AMENDMENT NO. 1 TO THE AGREEMENT FOR THE SUPPLY OF COAL TO MT. STORM POWER STATION

Exhibit 10.1

Portions of this exhibit indicated by “******” have been omitted pursuant to

a request for confidential treatment under Rule 24b-2 of the Securities

Exchange Act of 1934, as amended, and the omitted material has been

separately filed with the Securities and Exchange Commission

AMENDMENT NO. 1 TO THE AGREEMENT FOR

THE SUPPLY OF COAL TO MT. STORM POWER STATION BETWEEN

VIRGINIA ELECTRIC AND POWER COMPANY AND

ALLIANCE COAL, LLC

THIS AMENDMENT NO. 1 (the “Amendment No. 1”) is made effective January 1, 2007, (the “Effective Date”) by and between VIRGINIA ELECTRIC AND POWER COMPANY, a Virginia public service corporation with its principal office located in Richmond, Virginia (“Buyer”) and ALLIANCE COAL, LLC, a Delaware limited liability company with its principal office located in Tulsa, Oklahoma (“Seller”).

WHEREAS , Buyer and Seller entered into an agreement entitled “Agreement for the Supply of Coal to Mt. Storm Power Station between Virginia Electric and Power Company and Alliance Coal, LLC” dated June 22, 2005, (the “Agreement”). Capitalized terms herein shall have the same meaning ascribed to such terms in the Agreement, unless otherwise defined herein.

WHEREAS , Seller and Buyer desire to amend the Agreement in certain respects, as of the Effective Date hereof.

NOW, THEREFORE , in consideration of these premises and of the mutual covenants and agreements herein set forth, Buyer and Seller hereby agree as follows:

1. Article 1 “DEFINITIONS AND TERMS” is hereby amended by deleting the existing Section 1.1 (b)  Accelerated Delivery Basis in its entirety and replacing it with the following new Section 1.1 (b):

“(b) - Accelerated Delivery Basis – The make up of any Shortfall Quantity arising under the provisions of this Agreement whereby such Shortfall Quantity is fully made up in the manner provided herein in the immediately following Calendar Month(s) after the determination of any such Shortfall Quantity; provided that the parties agree that until any such Shortfall Quantity is fully made up, quantities of coal which are delivered by Seller and as to which Buyer takes Receipt during any such Calendar Month(s) shall be in addition to the existing quantities sold and purchased during such Calendar Month(s); provided further that, the combined total quantity of the base tonnage obligations and the Spot Tonnage obligations, as defined below, delivered by Seller and received by Buyer in any one Calendar Month in which a Shortfall Quantity is being made up shall not exceed a total amount of ****** tons, unless otherwise mutually agreed to by the parties. In regards to the make up of such a Shortfall Quantity, the parties agree as follows: (i) subject to the provisions of Section 3.1(b), the parties will schedule, Seller will deliver,

and Buyer will take Receipt of, a minimum total quantity of coal each Calendar Month of ****** tons until such Shortfall Quantity is made up, and (ii) Seller will deliver, and Buyer will take Receipt of, during any Calendar Month such quantities of coal representing Buyer’s monthly scheduling orders as set forth in Section 3.1(b) plus the Shortfall Quantity on a priority basis ahead of any other obligations the parties may have in regards to the sale and purchase coal under any third party arrangements. Notwithstanding the preceding sentence, Seller shall have the right to sell coal to third parties during the period of January 1, 2007 up through December 31, 2008, (as such date may be extended up through March 31, 2009 to make up for delivery of Shortfall Quantity), and during any period of extension for the delivery of Spot Tonnage under the ****** provisions of Section 7.8(e), if at any point in time and for any reason, (including by reason of a force majeure event affecting Buyer), the combined tonnage ordered by Buyer under this Agreement and the Third Restated and Amended Fuel Supply and Ash Management Services Agreement between Buyer and Mettiki Coal, (WV), LLC dated effective January 1, 2007 (“North Branch Agreement”) is ****** tons below the combined tonnage that Buyer is obligated to purchase under said agreements, as determined on a year-to-date basis. To clarify, Buyer’s monthly purchase obligation under this Agreement and the North Branch Agreement is the combined total of (1) the monthly base tonnage as provided in Buyer’s firm monthly forecast letters as set forth in Section 3.1(b), plus the additional monthly Spot Tonnage produced and made available by Seller, as provided in Seller’s firm monthly forecast letters as set forth in Section 3.1(b), not to exceed (i) ****** tons per month under normal conditions or (ii) ****** tons per month on an Accelerated Delivery Basis and (2) under the North Branch Agreement, ****** tons of Fuel on an equivalent ****** Btu per pound basis per semiannual period, plus Buyer’s option for an additional ****** tons of Fuel for the calendar years ****** and ******, if such option is elected by Buyer, (or any Shortfall Tonnage under the North Branch Agreement that is delivered to the Mt. Storm Power Station in accordance with the terms thereof).

The quantity of coal sold by Seller to any third party as provided above shall be made up to Buyer under subsequent monthly delivery schedules, which shall in no event extend beyond ******. The parties acknowledge and agree that in no event will Seller be required to make up any base tonnage obligation Shortfall Quantity on an Accelerated Delivery Basis if such Shortfall Quantity resulted from production losses attributable to or associated with the relocation of the longwall mining equipment from Mettiki Coal, LLC’s existing “D” Mine to Mettiki Coal (WV), LLC’s “E” Mine as more particularly described in Section 3.1(f).”

2. Article 1 “DEFINITIONS AND TERMS” is hereby amended by deleting the existing Section 1.1 (mm) Shipment in its entirety and replacing it with the following new Section 1.1 (mm):

“(mm) Shipment – For truck deliveries, unless administratively changed by the parties upon mutual agreement, a Shipment shall consist of all coal as to which Buyer has taken Receipt of in one (1) Calendar Day. For rail deliveries, a Shipment shall consist of all coal as to which Buyer has taken Receipt of in one (1) Calendar Day. For rail deliveries by Seller, Seller will provide, or cause to be provided, the bill of lading or

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individual mine cards/tags to the delivering carrier. For sampling, analysis and quality reporting purposes, a Shipment shall be specifically identified by Seller as to being either a Spot Tonnage Shipment or a base tonnage Shipment.”

3. Article 1 “DEFINITIONS AND TERMS” is hereby amended by adding the following new definition, which shall be listed as the last definition:

“(uu) Spot Tonnage – As defined in Section 3.1 (g).

4. Article 1 “DEFINITIONS AND TERMS” is hereby amended by deleting the existing Section 1.2 Term in its entirety and replacing it with the following new Section 1.2:

“Section 1.2 Term

The term of this Agreement shall commence on the Effective Date hereof and shall continue through December 31, 2013, unless terminated or canceled sooner in accordance with the provisions of this Agreement. The obligations of Seller to sell and deliver, and Buyer to purchase and receive, the Spot Tonnage of coal as provided in this Agreement shall commence in January 2007 and shall continue up through December 31, 2008, (as such date may be extended up through March 31, 2009 to make up for delivery of Spot Tonnage shortfall), or as otherwise extended under the re-opener provisions of Section 7.8(e). The obligations of Seller to sell and deliver, and Buyer to purchase and receive, the base tonnage obligations of coal as provided in this Agreement shall commence on January 1, 2007 and shall continue through December 31, 2013. With respect to Spot Tonnage, there shall be no further obligation to either party, except for liabilities or obligations based upon prior breach or performance, after December 31, 2008, (as such date may be extended up through March 31, 2009 to make up for delivery of Spot Tonnage Shortfall Quantity), regarding Seller’s sale and delivery and Buyer’s purchase and receipt of the Spot Tonnage, unless otherwise extended under the provisions of Section 7.8(e). With respect to base tonnage, there shall be no further obligation to either party, except for liabilities or obligations based upon prior breach or performance, after the end of December 31, 2013 regarding Seller’s sale and delivery and Buyer’s purchase and receipt of the base tonnage obligations.

Upon the fulfillment of the parties obligations regarding the sale and purchase of the quantity of Spot Tonnage as set forth herein, all provisions of this Amendment No. 1, shall automatically terminate and no longer be in force and effect, and the parties performance obligations thereafter shall be solely governed by the original terms and conditions of the Agreement in effect prior to the parties agreement to this Amendment No. 1.”

5. Article 3 “SALE, PURCHASE AND TRANSPORTATION OF COAL”, Section 3.1 “Quantity and Scheduling”, is hereby amended by deleting Section 3.1(b) in its entirety and replacing it with the following:

“3.1(b) Except as otherwise provided herein, Buyer’s monthly scheduling orders shall be for the combined total of (1) the monthly base tonnage of ****** tons and (2) the additional monthly Spot Tonnage produced by Seller for a total of up to ****** tons per month, unless otherwise mutually agreed upon by the parties, and as reflective of any makeup of Shortfall Quantities required pursuant to the provisions of this Agreement. The combined total of the monthly base tonnage obligation and the monthly Spot Tonnage obligation shall not exceed ****** tons per month under normal conditions or ****** tons per month on an Accelerated Delivery Basis, unless increased by any Shortfall Tonnage under the North Branch Agreement delivered to Mt. Storm in accordance with the terms thereof.

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Seller shall deliver the monthly tonnage ordered by Buyer throughout the month, excluding holidays, scheduled or unscheduled outages of the Facilities, the Rail Loadout, and/or the loading facilities at the Production Sources, Buyer’s reasonable requests for delay of shipments, force majeure events, or at such other times as Seller may direct due to, in Seller’s determination, abnormal impacts on transportation of daily truck shipments. Except as provided in the immediately preceding sentence, Seller shall have the discretion to deliver truck shipments of coal 365 days a year, 7 (seven) days a week, 24 (twenty-four) hours a day to meet Buyer’s monthly coal orders.

Buyer and Seller shall exert all reasonable efforts to meet the operational needs of the other party, taking into consideration Buyer’s and Seller’s scheduled outages, the consumption of coal, transportation, mining, seasons of the year as they relate to anticipated adverse weather conditions, mining conditions, and storage capabilities of each party. Accordingly, the parties shall exert all reasonable efforts to work toward mutually agreeable delivery schedules and make changes in previously established shipping schedules, if so requested by either party. The parties shall provide written notice for scheduled outages and prompt notice of unscheduled outages that will impact delivery. The parties acknowledge and agree that their respective obligations under this paragraph to meet the operational needs of the other party do not include changes in delivery schedules by either party in order to take advantage of market opportunities.

Buyer shall have the discretion to take Receipt of coal at varying rates of flow, subject to the capabilities and limitations of the Facilities as more particularly described in Annex H, seven (7) days a week, 24 (twenty-four) hours a day to meet Buyer’s Station needs including any synthetic fuel production, bunkering requirements or any other requirement of the Station. Subject to the foregoing provisions of this Section 3.1, Seller agrees to sell and deliver such monthly quantities as Buyer shall order.

With respect to the base tonnage obligations, Buyer shall order coal by providing written notice to Seller by means of monthly forecast letters specifying the monthly quantities of base tonnage coal to be purchased by Buyer for the following three months. Quantities of base tonnage specified by Buyer for delivery in the first and second months of the forecast letters shall be firm quantities (to be confirmed by a Purchase Notice from Buyer for those months), unless revisions are mutually agreed to and confirmed in writing by Buyer and Seller. The quantities of base tonnage specified by Buyer for the

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third month of the forecast letters are for planning purposes only and shall not be considered binding on either party hereto. Buyer’s three-month base tonnage quantity forecast letters shall be provided to Seller by the tenth (10 ^th ) of the month preceding the three (3) month period.

With respect to Spot Tonnage, Seller shall provide written notice to Buyer by means of monthly forecast letters specifying the monthly quantities of Spot Tonnage Seller expects to produce and have purchased by Buyer, of which may be up to the tonnage difference between ****** tons per month less the firm quantities of base tonnage nominated by Buyer in its monthly forecast letters to Seller. Quantities of Spot Tonnage specified by Seller for delivery in the first month of the forecast letters shall be firm quantities (to be confirmed by a Purchase Notice from Buyer for such month), unless revisions are mutually agreed to and confirmed in writing by Buyer and Seller. The quantities of Spot Tonnage specified by Seller for the second and third month of the forecast letters are for planning purposes only and shall not be considered binding on either party hereto. Seller’s three-month Spot Tonnage quantity forecast letters shall be provided to Buyer within two business days of Buyer’s provision of its base tonnage forecast letters.

Seller may deliver the 1,053,000 tons of Spot Tonnage, which may be increased by up to an additional 50,000 tons for Seller’s Spot Tonnage increase option as set forth in Section 3.1(g) and for any Additional 2007 Spot Tonnage as set forth below, during the period commencing January 1, 2007 up through December 31, 2008, (as such date may be extended up through March 31, 2009 to make up for delivery of Spot Tonnage Shortfall Quantity), after which the obligations for the sale and purchase of Spot Tonnage shall terminate and Seller’s restriction on third party sales as set forth in Section 3.1 (g) shall terminate. The Parties acknowledge that as currently contemplated, ****** tons of Spot Tonnage will be delivered in 2007 (at ****** as set forth in Article 7.8) and the remaining ****** tons will be delivered in 2008 (at $****** as set forth in Article 7.8). However, in the event Seller delivers more than ****** tons of Spot Tonnage in 2007 the pricing will be determined as follows. The first ****** tons of Spot Tonnage delivered in 2