AMENDMENT TWO TO SITHE STABLE PENSION ACCOUNT PLAN

Exhibit 10.42

AMENDMENT TWO TO

SITHE STABLE PENSION ACCOUNT PLAN

As Amended and Restated Effective January 1, 2007

WHEREAS, effective as of January 1, 2007, the Sithe Stable Pension Account Plan (the “Plan”) was amended and restated in its entirety;

WHEREAS, by the terms of Section 11.1 of the Plan, the Administrative Committee, which is the Dynegy Inc. Benefit Plans Committee, may amend the Plan as necessary to bring the Plan into conformity with legal requirements; and

WHEREAS, it is necessary that certain technical amendments be made to the Plan in order to comply with final regulations issued under section 415 of the Internal Revenue Code;

NOW, THEREFORE, the Plan is hereby amended, effective as of the dates specified below, as follows:

1. Effective January 1, 2008, Section 1.2 of the Plan is amended by adding the following new paragraph at the end thereof:

“Effective on and after January 1, 2008, the applicable mortality table used for adjusting any benefit or limitation under Code Section 415(b)(2)(B), (C), or (D) as referenced in Section 4.7 of the Plan and the applicable mortality table used for the purposes of satisfying the requirements of Code Section 417(e) as set forth in this Section 1.2 is the “applicable mortality table” as that term is defined in the Pension Protection Act of 2006 and as applied in accordance with guidance issued currently and in the future by the Internal Revenue Service.”

2. Effective January 1, 2008, the provisions of Section I. of the Seventh Amendment to Plan (which actually was Amendment One to the Sithe Stable Pension Account Plan, as Amended and Restated Effective January 1, 2007), effective January 1, 2000, amending Section 1.4 of the Plan are hereby restated as follows:

“1.4 ‘ Applicable Interest Rate ’ means the interest rate specified under Code Section 417(e)(3) as in effect for the November preceding the start of the Plan Year in which the payment is made. On and after January 1, 2008, the annual rate is the adjusted first, second, and third segment rates applied under rules similar to the rules of Code Section 430(h)(2)(C) for the November preceding the start of the Plan Year in which the payment is made. For purposes of this Paragraph, the adjusted first, second, and third segment rates are the first, second, and third segment rates which would be determined under Code Section 430(h)(2)(C) if (i) Code Section 430(h)(2)(D) were applied by substituting the average yields for the month described in clause (ii) for the average yields for the 24-month period described in such section; (ii) Code Section 430(h)(2)(G)(i)(ii) were applied by substituting “section 417(e)(3)(A)(ii)(II)” for “section 412(b)(5)(B)(ii)(II)”; and (iii) the applicable percentage under Code Section 430(h)(2)(G) were determined in accordance with the following table:

3. Effective for limitation years beginning on or after July 1, 2007, Section 4.7 of the Plan is amended to read in its entirety as follows:

“4.7 Maximum Benefit Limitation .

(A) Limitations Imposed by Section 415 of the Internal Revenue Code :

(1) The limitations of this Section 4.7(A) shall apply on and after January 1, 2008, except as otherwise provided herein.

(2) The Annual Benefit otherwise payable to a Member under the Plan at any time shall not exceed the Maximum Permissible Benefit. If the benefit the Member would otherwise accrue in a Limitation Year would produce an Annual Benefit in excess of the Maximum Permissible Benefit, the benefit shall be limited (or the rate of accrual reduced) to a benefit that does not exceed the Maximum Permissible Benefit.

(3) If the Member is, or has ever been, a participant in another qualified defined benefit plan (without regard to whether the plan has been terminated) maintained by the employer or a predecessor employer, the sum of the Member’s Annual Benefits from all such plans may not exceed the Maximum Permissible Benefit. Where the Member’s employer-provided benefits under all such defined benefit plans (determined as of the same age) would exceed the Maximum Permissible Benefit applicable at that age, the maximum monthly retirement income applicable to all such defined benefit plans of the employer shall be determined and allocated on a pro rata basis in proportion to the actuarially equivalent amount of retirement income otherwise accrued under each such defined benefit plan so that the Maximum Permissible Benefit is not exceeded.

(4) The application of the provisions of this section shall not cause the Maximum Permissible Benefit for any Member to be less than the Member’s accrued benefit under all the defined benefit plans of the employer or a predecessor employer as of the end of the last Limitation Year beginning before July 1, 2007 under provisions of the plans that were both adopted and in effect before April 5, 2007. The preceding sentence applies only if the provisions of such defined benefit plans that were both adopted and in effect before April 5, 2007 satisfied the applicable requirements of statutory provisions, regulations, and other published guidance relating to Section 415 of the Internal Revenue Code in effect as of the end of the last Limitation Year beginning before July 1, 2007, as described in Section 1.415(a)-1(g)(4) of the Treasury regulations.

(5) The limitations of this Section 4.7(A) shall be determined and applied taking into account the rules in Section 4.7(A)(7).

(6) Definitions.

(a) “Annual Benefit” shall mean a benefit that is payable annually in the form of a straight life annuity. Except as provided below, where a benefit is payable in a form other than a straight life annuity, the benefit shall be adjusted to an actuarially equivalent straight life annuity that begins at the same time as such other form of benefit and is payable on the first day of each month, before applying the limitations of this Section 4.7(A). For a Member who has or will have distributions commencing at more than one annuity starting date, the Annual Benefit shall be determined as of each such annuity starting date (and shall satisfy the limitations of this Section 4.7(A) as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other annuity starting dates. For this purpose, the determination of whether a new starting date has occurred shall be made without regard to Section 1.401(a)-20, Q&A 10(d), and with regard to Section 1.415(b)-1(b)(1)(iii)(B) and (C) of the Treasury regulations.

No actuarial adjustment to the benefit shall be made for (1) survivor benefits payable to a surviving spouse under a qualified joint and survivor annuity to the extent such benefits would not be payable if the Member’s benefit were paid in another form; (2) benefits that are not directly related to retirement benefits (such as a qualified disability benefit, preretirement incidental death benefits, and postretirement medical benefits); or (3) the inclusion in the form of benefit of an automatic benefit increase feature, provided the form of benefit is not subject to Section 417(e)(3) of the Internal Revenue Code and would otherwise satisfy the limitations of this Section 4.7(A), and the Plan provides that the amount payable under the form of benefit in any Limitation Year shall not exceed the limits of this Section 4.7(A) applicable at the annuity starting date, as increased in subsequent years pursuant to Section 415(d) of the Internal Revenue Code. For this purpose, an automatic benefit increase feature is included in a form of benefit if the form of benefit provides for automatic, periodic increases to the benefits paid in that form.

The determination of the Annual Benefit shall take into account Social Security supplements described in Section 411(a)(9) of the Internal Revenue Code and benefits transferred from another defined benefit plan, other than transfers of distributable benefits pursuant to Section 1.411(d)-4, Q&A-3(c), of the Treasury regulations, but shall disregard benefits attributable to employee contributions or rollover contributions.

Effective for distributions in Plan Years beginning after December 31, 2003, the determination of actuarial equivalence of forms of benefit other than a straight life annuity shall be made in accordance with Section 4.7(A)(6)(a)(i) or (ii) below.

(b) “IRC 415 Compensation” shall mean wages, salaries, and fees for professional services and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Employer maintaining the Plan to the extent that the amounts are includible in gross income (including, but not limited to, commissions paid salespersons, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, and reimbursements, or other expense allowances under a nonaccountable plan [as described in Section 1.62-2(c) of the Treasury regulations]), and excluding the following:

For any self-employed individual, IRC 415 Compensation shall mean earned income.

Except as provided herein, for Limitation Years beginning after December 31, 1991, IRC 415 Compensation for a Limitation Year is the IRC 415 Compensation actually paid or made available during such Limitation Year. IRC 415 Compensation for a Limitation Year shall include amounts earned but not paid during the Limitation Year solely because of the timing of pay periods and pay dates, provided the amounts are paid during the first few weeks of the next Limitation Year, the amounts are included on a uniform and consistent basis with respect to all similarly situated employees, and no compensation is included in more than one Limitation Year.

For Limitation Years beginning on or after July 1, 2007, IRC 415 Compensation for a Limitation Year shall also include compensation paid by the later of 2 ¹ / 2 months after an Employee’s severance from employment with the employer maintaining the Plan or the end of the Limitation Year that includes the date of the Employee’s severance from employment with the employer maintaining the Plan, if:

Any payments not described above shall not be considered IRC 415 Compensation if paid after severance from em