POWER PURCHASE AGREEMENT

Exhibit 10-28

POWER PURCHASE AGREEMENT


BETWEEN


CONSTELLATION POWER SOURCE, INC.


AND


ROCHESTER GAS AND ELECTRIC CORPORATION


DATED AS OF


NOVEMBER 24, 2003

CONFIDENTIAL

POWER PURCHASE AGREEMENT

        This Power Purchase Agreement (this "Agreement"), dated as of November 24, 2003 by and between Constellation Power Source, Inc. ("SELLER"), a Delaware corporation with offices located in Baltimore, Maryland, and Rochester Gas And Electric Corporation ("BUYER"), a New York corporation with offices located in Rochester, New York (SELLER and BUYER are each referred to herein as a "Party", and collectively as the "Parties").

WITNESSETH:

         WHEREAS , an affiliate (the "Transaction Affiliate") of SELLER and BUYER have entered into an Asset Purchase Agreement dated as of November 24, 2003 (the "APA") pursuant to which BUYER has agreed to sell, and Transaction Affiliate has agreed to purchase, the R.E. Ginna Nuclear Power Plant and certain facilities and other assets associated therewith and ancillary thereto (collectively, the "Plant");

         WHEREAS , simultaneously with the execution of this Agreement, Transaction Affiliate and BUYER have executed an Interconnection Agreement dated as ofNovember 24, 2003 (the "ICA") governing the terms of interconnection of the Plant with the Transmission System, as that term is defined in the ICA; and

         WHEREAS , on or before the Closing (as defined herein), Transaction Affiliate and SELLER will have executed a power purchase agreement under which capacity and energy produced by the Plant will be sold by Transaction Affiliate to SELLER, which capacity and energy will then be sold by SELLER to BUYER in accordance with the terms of this Agreement.

         NOW, THEREFORE , in consideration of these premises, the mutual agreements set forth herein and other good and valuable consideration, and intending to be legally bound, the Parties agree as follows:

1. DEFINITIONS.

In addition to the terms defined elsewhere herein, the following capitalized terms shall have the meaning stated below when used in this Agreement:

1.1     "Affiliate" means, with respect to a Party, a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with such Party.

1.2     "Ancillary Services" shall mean those services necessary to support the transmission of Energy from generators to loads, while maintaining reliable operation of the New York State power system in accordance with Good Utility Practice and reliability rules. Ancillary Services include scheduling, system control and dispatch service, reactive supply and voltage support service, regulation and frequency response service, energy imbalance service, operating reserve service (including spinning reserve, 10-minute non-synchronized reserves and 30-minute reserves), and black start capability, all as defined in Section 2.4 and Schedules 1-5 of the NYISO Services Tariff.

1.3     "Availability Factor" shall equal 1 less the NYISO-determined equivalent forced outage rate applicable to a particular Capability Period.

1.4     "Base Energy" shall have the definition set forth in Section 5.1(a).

1.5     "Base Unforced Capacity" shall have the definition set forth in Section 4.1.

1.6     "Bilateral Transaction" shall mean a transaction between two or more parties for the purchase and/or sale of Unforced Capacity and/or Energy, as defined in Section 2.16 of the NYISO Services Tariff.

1.7     "Breaching Party" shall have the definition set forth in Section 10.1.3(a).

1.8     "Business Day" means a 24-hour period ending at 5:00 p.m. prevailing Eastern Time, other than Saturday, Sunday and any day which is a legal holiday or a day on which banking institutions in New York, New York are authorized by law, or other governmental action, to close.

1.9     "Capability Period" shall mean six-month periods which are established as follows:  (a) from May 1 through October 31 of each year ("Summer Capability Period"); and (b) from November 1 of each year through April 30 of the following year ("Winter Capability Period"), as defined in Section 2.17 of the NYISO Services Tariff.

1.10    "Capability Period Percentage" shall mean the applicable percentage so identified on Schedule B.

1.11    "Capacity Price" shall mean the applicable price so identified in Schedule A.

1.12    "Claiming Party" shall have the definition set forth in Section 22.2.

1.13    "Closing" shall have the definition set forth in the APA.

1.14    "Closing Date" shall have the definition set forth in the APA.

1.15    "Company Representative" shall have the definition set forth in Section 11.1.

1.16    "Contract Energy" shall mean either the Base Energy or Incremental Energy that has been scheduled by SELLER, in accordance with this Agreement.

1.17    "Contract Price" shall mean the Monthly Price or the Capacity Price, as applicable.

1.18    "Contract Unforced Capacity" shall mean the sum of the Base Unforced Capacity and the Uprated Capacity.

1.19    "Contract Year" shall mean each twelve (12) month period during the Term, starting with the Initial Day.

1.20    "Credit Rating" shall mean, with respect to an entity on any date of determination, the respective rating then assigned to its unsecured and senior long-term debt or deposit obligations (not supported by third-party credit enhancement) by Standard & Poor's Rating Group (a division of McGraw-Hill), Moody's Investors Service, Inc., or their respective successors.

1.21    "Day-Ahead Market" or "DAM" shall mean the NYISO administered market in which Energy and/or Ancillary Services are scheduled and sold day-ahead consisting of the day-ahead scheduling process, price calculations and settlements, as defined at Definition 1.7d of the NYISO OATT.

1.22    "DAM Base Net Electric Output" shall mean, for any hour, the Day-Ahead Market expected Energy production to be generated by the Plant less (a) the Energy used to operate the Plant, but excluding Off-Site Power Service (as such term is defined in the ICA) used to operate the Plant, (b) the Energy used in the delivery of electric power to the Delivery Point (i.e., losses), and (c) the Day-Ahead Market scheduled Energy production associated with the Uprated Capacity applicable to that hour; provided, however, that for purposes of this Agreement, such DAM Base Net Electric Output shall not be less than zero. Such DAM Base Net Electric Output shall be estimated using Good Utility Practice.

1.23    "DAM Incremental Net Electric Output" shall mean, for any hour, the Day-Ahead Market expected Energy production to be generated by the Plant and associated with the Uprated Capacity applicable to that hour; provided, however, that for purposes of this Agreement, such DAM Incremental Net Electric Output shall not be less than zero. Such DAM Incremental Net Electric Output shall be estimated using Good Utility Practice.

1.24    "Delivery Point" shall mean the "Delivery Point" as that term is defined in the ICA and as indicated on the one-line diagram included as part of Appendix A of the ICA.

1.25    "Dependable Maximum Net Capability" or "DMNC" shall mean the sustained maximum net output of the Plant, as demonstrated by the performance of a test or through actual operation, averaged over a continuous period of time, and as defined in Section 2.40 of the NYISO Services Tariff.

1.26    "Early Termination Date" shall have the meaning set forth in Section 10.2.

1.27    "Effective Date" shall mean the date of the Closing.

1.28    "Energy" shall mean a quantity of electricity that is bid, produced, consumed, sold, or transmitted over a period of time, and measured or calculated in megawatt hours ("MWh").

1.29    "Energy Price" shall mean the prices so identified in Schedule A.

1.30    "Force Majeure" shall have the definition set forth in Section 22.1.

1.31    "Good Utility Practice" shall mean any of the practices, methods and acts engaged in or generally accepted by the electric generation, transmission, and distribution industry in the same geographic region in the United States during the relevant time period, or any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expediency, and compliance with applicable laws and regulations. Good Utility Practice is not intended to be limited to the optimum practice, method, or act, to the exclusion of all others, but rather to acceptable practices, methods, or acts generally accepted in the generation, transmission, and distribution industry in the United States. Good Utility Practice shall include any of the practices, methods, and acts endorsed or enacted by the Nuclear Regulatory Commission, the North American Electric Reliability Council, the Northeast Power Coordinating Council, the New York State Reliability Council, the System Operator (as defined in the ICA), the NYISO, the Federal Energy Regulatory Commission, the New York Public Service Commission, the Occupational Safety and Health Administration, or a regional transmission organization, as they may be amended or superseded, including the methods, practices and acts of any successor organization to the foregoing entities.

1.32    "Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

1.33    "Impaired Party" shall have the definition set forth in Section 21.1.

1.34    "Incremental Energy" shall have the definition set forth in Section 5.1(b).

1.35    "Incremental Unforced Capacity" shall have the definition set forth in Section 4.2.

1.36    "Initial Day" shall have the definition set forth in Section 3.1.

1.37    "Interim Period" shall have the definition set forth in Section 3.2.

1.38    "Interest Rate" means, for any date, the interest equal to the prime rate of Citibank (or its successor) as may from time to time be published in The Wall Street Journal under "Money Rates", plus two percent (2%).

1.39    "Investment Grade" shall mean having a Credit Rating of Baa3 or better by Moody's Investor's Service, Inc. (or its successor), or BBB- or better by Standard & Poor's Rating Group (a division of McGraw Hill) (or its successor).

1.40    "Monthly Off-Peak Price" shall mean the product of (a) the Energy Price times (b) the Off-Peak Monthly Energy Price Factor for the applicable calendar month, such prices and factors being set forth in Schedules A and C, respectively.

1.41    "Monthly On-Peak Price" shall mean the product of (a) the Energy Price times (b) the On-Peak Monthly Energy Price Factor for the applicable calendar month, such prices and factors being set forth in Schedules A and C, respectively.

1.42    "Monthly Price" shall mean the Monthly Off-Peak Price or the Monthly On-Peak Price, as applicable.

1.43    "New York Control Area" or "NYCA" shall have the meaning as defined Section 2.110 of the NYISO Services Tariff.

1.44    "New York Independent System Operator" or "NYISO" shall mean the not-for-profit corporation established in accordance with orders of the Federal Energy Regulatory Commission to administer the operation of, to provide equal access to, and to maintain the reliability of the bulk-power transmission system in New York State, or any successor organization.

1.45    "Non-Breaching Party" shall have the definition set forth in Section 10.1.3.

1.46    "NYISO Installed Capacity Manual" shall mean NYISO Installed Capacity Manual, version 4.0, as amended and superseded.

1.47    "NYISO OATT" shall mean the New York Independent System Operator Open Access Transmission Tariff revised as of 12/27/99, as amended and superseded.

1.48    "NYISO Services Tariff" shall mean the New York Independent System Operator Market Administration and Control Area Services Tariff revised as of 11/17/99, as amended and superseded.

1.49    "Off-Peak" shall mean the hours between 11:00 p.m. and 7:00 a.m., inclusive, prevailing Eastern Time, Monday through Friday, and all hours on Saturday and Sunday, and NERC-defined holidays, or as otherwise decided by the NYISO.

1.50    "On-Peak" shall mean the hours between 7:00 a.m. and 11:00 p.m. inclusive, prevailing Eastern Time, Monday through Friday, except NERC-defined holidays, or as otherwise decided by the NYISO.

1.51    "Performance Assurance" shall have the definition set forth in Section 21.2.

1.52    "Replacement Price" shall mean the price at which BUYER, acting in a commercially reasonable manner, purchases at the Delivery Point replacement Contract Energy and/or Contract Unforced Capacity not scheduled, delivered or provided by SELLER as required pursuant to this Agreement, plus (a) costs reasonably incurred by BUYER in purchasing such Contract Energy and/or Contract Unforced Capacity (excluding Taxes for which BUYER would otherwise be responsible under Section 5.5), and (b) additional transmission charges, if any, reasonably incurred by BUYER to the Delivery Point for such Contract Energy and/or Contract Unforced Capacity not scheduled, delivered or provided as determined by BUYER in a commercially reasonable manner; provided, however, in no event shall BUYER be required to utilize or change its utilization of its own or controlled assets or market positions to minimize SELLER's liability; and, provided further, however, that in no event shall the Replacement Price for Unforced Capacity be greater than the NYISO deficiency charge as defined on Sheet No. 144A of the NYISO Services Tariff.

1.53    "Requesting Party" shall have the definition set forth in Section 21.1.

1.54    "Rest of State" shall mean such Load Zones described in the NYISO Services Tariff, which as of the Effective Date includes all New York Control Area LBMP Load Zones other than LBMP Load Zones J and K.

1.55    "Sales Price" shall mean the price at which SELLER, acting in a commercially reasonable manner, resells at the Delivery Point any Contract Energy and/or Contract Unforced Capacity not accepted by BUYER, deducting from such proceeds any (a) costs reasonably incurred by SELLER in reselling such Contract Energy and/or Contract Unforced Capacity, and (b) additional transmission charges, if any, reasonably incurred by SELLER in delivering such Contract Energy and/or Contract Unforced Capacity to the third party purchasers; provided, however, in no event shall SELLER be required to utilize or change its utilization of its owned or controlled assets or market positions to minimize BUYER's liability.

1.56    "Settlement Amount" shall have the meaning as set forth in Section 10.3.

1.57    "Term" shall have the definition set forth in Section 3.1.

1.58    "Unforced Capacity" shall mean Unforced Capacity, as that term is defined in Section 2.194a of the NYISO Services Tariff, or a successor product if Unforced Capacity is replaced by a different capacity or reliability product, which qualifies as NYISO Rest of State and that otherwise satisfies all of the NYISO's current and future Unforced Capacity requirements (or the requirements of Unforced Capacity's successor product) contained in the NYISO Services Tariff, including the NYISO Installed Capacity Manual, rules and procedures.

1.59    "Uprate Notice" shall have the definition set forth in Section 4.2.

1.60    "Uprated Capacity" shall mean the total amount of Incremental Unforced Capacity for a Capability Period.

2. CONDITION PRECEDENT.

It is a condition precedent to the obligations of SELLER and BUYER under this Agreement that the Closing shall have occurred. This Agreement shall become effective, subject to Article 14, on the Effective Date. Notwithstanding any other provision of this Agreement, this Agreement shall become ineffective and shall terminate automatically if the APA terminates, without the Closing occurring and the Plant being transferred to the Transaction Affiliate.

3. TERM.

3.1     Base Term . The term of this Agreement (the "Term") shall commence after the Effective Date on the first day of the month following the month in which the Effective Date occurs (the "Initial Day") and shall expire at 12:00 midnight prevailing Eastern Time on the day immediately prior to the day that is the tenth (10th) year anniversary of the Initial Day.

3.2     Interim Period. BUYER shall provide an invoice to SELLER on or before the tenth (10th) day of the month following the month in which the Closing Date occurs showing the quantity of Unforced Capacity credit received by BUYER at the Delivery Point for the period from the Closing Date to the day immediately before the Initial Day (the "Interim Period"), and the quantity of Energy delivered to BUYER at the Delivery Point during the Interim Period. The invoice shall be accompanied by (a) a payment by BUYER for that invoiced quantity of Unforced Capacity, which payment will equal the product of (i) the amount of invoiced Unforced Capacity, and (ii) the applicable Capacity Price set forth in Schedule A for the Interim Period, and (b) a payment by BUYER for that invoiced quantity of Energy, which payment will equal the product of (i) the amount of invoiced Energy, and (ii) the applicable Monthly Price for the Interim Period. No later than two (2) Business Days before the Closing Date, SELLER and BUYER shall enter into an appropriate billing and scheduling arrangement to ensure that the SELLER receives proper compensation, in accordance with this Section 3.2, for the Unforced Capacity and Energy provided and delivered to BUYER during the Interim Period.

4. UNFORCED CAPACITY.

4.1     Base Unforced Capacity . SELLER shall schedule and provide to BUYER, and BUYER shall accept and pay SELLER for, an amount of Unforced Capacity ("Base Unforced Capacity"), for each Capability Period, or portion thereof, during the Term, equal to the product of (a) the applicable Capability Period Percentage, (b) the DMNC of the Plant for that Capability Period, and (c) the Availability Factor.

4.2     Incremental Unforced Capacity. The amount of Unforced Capacity to be provided to and purchased by BUYER pursuant to this Agreement shall be increased in the following amounts: (a) five percent (5%) of the Base Unforced Capacity (the "First Uprate"), and (b) twelve percent (12%) of the Base Unforced Capacity (the "Second Uprate") as in effect prior to the First Uprate. Each of the First Uprate and the Second Uprate will become effective after SELLER's provision of a written notice to BUYER of such effectiveness (an "Uprate Notice"), which notice shall be provided no later than sixty (60) days prior to the start of the Capability Period in which BUYER anticipates the respective uprate will take effect; provided however, that the First Uprate will become effective no earlier than the first day of the twenty-ninth (29th) full calendar month after the Effective Date and the Second Uprate will become effective no earlier than the first day of the forty-seventh (47th) full calendar month after the Effective Date. The amount of increased Unforced Capacity set forth in an Uprate Notice shall be referred to as "Incremental Unforced Capacity." With SELLER'S delivery of an Uprate Notice to BUYER, the Uprated Capacity in effect from the date set forth in such Uprate Notice shall increase by the amount of Incremental Unforced Capacity set forth in such Uprate Notice; provided however, that SELLER shall not be obligated to provide such Incremental Unforced Capacity if the associated uprate at the Plant has not been completed by the date set forth in the Uprate Notice; and provided further, that any delay in the provision of Incremental Unforced Capacity by SELLER by the date set forth in an Uprate Notice shall not foreclose SELLER from providing such Incremental Unforced Capacity to BUYER at a later date during the same Capability Period upon as much notice to BUYER as is practicable. SELLER shall schedule and provide to BUYER, and BUYER shall accept and pay for, the Uprated Capacity for each Capability Period, or portion thereof, during the Term equal to the product of (a) the applicable Capability Period Percentage, (b) the applicable Uprated Capacity during that Capability Period, and (c) the Availability Factor. If and when Uprated Capacity becomes available to BUYER under this Agreement, it shall remain in effect only during the remainder of the Term.

4.3     NYISO . SELLER shall use good faith efforts, including the timely filing of required documents with the NYISO, to ensure that the specified amounts of Contract Unforced Capacity are properly credited to BUYER; provided, however, in no event will SELLER be required to contract for, or take any other measure to obtain, additional Unforced Capacity to satisfy its obligations under this Article 4.

5. ENERGY.

5.1     Sale of Energy . During the Term, SELLER agrees to schedule, deliver and sell, and BUYER agrees to accept delivery of and purchase, at the Delivery Point, Contract Energy.

       (a)    Base Energy. During each hour of each Capability Period, or portion thereof, of the Term, SELLER shall schedule and deliver to the Delivery Point, and BUYER shall accept, an amount of Energy equal to the product of (i) the applicable Capability Period Percentage times (ii) the DAM Base Net Electric Output (such amount of Energy defined herein as the "Base Energy").

       (b)   Incremental Energy. During each hour of each Capability Period, or portion thereof, of the Term, SELLER shall schedule and deliver, and BUYER shall accept, an amount of Energy equal to the product of (i) the applicable Capability Period Percentage times (ii) the DAM Incremental Net Electric Output (such amount of Energy defined herein as the "Incremental Energy").

5.2     Scheduling . The Parties agree that this Agreement is "unit contingent" and, as such, SELLER shall not be obligated to schedule or deliver any amount of Energy except as otherwise provided in Section 5.1 and this Section 5.2. SELLER shall be obligated to (a) schedule the amounts of Base Energy and Incremental Energy described in Section 5.1, and (b) deliver what is scheduled, both as provided in Section 5.1 and Section 5.2.

     5.2.1   Scheduling of Contract Energy. SELLER shall provide the NYISO with a schedule for a Bilateral Transaction in the Day-Ahead Market, in accordance with the NYISO Services Tariff, for the Contract Energy to be delivered to BUYER under Section 5.1 of this Agreement. SELLER shall be solely responsible for all charges imposed by the NYISO as a result of any failure by SELLER to deliver the amount of Contract Energy specified in the Bilateral Transaction schedule to the Delivery Point. BUYER shall be solely responsible for all charges imposed by the NYISO as a result of any failure by BUYER to receive or accept the amount of Contract Energy specified in the Bilateral Transaction.

     5.2.2    NYISO. In addition to those steps described in Section 5.2.1, SELLER shall use good faith efforts, including the timely filing of required documents with the NYISO, to cause the Contract Energy that is scheduled hereunder to be delivered to BUYER at the Delivery Point.

     5.2.3   Modifications of NYISO Rules or Procedures . To the extent that a modification or change in NYISO-adopted rules or procedures which are effective as of the date of this Agreement (including but not limited to, a modification or change to the NYISO OATT, the NYISO Services Tariff or the NYISO Installed Capacity Manual) affects the administrative process of scheduling so as to impact a Party's ability to schedule, the Parties agree to cooperate to achieve the scheduling of the Contract Energy and Contract Unforced Capacity in the most efficient and cost effective manner; provided,