Exhibit 10.3.16









                              SCE STANDARD CONTRACT

                            LONG TERM POWER PURCHASE









                             POWER PURCHASE CONTRACT

                                     BETWEEN

                       SOUTHERN CALIFORNIA EDISON COMPANY

                                       AND

                            SANTA FE GEOTHERMAL, INC.

                                  (CASA DIABLO)


                                10 MW NAME PLATE
                                NEW FACILITY GIII


                                               DOCUMENT NO.: 2430H
                                               EFFECTIVE DATE: September 7, 1983
                                               REVISED:  May 4, 1984






                              SCE STANDARD CONTRACT
                            LONG-TERM POWER PURCHASE

                                TABLE OF CONTENTS
                                -----------------

SECTION        TITLE                                                       PAGE
-------        -----                                                       ----

1              PROJECT SUMMARY                                               1

                          GENERAL TERMS & CONDITIONS

2              DEFINITIONS                                                   2

3              TERM                                                          9

4              GENERATING FACILITY                                           9

5              OPERATING OPTIONS                                            20

6              INTERCONNECTION FACILITIES                                   22

7              ELECTRIC LINES AND ASSOCIATED EASEMENTS                      24

8              METERING                                                     25

9              POWER PURCHASE PROVISIONS                                    27

10             PAYMENT AND BILLING PROVISIONS                               48

11             TAXES                                                        52

12             TERMINATION                                                  53

13             LIABILITY                                                    53

14             INSURANCE                                                    55

15             UNCONTROLLABLE FORCES                                        58

16             NONDEDICATION OF FACILITIES                                  60

17             PRIORITY OF DOCUMENTS                                        60

18             NOTICES AND CORRESPONDENCE                                   60


                                       2


19             PREVIOUS COMMUNICATIONS                                      61

20             NONWAIVER                                                    61

21             SUCCESSORS AND ASSIGNS                                       62

22             EFFECT OF SECTION HEADINGS                                   62

23             GOVERNING LAW                                                62

24             MULTIPLE ORIGINALS                                           63

               SIGNATURES                                                   63





                                       3


1. PROJECT SUMMARY
   ---------------

         This Contract is entered into between Southern California Edison
Company ("Edison") and Santa Fe Geothermal, Inc. ("Seller"). Seller is willing
to construct, own, and operate a Qualifying Facility and sell electric power to
Edison and Edison is willing to purchase electric power delivered by Seller to
Edison at the Point of Interconnection pursuant to the terms and conditions set
forth as follows:

         1.1 All notices shall be sent to Seller at the following address:

         Santa Fe Geothermal, Inc.
         5001 East Commerce Center Drive
         Bakersfield, CA 93309

         1.2 Seller's Generating Facility:

             a. Nameplate Rating: 10,000 kW.

             b. Location: Section 9, T35, R28E, MDBM

             c. Type (Check One):

                N/A Cogeneration Facility
                ---

                 X  Small Power Production Facility
                ---

             d. Delivery of power to Edison at a nominal 33,000 volts.

             e. Seller shall commence construction of the Generating Facility by
                1987.

             1.3 Edison Customer Service District;

             Bishop District
             374 Lagoon Street
             Bishop, CA 93514

             1.4 Location of Edison Operating Switching Center:

             Bishop Hydro Division
             Control Substation, Route 1
             Bishop, CA 93514

                                       4


             1.5 Contract Capacity: 10,000 kW

                  1.5.1 Estimated as-available capacity: 0 kW.

             1.6 Expected annual production: 74,460,000 kWh.

             1.7 Expected Firm Operation for each generating unit(s): January
                 1988

             1.8 Contract Term: 30 years

             1.9 Operating Options pursuant to Section 5: (Check One)

                    N/A    Operating Option I. Entire Generator output
                    ---    dedicated to Edison. No electric service or
                           standby service required.

                    N/A    Operating Option II. Entire Generator output
                    ---    dedicated to Edison with separate electric
                           service required.

                           a.  Electric service Tariff Schedule No. ____
                               pursuant to Section 10.2.

                           b.  Contact demand: ____ kW.

                    X      Operating Option III. Excess generator output
                           dedicated to Edison with Seller serving own load.

                           a.  Electric service Tariff Schedule No. TOG-8
                               pursuant to Section 10.2.

                           b.  Contract demand: 1,500 kW.

                           c.  Standby Demand: 1,500 kW pursuant to Section
                               10.2.

                           d.  Maximum electrical requirements expected: 1,500
                               kW.

                           e.  Standby electric service Tariff Schedule No.
                               SCG-l pursuant to Section 10.2.

                           f.  Minimum monthly charge for standby service: N/A.
                                                                           ---

         l.10 Interconnection Facilities Agreement pursuant to Section 6 shall
be: (Check One)

                    N/A    - Added Facilities Basis (Appendix A.1)
                    ---

                                       5


                    X      - Capital Contribution Basis (Appendix A.2)
                    ---

                    N/A    - Seller Owned and Operated Basis (Appendix A.3)
                    ---

         1.11 The Capacity Payment Option selected by Seller pursuant to Section
9.1 shall be: (Check One)

                    N/A    Option A - As-available capacity based upon:
                    ---
                           N/A   Standard Offer No. 1 Capacity Payment Schedule,
                           ---   or

                           N/A   Forecast of Annual As-Available Capacity
                           ---   Payment Schedule. The as-available capacity
                                 price (first year): $_______/kW-yr. (Appendix
                                 B)

                    X      Option B - Firm Capacity (check one)
                    ---
                           X     Standard Offer No. 2 Capacity Payment Schedule
                           ---   in effect at time of Contract execution.

                           N/A   Standard Offer No. 2 Capacity Payment Schedule
                           ---   in effect at time of Firm Operation of first
                                 generating unit.

                           Contract Capacity Price: $165/kW-yr. (Firm Capacity).

         1.12 The Energy Payment Option selected by Seller pursuant to Section
9.2 shall be: (Check One)

                    X      Option 1 - Forecast of Annual Marginal Cost of Energy
                    ---    in effect at date of execution of this Contract.
                           (Appendix C)

                    N/A    Option 2 - Levelized Forecast of Marginal Cost of
                    ---    Energy in effect at date of execution of this
                           Contract. Levelized Forecast for the expected date of
                           Firm Operation is _____(cent)/kWh. If Seller's
                           Generating Facility is an oil/natural gas fueled
                           cogenerator. Seller may not select Option 2.

                           For the energy payment refund pursuant to Section 9.5
                           under Option 2, Edison's Incremental Cost of Capital
                           is ____%.

                           Seller may change once between Options 1 and 2,
                           provided Seller delivers written notice of such
                           change at least 90 days prior to the date of Firm
                           Operation.

                                       6


                           For option 1 or 2, Seller elects to receive the
                           following percentages in 20% increments, the total of
                           which shall equal 100%:

                           100   Percent of Forecast of Marginal Cost of Energy
                           ---   (Annual or Levelized), not to exceed 20% of the
                                 annual forecast for oil/natural gas fueled
                                 cogenerators, and

                           0     Percent of Edison's published avoided cost of
                           ---   energy based on Edison's full avoided operating
                                 costs as updated periodically and accepted by
                                 the Commission.

                    N/A    Option 3 - Incremental Energy Rate. Seller may
                    ---    select:

                           N/A   Forecast of Incremental Energy Rate in effect
                           ---   at date of execution of this Contract (Appendix
                                 D),

                                                     or


                           N/A   A range in increments of 100 Btu/kWh above and
                           ---   below the forecast of incremental energy rates
                                 for each year during the First Period of the
                                 Contract Term as follows:

                           Year     Range      Year      Range     Year    Range

                           ----     -----      ----      -----     ----    -----

                           ----     -----      ----      -----     ----    -----

                           ----     -----      ----      -----     ----    -----

                           ----     -----      ----      -----     ----    -----

         1.13 Metering Location (Check one)

                    Seller elects metering location pursuant to Section 8 as
                    follows:

                    X      Edison's side of the Interconnection Facilities
                    ---

                    N/A    Seller's side of the Interconnection Facilities. Loss
                    ---    compensation factor is equal to ______, pursuant to
                           Section 8.3.

                                       7


                           GENERAL TERMS & CONDITIONS

2. DEFINITIONS
   -----------

         When used with initial capitalizations, whether in the singular or in
the plural, the following terms shall have the following meanings:

         2.1 Adjusted Capacity Price: The $/kW-yr capacity purchase price based
on the Capacity Payment Schedule in effect at time of Contract execution for the
time period beginning on the date of Firm Operation for the first generating
unit and ending on the date of termination or reduction of Contract Capacity
under Capacity Payment Option B.

         2.2 Appendix A.l: Interconnection Facilities Agreement -- Added
Facilities Basis

         2.3 Appendix A.2: Interconnection Facilities Agreement -- Capital
Contribution Basis

         2.4 Appendix A.3: Interconnection Facilities Agreement -- Seller Owned
and Operated Basis

         2.5 Appendix B: Forecast of Annual As Available Capacity Payment
Schedule

         2.6 Appendix C: Forecast of Annual Marginal Cost of Energy

         2.7 Appendix D: Forecast of Incremental Energy Rates.

         2.8 Capacity Payment Schedule(s): Published capacity payment
schedule(s) as authorized by the Commission for as-available or firm capacity.

         2.9 Commission: The Public Utilities Commission of the State of
California.

         2.10 Contract: This document and Appendices, as amended from time to
time.

         2.11 Contract Capacity: The electric power producing capability at the
Generating Facility which is committed to Edison.

         2.12 Contract Capacity Price: The capacity purchase price from the
Capacity Payment Schedule approved by the Commission for Capacity Payment Option
B.

         2.13 Contract Term: Period in years commencing with date of Firm
Operation for the first generating unit(s) during which Edison shall purchase
electric power from Seller.

                                       8


         2.14 Current Capacity Price: The $/kW-yr capacity price provided in the
Capacity Payment Schedule determined by the year of termination or reduction of
Contract Capacity and the number of years from such termination or reduction to
the expiration of the Contract Term for Capacity Payment Option B.

         2.15 Edison: The Southern California Edison Company.

         2.16 Edison Electric System Integrity: The state of operation of
Edison's electric system in a manner which is deemed to minimize the risk of
injury to persons and/or property and enables Edison to provide adequate and
reliable electric service to its customers.

         2.17 Emergency: A condition or situation which in Edison's sole
judgment affects Edison Electric System Integrity.

         2.18 Energy: Kilowatthours generated by the Generating Facility which
are purchased by Edison at the Point of Interconnection.

         2.19 Firm Operation: The date agreed on by the Parties on which each
generating unit(s) of the Generating Facility is determined to be a reliable
source of generation and on which such unit can be reasonably expected to
operate continuously at its effective rating (expressed in kW).

         2.20 First Period: The period of the Contract Term specified in Section
3.1.

         2.21 Forced Outage: Any outage other than a scheduled outage of the
Generating Facility that fully or partially curtails its electrical output.

         2.22 Generation Facility: All of Seller's generators, together with all
protective and other associated equipment and improvements, necessary to produce
electrical power at Seller's Facility excluding associated land, land rights,
and interests in land.

         2.23 Generator: The generator(s) and associated prime mover(s), which
are a part of the Generating Facility.

         2.24 Interconnection Facilities: Those protection, metering, electric
line(s), and other facilities required in Edison's sole judgment to permit an
electrical interface between Edison's system and the Generating Facility in
accordance with Edison's Tariff Rule No. 21 titled Cogeneration and Small Power
Production Interconnection Standards filed with the Commission.

         2.25 Interconnection Facilities Agreement: That document which is
specified in Section 1.10 and is attached hereto.

                                       9


         2.26 KVAR: Reactive kilovolt-ampere, a unit of measure of reactive
power.

         2.27 Operate: To provide the engineering, purchasing, repair,
supervision, training, inspection, testing, protection, operation, use,
management, replacement, retirement, reconstruction, and maintenance of and for
the Generating Facility in accordance with applicable California utility
standards and good engineering practices.

         2.28 Operating Representatives: Individual(s) appointed by each Party
for the purpose of securing effective cooperation and interchange of information
between the Parties in connection with administration and technical matters
related to this Contract.

         2.29 Parties: Edison and Seller.

         2.30 Party: Edison or Seller.

         2.31 Peak Months: Those months which the Edison annual system peak
demand could occur. Currently, but subject to change with notice, the peak
months for the Edison system are June, July, August, and September.

         2.32 Point of Interconnection: The point where the transfer of
electrical energy between Edison and Seller takes place.

         2.33 Project: The Generating Facility and Interconnection Facilities
required to permit operation of Seller's Generator in parallel with Edison's
electric system.

         2.34 Protective Apparatus: That equipment and apparatus installed by
Seller and/or Edison pursuant to Section 4.2.

         2.35 Qualifying Faculty: Cogeneration or Small Power Production
Facility which meets the criteria as defined in Title 18, Code of Federal
Regulations, Section 292.201 through 292.207.

         2.36 Second Period: The period of the Contract Term specified in
Section 3.2.

         2.37 Seller: The Party identified in Section 1.0.

         2.38 Seller's Facility: The premises and equipment of Seller located as
specified in Section 1.2.

         2.39 Small Power Production Facility: The facilities and equipment
which use biomass, waste, or renewable resources, including wind, solar,
geothermal, and water, to produce electrical energy as defined in Title 18, Code
of Federal Regulations, Section 292.201 through 292.207.

                                       10


         2.40 Standby Demand: Seller's electrical load requirement that Edison
is expected to serve when Seller's Generating Facility is not available.

         2.41 Summer Period: Defined in Edison's Tariff Schedule No. TOU-8 as
now in effect or as may hereafter be authorized by the Commission.

         2.42 Tariff Schedule No. TOU-8: Edison's time-of-use energy tariff for
electric service exceeding 500 kW, as now in effect or as may hereafter be
authorized by the Commission.

         2.43 Uncontrollable Forces: Any occurrence beyond the control of a
Party which causes that Party to be unable to perform its obligations hereunder
and which a Party has been unable to overcome by the exercise of due diligence,
including but not limited to flood, drought, earthquake, storm, fire,
pestilence, lightning and other natural catastrophes, epidemic, war, riot, civil
disturbance or disobedience, strike, labor dispute, action or inaction of
legislative, judicial, or regulatory agencies, or other proper authority, which
may conflict with the terms of this Contract, or failure, threat of failure or
sabotage of facilities which have been maintained in accordance with good
engineering and operating practices in California.

         2.44 Winter Period: Defined in Edison's Tariff Schedule No. TOU-8 as
now in effect or as may hereafter be authorized by the Commission.

         3. TERM
            ----

         This Contract shall be effective upon execution by the Parties and
shall remain effective until either Party gives 90 days prior written notice of
termination to the other Party, except that such notice of termination shall not
be effective to terminate this Contract prior to expiration of the Contract Term
specified in Section 1.8.

         3.1 The First Period of the Contract Term shall commence upon date of
Firm Operation but not later than five years from the date of execution of this
Contract.

         a.  If the Contract Term specified in Section 1.8 is 15 years, the
             First Period of the Contract Term shall be for five years.

         b.  If the Contract Term specified in Section 1.8 is 20, 25, or 30
             years, the First Period of the Contract Term shall be for 10 years.

         3.2 The Second Period of the Contract Term shall commence upon
expiration of the First Period and shall continue for the remainder of the
Contract Term.

                                       11


4. GENERATING FACILITY
   -------------------

         4.1 Ownership

         The Generating Facility shall be owned by Seller.

         4.2 Design

                  4.2.1 Seller, at no cost to Edison, shall:

                        a.  Design the Generating Facility.

                        b.  Acquire all permits and other approvals necessary
                            for the construction, operation, and maintenance of
                            the Generating Facility.

                        c.  Complete all environmental impact studies necessary
                            for the construction, operation, and maintenance of
                            the Generating Facility.

                        d.  Furnish and install the relays, meters, power
                            circuit breakers, synchronizer, and other control
                            and Protective Apparatus as shall be agreed to by
                            the Parties as being necessary for proper and safe
                            operation of the Project in parallel with Edison's
                            electric system.

                  4.2.2 Edison shall have the right to:

                        a.  Review the design of the Generating Facility's
                            electrical system and the Seller's Interconnection
                            Facilities. Such review may include, but not be
                            limited to, the Generator, governor, excitation
                            system, synchronizing equipment, protective relays,
                            and neutral grounding.

                            The Seller shall be notified in writing of the
                            outcome of the Edison review within 30 days of the
                            receipt of all specifications for both the
                            Generating Facility and the Interconnection
                            Facilities. Any flaws perceived by Edison in the
                            design shall be described in Edison's written
                            notice.

                        b.  Request modifications to the design of the
                            Generating Facility's electrical system and the
                            Interconnection Facilities. Such modifications shall
                            be required if necessary to maintain Edison

                                       12


                            Electric System Integrity when in parallel with the
                            Edison electric system.

         4.2.3 If Seller's Generating Facility includes an induction-type
generator(s), Seller shall provide individual power factor correction capacitors
for each such generator. Such capacitors shall be switched on and off
simultaneously with each of the associated induction-type generator(s) of the
Generating Facility. The KVAR rating of such capacitors shall be the highest
standard value which will not exceed such generators no-load KVAR requirement.
Seller shall not install power factor correction in excess of that required by
this Section unless agreed to in writing by the Parties.

         4.3 Construction

         Edison shall have the right to review, consult with, and make
recommendations regarding Seller's construction schedule and to monitor the
construction and start-up of the Project. Seller shall notify Edison, at least
one year prior to Firm Operation, of changes in Seller's Construction Schedule
which may affect the date of Firm Operation.

         4.4 Operation

               4.4.1 The Generating Facility and Seller's Protective Apparatus
shall be operated and maintained in accordance with applicable California
utility industry standards and good engineering practices with respect to
synchronizing, voltage and reactive power control. Edison shall have the right
to monitor operation of the Project and may require changes in Seller's method
of operation if such changes are necessary, in Edison's sole judgment, to
maintain Edison Electric System Integrity.

               4.4.2 Seller shall notify in writing Edison's Operating
Representative at least 14 days prior to:

                    a.   the initial testing of Seller's Protective Apparatus;
                         and

                    b.   the initial parallel operation of Seller's Generators
                         with Edison's electrical system.

                    Edison shall have the right to have a representative present
                    at each event.

               4.4.3 Edison shall have the right to require Seller to disconnect
the Generator from the Edison electric system or to reduce the electrical output
from the Generator into the Edison electric system, whenever Edison determines,
in its sole judgment, that such a disconnection is necessary to facilitate
maintenance of Edison's facilities, or to maintain Edison Electric System
Integrity. If Edison requires Seller to disconnect the

                                       13


Generator from the Edison electric system pursuant to this Section 4.4.3, Seller
shall have the right to continue to serve its total electrical requirements
provided Seller has elected Operating Option III. Each Party shall endeavor to
correct, within a reasonable period, the condition on its system which
necessitates the disconnection or the reduction of electrical output. The
duration of the disconnection or the reduction In electrical output shall be
limited to the period of time such a condition exists.

               4.4.4 The Generating Facility shall be operated with all of
Seller's Protective Apparatus in service whenever the Generator is connected to
or is operated in parallel with the Edison electric system. Any deviation for
brief periods of emergency or maintenance shall only be by agreement of the
Parties.

               4.4.5 Each Party shall keep the other Party's Operating
Representative informed as to the operating schedule of their respective
facilities affecting each other's operation hereunder, including any reduction
in Contract Capacity availability. In addition, Seller shall provide Edison with
reasonable advance notice regarding its scheduled outages including any
reduction in Contract Capacity availability. Reasonable advance notice is as
follows:

                     SCHEDULED OUTAGE                        ADVICE NOTICE TO
                    EXPECTED DURATION                             EDISON
                    -----------------                             ------
  Less than one day                                             24 Hours

  One day or more (except major overhauls)                      1 Week

           Major overhaul                                       6 Months

               4.4.6 Notification by each Party's Operating Representative of
outage date and duration should be directed to the other Party's Operating
Representative by telephone.

               4.4.7 Seller shall not schedule major overhauls during Peak
Months.

               4.4.8 Seller shall maintain in operating log at Seller's Facility
with records of: real and reactive power production; changes in operating
status, outages, Protective Apparatus operations; and any unusual conditions
found during inspections. Changes in setting shall also be logged for Generators
which are "block-loaded" to a specific kW capacity. In addition, Seller shall
maintain records applicable to the Generating Facility, including the electrical
characteristics of the Generator and settings or adjustments of the Generator
control equipment and protective devices. Information maintained pursuant to
this Section 4.4.8 shall be provided to Edison, within 30 days of Edison's
request.

                                       14


               4.4.9 If, at any time, Edison doubts the integrity of any of
Seller's Protective Apparatus and believes that such loss of integrity would
impair the Edison Electric System Integrity, Seller shall demonstrate, to
Edison's satisfaction, the correct calibration and operation of the equipment in
question.

               4.4.10 Seller shall test all protective devices specified in
Section 4.2 with qualified Edison personnel present at intervals not to exceed
four years.

               4.4.11 Seller shall, to the extent possible, provide reactive
power for its own requirements, and where applicable, the reactive power losses
of interfacing transformers. Seller shall not deliver excess reactive power to
Edison unless otherwise agreed upon between the Parties.

               4.4.12 Seller warrants that the Generating Facility meets the
requirements of a Qualifying Facility as of the effective date of this Contract
and continuing through the Contract Term.

               4.4.13 The Seller warrants that the Generating Facility shall at
all times conform to all applicable laws and regulations. Seller shall obtain
and maintain any governmental authorizations and permits for the continued
operation of the Generating Facility. If at any time Seller does not hold such
authorizations and permits, Seller agrees to reimburse Edison for any loss which
Edison incurs as a result of the Seller's failure to maintain governmental
authorization and permits.

               4.4.14 At Edison's request, Seller shall make all reasonable
effort to deliver power at an average rate of delivery at least equal to the
Contract Capacity during periods of Emergency. In the event that the Seller has
previously scheduled an outage coincident with an Emergency, Seller shall make
all reasonable efforts to reschedule the outage. The notification periods listed
in Section 4.4.5 shall be waived by Edison if Seller reschedules the outage.

               4.4.15 Seller shall demonstrate the ability to provide Edison the
specified Contract Capacity within 30 days of the date of Firm Operation.
Thereafter, at least once per year at Edison's request, Seller shall demonstrate
the ability to provide Contract Capacity for a reasonable period of time as
required by Edison. Seller's demonstration of Contract Capacity shall be at
Seller's expense and conducted at a time and pursuant to procedures mutually
agreed upon by the Parties. If Seller fails to demonstrate the ability to
provide the Contract Capacity, the Contract Capacity shall be reduced by
agreement of the Parties pursuant to Section 9.1.2.5.

                                       15


         4.5 Maintenance

               4.5.l Seller shall maintain the Generating Facility in accordance
with applicable California utility industry standards and good engineering and
operating practices. Edison shall have the right to monitor such maintenance of
the Generating Facility. Seller shall maintain and deliver a maintenance record
of the Generating Facility to Edison's Operating Representatives upon request.

               4.5.2 Seller shall make a reasonable effort to schedule routine
maintenance during Off-Peak Months. Outages for scheduled maintenance shall not
exceed a total of 30 peak hours for the Peak Months.

               4.5.3 The allowance for scheduled maintenance is as follows:

                    a.   Outage periods for scheduled maintenance shall not
                         exceed 840 hours (35 days) in any 12-month period. This
                         allowance may be used in increments of an hour or
                         longer on a consecutive or nonconsecutive basis.

                    b.   Seller may accumulate unused maintenance hours on a
                         year-to-year basis up to a maximum of 1,080 hours (45
                         days). This accrued time must be used consecutively and
                         only for major overhauls.

         4.6. Any review by Edison of the design, construction, operation, or
maintenance of the Project is solely for the information of Edison. By making
such review, Edison makes no representation as to the economic and technical
feasibility, operational capability, or reliability of the Project. Seller shall
in no way represent to any third party that any such review by Edison of the
Project, including, but not limited to, any review of the design, construction,
operation, or maintenance of the Project by Edison, is a representation by
Edison as to the economic and technical feasibility, operational capability, or
reliability of said facilities. Seller is solely responsible for economic and
technical feasibility, operational capability, and reliability thereof.

5. OPERATING OPTIONS
   -----------------

         5.1 Seller shall elect in Section 1.9 to Operate its Generating
Facility in parallel with Edison's electric system pursuant to one of the
following options:

               a.   Operating Option I: Seller dedicates the entire Generator
                    output to Edison with no electrical service required from
                    Edison.

                                       16


               b.   Operating Option II: Seller dedicates the entire Generator
                    output to Edison with electrical service required from
                    Edison.

               c.   Operating Option III: Seller dedicates to Edison only that
                    portion of the Generator output in excess of Seller's
                    electrical service requirements. As much as practicable,
                    Seller intends to serve its electrical requirements from the
                    Generator output and will require electrical standby from
                    Edison as designated in Section 1.9.

         5.2 After expiration of the First Period of the Contract Term, Seller
may change the Operating Option, but not more than once per year upon at least
90 days prior written notice to Edison. A reduction in Contract Capacity as a
result of a change in operating options shall be subject to Section 9.1.2.5.
Edison shall not be required to remove or reserve capacity of Interconnection
Facilities made idle by a change in operating options. Edison may dedicate any
such idle Interconnection Facilities at any time to serve other customers or to
interconnect with other electric power sources. Edison shall process requests
for changes of operating option in the chronological order received.

         5.2.1 When the Seller wishes to reserve Interconnection Facilities paid
for by the Seller but idled by a change in operation option, Edison shall impose
a special facilities charge related to the operation and maintenance of the
Interconnection Facility. When the Seller no longer needs said facilities for
which it has paid, the Seller shall receive credit for the net salvage value of
the Interconnection Facilities dedicated to Edison's use. If Edison is able to
make use of these facilities to serve other customers, the Seller shall receive
the fair market value of the facilities determined as of the date the Seller
either decides no longer to use said facilities or fails to pay the required
maintenance fee.

6.  INTERCONNECTION FACILITIES
    --------------------------

         6.1 The Parties shall execute an Interconnection Facilities Agreement
selected by Seller in Section 1.10, covering the design, installation, operation
and maintenance of the Interconnection Facilities required in Edison's sole
judgment, to permit an electrical interface between the Parties pursuant to
Edison's Tariff Rule No. 21.

         6.2 The cost for the Interconnection Facilities set forth in the
appendices specified in Section 1.10, are estimates only for Seller's
information and will be adjusted to reflect recorded costs after installation is
complete; except that, upon Seller's written request to Edison, Edison shall
provide a binding estimate which shall be the basis for the Interconnection
Facilities cost in the Interconnection Facilities Agreement executed by the
Parties.

                                       17


         6.3 The nature of the Interconnection Facilities and the Point of
Interconnection shall be set forth either by equipment lists or appropriate
one-line diagrams and shall be attached to the appropriate appendix specified in
Section 1.10.

         6.4 The design, installation, operation, maintenance, and modifications
of the Interconnection Facilities shall be a Sellers expense.

         6.5 Seller shall not commence parallel operation of the Generating
Facility until written approval for operation of the Interconnection Facilities
has been received from Edison. The Seller shall notify Edison at least
forty-five days prior to the initial energizing of the Point of Interconnection.
Edison shall have the right to inspect the Interconnection Facilities within
thirty days of receipt of such notice. If the facilities do not pass Edison's
inspection, Edison shall provide in writing the reasons for this failure within
five days of the inspection.

         6.6 Seller, at no cost to Edison, shall acquire all permits and
approvals and complete all environmental impact studies necessary for the
design, installation, operation, and maintenance of the Interconnection
Facilities.

7. ELECTRIC LINES AND ASSOCIATED EASEMENTS
   ---------------------------------------

         7.1 Edison shall, as it deems necessary or desirable, build electric
lines, facilities and other equipment, both overhead and underground, on and off
Seller's Facility, for the purpose of effecting the agreements contained in this
Contract. The physical location of such electric lines, facilities and other
equipment on Seller's Facility shall be determined by agreement of the Parties.

         7.2 Seller shall reimburse Edison for the cost of acquiring property
rights off Sellers's Facility required by Edison to meet its obligations under
this Contract.

         7.3 Seller shall grant to Edison, without cost to Edison, and by an
instrument of conveyance, acceptable to Edison, rights of way, easements and
other property interests necessary to construct, reconstruct, use, maintain,
alter, add to, enlarge, repair, replace, inspect and remove, at any time, the
electric lines, facilities or other equipment, both overhead and underground,
which are required by Edison to effect the agreements contained in the Contract.
Seller shall also provide the rights of ingress and egress at all reasonable
times necessary for Edison to perform the activities contemplated in the
Contract.

         7.4 The electric lines, facilities, or other equipment referred to in
this Section 7 installed by Edison on or off Seller's Facility shall be and
remain the property of Edison.

                                       18


         7.5 Edison shall have no obligation to Seller for any delay or
cancellation due to inability to acquire a satisfactory right of way, easements,
or other property interests.

8. METERING
  ---------

         8.1 All meters and equipment used for the measurement of electric power
for determining Edison's payments to Seller pursuant to this Contract shall be
provided, owned, and maintained by Edison at Seller's expense in accordance with
Edison's Tariff Rule No. 21.

         8.2 All meters and equipment used for billing Seller for electric
service provided to Seller by Edison under Operating Options II or III shall be
provided, owned, and maintained by Edison at Edison's expense in accordance with
Edison's Tariff Rule No. 16.

         8.3 The meters and equipment used for measuring the Energy sold to
Edison shall be located on the side of the Interconnection Facilities as
specified by Seller in Section 1.13. If the metering equipment is located on
Seller's side of the Interconnection Facilities, then a loss compensation factor
agreed upon by the Parties shall be applied. At the written request of the
Seller, and at Seller's sole expense, Edison shall measure actual transformer
losses. If the actual measured value differs from the agreed-upon loss
compensation factor, the actual value shall be applied prospectively. If the
meters are placed on Edison's side of the Interconnection Facilities, service
shall be provided at the available transformer high-side voltage.

         8.4 For purposes of monitoring the Generator operation and the
determination of standby charges, Edison shall have the right to require, at
Seller's expense, the installation of generation metering. Edison may also
require the installation of telemetering equipment at Seller's expense for
Generating Facilities equal to or greater than 10 MW. Edison may require the
installation of telemetering equipment at Edison's expense for Generating
Facilities less than 10 MW.

         8.5 Edison's meters shall be sealed and the seals shall be broken only
when the meters are to be inspected, tested, or adjusted by Edison. Seller shall
be given reasonable notice of testing and have the right to have its Operating
Representative present on such occasions.

         8.6 Edison's meters installed pursuant to this Contract shall be tested
by Edison, at Edison's expense, at least once each year and at any reasonable
time upon request by either Party, at the requesting Party's expense. If Seller
makes such request, Seller shall reimburse said expense to Edison within thirty
days after presentation of a bill therefor.

         8.7 Metering equipment found to be inaccurate shall be repaired,
adjusted, or replaced by Edison such that the metering accuracy of said
equipment shall be within two

                                       19


percent. If metering equipment inaccuracy exceeds two percent, the correct
amount of Energy and Contract Capacity delivered during the period of said
inaccuracy shall be estimated by Edison and agreed upon by the Parties.

9. POWER PURCHASE PROVISIONS
   -------------------------

         Prior to the date of Firm Operation, Seller shall be paid for Energy
only pursuant to Edison's published avoided cost of energy based on Edison's
full avoided operating cost as periodically updated and accepted by the
Commission. If at any time Energy can be delivered to Edison and Seller is
contesting the claimed jurisdiction of any entity which has not issued a license
or other approval for the Project, Seller, in its sole discretion and risk, may
deliver Energy to Edison and for any Energy purchased by Edison, Seller shall
receive payment from Edison for (i) Energy pursuant to this Section, and (ii)
as-available capacity based on a capacity price from the Standard Offer No. 1
Capacity Payment Schedule as approved by the Commission. Unless and until all
required license; and approvals have been obtained, Seller may discontinue
deliveries at any time.

9.1 Capacity Payments

         Seller shall sell to Edison and Edison shall purchase from Seller
capacity pursuant to the Capacity Payment Option selected by Seller in Section
1.11. The Capacity Payment Schedules will be based on Edison's full avoided
operating costs as approved by the Commission through the life of this Contract.
Data used to derive Edison's full avoided costs will be made available to the
Seller, to the extent specified by Seller upon request.

               9.1.1 Capacity Payment Option A -- As Available Capacity.

               If Seller selects Capacity Payment Option A, Seller shall be paid
a monthly, capacity payment calculated pursuant to the following formula:

               MONTHLY CAPACITY PAYMENT = (A x D) + (B x D) / (C x D)

               Where A =  kWh purchased by Edison during on-peak periods defined
                          in Edison's Tariff Schedule No. TOU-8.

                     B =  kWh purchased by Edison during mid-peak periods
                          defined in Edison's Tariff Schedule No. TOU-8.

                     *C = kWh purchased by Edison during off-peak periods
                          defined in Edison's Tariff Schedule No. TOU-8.

                     D  = The appropriate time differentiated capacity price
                          from either the Standard Offer No. 1 Capacity Payment
                          Schedule or

                                       20

                          Forecast of Annual As-Available Capacity Payment
                          Schedule as specified by Seller in Section 1.11.

               9.1.1.1 If Seller specifies the Standard Offer No. 1 Capacity
Payment Schedule in Section 1.11, then the formula set forth in Section 9.1.1
shall be computed with D equal to the appropriate time differentiated capacity
price from the Standard Offer No. 1 Capacity Payment Schedule for the Contract
Term.

               9.1.1.2 If Seller specifies the Forecast of Annual As-Available
Capacity Payment Schedule in Section 1.11, the formula set forth in Section
9.1.1 shall be computed as follows:

                    a.   During the First Period of the Contract Term, D shall
                         equal the appropriate time differentiated capacity
                         price from the Forecast of Annual As-Available Capacity
                         Payment Schedule.

                    b.   During the Second Period of the Contract Term, the
                         formula shall be computed with D equal to the
                         appropriate time differentiated capacity price from
                         Standard Offer No. 1 Capacity Payment Schedule, but not
                         less than the greater of (i) the appropriate time
                         differentiated capacity price from the Forecast of
                         Annual As-Available Capacity Payment Schedule for the
                         last year of the First Period, or (ii) the appropriate
                         time differentiated capacity price from the Standard
                         Offer No. 1 Capacity Payment Schedule for the first
                         year of the Second Period.

               9.1.2 Capacity Payment Option B - Firm Capacity Purchase

               If Seller selects Capacity Payment Option B, Seller shall provide
to Edison for the Contract Term the Contract Capacity specified in Section 1.5,
or as adjusted pursuant to Section 9.1.2.6, and Seller shall be paid as follows:

               9.1.2.1 If Seller meets the performance requirements set forth in
Section 9.1.2.2, Seller shall be paid a Monthly Capacity Payment, beginning from
the date of Firm Operation equal to the sum of the on-peak, mid-peak, and
off-peak Capacity Period Payments. Each capacity period payment is calculated
pursuant to the following formula:

               MONTHLY CAPACITY PAYMENT = A x B x C x D

               Where A = Contract Capacity Price specified in Section 1.11 based
                         on the Standard Offer No. 2 Capacity Payment Schedule
                         as approved

                                       21


                         by the Commission and in effect on the date of the
                         execution of this Contract.

                     B = Conversion factors to convert annual capacity prices to
                         monthly payments by time of delivery as specified in
                         Standard Offer No. 2 Capacity Payment Schedule and
                         subject to periodic modifications as approved by the
                         Commission.

                     C = Contract Capacity specified in Section 1.5.

                     D = Period Performance Factor, not to exceed 1.0,
                         calculated as follows:

                         Period kWh purchased by Edison limited by the level of
                         Contract Capacity
                         ------------------------------------------------------
                         0.8 x Contract Capacity x (Period Hours minus
                         Maintenance Hours Allowed in Section 4.5.)

               9.1.2.2 Performance Requirements

               To receive the Monthly Capacity Payment in Section 9.1.2.1,
Seller shall provide the Contract Capacity in each Peak Month for all on-peak
hours as such peak hours are defined in Edison's Tariff Schedule No. TOU-8 on
file with the Commission, except that Seller is entitled to a 20% allowance for
Forced Outages for each Peak Month. Seller shall not be subject to such
performance requirements for the remaining hours of the year.

                    a.   If Seller fails to meet the requirements specified in
                         Section 9.1.2.2, Seller, in Edison's sole discretion,
                         may be placed on probation for a period not to exceed
                         13 months. If Seller fails to meet the requirements
                         specified in Section 9.1.2.2 during the probationary
                         period, Edison may derate the Contract Capacity to the
                         greater of the capacity actually delivered during the
                         probationary period, or the capacity at which Seller
                         can reasonably meet such requirements. A reduction in
                         Contract Capacity as a result of this Section 9.1.2.2
                         shall be subject to Section 9.1.2.5.

                    b.   If Seller fails to meet the requirements set forth in
                         Section 9.1.2.2 due to a Forced Outage on the Edison
                         system or a request to reduce or curtail delivery under
                         Section 9.4. Edison shall continue Monthly Capacity
                         Payments pursuant to Capacity Payment Option B. The
                         Contract Capacity curtailed shall be

                                       22


                         treated the same as scheduled maintenance outages in
                         the calculation of the Monthly Capacity Payment.

               9.1.2.3 If Seller is unable to provide Contract Capacity due to
Uncontrollable Forces, Edison shall continue Monthly Capacity Payments for 90
days from the occurrence of the Uncontrollable Force. Monthly Capacity Payments
payable during a period of interruption or reduction by reason of an
Uncontrollable Force shall be treated the same as scheduled maintenance outages.

               9.1.2.4 Capacity Bonus Payment For Capacity Payment Option B,
Seller may receive a Capacity Bonus Payment as follows:

                    a.   Bonus During Peak Months -- For a Peak Month, Seller
                         shall receive a Capacity Bonus Payment if (i) the
                         requirements set forth in Section 9.1.2.2 have been
                         met, and (ii) the on-peak capacity factor exceeds 85%.

                    b.   Bonus During Non-Peak Months -- For a non-peak month,
                         Seller shall receive a Capacity Bonus Payment if (i)
                         the requirements set forth in Section 9.1.2.2 have been
                         met, (ii) the on-peak capacity factor for each Peak
                         Month during the year was at least 85%, and (iii) the
                         on-peak capacity factor for the non-peak month exceeds
                         85%.

                    c.   For any eligible month, the Capacity Bonus Payment
                         shall be calculated as follows:

               CAPACITY BONUS PAYMENT = A x B x C x D

               Where A = (1.2 On-Peak Capacity Factor) - 1.02

               Where the On-Peak Capacity Factor, not to exceed 1.0, is
calculated as follows:

                    Period kWh purchased by Edison limited by the level of
                    Contract Capacity
                    ------------------------------------------------------
                    (Contract Capacity) x (Period Hours minus Maintenance
                    Hours Allowed in Section 4.5)

               B =  Contract Capacity Price specified in Section 1.11 for
                    Capacity Payment Option B

               C =  1/12

                                       23


               D =  Contract Capacity specified in Section 1.5

                    d.   When Seller is entitled to receive a Capacity Bonus
                         Payment, the Monthly Capacity Payment shall be the sum
                         of the Monthly Capacity Payment pursuant to Section
                         9.1.2.1 and the Monthly Capacity Bonus Payment pursuant
                         to this Section.

                    e.   For Capacity Payment Option B, Seller shall be paid for
                         capacity in excess of Contract Capacity based on the
                         as-available capacity price in Standard Offer No. 1
                         Capacity Payment Schedule, as updated and approved by
                         the Commission. Seller shall not receive any
                         as-available capacity payment in excess of Contract
                         Capacity if Sellers Generating Facility is a small
                         hydro project.

               9.1.2.5 Capacity Reduction

                    a.   Seller may reduce the Contract Capacity specified in
                         Section 1.5, provided that Seller gives Edison prior
                         written notice for a period determined by the amount of
                         Contract Capacity reduced as follows:

                                Amount of Contract                Length of
                                 Capacity Reduced              Notice Required
                                 ----------------              ---------------

                                25,000 kW or under                12 months

                                25,001 - 50,000 kW                36 months

                                50,001 - 100,000 kW               48 months

                                  over 100,000 kW                 60 months

                    b.   Subject to Section 10.4, Seller shall refund to Edison
                         with interest at the current published Federal Reserve
                         Board three months prime commercial paper rate an
                         amount equal to the difference between (i) the
                         accumulated Monthly Capacity Payments paid by Edison
                         pursuant to Capacity Payment Option B up to the time
                         the reduction notice is received by Edison, and (ii)
                         the total capacity payments which Edison would have
                         paid if based on the Adjusted Capacity Price.

                                       24


                    c.   From the date the reduction notice is received to the
                         date of actual capacity reduction, Edison shall make
                         capacity payments based on the Adjusted Capacity Price
                         for the amount of Contract Capacity being reduced.

                    d.   Seller may reduce Contract Capacity without the notice
                         prescribed in Section 9.1.2.5(a), provided that Seller
                         shall refund to Edison the amount specified in Section
                         9.1.2.5(b) and an amount equal to: (i) the amount of
                         Contract Capacity being reduced, times (ii) the
                         difference between the Current Capacity Price and the
                         Contract Capacity Price, times (iii) the number of
                         years and fractions thereof (not less than one year) by
                         which the Seller has been deficient in giving
                         prescribed notice. If the Current Capacity Price is
                         less than the Contract Capacity Price, only payment
                         under Section 9.1.2.5(b) shall be due to Edison.

               9.1.2. Adjustment to Contract Capacity. The Parties may agree in
writing at any time to adjust the Contract Capacity. Seller may reduce the
Contract Capacity pursuant to Section 9.1.2.5. Seller may increase the Contract
Capacity with Edison's approval and thereafter receive payment for the increased
capacity in accordance with the Contract Capacity Price for the Capacity Payment
Option selected by Seller for the remaining Contract Term.

         9.2 Energy Payments - First Period

         During the First Period of the Contract Term, Seller shall be paid a
Monthly Energy Payment for the Energy delivered by the Seller to Edison at the
Point of Interconnection pursuant to the Energy Payment Option selected by
Seller in Section 1.12, as follows. (Data used to derive Edison's Energy
payments for the First Period will be made available to the Seller, to the
extent specified by Seller, upon request.)

               9.2.1 Energy Payment Option 1 -- Forecast of Annual Marginal Cost
of Energy. If Seller selects Energy Payment Option 1, then during the First
Period of the Contract Term, Seller shall be paid a Monthly Energy Payment for
Energy delivered by Seller and purchased by Edison during each month in the
First Period of the Contract Term pursuant to the following formula:

               MONTHLY ENERGY PAYMENT = (A x D) + (B x D) + (C x D)

                                       25


               Where A = kWh purchased by Edison during on-peak periods defined
                         in Edison's Tariff Schedule No. TOU-8.

                     B = kWh purchased by Edison during mid-peak periods defined
                         in Edison's Tariff Schedule No. TOU-8.

                     C = kWh purchased by Edison during off-peak periods defined
                         in Edison's Tariff Schedule No. TOU-8.

                     D = The sum of:

                         (i) the appropriate time differentiated energy price
                         from the Forecast of Annual Marginal Cost of Energy,
                         multiplied by the decimal equivalent of the percentage
                         of the forecast specified in Section 1.12, and (ii) the
                         appropriate time differentiated energy price from
                         Edison's published avoided cost of energy multiplied by
                         the decimal equivalent of the percentage of the
                         published energy price specified in Section 1.12.

                     9.2.2 Energy Payment Option 2 -- Levelized Forecast of
Marginal Cost of Energy. If Seller selects Energy Payment Option 2, then during
the First Period of the Contract Term, Seller shall be paid a Monthly Energy
Payment for Energy delivered by Seller and purchased by Edison each month during
the First Period of the Contract Term pursuant to the following formula:

MONTHLY ENERGY PAYMENT = (A x D) + (B x D) + (C x D)

               Where A = kWh purchased by Edison during on-peak periods defined
                         in Edison's Tariff Schedule No. TOU-8.

                     B = kWh purchased by Edison during mid-peak periods defined
                         in Edison's Tariff Schedule No. TOU-8.

                     C = kWh purchased by Edison during off-peak periods defined
                         in Edison's Tariff Schedule No. TOU-8.

                     D = The sum of:

                         (i) the appropriate time differentiated energy price
                         from the Levelized Forecast of Marginal Cost of Energy,
                         for the First Period of the Contract Term multiplied by
                         the decimal

                                       26


                         equivalent of the percentage of the forecast levelized
                         specified in Section 1.12, and

                         (ii) the appropriate time differentiated energy price
                         from Edison's published avoided cost of energy
                         multiplied by the decimal equivalent of the percentage
                         of the published energy price specified in Section
                         1.12.

               9.2.2.1 Performance Requirement for Energy Payment Option 2

               During the First Period when the annual forecast referred to in
Section 9.2.1 is greater than the levelized forecast referred to in Section
9.2.2, Seller shall deliver to Edison at least 70 percent of the average annual
kWh delivered to Edison during those previous periods when the levelized
forecast referred to in Section 9.2.2 is greater than the annual forecast
referred to in Section 9.2.1 as resource conditions permit for solar, wind, and
hydro Generating Facilities and excluding uncontrollable forces. If Seller does
not meet the performance requirements of this Section 9.2.2.1, Seller shall be
subject to Section 9.5.

         9.3 Energy Payments - Second Period

         During the Second Period of the Contract Term, Seller shall be paid a
Monthly Energy Payment for Energy delivered by Seller and purchased by Edison at
a rate equal to 100% of Edison's published avoided cost of energy based on
Edison's full avoided operating cost as updated periodically and accepted by the
Commission, pursuant to the following formula:

MONTHLY ENERGY PAYMENT = kWh purchased by Edison for each on-peek, mid-peak, and
                         off-peak time period defined in Edison's Tariff
                         Schedule No. TOU-8
                       x Edison's published avoided cost of energy by time of
                         delivery for each time period.

         Data used to derive Edison's full avoided costs will be made available
to the Seller, to the extent specified by Seller, upon request.

         9.4 Edison shall not be obligated to accept or pay for Energy, and may
request Seller whose Generating Facility is one (l) MW or greater to discontinue
or reduce delivery of Energy, for not more than 300 hours annually during
off-peak hours when (i) purchases would result in costs greater than those which
Edison would incur if it did not purchase Energy from Seller but instead
utilized an equivalent amount of Energy generated from another Edison source, or
(ii) the Edison Electric System demand would require that Edison hydro-energy be
spilled to reduce generation.

                                       27


         9.5 Energy Payment Refund

         If Seller elects Energy Payment option 2, Seller shall be subject to
the following:

               9.5.1 If Seller fails to perform the Contract obligations for any
reason during the First Period of the Contract Term, or fails to meet the
performance requirements set forth in Section 9.2.2.1, and at the time of such
failure to perform, the net present value of the cumulative Energy payments
received by Seller pursuant to Energy Payment Option 2 exceeds the net present
value of what Seller would have been paid pursuant to Energy Payment Option 1,
Seller shall make an energy payment refund equal to the difference in such net
present values in the year in which the refund is due. The present value
calculation shall be based upon the rate of Edison's incremental cost of capital
specified in Section 1.12.

               9.5.2 Not less than 90 days prior to the date Energy is first
delivered to the Point of Interconnection, Seller shall provide and maintain a
performance bond, surety bond, performance insurance, corporate guarantee, or
bank letter of credit, satisfactory to Edison, which shall insure payment to
Edison of the Energy Payment Refund at any time during the First Period. Edison
may, in its sole discretion accept another form of security except that in such
instance a 1-1/2 percent reduction shall then apply to the levelized forecast
referred to in Section 9.2.2 in computing payments for Energy. Edison shall be
provided with certificates evidencing Seller's compliance with the security
requirements in this Section which shall also include the requirement that
Edison be given 90 days prior written notice of the expiration of such security.

               9.5.3 If Seller fails to provide replacement security not less
than 60 days prior to the date of expiration of existing security, the Energy
Payment Refund provided in Section 9.5 shall be payable forthwith. Thereafter,
payments for Energy shall be 100 percent of the Monthly Energy Payment provided
in Section 9.2.1.

               9.5.4 If Edison at any time determines the security to be
otherwise inadequate, and so notifies Seller, payments thereafter for Energy
shall be 100 percent of the Monthly Energy Payment provided in Section 9.2.1. If
within 30 days of the date Edison gives notice of such inadequacies, Seller
satisfies Edison's security requirements, Energy Payment Option 2 shall be
reinstated. If Seller fails to satisfy Edison's security requirements within the
30-day period, the Energy Payment Refund provided in Section 9.5 shall be
payable forthwith.

         10. PAYMENT AND BILLING PROVISIONS
             ------------------------------

         10.1 For Energy and capacity purchased by Edison:

                                       28


               10.1.1 Edison shall mail to Seller not later than thirty days
after the end of each monthly billing period (1) a statement showing the Energy
and Contract Capacity delivered to Edison during the on-peak, mid-peak, and
off-peak periods, as those periods are specified in Edison's Tariff Schedule No.
TOU-8 for that monthly billing period, (2) Edison's computation of the amount
due Seller, and (3) Edison's check in payment of said amount.

               10.1.2 If the monthly payment period involves portions of two
different published Energy payment schedule periods, the monthly Energy payment
shall be prorated on the basis of the percentage of days at each price.

               10.1.3 If the payment period is less than 27 days or greater than
33 days, the capacity payment shall be prorated on the basis of the average days
per month per year.

               10.1.4 If within thirty days of receipt of the statement Seller
does not make a report in writing to Edison of an error, Seller shall be deemed
to have waived any error in Edison's statement, computation, and payment, and
they shall be considered correct and complete.

         10.2 For electric service provided by Edison:

               10.2.1 Under Operating Option III pursuant to Section 5.1,
standby electric service shall be provided under terms and conditions of
Edison's tariff schedule indicated below as now in effect or as may hereafter be
authorized by the Commission to be revised. The applicable tariff schedules are:

                   STANDBY TARIFF              ELECTRIC SERVICE TARIFF
                   --------------              -----------------------
                   SCHEDULE NO.
                   ------------

                      SCG-1                         TOU-8 or GS-2
                      SCG-2                         TOU-8
                      SCG-3                         TOU-8

               10.2.1.1 (Applicable to SCG-1 only) The Standby Demand for
calculation of the standby charge in SCG-1 is specified in Section 1.9. Edison
reserves the right to adjust the Standby Demand based on recorded demand during
periods standby power is required.

               10.2.1.2 (Applicable to SCG-1 only) The capacity rating for
determination of standby waiver qualifications shall be Contract Capacity plus
the maximum electric load served by the Generating Facility during the on-peak
time period recorded during the preceding 12-month time period.

                                       29


               10.2.1.3 A minimum monthly charge may be established for standby
electric service as provided in the tariff schedule elected in section 1.9. Said
minimum monthly charge shall be specified in Section 1.9.

               10.2.2 Under Operating Options II and III pursuant to Section
5.1, electric service shall be provided under terms, conditions, and rates of
Edison's tariff schedule indicated below as now in effect or as may hereafter be
authorized by the Commission to be revised. The applicable tariff schedule is:

                       TOU-8, or

                       GS-2

               The contract demand for calculation of the minimum demand charge
in the applicable tariff schedules is specified in Section 1.9.

               10.2.3 Edison shall commence billing Seller for electric service
rendered pursuant to the applicable tariff schedule on the date that the Point
of Interconnection is energized.

         10.3 Monthly charges associated with Interconnection Facilities shall
be billed pursuant to the Interconnection Facilities Agreement contained in the
Appendix specified in Section 1.10.

         10.4 Payments due to Contract Capacity Reduction

               10.4.1 The Parties agree that the refund and payments provided in
Section 9.1.2.5 represent a fair compensation for the reasonable losses that
would result from such reduction of Contract Capacity.

               10.4.2 In the event of a reduction in Contract Capacity, the
quantity, in kW, by which the Contract Capacity is reduced shall be used to
calculate the refunds and payments due Edison in accordance with Section
9.1.2.5, as applicable.

               10.4.3 Edison shall provide invoices to Seller for all refunds
and payments due Edison under this section which shall be due within 60 days.

               10.4.4 If Seller does not make payments as required in Section
10.4.3, Edison shall have the right to offset any amounts due it against any
present or future payments due Seller and may pursue any other remedies
available to Edison as a result of Seller's failure to perform.

         10.5 Energy Payment Refund

                                       30


         Energy Payment Refund is immediately due and payable upon Seller's
failure to perform the contract obligations as specified in Section 9.5.

         11. TAXES
             -----

               11.1 Seller shall pay ad valorem taxes and other taxes properly
attributable to the Project. If such taxes are assessed or levied against
Edison, Seller shall pay Edison for such assessment or levy.

               11.2 Seller shall pay ad valorem taxes and other taxes properly
attributed to land, land rights, or interest in land for the Project. If such
taxes are assessed or levied against Edison, Seller shall pay Edison for such
assessment or levy.

               11.3 If the Interconnection Facilities are owned by Edison,
Edison shall pay ad valorem taxes and other taxes properly attributed to said
facilities. If such taxes are assessed or levied against Seller, Edison shall
pay Seller for such assessment or levy.

               11.4 Seller or Edison shall provide information concerning the
Project to any requesting taxing authority.

         12. TERMINATION
             -----------

         This Contract shall terminate if Firm Operation does not occur within 5
years of the date of Contract execution.

         13. LIABILITY
             ---------

         13.1 Each Party (First Party) releases the other Party (Second Party),
its directors, officers, employees and agents from any loss, damage, claim,
cost, charge, or expense of any kind or nature (including any direct, indirect
or consequential loss, damage, claim, cost, charge, or expense), including
attorneys' fees and other costs of litigation incurred by the First Party in
connection with damage to property of the First Party caused by or arising out
of the Second Party's construction, engineering, repair, supervision,
inspection, testing, protection, operation, maintenance, replacement,
reconstruction, use or ownership of its facilities, to the extent that such
loss, damage, claim, cost, charge, or expense is caused by the negligence of
Second Party, its directors, officers, employees, agents, or any person or
entity whose negligence would be imputed to Second Party.

         13.2 Each Party shall indemnify and hold harmless the other Party, its
directors, officers, and employees or agents from and against any loss, damage,
claim, cost, charge, (including direct, indirect or consequential loss, damage,
claim, cost, charge, or expense), including attorneys' fees and other costs of
litigation, incurred by the other Party in connection with the injury to or
death of any person or damage to property of a third party

                                       31


arising out of the indemnifying Party's construction, engineering, repair,
supervision, inspection, testing, protection, operation, maintenance,
replacement, reconstruction, use, or ownership of its facilities, to the extent
that such loss, damage, claim, cost, charge, or expense is caused by the
negligence of the indemnifying Party, its directors, officers, employees,
agents, or any person or entity whose negligence would be imputed to the
indemnifying Party; provided, however, that each Party shall be solely
responsible for and shall bear all cost of claims brought by its contractors or
its own employees and shall indemnify and hold harmless the other Party for any
such costs including costs arising out of any workers compensation law. Seller
releases and shall defend and indemnify Edison from any claim, cost, loss,
damage, or liability arising from any contrary representation concerning the
effect of Edison's review of the design, construction, operation, or maintenance
of the Project.

         13.3 The provisions of this Section 13 shall not be construed so as to
relieve any insurer of its obligations to pay any insurance claims in accordance
with the provisions of any valid insurance policy.

         13.4 Neither Party shall be indemnified under this Section 13 for its
liability or loss resulting from its sole negligence or willful misconduct.

         14. INSURANCE
             ---------

         14.1 Until Contract is terminated, Seller shall obtain and maintain in
force as hereinafter provided comprehensive general liability insurance,
including contractual liability coverage, with a combined single limit of (i)
not less than $1,000,000 each occurrence for Generating Facilities 100 kW or
greater; (ii) not less than $500,000 for each occurrence for Generating
Facilities between 20 kW and 100 kW; and (iii) not less than $l00,000 for each
occurrence for Generating Facilities less than 20 kW. The insurance carrier or
carriers and form of policy shall be subject to review and approval by Edison.

         l4.2 Prior to the date Sellers Generating Facility is first operated in
parallel with Edison's electric system, Seller shall (i), furnish certificate of
insurance to Edison, which certificate shall provide that such insurance shall
not be terminated nor expire except on thirty days prior written notice to
Edison, (ii) maintain such insurance in effect for so long as Seller's
Generating Facility is operated in parallel with Edison's electric system, and
(iii) furnish to Edison an additional insured endorsement with respect to such
insurance in substantially the following form:

               "In consideration of the premium charged, Southern California
               Edison Company (Edison) is named as additional insured with
               respect to all liabilities arising out of Sellers use and
               ownership of Seller's Generating Facility."

                                       32


               "The inclusion of more than one insured under this policy shall
               not operate to impair the rights of one insured against another
               insured and the coverages afforded by this policy will apply as
               though separate policies had been issued to each insured. The
               inclusion of more than one insured will not, however, operate to
               increase the limit of the carrier's liability. Edison will not,
               by reason. of its inclusion under this policy, incur liability to
               the insurance carrier for payment of premium for this policy."

               "Any other insurance carried by Edison which may be applicable
               shall be deemed excess insurance and Seller's insurance primary
               for all purposes despite any conflicting provisions in Seller's
               policy to the contrary."

         If the requirement of Section 14.2(iii) prevents Seller from obtaining
the insurance required in Section 14.1 then upon written notification by Seller
to Edison, Section 14.2(iii) shall be waived.

         14.3 The requirements of this Section 14 shall not apply to Seller who
is a self-insured governmental agency with established record of self-insurance.

         l4.4 If Seller fails to comply with the provisions of this Section 14,
Seller shall, at its own cost, defend, indemnify, and hold harmless Edison, its
directors, officers, employees, agents, assigns, and successors in interest from
and against any and all loss, damage, claim, cost, charge, or expense of any
kind or nature (including direct, indirect or consequential loss, damage, claim,
cost, charge, or expense, including attorneys' fees and other costs of
litigation) resulting from the death or injury to any person or damage to any
property, including the personnel and property of Edison, to the extent that
Edison would have been protected had Seller complied with all of the provisions
of this Section 14.

         15.  UNCONTROLLABLE FORCE
              --------------------

         15.1 Neither Party shall be considered to be in default in the
performance of any of the agreements contained in this Contract, except for
obligations to pay money, when and to the extent failure of performance shall be
caused by an Uncontrollable Force.

         15.2 If either Party because of an Uncontrollable Force is rendered
wholly or partly unable to perform its obligations under this Contract, the
Party shall be excused from whatever performance is affected by the
Uncontrollable Force to the extent so affected provided that:

                                       33


         (1) the nonperforming Party, within two weeks after the occurrence of
the Uncontrollable Force, gives the other Party written notice describing the
particulars of the occurrence,

         (2) the suspension of performance is of no greater scope and of no
longer duration than is required by the Uncontrollable Force,

         (3) the nonperforming Party uses its best efforts to remedy its
inability to perform (this subsection shall not require the settlement of any
strike, walkout, lockout or other labor dispute on terms which, in the sole
judgment of the Party involved in the dispute, are contrary to its interest. It
is understood and agreed that the settlement of strikes, walkouts, lockouts or
other labor disputes shall be at the sole discretion of the Party having the
difficulty),

         (4) when the nonperforming Party is able to resume performance of its
obligations under this Contract, that Party shall give the other Party written
notice to that effect, and

         (5) capacity payments during such periods of Uncontrollable Force, on
Seller's part shall be governed by Section 9.1.2.3.

         15.3 In the event that either Party's ability to perform cannot be
corrected when the Uncontrollable Force is caused by the actions or inactions of
legislative, judicial or regulatory agencies or other proper authority, this
Contract may be amended to comply with the legal or regulatory change which
caused the nonperformance.

         If a loss of Qualifying Facility status occurs due to an Uncontrollable
Force and Seller fails to make the changes necessary to maintain its Qualifying
Facility status, the Seller shall compensate Edison for any economic detriment
incurred by Edison as a result of such failure.

         16. NONDEDICATION OF FACILITIES
             ---------------------------

         Neither Party, by this Contract, dedicates any part of its facilities
involved in this Project to the public or to the service provided under the
Contract, and such service shall cease upon termination of the Contract.

         17. PRIORITY OF DOCUMENTS
             ---------------------

              If there is a conflict between this document and any Appendix, the
provisions of this document shall govern. Each Party shall notify the other
immediately upon the determination of the existence of any such conflict.

                                       34


         18. NOTICES AND CORRESPONDENCE
             --------------------------

         All notices and correspondence pertaining to this Contract shall be in
writing and shall be sufficient if delivered in person or sent by certified
mail, postage prepaid, return receipt requested, to Seller as specified in
Section 1.1, or to Edison as follows:

                    Southern California Edison Company
                    Post Office Box 800
                    Rosemead, California 91770
                    Attention:  Secretary

         All notices sent pursuant to this Section 18 shall be effective when
received, and each Party shall be entitled to specify as its proper address any
other address in the United States upon written notice to the other Party.

         19. PREVIOUS COMMUNICATIONS
             -----------------------

         This Contract contains the entire agreement and understanding between
the Parties, their agents, and employees as to the subject matter of this
contract, and merges and supersedes all prior agreements, commitments,
representations, and discussions between the Parties. No Party shall be bound to
any other obligations, conditions, or representations with respect to the
subject matter of this Contract.

         20. NONWAIVER
             ---------

         None of the provisions of the Contract shall be considered waived by
either Party except when such waiver is given in writing. The failure of either
Edison or Seller to insist on any one or more instances upon strict performance
of any of the provisions of the Contract or to take advantage of any of its
rights hereunder shall not be construed as a waiver of any such provisions or
the relinquishment of any such rights for the future, but the same shall
continue to remain in full force and effect.

         21. SUCCESSORS AND ASSIGNS
             ----------------------

         Neither Party shall voluntarily assign its rights nor delegate its
duties under this Contract, or any part of such rights or duties, without the
written consent of the other Party, except in connection with the sale or merger
of a substantial portion of its properties. Any such assignment or delegation
made without such written consent shall be null and void. Consent for assignment
shall not be withheld unreasonably. Such assignment shall include, unless
otherwise specified therein, all of Seller's rights to any refunds which might
become due under this Contract.

         22. EFFECT OF SECTION HEADINGS
             --------------------------

                                       35



         Section headings appearing in this Agreement are inserted for
convenience only, and shall not be construed as interpretations of text.

         23. GOVERNING LAW
             -------------

         This Contract shall be interpreted, governed, and construed under the
laws of the State of California if executed and to be performed wholly within
the State of California.

         24. MULTIPLE ORIGINALS
             ------------------

         This Contract is executed in two counterparts, each of which shall be
deemed an original.

         SIGNATURES
         ----------

         IN WITNESS WHEREOF, the Parties hereto have executed this Contract this
16 of April, 1985.

                                     SOUTHERN CALIFORNIA EDISON COMPANY



                                     By /s/ Edward A. Myers, Jr.
                                       ----------------------------------------
                                                  EDWARD A. MYERS, JR.
                                                     Vice President



                                     SANTE FE GEOTHERMAL, INC.



                                     By /s/ Robert J. Fernandes
                                       ----------------------------------------
                                                   ROBERT J. FERNANDES
                                                         President