AMENDED AND RESTATED POWER PURCHASE AGREEMENT

Exhibit 10.46

AMENDED AND RESTATED POWER PURCHASE AGREEMENT





dated as of

May 16, 2003


By and Between



North Jersey Energy Associates, A Limited Partnership


and


JERSEY CENTRAL POWER & LIGHT COMPANY

AMENDED AND RESTATED POWER PURCHASE AGREEMENT

THIS AMENDED AND RESTATED POWER PURCHASE AGREEMENT (the " Agreement ") is entered into as of May 16, 2003 (the " Agreement Date "), by and between Jersey Central Power & Light Company, a New Jersey corporation (as defined below " JCP&L " ) and North Jersey Energy Associates, A Limited Partnership, a New Jersey limited partnership (as defined below " NJEA " ). JCP&L and NJEA are individually referred to herein as a " Party " and are collectively referred to herein as the " Parties " .

WHEREAS , NJEA owns a nominal 300 MW natural gas-fired electricity and steam generating plant located in the borough of Sayreville, New Jersey, as described in the Existing PPA (the " Facility " ).

WHEREAS , JCP&L is a public utility as defined in N.J.S.A. 48:2-13 and, as such, is required by applicable statutes and regulations to furnish safe, adequate and proper service to its customers and further, to have and maintain its property, plant and equipment in such condition as to enable it to do so.

WHEREAS, JCP&L is a member of the Pennsylvania-New Jersey-Maryland Interconnection, L.L.C. (" PJM ").

WHEREAS , New Jersey's Electric Discount and Energy Competition Act, N.J.S.A . 48:3-49 et seq. (the " New Jersey Competition Act "), and certain orders of the BPU encourage the mitigation of above-market costs of long-term power purchase agreements with non-utility generators to effect rate payer savings.

WHEREAS , Section 13 of the New Jersey Competition Act provides for the participating utility to recover the costs of restructuring such long-term power purchase agreements on a full and timely basis.

WHEREAS , JCP&L and NJEA are parties to a Power Purchase Agreement dated as of October 22, 1987, as amended to date (the " Existing PPA "), pursuant to which JCP&L purchases from NJEA contract capacity of not less than 250 MW and the associated electricity of the Facility.

WHEREAS, in connection with a financing relating to the Facility and a nominal 300 MW natural gas-fired electricity and steam generating plant owned by Northeast Energy Associates, A Limited Partnership (" NEA ") located in the town of Bellingham, Massachusetts (the " Bellingham Facility "), ESI Tractebel Funding Corp., a Delaware corporation (formerly IEC Funding Corporation) (" ESI Funding ") issued its senior secured securities (the " Senior Secured Notes ") pursuant to the Trust Indenture, dated as of November 15, 1994, among ESI Funding, NJEA, NEA and State Street Bank and Trust Company, as trustee (the " Senior Trustee "), as supplemented by the First Supplemental Indenture dated as of November 15, 1994, and the Second Supplemental Trust Indenture dated as of January 14, 1998, (collectively, the " Senior Indenture "). As part of the security for the Senior Secured Notes, NJEA collaterally assigned its right, title and interest in the Existing PPA to the Senior Trustee on behalf of the holders of the Senior Secured Notes, and pledged all of the revenues received under, and granted a priority perfected security interest in, the Existing PPA to the Senior Trustee on behalf of the holders of the Senior Secured Notes pursuant to the Senior Indenture and related security documents. The Senior Secured Notes are also secured by NEA's interests in the Bellingham Facility and its related revenue generating agreements.

WHEREAS, in connection with an additional financing to, among other purposes, acquire and provide additional capital for the Facility and the Bellingham Facility, ESI Tractebel Acquisition Corp., a Delaware corporation (" ESI Acquisition, " and together with ESI Funding, the " Issuers ") issued its secured securities (the " Junior Secured Notes ") pursuant to the Indenture, dated as of February 19, 1998, among ESI Acquisition, NELP and Northeast Energy, LLC, a Delaware limited liability company (" NELLC "), directly and wholly owned by Northeast Energy, LP, a Delaware limited partnership (" NELP "), and State Street Bank and Trust Company, as trustee (the " Junior Trustee "), as supplemented by the First Supplemental Indenture dated as of February 19, 1998, (collectively, the " Junior Indenture "). The Junior Secured Notes are payable by NELP from distributions to it by NJEA and NEA.

WHEREAS , JCP&L and NJEA desire to amend and restate the Existing PPA to provide for, among other things, the delivery of electricity from sources other than the Facility and the delivery by NJEA and purchase by JCP&L of Contract Energy and Capacity for an Energy Payment that is less than the payment required from JCP&L under the Existing PPA.

NOW, THEREFORE , in consideration of the premises and of the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. DEFINITIONS

1.1 Certain Defined Terms.

In addition to terms defined in the recitals hereto, the following terms shall have the meanings set forth below.

" AAA " shall have the meaning set forth in Section 10(a) hereof.

" Actual Delivery Point Differential " for any calendar year shall mean (i) for On-Peak Hours during which electricity is delivered to a Delivery Point other than the Facility Bus during such calendar year, an amount ($/MWh) equal to (A) the MWh-weighted average hourly LMP ($/MWh) for such Delivery Point(s) for the actual On-Peak Hours during which Contract Energy was delivered to such Delivery Point(s) during such calendar year less (B) the MWh-weighted average hourly LMP ($/MWh) for the Facility Bus for the actual On-Peak Hours during which Contract Energy was delivered to Delivery Point(s) other than the Facility Bus during such calendar year, and (ii) for Off-Peak Hours, an amount ($/MWh) equal to (A) the MWh-weighted average hourly LMP ($/MWh) for such Delivery Point(s) for the actual Off-Peak Hours during which Contract Energy was delivered to such Delivery Point(s) during such calendar year less (B) the MWh-weighted average hourly LMP ($/MWh) for the Facility Bus for the actual Off-Peak Hours during which Contract Energy was delivered to such Delivery Point(s) other than the Facility Bus during such calendar year. The LMP for Contract Energy scheduled for delivery hereunder to the "JCP&L Zone" (as opposed to a particular nodal point therein) shall be the applicable JCP&L Zonal Price.

" Actual Monthly Henry Hub Price " shall have the meaning set forth in Part I of Schedule B hereof.

" Affiliate " shall mean, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries' controls, is controlled by, or is under common control with, such first Person. As used in this definition, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

" AGC Credits " shall mean all credits or other remuneration from PJM or the ISO as described in Section 3.6(e) hereof.

" AGC " shall have the meaning set forth in Section 3.6(e) hereof.

" AGC Annual Threshold " shall have the meaning set forth in Section 3.6(e) hereof.

" Agreement " shall have the meaning set forth in the first paragraph of this Agreement.

" Agreement Date " shall have the meaning set forth in the first paragraph of this Agreement.

" Alternate Delivery Points " shall have the meaning set forth in Section 3.8(b) hereof.

" Ancillary Termination Damages " shall mean penalties assessed by PJM against the terminating Party and all reasonable fees and expenses incurred by the terminating Party in connection with the termination of this Agreement pursuant to Section 8.2 hereof.

" Annual Energy Quantity " shall mean 2,043,600 MWh per calendar year in any calendar year containing 365 days and 2,049,600 MWh per calendar year in any calendar year containing 366 days. For any partial calendar year containing less than 365 days, the Annual Energy Quantity shall mean the sum of the daily amounts for each calendar day during such partial calendar year that this Agreement is in effect; each such daily amount shall be calculated as follows: (i) 24, multiplied by , (ii) either 200 for each day in April, May, October and November or 250 for each day in every other calendar month.

" Bellingham Facility " shall have the meaning set forth in the Recitals .

" BPU " shall mean the New Jersey Board of Public Utilities and any successor entity.

" Business Day " shall mean any day that is not a Saturday, Sunday, or NERC Holiday.

" Capacity " shall have the same meaning as "Unforced Capacity" as defined in the PJM Agreement on the Agreement Date.

" Capacity Damages " shall have the meaning set forth in Section 5.2 hereof.

" Capacity Requirement " shall (subject to the provisions of Section 5.1 hereof) mean 250 MW per day; provided, however, that so long as the Facility is a PJM Capacity asset the "Capacity Requirement" shall be the greater of (i) 250 MW per day (subject to the provisions of Section 5.1 hereof) or (ii) the actual Capacity of the Facility as determined by PJM from time to time; provided, however, that any Facility Capacity that results from additions or improvements to the Facility after the Agreement Date shall not be included in the actual Capacity determined pursuant to clause (ii) hereof. 

" Change in Law " shall mean the adoption, promulgation, issuance, modification or change in administrative or judicial application, after the Agreement Date, of any applicable law, regulation, rule, requirement or ordinance of any government entity. A repeal, amendment or interpretation of the New Jersey Competition Act (including, without limitation, N.J.S.A. 48:3-61(a)(4)) shall not constitute a Change in Law.

" Claiming Party " shall have the meaning set forth in Section 9.2(b) hereof.

" Contract Adjuster " shall mean the monthly On-Peak and Off-Peak amounts in $/MWh calculated on or about the Effective Date in accordance with Schedule B hereof.

" Contract Energy " shall have the meaning set forth in Section 3.1 hereof.

" Cover Damages " shall have the meaning set forth in Section 3.6(a) hereof.

" Delivery Point " shall have the meaning set forth in Section 3.8(a) hereof.

" Delivery Point Adjustment " shall have the meaning set forth in Section 3.8(f) hereof.

" Delivery Shortfall " shall have the meaning set forth in Section 3.6(a) hereof.

" Eastern Prevailing Time " shall mean either Eastern Standard Time or Eastern Daylight Savings Time, as in effect from time to time.

" eCapacity " shall have the meaning set forth in the PJM Agreement or, in the event such term is no longer utilized in any successor PJM Agreement, shall mean a similar successor capacity recognition methodology utilized by such successor PJM Agreement, such that JCP&L's account with PJM shall reflect such Capacity as of the Effective Date and at all times throughout the Term hereof.

" Effective Date " shall have the meaning set forth in Section 2.1 hereof.

" Energy Payment " shall have the meaning set forth in Section 4.1(a) hereof.

" Energy Price " shall mean, in each month and for each MWh of Contract Energy delivered hereunder, an amount equal to (i) during On-Peak Hours, the sum of (A) the product of the Gas Price multiplied by the On-Peak Heat Rate plus (B) the applicable Contract Adjuster or (ii) during Off-Peak Hours, the sum of (A) the product of the Gas Price multiplied by the Off-Peak Heat Rate plus (B) the applicable Contract Adjuster.

" eSchedule " shall have the meaning set forth in the PJM Agreement or, in the event such term is no longer utilized in any successor PJM Agreement, shall mean a similar successor scheduling methodology utilized by such successor PJM Agreement.

" ESI Acquisition " shall have the meaning set forth in the Recitals and shall include its successors .

" ESI Funding " shall have the meaning set forth in the Recitals and shall include its successors.

" Event of Default " shall have the meaning set forth in Section 8.1 hereof.

" Excess Deliveries " shall have the meaning set forth in Section 3.1 hereof.

" Excess Delivery Charge " shall have the meaning set forth in Section 3.1 hereof.

" Execution Agreement " shall mean the Execution Agreement by and between NJEA and JCP&L dated as of May 16, 2003.

" Existing PPA " shall have the meaning set forth in the Recitals .

" Facility " shall have the meaning set forth in the Recitals .

" Facility Bus " shall mean the point of interconnection between the Facility and the PJM transmission system, which as of the Agreement Date is the South River 230 kV bus.

" FERC " shall mean the United States Federal Energy Regulatory Commission, and shall include its successors.

" Final Decision " shall have the meaning set forth in the Execution Agreement.

" 5% Threshold " shall have the meaning set forth in Section 3.8(f) hereof.

" Forced Outage " shall mean a partial or full interruption in the generating capability of the Facility, during any period in which NJEA has elected to deliver Contract Energy hereunder generated at the Facility (as reflected in its Supply Notice), due to any unplanned component failure (immediate, delayed, postponed, or startup failure) or any other condition that requires the applicable unit to be removed from service, or prevents the unit from going into service, including (without limitation) (i) any inability to successfully start-up and commence generation following a period during which the Facility has not been operational for any reason and (ii) any unplanned or planned interruption in the generating capability of the Facility in order to conduct repair, replacement, maintenance or diagnostic activity to avoid loss or serious injury or damage to persons or property that NJEA reasonably expects to occur within ten (10) days after the beginning of the interruption if the repair, replacement, maintenance or diagnostic activity is not performed. 

" Force Majeure " shall have the meaning set forth in Section 9.1 hereof.

" Gas Forward Curve " shall have the meaning set forth in Schedule B hereof.

" Gas Price " shall mean, for each calendar month, the arithmetic average of (i) monthly gas prices published in The Gas Daily Price Guide "Monthly Contract Index" under "Market Centers", "Northeast", "Texas Eastern, zone M-3" and (ii) monthly gas prices published in The Gas Daily Price Guide "Monthly Contract Index" under "Market Centers", "Northeast", "Transco, zone 6 non- N.Y.", each published by Platts on or about the fifth Business Day of such calendar month (each an " Index " and collectively, the " Indices "). The Indices are intended by the Parties to reflect the price of natural gas in Middlesex County, New Jersey. In the event either Index ceases to be published or ceases to be determined substantially as such Index is determined on the Agreement Date, then the Parties shall meet as soon thereafter as possible to identify a replacement index or indices (as the case may be) with the intent of such replacement(s) being to represent the market price of natural gas in Middlesex County, New Jersey.

" Indemnified Party " shall have the meaning set forth in Section 12.1 hereof.

" Indemnifying Party " shall have the meaning set forth in Section 12.1 hereof.

" Interconnection Facilities " shall mean all apparatus required and associated equipment installed to interconnect and deliver electricity from the Facility to JCP&L's transmission system including, but not limited to, connection, transformation, switching, metering, communications and safety equipment, such as equipment required to protect (1) JCP&L's transmission system and its customers from faults occurring at the Facility and (2) the Facility from faults occurring on JCP&L's transmission system or on the systems of others to which JCP&L's transmission system is directly or indirectly connected. Interconnection Facilities shall also include any necessary additions and reinforcements to JCP&L's transmission system required as a result of the interconnection of the Facility to JCP&L's transmission system.

" Issuers " shall have the meaning set forth in the Recitals .

" ISO " shall mean any independent system operator of the PJM transmission system.

" JCP&L " shall mean Jersey Central Power & Light Company, a New Jersey corporation, and its permitted successors and assigns hereunder.

" JCP&L Discount " shall mean $5.50 per MWh of Contract Energy delivered to JCP&L pursuant to this Agreement from sources other than the Facility.

" JCP&L Discount Rate " shall mean the after-tax weighted average cost of capital (" WACC ") that will be based on the before-tax WACC that will be set by the BPU in JCP&L's current rate proceeding, Docket No. ER02080506. The WACC set by the BPU will then be converted to an after-tax WACC using a combined federal and state income tax rate of 40.15%, as adjusted to reflect the current combined federal and state income tax rate, for the capital components that are tax-deductible, which rate the Parties agree shall be 8.46% for any prepayment pursuant to Section 4.2 hereof on or before the Effective Date and for the period between the Effective Date and the approval by the BPU of JCP&L's after-tax WACC pursuant to the current rate proceeding, Docket No. ER02080506, or as reset by the BPU as part of the most recent JCP&L proceeding.

" JCP&L Reorganization Event " shall mean (a) any consolidation, merger or other form of combination of JCP&L with any other Person, (b) the acquisition of a majority of the outstanding shares of JCP&L by any Person or (c) the sale, conveyance, lease, transfer or other disposition, in one transaction or a series of related transactions, including without limitation the transfer or "spin-off" of shares of a subsidiary (collectively, a "transfer"), affecting all or substantially all of the assets of JCP&L existing on the Agreement Date or hereafter acquired, other than transfers to or among wholly-owned subsidiaries of JCP&L. For purposes of this definition, the transfer, sale or other disposition of all or substantially all of the transmission and/or distribution assets of JCP&L, will, in either case, constitute a "JCP&L Reorganization Event."

" JCP&L Termination Payment " shall have the meaning set forth in Section 8.2(c) hereof.

" JCP&L Zonal Price " shall mean, for any hour, the daily "Day Ahead Hourly LMP" for deliveries to the "JCPL Zone" as posted on the "Daily Day-Ahead LMP" page on the PJM website at www.PJM.com (on the "Energy" page, under "Markets"). If such price should ever cease to be so published, then the Parties shall agree in writing to a regularly published comparable substitute price.

" JCP&L Zone " shall mean all of the nodal points within the PJM transmission system comprising the "JCPL Zone" as designated by PJM from time to time.

" Junior Indenture " shall have the meaning set forth in the Recitals .

" Junior Secured Notes " shall have the meaning set forth in the Recitals .

" Junior Trustee " shall have the meaning set forth in the Recitals .

" Late Payment Rate " shall have the meaning set forth in Section 4.6 hereof.

" Libor " shall have the meaning set forth in Section 4.5(b) hereof.

" LMP " for any PJM nodal point for any hour on any day (either a previous day or the prompt day) shall mean the price ($/MWh) at such PJM nodal point as reported on the PJM website at www.PJM.com on the "Energy" page (under "Markets") under the "Daily Day-Ahead LMP" for such nodal point on such date and time. If such price should ever cease to be so published, then the Parties shall agree in writing to a regularly published comparable substitute price.

" Market Seller " shall have the meaning set forth in Schedule 1 to the PJM Agreement.

" Minimum Energy Price Discount " for any calendar year shall mean the product of (i) $4.50 and (ii) the Annual Energy Quantity, which amounts are set forth on Part 2 of Schedule A hereof.

" Model " shall have the meaning set forth in Part I of Schedule B hereof.

" Monthly Discount Factor " for any calendar month during the Term shall mean $4.50 per MWh, as such amount may be adjusted from time to time in accordance with any prepayment as provided in Section 4.2 and Schedule D hereof.

" Monthly Henry Hub Futures " shall have the meaning set forth in Part I of Schedule B hereof.

" Monthly Minimum Energy Price Discount " for any calendar month during the Term shall mean the product of (i) the number of MWhs to be delivered to JCP&L during such month as set forth in Schedule C hereof and (ii) the Monthly Discount Factor.

" Moody's " shall mean Moody's Investors Service, Inc., and any successor thereto.

" Must-Run Order " shall have the meaning set forth in Section 5.3(c) hereof.

" MW " shall mean a megawatt.

" MWh " shall mean a megawatt-hour. One MWh shall equal 1,000 kWh.

" NEA " shall mean Northeast Energy Associates, A Limited Partnership and its permitted successors and assigns hereunder.

" NELLC " shall mean Northeast Energy, LLC, a Delaware limited liability company, and its permitted successors and assigns hereunder.

" NELP " shall mean Northeast Energy, LP, a Delaware limited partnership, and its permitted successors and assigns hereunder.

" NERC Holiday " shall mean New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

" Net Capability " shall have the meaning set forth in Section 5.3(a) hereof.

" New Jersey Competition Act " shall have the meaning set forth in the Recitals .

" NJEA " shall mean North Jersey Energy Associates, A Limited Partnership, a New Jersey limited partnership, and its permitted successors and assigns hereunder.

" NJEA Termination Payment " shall have the meaning set forth in Section 8.2(b) hereof.

" Offer Data " shall have the meaning set forth in Schedule 1 to the PJM Agreement.

" Off-Peak Heat Rate " shall mean 9.528 MMBtu/MWh.

" Off-Peak Hours " shall mean the eight-hour period beginning at 2300 (for the hour ending at 2400 hours) on the day prior to delivery and ending at 0700 hours (for the hour ending at 0700 hours) on the day of delivery, Eastern Prevailing Time on each Business Day and all hours on each Saturday, Sunday and NERC Holiday.

" On-Peak Heat Rate " shall mean 13.059 MMBtu/MWh.

" On-Peak Hours " shall mean the sixteen-hour period beginning at 0700 hours (for the hour ending at 0800 hours) and ending at 2300 hours (for the hour ending at 2300 hours) on the day of delivery, Eastern Prevailing Time on each Business Day.

" Party " and " Parties " shall have the meaning set forth in the first paragraph of this Agreement.

" Person " shall mean an individual, partnership, corporation, limited liability company, limited liability partnership, limited partnership, association, trust, unincorporated organization, or a government authority or agency or political subdivision thereof.

" PJM " shall mean Pennsylvania-New Jersey-Maryland Interconnection L.L.C. and any successor organization (including any ISO).

" PJM Agreement " shall mean the Amended and Restated Operating Agreement of PJM dated as of June 2, 1997, as amended, modified, or supplemented from time to time and shall also include any successor agreement of PJM.

" PJM Manual " shall have the meaning set forth in Section 5.3(a) hereof.

" PJM Practices " shall mean the PJM practices and procedures for delivery and transmission of electricity and capacity and capacity testing in effect from time to time and shall include, without limitation, applicable requirements of the PJM Agreement.

" PJM Reconciliation Amount " shall have the meaning set forth in Section 4.4(c) hereof.

" Planned Outage " shall mean a partial or full interruption in the generating capability of the Facility due to the removal of a unit from service to perform work on specific components that is scheduled well in advance and has a predetermined date and estimated duration (such as annual overhauls, inspections, and testing).

" Prepayment Amount " shall have the meaning set forth in Section 4.2(a) hereof.

" Prepayment Date " shall mean the date of prepayment specified in a Prepayment Notice, which shall be no more than seventy-five (75) and no fewer than forty-five (45) days from the date of such Prepayment Notice.

" Prepayment Notice " shall have the meaning set forth in Section 4.2(a) hereof.

" Prepayment Rate " shall have the meaning set forth in Section 4.2(b) hereof.

" Prepayment Right " shall have the meaning set forth in Section 4.2(a) hereof.

" Prepayment Spreadsheet " shall have the meaning set forth in Schedule D hereof.

" Protective Apparatus " shall mean such equipment and apparatus, including but not limited to protective relays, circuit breakers and the like, necessary or appropriate to isolate the Facility from JCP&L's transmission system consistent with those practices, methods, standards and equipment commonly used, from time to time, in prudent electrical engineering and operations to operate electrical equipment lawfully and with safety, dependability and efficiency in accordance with the national Electrical Safety Code, the National Electrical Code and any other applicable federal, state and local codes.

" Prudent Utility Practices " shall have the meaning set forth in Part II of Schedule H hereof.

" PSE&G " shall mean Public Service Electric and Gas Company, and its permitted successors and assigns under the PSE&G Agreement.

" PSE&G Agreement " shall mean the Gas Purchase and Sales Agreement between NJEA and PSE&G dated May 4, 1989 as amended, modified, or supplemented from time to time.

" PSE&G Interruption Right " shall have the meaning set forth in Section 3.6(d) hereof.

" PURPA " shall mean the Public Utility Regulatory Policies Act of 1978, as amended.

" QF " shall have the meaning set forth in Section 15.2(a)(ii) hereof.

" Qualified Transferee " shall have the meaning set forth in Section 5.3(b) hereof.

" Rejected Power " shall have the meaning set forth in Section 3.7 hereof.

" Replacement Period " shall mean the period beginning on the date this Agreement is terminated pursuant to Section 8.2 hereof and ending at 11:59 p.m. August 13, 2011.

" Replacement Power " shall mean electricity purchased by JCP&L and delivered to the Delivery Point as replacement for any Delivery Shortfall. Replacement Power shall not include Contract Energy delivered to JCP&L on behalf of NJEA pursuant to Section 3.1 hereof.

" Replacement Price " shall mean the lesser of (A) the price at which JCP&L, acting in a commercially reasonable manner, purchases Replacement Power, plus (i) transaction and other administrative costs reasonably incurred by JCP&L in purchasing such Replacement Power and (ii) additional transmission charges, if any, reasonably incurred by JCP&L to transmit Replacement Power to the Delivery Point, or (B) the LMP at the Delivery Point for such Replacement Power; provided, however, that in no event shall such price include any penalties, ratcheted demand or similar charges, nor shall JCP&L be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize NJEA's liability.

" Resale Damages " shall have the meaning set forth in Section 3.7 hereof.

" Resale Price " shall mean, without duplication, (i) the price at which NJEA, acting in a commercially reasonable manner, sells or is paid for Rejected Power, plus (ii) transaction and other administrative costs reasonably incurred by NJEA in re-selling such Rejected Power; provided, however, that in no event shall NJEA be required to utilize or change its utilization of the Facility or its other assets or market positions in order to minimize JCP&L's liability for Rejected Power.

" Restructuring " shall mean the consummation by JCP&L, NJEA, NELP and other necessary Persons of the amendment of the Existing PPA, the execution, delivery and performance of this Agreement and the Execution Agreement and the satisfaction or waiver of the conditions precedent set forth in the Execution Agreement.

" Senior Indenture " shall have the meaning set forth in the Recitals .

" Senior Secured Notes " shall have the meaning set forth in the Recitals .

" Senior Trustee " shall have the meaning set forth in the Recitals .

" S&P " shall mean Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., and any successor thereto.

" Special Facilities " shall have the meaning set forth in Part I of Schedule H hereof.

" Supply Notice " shall have the meaning set forth in Section 3.4(e) hererof.

" System Emergency " shall mean the existence of a physical or operational condition and/or the occurrence of an event on the JCP&L transmission system or the PJM transmission system which in JCP&L's or PJM's reasonable judgment consistent with Prudent Utility Practices and applied in a non-discriminatory manner is: (i) imminently likely to endanger life or property or (ii) impairs and/or imminently will impair: (a) JCP&L's ability to discharge its statutory obligation(s) to provide safe, adequate and proper service to its customers; or (b) the safety and/or reliability of JCP&L's or PJM's transmission system. System Emergency shall include a minimum generation emergency declaration by PJM that meets the requirements specified in the previous sentence.

" Term " shall have the meaning set forth in Section 2.2 hereof.

" VER " shall have the meaning set forth in Section 4.5(a) hereof.

2. EFFECTIVE DATE; TERM

2.1 Effective Date.

The " Effective Date " of this Agreement shall be the Closing Date under the Execution Agreement.

2.2 Term.

(a) The " Term " of this Agreement shall mean the period from and including 11:59 p.m. (Eastern Prevailing Time) on the Effective Date through and including 11:59 p.m. (Eastern Prevailing Time) on August 13, 2011, unless this Agreement (i) is sooner terminated in accordance with the provisions hereof, or (ii) is extended pursuant to Section 2.2(c) below.

(b) At the expiration of the Term, the Parties shall no longer be bound by the terms and provisions hereof, except (i) to the extent necessary to provide invoices and make payments with respect to Contract Energy or Capacity delivered prior to such expiration or termination, (ii) to the extent necessary to enforce the rights and the obligations of the Parties arising under this Agreement before such expiration or termination and (iii) the obligations of the Parties hereunder with respect to confidentiality and indemnification shall survive the expiration or termination of this Agreement and shall continue for a period of two (2) calendar years following such expiration or termination.

(c) JCP&L may, upon written notice to NJEA delivered not later than twelve (12) months prior to the initial expiration date set forth in Section 2.2(a) above, extend the Term hereof for a period of up to five (5) years upon the terms and conditions set forth herein, except for the Energy Price to be paid for Contract Energy and Capacity provided hereunder, which shall be determined by mutual agreement of JCP&L and NJEA. If the Parties are unable to reach such an agreement, the Term hereof shall not be so extended.

3. DELIVERY OF CONTRACT ENERGY

3.1 Obligation to Sell and Purchase Contract Energy.

During the Term, NJEA shall sell and deliver, and JCP&L shall purchase and receive, firm electricity in the amounts set forth in Section 3.3(a) hereof and otherwise in accordance with the terms and conditions of this Agreement (" Contract Energy "). JCP&L shall not be required to accept electricity delivered in excess of the limitations set forth in Section 3.3(a) hereof (" Excess Deliveries "); provided, however, that if JCP&L accepts Excess Deliveries, JCP&L shall pay to NJEA the hourly LMP ($/MWh) at the Delivery Point for such Excess Deliveries (the " Excess Delivery Charge ") (the foregoing being JCP&L's sole remedy in respect of Excess Deliveries). The Excess Delivery Charge shall be invoiced and paid as provided in Section 4.1 hereof. Contract Energy delivered to JCP&L by NJEA or on behalf of NJEA by NJEA's suppliers, designees or any other Person (including, without limitation, PJM), shall be deemed delivered by NJEA hereunder and NJEA shall be solely responsible for any costs payable to its suppliers for such delivery.

3.2 Characteristics.

Contract Energy delivered by NJEA to JCP&L at the Delivery Point shall be in the form of three (3)-phase, sixty (60) Hertz, alternating current and otherwise in the form required by PJM Practices.

3.3 Quantities and Hourly Limitations.

(a) During the Term, NJEA shall deliver to JCP&L, at the Delivery Point, Contract Energy (i) in an amount equal to the applicable Annual Energy Quantity in each calendar year, and (ii) in the monthly quantities determined pursuant to Schedule A hereof in each calendar month (which amount shall be pro-rated for the first and last partial month of the Term). The Annual Energy Quantity, the monthly quantities determined pursuant to Schedule A hereof and the hourly delivery requirements shall each be adjusted to reflect delivery interruptions excused by this Agreement.

(b) Hourly deliveries of Contract Energy by NJEA to JCP&L hereunder (i) shall equal 250 MW for the months of December through March and June through September during On-Peak Hours and Off-Peak Hours, and (ii) shall equal 200 MW for the months of April, May, October and November during On-Peak Hours and Off-Peak Hours.

(c) Notwithstanding the foregoing, any decrease in deliveries of Contract Energy hereunder due to AGC activities shall not constitute a violation of the provisions of Section 3.3(a) or (b) hereof as more particularly provided in Section 3.6(e) hereof.

3.4 Schedules; Bidding; Metering; Operations and Interconnection.

(a) (i) NJEA shall schedule and bid deliveries of Contract Energy delivered hereunder with PJM in accordance with all PJM requirements applicable thereto. JCP&L shall cooperate with NJEA in connection with any such scheduling and bidding and shall promptly provide telemetering and other information reasonably requested by NJEA for the purpose of assisting NJEA with its scheduling and bidding obligations hereunder. The Parties acknowledge that JCP&L was obligated to schedule and bid deliveries of electricity under the Existing PPA and that in connection with NJEA's obligation to schedule and bid deliveries of Contract Energy delivered hereunder pursuant to this Section 3.4(a)(i) , JCP&L shall, upon the reasonable request of NJEA, provide reasonable assistance to NJEA in order to implement the transition of such scheduling and bidding obligations from JCP&L to NJEA. In accordance with current PJM scheduling requirements NJEA shall submit all final schedules for Contract Energy via the PJM eSchedule system and JCP&L shall confirm all such schedules, in each case, before the PJM deadline applicable thereto. In connection with any change in the Delivery Point for Contract Energy to be delivered hereunder, NJEA shall provide JCP&L with a final daily schedule for deliveries of Contract Energy to the new Delivery Point in accordance with all PJM requirements applicable thereto. NJEA shall not schedule for delivery any amount that exceeds the delivery rates specified in Section 3.3 hereof.

(ii) NJEA shall schedule Contract Energy deliveries and designate one or more Delivery Points hereunder in its discretion.

(iii) On or before the Effective Date, NJEA shall enter Capacity in the amount of 250 MW per day for each day during the Term into PJM's eCapacity system in order to satisfy its Capacity obligation to JCP&L for the full Term; provided, however, (A) if PJM will not permit scheduling of Capacity for the full Term then NJEA shall schedule Capacity in the amount of 250 MW per day for the maximum period permitted by PJM and shall submit supplemental schedules to provide for the scheduling of Capacity to be delivered hereunder for the remainder of the Term, (B) the foregoing commitment shall not (1) abrogate the rights of NJEA under Section 5.1 hereof or (2) limit NJEA's ability to schedule Capacity deliveries on a daily or other interim basis in its sole discretion, (C) to the extent NJEA must deliver more than 250 MW of Capacity per day, NJEA shall periodically schedule deliveries of such additional amounts so as to satisfy its Capacity delivery obligation under this Agreement and (D) if and to the extent the Capacity Requirement is less than 250 MW per day as a result of the occurrence of applicable events described in Section 5.1 hereof, then the 250 MW amounts described in the foregoing provisions of this Section 3.4(a)(iii) shall be an amount equal to the reduced Capacity Requirement.

(iv) If JCP&L receives revenues, credits or other compensation from PJM for services provided by, or relating to, the Facility that NJEA is entitled to receive in accordance with the terms of this Agreement, then JCP&L shall hold in trust and promptly pay such revenues, credits or other compensation over to, or credit the amount of such revenues, credits or other compensation to, NJEA and shall take any action reasonably requested by NJEA in order to cause such revenues, credits or other compensation to be paid or credited directly to NJEA.

(b) The Parties agree to use commercially reasonable efforts to comply with all applicable PJM Practices in connection with the scheduling and delivery of Contract Energy and Capacity hereunder.

(c) The obligations of the Parties with respect to the metering of electricity generated at the Facility and delivered to the Facility Bus are set forth in Schedule G hereof.

(d) The obligations of the Parties with respect to (i) Facility interconnection and (ii) Facility operational matters are set forth in Schedules H and I hereof; provided, however, that if the provisions of Schedule I conflict with the other provisions of this Agreement, the conflicting provisions of Schedule I shall not apply and the other provisions of this Agreement shall control.

(e) NJEA shall provide JCP&L with a written notice of its intent to supply Contract Energy from the Facility by no later than noon on the day before such delivery (the " Supply Notice "). No Supply Notice shall cover more than a seven (7) day period. NJEA may alter its Supply Notice up until noon on the day before such delivery. Notwithstanding the delivery of a final Supply Notice pursuant to the preceding sentence, NJEA may supply the Contract Energy which is the subject of the Supply Notice from the Facility or a source other than the Facility. On any day following a day in which NJEA did not give a Supply Notice of its intent to supply Contract Energy from the Facility (evincing an intent to supply the Contract Energy from a source other than the Facility) and NJEA chooses to dispatch the Facility, NJEA shall not be entitled to the rights provided in Section 3.6(c) hereof in the event of a Forced Outage for such delivery day.

3.5 Sales for Resale.

All Contract Energy delivered by NJEA to JCP&L hereunder shall be sales for resale, with JCP&L reselling such Contract Energy. JCP&L shall provide NJEA with any certificates reasonably requested by NJEA to evidence that the deliveries of Contract Energy hereunder are sales for resale.

3.6 Failure of NJEA to Deliver Scheduled Contract Energy; Cover Damages.

(a) In the event NJEA fails to deliver Contract Energy it is obligated to deliver hereunder and such failure is not excused under the terms of this Agreement (such undelivered Contract Energy to be referred to herein as the " Delivery Shortfall "), then NJEA shall pay JCP&L, on the date payment would otherwise be due in respect of the month in which the failure occurred, an amount for such deficiency equal to the Cover Damages. " Cover Damages " means an amount equal to (i) the positive difference, if any, between (x) the Replacement Price ($/MWh) multiplied by the quantity (in MWh) of the Delivery Shortfall, minus (y) the Energy Payment that would have been paid pursuant to Section 4.1 hereof had the Delivery Shortfall been delivered, plus (ii) any applicable penalties assessed by PJM against JCP&L as a direct result of NJEA's failure to deliver such Contract Energy. Except as otherwise provided in Section 8.2 hereof, the damages provided in this Section 3.6 shall be the sole and exclusive remedy of JCP&L for any failure of NJEA to deliver Contract Energy that it is obligated to deliver hereunder. The invoice for the amount payable pursuant to this Section 3.6 shall include a written statement explaining in reasonable detail the calculation of such amount.

(b) All Cover Damages payable by NJEA pursuant to this Section 3.6 shall be paid by netting such amounts against amounts otherwise payable by JCP&L to NJEA hereunder. Each Party reserves to itself all rights, counterclaims and, except as provided in Section 3.6(a) and 3.7 hereof, other remedies and defenses consistent with this Agreement which such Party has or may be entitled to arising from or out of this Agreement.

(c) Notwithstanding any other provision of this Agreement to the contrary, during any Planned Outage or Forced Outage the failure by NJEA to deliver or cause to be delivered Contract Energy to JCP&L shall be excused and shall not constitute a Delivery Shortfall hereunder. NJEA shall only schedule Planned Outages during the calendar months of March, April, October and November. Upon the occurrence of a Forced Outage, NJEA (1) may, but shall not be obligated to, commence delivery of Contract Energy from a source other than the Facility for all or a portion of the Forced Outage and (2) shall not deliver electricity from the Facility to any third party for the duration of the Forced Outage. NJEA shall use its best efforts to overcome or cure any Forced Outage promptly after the occurrence thereof and shall, upon prior written notice from JCP&L, provide representatives of JCP&L with access to the Facility at reasonable times for the purpose of inspecting NJEA's repair efforts; provided that such access shall be at JCP&L's sole cost and shall not interfere with NJEA's normal business operations or repair efforts. A Forced Outage shall not constitute a Force Majeure hereunder and NJEA shall not be obligated to deliver Contract Energy from a source other than the Facility in order to overcome or mitigate the effects of a Forced Outage. If a Forced Outage occurs and NJEA does not deliver Contract Energy from a source other than the Facility during such Forced Outage, then as early as commercially practicable but in no event later than two (2) Business Days after the initial occurrence of the Forced Outage, NJEA shall provide JCP&L preliminary telephonic notice of the occurrence of the Forced Outage promptly (but in no event later than ten (10) Business Days after the initial occurrence of the Forced Outage) followed by written notice. The written notice shall specify the nature and, if known, cause of the Forced Outage, its anticipated effect on the ability of NJEA to deliver Contract Energy to JCP&L hereunder and the estimated duration of such Forced Outage.

(d) The Parties acknowledge that PSE&G is the supplier of natural gas to the Facility pursuant to the PSE&G Agreement and that Article 7 of the PSE&G Agreement entitles PSE&G to interrupt transportation and supply services for natural gas to the Facility (the " PSE&G Interruption Right "). The Parties agree that upon exercise of the PSE&G Interruption Right, NJEA will use best efforts to obtain replacement natural gas in order to satisfy its Contract Energy delivery obligations hereunder. If, despite NJEA's best efforts, replacement natural gas is not available for purchase by NJEA and delivery to the Facility, the failure by NJEA to deliver Contract Energy to JCP&L due to the unavailability of natural gas resulting from exercise of the PSE&G Interruption Right shall be excused and shall not constitute a Delivery Shortfall hereunder. NJEA's obligation to use "best efforts" to obtain replacement natural gas pursuant to this Section 3.6(d) shall obligate it to exercise diligent and consistent efforts and make substantial expenditures to acquire replacement natural gas but shall not require it to deliver Contract Energy from a source other than the Facility to JCP&L to avoid a Delivery Shortfall. The provisions of this Section 3.6(d) do not address, and shall not excuse, any Delivery Shortfall resulting from the failure by NJEA to generate Contract Energy at the Facility using replacement natural gas obtained by it in satisfaction of the forgoing best efforts obligation or the failure to deliver such Contract Energy to JCP&L to the extent required by the other provisions of this Agreement.

(e) The Parties acknowledge that, during any time when the Facility is operating and generating electricity, PJM or the ISO (as applicable) shall have the right to exercise Automatic Generation Control (" AGC ") that may, per hour, (i) increase or decrease the amount of electricity generated at the Facility by up to 3 MW. NJEA shall be entitled to all AGC Credits related to times when the Facility is operating and generating electricity. Notwithstanding the foregoing, if the cumulative amount of AGC Credits received during any calendar year during the Term exceeds $200,000 (the " AGC Annual Threshold "), JCP&L shall receive a credit against amounts it owes to NJEA hereunder which credit shall be an amount equal to any AGC Credits received by NJEA during such calendar year in excess of the AGC Annual Threshold. NJEA shall provide JCP&L with a statement within fifteen (15) calendar days after the end of each calendar year, setting forth the amount of AGC Credits earned by NJEA in such calendar year and any credits owed to JCP&L for such calendar year pursuant to this Section 3.6(e) . Upon JCP&L's reasonable request, NJEA shall provide JCP&L with supporting documentation confirming the amount of AGC Credits earned by NJEA in such calendar year. Any credits owed to JCP&L pursuant to this Section 3.6(e) shall offset amounts otherwise payable by JCP&L to NJEA in the following billing periods. The provisions of Section 3.4(a)(iv) hereof shall be applicable to any and all AGC Credits. In the event of an AGC decrease, the non-delivery of Contract Energy in the amount of the AGC decrease (up to 3 MW per hour) shall not constitute a Delivery Shortfall hereunder.

3.7 Failure by JCP&L to Accept Delivery of Contract Energy; Resale Damages.

If JCP&L fails to accept all or part of the Contract Energy it is obligated to accept hereunder and such failure to accept is not excused under the terms of this Agreement (such Contract Energy is referred to herein as " Rejected Power "), then JCP&L shall pay NJEA, on the date payment would otherwise be due in respect of the month in which the failure occurred, an amount for such deficiency equal to the Resale Damages. " Resale Damages " means an amount equal to (i) the positive difference, if any, between (x) the Energy Payment that would have been paid pursuant to Section 4.1 hereof for such Rejected Power, had it been accepted, minus (y) the Resale Price ($/MWh) multiplied by the quantity (in MWh) of Rejected Power resold by NJEA, plus (ii) any applicable penalties assessed by PJM against NJEA as a direct result of JCP&L's failure to accept such Contract Energy. Except as otherwise provided in Section 8.2 hereof, the damages provided in this Section 3.7 shall be the sole and exclusive remedy of NJEA for any failure of JCP&L to accept delivery of Contract Energy that it is obligated to accept hereunder.

3.8 Delivery Point.

(a) All Contract Energy shall be delivered by NJEA to JCP&L hereunder at either (i) the Facility Bus, (ii) any nodal point included within the JCP&L Zone, (iii) the JCP&L Zone or (iv) any other delivery point mutually agreed to by the Parties (the " Delivery Point "). In the event PJM or its successor no longer recognizes a nodal point that was part of the JCP&L Zone on the Agreement Date, such nodal point shall be a Delivery Point for purposes of this Agreement and NJEA shall be permitted to deliver Contract Energy to such nodal point notwithstanding its subsequent exclusion from the nodal points included in the JCP&L Zone by PJM.

(b) If NJEA is unable to deliver Contract Energy to any designated Delivery Point due to the unavailability of transmission service or transmission service interruptions or due to a problem with a supplier, then JCP&L shall, at no additional out-of-pocket cost to JCP&L, use commercially reasonable efforts to make available or accept alternate delivery points reasonably requested by NJEA for the delivery of Contract Energy hereunder (" Alternate Delivery Points "); provided, however, that the failure, after commercially reasonable efforts, to make available or accept such Alternate Delivery Points as aforesaid shall not otherwise affect NJEA's rights and obligations hereunder.

(c) NJEA may deliver Contract Energy to one or more Alternate Delivery Points, at no additional out-of-pocket cost to JCP&L, for so long as one or more of the conditions described in Section 3.8(b) hereof continues if NJEA uses commercially reasonable efforts to provide JCP&L with reasonable prior notice to such effect (or such shorter period required as a result of an event of Force Majeure or as the Parties otherwise agree in writing, such agreement not to be unreasonably withheld).

(d) NJEA shall be responsible for all transmission charges, including applicable ancillary service charges, line losses, congestion charges and other PJM or applicable system costs or charges associated with transmission incurred, in each case, in connection with the delivery of Contract Energy to the Delivery Point or to any Alternate Delivery Point.

(e) JCP&L shall be responsible for all transmission charges, ancillary services charges, line losses, congestion charges and other PJM or applicable system costs or charges associated with transmission, incurred, in each case, in connection with the transmission of Contract Energy delivered under this Agreement from and after the Delivery Point or an Alternate Delivery Point (as the case may be), to any other location.

(f) Delivery of Contract Energy at any Delivery Point other than the Facility Bus shall result in a " Delivery Point Adjustment " to the Energy Payment. The Delivery Point Adjustment shall initially equal (x) -32 cents ($0.32) per MWh of Contract Energy delivered during On-Peak Hours; and (y) -12 cents ($0.12) per MWh of Contract Energy delivered during Off-Peak Hours. At the end of each calendar year, the Actual Delivery Point Differential for the calendar year just concluded shall be determined for (i) On-Peak Hours and (ii) Off-Peak Hours. If (x) the difference between the then applicable Delivery Point Adjustment and the Actual Delivery Point Differential is greater than 5 cents ($0.05) per MWh for either the On-Peak Hours or Off-Peak Hours (as applicable) and (y) during such calendar year at least five percent (5%) of Contract Energy delivered hereunder during On-Peak Hours or Off-Peak Hours (as applicable) is delivered to a Delivery Point other than the Facility Bus (the " 5% Threshold "), then for the forthcoming calendar year the Delivery Point Adjustment in effect for the prior calendar year for either or both categories of hours (as applicable) shall be increased or decreased by the difference and such adjusted amount shall be the Delivery Point Adjustment effective for the forthcoming calendar year. If deliveries of Contract Energy to Delivery Points other than the Facility Bus do not exceed the 5% Threshold for either On-Peak Hours or Off-Peak Hours during a particular year, the Delivery Point Adjustment for both On-Peak Hours and Off-Peak Hours shall remain unchanged. Examples of the intended operation and calculation of the Delivery Point Adjustment component of the Energy Payment are set forth on Schedule E hereof.

4. PAYMENTS FOR CONTRACT ENERGY

4.1 Payment for Contract Energy.

(a) All Contract Energy delivered to JCP&L under this Agreement shall be purchased by JCP&L at the Energy Price. Beginning on the Effective Date and continuing for the Term, JCP&L shall pay NJEA a monthly payment (the " Energy Payment ") for Contract Energy delivered during such month in an amount equal to the sum of (A) (i) the product of the total Contract Energy (in MWh) delivered to JCP&L hereunder during such month, multiplied by (ii) the per-MWh Energy Price for each MWh of such delivered Contract Energy, plus (B) any Excess Delivery Charge, minus (C) the Monthly Minimum Energy Price Discount, plus or minus (D) the PJM Reconciliation Amount, plus (E) the applicable Delivery Point Adjustment (which may be a positive or negative number ($/MWh)) for each MWh of Contract Energy delivered to any Delivery Point other than the Facility Bus.

(b) The Energy Payment for each month shall be calculated in accordance with the following formula:

EP = (CEDp x EPp) + (CEDop x EPop) + EDC - MD +/- PRA + DPA

where: "EP" = Energy Payment for the month;

"CEDp" = Contract Energy delivered during On-Peak Hours during the month;

"EPp" = Energy Price for Contract Energy delivered during On-Peak Hours during the month;

"CEDop" = Contract Energy delivered during Off-Peak Hours during the month;

"EPop" = Energy Price for Contract Energy delivered during Off-Peak Hours during the month;

"EDC" = Excess Delivery Charge for Excess Deliveries during the month;

"MD" = Monthly Minimum Energy Price Discount;

"PRA" = PJM Reconciliation Amount for such month; and

"DPA" = the sum of the Delivery Point Adjustments for each MWh of Contract Energy delivered to a Delivery Point other than the Facility Bus during the month (which amount may be a positive or negative number, with a negative number decreasing the Energy Payment and a positive number increasing the Energy Payment).

4.2 Prepayment of Minimum Energy Price; JCP&L Discount Rate.

(a) During the three (3) year period commencing on the Effective Date, NJEA may, at its sole election and from time to time prepay all or any portion of the remaining Minimum Energy Price Discounts for the then remaining Term of the Agreement (the " Prepayment Right ") by delivering a written notice (the " Prepayment Notice ") to JCP&L of its election to prepay an amount (the " Prepayment Amount ") on the Prepayment Date. If NJEA elects to exercise its Prepayment Right at any time after the Effective Date, then within two (2) Business Days following receipt by JCP&L of the Prepayment Notice, JCP&L shall provide NJEA with written notice of the then current JCP&L Discount Rate, including documentation supporting any change in the JCP&L Discount Rate from the JCP&L Discount Rate of 8.46% as of the Effective Date. Within two (2) Business Days following receipt by NJEA of such notice indicating the proposed JCP&L Discount Rate, NJEA shall provide JCP&L with written notice of (i) the new Prepayment Rate and new Monthly Discount Factor that will be applicable following the then proposed prepayment or (ii) NJEA's intent to postpone or cancel the proposed prepayment or (iii) any dispute regarding JCP&L's proposed JCP&L Discount Rate (which dispute shall be resolved as provided in Article 10 hereof). Within two (2) Business Days following receipt by JCP&L of NJEA's notice of the new Prepayment Rate and new Monthly Discount Factor, or in the case of a dispute, the resolution of such dispute and receipt by JCP&L of NJEA's calculation of the new Prepayment Rate and new Monthly Discount Factor that will be applicable following the then proposed prepayment, JCP&L shall advise NJEA of any dispute related to the calculation thereof (such dispute to be resolved as provided in Article 10 hereof). In the absence of any dispute as described in the preceding sentence or, if such dispute exists, upon the resolution thereof in accordance with the provisions of Article 10 hereof, NJEA may proceed with the prepayment as described below.

(b) In the event NJEA elects to exercise the Prepayment Right at any time after the Effective Date, provides JCP&L with a Prepayment Notice and pays the Prepayment Amount on the Prepayment Date, such Prepayment Amount shall be converted into a specific amount ($/MWh) in accordance with Schedule D hereof (calculated using the JCP&L Discount Rate, the Prepayment Date and the Prepayment Amount) (the " Prepayment Rate "). Such Prepayment Rate shall reduce the Monthly Discount Factor in effect immediately prior to the prepayment in accordance with Exhibit A to Schedule D hereof and the adjusted Monthly Discount Factor shall be applicable as of the Prepayment Date.

(c) Notwithstanding any other provision of this Section 4.2 , the Parties agree and acknowledge that (i) NJEA shall be entitled (but shall not be obligated) to exercise the Prepayment Right on the Effective Date without delivering a Prepayment Notice to JCP&L and (ii) for the purposes of this Agreement the JCP&L Discount Rate for any prepayment pursuant to Section 4.2 hereof on or before the Effective Date shall be 8.46%.

4.3 Statements.

(a) For each month during the Term, JCP&L shall prepare and present to NJEA, on or before the twentieth (20 ^th ) day of the subsequent month, a statement (in $/kWh) for Contract Energy and Capacity delivered to JCP&L during such month in accordance with Article 4 hereof. Such statement shall indicate (1) the total MWhs of Contract Energy and Capacity delivered or supplied during the month, (2) the calculation of the Energy Price for such Contract Energy and any Delivery Point Adjustment applicable in respect of such month pursuant to Section 3.8(f) hereof and (3) any applicable credits or amounts payable to either Party pursuant to Sections 3.6, 3.7, 4.1, and 5.2 hereof or any other provision of this Agreement. All invoices and statements for amounts payable by one Party to the other Party under this Agreement shall be in $/kWh.

(b) On or before the fifteenth (15 ^th ) day following the end of each month during the Term, NJEA shall provide written notice to JCP&L of the amount of Contract Energy delivered to JCP&L hereunder during the preceding month that was delivered from sources other than the Facility. On or before the fifteenth (15 ^th ) day following the end of each calendar year during the Term (or partial calendar year, as applicable), NJEA shall provide written notice to JCP&L of the amount of Contract Energy delivered to JCP&L hereunder during the preceding calendar year (or partial calendar year, as applicable) that was delivered from sources other than the Facility. If for any calendar year (including, without limitation, the first and last partial calendar years of the Term) the product of the JCP&L Discount multiplied by the number of MWhs of Contract Energy delivered to JCP&L hereunder during such calendar year (or partial calendar year, as applicable) by or on behalf of NJEA from sources other than the Facility is greater than the Minimum Energy Price Discount for such calendar year, then such difference shall be deducted from the amount payable by JCP&L hereunder for the next succeeding month or in the case of the last year of the Term, the end of Term invoice for Contract Energy delivered for the last month of the Term (which month could be a full or partial calendar month).

4.4 Payment and Disputes; Reconciliation with PJM.

(a) Unless otherwise agreed by the Parties, payment of amounts reflected in a statement rendered pursuant to Section 4.3 hereof shall be due and payable on or before the last Business Day of the month in which the statement is delivered to NJEA. Payments shall be made by wire transfer to an account designated by NJEA in a notice delivered to JCP&L, or in the case of a payment due to JCP&L, to an account designated by JCP&L in the statement or in a written notice delivered to NJEA.

(b) In the event NJEA disputes all or any part of a statement delivered to it pursuant to Section 4.3 hereof, NJEA shall notify JCP&L of the basis for the dispute in writing, accompanied by supporting documentation, within a thirty (30) day period from receipt of such statement. Upon receipt of notice of the dispute and supporting documentation, JCP&L shall have thirty (30) days from receipt of such notice to resolve any dispute with NJEA. In the event the dispute is not resolved within the thirty (30) day period, either Party may submit the matter to arbitration for resolution in accordance with Article 10 hereof. In the event of any dispute regarding a statement, the undisputed portion thereof shall be paid when due as if there were no dispute, and the disputed portion shall not be due until the dispute is resolved in favor of the Party claiming entitlement to payment. The disputed amount of any statement shall accrue interest at the Late Payment Rate from the date payment of such amount would have been due absent the dispute with respect to such amount until the date payment is made.

(c) In the event that PJM billing and reconciliation statements issued pursuant to the PJM Agreement contain information relating to deliveries of Contract Energy or Capacity hereunder that differ from the information for the same period contained in statements generated by JCP&L pursuant to Section 4.3 hereof, then the dollar amount of such difference (the " PJM Reconciliation Amount ") shall be added to or subtracted from (as appropriate) the Energy Payment calculated pursuant to Section 4.1 hereof for the next billing month. Upon request by NJEA, JCP&L shall promptly provide to NJEA any PJM reconciliation statements, notices, invoices, and other records as are reasonably necessary to provide written substantiation of the quantities, prices, calculations and other pertinent data used by JCP&L in rendering the monthly statements pursuant to Section 4.3 hereof.

4.5 Variable Energy Rate Retroactive Application

(a) Effective as of February 1, 2003, and continuing through the earlier of (i) August 13, 2003 or (ii) the Effective Date of this Agreement, the variable energy rate as described and utilized in Section 3.1(a) and Appendix I of the Existing PPA (the " VER ") shall be 5.700 cents/kWh. Effective as of August 14, 2003 and continuing through the earlier of (i) August 13, 2004 or (ii) the Effective Date of this Agreement, the VER shall be 4.177 cents/kWh, which was derived by dividing the arithmetic average of the monthly Gas Prices for the preceding calendar year (2002) by the arithmetic average of the monthly Gas Prices for the calendar year two (2) years prior (2001) and multiplying such quotient by the VER in effect immediately prior to such adjustment (5.700 cents/kWh) in accordance with the methodology provided in Schedule F hereof. VER shall have no effect for any purpose under this Agreement as of the day immediately following the Effective Date.

(b) As a result of retroactive application of the VER for the period beginning August 14, 2002 and ending at 11:59 p.m. (Eastern Prevailing Time) on January 31, 2003, JCP&L paid NJEA a lump sum payment of $9,221,335.03 on March 4, 2003, calculated by adding (i) $9,170,750.02 for power delivered to JCP&L by NJEA during such period, plus (ii) interest of $50,585.01, such interest having been calculated on the last day of each month of such period using the one month London Interbank Offered Rate (" Libor ") as published in the Wall Street Journal under "Money Rates" on the last Business Day of such month plus 125 basis points (1.25%).

4.6 Interest on Late Payment.

If a payment is not received when due under this Agreement, the delinquent Party shall pay to the other Party interest on such unpaid amount which shall accrue from the due date until the date upon which payment in full is made at the prime lending rate as may from time to time be published in The Wall Street Journal under "Money Rates" on such day (or if not published on such day on the most recent preceding day on which published), plus two percent (2%) (the " Late Payment Rate ").

4.7 Administrative Fee

The Parties hereby agree that NJEA shall pay JCP&L a monthly fee to compensate JCP&L for the administrative burden associated with this Agreement. The monthly administrative fee shall be an amount equal to (a) from the Effective Date through and including December 31, 2005, $2,000.00 per month (pro-rated for the first partial month of this Agreement) and (b) from January 1, 2006 through the remainder of the Term, $2,500.00 per-month (pro-rated for the last partial month of this Agreement). All administrative fees payable by NJEA pursuant to this Section 4.7 shall be paid by netting such amounts against amounts otherwise payable by JCP&L to NJEA hereunder.

5. CAPACITY; FACILITY OBLIGATIONS

5.1 Obligation to Provide Capacity.

During the Term, NJEA shall provide to JCP&L the Capacity Requirement from any source in NJEA's sole discretion in accordance with the terms and conditions of this Agreement. So long as the Facility is a PJM Capacity asset, the Capacity Requirement shall be the greater of 250 MW per day (unless modified as provided below in connection with any modifications or adjustments to PJM Practices) or the actual Facility Capacity as determined by PJM from time to time; provided, however, that any Facility Capacity that results from additions or improvements to the Facility after the Agreement Date shall not be included in the actual Facility Capacity determined by PJM from time to time. If a Party receives notice from PJM of a change in the actual Facility Capacity as determined by PJM from time to time, such Party shall promptly provide the other Party with notice of such change. The Parties have agreed to an initial Capacity Requirement of 250 MW based on historical generation levels at the Facility and PJM Practices as of the Agreement Date for determining the amount of Capacity generated or provided by the Facility. If such PJM Practices are adjusted or modified in the future, the Parties agree to modify the Capacity Requirement hereunder to reflect the impact that such adjustments or modifications have on the Capacity available from the Facility. For example, if the modification reasonably results, or would have reasonably resulted, in the Facility realizing only 75% of the amount of Capacity generated or produced prior to this Agreement, then the Capacity Requirement shall be reduced by 25% as of the effective date of the adjustments or modifications of the PJM Practices. In the event that (i) there is no longer a market for Capacity or (ii) Capacity no longer has economic value to JCP&L, then the Capacity Requirement will be reduced accordingly or eliminated entirely, as appropriate, as determined by the Parties in their reasonable judgment, and to the extent of such reduction or elimination, NJEA shall be released from its obligation under this Section 5.1 . The Energy Payment shall not be reduced as a result of any reduction in the Capacity Requirement.

5.2 Failure of NJEA to Deliver Capacity; Remedy.

If NJEA fails to provide JCP&L with all or part of the Capacity Requirement it is required to provide pursuant to Section 5.1 hereof, and such failure is not excused under the terms of this Agreement, then the Capacity Damages associated with such Capacity Requirement delivery failure shall be deducted from amounts payable by JCP&L hereunder for the next succeeding month. " Capacity Damages " means an amount equal to (i) the replacement price for such Capacity Requirement in the PJM Daily Capacity Credit Market (as defined in the PJM Agreement or any product or market that becomes a surrogate therefor), plus (ii) any penalties assessed by PJM against JCP&L as a direct result of NJEA's failure to deliver the Capacity Requirement in accordance with Section 5.1 hereof. Except as otherwise provided in Section 8.2(a) hereof , the damages provided in this Section 5.2 shall be the sole and exclusive remedy of JCP&L for any failure of NJEA to deliver the Capacity Requirement hereunder and there shall be no other adjustment of the Energy Payment as a result of NJEA's failure to deliver such Capacity Requirement. The invoice for the amount payable hereunder shall include a written statement explaining in reasonable detail the calculation of such amount.

5.3 Obligations with Respect to Facility and Status as a PJM Market Seller.

(a) Except as provided in Section 5.1 hereof, throughout the Term NJEA shall (1) maintain its status as a Market Seller under the PJM Agreement, (2) submit to PJM the Offer Data with respect to the Facility as required pursuant to Schedule 1 to the PJM Agreement, and update such data as required by the PJM Agreement, and (3) maintain a " Net Capability " for the Facility of no less than 250 MW per day, as Net Capability is defined in, and pursuant to the requirements set forth in, the PJM Manual for Rules and Procedures for Determination of Generating Capability, dated as of August 23, 2000, as such manual may be amended from time to time (the " PJM Manual ").

(b) Nothing in Section 5.3(a) nor in Article 13 hereof shall constitute a prohibition against or a restriction upon NJEA's ability to sell, transfer, lease, exchange, or otherwise dispose of the Facility, provided that (i) NJEA shall require, as a condition to the consummation of any such transaction, that the buyer, transferee, subsequent owner or lessee of the Facility shall agree to be bound by the covenants set forth in this Section 5.3 (including the covenant contained in this Section 5.3(b) to bind any subsequent transferees) and (ii) any such buyer, transferee, subsequent owner or lessee shall be at least as creditworthy as NJEA at the time of the sale, transfer, lease, exchange or other disposition and shall be a Person regularly engaged in the ownership or operation of electric generating facilities and be capable of operating the Facility in compliance with the covenants contained in this Section 5.3 (a " Qualified Transferee ").

(c) In the event that PJM dispatches the Facility for reliability purposes at a time when the Facility would not otherwise be operational (a " Must-Run Order ") and NJEA operates the Facility in accordance therewith, electricity delivered pursuant to the Must Run Order shall not be a delivery hereunder so long as NJEA has not scheduled the delivery of Contract Energy generated at the Facility to JCP&L. NJEA is entitled to deliver hereunder from the Facility during any time a Must-Run Order is effective and NJEA may (but shall not be obligated to) continue deliveries hereunder from a source other than the Facility simultaneously with deliveries from the Facility pursuant to the Must-Run Order. In the event PJM dispatches the Facility for reliability purposes at a time when the Facility is running or was intended to be run in order to deliver Contract Energy hereunder, then such deliveries shall be pursuant to this Agreement without regard to this Section 5.3(c) notwithstanding the PJM dispatch.

(d) Nothing in this Section 5.3 is intended to prohibit or preclude NJEA from selling or delivering all or any part of the Capacity, installed capacity or operating capacity of the Facility to any third party provided that such sale and delivery to a third party shall not diminish, relieve or modify NJEA's obligation to deliver Capacity to JCP&L in accordance with the terms of this Agreement and be available for dispatch in accordance with Section 5.3(c) hereof.

6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF JCP&L

6.1 Representations and Warranties of JCP&L.

JCP&L hereby represents and warrants to NJEA as of the Effective Date as follows:

(a) Organization and Good Standing; Power and Authority . JCP&L is a corporation duly incorporated, validly existing and in good standing under the laws of the State of New Jersey. JCP&L has all requisite power and authority to execute, deliver, and perform its obligations under this Agreement.

(b) Due Authorization; No Conflicts . The execution and delivery by JCP&L of this Agreement, and the performance by JCP&L of its obligations hereunder, have been duly authorized by all necessary actions on the part of JCP&L and do not and, under existing facts and law, will not: (i) contravene its restated certificate of incorporation or any other governing documents; (ii) conflict with, result in a breach of, or constitute a default under any note, bond, mortgage, indenture, deed of trust, license, contract or other agreement to which it is a party or by which any of its properties may be bound or affected; (iii) assuming receipt of the Final Decision, violate any order, writ, injunction, decree, judgment, award, statute, law, rule, regulation or ordinance of any governmental authority or agency applicable to it or any of its properties; or (iv) result in the creation of any lien, charge or encumbrance upon any of its properties pursuant to any of the foregoing.

(c) Binding Agreement . This Agreement has been duly executed and delivered on behalf of JCP&L and, assuming the due execution hereof and performance hereunder by NJEA and, assuming receipt of the Final Decision, constitutes a legal, valid and binding obligation of JCP&L, enforceable against it in accordance with its terms, except as such enforceability may be limited by law or principles of equity.

(d) No Proceedings . Other than the BPU proceeding in connection with the Final Decision and (with respect to (ii) below) other than as set forth in JCP&L's Form 10-K for the year ended December 31, 2002, Forms 10-Q for the quarter ended March 31, 2003, and Forms 8-K through March 31, 2003, all as filed with the Securities and Exchange Commission, there are no actions, suits or other proceedings, at law or in equity, by or before any governmental authority or agency or any other body pending or, to the best of its knowledge, threatened against or affecting JCP&L or any of its properties (including, without limitation, this Agreement) which relate in any manner to this Agreement or any transaction contemplated hereby, or which JCP&L reasonably expects to lead to a material adverse effect on (i) the validity or enforceability of this Agreement or (ii) JCP&L's ability to perform its obligations under this Agreement.

(e) Consents and Approvals . Except for the Final Decision, the execution, delivery and performance by JCP&L of its o