APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

EXHIBIT 10.2

APX SETTLEMENT AND RELEASE OF CLAIMS AGREEMENT

     This Agreement is entered into, as of January 5, 2007, by and among each of the following:

APX Inc.
Allegheny Energy Supply Company, LLC
American Electric Power Service Corp.
Aquila Merchant Services, Inc.
Avista Energy, Inc.
BP Energy Company
Calpine Energy Services, L.P.
Commonwealth Energy Corporation (n/k/a Commerce Energy, Inc.)
Constellation NewEnergy, Inc.
El Paso Marketing, LP (f/k/a El Paso Merchant Energy, LP)
Enron Energy Services, Inc.
Enron Power Marketing, Inc.
Sacramento Municipal Utility District
Salt River Project Agricultural Improvement and Power District
Merrill Lynch Capital Services, Inc.
Morgan Stanley Capital Group Inc.
Tractebel Energy Marketing, Inc. (n/k/a Suez Energy Marketing NA, Inc.)
TransAlta Energy Marketing (US) Inc.
Sempra Energy Solutions LLC
UC Davis Medical Center (The Regents of the University of California)
Sierra Pacific Industries

     Each of the above-described entities is a Sponsoring Party, and collectively are Sponsoring Parties to this Agreement and, together with the Subject Parties, are “Parties” to this Agreement. Unless otherwise expressly provided for herein, each capitalized term used in this Agreement shall have the meaning set forth for such term in Section 1 or as defined elsewhere in this Agreement.

RECITALS

      Whereas, various of the Parties are engaged in or have an interest in complex and disputed proceedings including but not limited to proceedings before FERC and related appeals pending before the United States Court of Appeals for the Ninth Circuit, Enron Bankruptcy Proceedings, Calpine Bankruptcy Cases, appellate proceedings, litigation, and investigations regarding numerous issues and allegations arising from events in the Western electricity markets in 2000 and 2001, including but not limited to transactions facilitated by the APX.

      Whereas , the Sponsoring Parties collectively represent approximately 95% of the value attributable to the APX Transactions during the Settlement Period;

      Whereas, EESI and EPMI, both participants in the APX, are debtors in the Enron Bankruptcy Cases;

      Whereas, Calpine Energy Services, L.P. (successor in interest to Calpine Power Services Company) (“Calpine”), a participant in the APX, is a debtor in the Calpine Bankruptcy Cases;

      Whereas, the Parties have determined that it is preferable to settle the disputes addressed herein, rather than engage in costly, protracted and uncertain litigation and to facilitate distribution of funds claimed to be owed and owing by and to the Parties;

      Whereas, this Agreement contemplates a comprehensive resolution of all disputes and other matters between the Parties with respect to the APX Related Claims, except as expressly reserved in Section 6.7 below, (i) through the settlement of the regulatory proceedings, bankruptcy proceedings, appellate proceedings, litigation, proofs of claim, and claims identified herein, solely as to the portions thereof pertaining to the APX Related Claims between the Parties, and (ii) by effectuating the transactions, granting of rights and benefits, and assumption of obligations specified and provided for herein; and

      Whereas , the Parties believe that the implementation of this Agreement will simplify and expedite the overall re-settlement of the California centralized markets during the Settlement Period, avoid potential future issues with respect to cash clearing and liability arising from the APX Related Claims, and, therefore, serves the public interest.

      Now, Therefore, in consideration of the mutual covenants and agreements, and other good and valuable consideration provided for herein, the sufficiency of which is hereby acknowledged, intending to be legally bound, and to resolve definitively and for all time, any and all present, past and potential differences and disputes between them related to the APX Related Claims, except as expressly reserved in Section 6.7, and subject to and upon the terms and conditions hereof, the Parties agree as follows:

AGREEMENT

     The following capitalized terms, which are in addition to other terms with initial capital letters defined in the body of this Agreement or by the context in which they appear in this Agreement, when used in this Agreement shall have the meanings specified in this Section when used herein.

	1.1.		“ Affiliate ” means, with respect to any person, any other person (other than an individual) that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such person. For this purpose, “control” means the direct or indirect ownership of fifty percent (50%) or more of the outstanding capital stock or other equity interests having ordinary voting power.
	1.2.		“ Agreement ” means this APX Settlement and Release of Claims Agreement as the same may be amended, modified, supplemented, or replaced from time to time by written agreement of the Parties.
	1.3.		“ APX ” means APX Inc. also having done business as the Automated Power Exchange.

	1.4.		“ APX Escrow Account ” shall have the meaning provided in Section 4.5.
	1.5.		“ APX Holding Account ” means the account that APX uses to cash clear PX and ISO amounts for APX Participants.
	1.6.		“ APX Monetary Reserve ” means one or more APX accessible accounts maintained with Comerica Bank – California, or a successor entity appointed by APX, that contains cash to secure all or a portion of the obligations of certain APX Participants.
	1.7.		“ APX Participant ” means the entities identified on Exhibit A attached hereto and their respective Guarantors.
	1.8.		“ APX Payment Recipients ” mean all APX Participants entitled to receive a net payment pursuant to this Agreement, as indicated in Exhibit B attached hereto.
	1.9.		“ APX Related Claims ” means all claims, demands, causes of action, offsets or setoffs and any resulting losses, damages, expenses, attorneys’ fees and court costs that the Parties and their Affiliates or Guarantors have or may have against each other and their Affiliates or Guarantors in the FERC Proceedings during the Settlement Period arising out of the APX’s participation in the PX and ISO centralized markets for wholesale electricity including, but not limited to (a) ISO Amendment 51 and/or ISO GFN Adjustments involving APX and included in the cash clearing for APX Transactions and (b) FERC refunds for APX Transactions during the Settlement Period.
	1.10.		“ APX Transactions ” means energy and ancillary services bids, offers, purchases, sales and related transmission schedules submitted and/or completed by APX in the ISO and PX centralized markets and all APX Participant bids and offers, and resulting transactions, that APX cleared among APX Participants.
	1.11.		“ Authorized Person ” means a representative of a Party with authority to bind the Party to the terms of this Agreement.
	1.12.		“ Bankruptcy Code ” means Title 11 of the United States Code, as the same may be amended from time to time.
	1.13.		“ Bankruptcy Rule 9019 Motion ” has the meaning set forth in Section 7.5.
	1.14.		“ Business Day ” means a calendar day falling within Monday through Friday except for Federal holidays.
	1.15.		“ California Parties ” means collectively, Pacific Gas and Electric Company, Southern California Edison Company, San Diego Gas & Electric Company, the People of the State of California, ex rel. Bill Lockyer, Attorney General, the California Department of Water Resources acting solely under authority and powers created by California Assembly Bill 1 from the First Extraordinary Session of 2000-2001, codified in Sections 80000 through 80270 of the California Water Code (“CERS”), the California Electricity Oversight Board, and the California Public Utilities Commission.

	1.16.		“ Calpine Bankruptcy Cases ” means collectively, the cases commenced under Chapter 11 of the Bankruptcy Code by Calpine Corporation and certain affiliates on or after the initial petition date of December 20, 2005, styled In re Calpine Corporation, et al. , Chapter 11 Case Nos. 05-60200 (BRL), et al. , Jointly Administered, pending before the United States Bankruptcy Court for the Southern District of New York.
	1.17.		“ Calpine Bankruptcy Court ” means the court before which the Calpine Bankruptcy Cases are pending: United States Bankruptcy Court, Southern District of New York.
	1.18.		“ Calpine Bankruptcy Court Order ” means the Calpine Bankruptcy Court order granting the Required Calpine Bankruptcy Court Approval regardless of whether such order or orders are subject to appeal; provided that such order or orders have not been stayed pending such appeal.
	1.19.		“ Contributing Seller ” has the meaning given in Section 4.4.
	1.20.		“ EESI ” means Enron Energy Services, Inc.
	1.21.		“ Enron ” or the “ Enron Parties ” means EPMI and EESI.
	1.22.		“ Enron Bankruptcy Cases ” means, collectively, the cases commenced under Chapter 11 of the Bankruptcy Code by the Enron Debtors and certain affiliates on or after the Initial Petition Date, styled In re Enron Corp. et al. , Chapter 11 Case No. 01-16034 (AJG) Jointly Administered, pending before the Enron Bankruptcy Court.
	1.23.		“ Enron Bankruptcy Court ” means the court before which the Enron Bankruptcy Cases are pending: United States Bankruptcy Court, Southern District of New York.
	1.24.		“ Enron Bankruptcy Court Order ” means the Enron Bankruptcy Court order granting the Required Approval with respect to the Enron Bankruptcy Proceedings, in accordance with Sections 7.1 and 7.3 of this Agreement.
	1.25.		“ Enron Bankruptcy Proceedings ” means, collectively, the Enron Bankruptcy Cases and all related adversary proceedings, claims objection proceedings, and appeals pending before the Enron Bankruptcy Court and the United States District Court for the Southern District of New York, and any proceedings on remand.
	1.26.		“ Enron-California Parties Settlement Agreement ” means that certain settlement between Enron, the California Parties, and the FERC’s Office of Market Oversight and Investigations (“OMOI”) approved by FERC in an order dated November 15, 2005.
	1.27.		“ Enron Debtors ” means EPMI and EESI, together with their Affiliates, all as debtors in possession (or reorganized debtors) on behalf of themselves and their respective estates.
	1.28.		“ Enron Non-Settling Parties ” has the meaning given in Section 2.2.1.

	1.29.		“ Enron Plan ” means the Supplemental Modified Fifth Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the Bankruptcy Code confirmed by the Enron Bankruptcy Court on or about July 15, 2004, in the Enron Bankruptcy Cases as it may be amended, modified, or supplemented from time to time in accordance with the terms thereof.
	1.30.		“ Enron PX Collateral ” means the cash collateral and letter of credit proceeds held in the Enron PX Collateral Account totaling one hundred forty five million four hundred fifty two thousand nine hundred forty seven dollars and no cents ($145,452,947) as of November 30, 2006 and including any additional accrued interest prior to distribution as required herein.
	1.31.		“ Enron PX Collateral Account ” means the Bank of New York Trust company, N.A. segregated escrow sub-accounts Number 028269 identified to EPMI.
	1.32.		“ Enron Settlement Amount ” means eleven million dollars and no cents ($11,000,000).
	1.33.		“ Enron Settlement Reserve ” has the meaning given in Section 2.2.1.
	1.34.		“ EPMI ” means Enron Power Marketing, Inc.
	1.35.		“ Execution Date ” means, with respect to a Sponsoring Party, the date upon which this Agreement has been executed by such Party, including execution by any Party in accordance with Section 9.2 of this Agreement.
	1.36.		“ Existing Global Settlements ” are those listed on Exhibit F.
	1.37.		“ FERC ” means the Federal Energy Regulatory Commission.
	1.38.		“ FERC Proceedings ” means the Refund Proceeding and any related appeals and/or petitions for review and any proceedings on remand relating to the foregoing proceeding insofar and only to the extent that such proceedings are related to the APX Transactions.
	1.39.		“ FERC Settlement Order ” means a FERC order meeting the requirements for a Required FERC Approval in accordance with Section 7 of this Agreement, regardless of whether such order is subject to requests for rehearing or appeals and regardless of whether such order is subsequently modified or reversed by FERC or a court subsequent to the Settlement Effective Date; provided that on the Settlement Effective Date, such order has not been stayed by FERC or a reviewing court pending such rehearing or appeal.
	1.40.		“ Final and Non-Appealable ” with respect to an order of the Enron Bankruptcy Court, shall mean such order has not been reversed, stayed, modified, amended or vacated and as to which (a) any appeal taken, petition for certiorari or motion for rehearing or reconsideration that has been filed, has been finally determined or dismissed or (b) the time to appeal, seek certiorari or move for reconsideration or rehearing has expired and

			no appeal, petition for certiorari or motion for reconsideration or rehearing has been timely filed.
	1.41.		“ Final Staff Report ” means the final report entitled “Final Report on Price Manipulation in Western Markets — Fact-Finding Investigation of Potential Market Manipulation of Electric and Natural Gas Prices” issued by FERC staff on March 26, 2003 in FERC Docket No. PA02-2.
	1.42.		“ FPA ” means the Federal Power Act, as codified at 16 U.S.C. §791a et. seq., as the same may be amended from time to time.
	1.43.		“ Governmental Authority ” means any “governmental unit” as defined in Section 101 of the Bankruptcy Code.
	1.44.		“ Guarantor ” means with respect to a Party, one who guarantees the payment obligations of the Party pursuant to the applicable ISO tariff, the PX tariff or the APX Participant agreement.
	1.45.		“ Initial Distribution ” has the meaning given in Section 4.5.
	1.46.		“ Initial Petition Date ” means December 2, 2001, the date certain that the Enron Debtors, including EPMI and EESI, filed petitions for relief under Chapter 11 of the Bankruptcy Code and commenced the Enron Bankruptcy Cases in the Enron Bankruptcy Court.
	1.47.		“ Initial Staff Report ” means the Initial Report released by FERC staff on August 13, 2002 in connection with the FERC investigation in FERC Docket No. PA02-2.
	1.48.		“ ISO ” means the California Independent System Operator Corporation, a California public benefit corporation, and any successor thereto.
	1.49.		“ ISO Amendment 51 ” means the system recalculation performed by the ISO pursuant to procedures described by the ISO in filings made in FERC Docket No. ER03-746, the purpose of which was to establish the appropriate baseline against which to apply the mitigated market price methodology to applicable APX Transactions during the Refund Period.
	1.50.		“ ISO GFN Adjustments ” means ISO adjustments for the April 1998 to June 20, 2001 timeframe made pursuant to an approved good faith negotiation that are to be cash cleared in connection with the Refund Proceeding.
	1.51.		“ Material Change Notice ” has the meaning given in Section 7.4.
	1.52.		“ Net Buyers ” mean all APX Participants that, on a net basis and without regard to Short Payments owed to them, are entitled to refunds for APX Transactions during the Refund Period, as indicated in Exhibit B by the designation “NB”.

	1.53.		“ Net Sellers ” mean all APX Participants that, on a net basis and without regard to Short Payments owed to them, are identified as potential refund payers for APX Transactions during the Refund Period, as indicated in Exhibit B by the designation “NS”.
	1.54.		“ Party ” and “ Parties ” have the meanings set forth in the preamble to this Agreement and is inclusive of their Affiliates and Guarantors.
	1.55.		“ Pre-Refund Period ” means the period from May 1, 2000 through October 1, 2000.
	1.56.		“ PX ” means the California Power Exchange Corporation, a California public benefit corporation.
	1.57.		“ Refund Period ” means the period from October 2, 2000 through June 20, 2001.
	1.58.		“ Refund Interest Reserve ” has the meaning set forth in Section 4.1.3.
	1.59.		“ Refund Proceeding ” means San Diego Gas & Electric Co., et al. , FERC Docket No. EL00-95, et al.
	1.60.		“ Required Approvals ” means the Required FERC Approval and Required Enron Bankruptcy Court Approval.
	1.61.		“ Required Calpine Bankruptcy Court Approval ” means an order issued by the Calpine Bankruptcy Court approving this Agreement, as described in Section 7.4, authorizing the Calpine to grant releases in Section 6 below and authorizing the allocation of the Calpine Short Payments and associated interest and the release of collateral as set forth in Section 4.3.
	1.62.		“ Required Enron Bankruptcy Court Approval ” means issuance of an Enron Bankruptcy Court Order that is Final and Non-Appealable.
	1.63.		“ Required FERC Approval ” means an order issued by FERC approving this Agreement as required herein in Section 7.
	1.64.		“ Retained Enron PX Collateral ” has the meaning given in Section 4.2.
	1.65.		“ Scheduled Liabilities ” means the liability schedules prepared and filed by the Enron Debtors with the Enron Bankruptcy Court at or about the time the Enron Debtors filed the Enron Bankruptcy Cases, reflecting sums owed to various third parties.
	1.66.		“ Seller Contribution Funding Agreement ” has the meaning given in Section 4.4.
	1.67.		“ Seller Funding Amount ” has the meaning given in Section 4.4.
	1.68.		“ Settlement Effective Date ” has the meaning set forth in Section 2.3.
	1.69.		“ Settlement Period ” means the combined Pre-Refund Period and Refund Period.

	1.70.		“ Shortpay Interest Reserve ” has the meaning set forth in Section 4.1.3.
	1.71.		“ Short Payments ” means all funds owed to any APX Participant by the ISO or PX in connection with its APX Transactions during the Settlement Period, inclusive of unpaid soft cap reversals and PX default payment funds held in escrow by the PX as well as $234,799 of CAISO Short Payments due APX Participants for the period July-August 2001.
	1.72.		“ Sponsoring Party ” means all signatories to this Agreement, including those Parties first identified above together with those Parties that elect to become a Sponsoring Party pursuant to Section 9.2.
	1.73.		“ Subject Parties ” means those entities identified in Exhibit A that are not Sponsoring Parties.
	1.74.		“ Supporting Parties ” means Puget Sound Energy, Inc. (“Puget”), Avista Energy, Inc. (“Avista”), and Coral Power, L.L.C. (“Coral”). Avista is both a Sponsoring Party and a Supporting Party. Puget and Coral are signatories to this Agreement as Supporting Parties for the sole purpose of acknowledging and supporting its provisions as a means to resolve such parties’ objections to EPMI’s July 20, 2006 motion for release the Enron PX Collateral in FERC Docket Nos. EL00-95-000 and EL00-98-000.

2. CONDITIONS TO EFFECTIVENESS; SETTLEMENT EFFECTIVE DATE; TERMINATION

	2.1.		Agreement Binding as of the Execution Date. Except as provided in Section 2.4 and Section 4.1.1.2, this Agreement shall be a binding obligation of each Party immediately upon the Execution Date.
	2.2.		Conditions Precedent to Certain Obligations. The occurrence of the Settlement Effective Date is a condition precedent to: the obligation of a Party to make payments or to allow or release claims or defenses under Sections 4, 5 and 6 hereof, and the effectiveness of all such obligations, allowances, or releases specified hereunder. It shall also be a condition to the effectiveness of this Agreement that Enron and the California Parties reach agreement in accordance with Section 13.6 of the Enron-California Parties Settlement Agreement to modify the Enron-California Parties Settlement Agreement with respect to APX refunds and associated interest from CERS set forth in Section 4.1.4, 4.1.5 and 4.3.3 such that the Enron–California Parties Settlement Agreement is consistent with Section 4.1.1.1 of this Agreement with respect to the rights of Enron Non Settling Parties; provided this condition may be waived by Enron subject to Enron’s full and complete performance of the Enron-California Parties Settlement Agreement including sections 4.1.4, 4.1.5, and 4.3.3 thereof. It shall be a further condition to the effectiveness of this Agreement, unless expressly waived by Enron, that, in accordance with Section 7 and unless the FERC Settlement Order makes an express, specific finding to the contrary, the FERC Settlement Order shall be deemed and construed as an order finding and concluding:

	2.2.1.		The following funds are sufficient and adequate to protect the interests of Enron Non-Settling Parties: (a) the Enron Settlement Amount, plus (b) the Retained Enron PX Collateral, to create a total fund of fourteen million five hundred thousand dollars and no cents ($14,500,000.00) in the Enron PX Collateral Account (the “Enron Settlement Reserve”), plus (c) the funds already set aside in escrow (approximately $2.8 million) pursuant to the Enron-California Parties Settlement Agreement for “Non-Settling Participants” (as that term is defined in the Enron-California Parties Settlement Agreement) so long as they remain “Non-Settling Participants” (the “Enron Non-Settling Parties”), such funds totaling approximately $17.3 million, provided, however, that the Enron Settlement Reserve shall be used, if and only if, any refund amounts due to the Enron Non-Settling Parties from Enron (as determined by FERC) resulting from participation in the ISO and PX markets are unpaid directly as a result of EPMI’s bankruptcy or otherwise.
	2.2.2.		The allocation of the Enron Settlement Reserve for the Enron Non-Settling Parties set forth in Exhibit D is appropriate to protect the interests of the Supporting Parties, as well as the other Enron Non-Settling Parties, as described in Exhibit D, if and only if, any refund amounts due to the Enron Non-Settling Parties from Enron (as determined by FERC) resulting from participation in the ISO and PX markets are unpaid directly as a result of EPMI’s bankruptcy or otherwise.
	2.2.3.		Subject to the terms and conditions of this Agreement, EPMI’s motion for release of the Enron PX Collateral is reasonable and the PX is ordered to immediately release from the Enron PX Collateral Account to EPMI, for payment to its creditors under the Enron Plan, the balance of EPMI’s assets held by the PX in excess of the Enron Settlement Reserve, plus applicable interest, in the amount of one hundred forty one million nine hundred fifty two thousand nine hundred forty seven dollars and no cents ($141,952,947.00) (which amount reflects the balance in the Enron PX Collateral account as of November 30, 2006 plus the Enron Settlement Amount less the Enron Settlement Reserve), plus interest accrued on the Enron PX Collateral after November 30, 2006.

2.3.

Settlement Effective Date. The “Settlement Effective Date” shall occur on the beginning of the third Business Day following the latest of the following dates: (i) the date when the Required FERC Approval (as defined in Section 7) has been issued, provided that a Material Change Notice has not been timely and properly given by a Sponsoring Party as to such approval in accordance with Section 7.4 (unless the other Sponsoring Parties agree in writing, on or before March 1, 2007, that the Settlement Effective Date has occurred notwithstanding any such Material Change Notice), and (ii) the date when the Required Enron Bankruptcy Court Approval has been received provided that no Material Change Notice has been timely and properly given by a Sponsoring Party as to such approval in accordance with Section 7.4 (unless the other Sponsoring Parties agree in writing, on or before March 1, 2007, that the Settlement Effective Date has occurred notwithstanding any such Material Change Notice). On

			the Settlement Effective Date, Enron shall provide the Sponsoring Parties and the PX with written notice of the occurrence of the Settlement Effective Date.
	2.4.		Termination. This Agreement shall terminate in the event any of the following occurs, and not otherwise: (a) unless waived by Enron, if a fully-executed Agreement constituting part of an offer of settlement pursuant to Rule 602 of FERC’s Rules of Practice and Procedure, along with a motion for expedited approval, is not filed with FERC on or before January 5, 2007; (b) unless waived by Enron, if FERC has not issued an order approving the Agreement by March 1, 2007; (c) as to the FERC Settlement Order, FERC issues an order denying approval of this Agreement, or a Sponsoring Party provides to the other Sponsoring Parties with a Material Change Notice and the other Sponsoring Parties do not agree in writing on or before March 1, 2007 that the Settlement Effective Date has occurred notwithstanding the Material Change Notice; (d) as to the Enron Bankruptcy Court Order, the Enron Bankruptcy Court issues an order denying approval of this Agreement, or a Sponsoring Party provides to the other Sponsoring Parties with a Material Change Notice and the other Sponsoring Parties do not agree in writing on or before March 1, 2007 that the Settlement Effective Date has occurred notwithstanding the Material Change Notice; or (e) the Settlement Effective Date has not occurred by the third Business Day after March 1, 2007, unless all Sponsoring Parties consent voluntarily in writing to an extension of such date. Upon the occurrence of the Settlement Effective Date, this Agreement shall not thereafter terminate for any reason. The Sponsoring Parties agree that from and after the Settlement Effective Date (i) they shall be bound by the terms of this Agreement notwithstanding any order or ruling reversing, remanding or otherwise modifying this Agreement on rehearing, reconsideration, appeal or remand of the Enron Bankruptcy Court Order and/or the FERC Settlement Order, and (ii) they shall use reasonable efforts to defend and preserve the terms of this Agreement against any such order or ruling.
	2.5.		Effect of Termination. In the event of termination pursuant to Section 2.4, this Agreement shall be of no further force or effect, with all rights, claims, defenses, duties, and obligations of the Parties thereafter restored as if this Agreement had never been executed.

3. SETTLEMENT AND ACKNOWLEDGMENT

3.1.

Acknowledgement of Compromise. The payments and other consideration agreed to in this Agreement, along with the covenants and obligations herein, settle and compromise the APX Related Claims and/or defenses of the Parties against each other in the various proceedings described in Exhibit C attached hereto and avoid costly, protracted and uncertain litigation and ensure expedient release of payments under the Agreement.

4.1.

Monetary Consideration. The monetary settlement consideration exchanged by the Parties shall be comprised of the following terms pursuant to the FERC Settlement Order:

4.1.1.

The Parties shall pay and be paid the amounts set forth on Exhibit B attached hereto, subject to the following adjustments:

	4.1.1.1.		Enron shall be paid the Enron Settlement Amount ($11,000,000.00) from the APX Escrow Account within ten (10) Business Days of the Settlement Effective Date, which funds shall be used to establish the Enron Settlement Reserve as described in Section 4.2 below. Notwithstanding any other provision in this Agreement and subject to Section 2.2 of this Agreement with regard to Sections 4.1.4, 4.1.5 and 4.3.3 of the Enron-California Parties Settlement Agreement, the Enron Settlement Amount is not subject to any adjustment for any reason as of the Settlement Effective Date.
	4.1.1.2.		Calpine’s rights and obligations under this Agreement shall be null and void unless the Required Calpine Bankruptcy Court Approval is received on or before February 28, 2007. Calpine shall provide written notice to the Sponsoring Parties immediately upon the receipt of the Required Calpine Bankruptcy Court Approval. In the event that Calpine does not obtain the Required Calpine Bankruptcy Court Approval by February 28, 2007, then Calpine shall be excluded from this Agreement and the amounts to be paid to Net Buyers, as reflected in Exhibit B shall be reduced on a pro rata basis, by the amount of Calpine’s contribution to the settlement, as reflected in Exhibit B and APX shall proceed to make proportional assignment of its rights, title and interest in Proof of Claim No. 3655 in the Calpine Bankruptcy Cases to the Net Buyers reflected on Exhibit B. In this event, the Parties retain all rights and claims otherwise available to them against Calpine, including but not limited to, in the FERC Proceedings and the Calpine Bankruptcy Case, and this Agreement shall have no effect on those rights and claims.
	4.1.1.3.		In the event that any Party is excluded from this Agreement pursuant to Section 9.3, then the amounts to be paid to Net Buyers, as reflected in Exhibit B shall be increased or decreased on a pro rata basis by the amounts allocated to such Party as reflected in Exhibit B.
	4.1.1.4.		In the event that amounts due and owing to the APX from the ISO and/or PX are reduced or not paid for any reason, the amounts to be paid to Net Buyers, as reflected in Exhibit B, shall be decreased on a

			pro rata basis by the amount the ISO and/or PX fail to pay APX. Tractebel will waive its cost recovery filing as moot upon the Settlement Effective Date and will file to withdraw its filing with prejudice as of the date the FERC Settlement Order becomes final and non-appealable. The ISO and PX shall not reduce the refunds to be paid to APX on account of Tractebel’s cost recovery filing.
	4.1.1.5.		Within five (5) Business Days following the Settlement Effective Date, APX shall initiate the necessary actions to opt-in to the Existing Global Settlements set forth on Exhibit F, and thereafter use its best efforts to successfully complete such opt-ins. APX shall provide status reports of its efforts in this respect to the Net Buyers at no less than monthly intervals. Within two (2) Business Days following the filing of this Agreement with FERC, APX will supply a copy of this Agreement and all Exhibits to each of the named sellers in the Global Settlement Agreements listed in Exhibit F of this Agreement, and specifically advise each such seller of the existence of this Section 4.1.1.5. To the extent that the California Parties and the named sellers under the Existing Global Settlements agree to waive the deadline provisions for opting into those Global Settlements, APX will opt-in to the Existing Global Settlements within five (5) Business Days of the Settlement Effective Date, or as soon thereafter as any such waivers are provided. All amounts, including interest, paid to APX as a result of it opting into the Existing Global Settlements will be paid to APX in accordance with the terms of those Settlements, and will be flowed through to the Net Buyers listed on Exhibit B on a pro rata basis in accordance with the terms of Section 4.5.
	4.1.1.6.		Within two (2) Business Days following the Settlement Effective Date, APX shall pay or debit, as appropriate, to the APX Participants the net collateral listed on Exhibit J, provided however, the collateral shown for EESI on Exhibit J shall be paid as directed in Section 4.5.

4.1.2.

Subject to any adjustments pursuant to Section 4.1.1, and pursuant to the procedures set out in Section 4.5, APX shall be ordered to pay and distribute to APX Payment Recipients, in accordance with the amounts shown on Exhibit B (a) all refunds owed to and received by APX from the ISO and PX, including such refunds resulting from APX’s successful opt-in efforts pursuant to Section 4.1.1.5 of this Agreement, plus interest; plus (b) all Short Payments, including those arising from payment defaults, owed to APX from the ISO and PX, to the extent received from the ISO and PX, including interest subject to Sections 4.1.3 and Section 4.3; plus (c) five million one hundred sixty one thousand one hundred seventy eight dollars and ninety six cents ($5,161,178.96) held in the APX Holding Account; plus (d) two million forty five thousand eight hundred twenty two dollars and no cents

			($2,045,822.00) held as collateral for EESI, which amount shall be released by APX from the APX Monetary Reserve to the APX Escrow Account; plus (e) the Seller Funding Amount under Section 4.4.
	4.1.3.		The ISO and PX will include interest on the refunds and Short Payments that they will provide APX pursuant to Section 4.5(a) of this Settlement Agreement. The interest will be determined in accordance with the Commission’s applicable rulings in this proceeding. To the extent that either the ISO or PX has an interest short-fall below the interest rates otherwise required by the Commission’s regulations and rulings in this proceeding related to either the refunds and Short Payments owed APX for APX Transactions in the PX and ISO centralized markets during the Refund Period, they will be permitted to hold-back, as necessary, 25 percent of the interest otherwise owed to APX on the refunds (“Refund Interest Reserve”) and Short Payments (“Shortpay Interest Reserve”), and subject to Section 4.3 pertaining to Calpine. APX shall distribute all of the interest that it receives from the ISO and PX to the Net Buyers on Exhibit B on a pro rata basis in accordance with the provisions of Section 4.5. At the conclusion of the FERC Proceedings, to the extent that FERC does not require the ISO or PX to utilize any or all of the Shortpay Interest Reserve and/or the Refund Interest Reserve to cover interest short-falls related to APX Transactions, the ISO and PX shall distribute such amounts (inclusive of any actual additional interest that may accumulate thereon) to APX, and APX shall distribute any such amounts within five (5) Business Days of receipt to the Net Buyers listed on Exhibit B on a pro rata basis.
	4.1.4.		To the extent any net refunds, including interest related thereto, are paid by the ISO and/or PX to the APX for APX Transactions during the Pre-Refund Period, those amounts shall be paid and distributed to the Net Buyers on Exhibit B in proportion to their pro rata share of APX Transactions during the Pre-Refund Period. This Agreement does not address who is responsible for any refunds (if any) that FERC may hereafter direct be paid to the ISO and/or PX in respect of APX Transactions for the Pre-Refund Period; provided, however, that in no event will EPMI/EESI or APX itself have any responsibility for paying any such refunds. All Parties reserve their rights to contest any proposal that refunds are owed in respect of APX Transactions refunds for the Pre-Refund Period and to appeal any finding by FERC that such refunds are owed for the Pre-Refund Period; provided, however, that with respect to the Settlement Period in its entirety, no claim for intra-APX market refunds will be advanced by any Party. Under no circumstances will the operation of this Section 4.1.4 alter, decrease, increase or otherwise change the fixed amounts due Enron pursuant to Section 4.1.1.1 hereof.

4.2.

Enron Settlement Reserve. The Enron Settlement Amount shall be transferred from the APX Escrow Account to the Enron PX Collateral account. In addition, Enron hereby agrees to set aside an additional three million five hundred thousand dollars and no cents ($3,500,000.00) in funds from the Enron PX Collateral (the “Retained Enron

			PX Collateral”) to establish the Enron Settlement Reserve in the total amount of fourteen million five hundred thousand dollars and no cents ($14,500,000.00) to be held in the Enron PX Collateral Account as described in Section 2.2.1. The Enron Settlement Reserve is available to settle the claims of the Enron Non-Settling Parties, if and only if, any refund amounts due to the Enron Non-Settling Parties from EPMI (as determined by FERC) resulting from Enron’s participation in the PX and ISO markets are unpaid for any reason directly as result of EPMI’s bankruptcy or otherwise. In the event that the Enron Settlement Reserve for Enron Non-Settling Parties is not needed for the Enron Non-Settling Parties and/or Supporting Parties for the purpose stated, then the balance plus accrued interest shall be paid to EPMI by the PX at the earliest possible date without further action by EPMI.
	4.3.		Calpine Monetary Consideration. Of the Short Payments plus interest owed to Calpine, Calpine hereby agrees, subject to receipt of the Required Calpine Bankruptcy Court Approval on or before February 28, 2007, to release and contribute on the Settlement Effective Date two million five hundred eighty nine thousand two hundred fifty one dollars and no cents ($2,589,251.00) plus interest accrued on this amount to the APX Escrow Account. So long as the Required Calpine Bankruptcy Court Approval has been received on or before February 28, 2007, upon receipt of amounts owed to it by the PX and ISO the APX shall, within ten (10) days of the Settlement Effective Date, pay to Calpine the sum of (a) the remaining two million five hundred eighty nine thousand two hundred fifty one dollars and no cents ($2,589,251.00) of Short Payments, plus (b) interest accrued on this amount, plus (c) the Calpine collateral shown on Exhibit J. Subject to receipt of the Required Calpine Bankruptcy Court Approval on or before February 28, 2007, APX, the Enron Parties, and Constellation NewEnergy, Inc. agree to withdraw with prejudice their proofs of claims against Calpine in the Calpine Bankruptcy Cases, in the form and substance of the notices of withdrawal attached as Exhibit E hereto including without limitation, Proof of Claim Nos. 3655 filed by APX, 2998 filed by Constellation NewEnergy, Inc., and 4079 and 4087 filed by the Enron Parties. Calpine, APX, Constellation NewEnergy, Inc. and the Enron Parties agree that each shall act reasonably and in good faith to cooperate and to take all reasonable steps to secure satisfaction of the terms specified in this Section 4.3. Upon the Settlement Effective Date and subject to the Required Calpine Bankruptcy Court Approval being received no later than February 28, 2007, that part of Proof of Claim No. 5285 filed by FERC concerning APX Transactions and APX Related Claims and the claims of the Subject Parties in the Calpine Bankruptcy Cases concerning APX Transactions and APX Related Claims, if any, shall be deemed to have been satisfied. Other than the claims identified in this Section 4.3, the Sponsoring Parties represent that no other claims have been filed by the Sponsoring Parties in the Calpine Bankruptcy Cases for APX Related Claims. No claim filed in the Calpine Bankruptcy Cases by any of the Parties for non-APX Related Claims shall be affected in any way by this Agreement.
	4.4.		Seller Contributions. As part of the aggregate consideration paid for the settlement, certain Net Sellers (each a “Contributing Seller” and together the “Contributing Sellers”) have entered into a written payment agreement with APX (the “Seller Contribution Funding Agreement”) that (a) directs APX to function as agent for the net

			payees under the settlement and (b) prohibits disclosure of the identity of any of the Contributing Sellers or their respective payment amounts. Pursuant to the terms of the Seller Contribution Funding Agreement, the Contributing Sellers will forward to APX fixed dollar amounts totaling in the aggregate of one million two hundred fifty thousand dollars and no cents ($1,250,000.00) (the “Seller Funding Amount”), with such payments to be made by each such Contributing Seller via wire transfer to APX within five (5) Business Days of the date of the Settlement Effective Date in compliance with the terms of Section 4.5 of this Agreement. APX shall provide all Sponsoring Parties with written confirmation that the APX has received the aggregate Seller Funding Amount within seven (7) Business Days of the date of the Settlement Effective Date. In the event that a Contributing Seller does not comply with its obligation under the Seller Contribution Funding Agreement to make a required payment, APX shall disclose, to any APX Payment Recipient hereunder requesting such disclosure, the identity of such noncompliant Contributing Seller and the amount of such Contributing Seller’s required payment under the Seller Contribution Funding Agreement, and any such APX Payment Recipient hereunder has standing to and may seek to enforce such payment obligation directly against any such noncompliant Contributing Seller.
	4.5.		Payments. Within five (5) Business Days of the Settlement Effective Date, in order to facilitate the distribution of funds by APX to the APX Payment Recipients, (a) the ISO and PX shall release to APX all funds owed to APX, including refunds and Short Payments for APX Transactions during the Refund Period, plus interest thereon, subject to the provisions of Section 4.1.3 regarding interest, (b) the Parties required to release receivables reflected in Exhibit B shall provide such releases to APX; (c) APX shall release five million one hundred sixty one thousand one hundred seventy eight dollars and ninety six cents ($5,161,178.96) in the APX Holding Account; (d) APX shall release from the APX Monetary Reserve two million forty five thousand eight hundred twenty two dollars and no cents ($2,045,822.00) held as collateral for Enron; and (e) the Contributing Sellers shall pay the Seller Funding Amount. All amounts referred to in the preceding sentence shall be placed in a segregated account to be established by the APX at its expense for purposes of effectuating this Agreement (the “APX Escrow Account”). Within ten (10) Business Days of the Settlement Effective Date, APX shall distribute all of the monies contained in the APX Escrow Account to the APX Payment Recipients shown on Exhibit B on a pro rata basis in accordance with Exhibit B, as may be adjusted pursuant to Section 4.1.1 (the “Initial Distribution”). All funds, if any, owed to APX related to APX’s opt-in to the Existing Global Settlements in accordance with Section 4.1.1.5, shall be placed in the APX Escrow Fund immediately upon receipt. APX shall thereafter provide notice to the Parties of the amount and source of such funds received, and shall distribute all such funds to Net Buyers shown on Exhibit B on a pro rata basis within five (5) Business Days of receipt. Any failure or delay in receipt of payments, or the timing of the receipt of any funds related to APX’s opt-in to the Existing Global Settlements, shall not alter or prevent in any manner the immediate release of the balance of the Enron PX Collateral, as contemplated in Section 2.2.3 and the FERC Settlement Order. To the extent that APX receives additional funds covered by this Agreement from the ISO and/or the PX after the Initial Distribution, APX shall immediately notify

the Parties of such receipt and distribute such additional funds within two (2) Business Days of receipt to the APX Payment Recipients shown on Exhibit B on a pro rata basis in accordance with Exhibit B.

	5.1.		Additional Consideration Exchanged . Simultaneous with the Settlement Effective Date, additional non-monetary consideration shall be, and shall be deemed to have been, exchanged in the form and substance of the mutual releases set forth in Section 6.
	5.2.		UC Davis Medical Center. The UC Davis Medical center represents that the generation unit at the University of California Davis Medical Center only sold ancillary services to the ISO during the Refund Period. APX submitted unit-specific bids and schedules on behalf of the Regents of the University of California (“Regents”) to the ISO and APX received unit-specific dispatch instructions and ancillary service awards from the ISO. Settlement statements from the ISO clearly identify all UC Davis Medical Center schedules and transactions by unit designation for instructed energy, deviations and ancillary service award. If the Regents and the California Parties reach a settlement of refund issues related to APX Transactions prior to the Settlement Effective Date, the Regents shall be excluded from this Agreement. The APX Participants will not impede the Regents from settling issues directly related to