<Page>
EXHIBIT 10.6.5
Niagara Mohawk Power Corporation Substitute Original Sheet No. 1
Rate Schedule FERC No. 189 Superceding Original Sheet No. 1
AMENDED AND RESTATED
INTERCONNECTION AGREEMENT
This AMENDED AND RESTATED INTERCONNECTION AGREEMENT (hereinafter
referred to as the "AGREEMENT") is made as of June 29, 2001, between NIAGARA
MOHAWK POWER CORPORATION (hereinafter referred to as "NIAGARA MOHAWK") and
SITHE/INDEPENDENCE POWER PARTNERS, L.P., (hereinafter referred to as the
"PRODUCER").
WHEREAS, NIAGARA MOHAWK and PRODUCER have previously entered into the
INTERCONNECTION AGREEMENT dated March 9, 1992, as amended on July 20, 1992 and
November 17, 1992, which provides for the interconnection of the PRODUCTION
FACILITY (as defined below) with NIAGARA MOHAWK's electric transmission system;
and
WHEREAS NIAGARA MOHAWK and PRODUCER desire to amend the INTERCONNECTION
AGREEMENT further in certain respects and to restate the AGREEMENT as set
forth herein, in compliance with the Federal Energy Regulatory Commission's
(hereinafter referred to as "FERC") Order No. 614, 90 FERC [Paragraph] 61,352
(2000); and
WHEREAS, PRODUCER owns the PRODUCTION FACILITY (as defined in Section 1.1
of the Amended and Restated Transmission Services Agreement between the parties,
dated June 29, 2001 (as amended, supplemented or modified and in effect from
time to time, "Transmission Services Agreement")), which is interconnected with
NIAGARA MOHAWK's bulk power transmission system at the POINT OF RECEIPT (as
defined in Section 1.2 below); and
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 2
Rate Schedule FERC No. 189 Superceding Original Sheet No. 2
WHEREAS, the New York State electricity market has been restructured: (a)
to give the New York Independent System Operator, Inc. (hereinafter referred to
as "NYISO") operational control over certain transmission facilities owned by
the Members of the Transmission Owners Committee of the Energy Association of
New York State (hereinafter referred to as the "MEMBER SYSTEMS"); and (b) to
establish the ISO ADMINISTERED MARKETS (as defined in the New York Independent
System Operator Market Administration and Control Area Services Tariff (as
amended, supplemented or modified and in effect from time to time, the "NYISO
SERVICES TARIFF")); and
WHEREAS, the NYISO also provides transmission services to customers in New
York State pursuant to the provisions of its Open Access Transmission Tariff, as
amended, supplemented, or modified and in effect from time to time (the "NYISO
OATT"); and
WHEREAS, PRODUCER may, in PRODUCER's sole discretion, subject to the
provisions of the NYISO OATT and the NYISO SERVICES TARIFF, as applicable, sell
electric energy, capacity or other services into the ISO ADMINISTERED MARKETS
and/or may enter into any number of BILATERAL TRANSACTIONS (as that term is
defined in the NYISO SERVICES TARIFF); and
WHEREAS, PRODUCER and NIAGARA MOHAWK have entered into the Transmission
Services Agreement, which provides that NIAGARA MOHAWK will provide transmission
services to deliver electric energy and capacity from the PRODUCTION FACILITY to
the Pleasant Valley Substation; and
WHEREAS, PRODUCER desires to receive, and NIAGARA desires to furnish, the
interconnection services provided in this AGREEMENT.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 3
Rate Schedule FERC No. 189 Superceding Original Sheet No. 3
NOW THEREFORE, in consideration of the mutual obligations and undertakings
set forth herein, the parties to this AGREEMENT covenant and agree as follows:
1. AGREEMENT TO INTERCONNECT; DESCRIPTION OF INTERCONNECTION FACILITY
1.1 NIAGARA MOHAWK and PRODUCER agree to retain the existing
interconnection between the PRODUCTION FACILITY and NIAGARA MOHAWK's existing
transmission system (hereinafter "TRANSMISSION SYSTEM") in accordance with the
terms and conditions contained herein.
1.2 The TRANSMISSION SYSTEM and PRODUCTION FACILITY are
interconnected within the Independence Switchyard owned by NIAGARA MOHAWK at the
motor-operated switches commonly referred to as Switch Number 273 and Switch
Number 283 (collectively, the "POINT OF RECEIPT"). For purposes of this
AGREEMENT, the term "INTERCONNECTION FACILITY" includes, as detailed in Schedule
A and Schedule B, the Independence 345kV Switchyard, the 345kV line from
Independence to Scriba, the new two breaker bay at Scriba, the new 345kV line
from Independence to Clay and the new two breaker bay at Clay. PRODUCER and
NIAGARA MOHAWK stipulate and agree that the facilities on NIAGARA MOHAWK's side
of the POINT OF RECEIPT are operated and controlled by the NYISO and that
PRODUCER's delivery of electricity to the POINT OF RECEIPT constitutes delivery
of such electricity to the NYISO for purposes of service under the NYISO OATT,
or for any sales by PRODUCER of electricity, capacity, ancillary services or any
other services under the NYISO SERVICES TARIFF. The parties further stipulate
and agree that PRODUCER shall not be required to purchase any additional
services from NIAGARA MOHAWK in connection with transmission service under the
NYISO OATT, or for any sales by PRODUCER of electricity, capacity, ancillary
services or any other services under the NYISO SERVICES
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 4
Rate Schedule FERC No. 189 Superceding Original Sheet No. 4
TARIFF, so long as the NYISO continues to operate and control the transmission
facilities on NIAGARA MOHAWK's side of the POINT OF RECEIPT. In accordance with
Article 11, PRODUCER shall be responsible for all of the reasonable
out-of-pocket costs and expenses of NIAGARA MOHAWK in connection with the
operation and maintenance of the INTERCONNECTION FACILITY.
1.3 Electricity transferred to the TRANSMISSION SYSTEM shall be
measured by electric watt-hour meters of a type approved by the Public Service
Commission of the State of New York. If the meters are located at a point other
than the POINT OF RECEIPT, the readings will be adjusted for losses between the
metering location and the POINT OF RECEIPT. These metering facilities will be
installed, owned and maintained by NIAGARA MOHAWK and shall be sealed by NIAGARA
MOHAWK, with the seal broken only upon occasion when the meters are to be
inspected, tested or adjusted and representatives of both NIAGARA MOHAWK and
PRODUCER are present. The meter and installation costs shall be borne by
PRODUCER. The meters shall be maintained in accordance with the rules set forth
in 16 NYCRR Part 92 and in conformance with ESB #756-B, both of which are
incorporated herein by reference. NIAGARA MOHAWK will guarantee the installation
of any meter and its accuracy for a period of one year from the date that said
meter is installed. Any maintenance, repair or replacement required during the
initial year for any such meter will be at the expense of NIAGARA MOHAWK. In the
event that any meter is found to be inaccurate after the initial year, NIAGARA
MOHAWK will repair or replace the same as soon as possible at the expense of
PRODUCER. Each party shall have the right at all reasonable times, upon giving
not less than five (5) days notice to the other party for the purpose of
permitting the other party to be present at the inspection, to inspect, and test
said meters and, if found defective, NIAGARA MOHAWK
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 5
Rate Schedule FERC No. 189 Superceding Original Sheet No. 5
shall adjust, repair or replace the same at the expense (after the initial year)
of PRODUCER. Any test or inspection requested by a party shall be at the expense
of the requesting party.
If a meter fails to register, or if the measurement made by a meter is
found to be inaccurate by more than the limits defined in 16 NYCRR Part 92, then
an adjustment shall be made correcting all measurements made by the inaccurate
or defective meter for (a) the actual period during which inaccurate
measurements were made, if that period can be determined to the satisfaction of
the parties; or (b) if the actual period cannot be determined to the mutual
satisfaction of the parties, one-half of the period from the date of the last
previous test of the meter. PRODUCER may elect to install its own metering
equipment in addition to NIAGARA MOHAWK's metering equipment. Such metering
equipment shall meet the requirements of 16 NYCRR Part 92. Should any metering
equipment installed by NIAGARA MOHAWK fail to register during the term of this
AGREEMENT, the parties shall use PRODUCER's metering equipment, if installed, to
determine the amount of electricity delivered to the TRANSMISSION SYSTEM. On a
day on which neither NIAGARA MOHAWK's nor PRODUCER's metering equipment is in
service, the quantity of electricity delivered shall be determined in such
manner as the parties shall agree.
The duly authorized agent or agents of NIAGARA MOHAWK shall, at all
reasonable business hours, upon three (3) days written notice, have free access
to the premises of PRODUCER for the purpose of inspecting the records of
electricity generated by PRODUCER and delivered to the POINT OF RECEIPT.
1.4 PRODUCER agrees that the installation of the electrical
connections and the operation of the PRODUCTION FACILITY must meet or exceed the
requirements of NIAGARA MOHAWK's Electric System Bulletin No. 756-B, as well as
any
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 6
Rate Schedule FERC No. 189 Superceding Original Sheet No. 6
other pertinent NIAGARA MOHAWK bulletins. The voltage control requirements for
the PRODUCTION FACILITY are detailed in Schedule B.
2. REPRESENTATIONS AND WARRANTIES OF PARTIES
2.1 The Representations and Warranties of the Parties in Sections
2.2 through 2.6 are made as of March 3, 1992 for PRODUCER and March 9, 1992 for
NIAGARA MOHAWK.
2.2 PRODUCER is a limited partnership duly organized and validly
existing under the laws of the State of Delaware. PRODUCER is qualified to do
business under the laws of the State of New York, is in good standing under the
laws of the State of New York, has the power and authority to own its
properties, to carry on its business as now being conducted, and to enter into
this AGREEMENT and the transactions contemplated herein and perform and carry
out all covenants and obligations on its part to be performed under and pursuant
to this AGREEMENT, and is duly authorized to execute and deliver this AGREEMENT
and consummate the transactions contemplated herein.
2.3 PRODUCER is not prohibited from entering into this AGREEMENT
and discharging and performing all covenants and obligations on its part to be
performed under and pursuant to this AGREEMENT. The execution and delivery of
this AGREEMENT, the consummation of the transactions contemplated herein and the
fulfillment of and compliance with the provisions of this AGREEMENT will not
conflict with or constitute a breach of or a default under any of the terms,
conditions or provisions of any law, rule or regulation, any order, judgment,
writ, injunction, decree, determination, award or other instrument or legal
requirement of any court or other agency of government, the partnership
agreement of PRODUCER or any contractual limitation, corporate restriction or
outstanding trust
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 7
Rate Schedule FERC No. 189 Superceding Original Sheet No. 7
indenture, deed of trust, mortgage, loan agreement, lease, other evidence of
indebtedness or any other agreement or instrument to which PRODUCER is a party
or by which it or any of its property is bound and will not result in a breach
of or a default under any of the foregoing. This AGREEMENT is the legal, valid
and binding obligation of PRODUCER enforceable in accordance with its terms.
2.4 With respect to the PRODUCTION FACILITY, PRODUCER is a
"qualifying cogenerator" as defined in Section 3 of the Federal Power Act, as
amended by Section 201 of the Public Utilities Regulatory Policies Act of 1978,
and, the Production Facility is considered a "Qualifying Facility" within the
meaning of Internal Revenue Service ("IRS") Notice 88-129, 1988-2 C.B. 541.
PRODUCER reasonably projects that during the first ten taxable years, beginning
with the year the INTERCONNECTION FACILITY is placed in service, no more than 5%
of the projected total power flows over the INTERCONNECTION FACILITY will flow
to the PRODUCTION FACILITY ("the 5% test"); provided, that if the power flows in
the taxable year during which the INTERCONNECTION FACILITY is placed in service
cause the PRODUCER to violate the "5% test" NIAGARA MOHAWK shall ignore the
power flows in the taxable year in which the INTERCONNECTION FACILITY is placed
in service as provided in Notice 88-129. PRODUCER will promptly notify NIAGARA
MOHAWK of any change in its circumstances affecting the accuracy of the
statements set forth in this Section 2.4 or any failure to otherwise meet the
"5% test" during the term of this AGREEMENT.
2.5 NIAGARA MOHAWK is a corporation duly organized, validly
existing and qualified to do business under the laws of the State of New York,
is in good standing under its certificate of incorporation and the laws of the
State of New York, has the corporate authority to own its properties, to carry
on its business as now being conducted, and to
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 8
Rate Schedule FERC No. 189 Superceding Original Sheet No. 8
enter into this AGREEMENT and the transactions contemplated herein and perform
and carry under the pursuant to this AGREEMENT, and is duly authorized to
execute and deliver this AGREEMENT and consummate the transactions contemplated
herein.
2.6 NIAGARA MOHAWK is not prohibited from entering into this
AGREEMENT and discharging and performing all covenants and obligations on its
part to be performed under and pursuant to this AGREEMENT. The execution and
delivery of this AGREEMENT, the consummation of the transactions contemplated
herein and the fulfillment of and compliance with the provisions of this
AGREEMENT will not conflict with or constitute a breach of or a default under
any of the terms, conditions on provisions of any law, rule or regulation, any
order, judgment, writ, injunction, decree, determination, award or other
instrument or legal requirement of any court or other agency of government, the
certificate of incorporate or bylaws of NIAGARA MOHAWK or any contractual
limitation, corporate restriction or outstanding trust indenture, deed of trust,
mortgage, loan agreement, lease, other evidence of indebtedness or any other
agreement or instrument to which NIAGARA MOHAWK is a party or by which it or any
of its property is bound and will not result in a breach of or a default under
any of the foregoing. This AGREEMENT is the legal, valid and binding obligation
of NIAGARA MOHAWK enforceable in accordance with its terms.
3. INTERCONNECTION STUDY
3.1 NIAGARA MOHAWK has performed the interconnection study
(hereinafter referred to as the "INTERCONNECTION STUDY") which is attached
hereto as Schedule B. PRODUCER understands, as stated in Schedule B, that
additional power system stabilizers may be required on other generating units in
the Oswego area pending the design of a power system stabilizer on the
PRODUCTION FACILITY.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 9
Rate Schedule FERC No. 189 Superceding Original Sheet No. 9
4. OBTAINING RIGHTS-OF-WAY
4.1 PRODUCER will acquire all rights of way needed for placement,
construction, and maintenance of all equipment and facilities reasonably
required including, but not limited to electric transmission and substation
facilities, access roads, system enhancements and improvements or equipment
incidental thereto. The quantum of land, including width of transmission
corridor and size and configuration of substation sites shall be as reasonably
required by NIAGARA MOHAWK. The interest in land acquired by PRODUCER, whether
in fee or by easement, or other means, must be adequate for the purposes for
which such land is being acquired hereunder. The format and content of the legal
instruments conveying such rights in land shall be approved by NIAGARA MOHAWK,
which approval shall not be unreasonably withheld or delayed. PRODUCER
understands and agrees that all right-of-way acquisition must conform to NIAGARA
MOHAWK standards for location and siting of transmission facilities, including
without limitation, transmission line structures and appurtenances, substation
equipment and improvements, clearings, access roads and various system
enhancements and equipment incidental thereto. Prior to initiating such efforts
and during the course of such efforts, PRODUCER shall regularly consult with
NIAGARA MOHAWK. In the event PRODUCER elects to hire a consulting firm to
acquire the said lands, NIAGARA MOHAWK reserves the right to approve said firm
and its land and right of way acquisition methods and practices, which approval
shall not be unreasonably withheld or delayed. Details regarding he use of
NIAGARA MOHAWK's existing rights-of-way are detailed in Schedule B except that
PRODUCER will not be required to provide NIAGARA MOHAWK with monetary
compensation for the use of NIAGARA MOHAWK's existing rights-of-way between
Volney and Clay substations.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 10
Rate Schedule FERC No. 189 Superceding Original Sheet No. 10
4.2 PRODUCER agrees that prior to the acquisition of any property
interest or rights-of-way, or the acquisition of any property to be used or
developed in connection with the INTERCONNECTION FACILITY, it will conduct
sampling, soil testing, and any other methods of investigation which would
disclose the presence of any hazardous substance as waste which has been
released on the property or which is present upon the property by migration from
an external source on the property. PRODUCER agrees to indemnify and save
NIAGARA MOHAWK harmless from all liability cost and expense (including
reasonable attorney's fees), civil and criminal, for the removal of any
hazardous substance or management methods. If the presence of any such hazardous
substance is discovered prior to acquisition of the property, PRODUCER agrees to
provide NIAGARA MOHAWK with prompt written notice thereof, and the parties will
thereafter determine whether said property should be acquired and used.
4.3 INTERCONNECTION FACILITY construction activities will be
developed and carried out in accordance with standard NIAGARA MOHAWK
environmental, construction, forestry, and right-of-way management practices and
procedures, including but not limited to, "NMPC EMCP Protection Measures", and
NIAGARA MOHAWK's "Transmission Right-of-Way Management Plan - October 1989", and
NIAGARA MOHAWK's specification for right of way clearing, access roads, and
right-of-way restoration. Copies of these and other relevant procedures will be
provided on a timely basis by NIAGARA MOHAWK to PRODUCER. PRODUCER agrees it
will not deviate from NIAGARA MOHAWK's practices or procedures without prior
written NIAGARA MOHAWK approval, which approval shall not be unreasonably
withheld or delayed.
4.4 In the event PRODUCER is unable to acquire any of the
applicable permits, authorizations, or rights-of-way after using its best
efforts to do so, NIAGARA
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 11
Rate Schedule FERC No. 189 Superceding Original Sheet No. 11
MOHAWK agrees to accept and cooperate with PRODUCER in seeking approval for the
transfer of so much of the appropriate documents as authorizes construction of
the transmission and interconnection facilities and upon the effectiveness of
such transfer, to assert its eminent domain authority for the prosecution of
said eminent domain proceedings. NIAGARA MOHAWK shall retain counsel to conduct
eminent domain proceedings. PRODUCER agrees to reimburse NIAGARA MOHAWK for all
reasonable legal fees and costs therefore, and, except to the extent arising out
of the gross negligence or intentional acts or omissions of NIAGARA MOHAWK, for
all reasonable legal fees, costs, liabilities, judgements, fines, and other
sanctions against NIAGARA MOHAWK arising out of its exercise of eminent domain
powers. NIAGARA MOHAWK agrees to take such reasonable steps prior to the
commencement of eminent domain proceedings as are necessary to facilitate said
proceedings. The parties understand and agree that their execution of this
AGREEMENT setting forth terms and conditions relating to the engineering,
construction and ownership of the transmission line and interconnection is a
condition precedent to the actual exercise by NIAGARA MOHAWK of its eminent
domain authority. NIAGARA MOHAWK does not warrant or guarantee that assertion of
its eminent domain powers will result in successful acquisition of real property
interests for the INTERCONNECTION FACILITY. If NIAGARA MOHAWK is unable to
acquire real property for the INTERCONNECTION FACILITY using its eminent domain
authority, PRODUCER shall have the option of modifying the INTERCONNECTION STUDY
subject to the prior written approval of NIAGARA MOHAWK, which approval shall
not be unreasonably withheld or delayed or terminate this AGREEMENT.
4.5 All expenditures by PRODUCER, and all reasonable
out-of-pocket expenditures by NIAGARA MOHAWK, incurred in acquiring the
necessary rights-of-way and
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 12
Rate Schedule FERC No. 189 Superceding Original Sheet No. 12
associated permits and authorizations shall be borne by PRODUCER. PRODUCER shall
reimburse NIAGARA MOHAWK for such expenditures as provided in Article 11 of this
AGREEMENT.
4.6 After completion of construction of the INTERCONNECTION
FACILITIES, and thirty (30) days prior to the anticipated date of initial
operation of the PRODUCTION FACILITY, PRODUCER shall convey and transfer to
NIAGARA MOHAWK by warranty deed, by assignment of easement or other means, as
appropriate for the conveyance and transfer of such interest, all of its right,
title and interest in the INTERCONNECTION FACILITY free and clear of all liens
and encumbrances other than easements, rights-of-way, restrictions, minor
defects and other similar encumbrances and exceptions to title (whether or not
identified as an exception to title in any title search or title insurance
policy furnished in accordance with this Section 4.6) which could not,
individually or in the aggregate, reasonably be expected to have a material and
adverse effect on the ability of the parties to operate and maintain the
INTERCONNECTION FACILITY. PRODUCER further agrees to provide to NIAGARA MOHAWK
an instrument survey of the lands conveyed by and/or described in the documents
of title transfer, which said survey shall be prepared in accordance with the
Code of Practice for land title surveys adopted by the New York State
Association of Professional Land Surveyors. In addition to such a survey
prepared as aforesaid, PRODUCER shall, in a format and size designated by
NIAGARA MOHAWK, also furnish maps and drawings of the transmission corridor
which shall constitute a plan and profile of said electric line depicting the
transmission corridor, location of electric transmission structures, survey and
title data, and a profile setting forth grade elevations and structure and
conductor locations. A reasonable time prior to completion of construction, and
in no event less than sixty (60) days, PRODUCER shall
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 13
Rate Schedule FERC No. 189 Superceding Original Sheet No. 13
provide to NIAGARA MOHAWK copies of the proposed deeds and other title documents
together with either fully guaranteed tax and title searches made by an
incorporated abstract company which shall cover the premises constituting the
transmission corridor and substation site together with tax searches, federal
code searches and local tax certificates or a fee title insurance policy,
containing only standard exceptions and such other exceptions which could not,
individually or in the aggregate, reasonably be expected to have a material and
adverse effect on the ability of the parties to operate and maintain the
INTERCONNECTION FACILITY, insuring marketability of the lands and interest in
lands to be transferred to NIAGARA MOHAWK. For purposes of this Agreement,
"Completion of Construction" shall mean the acquisition of all required rights
in land, design and construction in the field of electric transmission and
substation facilities, acquisition of licenses and permits in accordance with
Article 10 and completion of all other matters reasonably necessary to effect
successful transfer of property interests, including the transfer of ownership.
NIAGARA MOHAWK shall be given the opportunity to inspect the INTERCONNECTION
FACILITY and review all appropriate approvals, certificates, permits and
authorizations and PRODUCER shall be responsible for correcting any situations
which NIAGARA MOHAWK reasonably deems unacceptable or any deficiencies which
could reasonably be expected to impede the transfer of title pursuant to this
AGREEMENT. The provisions and requirements of this Section 4.6 shall apply to
any STEP DOWN FACILITIES which Producer may transfer ownership of to NIAGARA
MOHAWK; provided, however, that PRODUCER may retain ownership in the STEP DOWN
FACILITIES should PRODUCER provide NIAGARA MOHAWK with written notice prior to
the transfer of the INTERCONNECTION FACILITY as provided herein of its intention
to retain ownership in the STEP DOWN FACILITIES for the purposes of supplying
the electrical requirements of its steam
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 14
Rate Schedule FERC No. 189 Superceding Original Sheet No. 14
host(s) (steam hosts shall be defined as other businesses or entities to which
PRODUCER may sell steam for said businesses' or entities' own use). For purposes
of this Agreement, STEP DOWN FACILITIES shall be defined as those facilities (as
depicted in Schedule C), including the 345-115 KV transformer, 115 KV tap,
115-13.2 KV transformer, 13.2 KV tap and all associated equipment.
4.7 PRODUCER shall grant to NIAGARA MOHAWK rights of access to
PRODUCER's property interests acquired hereunder, prior to and upon transfer of
title to NIAGARA MOHAWK. 4.8 PRODUCER and NIAGARA MOHAWK agree that in the event
PRODUCER abandons going forward with its PRODUCTION FACILITY, for whatever
reason, NIAGARA MOHAWK shall have the option and right of first refusal to
acquire any rights-of-way obtained by PRODUCER pursuant to this AGREEMENT.
5. CONSTRUCTION OF INTERCONNECTION FACILITY
5.1 The INTERCONNECTION FACILITY shall be designed and
constructed in accordance with NIAGARA MOHAWK standards and in accordance with
Schedules A and B. Upon NIAGARA'S MOHAWK'S completion and/or acceptance of the
INTERCONNECTION STUDY, the INTERCONNECTION FACILITY shall be designed and
constructed by either NIAGARA MOHAWK, the PRODUCER, or by a third-party
contractor to be selected by PRODUCER or by a combination of the parties and
subject to NIAGARA MOHAWK's and PRODUCER'S prior written approval, which
approval shall not be unreasonably withheld or delayed. PRODUCER shall be
responsible for all of the reasonable out-of-pocket costs and expenses of
NIAGARA MOHAWK in connection with the design and construction of the
INTERCONNECTION FACILITY and the correction of any situations which
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 15
Rate Schedule FERC No. 189 Superceding Original Sheet No. 15
NIAGARA MOHAWK reasonably deems unacceptable. PRODUCER shall be responsible for
all of its costs and expenses and all of the costs and expenses of any
third-party contractor. The INTERCONNECTION FACILITY shall be designed and
constructed in accordance with prudent electrical practices and good engineering
practices in the same first class and workmanlike manner and using materials and
equipment of a quality and type customarily used by NIAGARA MOHAWK in designing
and constructing its transmission systems. Prior to transfer of ownership of
INTERCONNECTION FACILITY pursuant to Article 4 herein, NIAGARA MOHAWK shall be
given the opportunity to inspect the INTERCONNECTION FACILITY. PRODUCER shall be
responsible for correcting any situations which NIAGARA MOHAWK reasonably deems
unacceptable. Prior to the COMMERCIAL OPERATION DATE and line energization,
PRODUCER shall be responsible for the costs associated with making such
corrections. For the purposes of the AGREEMENT, "COMMERCIAL OPERATION DATE"
shall be as defined in the Transmission Services Agreement.
5.2 Upon completion of construction of the INTERCONNECTION
FACILITY, PRODUCER shall convey to NIAGARA MOHAWK copies of all documents,
reasonably required by NIAGARA MOHAWK'S Engineering Department, including but
not limited to as-built drawings, in both hard copy as well as in the form of
computer readable data that will generate the drawings.
5.3 PRODUCER will be deemed to be in exclusive control of and be
responsible for any loss or damage to the INTERCONNECTION FACILITY until the
transfer thereof to NIAGARA MOHAWK in accordance with Section 4.6. Subject to
Section 1.2, NIAGARA MOHAWK will be deemed to be in exclusive control of and be
responsible for any
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 16
Rate Schedule FERC No. 189 Superceding Original Sheet No. 16
loss or damage to the INTERCONNECTION FACILITY from and after the transfer
thereof to NIAGARA MOHAWK in accordance with Section 4.6.
5.4 PRODUCER shall grant to NIAGARA MOHAWK rights of access to
the INTERCONNECTION FACILITY prior to and upon transfer of title to NIAGARA
MOHAWK. NIAGARA MOHAWK shall grant to PRODUCER rights of access to the
INTERCONNECTION FACILITY prior to transfer of title to NIAGARA MOHAWK.
5.5 NIAGARA MOHAWK shall perform an environmental inspection of
the INTERCONNECTION FACILITIES which includes but is not limited to NIAGARA
MOHAWK'S Right-of-Way Restoration Specification compliance, access road
stability, erosion control, successful revegetation, vegetative visual screening
and Right-of-Way access security within the first growing season after
Construction Restoration has been completed. The PRODUCER shall be responsible
for correcting any situations which NIAGARA MOHAWK reasonably deems
unacceptable.
5.6 PRODUCER and NIAGARA MOHAWK shall provide the other with all
documentation reasonably necessary to verify the cost of the INTERCONNECTION
FACILITY. PRODUCER and NIAGARA MOHAWK shall have the right to any supporting
documents or evidence which PRODUCER or NIAGARA MOHAWK reasonably deems
necessary to further substantiate such costs.
6. CONSTRUCTION OF SYSTEM FACILITIES
6.1 NIAGARA MOHAWK shall be responsible for the construction of
any reinforcements to or additions of new facilities to NIAGARA MOHAWK's
transmission system (other than the INTERCONNECTION FACILITY) reasonably
required in order for NIAGARA MOHAWK to provide PRODUCER with the transmission
services agreed to
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 17
Rate Schedule FERC No. 189 Superceding Original Sheet No. 17
pursuant to the Transmission Services Agreement (the "SYSTEM FACILITIES") as
detailed in Schedule B. PRODUCER shall be responsible for all of the reasonable
out-of-pocket costs and expenses of NIAGARA MOHAWK in connection with the
construction of such reinforcements and additions. Prior to approval of the
Article VII License or within a reasonable time period thereafter agreed to by
both parties, the parties shall exchange schedules for the construction of the
SYSTEM FACILITIES and INTERCONNECTION FACILITY respectively, such schedules
shall not be inconsistent with each other or the Power Purchase Agreement.
PRODUCER shall provide NIAGARA MOHAWK with monthly status reports on the
progress of the INTERCONNECTION FACILITY construction and NIAGARA MOHAWK may
revise its construction schedule based upon PRODUCER'S status reports. NIAGARA
MOHAWK will provide PRODUCER with monthly status reports on the progress of the
SYSTEM FACILITIES construction. If NIAGARA MOHAWK completes construction of the
SYSTEM FACILITIES after the scheduled completion date or any revised or adjusted
scheduled completion dates of the INTERCONNECTION FACILITY, the date of
Commercial Operation shall be extended by the same length of time by which the
scheduled completion date of the SYSTEM FACILITIES is delayed without liability
of any kind to NIAGARA MOHAWK. NIAGARA MOHAWK will use its best efforts to
complete the construction of the SYSTEM FACILITIES by the scheduled completion
date or any revised or adjusted scheduled completion dates of the
INTERCONNECTION FACILITY, provided that NIAGARA MOHAWK shall not be responsible
for delays in Completion of Construction of the INTERCONNECTION FACILITY or
SYSTEM FACILITIES arising from or attributable to any cause including but not
limited to the application for necessary governmental licenses, permits,
authorizations, and approvals
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 18
Rate Schedule FERC No. 189 Superceding Original Sheet No. 18
except to the extent that any such delays are the result of the gross negligence
or intentional acts or omissions of NIAGARA MOHAWK.
6.2 NIAGARA MOHAWK shall bill PRODUCER for its costs of
constructing the SYSTEM FACILITIES in accordance with Articles 11 and 12 herein.
7. MODIFICATION TO INTERCONNECTION FACILITY DUE TO TRANSMISSION SYSTEM
7.1 If, during the term of this AGREEMENT, NIAGARA MOHAWK
reasonably determines that it is necessary to relocate or rearrange its
transmission system in order to maintain reliable electric service in accordance
with GOOD UTILITY PRACTICE (as defined in the Transmission Services Agreement),
so that a change is required to a portion of the INTERCONNECTION FACILITY and/or
a new INTERCONNECTION FACILITY is required, NIAGARA MOHAWK shall give the
PRODUCER no less than one year's written notice of such relocation or
rearrangement and shall defer such relocation or rearrangement until the new
INTERCONNECTION FACILITY can be reconfigured so that PRODUCER's sales of energy,
capacity, ancillary or other services, or any combination thereof, into the ISO
ADMINISTERED MARKETS and/or through any BILATERAL TRANSACTIONS (as that term is
defined in the NYISO SERVICES TARIFF) may continue without interruption,
provided that such notice period or deferral may be reduced to the extent
reasonably required in order to maintain reliable electric service in accordance
with GOOD UTILITY PRACTICE (as defined in the Transmission Services Agreement).
7.2 If NIAGARA MOHAWK is required or ordered by governmental
authority to relocate or rearrange its transmission system so that a new POINT
OF RECEIPT is required, NIAGARA MOHAWK shall promptly so notify PRODUCER.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 19
Rate Schedule FERC No. 189 Superceding Original Sheet No. 19
7.3 If NIAGARA MOHAWK reasonably determines that it is necessary
to relocate or rearrange its transmission system in accordance with Section 7.1
or if NIAGARA MOHAWK is required or ordered by governmental authority to
relocate or rearrange its transmission system, NIAGARA MOHAWK shall perform or
have performed a new INTERCONNECTION STUDY in accordance with the terms of this
AGREEMENT. NIAGARA MOHAWK shall be responsible for all of the costs and expenses
in connection with such INTERCONNECTION STUDY, in connection with obtaining
rights-of-way and in connection with the construction of any new INTERCONNECTION
FACILITIES unless such relocation or rearrangement is required in order to
maintain reliable electric service in accordance with GOOD UTILITY PRACTICE (as
defined in the Transmission Services Agreement), in which case PRODUCER shall be
responsible for such costs and expenses in accordance with the terms of Articles
3, 4 and 5. In its sole discretion, if, in accordance with the preceding
sentence, PRODUCER is responsible for the costs and expenses of any new
INTERCONNECTION STUDY or the construction of any new INTERCONNECTION FACILITIES,
PRODUCER shall have the option to (a) reimburse NIAGARA MOHAWK for the actual
out-of-pocket costs of such construction promptly upon completion thereof; (b)
construct, at its own expense, a new INTERCONNECTION FACILITY in accordance with
the terms of this AGREEMENT; or (c) terminate this AGREEMENT upon at least
thirty (30) days written notice to NIAGARA MOHAWK.
7.4 If the relocation or rearrangement is ordered or required by
governmental authority, NIAGARA MOHAWK shall cooperate with PRODUCER in
PRODUCER's efforts to be reimbursed by the governmental authority for its
mutually agreed upon share of the costs of such relocation or rearrangement, but
in no event shall NIAGARA
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 20
Rate Schedule FERC No. 189 Superceding Original Sheet No. 20
MOHAWK be responsible for reimbursing PRODUCER for any costs associated with
such relocation or rearrangement for which PRODUCER is responsible hereunder.
7.5 If the PRODUCER elects to construct a new INTERCONNECTION
FACILITY, construction, title, and payment shall be in accordance with the terms
and conditions of this AGREEMENT.
8. ABANDONMENT OR RETIREMENT OF INTERCONNECTION FACILITY
8.1 If NIAGARA MOHAWK reasonably determines that it is necessary
to abandon or to retire the entire INTERCONNECTION FACILITY so that it can
relocate or rearrange its transmission system in order to maintain reliable
electric service in accordance with GOOD UTILITY PRACTICE (as defined in the
Transmission Services Agreement), NIAGARA MOHAWK shall give the PRODUCER no less
than (1) year's written notice of such abandonment or retirement and shall defer
such abandonment or retirement until a new INTERCONNECTION FACILITY has been
constructed, so that PRODUCER's sales of energy, capacity, ancillary or other
services, or any combination thereof, into the ISO ADMINISTERED MARKETS and/or
through any BILATERAL TRANSACTIONS may continue without interruption, provided
that such notice period or deferral may be reduced to the extent reasonably
required in order to maintain reliable electric service in accordance with GOOD
UTILITY PRACTICE (as defined in the Transmission Services Agreement).
8.2 If NIAGARA MOHAWK is required to abandon or retire its
transmission system as a result of an order of government authority, and such
relocation or rearrangement requires the construction of a new INTERCONNECTION
FACILITY, NIAGARA MOHAWK shall so notify PRODUCER.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 21
Rate Schedule FERC No. 189 Superceding Original Sheet No. 21
8.3 If NIAGARA MOHAWK reasonably determines that it is necessary
to abandon or retire its transmission system in accordance with Section 8.1 or
if NIAGARA MOHAWK is required or ordered by governmental authority to abandon or
retire its transmission system, NIAGARA MOHAWK shall perform or have performed a
new INTERCONNECTION STUDY in accordance with the terms of this AGREEMENT.
NIAGARA MOHAWK shall be responsible for all of the costs and expenses in
connection with such INTERCONNECTION STUDY, in connection with obtaining
rights-of-way and in connection with the construction of any new INTERCONNECTION
FACILITIES unless such abandonment or retirement is required in order to
maintain reliable electric service in accordance with GOOD UTILITY PRACTICE (as
defined in the Transmission Services Agreement), in which case PRODUCER shall be
responsible for such costs and expenses in accordance with the terms of Articles
3, 4 and 5. In its sole discretion, if, in accordance with the preceding
sentence, PRODUCER is responsible for the costs and expenses of any new
INTERCONNECTION STUDY or the construction of any new INTERCONNECTION FACILITIES,
PRODUCER shall have the option to (a) reimburse NIAGARA MOHAWK for the actual
out-of-pocket costs of such construction promptly upon completion thereof; (b)
construct at its own expense, a new INTERCONNECTION FACILITY subject to the
terms of this AGREEMENT; or (c) terminate this AGREEMENT, upon no less than
thirty (30) days written notice to NIAGARA MOHAWK.
8.4 If the abandonment or retirement of the entire
INTERCONNECTION FACILITY is ordered or required by governmental authority,
NIAGARA MOHAWK will cooperate with PRODUCER in PRODUCER's efforts to be
reimbursed by such governmental authority for its mutually agreed upon share of
the costs of such abandonment or retirement, but in no event shall NIAGARA
MOHAWK be responsible for reimbursing
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 22
Rate Schedule FERC No. 189 Superceding Original Sheet No. 22
PRODUCER for any costs associated with such abandonment or retirement for which
PRODUCER is responsible hereunder.
8.5 If the PRODUCER elects to construct a new INTERCONNECTION
FACILITY, construction, title and payment shall be in accordance with the terms
and conditions of this AGREEMENT.
9. [INTENTIONALLY LEFT BLANK]
10. COMPLIANCE WITH LAWS AND OBTAINING PERMITS AND LICENSES
10.1 PRODUCER and NIAGARA MOHAWK agree to comply with all
applicable federal, state and local, ordinances, rules, regulations, permits,
licenses, approvals, certificates, and requirements thereunder in connection
with all activities performed pursuant to this AGREEMENT, including, but not
limited to all design, environmental, regulatory, engineering, construction, and
property acquisition activities.
10.2 PRODUCER further agrees to obtain all necessary
environmental, regulatory, licenses, certificates, permits and approvals, in
connection with all activities performed pursuant to this Agreement, at its sole
expense, and to obtain NIAGARA MOHAWK's review and approval of all applications
with respect thereto, which approval shall not be unreasonably withheld or
delayed, prior to their submittal to any of the appropriate agencies or
governmental authorities. To the extent permitted by law, prior to the Initial
Synchronization Date, PRODUCER shall convey to NIAGARA MOHAWK said licenses,
certificates, permits and approvals.
10.3 Each of PRODUCER and NIAGARA MOHAWK agrees to indemnify and
save the other harmless and defend the other from all liability, civil and
criminal, costs and expenses (including reasonable attorney's fees) arising from
violations by it of all
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 23
Rate Schedule FERC No. 189 Superceding Original Sheet No. 23
applicable laws, ordinances, rules, regulations, permits, licenses, approvals,
certificates and requirements thereunder. Each of PRODUCER and NIAGARA MOHAWK
agrees to bear fully all civil and criminal penalties that may arise from its
activities or from its violations of or its failure to comply with the
aforementioned laws and requirements, whether such penalties are assessed
against PRODUCER or NIAGARA MOHAWK.
10.4 If PRODUCER observes that any requirement specified in this
AGREEMENT is at variance with any governing laws, ordinances, rules,
regulations, permits, licenses, approvals, certificates and requirements
thereunder, PRODUCER shall promptly notify NIAGARA MOHAWK in writing before
incurring any further liability, expense or obligation. NIAGARA MOHAWK and
PRODUCER shall in good faith attempt to reform this Agreement to comply with the
aforementioned laws, ordinances, rules, regulations, permits, licenses,
approvals, or certificates at PRODUCER's sole cost and expense. If NIAGARA
MOHAWK and PRODUCER are unable to do so, either party may terminate this
AGREEMENT.
11. COST PAYMENTS
11.1 Prior to the start of construction of the INTERCONNECTION
FACILITY and the SYSTEM FACILITIES, PRODUCER shall pay to NIAGARA MOHAWK from
time to time an amount equal to the reimbursable costs incurred by NIAGARA
MOHAWK in connection with the design of such INTERCONNECTION FACILITY and SYSTEM
FACILITIES as set forth in itemized invoices provided by NIAGARA MOHAWK
detailing such reimbursable costs. Prior to the start of construction of the
INTERCONNECTION FACILITY and the SYSTEM FACILITIES and as soon as reasonably
practicable, PRODUCER and NIAGARA MOHAWK shall agree upon a schedule of payments
by PRODUCER to NIAGARA MOHAWK for reimbursable costs to be incurred by NIAGARA
MOHAWK in connection with
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 24
Rate Schedule FERC No. 189 Superceding Original Sheet No. 24
the construction of the INTERCONNECTION FACILITY and the SYSTEM FACILITIES,
which schedule of payments shall be based upon the current estimate of such
costs included in Schedule B hereto less reimbursable costs actually paid by
PRODUCER to NIAGARA MOHAWK in connection with the design of the INTERCONNECTION
FACILITY and the SYSTEM FACILITIES. Such schedule of payments may be modified
upon the agreement of each of the parties to reflect the actual costs incurred
by NIAGARA MOHAWK. NIAGARA MOHAWK shall review actual charges on a regular basis
and invoice PRODUCER accordingly if additional funds are required to pay
reimbursable costs (as defined in Section 11.2). At the completion of
construction, should the actual out-of-pocket costs incurred by NIAGARA MOHAWK
be less than the amount paid to NIAGARA MOHAWK by PRODUCER, NIAGARA MOHAWK shall
reimburse PRODUCER accordingly. NIAGARA MOHAWK shall provide itemized invoices
detailing all reimbursable costs against PRODUCER'S payments at the time of
final billing. PRODUCER agrees to pay all invoices within thirty (30) days from
date of the invoice. In accordance with NIAGARA MOHAWK POWER CORPORATION'S
P.S.C. 207. Electricity, if any invoice remains unpaid thirty (30) days from the
invoice date, NIAGARA MOHAWK shall apply to the unpaid balance, and PRODUCER
shall pay, a finance charge at the rate of one and one-half percent (1.5%) per
month, but in no event more than the maximum allowed by law. If any invoice
remains unpaid for sixty (60) days, NIAGARA MOHAWK shall have no further
obligation to perform under this AGREEMENT until all outstanding sums, including
interest, have been paid in full.
11.2 Reimbursable costs shall mean the following:
(A) All reasonable NIAGARA MOHAWK out-of-pocket costs and
expenses associated with the acquisition, inspection, design
review, engineering, survey, project management and
coordination,
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 25
Rate Schedule FERC No. 189 Superceding Original Sheet No. 25
testing of electrical equipment and installation and
testing of EMS-RTU and metering equipment, development
of energization procedure, construction, environmental
and regulatory permitting and licensing of, taxes as
provided for in Article 12 and transfer of title and
interest to, the INTERCONNECTION FACILITY, and any new
or replaced facility as provided under Articles 7 and 8
for which PRODUCER is responsible hereunder, upon
transfer of title and interest to NIAGARA MOHAWK.
(B) All reasonable NIAGARA MOHAWK out-of-pocket costs in
connection with any INTERCONNECTION STUDIES for which
PRODUCER is responsible hereunder.
(C) All reasonable NIAGARA MOHAWK out-of-pocket costs and
expenses of acquiring, designing, engineering,
constructing, financing, taxes as provided for in
Article 12, environmental permitting, and licensing any
SYSTEM FACILITIES, or any new or replaced facilities for
which PRODUCER is responsible hereunder.
(D) All reasonable out-of-pocket legal fees, costs,
liabilities, judgments, fines and other sanctions or
penalties arising out of NIAGARA MOHAWK's exercise of
its eminent domain authority, except to the extent
arising out of the gross negligence or intentional acts
or omissions of NIAGARA MOHAWK.
(E) Any transmission related out-of-pocket cost or expense
determined by a regulatory body having jurisdiction to
be properly allocable to PRODUCER, in whole or in part.
(F) All other reasonable out-of-pocket costs NIAGARA MOHAWK
incurs in carrying out any responsibilities under this
AGREEMENT, including the following services: engineering
services, legal services, contract administration,
rights-of-way acquisition, and environmental service and
studies except for costs for which NIAGARA MOHAWK is
responsible in accordance with the provisions of this
AGREEMENT.
11.3 NIAGARA MOHAWK shall not be responsible or liable for any
losses or damages resulting from any delays in PRODUCER's completion of
construction according to schedule, or PRODUCER's failure to meet the COMMERCIAL
OPERATION DATE, or PRODUCER's failure to pay or delay in paying NIAGARA MOHAWK
all costs
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 26
Rate Schedule FERC No. 189 Superceding Original Sheet No. 26
invoiced hereunder except to the extent that any such delays are the result of
the gross negligence or intentional acts or omissions of NIAGARA MOHAWK.
11.4 Payment of amounts due for the operation, maintenance,
reconstruction or relocation of the INTERCONNECTION FACILITY during the term of
this AGREEMENT shall be made in accordance with the provisions of this Article.
11.5 NIAGARA MOHAWK shall be solely responsible for the
operation, maintenance and repair of the INTERCONNECTION FACILITY and the SYSTEM
FACILITIES. The INTERCONNECTION FACILITY and the SYSTEM FACILITIES shall at all
times be operated, maintained and repaired in accordance with GOOD UTILITY
PRACTICES (as defined in the Transmission Services Agreement) and NIAGARA
MOHAWK'S own standards and procedures. Except as provided in Section 12.1(b), as
full compensation to NIAGARA MOHAWK for its ownership, operation, maintenance
and repair of the INTERCONNECTION FACILITY and the SYSTEM FACILITIES for the
entire term of this AGREEMENT, PRODUCER hereby agrees to pay to NIAGARA MOHAWK
an aggregate amount equal to $8,950,000 (hereinafter, the "OPERATION AND
MAINTENANCE FEE"). The OPERATION AND MAINTENANCE FEE shall be in lieu of any
other payments or compensation to NIAGARA MOHAWK in respect of its ownership,
operation, maintenance or repair of the INTERCONNECTION FACILITY and the SYSTEM
FACILITIES (other than payments for electric transmission service to be rendered
in accordance with Article 5 of the Transmission Services Agreement). The
OPERATION AND MAINTENANCE FEE shall be payable in three installments. The first
installment shall be in an amount equal to $4,300,000 and shall be payable by
PRODUCER to NIAGARA MOHAWK within thirty days of receipt of written confirmation
from NIAGARA MOHAWK that the construction of the
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 27
Rate Schedule FERC No. 189 Superceding Original Sheet No. 27
INTERCONNECTION FACILITY and the SYSTEM FACILITIES is complete. The second
installment shall also be in an amount equal to $1,550,000 and shall be payable
by PRODUCER to NIAGARA MOHAWK within thirty days of receipt of written
acknowledgment from NIAGARA MOHAWK that the PLANT has been synchronized with the
NIAGARA MOHAWK transmission system. The third installment shall be in an amount
equal to $3,100,000 and shall be payable by PRODUCER to NIAGARA MOHAWK within
thirty days of the COMMERCIAL OPERATION DATE. Furthermore, PRODUCER shall
indemnify, defend and hold harmless NIAGARA MOHAWK for any and all claims,
suits, liabilities or damages (including reasonable attorney's fees) arising
from NIAGARA MOHAWK's obligations under this Agreement, except to the extent
said claims, suits, liabilities or damages are caused in whole or in part by the
gross negligence or intentional acts or omissions of NIAGARA MOHAWK.
12. TAXES
12.1 PRODUCER shall reimburse, indemnify, and hold harmless
NIAGARA MOHAWK for the following taxes levied or assessed on NIAGARA MOHAWK, as
a result of this AGREEMENT:
(a) Transfer Tax. PRODUCER shall be responsible for any
transfer taxes associated with the transfer of the
INTERCONNECTION FACILITY.
(b) Property Tax. PRODUCER shall be responsible for one-half of
any property taxes levied or assessed against NIAGARA MOHAWK
attributable to the transfer of title to NIAGARA MOHAWK in
the INTERCONNECTION FACILITY.
(c) Federal Income Tax. PRODUCER shall be responsible for
any federal income taxes imposed on NIAGARA MOHAWK, or
any increased federal income tax liability incurred by
NIAGARA MOHAWK arising from (i) the reimbursement by
PRODUCER of any cost incurred by NIAGARA MOHAWK to
design, construct, install, obtain rights-of-way,
licenses, certificates, permits or approvals for,
operate, or maintain the INTERCONNECTION
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 28
Rate Schedule FERC No. 189 Superceding Original Sheet No. 28
FACILITY or SYSTEM FACILITIES, (ii) the transfer of any
property, rights-of-way, licenses, certificates, permits
or approvals from PRODUCER to NIAGARA MOHAWK, or any
other provision of services by PRODUCER relating to this
AGREEMENT, and (iii) the termination of the Power
Purchase Agreement or the occurrence of any other
"disqualification event" within the meaning of IRS
Notice 88-129 and IRS Notice 90-60 as they may be
amended; provided, the "disqualification event" is not
caused by NIAGARA MOHAWK.
(d) New York Taxes. Consistent with Section 12.1(c),
PRODUCER shall be responsible for any New York State
taxes imposed on NIAGARA MOHAWK that are based on or
measured by net or gross income or receipts as a result
of payments made by PRODUCER for (i) the reimbursement
by PRODUCER of any cost incurred by NIAGARA MOHAWK to
design, construct, install, obtain rights-of-way,
licenses, certificates, permits or approvals for,
operate, or maintain the INTERCONNECTION FACILITY or
SYSTEM FACILITIES, (ii) the transfer of any property,
rights-of-way, licenses, certificates, permits or
approvals from PRODUCER to NIAGARA MOHAWK, or any other
provision of services by PRODUCER relating to this
AGREEMENT, and (iii) the termination of the Power
Purchase Agreement or the occurrence of any other
"disqualification event" within the meaning of IRS
Notice 88-128 and ITS Notice 90-60 as they may be
amended; provided, the "disqualification event" is not
caused by NIAGARA MOHAWK.
(e) Adjustments Arising from the Payment or Reimbursement of
Tax under the Preceding Provisions. The amounts payable
pursuant to clauses (a) through (d) of this Section 12.1
shall be reduced by (i) any net actual tax savings
resulting from the payment or accrual by NIAGARA MOHAWK
of the taxes described in said clauses (a) through (d)
and (ii) the present value of the tax benefits, if any,
that NIAGARA MOHAWK can expect to realize through
depreciation, amortization and other deduction available
to it with respect to expenses reimbursed hereunder or
the acquisition of depreciable or amortizable assets in
connection with the transaction which causes NIAGARA
MOHAWK to be entitled to reimbursement of tax from
PRODUCER (collectively (i) and (ii) are the "Tax
Benefits"). PRODUCER shall fully reimburse NIAGARA
MOHAWK for any net actual federal income tax, New York
tax or transfer tax ("Tax"), if any, arising out of any
payment or reimbursement of any tax by PRODUCER under
this Section such that the net amount received by
NIAGARA MOHAWK, after reduction by such net actual Taxes
on the amounts payable pursuant to this
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 29
Rate Schedule FERC No. 189 Superceding Original Sheet No. 29
Article 12 (including this Section 12.1(e)) shall equal
the amount payable pursuant to clauses (a) through (d)
of this Section 12.1 less any Tax Benefits. NIAGARA
MOHAWK shall calculate and advise PRODUCER of its
liability for Tax under this paragraph. NIAGARA MOHAWK
shall perform this calculation utilizing (i) its
effective rate of Tax (the "Rate") for the year(s) of
income inclusion and (ii) with respect to any Tax
Benefits, the depreciation or amortization rates,
methodology, bases and periods of time that it would
normally use for similar property, the Rate or Rates of
Tax expected to be applicable for the year or years in
which the deductions will be utilized and a discount
factor equal to it "Composite Cost of Capital" as
approved by the COMMISSION for the year to which the
calculation relates. At PRODUCER's request, the amount
of any indemnity payment by PRODUCER to NIAGARA MOHAWK
pursuant to this Article 12 shall be verified and
certified by Price Waterhouse or the nationally
recognized firm of independent public accountants then
normally employed by NIAGARA MOHAWK. Producer shall pay
the accountants' fee for verifying the indemnity payment
pursuant to this Section 12.1(e), unless the
verification discloses an error in NIAGARA MOHAWK's
favor exceeding 2.5% for the amount of the payment as
determined by NIAGARA MOHAWK, in which case NIAGARA
MOHAWK shall pay the accountants' fee for verifying the
amount of the payment. PRODUCER and NIAGARA MOHAWK
hereby agree that the accountants' sole responsibility
shall be to verify the calculation of an indemnity
payment under this Article 12 and interpretation of this
AGREEMENT shall not be within the scope of the
accountants' responsibilities.
12.2 Except as provided in Sections 12.3 and 12.5, PRODUCER shall
fully reimburse NIAGARA MOHAWK for the amount of any tax that is the
responsibility of PRODUCER pursuant to Section 12.1 within thirty (30) days of
being notified by NIAGARA MOHAWK, but not prior to the date that such taxes
(including any estimated payments of such taxes) are due. PRODUCER shall not be
liable for taxes that would otherwise be owed by NIAGARA MOHAWK in the absence
of this AGREEMENT or any activities hereunder.
12.3 At the time of the payment or reimbursement of any amount by
PRODUCER under this AGREEMENT, or the transfer of any property, rights-of-way,
licenses,
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 30
Rate Schedule FERC No. 189 Superceding Original Sheet No. 30
certificates, permits or approvals from PRODUCER to NIAGARA MOHAWK pursuant to
this AGREEMENT, or the termination of the Power Purchase Agreement or the
occurrence of any other "disqualification event" within the meaning of IRS
Notice 88-129 and IRS notice 90-60, as they may be amended, PRODUCER shall also
pay to NIAGARA MOHAWK any amounts due under Section 12.1 if NIAGARA MOHAWK
advises PRODUCER that it believes the payment, reimbursement or transfer
constitutes gross income to NIAGARA MOHAWK; provided, however, NIAGARA MOHAWK
shall not file any return reflecting a liability for any tax subject to
indemnity under Section 12.1 or pay such tax if PRODUCER, at PRODUCER's sole
expense, furnishes NIAGARA MOHAWK with an opinion of independent tax counsel
selected by PRODUCER and reasonably satisfactory to NIAGARA MOHAWK, to the
effect that there is substantial authority within the meaning of Section
6662(d)(2)(5)(i) of the Internal Revenue Code of 1986, as amended, and the
regulations (whether final, temporary or proposed) thereunder (or with respect
to New York taxes, applying corresponding principles) ("Substantial Authority")
to conclude that the payments, reimbursements and transfers do not constitute
gross income to NIAGARA MOHAWK. If PRODUCER shall have furnished NIAGARA MOHAWK
with such an opinion concerning tax liability which NIAGARA MOHAWK believes may
be in excess of $100,000 and PRODUCER's senior unsecured debt is rated lower
than investment grade by either Moody's Investor's Services, Inc. or by Standard
and Poor's Corporation ("INVESTMENT GRADE"), PRODUCER shall provide collateral
to NIAGARA MOHAWK in a manner reasonably satisfactory to NIAGARA MOHAWK for any
tax that later may be imposed unless the opinion described in the preceding
sentence shall be to the effect that it is more likely than not that the
payment, reimbursement or transfer does not constitute gross income. In no event
shall PRODUCER be required to provide collateral in excess of the amount payable
under
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 31
Rate Schedule FERC No. 189 Superceding Original Sheet No. 31
Section 12.1 (the net amount of any taxes to be calculated assuming the taxes
are payable at the highest marginal statutory rates applicable to NIAGARA MOHAWK
for the relevant period, and further assuming, in the case of a termination of
the Power Purchase Agreement or the occurrence of any other "disqualification
event" within the meaning of IRS Notice 88-129 and IRS Notice 90-60, that
NIAGARA MOHAWK's gross income arising from such event will not exceed the lesser
of the INTERCONNECTION FACILITY's (i) fair market value as determined using the
depreciated replacement cost method, as defined in IRS Notice 90-60, and (ii)
fair market value as determined under a procedure or method established or
utilized by the relevant utility commission, as provided in IRS Notice 90-60).
Notwithstanding the foregoing, NIAGARA MOHAWK shall return all collateral
provided under this Section 12.3 to PRODUCER within 30 days from the date
PRODUCER's senior unsecured debt is rated INVESTMENT GRADE or higher, and in any
event, NIAGARA MOHAWK shall return the collateral provided under this Section
12.3 to PRODUCER upon the termination of the statute of limitations applicable
to the taxable year in which occurs such payment, reimbursement or transfer.
Nothing in this Section 12.3 shall reduce or limit any liability by PRODUCER to
pay such tax if, and when, it is imposed on NIAGARA MOHAWK. Notwithstanding the
foregoing provisions of this Section, 12.3, PRODUCER shall not be required to
provide collateral with respect to potential tax liability to the State of New
York.
12.4 NIAGARA MOHAWK agrees to cooperate in good faith with
PRODUCER in attempting to minimize NIAGARA MOHAWK's costs under this Article,
provided PRODUCER reimburses NIAGARA MOHAWK for all out of pocket costs incurred
by NIAGARA MOHAWK in connection therewith, including attorneys fees, and
provided further that PRODUCER shall indemnify NIAGARA MOHAWK against any and
all penalties,
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 32
Rate Schedule FERC No. 189 Superceding Original Sheet No. 32
judgments, fines (civil or criminal), or other costs that may be imposed by any
governmental authority as a result hereof except to the extent caused by the
gross negligence or willful misconduct of NIAGARA MOHAWK.
12.5 Notwithstanding the foregoing, PRODUCER shall have the
right to require NIAGARA MOHAWK to contest, appeal or seek abatement of any tax,
levy or assessment against NIAGARA MOHAWK and for which PRODUCER may be required
to reimburse NIAGARA MOHAWK under this Article if (i) PRODUCER shall have
furnished to NIAGARA MOHAWK, at PRODUCER's sole expense, an opinion of
independent tax counsel selected by PRODUCER and reasonably satisfactory to
NIAGARA MOHAWK, to the effect that there is Substantial Authority that such
contest, appeal or abatement will be successful. If the PRODUCER's senior
unsecured debt is rated lower than INVESTMENT GRADE, PRODUCER shall provide
collateral to NIAGARA MOHAWK in a manner reasonably satisfactory to NIAGARA
MOHAWK for the amount of the tax asserted (excluding taxes imposed by the State
of New York) and all out of pocket costs expected to be incurred by NIAGARA
MOHAWK in connection with such contest, appeal or abatement. NIAGARA MOHAWK
shall, in good faith, control any such contest, appeal or abatement, including,
but not limited to, the selection of counsel and the forum for such contest,
appeal or abatement. Unless prepayment of tax is necessary in the forum selected
(in which case PRODUCER shall make such prepayment in the form of an
interest-free loan to NIAGARA MOHAWK to be applied for that purpose, and NIAGARA
MOHAWK shall return to PRODUCER, at the conclusion of such contest, appeal or
abatement, any refund it actually receives of the amount of such prepayment and
any interest it actually receives thereon), no reimbursement shall be payable by
PRODUCER to NIAGARA MOHAWK under this Article until such tax, levy or assessment
is due by a final and non-
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 33
Rate Schedule FERC No. 189 Superceding Original Sheet No. 33
appealable order by a court or agency of competent jurisdiction. PRODUCER shall
reimburse NIAGARA MOHAWK for all out of pocket costs incurred by NIAGARA MOHAWK
in connection with such contest, appeal or abatement request, including but not
limited to interest charges, penalties, additions to tax, and attorneys' fees,
as such costs are incurred by NIAGARA MOHAWK.
12.6 PRODUCER shall not be responsible for any taxes under this
Article to the extent that such liability is attributable to a "disqualification
event" within the meaning of IRS Notice 88-129 and IRS Notice 90-60, as they may
be amended, which is caused by NIAGARA MOHAWK. In addition, PRODUCER shall not
be responsible for any income tax assessed against NIAGARA MOHAWK to the extent
such tax would not be assessed but for NIAGARA MOHAWK's use of the
INTERCONNECTION FACILITY for any purpose other than transmitting power for, or
selling power to, PRODUCER or an entity which is a customer of PRODUCER (an
"unrelated use"); provided, however, that if such income tax would be assessed
against NIAGARA MOHAWK regardless of such unrelated use, then NIAGARA MOHAWK
shall only be obligated to pay the incremental portion of the tax above the
amount that would have been due if there had been no unrelated use.
12.7 If NIAGARA MOHAWK shall obtain a refund of all or any part
of any tax for which it has been compensated by PRODUCER under this Article 12,
or if, in lieu of such refund, NIAGARA MOHAWK shall receive a credit against any
tax not indemnified against hereunder by reason of all or part of any such tax,
NIAGARA MOHAWK shall pay PRODUCER, on an after tax basis (after giving effect to
any tax savings the PRODUCER realizes determined in a manner consistent with
Section 12.1(e)), an amount equal to the amount
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 34
Rate Schedule FERC No. 189 Superceding Original Sheet No. 34
of such tax, refund or credit, including interest attributable thereto, to the
extent such amount has not previously been paid or credited to PRODUCER under
the provision of this AGREEMENT.
13. NOTICES
13.1 All written notifications pursuant to this AGREEMENT shall
be in writing and shall be personally delivered or mailed by certified or
registered first class mail, return receipt requested, as follows:
To NIAGARA MOHAWK To PRODUCER:
--------
MANAGER-TRANSMISSION CONTRACTS General Manager
NIAGARA MOHAWK POWER CORPORATION Sithe/Independence Power
300 Erie Boulevard West Partners, L.P.
Syracuse, New York 13202 c/o Sithe/Independence, Inc.
P.O. Box 1046
76 Independence Way
Oswego, NY 13126
and
Sithe Energies, Inc.
335 Madison Ave.
28th Floor
New York, NY 10017
Attn: General Counsel
Either party may change its address for notices by notice to the
other in the manner provided above.
13.2 The above mentioned representatives of their designees
shall be authorized to act on behalf of the parties, and their instructions,
requests, and decisions will be binding upon the parties as to all matters
pertaining to this AGREEMENT and the performance of the parties hereunder. Only
these representatives shall have the authority to commit funds or make binding
obligations on behalf of the parties. These representatives shall be responsible
for
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 35
Rate Schedule FERC No. 189 Superceding Original Sheet No. 35
tracking work, costs, schedules and all other matters related to this AGREEMENT,
and for the performance of any third parties.
14. TERM
14.1 This AGREEMENT shall be effective on the date of execution
by both parties.
14.2 Upon such effectiveness, this AGREEMENT shall expire on the
date occurring twenty (20) years from the COMMERCIAL OPERATION DATE of the
PRODUCTION FACILITY.
14.3 This AGREEMENT shall not merge with or be terminated or
superseded by any future agreement between the parties that does not
specifically so provide.
15. TERMINATION FOR BREACH/DEFAULT
15.1 In the event of a material default or breach of any
provision of this AGREEMENT, where such default or breach shall have continued
for and not been cured within sixty (60) days after receipt of a written notice
from the non-breaching party specifying in reasonable detail the nature of such
default or breach, the non-breaching party may by written notice terminate the
AGREEMENT at the end of the next succeeding calendar month; provided however,
that if such default or breach cannot reasonably be cured within such sixty (60)
day period, the breaching party shall be entitled to an additional period of
time to cure the breach, as may be reasonable under the circumstances; provided
that the breaching party commences efforts to cure within the initial sixty (60)
day period and diligently pursues cure thereafter. Any LENDER (as defined in the
Transmission Services Agreement) shall have the right, in its sole discretion
and without obligation, to prevent such termination by curing any such default
or breach on PRODUCER's behalf within the relevant period.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 36
Rate Schedule FERC No. 189 Superceding Original Sheet No. 36
15.2 Termination of this AGREEMENT for breach or default shall
not relieve the breaching party of any of its liabilities and obligations
hereunder, and the non-breaching party may take whatever judicial or
administrative actions as appear necessary or desirable to enforce its rights
hereunder. The rights specified herein are not exclusive and shall be in
addition to all other remedies available to NIAGARA MOHAWK or PRODUCER, either
at law or in equity, for default or breach of any provision of this AGREEMENT.
Notwithstanding any other provision of this AGREEMENT, neither NIAGARA MOHAWK
nor the PRODUCER shall be liable to the other for incidental, consequential,
indirect, special or punitive damages arising from breach of this AGREEMENT.
15.3 Upon termination, NIAGARA MOHAWK shall give any regulatory
or judicial authorities such notice as is required by law.
16. FORCE MAJEURE
16.1 Neither party shall be considered to be in default or breach
hereunder, and each party shall be excused from performance hereunder, if and to
the extent that it shall be delayed in or prevented from performing or carrying
out any provision of this AGREEMENT by reason of or through storm, flood,
lightning strikes, earthquake, fire, ice, epidemic, war, invasion, riot, civil
disturbance, sabotage, explosion, insurrection, military or usurped power,
strikes, stoppage of labor, labor dispute, failure of contractors or supplies of
material, action of any court or public authority, or any civil or military
authority de facto or de jure, change in law, act of God or the public enemy, or
any other cause beyond such party's control, including, without limitation,
disconnection or limited operation of the PRODUCTION FACILITY, the
INTERCONNECTION FACILITY or NIAGARA MOHAWK's electric system due to failure of
facilities or unscheduled repairs or maintenance.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 37
Rate Schedule FERC No. 189 Superceding Original Sheet No. 37
16.2 The party claiming force majeure shall use due diligence to
resume performance or the provision of service hereunder as soon as practicable.
16.3 Neither party shall be liable to the other party for or on
account of any loss, damage, injury or expense, including, but not limited to,
incidental, punitive, special, indirect and consequential damages, resulting
from or arising out of such delay or inability to perform.
17. RELATIONSHIP OF PARTIES
17.1 Nothing contained in this AGREEMENT shall be construed or
deemed to cause, create, constitute, give effect to, or otherwise recognize
PRODUCER and NIAGARA MOHAWK to be partners, joint venturers, employer and
employee, principal and agent, or any other business association, with respect
to any matter.
17.2 Unless otherwise agreed to in writing signed by both
parties, neither party shall have any authority to create or assume in the other
party's name or on its behalf any obligation, express or implied, or to act or
purport to act as the other party's agent or legally empowered representative
for any purpose whatsoever.
17.3 Neither party shall be liable to any third party in any way
for any engagement, obligation, commitment, contract, representation or for any
negligent act or omission to act of the other party, except as expressly
provided for herein.
18. THIRD-PARTY BENEFICIARY
18.1 No person or party shall have any rights or interests,
direct or indirect, in this AGREEMENT or the services or facilities to be
provided hereunder, or both, except the parties, their successors, and
authorized assigns.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 38
Rate Schedule FERC No. 189 Superceding Original Sheet No. 38
18.2 The parties specifically disclaim any intent to create any
rights in any person or party as a third-party beneficiary to this AGREEMENT or
to the services or facilities to be provided hereunder, or both.
19. APPROVAL
19.1 If required by law, NIAGARA MOHAWK shall file this AGREEMENT
with the appropriate regulatory or judicial authorities within thirty days of
receipt of the executed AGREEMENT from PRODUCER. If such regulatory body
substantially modifies the terms and conditions of this AGREEMENT either party
shall have the right to unilaterally terminate this AGREEMENT effective upon
written notice to the other party; provided, however, that prior to exercising
such termination rights, the parties agree to meet and discuss possibly
modifying this AGREEMENT or entering into a new agreement.
19.2 All filing fees for the initial filing of this AGREEMENT and
for any subsequent filings with any regulatory or judicial authorities for the
approval or effectiveness of this AGREEMENT shall be paid by PRODUCER. NIAGARA
MOHAWK shall pay any filing fees in connection with any other filing by it.
Nothing contained herein shall be construed as affecting in any way either
NIAGARA MOHAWK's right to make applications to the FERC or any other appropriate
regulatory authority having jurisdiction over the transactions contemplated
hereby or PRODUCER's right to challenge such application.
20. ASSIGNMENT
20.1 Except as otherwise expressly provided in this Article 20,
neither party shall assign, pledge or otherwise transfer this AGREEMENT or any
right or obligation under this AGREEMENT, by operation of law or otherwise,
without first obtaining the other party's written consent, which consent shall
not be unreasonably withheld.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 39
Rate Schedule FERC No. 189 Superceding Original Sheet No. 39
20.2 Upon thirty (30) days prior written notice to NIAGARA
MOHAWK, PRODUCER may, without the consent of NIAGARA MOHAWK, assign its
interests in this AGREEMENT, in whole or in part, to (a) LENDERS (as defined in
the Transmission Services Agreement) or any successor to such LENDERS; or (b) an
entity controlling, controlled by, or under common control with PRODUCER
("Affiliate"); provided, however, that in each such case, such assignment shall
not relieve PRODUCER of its obligations under this AGREEMENT, unless the
assignee shall expressly assume all of PRODUCER's obligations under this
AGREEMENT. If LENDERS or any successor to such LENDERS succeed to the interest
of PRODUCER in this AGREEMENT by foreclosure or otherwise, NIAGARA MOHAWK shall
accord such LENDERS or any successor to such LENDERS, their successors and the
assigns, the same rights as PRODUCER hereunder. In connection with the FINANCIAL
CLOSING (as defined in the Transmission Services Agreement), NIAGARA MOHAWK
agrees to execute and deliver and to furnish a written consent to the assignment
by PRODUCER of this AGREEMENT to the LENDERS, a certificate of an authorized
officer of NIAGARA MOHAWK and an opinion of counsel to NIAGARA MOHAWK, in each
case in form and substance reasonably acceptable to the LENDERS and NIAGARA
MOHAWK.
20.3 Any company or entity which shall succeed by purchase,
merger or consolidation to the properties, substantially or entirely, of either
NIAGARA MOHAWK or PRODUCER, as the case may be, shall be entitled to the rights
and shall be subject to the obligations of its predecessor in title under this
AGREEMENT provided that, at least thirty (30) days prior to the effective date
of the proposed assignment, the assignee shall unconditionally assume, and agree
to be bound by, all of the terms and conditions of this AGREEMENT, and the
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 40
Rate Schedule FERC No. 189 Superceding Original Sheet No. 40
assignee makes certain additional representations and warranties as appropriate
for assignee as contained in Article 2.
20.4 This AGREEMENT shall bind and inure to the benefit of the
parties to this AGREEMENT, their successors and permitted assigns.
21. WAIVER
21.1 No provision of this AGREEMENT may be waived except by
mutual agreement of the parties as expressed in writing and signed by both
parties.
21.2 Any waiver that is not in writing and signed by both parties
shall be null and void from its inception.
21.3 No express waiver in any specific instance as provided in a
required writing shall be construed as a waiver of future instances unless
specifically so provided in the required writing.
21.4 No express waiver of any specific default shall be deemed a
waiver of any other default whether or not similar to the default waived, or a
continuing waiver of any other right or default by a party.
21.5 The failure of either party to insist in any one or more
instances upon the strict performance of any of the provisions of this
AGREEMENT, or to exercise any right herein, shall not be construed as a waiver
or relinquishment for the future of such strict performance of such provision or
the exercise of such right.
22. AMENDMENT/MODIFICATION
22.1 This AGREEMENT may be amended or modified only if the
amendment or modification is in writing and executed by both parties.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 41
Rate Schedule FERC No. 189 Superceding Original Sheet No. 41
22.2 Any amendment or modification that is not in writing and
signed by both parties shall be null and void from its inception.
22.3 No express amendment or modification in any specific
instance as provided herein shall be construed as an amendment or modification
of future instances, unless specifically so provided in the required writing.
23. CHOICE OF LAW/JURISDICTION/SERVICE OF PROCESS
23.1 This AGREEMENT shall be deemed to be executed in the State
of New York and shall be interpreted and enforced according to the Laws of the
State of New York.
23.2 Each of the parties agrees to submit to the jurisdiction of
the courts in the State of New York for the purposes of interpretation and
enforcement of this AGREEMENT; provided, however, that this Article shall not
serve to divest an administrative agency of competent jurisdiction from
interpreting or enforcing this AGREEMENT.
23.3 Each of the parties waives personal service by manual
delivery and agrees that service of process in any action concerning or arising
out of this AGREEMENT may be made by registered or certified mail, return
receipt requested, delivered at such party's address set forth in Section 13.1
hereof.
24. SEVERABILITY
24.1 If any terms of this AGREEMENT, or the interpretation or
application of any term or provision to any prior circumstance, is held to be
unenforceable, illegal, or invalid by a court or agency of competent
jurisdiction, the remainder of this AGREEMENT, or the interpretation or
application of all other terms or provisions to persons or circumstances other
than those that are unenforceable, illegal, or invalid, shall not be affected
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 42
Rate Schedule FERC No. 189 Superceding Original Sheet No. 42
thereby and each term and provision shall be valid and be enforced to the
fullest extent permitted by law.
25. HEADINGS
25.1 The headings in this AGREEMENT are included herein for
convenience of reference only and shall not constitute a part of this AGREEMENT
for any other purpose, or limit or be used as an aid in construing the
provisions of this AGREEMENT.
26. INTEGRATION/MERGER/SURVIVABILITY
26.1 This AGREEMENT sets forth the entire understanding and
agreement of the parties as to the subject matter of this AGREEMENT, except to
the extent covered in the Transmission Services Agreement.
26.2 This AGREEMENT merges and supersedes all prior agreements,
commitments, representations, writings and discussions between the parties
regarding the subject matter herein, except those contained in the Transmission
Services Agreement.
26.3 In the event of any conflict between the terms and
conditions of this AGREEMENT and the Transmission Services Agreement, the terms
and conditions of the Transmission Services Agreement shall control.
26.4 Neither party shall be bound or liable to the other party
for any prior obligations, affirmations of fact, conditions, warranties,
representations, understandings, promises, assurances, inducements, or
agreements of any kind, whether written or oral, made by any agent or person in
the other party's employ with respect to the subject matter of this AGREEMENT,
unless explicitly embodied herein.
<Table>
Issued by: Susan L. Hodgson Effective Date: July 1, 2001
Manager- Transmission and Delivery Services
Issued on: June 29, 2001
</Table>
<Page>
Niagara Mohawk Power Corporation Substitute Original Sheet No. 43
Rate Schedule FERC No. 189 Superceding Original Sheet No. 43
27. EXECUTION IN COUNTERPARTS
27.1 This AGREEMENT may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and
the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed as of the day and year first above written.
SITHE/INDEPENDENCE POWER NIAGARA MOHAWK
PARTNERS, L.P. POWER CORPORATION
By: Sithe/Independence, Inc.
its General Partner
By: /s/ Martin B. Rosenberg By: /s/ Edward J. Dienst
------------------------------- --------------------------
Title: Senior Vice President Title: Senior Vice President
Date: June 29, 2001 Date: June 29, 2001