026215925.7422262327232127A6273f23.4l2199232818.27id.ib14.9117.8720.0415541537f7'dnb20.72f556fbnffTNf355333335353$192717.4317.1419A223.661L92192419.7022,1623AT19.0818.101950Ganars1onTfsfnfstknSrlesns.Jan98F~Mv4kfApr4ffMs76tbAn95JJIkfhu965SapbdOcf68Nav$8Dao98Amual4.414.414,414A14A1IA14A14A14A14A1IA14A14A1038038ond0.350.380.380380350.380.380.380.38038159015A216A9fTJI6252316.5519.601nn3239223.7719.77182819.61f88516.6615351dAI20.6717.0616.5817.7518962fnTiSAT15.801TAS1bnf15.1lf5dl152022.5717.6818.0116.4921.0222371TAI1S.8315.5921.6920202128226530.0223342435243228.702855245523.06243915.8516.681snb1L4420.6717.0615.6517.75f696213715A715.8017.8620.0l15.141TAI20.1924.5719.6820.0120AS23.022436198418832055KndffnLQnhJrJf/MnfJsrvgbFazedMvsAcr@6May98AI.95Aun.9SOcegbN~Dao4fb4AT~AT4A74AT4A74A74A7IAT4.474AT4ATIAT4.470.380.38onb0350.380.380.3S0380.3S0.380.38a380.380.680.680.680.680.6S0.680.680.680.650.680.650.680.6817.1215.6115.701LOS25.5518.7d19.6419.78242124.0620.01185019.6519.091L6715.5815.67209317281TJ6179719.1921.6416.6716.0015.0515271534150415.4222.55fTAlf182415.72212922.65180717.0lf68222.6l21.13222223.6131.0724312535253029.74295925.5424.0325.3719.0915.87fMS15.6720Jkf17M17.0917.9719.1921.6416.6716.0015.05205718.64153420.7325.152021205421.02235924952037193421.12Jsn98FangbMv-98/vrrrNMsyddJngbAu965SapdbOcedbNov98Dec-98Amus!4564.564.564.56IAS4564.564.56Ind4.584.584.564.560390.390.390.390.390.39on90.390.390390.390.390.390.690.690.690.690.690690.690.690.690.690.690.690.6917A715.9317.0418A619.1d20.1924.72245620A3fan19.45172215.9019.08213617.6417.45f834f95922.0917.0216.33184615.651L68183518812333152815.62195121.7323.121L4l17.40192123.112LST22.6524.1031.7224.6125/f9258330.3626.07245325.9019AS172215.9019.0621nb17.6l17.4518.34f9.QI22.0917.0216.3318A61L031L7321.16209721.4624.0525.4720.7919.7421.56ddl10/9/97SCS1998.XLS

NAGARAMOHAWKPOWERCORPORATlOXDEVELOPMENTOFPSC207SCSBUYBACKRATESENERGYandCAPACIIYAraa2PREMRAATTACHMENTDApped>dixDPage22Cf43fhnculla$'9$$3GcncraconJsn88$423Fc598$423Msr-98$423Apr48$423May98$423Acv88$423A@98$423Aup98$423Sepge$423Odee$423Nov4S$423Oeoge$423Anal$423OW036036036026026036038OW036036026036aec0.640.6l0.6l0.64aec0.64aec0.64aec0.640.64aecOnpesk$1L25$14.79$$5JIO$17.11$25373$7J$2$18.78$18.71$229$$23.75$24.763$7$$3$9501L12$59814.7417.6720.781L3916.18$6591L16212620.63$L$417.77$7&15.4915.1917A422.691L99$72617.7120.14223522.3516.1318A9Jsn98Feb98Apr~Ms@98JmeeAuy98Sep98Od88NoveeDence3428$428$428$428$428$428$4283428$428$428$428$428$428Onpcsk$16.75$$52531L30$17.65$26.16$1L383$9383$929$23.63$24.4932554$18.06820.11CNPask18.6816AS$520IL2221A3$69$1L68$75218.732202212715.6118.32~iAverage17.88Ia9715.66$78823.40$782$7AO182620.7723.0523.0516.6319.072103$95320ST219330A422.6623.6l238727JO28.7629JII223324.3918.681L481520$82221AS$69$16.68$75218.7322.02212715.6118.3219.6617.7517Al19.7625.15$930$95820042255248324JO18A120J$5Jsn98Fetx98Mar@8Apl~Msy98Al48Auy.98Scp98Od88Gcneracon$4.41$4.41$4A1$4.4134.41$4AI$4.4$$4A1$4.4134A1$4A1$4.41$4Al038038038038038038038a38038038038038038$72815.73$6J$$$82$2659$896$998$990243725262634$L6320.75$928$7AO15.6918.7922,1$17A4$72$18.08$93222.72219518.1018901L451L4816.161L5524.1418.07$83618.8421A323.7823.7817.1619.67220721.60229931.77237524.7624.6929.1631.132342$928$7AO15.691L7922.1117.44$72$18.08$93222722U5$1L101L9020A418AT18.1520542L1l20072026208323.4225.7725.7719.152$$7JaneeFableMsr8Apl'ay.98AnS8JLC98Auy88ecp88Od98Oeo.98AnnualGcncraccn$4A7$4A7$4.47$4.47$4AT$4.47$4.47$4AT$4.47$4AT$4AT34A734A70380380380380380380380380380380380280380.680.680.680.68aee0.680.680.680.680.680.68$750$59317.0218A327m$920202320.1524.682aee26.671LM2$J$$$952$722$5Jre$9A$3223817.6617A3$820$95623.002222$63019.1418.681L681L3618.7824A41830$85919.0721.6924.0824.08$737$98223.0221.45238S32.8524.7225.7525.6731.1032.192439$952$722$5J$8$9.03223817.6617A31L30$95623.0022221a3019.142058159818.662$AS26.7420.602089213724.00253819.672222Jan&8Fan@Msr48Apl@8MayyeJLI48Aug-98ScpgeOd88Now88Oea98ArnuslGcnctaccn$456$456$456$456$456$456$456$456$456$456$456$456$4560390390390390390390390390390cy039039OMaegaeg0.690.690.690.690.690.690.690.690.690.69aeg$7AS$626$7M18Jt227J$919.6020.65205725.$926.1127m$92821A4$952$758$82$19A2228518.0317.7918.69$99723A822.6816.6419.54$9.06$7.0316.7019.17249518.681L9819.4722.1524$S245817.73203323.50218024.462524262826.2130.8331.75328724.8927.08$992$758162119A222J$518.0317.791L6919.9723A822,681L6l19.54eAvcraye21A1$93819.05215227302$AO21332$JI224.5026.93269320.0822.68Sdl10iyl97SCS1998.XLS

NAGARAMONAWKPOWERCORPORATIONDEVELOPMENTOFPSC207SCSBVYBACKRATESENERGYandCAPACITYAree4PREMRAATTACHMENT0AppendixDPage23of43Q~nlhGeneralonJan98$423Fcb98$423Mar~$423Apr48$423Map98$423JI4X98$423JI448$423Au998S423$4Z$Oo$98$423NESS$4nBeo-98$423AreaalS423096096a36096096096096096096096a360960960.6l0.640.640.640.640.640.6la640.6l0.640.640.64312530.7029.10249$2596229024952498239925.1428.61309926.762L32249622.621L0120072a542098219418.6720AT209622892$9$2L372795253220.64222721.52225322.602a722242n902a852XTOFebSSAprreMay98Ju$48hi98Au998SeP98Oc$98Genera$on$498$428$428$428$428$428$428$428$4285428$428$428$4nCnpeak$3223$31965309$$25.07526.15$23.61$25.63S25.12$2493$2592S2990$3196S27.6027.1425.74n931LET20.7021.18219322.01$99521.1121.0024.64ZL1829262a2$26.11212822.972220n24n.3021972312249427.6924A4SESO35933l28292530A32799299029AO28.60302033.783623319727.1425.74n331L5720.7021.1821932201$92521.11219024.6422.1831.042999279922062LTS2L9825.022S.092L152490269229A7Jan98Feb.98MerrNIAy~An98Al98Au998Sep98Oca98~8Oeo98AnnualGeneraoonS4.41$4A1S4A1$4.41$4A1$4A1SL41$4A1$4A1$4A1$4A1$4A1$4.41098098098098098098098098098098098098098Onyeek53325$32.66$3096S2288$2698$2496$26A4$2592$25.10$26.75$30.44S3297S28AT28.00269524.0619.1621952195222122.7019.8621.782$.6625A2228830.1929.102L94219522702290n9724.0422.04239525922L56252138.0337A535.7530.653$.7729.15312230.7029.88319337.7628.00269524.0619.1621952195n2122.7019.8821.7821.6625A2228832.1831.092893239525.692499259726.0424.0l2594279$3096272$Rm$0$5tn!MaSu$4.47$4.47$4.47$4ATS4A7S4A7$4A7$4AT$4A7S4ATS4AT$4ATS4AT$$$85$SSSS$$$0980980980980980980980980980980980980.680.680.680.680.680.68a680.680.680.680.680.68a6833.6633.07319426.18279224.672L2425A127.083398OnpeekS$SSSS$$$$5$S28952698249819.4021.6222.12229920.1122.05219325.7323.17309629A6272722nn9923182427249422322l.1425.632892259339.18SLI$36.8731.71328l30.19322931.76309332.603L3434952L352a88249619AO21.6222.1222A9229920.112205219325.n23.1732863$.7629972493282925A82aST26.6l24.6226A5279331222793GenealcnS496$496$496$4.56$496$496$496$496$498$496$496$4965496099099099099099099099099099a390990990.39S0.695a69$0.6950.69S0.69$0.69S0.69S0.69$0.69$0.69$0.69$0.69S0.69OnpeakS3496$33.76332.00S26.73S2798S2S.18$2792$26.79$259lS27.64$31A6$34.08S29.4227.45249719.8022.0722M229623AS20932251312030.072794226924,492%6724.78249522.7824.6526.17299226.06399937.6332373L5230.82329632,42319837.1039.713S.06289427AS2497$99022.072258229623.462093225122392a2723.65335532A230.1925.0426.8l26.0227.13272025.1327Am2L52319728A1sdl10/9$7SCB1998.XLS

NAGARAMOHAWKPOWERCORPORAllONDEYELOPMEMTOFPSC207SCSBUYBACKRATESENERGYandCAPACIIYArea1-POStMRAATfACHMENTDAppendixDPage24of43Q~nInGenerafknJrn88$423Feb98$423Mere$423Agre$423May@8$423Jrn98$423Jfl48$423Au988$423Sep98S423Od86$423Nov88$423Dec66$423Arnusl$423096096aw096096096096096096a36096096aM0.640.640.640.6l0.640.640.640.640.640.640.640.640.64Onyeak$2S.102390229821.622$.1924.1023.1424.642392282624.0l19.1517.7518.4320.1820$0189719.4519.531997212218$119$2199921.6320.15202920.7820AT219921.1222.6$20.7223162123Off-PeakAverageJrn86Feb98MsrrkfApr48Msp98Jfn98Jr$98Auy88Sep98OcP98Nov9SDeb98AnnualGenerslon$4283428$428342S$428$428$428342S$42834283428$428$4282599242323.602229259823A3249524.07239625A124$629.1424.7919.7518901991209121.1419A6209620.14'1997219819.0920.131999223120.78209221A323.1621.1122.0621.7821$92395219723.88219930.1628$12797$27.71$29.13$2%34$28.1433.4229.0719.75183019.01209121.1419.4620.0620.14199721.8819.0920.13199924.092256227023212494229023$42396233825.1323.1525.6723.78CnpeskOS-PeakAverageJm98FebgaMar@8Afr48May@8Jrn68AHSAuy98Sep98Od98Nov98Deb98ArrssrfGenerafkn$4.41$4.41$4.41$4.41$4.41$4.41$4.41$4.41$4.41$4.41$441$4.41$4A10980980980980980980980980980980980980982L7125.00249423fo269024.1725.64248324.62262125943ao625982097189819.6121AT2191209820.6920.7820.612298199920.7720.6323.0121A421$8221123.8921.782LTS22A7222824.09220524.6422.6931A929.7929.1327.793199289630.4329.6229AO31.0030.1334$$30972097189819.6121.47219120.6920.7820.61225S19.6920.7725.0123A3239824.1025.8823.7824.7524A6242726.0924.0l26.6l24.68Feb98MarMApr~Map98Jrn98Aug.98Sep98Od98Nov98Deb98Gencralcn$4.47$4.4784AT$4.47$4.47$4,47$4AT$4.4734.47$4A7$4.47$4.47$4.470980980980980980280980980980980980980980$80$80.680.680$80.680.680.680.680.68a680.6827.04259124.65232927.1324A72$.142492269425.662590209319.12'19$521.7422.082093209521.0420962296199421932098233021.7021$$229824.1922.05ZL042275225624992232249522.973256309330.17289132.66299931A830.6630.4532.0631.18359631A220.6319.1219.8521.7422.082093209521.0420.8622.86199421.0320$824.0024.1524.6826A9249$259424.8624.622725Generalon$4.56$4.56$4$6$4.56$4.56$496$4$6$4$6$496$4$6$496$4$6$4$60290990990990990990990990990990990990990.690.690.690$90.690.690.690.690.690.690.690$90.6925.1627.7024.9825.6626.1931.0721.0619$2202722.19225420.75219921A721202323209521A621922L7822,162230228524.69225123$22322Zk03249022.7925A723ASCnpeskS332431A8309029A1339430.6232.1431203198u.7331$33LTI320721.0619$222.19225420.75219921.4721902323209521.462f9226.132ASO24.65252027.0l24$8259725972597272525.13279225.80Otf.PeakAverageSdf10/9/97SC61998.XLS

NAGARAMOHAWKPOWERCORPORATIONDEVELOPMENTOFPSC207SCSBUYBACKRATESENERGYandCAPACIIYAres2-POSTMRAATTACHMENT0AppendixDPage25of43QLnnrn~ISGcnerallcnJsn88$423Feb88$423Msr4S$423APTS$423Msy86$423Jun8S$423Jal88$423Au9883423Scp883423Od88$423Nov88$423Dec-98$423Arrrusl$4230.360.36026026OM026026026OM026026OM0280.640.640.640.64a640.640.640.640.640.640.647snsnrssknasrrrans.23A32283218525.6623AO24.74n8623.672a372%952a672494Olriaeek$192631720$1839320AO$20JIS319.13319rIT5199631981$22.71$22A9$1980$20.1121.7620.09202421.00228820.752185215921A2242325.182L5022.12Jsn88Feb88Msr4SApr~May88Jaca88Jal88Au988Sep98Oc188Nov88Deo83Gcncralcn$4283428$428$428$428428$428$428$428$428$428S428S428260424.162354225l26A6n75255124.6024A127.1929.85295625.72$19JIT$182531896$21AQ32154S19.72S2059$2059S20.43$23A2$2320320A2$20.7422Al20.7220.8721.66n5921AO22.64222622.09249925972423228130222L4427JI226JII30.7428.0229.792a8828.6931AT34.1333JH299919JIT1825189621'15419.7220592a5920.4323.42n2020A220.74242222.65252723.1824.4223JIT26.7727.7526.012459Jsn88Feb88MarakiApr48May88JaS88Au988Sep88OcS98Nov88Deb88GeneraaanS4A1$4.41$4A1$4A1$4AI$4A1$4A1$4A194A1$4A134A1$4.41$4.41a38028028028038OM028028OMa38a38a38028nc2587249324292325272024502L32252825.18280530AO30502L53$20A9$1a83$1956$21.70$2222$2a3532124$2124321AS$24.16$2393$21A17$212923.1521M21432235242422.08n36229622.7925.7826.7925.00n5331.6529.7229J)7280432.09292931.1130.172997328435583529312220A91L83195621.7022222a352124212421AIS24.162L932UIT212925.1423532424262324.07252524.7827.7828.79269925.53Jsn88Feb88MarakiApr48May88Jasa88JaS88Au988Sep88Od88Nov88Deb98GeneralcnS4AT$4A7$4A7$4AT$4AT$4A7S4A7$4.47S4A7$4.47$4ATS4A7$4A7028OM0.38028OM028028038038OM0280280280.680.680.680.680.680.680.680.680.680.680.680.680.6827m25242459235427.6l24JO26jr525.70255028AO31.1830AS26AS$20.75$19.06$198132197S2250S20JIO$2151$2150S2124$24A6$2423$2123$215623A421.6l212022.6224.64223523.65n2523.0726.1027.132521n83EnexShtxJhlmruzOnpeskOrriaeskAvera9e32.7330.7630.1129.0633.163a3332.17312231.02339236.7036AO323820.7519.0619JII2197225020.6021412150212424AS2423212321.6625.74239424.102483269424.652595255525.372L4029.4327.6126.13Jsn88MsrrrsAprMMay.98Jasa88JaS88Au988Sep88Od88Ncna98Dec86ArluatGeneraecn$456$456$456$456$456S456$456$446S456$456$456$456$456029029029029029028029AS029029028OM0290.690.690.690.690.690.690.690.690.690.690.690.690.6927.7725.7625.10240328222a32272026232L032L993&3315227A2Orf-Peek$21.18$19A6$2022$22A3$2296$2120$219532195S21.79$2487S2873$21.77$22.11n9322.09222523.1025.15228224.1423.74n5526.6527.6925JM242233.4131AO30.7429.6732863096328431JIT31.6734.6337AT37.1633.0621.1819A6202222.43229621.032195219521.79249724.7321.7722.1124.4424.6025.44275025.1726A926.0829.0028.1826.67sdl10887SC61998.XLS

tnAGARAMOHAWKPOWERCORPORATONDEVELOPMENTOFPSC207SC6BIIYBACKRATESENERGYandCAPACITYArea4POSTMRAATTACHMENT0AppendixDPage26of43Eunn!~9319GeneraaonJsnge$423FeM8$423Msr48$423Apr48$423Mayge$423hnS8$423JrL985423Aug48S423Sep68S423OctdtSS423Nov68$423DeoSS$423AnnualS423tL360964360960264360360960260964MIL364360.640.640.640.640.640.640.640.640.6l0.6l0.64Onpeak631$7$30.19$28.7524$3259622962496232l25.7528.6930.702L6626.642$A723.672020209920$821A3219619$82267222223962?973S5$$.$5S$$$$28.692?A425.7922.0022.632197228622.1221.16239$2l9226.7724.16GenendmJsngeS428Feb'428Mar~$428Apr~$428Msyge$428Jjnge8428Jd686428Aug68$428ecP68$428Od486428Novae3428Deo48$428Arnual9428325631.1329.6S2L3025$l23.6825.6l242$23972L5529$931.6627A927AT2L2724.41209321$l21222?.1021.7220292L38229124.7123.0729$92L2926$922.692333222523$72?$1219224.7025$927.60249136$335.41339229$73tL122795299128.62282434833396359331.7727.47262724A1204321$l212222.1021.7220292L38229124.7123.07319730.072L3724A725.1224.032L3524$923.6126.4S27A8292926.69Jan@8F~Mar%6AprrteMay-98Jrn68AI68Aug68eep68OcugeNov68Deo68AnnualGeneratcn$4.4134A1$4A154A154A1S4A154A16lA1$4A1$4.41$4A1$4.41$4A1098098438098IL380980980280980980980$809833$932.1226.1026.6624A326A$25,1224.72272934522L36289427.1025.1821A92?222UI22.802?AO209424.1223.6425A923.80305329.1927A323AI2497249223$4225125AS26$128AS2$.7038373690359730.8831A529213123299029.5132.18359137A533.15243427.1025.1821A9222221A822AN22AO209424.1223.6425A923$0325231.1829A325AO26.0724942L3125.5324.512?AS285030AT27.69GeeratcnJan68$4ATFcb45$4A7Mar48S4A7Apr48S4A7Mayge$447Jtn68$4ATJU68$4ATAug68$4A7eep68S4ATOcp98$4A7No48S447Deo68S447Arnuat$4AT0980980280980280980984M028438438098098aee0$8aee0.68ae80.680$80.680$80.680.684683?$230.9726A2269924.7326.7825.4327.74309033.072IL7228.6927A325$021.76225022.172%0822.68212024.42239325.8124.10309129$52L7823.7024272324249223$3228025902L842L8326.02EmnnLI?nhldnsntOnpeskOSPoakAverage39$3340436.4931943?'$230253230309530$5332636.433L$9342428,692TA32$$021.76225022,1723.082268212024.422L93259124.103321319526.67269226.132$.1028.1029.143t.13Genccaton$4$6F~S4$6Msr4S$4$6AprMS4$6$4$6Ange$4$6Jd48S4$6Auyge$4$6Sep6864$6OcNSS4$6Nov48S4$6Dax98$4$6ArnualS4$60290290&i099099029099039IL39IL394390990990.690$90.690.690.690.690.690.690$90.690.690.6934.71332031.61269727$525252794259625$5243131$533.76299129292tL0126.032221229722.63235623.1621.6l249324A3269524.60Average31$530.172L?$24.192l$8?L7225.1424932327269427.4029.4326$640953483372532.6133.1930$8329731.6031.19339537.1839993495292928.0126.032221229722.6323$623.162194249324.43262$24.6033903?$2347026$4272326.072?A826.6725.6228.6929.7531.782891ectl10/9/97SCB19983Q.S

ORIGINALAPPENDIXDSCHEDULE7,SHEET35FROM7/23/97PROPOSALUnbundledPriceDataAppendixDPage27of43199819992000arketriceofElectriiForecastMWesternRegionSC1SG2NDSC2DSC3SecondaSC3PrimaSC3SubtransmissionSC3TransmissionSC3ASecondaWnSC3ASeconda-OffSC3APrimaWnSC3APrimaWffSC3ASubtransmissionWnSC3ASubtransmission-OffSG3ATransmissionWnSC3ATransmission-OffAllhourswithlossesaliedOn/Offaklossesalied$0.02556$0.02501$0.02527$0.02449$0.02361$0.02324$0.02218$0.02725$0.02318$0.02145$0.02525$0.02134$0.02419$0.02040$0.02564$0.02591$0.02510$0.02420$0.02382$0.02273$0.02793$0.02376$0.02199$0.02588$0.02188$0.02479$0.02091$0.02686$0.02628$0.02655$0.02573$0.02480$0.02441$0.02330$0.02863$0.02435$0.02671$0.02242$0.02541$0.02143CentralRegionSC1SC2NDSC2DSC3SecondaSC3PrimaSC3SubtransmissionSC3TransmissionAIIhourslossesalied$0.02498$0.02407$0.02370$0.02261$0.02671$0.02614$0.02560$0.02467$0.02430$0.02317$0.02738$0.02679$0.02624$0.0252S$0.02490$0.02375SC3ASeconda-OnSC3ASeconda-OffSC3APrima-OnSG3APrimaWffSG3ASubtransmission-OnSC3ASubtransmission-OffSC3ATransmissionWnSC3ATransmission-OffOn/Offaklossesatied$0.02617$0.02172$0.02598$0.02214$0.02550$0.02117$0.02937$0.02463$0.02282$0.02729$0.02269$0.02614$0.02170EasternRegionSC1SC2NDSC2DSC3SecondaSC3PrimaSC3SubtransmissionSG3TransmissionAllhourslossesalied$0.03058$0.03000$0.03021$0.02924$0.02818$0.02770$0.02657$0.03134$0.03075$0.03097$0.02997$0.02888$0.02840$0.02724$0.03213$0.03152$0.03174$0.03072$0.02961$0.02911$0.02792SC3ASeconda-OnSC3ASeconda-OffSC3APrtmaWnSC3APrimaWffSC3ASubtransmission-OnSC3ASubtransmission-OffSC3ATransmission-OnSC3ATransmission-OffOn/Offaklossesalied$0.03293$0.0271S$0.03115$0.02529$0.03072$0.02498$0.03375$0.02787$0.03459$0.02857$0.03272$0.03099$0.025139/30/972:38PMConrdentialSettlementDocumentCOM$.XLS

REVISEDAPPENDIXDSCHEDULE7,SHEET35FROM7/23/97PROPOSALWITHREVISEDBACKOUTRATESUnbundledPriceDataAppendixDPage28Of43199819992000ForecastMarketPriceofElecticiWesternRegionSC1SC2NDSC2DSC3SecondaSC3PrimaSC3SubtransmissionSC3TransmissionAllhourslossesalied$0.02556$0.02501$0.02527$0.02449$0.02361$0.02324$0.02218$0.02827$0.02766$0.02795$0.02708$0.02611$0.02570$0.02453$0.03076$0.03009$0.03041$0.02947$0.02840$0.02796$0.02668SC3ASecondaWnSC3ASeconda~fSC3APrimaWnSC3APrimaWffSC3ASubtransmissionWnSC3ASubtransmission~fSC3ATransmission~SC3ATransmissionWffOn/Offwithlossesaplied$0.02725$0.02318$0.02543$0.02145$0.02525$0.02134$0.02419$0.03014$0.02564$0.02812$0.02373$0.02675$0.02256$0.03279$0.02789$0.03059$0.02910CentralRegionSC1SC2NDSC2DSC3SecondaSC3PrimaSC3SubtransmissionSC3TransmissionSC3ASccondaSC3ASeconda~fSC3APrimaSC3APrimaWffSC3ASubtransmissionWnSC3ASubtransmission~fSC3ATransmissionWnSC3ATransmission~fAllhourswithlossesaliedOn/Offlossesapplied$0.02550$0.02578$0.02498$0.02407$0.02370$0.02261$0.02796$0.02617$0.02172$0.02598$0.02882$0.02820$0.02851$0.02762$0.02662$0.02894$0.02402$0.02873$0.02752$0.02284$0.03136$0.03069$0.03102$0.03005$0.02897$0.02852$0.02720$0.03364$0.02821$0.03149$0.02613$0.03126EasternRegionSC1SC2NDSC2DSC3SecondaSC3PrimaSC3SubtransmissionSC3TransmissionAIIhourslossesalied$0.03058$0.03000$0.03021$0.02924$0.02818$0.02770$0.02657$0.03382$0.03318$0.03341$0.03233$0.03117$0.03064$0.02939$0.03679$0.03610$0.03635$0.03518$0.03391$0.03333$0.03197SC3ASecondaWnSC3ASeconda~fSC3APrimaSC3APrimaWffSC3ASubtransmissionWnSC3ASubtransmission~fSC3ATransmissionWnSC3ATransmissionWffOn/Offlossesalied$0.03293$0.02719$0.03115$0.02529$0.03072$0.02498$0.03641$0.03007$0.03445$0.02797$0.03398$0.02763$0.028789/30/97,2:45PMConfidentialSettiementDocumentCOM$997.XLS

NIAGARAMOHAWKPOWERCORPORATIONPowerChoiceRevenueComponentsPrivateAreaLihtingS.C.No.1-FullServicePresentStructure'owerChoiceStructure~cornoncetFacilityRevenue$2,680,288~cornonenrFacilityServicesRevenue$1,605,598Energy$2,017,413EnergyServices$3,092,103$0.105787Total$4,697,701Total$4,697,7011998SalesForecasL29,229,395kWh'1996FreezeRates0>D(D'z>>Qrarog.OX<<Odtm.unbundlei98ry95lrevrordslpel

AppendixDPage30of43NIAGARAMOHAWKPOWERCORPORATIONP.S.C.No.213,S.C.No.1PrivateAreaLightingComparisonofMonthlyFacilityPricesFreezeandPowerChoiceLAMPS&LUMINAIRES~DeeIeiStandardMercuryVaporHighPressureSodium175w400w1000w70w100w1Sow250w400w1000wFreezeCharac$8.75$10.76$14.72$6.44$6A3$9.78$6.95$11.25$19.78Proposed~Chare$4.34$4.87$9.64$4.24$4.23$4.30$4.82$5.06$9.87($4.42)($5.89)($5.08)($2.20)($2.20)($5.48)($2.13)($6.19)($9.91)-606%-54.8%-34.5%342oro342%-56.1%306%-550501%AdjustmentAmountPercentRoodMercuryVaporHighPressureSodiumMetalHalideShoeboxHighPressureSodiumMetalHalide~P*tTeColonialHighPressureSodium400w1000w250w400w1000w400w$11.25$14.89$5.86$13.03$16.16$7.0770w100w150w$6.24$6.23$6.19100w$9.08150w$8.94250w$8.95400w$9.03400w$9.22$6.64$6.74$5.41$5.65$7.03$6.35$7.18$6.52$7.12$7.06$7.21$4.61$4.62$4.72($5.71)($8.15)($0.45)($7.38)($9.13)($0.72)($1.91)($2A2)($1.84)($1.97)($2.01)($1.63)($1.61)($1.47)-50.8%-54.7%-7.7%-56.7%565-102%21.0%2720S%218%18oro262%-25.8%-237%TraditionalHighPressureSodium70w100w150w$10.64$10.78$10.64$8.51$8.92$8.73($2.13)($1.86)($1.92)20.0%-172%18.0%AcornHighPressureSodium70w$10.39100w$10.381SowS10.19$8.31$8.31$8.31($2.08)($2.07)($1.88)20.0%19.9%-18.4%EnergyPriceperKwh$0.06902$0.10579$0.0367753.3%ConfidonrlalSerrlerrrenrDoeurrrenr

AppendixDPage31of43NIAGARAMOHAWKPOWERCORPORATIONP.S.C.No.213,S.C.No.1PrivateAreaLightingComparisonofMonthlyFacilityPricesFreezeandPowerChoicePOLESFOUNDATIONSCIRCUITSPOLES~DecotoOverheadServiceFreezeCh~rcheProposedCh~rcheAdjustmentAmountPercentWoodUnderroundService-Standard$5.50$5.45($005)a08%~Retees16'rloss16'rless,embeddedover16'-25'-pendantAluminum16'rless,squareover16'-25'-davitover16'-30',square$6.50$9.10$12.20$24.25$15.10$40.32$5.09$6.99$11.39$22.52$16e41$36.87($1.41)($2.11)($0.81)($1.73)$1.31($3.45)217%23.2%6-7.1%87%8.6%FOUNDATIONSPouredConcreteforpoles:16'rlossover16'20.95$14.20($6.75).32.2%$2425$1655($770)317%~Screw.Teallapplications~PkinLotallapplications$11.25$8.13$14.75$11.19($312)-277%($3.57)-24.2%CIRCUITSOverheadService(basedon150tt.)cableonlyUnderroundService(basedonperft.)cableandconduitcableonlydirectburiedcable$2.05$2.52047227%$0.18$0,13($0.06)30.6%$0.04$0.03($0.01)-27.0%$0.15S0.10($0.05)-33.3%Confid'nrlclSeulenrenrDoeumenr

NIAGARAMOHAWKPOWERCORPORATIONPowerChoiceRevenueComponentsStreetandHihwaLihtinS.C.No.2-FullServiceContract-CustomerContributoryPresentStructure'owerChoiceStructure~ComonenrRevenue~ComonenrRevenuelkwhFacilitySC2Contract$33,615,147f43790Total$33,658,937FacilityServicesSC2Contract$27,578,724$33328Total$27,612,050EnergySC2Contract$12,030,023r1538Total$12,031,561EnergyServicesSC2Contract$18,066,446$12002Total$18,078,448$0.103784TotalSC2Contract$45,645,170345328Total$45,690,498TotalSC2Contract$45,645,170345328Total$45,690,4981996SalesForecast:SC2174,171,474kWhContract~6kWh174,193,736kWh'1996FreezeRates.dfm-unbundlettr8rteSIrevrorrdototrt2conl

NIAGARAMOHAWKPOWERCORPORATIONAppendixDPage33of43P.S.C.No.213Electricity,S.C.No.2StreetandHighwayLighting-FullServiceComparisonofAnnualFacilityPricesFreezePricesandPowerChoiceSTANDARDEQUIPMENTLAMPSLUMINAIRESLAMPSFsciliSize8iTeFreezeCharcheProposed~ChareAdjustmentAmountPercentMercuryVaporHighPressureSodiumLUMINAIRESStandardArchitecturalUnderpassParkwayDecorative100w175w400w1000w70w100w150w250w400w1000w70w100w150w/175w400w1000w100w150w/175w250w400w70w/100w150w/175w150w/175w1000w$30.62$26.40$30.93$38.83$33A3$39.96$43.35$44.84$45.49$85.11$57.16$55.17$58.81$78.05$126.54$85.11$85.11$141.85$136.32$80.85$66.16$95.55$192.65$5.29$5.17$5.96$8.89$6.30$6.33$6.55$6.61$6.62$12.90$44.68~$44.58$45.62$52.70$107.27$72.32$58.74$78.91$7847$80.35$81.16$94.21$189.96($25.33)($21.23)($24.97)($29.94)($27.13)($27.13)($33.63)($36.80)($38.23)($38.87)($1248)($10.59)($13.19)($25.35)($19.27)($12.79)($26.37)($62.94)($57.85)($0.50)$15.00($1.34)($2.69)82.7%-so.a%-807%-77.1%-81.2%-81.2%-Sa.2%-849%853o/o-854%-21.8%192%.224%32.5%15.2o)o150%31.0%-aa.4%42.4o/~06%227%1.4%1.4%Roodarmorysquareedgewatercentralparkmarineredgewatercentralpark100w100w100w100w150w/175w150w/175w250w400w$123.17$126.34$133.07$237.00$126.43$113.26$60.37$61.54$122.93$120.95$116.16$296.00$126.34$107.62$52.89$55.73($0.24)($5.39)($16.91)$59.00($0.09)($5.64)($7.48)($5.81)0.2%-4.3%-12.7%249%01%-5.0%12.4%9.4%EnergyRateperKWH$0.06907$0.10378$0.0347150.3%ConfidentialSerilemenrDaeumenr

NIAGARAMOHAWKPOWERCORPORATIONAppendixDPage34of43P.S.C.No.213Electricity,S.C.No.2StreetandHighwayLighting.FullServiceComparisonofAnnualFacilityPricesFreezePdcesandPowerChoice'STANDARDEQUIPMENTPOLESFOUNDATIONSPOLESFacilitSize&TeOverheadServiceFreezeProposedAdjustmentCh~rche~ChareAmountPercentWoodSteelAluminumUnderroundService-Standard$57.75$79.10$100.00$95.65$163.62$167.25$37.9065.6%$84.52106.9%S67.2567.3%Steel16'under16'under,embeddedover16'ver16',heavydutyAl16'underover16'ver16',heavydutyover16',square~RGGlass$40.05$79.95$102.90$127.35$39.70$102.90$204.35$316.05$102.79$120.67$237.73$326.37$121.92$231s48$273.95$470.02$62.74$40.72$134.83$199.02$82.22$128.58$69.60$153.971567%50.9%131.0%156.3%207.1%125.0%34.1%487%16'under16'under,embeddedover16'ndergroundService-DecorativeAl16'under:$32.95$61.10$28.15$64.25$83.87$19.62$96.20$156.02$59.8285.4%30.5%622%Casl*Rb*nblasarmorysquare16'under:armorysquare16'under:$271.90$310.61$271.90$345.66$38.71$73.7614.2%27.1%presidentialpresidential,embeddedFOUNDATIONS$126.08$185.42$162.08$214.07$36.0028.6%S28.6515.5%CGt*forpoles:16'underover16'ver16',heavyduty~a*-tallapplicationsS100.15$140.75$182.85$62.50$170.40$198.62$217.68$97.60$70.25$57.87$34.83$35.1070.1%41.1%190%56.2%Confidenria!SeulemenrDoeumenr

NIAGARAMOHAWKPOWERCORPORATIONAppendixDPage350f43P.S.C.No.213Electricity,S.C.No.2StreetandHighwayLighting-FullServiceComparisonofAnnualFacilityPricesFreezePricesandPowerChoiceSTANDARDEQUIPMENTCIRCUITSOTHERCHARGESFacilitSize8TeCIRCUITSStandardUnderroundFreezeProposedAdjustmentCharcheCher<heAmountPercentcableandconduitcableonlydirectburiedcableResidentialUnderrounddirectburiedcableExcessFootae-erfoot$102.80$19.75$56.35$11.25$12.06$0.817.2%$75.14($27.66l.26.9%S17.66(S2.09)-10.6%$60.29$3.947.0cableandconduitcableonlydirectburiedcable$2.05$0.34$1.10$1.50$0.35$1.20($0.55)$0.01$0.'IO.26.8%2.9%9.1%OTHERCHARGES24HourService-AdditionalChareMercuryVaporHighPressureSodium100w175w70w100w150w$9.75$9.55$10.90$10.65$9.55$5.29$5.17$6.30$6.33$6.55($4.46)($4.38)($4.60)($4.32)($3.00)-45.7%-45.9%42.2%-406%31.4%ConvenienceOutletsonnewmetalpoleonexistingmetalpoleonwoodpole$16.90$34.30$48.01$42.12$58.00$52.85$25.22149.2%$23.7069.1%$4.8410.1%EnergyRateperKWH$0.06907$0.10378$0.0347150.3%ConjidenrialSealemenrDocnnrenr

NIAGARAMOHAWKPOWERCORPORATIONAppendixDPage36of43P.S.C.No.213Electricity,S.C.No.2StreetandHighwayLighting-FullServiceComparisonofAnnualFacilityPricesFreezePricesandPowerChoiceDISCONTINUEDEQUIPMENTLAMP&LUMINAIRECONVENIENCEOUTLETFecilitSize&TeFreezeProposedAdjustment~ChareChsrcheAmountPercentLAMP&LUMINAIRE~M6raurVr100watt-open700watt-enclosed$74.94$176.12$74.94$176.12$0.00$0.00p.p0.0%Incandescent2500lumen-open2500lumen.enclosed4000lumen-open4000lumen-enclosed6000lumen-enclosed10000lumen-enclosed$64.14$83.07$79.65$85.71$92.32$140.07$64.14$83.07$79.65$85.7'I$92.32$140.07$0.00$0.00$0.00$0.00$0.00$0.00p.p0.0%0.0%p.pP0%p.pFluorescentunderpass-1lampunderpass-1lamp,24hrunderpass-2lamp$144.91$181.95$190.81$144.91$181.95$190.81$0.00$0.00$0.000.0%0.0%0.0%CONVENIENCEOUTLETold$4.75$4.75$0.00PP%EnergyRateperKWH$0.06907$0.10378$0.0347150.3%ConfidenttalSettlementDocument

N)AGARAMOHAWKPOWERCORPORATlONAppendixDPage37of43ContractUghting-CustomerContributoryComparisonofAnnualFacilityPricesFreezePricesandPowerChoiceLAMPSFacihtSize8iTeFreeze~ChareProposed~ChareAd/ustmentAmountPercent~MessVsssHihPressureSodiuin100W175W400W1000W70W100W150W250W400W1000W$30.62$26.40$30.93$38.83$33.43$39.96$43.35sa4.84$45.49$85.11$5.29$5.17$5.96$8.89$6.30$6.33$6.55$6.61$6.62$12.90($25.33)'$21.23){$24.97)($29.94)($27.13)($33.63)($36.80)i$38.23)($38.87)($72.21)8280.4%-80.7%771%812%-84.2%-849%853854%-84.8%LUMINAIRESStandard~Uds70W100W150W/175W250/400W1000W$15.03$15.21$15.36$17.46$46.13$15.03$15.21$15.36$17A6$46.13$0.00$0.00$0.00$0.00$0.00p.pp.p0.0%0.0%0.0%Architectural70W/100W150W/175W$23.55$23.55$20.76$20.76$0.00$0.000.0%0.0%100W150W/175W400WDecorativearmorysquare100Wedgewater100Wedgewater150Wcentralpark100Wcentralpark175Wmariner100WRood250Wappw$19.89$18.49$22.62$38.43$34.33$34.21$32.65$29.61$73.99$18.10$18.45$19.89$18A9$22.62$38.43$34.33$34.21$32.65$29.61$73.99$18.10$18.45$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.000.0%0.0%0.0%p.pP0%PP%p.p0.0%00%p.p00%EnergyRateperKWH$0.06907$0.10378$0.0347150.3%ConfidentialSea/einenrDocument

NIAGARAMOHAWKPOWERCORPORATIONAppendixDPage38of43ContractLighting-CustomerContributoryComparisonofAnnualFacilityPricesFreezePricesandPowerChoiceFaciliSize8iTePOLESUnderoroundService-StandardSteelFreezeCh~rcheProposed~ChareAdjustmentAmountPercent16'ndunder16'ndunder,embeddedover16'lumlum$26.02$34.97,$53.50$26.02S34.97$53.50$0.00$0.00$0.00Oe0%0.0%0.0%over16'ver16',heavydutyover16',square~Reelss16'ndunder16'ndunder,embeddedover16'nderroundService-DecorativeAluminum16'ndunderarmorysquareCastIron16'ndunderarmorysquare~Ruele16'ndunder$54.82$55.68$124.72$54.82$55.68$124.72$16.53$16.53$25.59$25.59$41.54$41.54$103.59$103.59$103.59$103.59Sp.pp$0.00$0.00$0.00$0.00$0.00$0.00$0.00p.pp.p00%0.0%PP%p.p0.0%p.ppresidentialpresidential,embedded$39.22$45.68$39.22$45.68Sp.pp$0.000.0%0.0%FOUNDATIONSConcreteforpoles:16'ndunderover16'ver16'eavyduty~eeew-tallapplications$58.41$66.91$73e44$32.51$58.41$66.91$73.44$32.51$0.00$0.00$0.00$0.00p.p0.0%p.p0P%ConfidentialSettlementDocument

AppendixDPage39of43NIAGARAMOHAWKPOWERCORPORATIONContractLighting-CustomerContributoryComparisonofAnnualFacilityPricesFreezePricesandPowerChoiceFscilitSize&TeCIRCUITSStandardUnderroundServiceFreezeProposedAdjustment~Chare~ChareAmountPercentcableandconduitcableonlydirectburiedcableResidentialUnderroundServicedirectburiedcableExcessFootseBothCatepriescableandconduitcableonlydirectburiedcable$25.21$5.64$20.43$4.08$0.51$0.11$0.41$25.21$5.64$20e43$4.08$0.51$0.11$0.41$0.00$0.00SO.OP$0.00$0.00$0.00$0.000.0%00%0.0%0.0%O.po/op.p0.0%MISCELLANEOUS24HourService-AdditionalChare~MerVeor100W175WHihPressureSodium70W100W150W$9.27$9.08$10.63$10.57$10.62$9.27$9.08"$10.63$10.57$10.62$0.00$0.00$0.00$0.00$0.000.0%0P%p.p0.0%p.pCreditforLsmsUnlitMercreMVoHihPressureSodium100W175W400W1000W($30.62)($26e40)($30.93)($38.83)($5.29)$25.33-82.7%($517)$2123-804%($5.96)$24.97-80.7%($8.89)$29.94-77.1%70W100W150W250W400W1000W($33.43)($39.96)($43.35)($44.84)($45.49)-($85.11)($6.30)(S6.33)($6.55)($6.61)($6.62)($12.90)$27.13$33.63$36.80$38.23$38.87$72.21812%84.2%-849%85.3%-854%84.BoffoConvenienceOutletsnewmetalpoleexistingmetalpoler$11.52$18.29$11.52$18.29$0.00$0.00p.pP0%EnergyRateperKWH$0.06907$0.10378$0.0347150.3%Conf)denrlalSerrlemenrDoeumenr

NIAGARAMOHAWKPOWERCORPORATIONPowerChoiceRevenueComponentsStreetandHihwaIihtinS.C.No.3-EnergyOnly~ComonenlRevenuePresentStructure'ComonenlPowerChoiceStructureRevenueIkWhEnergy$438,773EnergyServices$438,773$0.069070Total$438,773Total$438,7731998SalesForecasL'1996FreezeRates.6,352,605kWhU>CD0tQC5CDCDO-0<<0COellm~nbundloSary95(revroc.xlslelrts

NIAGARAMOHAWKPOWERCORPORATIONPowerChoiceRevenueComponentsStreetandHihwaLihtinS.C.No.6-CompanyMaint./CustomerEquipmentPresentStructure'owerChoiceStructure~ComanentRevenue~ComoncetRevenueIkwhFacility$13,100FacilityServices$8,913Energy$50,691EnergyServices$54,878$0.074777Total$63,791Total$63,7911998SalesForecast:733,885Rwh't996FreezeRates.dtttt.unbundleteaty95Irevrot.ttbtebte

NIAGARAMOHAWKPOWERCORPORATIONAppendixDPage42of43P.S.C.No.213Electricity,S.CNo.6StreetandHighwayLighting-Co.Maint.,Cust.Equip.ComparisonofAnnualFacilityPricesFreezePricesandPowerChoiceFaciiitSize&TeLAMPMAINTENANCEMercuneMVaiHihPressureSodium100W175W250W400W1000W70W100W150W250W400W1000WFreezeChar<he$11.27$11.01$11.63$11.63$17.53$13.11$13.09$13.10$13.48$13.64$23.67ProposedChsrche$6.81$6.42$7.02$7.02$9.27$7.31$7.35$7.51$7.59$7.59$12.73($4.46)($4.59)($4.61)($4.61)($8.26)($5.80)($5.74)($5.59)($5.89)($6.05)($10.94)39.6%417%39.6%39.6%471%-44.2%-43.9%42.7%-43.7%-44.4%46.2%AdjustmentAmountPercentCONTINUOUSILLUMINATION-ADDITIONALLAMPMAINTENANCECHARGE~MBPCUVHihPressureSodiumCREDITFORLAMPSUNLITMeule¹VBHihPressureSodium100W175W70W100W150W100W175W250W400W1000W70W100W150W250W400W1000W$10.36$10.17$11.72$11.66$11.71($11.27)($11.01)($11.63)($11.63)($17.53)($13.11)($13.09)($13.10)($13.48)($13.64)($23.67)$5.82$5.48$6.02$6.05$6.21($6.81)($6.42)($7.02)($7.02)($9.27)($7.31)($7.35)($7.51)($7.59)($7.59)($12.73)($4.54)($4.69)($5.70)($5.61)($5.50)$4.46$4.59$4.61$4.61$8.26$5.80$5.74$5.59$5.89$6.05$10.9443.8%-461%48.6%48.1%-47.0%39.6%41.7%39.6%39.6%471%44.2%43.9%-42.7%43.7%-44.4%46.2%EnergyRateperKWH$0.06907$0.07478$0.00571ConfidenttalSettlementDocument

NIAGARAMOHAWKPOWERCORPORATION'owerChoiceRevenueComponentsS.C.No.4PresentStructure'owerChoiceStructure~Comonenievenue~ComonentRevenueISinalaceSignalFace/Energy$1,926,478SignalFace/EnergyServices$1,926,478$3.76Total$1,926,478Total$1,926,4781998SalesForecast:25,618,077kWh512,362SignalFaces'1996FreezeRatesU>OIUlO'l3CDCDCp)-.Odfm.unbundleIS8ry95ffevloe.xloIbfela

APPENDIXEBALANCESOFDEFERREDDEBITSANDCREDITSNOTYETREFLECTEDINRATES 0

L5II235GABhJ}IOZKQYIU'QKElUOM5HMX19itRegllJkf~ssClSJNSLRCaM)119lg3Milt(tiesKoxeeastaUa3hcemhet31M2~ujingturnoscsRevised09-Oct-97DeferredforRegulatoryPuoses12/96DeferredDebitsNotinRatesBalanceAllocatedtoElectric1997ChaneEst.ElectricBalanceI12/97TobeRecovered141.10049141.10151246.00063141.10184141.10187141.10191141.10179246.00006141.10165141.10115141.10117NM2AFUDCDeferredforCWIPNUGActionPlanImplementationCostsPensionExpenseDeferred-ElectricStormRestorationCostsDeferredBFALineofCreditFees-ElectricNYSSalesTaxAuditAssessment('88-'92)DunkirkPropertyTaxesDeferredPurchaseofEmissionCreditsWasteDisposalFeesDeferred-NM2HumanResourcePlanSeparationAllowanceInterestonIRSAuditAssessment-1986239,880,02244,981,72411,101,2828,726,0003,199,1337,566,5201,237,69848,75048,25237,482(292470)239,880,02244,981,72411,101,2828,726,0003,199,1337,433,7851,237,69848,75048,25232,564(255180)6,220,0001,800,000(1,299,000)(2,649,400)239,880,02251,201,72412,901,2828,726,0001,900,1334,784,3851,237,69848,75048,25232,564(255180)Lesahmomts~uslyMpmsuQMtfetL09246.00063PensionExpenseDeferred-Electric141.10184StormRestorationCostsDeferred141.10191NYSSalesTaxAuditAssessment('88-'92)141.10187BFALineofCreditFees-Electric141.10179DunkirkPropertyTaxesDeferred00006PurchaseofEmissionCredits.10115HumanResourcePlanSeparationAllowance141.10117InterestonIRSAuditAssessment-19863165343933164340304071600A3205056301,161,1958,726,0005,382,075602,3971,237,69848,7503,405(48053)17,113,467NetdeferreddebitsA-B303392163246.00025145.35246.00036246.00103246.00104246.00099242.05111246.00042246.00071246.00048246.00059NM2AFUDCDeferredforCWIPSIROvercollectionAccruedUnbilledRevenue-ElectricMERITOvercollectionIBMCustomerServiceSettlementAgreementElectricCustomerServicePenaltyNYSGRTAuditRefund(1987-1990)PensionSettlementGainDeferred'RSAuditRefund(1983%4)NM2ContractorLitigationNM2ConstructionSparePartsDeferred239,880,0226,033,45511,129,07412,144,8827,500,0004,222,0006,435,43419,268,578973,73318,0901687239,880,0226,033,45511,129,07410,592,7126,375,0004,222,0005,616,43416,443,804827,67318,090168716,914,000(3,648,631)(5,896,000)239,880,02222,947,45511,129,07410,592,7126,375,0004,222,0001,967,80310,547,804827,67318,0901687C308509320NetdeferredcreditsoverdebitsA0C~511715$'heCompanyrecognizesthereisataxbenefitassociatedwiththeamortizationofthisitem,whichisnotreflectedonthisschedule.

APPENDIXFGENERALSTRUCTUREOFFINANCIALSWAPSANDSWAPTION

APPENDIXFGENERALSTRUCTUREOFFINANCIALSWAPSANDSWAPTIONSF.1GENERALSTRUCTUREOFFINANCIALSWAPSFinancialSwapsarecontractsthatrequireRegCotopaygeneratorsthedifferencebetweenthecontractpriceandtheapplicablelocationalbasedmarginalprice(LBMP).Morespecifically,foreachmonthofeachyearofthecontractterm,RegCowillpaygeneratorn:NetPayment=S,((P;P,,)*Q,}+FP-GSwhere:(Equation1.0)PP~QIFPGSvolumetriccomponentofcontractpricespotmarketprice(LBMP)forpowerinhourIateachgeneratorbuscontractquantityforeachhourIhourspermonthfixedchargepaidbyRegCotoreflectnon-volumetricportionoftheContractpricemarketpriceofpaymentsmadebyISO/PowerExchangeorRegCoforothergenerationservicesThevolumetriccontractpriceisthenegotiatedpricebetweenRegCoandeachgeneratorandmayincludeenvironmentallyeffluentcostchanges.Thespotpriceisthehourlywholesalemarketlocationalspotprice(LBMP)foreachofthegenerators.AproxymarketpricewillbeuseduntiltheISOisformedandanLBMPisavailable.Thecontractquantityisthehourlyamountofenergy(kWh)onwhichthecontractisbased.Foreachfinancialswapanhourlyprofile(kWh)willbeforecastforthecontractterm.Thefixedcostchargeisamonthlyfixedpaymenttothegenerator(s)designedtocoverthefixedandunavoidablecosts.ThemarketpriceofpaymentsmadebytheRegCofornon-energygenerationservicesincludepaymentsforcapacity,ancillaryservices,andothergeneratorservicesthatarereflectedincustomerprices(allofthenon-energygenerationserviceswillbereferredtoas"othergenerationservices"intheremainderofthisdocument).'hisadjustmentforothergenerationservicesreflectsthepossibleexistenceofseparatesupplymarketsforcapacityandancillaryservicesand'heothergenerationservicesinclude:installedcapacity,operatingreserves,frequencycontrol,blackstartcapability,andvoltagesupport.

separatepaymentstogeneratorsfortheseotherservices.Theseothergenerationservicesmaybeincludedasupliftinthespotpriceschargedtocustomersinthewholesalemarket.Theothergenerationservicesarecurrentlyprovidedaspartofthegenerationcostsincludedinretailprices.Ingeneral,generatorswithfinancialcontractswillhavetheISO'scostoftheseothergenerationservicessubtractedfromtheircontractpaymentswithquantitiesnottoexceedcontractedamountsandpricesdeterminedbythemarket.F.2GENERALSTRUCTUREOFFINANCIALSWAPTIONSTheswaptioncontractconceptwillequalthefinancialswapdescribedaboveifRegCoexercisesitscalloptionineachhourforexactlytheforecastedcontractquantity.However,theswaptionstructureallowsRegCoadditionalflexibilitynottocalItheoptioninperiodsoftheyearwherethemarketpriceislowerthanthevariablecontractprice,resultinginlowerpricesforcustomers.TheoptionprovidesRegCotheflexibilitytoshiftsomecontractquantitybetweenhourstoadjusttoshiftsinthehourlydemandforelectricity.Swaptionquantitiesforindividualgeneratorsshallnotexceedpre-determinedannuallimitsbasedonaggregategeneratoroutputforRegCo'sretailload.Additionally,theseaggregatequantitiesalongwithRegCo'sotherphysicalandfinancialpowersupplyhedgesmaynotexceedRegCo'snetenergyforloadrequirementsinanyhour.RegComustprovideswaptionquantitynotificationtogeneratorsatthesametimeasthegeneratorsmustsubmitday-aheadforwardbidstotheISO.PageF-2

APPENDIXGCREDITWORTHINESSEVALUATION

APPENDIXGCREDITWORTHINESSEVALUATIONEstablishmentofCreditLimit.NiagaraMohawkestablishescreditlimitsforGasSuppliers(marketers)whoactassupplyaggregatorsandcustomerstowhomtheCompanymakessaleofgasforresalebyapplyingonaconsistentnon-discriminatorybasisthesamefinancialevaluationstandard.TheCompanywillestablishcreditlimitsforESCosbyapplyingthesameconsistentfinancialevaluationstandardindeterminingcreditworthiness.Creditlimitsarereviewedcontinually.Ifanentityisassignedacreditlimitthatisnotsufficienttomeettherequirements,theserequirementsmaybemetbyprovidingsecurityinaformthatisacceptabletoNiagaraMohawk.Asummaryofthecriteriaandactionstepsinitiatedinapplyingthefinancialevaluationareasfollows:1.CustomerCreditProfile.GeneralcreditinformationisdevelopedbasedoninformationfromaCommercialCreditReporting/RatingOrganization,SecuritiesandExchangeCommission,customer'sauditedfinancialstatementsandotherrecognizedcompaniesthatprovidefinancialinformationandforecasts.Theprofilefocusesonthefollowingareas:~Thenatureofthebusinessandproduct.~Whatisthebusinessenterpriseandwhoownsthecompany?~Whatisthecompany'shistorybasedontradereports?~Howmanyyearshasthecustomerbeeninbusiness?~Whatdoyouknowaboutthemanagement'sintegrity?~Arebankloanssecuredunsecured,orsecuredbycurrentassets?~Whatisthefirms'aymenthistorywithNiagaraMohawk?~Doesthecompanyowntheirownfacilities?~AsktheNiagaraMohawksalespersonassignedtotheaccountaboutthecompany.2.BaIeeeces.Bankingreferencesprovidedandauthorizedbythecustomer.Whenreferencesarefurthercheckedthefollowingquestionsareaskedofthebankofficerhandingtheaccount.~Howlonghasthebankhadtheaccount?~Doesthecompanyhaveoutstandingloans?~Whatisthehighestaccommodationthebankwouldallow?~Doyouconsiderthecustomeragoodrisk?~Doesthecustomerkeeploanterms?~Arebankloanssecured,unsecured,orsecuredbycurrentassets?

3.Financialinformation.Financialdataisusedtoanalyzeafirm'spastperformanceandassessitscurrentfinancialstanding.Financialratiosareusedtosummarizethedataandcomparethefirm'sperformancewithstandardpractices.Thesefinancialratiosandotherindicatorsare:~LiquidityRatios~CurrentRatio(measurecashreservoir-currentassets/currentliabilities).~QuickRatio(company'scurrentliabilitiesarecoveredbyitsmostcurrentliquidasset;cash,equivalentsandtradereceivables/currentliabilities).~WorkingCapital~Positive(checkaverageofpastthreeyears).~Negative(ifnegative,checktoseeifcompanyhasstronginternalcash-generatingcapabilitiesand/oraccesstoreadyfinancing).~DebtRatio~DebtEquity(awaytoexpressleverageintermsofthecompany'sdebt-equityratio;long-termdebt/equity).~ProfitabilityRatio~Salestototalassets(showshowhardthefirm'sassetsarebeingused;sales/averagetotalassets)..~Percentofreturnonnetworthcomparedtoindustrystandards.~NetWorth~Checkforintangibles(goodwill).~Reviewtheincreases/decreasesinretainedearningsforthepastthreeyears.4.BillPametPerformance~Reviewthenumberofexperiencesandthetermskept.~Highestcreditgrantedandthepaymentperformanceoverthepast12months.~Checkwithmajortradevendors,ifnecessary.~Numberofreturnedchecks.

5.~PP'*Piti.Pdttd<<tdttt,It5t,dtdactionsthatcouldimpactthefirm'sfinancialhealth.~RequirecustomertoprovidecopyofCourtOrderofDismissalifclaimssatisfied.~Checkforanyindicationofbankruptcyfilingsbyparent/subsidiary.~Investigateannouncedtakeovers,buyoutmergers,andacquisitions.6.DetermineCeditLimit.Ifnoothermajornegativecreditindicatorsarepresent,thecreditlineisderivedbytakingthesmallerof:~4%to6%ofnetworth(reviewretainedearningsperformance)~10%to12%ofworkingcapital(basedonmostcurrentauditedreport).Whencheckingworkingcapitallookatnatureofthebusiness.Thecompanymayhavecapacitytogeneratefundstopaybillspromptly.7.DecreaseorShutOfftheCreditLimi.Thefollowingindicatorsmayresultinacustomer'screditlimitshutoffordowngraded:~Company'screditratingisdowngradedbycreditreportingagency.~Significantdecreaseinreportedearningsandequitypositionisweakened.~Authenticatedreportsthatthecompanyisexperiencingserious'ashflowandotherfinancialproblems.~Reportsofliens,attachmentsorotherlegalactionsthatmayimpairthecompany'sfinancialhealth.~BillpaymentproblemswithNiagaraMohawk.8.IncreaseorReturnSecuri.Thefollowingindicatorsmayresultinanincreaseintheunsecuredcreditlimitand/orreturnoffinancialsecurity:~Thecompanyhasbeenprofitableforthelasttwoyearsandhasreinvestedprofitsinthebusiness.~Strongimprovementsintheearningperformance.~Long-termdebtissteadilybeingreduced.~Improvedfinancingarrangementsthatallowsforfinancialflexibility.~Improvedcreditratingbycommercialratingagencies.Inreachingacreditdecisionregardinggrantingunsecuredcredit,thefirm'spastfinancialperformanceanditscurrentfinancialstandingweighsmoreheavilythanotherinformationandcreditindicators.Ifthisinformationisnotavailableandotherinformationisinsufficienttodeterminethecreditworthinessofafirm,securityisrequiredtocollateralizethecreditlimit.

APPENDIXHLISTOFFACILITIESTHATAREPOTENTIALCANDIDATESFORSALE,LEASEORSALELEASEBACKTRANSACTIONS

f'7000700170027003700470057101710271037104710571067108710974017402740374047405770277047705770677087709771080008001800280038004800580078008805080518052805380548055CommonchargestobedistributedDEWEY/KENSINGTONCOMMONDEWEYAVE.BLDG.1"DEWEYAVEBLDGS.2,3,6,7""DEWEYAVE.BLDGS.4,5"KENSINGTONCOMPLEXBUFFALOELECTRICBLDG.AM%ERSTC.F.SENECAC.F.TONAWANDAC.F.NIAGARAFALLSS.C.JAMESST.RIGGERSBLDGCFNEWPANEC.P.N.AMHERSTS.C.ERIECOUNTYFAIRBLDGALBIONC.F.E.AVONC.F.BATAVIAS.C.MEDINAC.F.LEROYC.F.ANGOLAC.F.ELLICOTIVILLEC.F.FRANIU.GRILLEC.F.FREDONIAC.F.OLEANC.F.STOWC.F.SHEEGvG&lSTOREHOUSECommonchargestobedistributedSOCCOMMONGRDS.SOCBLDG.ASOCBLDG.BSOCBLDG.CSOCBLDG.DSOCBLDG.FSOCGUARDSTATIONCommonchargestobedistributedHCBMETER8cTESTBLDG.HCBBLDG2STORESACFHCBFACILITYMAINT.BLDGHCBBLDG.4TSDFACILITYHCBTSDOFFICETIVJLERSL~OCEON0ELILCCINNEEIN7BOOKVALUE28,696,48813,332,604353,945539,098257,1172,422,3662,068,27933,593931,9352,809,3295,057,151760,2541,161,63129,006138,3733,715,6232,898,650904,1413,56350,008,37711,181,0607110CONFIDENTIALSETTLEMENTDOCUMENT-page1

8056805880768103810581068107810981108112811381148115811681178120812181228123812481258401840284048405840684088410841184128413841584168701870487058706870787088710871187128713HCBMETER&;TEST'IRAILERHCBCOMMONGROUNDSEMERSONAVE.C.F.INVESTMENTRECOVERYBREWERTONC.F.CAZENOVIAC.F.CORTLANDC.F.FULTONC.F.FULTONST.HIAWATHABLVD.C.F.HINSDALEC.F.OSWEGOFIRESCHOOLOSWEGOC.F.PULASKIC.F.RADISSONC.F.TOWPATHIC.F.TOWPATHIIC.F.TOWPATHIIIC.F.TULLYC.F.VOLNEYC.F.JAMESA.O'EILLCAMDENC.F.CAMPIONRD.S.C.HEMQMERS.C.ILLIONC.F.OLDFORGEC.F.ONEIDAC.F.TRENTONFALLSC.F.W.ROMES.C.HARBORPOINTC.F.HARBORPTREMEDIATIONFACS.WASHINGTONSTHERKIMERKINGSLEYAVE.S.C.CLAYTONC.F.W.CARTHAGEC.F.LOWVILLES.C.WATERTOWNhVdNAVE.C.F.MALONES.C.MILLSTREETC.F.OGDENSBURGS.C.POTSDAMC.F.SARANACLAKES.C.S.WATERTOWNS.C.2,816,4246,221,729464,071219,951812,535449,7621,305,38928,081755,1902,195,392751,9061,991,173934,4671,976,681621,5951,647,10110,146,5718,317,820328,77122,958307,039462,592169,2742,889,301273,8682,142,371831,384331,4824,029,565624,459399,0613,871,959694,1715,651,048CONFIDENTIALSETTLEMENTDOCUMENT-page2

8716MPJKI'.BLDG.WTOWNC.F.*inclin87068717ENGINEST.STORAGEAREA9000Commonchargestobedistributed9001N.ALBANYCOMMONAREA9002N.ALBANYBLDG.29005N.ALBANYVERSAIRE019006N.ALBANYTRI-AIRD2-19007N.ALBANYBLDG.59009N.ALBANYBLDG.2-39010N.ALBANYBLDG.2-49103GLENMONTC.F.9104HUDSONS.C.9105OAKWOODAVE.TROYCZ.9106SMITHAVE.C.F.9107RENSSELAER'IHI:RDAVEC.F.9109SCHENECTADYBROADWAYC.F.9111CLIFTONPARK9113SENECASTREETC.F.9115EASTERNREG.CTRL.CTR.9402AMSTERDAMC.F.9410GLENSFALLSMOHICANSTCF9411GLOVERSVILLEC.F.9413SARATOGAEXCELSIORAVECF9420NORTHCREEKC.F.19,714,544873,8781,724,6662,771,8511,574,7881,837,7496,325,438662,759791,9552,721,3362,029,8121,021,174CONFIDENTIALSETTLEMENTDOCUMEYI'page3

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