EX-10.3.29 18 file010.htm PLANT CONNECTION AGREEMENT

Exhibit 10.3.29
89A.1
GEOOC2
03-02-89
EXECUTION COPY

PLANT CONNECTION AGREEMENT

FOR THE

GEO EAST MESA LIMITED PARTNERSHIP

UNIT NO. 2

BETWEEN

IMPERIAL IRRIGATION DISTRICT

AND

GEO EAST MESA LIMITED PARTNERSHIP

EXECUTION COPY
03-02-89

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

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

1 PARTIES . . . . . . . . . . . . . . . . . . 1

2 RECITALS . . . . . . . . . . . . . . . . . . 1

3 AGREEMENT . . . . . . . . . . . . . . . . . . 2

4 DEFINITIONS . . . . . . . . . . . . . . . . . 2

5 EFFECTIVE DATE AND TERM . . . . . . . . . . . . . . 3

6 CONNECTION OF PLANT . . . . . . . . . . . . . . . 3

7 ELECTRIC SERVICE TO PRODUCER . . . . . . . . . . . . . 3

8 METERING OF ENERGY DELIVERIES . . . . . . . . . . . . . 3

9 PRODUCER'S DELIVERY AND IID ACCEPTANCE OF ENERGY FROM PLANT . . . . . 3

10 PRODUCER'S GENERAL OBLIGATIONS . . . . . . . . . . . . . 4

11 IID'S GENERAL OBLIGATIONS . . . . . . . . . . . . . . 5

12 BILLING . . . . . . . . . . . . . . . . . . 6

13 AUTHORIZED REPRESENTATIVES . . . . . . . . . . . . . 6

14 METERS . . . . . . . . . . . . . . . . . . 7

15 CONTINUITY OF SERVICE . . . . . . . . . . . . . . 8

16 LIABILITY . . . . . . . . . . . . . . . . . 9

17 UNCONTROLLABLE FORCES . . . . . . . . . . . . . . 10

18 INTEGRATION AND AMENDMENTS . . . . . . . . . . . . . 11

19 NON-WAIVER . . . . . . . . . . . . . . . . . 11

20 NO DEDICATION OF FACILITIES . . . . . . . . . . . . . 12

21 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . 12

22 EFFECT OF SECTION HEADINGS . . . . . . . . . . . . . 12

23 GOVERNING LAW . . . . . . . . . . . . . . . . 13

24 ARBITRATION . . . . . . . . . . . . . . . . . 13

25 ENTIRE AGREEMENT . . . . . . . . . . . . . . . 15

26 NOTICES . . . . . . . . . . . . . . . . . . 15

27 SEVERAL OBLIGATIONS . . . . . . . . . . . . . . . 15

28 SIGNATURE CLAUSE . . . . . . . . . . . . . . . 16

ATTACHMENTS
-----------

EXHIBIT "A" - RATE SCHEDULES GL AND A2 . . . . . . . . 17

EXHIBIT "B" - METERING ONE-LINE DIAGRAM . . . . . . . 21

EXHIBIT "C" - FUNDING AND CONSTRUCTION AGREEMENT
HEBER-MIRAGE TRANSMISSION PROJECT . . . . . 22

1. PARTIES
-------

The parties to this Agreement are IMPERIAL IRRIGATION DISTRICT ("IID"),
organized under the Water Code of the State of California and GEO EAST MESA
LIMITED PARTNERSHIP ("Producer"), hereinafter referred to individually as
"Party", and collectively as "Parties".

2. RECITALS
--------
2.1 Producer intends to construct and operate, as owner or lessee, a
megawatt generating facility with a maximum 27.5 megawatt net operating capacity
at the East Mesa (KGRA), Imperial County, California, and to sell the Plant
electrical output to Southern California Edison Company ("SCE").

2.2 SCE entered into the Power Purchase Agreement dated May 20, 1988,
("Purchase Agreement") with Producer, to purchase all the electrical output from
the Plant.

2.3 SCE and Producer agree that the terms and conditions regarding
transmission of the Plant's Energy to an IID/SCE point of interconnection shall
be pursuant to a Transmission Service Agreement to be entered into between IID
and Producer.

2.4 Since the Plant will be built in the IID service territory, it will
be convenient to connect the Plant to the IID electric system.
Producer hereby grants the IID the right to enter the Plant site for any
reasonable purposes connected with this Agreement, by previous arrangements with
the Plant manager. Those reasonable purposes include maintenance and repairs to
IID equipment in Producer's facilities, observing tests of said facilities,
reading of kilowatt-hour meters, and the like.

2.5 Producer desires to purchase and IID desires to sell the electrical
energy necessary to satisfy the operation and maintenance power consumption
requirements of the Plant for the life of the Plant that is not normally
generated by the Plant itself, or portable generating equipment.

2.6 The Parties desire, by means of this Agreement, to interconnect the
Plant to the IID electrical system and to establish the terms, conditions and
obligations of the Parties relating to such interconnection.

3. AGREEMENT
---------

The Parties agree as follows:

4. DEFINITIONS
-----------
4.1 Agreement: This Plant Connection Agreement between IID and
Producer, and all Exhibits hereto, as may be amended from time to time.

4.2 Authorized Representative: The representative of a Party
designated accordance with Section 13.

4.3 Energy: Electric energy in excess of Producer's electric energy
requirements, expressed in kilowatt-hours, generated by the Plant and measured
and delivered to the Point of Delivery.

4.4 Funding and Construction Agreement: An agreement entered into by
IID and others dated June 29, 1987, providing for the funding and construction
of the Heber-Mirage Transmission Project, to which a form of this Agreement is
attached as Exhibit C.

4.5 Operation Date: The day on which the Plant Energy is first
accepted by IID for delivery to SCE.

4.6 Plant: A maximum of 27.5 MW net operating capacity Geothermal
facility operated by Producer, as owner or lessee, including all associated
equipment and improvements necessary for generating electric energy and
transmitting it to the high voltage side of the power transformer.

4.7 Point of Delivery: The point on the high voltage side of
Producer's switchyard where IID's metering equipment measures the delivery of
Energy to the IID system as shown on Exhibit "B".

4.8 System Emergency: A condition on IID's system which is likely
to result in imminent significant disruption of service to customers or is
imminently likely to endanger life or property.

5. EFFECTIVE DATE AND TERM
-----------------------

This Agreement shall become effective upon the Operation Date of the
Plant, and shall remain in effect until the earlier of (i) April 15, 2015, or
(ii) thirty six (36) months from the date the Plant has ceased to operate at the
option of IID. It is understood that (i) if the Completion Date, as the term
Completion Date is defined in Article I of Funding and Construction Agreement
does not occur, or (ii) if the Operation Date does not occur within five (5)
years after the date this Agreement was executed, this Agreement shall be of no
force or effect.

6. CONNECTION OF PLANT
-------------------

6.1 Producer may electrically connect its Plant, in accordance with
the provisions of this Agreement, so that it can operate in parallel with the
IID electric system. Parallel operation will not commence until IID has
inspected and approved the interconnection facilities and operational
procedures.

6.2 Notwithstanding the provision that Producer has furnished the
high voltage switchyard complete, including the high voltage oil circuit
breakers and disconnect switches, the control of the high voltage oil circuit
breakers and disconnect switches shall be under the control of the IID
dispatcher.

7. ELECTRIC SERVICE TO PRODUCER
----------------------------

IID shall provide electric service to Producer pursuant to Section 12.

8. METERING OF ENERGY DELIVERIES
-----------------------------

Metering for electric service to Producer and for energy deliveries by
Producer to IID for delivery to SCE shall be at the Point of Delivery as shown
on Exhibit "B." Four meters shall be installed which shall measure and record
flows in each direction as shown on Exhibit "B."

9. PRODUCER'S DELIVERY AND IID ACCEPTANCE OF ENERGY FROM PLANT
-----------------------------------------------------------

Whenever electric output from the Plant exceeds Producer's power
requirements, Producer shall deliver all such excess output to IID for delivery
to SCE and IID shall accept such output for delivery to SCE and deliver such
output to SCE pursuant to a transmission service agreement to be entered into
between Producer and IID.

10. PRODUCER'S GENERAL OBLIGATIONS
------------------------------

Producer shall:

10.1 Operate the Plant in a manner consistent with applicable electric
utility industry standards, good engineering practice, and without degradation
of quality or reliability of service to IID customers.

10.2 Deliver the Plant's net electrical output to IID for the account
of SCE at the Point of Delivery.

10.3 Each Party shall provide the reactive kilovolt-ampere (KVA)
requirements of its own system so that there will be no interchange of reactive
KVA between systems. The Parties shall cooperate to control the flow of reactive
KVA to prevent the introduction of objectionable operating conditions on the
system of either Party.

10.4 Coordinate, to the greatest extent practicable, major overhaul
and inspection outages of the Plant with IID.

10.5 Give IID a written schedule on or before June 1, and December 1,
each year of the estimated amounts and rates of delivery of energy to be
delivered to IID for the account of SCE at the Point of Delivery during each
month of the succeeding twelve-month (12) period commencing July 1, and
January 1.

10.6 Give IID a written schedule on or before the fifteenth (15th) day
of each month of the estimated amounts and rates of delivery of energy to be
delivered to IID for the account of SCE at the Point of Delivery during each day
of the succeeding calendar month.

10.7 Give IID a schedule on or before 12:01 p.m. on Tuesday of each
seven-day (7) period of the estimated amounts and rates of delivery of energy to
be delivered to IID for the account of SCE at the Point of Delivery during each
hour of the succeeding seven-day (7) period commencing at 12:01 a.m. on the
following Monday; provided, however, that if any changes in the hourly
deliveries so scheduled become necessary, Producer shall notify IID of such
changes as far in advance as possible.

10.8 Provide IID any reasonable rights-of-way and access required for
testing and reading of meters by previous arrangement with the Plant manager.

10.9 Carry out the directions of the Authorized Representatives with
respect to the matters set forth in this Agreement.

11. IID'S GENERAL OBLIGATIONS
-------------------------

IID shall:

11.1 Design, acquire, construct, operate and maintain, or cause to be
designed, acquired, constructed, operated and maintained, and shall own, a
connecting transmission line between

IID's transmission system and the Plant. Following the completion of such line,
IID may bill and Producer shall pay IID's costs of designing, acquiring and
constructing such line. Producer shall have the right to audit IID's records and
accounts to verify the cost of such line.

11.2 Accept the Plant's net electrical output for the account of SCE
at the Point of Delivery and simultaneously deliver an equal amount of electric
energy (less applicable transmission losses) to the SCE system at IID/SCE
point(s) of interconnection.

11.3 Coordinate, to the greatest extent practicable, major overhaul
and inspection outages of IID transmission facilities with Producer and notify
Producer of any changes as far in advance as possible.

11.4 Carry out the directions of the Authorized Representative with
respect to the matters set forth in this Agreement.

11.5 Operate its system in a manner consistent with applicable utility
industry standards and good engineering practices.

12. BILLING
-------

12.1 IID shall read the meters monthly according to its regular meter
reading schedule beginning no more than thirty (30) days after the date that
electric energy is first supplied to Producer. IID monthly shall send Producer
within ten (10) working days after the meter is read a bill for electric
service. Producer shall pay IID the total amount billed within thirty (30) days
of receipt of the bill.

12.2 IID shall bill Producer for Producer's consumption of energy from
IID's resources in accordance with Rate Schedule GL or Rate Schedule A-2, as
applicable, as it may be revised from time to time. Copies of current Rate
Schedule GL and current Rate Schedule A-2 are attached as Exhibit "A."

12.3 If Producer disputes a bill, payment shall be made as if no
dispute existed pending resolution of the dispute by the Authorized
Representatives. If the bill is determined to be in error, the disputed amount
shall be refunded by IID including interest at the rate of one and one-half
percent (1 1/2%) per month, compounded monthly, from the date of payment to the
date the refund check or adjusted bill is mailed.

13. AUTHORIZED REPRESENTATIVES
--------------------------

13.1 Within thirty (30) days after the date this Agreement is signed,
each Party shall designate, by written notice to the other Party, an Authorized
Representative who is authorized to act in its behalf in the implementation of
this Agreement and with respect to those matters contained herein which are the
functions and responsibilities for the Authorized Representatives. Either Party
may, at any time, change the designation of it Authorized Representative by
written notice to the other Party.

13.2 IID's Authorized Representative shall develop detailed written
procedures necessary and convenient to administer this Agreement within six (6)
months after the date signed. Such procedures shall be submitted to Producer's
Authorized Representative for review, comment, discussion and concurrence before
they are put into effect. Such procedures shall include, without limitation: (i)
communication between Producer and IID's electric system dispatcher with regard
to daily operating matters, (ii) billing and payments, (iii) specified equipment
tests, and (iv) operating matters which affect or may affect quality and
reliability of service to electric customers and continuity of deliveries to
SCE.

13.3 The Authorized Representative shall have no authority to modify
any of the provisions of this Agreement.

14. METERS
------

14.1 All meters shall be sealed and the seal shall be broken only upon
occasions when the meters are to be inspected, tested or adjusted.

14.2 IID shall inspect and test all meters upon their installation and
at least once every year thereafter. If requested to do so by Producer, IID
shall inspect or test a meter more frequently than every year, but the expense
of such inspection or test shall be paid by Producer unless the meter is found
to register inaccurately by more than two percent (2%) from the measurement made
by a standard meter. Each Party shall give reasonable notice to the other Party
of the time when any inspection or test shall take place and that Party may have
representatives present at the test or inspection. If a meter is found to be
inaccurate or defective, it shall be adjusted, repaired or replaced in order to
provide accurate metering. All adjustments due to inaccurate meters shall be
limited to the preceding six (6) months.

14.3 If a meter fails to register, or if the measurement made by a
meter during a test varies by more than two percent (2%) from the measurement
made by the standard meter used in the test, adjustment shall be made correcting
all measurements made by the inaccurate meter for:

(i) the actual period during which inaccurate measurements were
made, if the period can be determined, or if not,

(ii) the period immediately preceding the test of the meter equal

to one-half (1/2) the time from the date of the last previous
test of the meter; provided, however, that the period covered
by the correction shall not exceed six (6) months.

14.4 Producer shall telemeter information to IID's Dispatch Center
regarding the kilowatts, kilowatt-hours, kilovars and kilovar-hours delivered to
or received from IID at the Point of Delivery over phone line leased by
Producer.

IID shall purchase, own, and shall design, install, operate, maintain, or
cause to be designed, installed, operated, and maintained, equipment to
automatically transmit from the Plant to IID's Dispatch Center continuous values
of Plant output expressed as megawatts, megavars and megawatt-hours. IID may
thereupon bill and Producer shall promptly pay IID's cost of design, purchase
and installation of said equipment. Producer shall have the right to audit IID's
records and accounts to verify the cost of said equipment.

15. CONTINUITY OF SERVICE
---------------------

IID shall not be obligated to accept and IID may require Producer to
temporarily curtail, interrupt or reduce deliveries of energy upon advance
notice to Producer, when such curtailment, interruption or reduction is required
in order for IID to construct, install, maintain, repair, replace, remove,
investigate or inspect any of its equipment or any part of its system or if IID
determines that such curtailment, interruption or reduction is necessary because
of a System Emergency, forced outages or abnormal operating conditions on its
system. IID shall use reasonable efforts to keep interruptions and curtailments
to a minimum time.

16. LIABILITY
---------

16.1 Except for any loss, damage, claim, costs, charge or expense
resulting from Willful Action, neither Party (the "released Party"), its
directors or other governing body, officers or employees shall be liable to the
other Party for any loss, damage, claim, cost, charge, or expense of any kind or
nature incurred by the other Party (including direct, indirect or consequential
loss, damage, claim, cost, charge or expense; and whether or not resulting from
the negligence of a Party, its directors or other governing body, officers,
employees or any person or entity whose negligence would be imputed to a Party)
from engineering, repair, supervision, inspection, testing, protection,
operation, maintenance, replacement, reconstruction, use or ownership of the

released Party's electrical system, Plant(s) or associated facilities in
connection with the implementation of this Agreement. Except for any loss,
damage, claim, cost, charge or expense resulting from Willful Action, each Party
releases the other Party, its directors or other governing body, officers and
employees from any such liability.

16.2 For the purpose of this Section 16, Willful Action shall be
defined as action taken or not taken by a Party at the direction of its
directors or other governing body, officers or employees having management or
administrative responsibility affecting its performance under this Agreement, as
follows:

16.2.1 Action which is knowingly or intentionally taken or not taken
with conscious indifference to the consequences thereof or with intent that
injury or damage would result or would probably result therefrom.

16.2.2 Action which has been determined by final arbitration award or
final judgment or judicial decree to be a material default under this Agreement
and which occurs or continues beyond the time specified in such arbitration
award or judgment or judicial decree for curing such default or, if no time to
cure is specified therein, occurs or continues thereafter beyond a reasonable
time to cure such default.

16.2.3 Action which is knowingly or intentionally taken or not taken
with the knowledge that such action taken or not taken is a material default
under this Agreement.

16.3 Willful Action does not include any act or failure to act which
is merely involuntary, accidental or negligent.

16.4 The phrase "employees having management or administrative
responsibility," as used in Section 16.2, means the employees of a Party who are
responsible for one or more of the

executive functions of planning, organizing, coordinating, directing,
controlling and supervising such Party's performance under this Agreement with
responsibility for results.

16.5 Subject to the foregoing provisions of this Section 16, each
Party agrees to defend, indemnify and save harmless the other Party, its
officers, agents, or employees against all losses, claims, demands, costs or
expenses for loss of or damage to property, or injury or death of persons, which
directly or indirectly arise out of the indemnifying Party's performance
pursuant to this Agreement; provided, however, that a Party shall be solely
responsible for any such losses, claims, demands, costs or expenses which result
from its sole negligence or Willful Action.

17. UNCONTROLLABLE FORCES
---------------------

Neither Party shall be considered to be in default in the performance of
any of its obligations under this Agreement when a failure of performance shall
be due to an uncontrollable force. The term "uncontrollable force" shall mean
any cause beyond the control of the Party affected including, but not restricted
to, failure of or threat of failure of facilities which have been maintained in
accordance with generally-accepted engineering and operating practices in the
electrical utility industry, flood, drought, earthquake, tornado, storm fire,
pestilence, lightning and other natural catastrophes, epidemic, war, riot, civil
disturbance or disobedience, strike, labor dispute, labor or material shortage,
sabotage, government priorities and restraint by court order or public authority
(whether valid or invalid) and actions or nonaction by or inability to obtain or
keep the necessary authorizations or approvals from any governmental agency or
authority, which by exercise of due diligence such Party could not reasonably
have been expected to avoid and which by exercise of due diligence it has been
unable to overcome. Nothing contained herein shall be construed as to require a
Party to settle any strike or labor dispute in which it may be

involved. Either Party rendered unable to fulfill any of its obligations under
this Agreement by reason of an uncontrollable force shall give prompt written
notice of such fact to the other Party and shall exercise due diligence to
remove such inability with all reasonable dispatch.

18. INTEGRATION AND AMENDMENTS
--------------------------

This Agreement constitutes the entire agreement between the Parties
relating to the interconnection of Producer's Plant to IID's electric system,
the acceptance of energy by IID from Producer and the providing of electric
service by IID. No oral agreement or prior written agreement between the Parties
shall be of any effect whatsoever; provided, however, that any arrangements
agreed upon by the Authorized Representatives within the limits of their
authority, and consistent with this Agreement shall be binding upon the Parties.
All changes to this Agreement shall be in writing and shall be signed by an
officer of each Party.

19 NON-WAIVER
----------

None of the provisions of this Agreement shall be considered waived by
either Party except when such waiver is given in writing. The failure of either
Party to insist in any one or more instances upon strict performance of any of
the provisions of this Agreement 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
and remain in full force and effect.

20. NO DEDICATION OF FACILITIES
---------------------------

Any undertaking by one Party to the other Party under any provision of
this Agreement shall not constitute the dedication of the system or any portion
thereof by the Party to the public or to the other Party, and it is understood
and agreed that any such undertaking under any

provision of this Agreement by a Party shall cease upon the termination of its
obligations hereunder.

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

21.1 This Agreement shall be binding upon and inure to the benefit of
the respective successors and assigns of the Parties.

21.2 This Agreement may be assigned by Producer only (i) to a
purchaser or co-owner of the Plant or to a person who will operate the Plant
pursuant to a contract or other arrangement with such purchaser and in either
case with the prior written consent of IID (which shall not be unreasonably
withheld) or (ii) for security purposes, to a bank or other entity which
provides financing for the Plant or any electrical transmission facilities
associated therewith. Producer and IID agree that nothing in this Section 21.2
may be amended, modified or waived without the prior written consent of each and
every Party to the Funding and Construction Agreement (except for any Parties in
default thereunder.)

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

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

23. GOVERNING LAW
-------------
This Agreement shall be interpreted, governed and construed under the
laws of the State of California or the laws of the United States, as applicable.

24. ARBITRATION
-----------

however, that no Party to the dispute shall be bound to any greater extent than
any other Party to the dispute. Arbitration shall not apply to any dispute or
matter that is within the jurisdiction of any regulatory agency.

24.2 Any demand for arbitration shall be made by written notice ot the
other Party setting forth in adequate detail the nature of the dispute, the
issues to be arbitrated, the amount or amounts, if any, involved in t he
dispute, and the remedy sought. Within twenty (20) drays from the receipt of
such notice, the other Party may submit its own written statement of the dispute
and may set forth in adequate detail any additional related matters or issues to
be arbitrated.

24.3 Within thirty (30) days after delivery of the written notice
demanding arbitration the Parties acting through their Authorized
Representatives shall meet for the purpose of selecting an arbitrator. The
Parties may agree upon a singe arbitrator, but in the event that they cannot
agree, three arbitrators shall be used. Each Party shall designate one
arbitrator, and the two arbitrators shall then select a third arbitrator. All
arbitrators hall be persons skilled and experienced in the field in which the
dispute has arisen and no person shall be eligible for appointment as an
arbitrator who is or has been an officer or employee of either of the Parties or
otherwise interested in the matter to be arbitrated. Should either party refuse
or neglect to appoint an arbitrator or to furnish the arbitrators with any
papers or information demanded, the arbitrators are empowered, by both Parties,
to proceed without the participation or assistance of that Party.

24.4 Except as otherwise provided in this Section, the arbitration
shall be governed by the rules and practices of the American Arbitration
Association, or a similar organization if the American Arbitration Association
should not at the time exist.

24.5 Arbitration proceedings shall be held in Imperial, California, at
a time and place to be selected by the arbitrators. The arbitrators shall hear
evidence submitted by the Parties and

may call for additional information which shall be furnished by the Party having
such information. The arbitrators shall have no authority to call for
information not related to the issues included in the dispute or to determine
other issues not in dispute.

24.6 If there is only one arbitrator, his decision shall be binding
and conclusive on the Parties. If there are three arbitrators, the decision of
any two shall be binding and conclusive. The decision of the arbitrators shall
contain findings regarding the issues involved in the dispute, including the
merits of the positions of the Parties, the materiality of any default, and the
remedy or relief to which a Party shall be entitled. The arbitrators may not
grant any remedy or relief which is inconsistent with this Agreement, nor shall
be arbitrators make findings or decide issues not in dispute.

24.7 The fees and expenses of the arbitrators shall be shared equally
by the Parties, unless the decision of the arbitrators specifies some other
apportionment. All other expenses and costs of the arbitration shall be borne by
the Party incurring such expenses and costs.

24.8 Any decision or award granted by the arbitrators shall be final
and judgment may be entered on it in any court of competent jurisdiction. This
agreement to arbitrate shall be specifically enforceable.

25. ENTIRE AGREEMENT
----------------

25.1 The complete agreement of the Parties is set forth in this
Agreement and all communications regarding subject interconnected operations
whether oral or written, are hereby abrogated and withdrawn.

26. NOTICES
-------

Any formal communication or notice in connection with this Agreement
shall be in writing and shall be deemed properly given if delivered in person or
sent first class mail, postage prepaid to the person specified below:

GEO EAST MESA
LIMITED PARTNERSHIP
P.O. Box 748
Holtville, CA 92250

IMPERIAL IRRIGATION DISTRICT
c/o General Manager
P. O. Box 937
Imperial, California 92251

27. SEVERAL OBLIGATIONS
-------------------

Except where specifically stated in this Agreement to be otherwise, the
duties, obligations and liabilities of the Parties are intended to be several
and not joint or collective. Nothing contained in this Agreement shall ever be
construed to create an association, trust, partnership, or joint venture, or
impose a trust or partnership duty, obligation or liability on or with regard to
either Party. Each Party shall be individually and severally liable for its own
obligations under this Agreement.

28. SIGNATURE CLAUSE
----------------

The Parties have caused this Agreement to be executed in their respective
names, in duplicate, by their respective officers hereunto this 21st day of
March, 1989.
GEO EAST MESA LIMITED PARTNERSHIP

By /s/ Indecipherable
-----------------------------------
3-16-89

ATTEST:

By /s/ Indecipherable
--------------------------------
Secretary

IMPERIAL IRRIGATION DISTRICT

By /s/ Indecipherable
---------------------------------------
President, Board of Directors

ATTEST:

By /s/ Larry E. Beck
---------------------------------
Secretary

EXHIBIT "A"

IMPERIAL IRRIGATION DISTRICT Revised Sheet No. 166
Imperial, California Cancelling Sheet No. 139

SCHEDULE A-2
GENERAL WHOLESALE POWER SERVICE

APPLICABILITY

Applicable to general wholesale power service for industrial, commercial
and agricultural purposes, subject to special conditions hereinafter
stated.

Applicable to standby or breakdown service where the entire electric power
requirements on the customer's premises are not regularly supplied by the
District.

MONTHLY RATE

The monthly rate shall be the sum of A, B, C and D.

A. Demand Charge ................. $2.52 per kilowatt of Billing Demand

B. Energy Charge ................. 5.60 CENTS per kwh.

C. Energy Cost Adjustment -

The amount computed in accordance with Schedule ECA.

D. Power Factor Adjustment -

A charge of $0.25 per kilovar of reactive demand as measured by
the incoming kilovar demand meter for each kilovar in excess of
.60 times the kilowatt demand measured and supplied by the
District.

MINIMUM CHARGE

The minimum charge shall be the demand charge, but in no case shall the
minimum charge be less than the demand charge (A) multiplied by 75% of the
highest maximum demand established in the preceding 11 months.

SPECIAL CONDITIONS

(a) Vo1tage: This schedule applies to service rendered at a transmission
voltage of 34.5-kV or above. It shall be the responsibility of the
customer to furnish transformation to any other voltages required.

(b) Billing Demand: The billing demand shall be the kilowatts of measured
maximum demand but in no case less than 75 percent of the highest
maximum demand established in the preceding 11 months. The measured
maximum demand in any month will be the average kilowatt delivery
indicated or recorded by the District's demand meter in the 15-minute
interval in which such delivery is greater than any other 15-minute
interval. In case the load is intermittent or subject to violent
fluctuations, the District may base the demand upon a 5-minute
interval instead of a 15-minute interval.

Board Resolution Date Effective
July 3, 1984 August 1, 1984

- 17 -

IMPERIAL IRRIGATION DISTRICT Revised Sheet No. 167
Imperial, California Cancelling Sheet No. 139

SCHEDULE A-2 (Continued)
GENERAL WHOLESALE POWER SERVICE

(d) Parallel Operation: A customer may operate its generating plant in
parallel with the District's system if such customer installs and
operates such control and protective equipment as required by the
District.

(e) Metering: The District will provide the normal metering equipment for
the size and type of load served. Additional metering which may be
required by the District shall be furnished by the customer and tested
in accordance with requirements of the District. Meters shall not
allow reverse registration.

(f) Regulations Governing Sale of Electric Energy: Service under this rate
schedule is subject to the District's Regulations Governing the Sale
of Electric Energy.

Board Resolution Date Effective
July 3, 1984 August 1, 1984

- 18 -

EXHIBIT "A"

IMPERIAL IRRIGATION DISTRICT Revised Sheet No. 152
Imperial, California Cancelling Sheet No. 137

SCHEDULE GL
LARGE GENERAL SERVICE

APPLICABILITY

Applicable to general service having a demand of 100 kilowatts or
higher. Not applicable for standby, supplemental or resale service.

MONTHLY RATE

The monthly rate shall be the sum of A, B and C.

A. Demand Charge ................. $2.65 per kilowatt of Billing Demand

B. Energy Charge ................. 5.90 CENTS per kwh

C. Energy Cost Adjustment -

The amount computed in accordance with Schedule ECA.

SPECIAL CONDITIONS

(a) Voltage: Service under this schedule normally will be supplied at
standard voltage available at the location. Where 240-volt three-
phase power is to be combined with single-phase, and 4-wire service is
available, service will be supplied through one meter. In 240-volt
areas, where, as determined by District, it is not practical to
provide a 4-wire service, such single-phase and three-phase service
will be supplied and metered separately, the meter readings, both kwh
and demands, being combined for the purpose of computing charges on
this schedule. Where service is taken at 480-volts or higher, a
three-phase service at one voltage only will be supplied.

(b) Billing Demand: The billing demand shall be the higher of (i) the
highest 15-minute integrated or thermal kilowatt demand measured
during the billing period, or (ii) 50% of highest demand measured
during the five summer months (May-September) of the 12-months ending
with the current month, or (iii) 20% of the highest measured demand
during the seven winter months (October-April) of the 12-months ending
with the current month, or (iv) the demand specified in a contract, or
(v) 50 kilowatts.

When the monthly demand exceeds 100 KW in any billing month, billing
will be under Rate Schedule GL, and thereafter continue under Rate
Schedule GL until monthly demands have been less than 100 KW for a
period of twelve consecutive months.

Board Resolution Date Effective
January 18, 1983 February 1, 1983

- 19 -

IMPERIAL IRRIGATION DISTRICT Revised Sheet No. 153
Imperial, California Cancelling Sheet No. 138

SCHEDULE GL (Continued)
LARGE GENERAL SERVICE

(c) Seasonal Loads: When any customer disconnects service and resumes
service within 12-months from date of last disconnection, the customer
will be required to pay all charges which would have been billed if
the customer had not been disconnected.

(d) Wind Machines: Wind machines for frost protection may be served under
this schedule provided the load will be limited to existing unused
capacity of lines and substations as determined by the District.
Provisions (ii), (iii) and (v) of (b) shall not apply to wind
machines.

(e) Vacuum Cooling Loads: Portable vacuum cooling loads will be served on
existing facilities where adequate capacity is avaliable provided the
customer pays any up-and-down cost necessary to provide service and
deposits a nonrefundable amount equal to the minimum charge for the
succeeding 12-month period. One twelfth of such deposit will be
applied or prorated to any monthly billing during the 12-month period.

(f) Regulations Governing Sale of Electric Energy: Service under this rate
schedule is subject to the District's Regulations Governing the Sale
of Electric Energy.

Board Resolution Date Effective
January 18, 1983 February 1, 1983

- 20 -

Exhibit B

[Graphic: Simplified Switch Connection Diagram of Imperial Irrigation
District to Geo East Mesa #2 Single Line Diagram (GEM2)]

EXHIBIT C

FUNDING AND CONSTRUCTION AGREEMENT
(Heber-Mirage Transmission Project)

June 29, 1987

Exhibit C

FUNDING AND CONSTRUCTION AGREEMENT

THIS FUNDING AND CONSTRUCTION AGREEMENT, made and entered into as of
June 29, 1987, by and among IMPERIAL IRRIGATION DISTRICT, organized under the
Water Code of the State of California (hereinafter referred to as "IID"), and
the persons listed as Participants in Exhibit 1 attached hereto (hereinafter
referred to individually as "Participant" and collectively as "Participants"),

WITNESSETH:

Whereas each Participant or its Associated Producer (as defined in
Article I) presently owns and operates, or proposes to construct, in the
Imperial Valley, a small power producing facility which is or will be a
Qualifying Facility under the Public Utility Regulatory Policies Act of 1978;
and

Whereas each Participant or its Associated Producer has entered into a
contract which entitles it to deliver electric power generated by its Qualifying
Facility to the electric system operated by Southern California Edison Company
("Edison"); and

Whereas the electric transmission system operated by IID has
insufficient capacity at present to enable IID to enter into contracts for the
transmission of all such power to the electric system operated by Edison; and

-1-

Whereas the Participants therefore propose to fund the construction of
a new transmission line in IID's service territory, which will enable IID to
enter into transmission service agreements with them or their Associated
Producers; and

Whereas the Participants and IID wish to define the terms and
conditions on which such funding will take place and such line will be
constructed:

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

ARTICLE I

Definitions

For purposes of this Agreement, the following defined terms, whether
used in the singular or the plural, shall have the meanings set forth in this
Article. The Article and Section numbers and Exhibit references used herein
refer to Articles and Sections of this Agreement and Exhibits annexed hereto
unless otherwise specifically described.

Additional Capacity

The term "Additional Capacity" means, as regards the entry into
Transmission Agreements or the granting of

-2-

Transmission Service Entitlements relative to the transmission of power from the
Midway substation, an amount, expressed in megawatts, equal to the Deemed
Capacity less the sum of IID's Reserved Capacity and the Transmission Service
Entitlements of the Participants and their Associated Producers. The term
"Additional Capacity" means, as regards the entry into Transmission Agreements
or the granting of Transmission Service Entitlements relative to the
transmission of electric power from the Highline substation, an amount,
expressed in megawatts, equal to the lesser of (i) an amount calculated as
provided in the preceding sentence or (ii) three hundred (300) megawatts less
the sum of IID's Reserved Capacity and the Transmission Service Entitlements of
the Participants and their Associated Producers with regard to Qualifying
Facilities connected to the Highline substation.

Additional Participant

The term "Additional Participant" means a person whose name does not
appear in the list of Participants in Exhibit 1 at the time this Agreement is
originally executed but who later executes and becomes a party to this Agreement
in accordance with the procedures set forth in Article VIII.

Affiliate

The term "Affiliate" means, with respect to a particular Participant
or Associated Producer, any corporation, partnership, firm, association or
business organization which directly or indirectly controls, is

-3-

controlled by, or is under common control with, such Participant or Associated
Producer.

Agreement

The term "this Agreement" means this Funding and Construction Agreement
(Heber-Mirage Transmission Project) among IID and the Participants, and all
Exhibits attached hereto, as amended from time to time.

Associated Producer

The term "Associated Producer" means, as to a particular Participant
(i) an Affiliate thereof which owns or operates or proposes to construct a
Qualifying Facility or (ii) a firm which owns or operates or proposes to
construct a Qualifying Facility and purchases or will purchase geothermal energy
for use therein from such Participant or its Affiliate.

Capacity Nomination

The term "Capacity Nomination" means the transmission capacity, expressed in
megawatts, specified by a Participant for use by such Participant or its
Associated Producer in transmitting electric power to Edison's Electric System,
either at the time this Agreement is originally executed or later pursuant to
Section 8.02. A Participant's Capacity Nomination may be adjusted pursuant to
Section 3.07 or increased pursuant to Section 8.06.

-4-

Completion Date

The term "Completion Date" means the date on which the Transmission
Project is fully tested and accepted by IID.

Credit Installment Period

The term "Credit Installment Period" means the ten-year period
beginning on the first day of the calendar month in which the Completion Date
occurs.

Credit Installment Year

The term "Credit Installment Year" means a twelve (12) month period
beginning on the first day of the Credit Installment Period or any anniversary
of such day during the Credit Installment Period.

Deemed Capacity

The term "Deemed Capacity" means an electric transmission capacity
equal to six hundred (600) megawatts.

Edison

The term "Edison" means Southern California Edison Company.

Edison's Electric System

The term "Edison's Electric System" means the electric system operated
by Edison.

IID or District

The terms "IID" or "the District" mean Imperial Irrigation District,
organized under the Water Code of the State of California.

-5-

IID-Edison Agreement

The term "IID-Edison Agreement" means the IID-Edison Transmission
Service Agreement for Alternative Resources dated September 26, 1985 between IID
and Edison.

IID's Reserved Capacity

The term "IID's Reserved Capacity" means the transmission capacity in
the Project, expressed in megawatts, which is reserved for use by IID as
provided in Section 6.05.

IID's Transmission System

The term "IID's Transmission System" means the electric transmission
system owned and operated by IID, including (after it is constructed) the
Transmission Project.

Imperial Valley Transmission Study Group

The term "Imperial Valley Transmission Study Group" means the group
formed by companies interested in the development of the Transmission Project
under that certain Study Group Agreement dated as of October 15, 1985.

Management Committee

The term "Management Committee" means the Management Committee
established pursuant to Section 5.01.

Manager

The term "Manager" means the Participant or other person designated as
Manager pursuant to Section 5.02.

-6-

Normal Transmission Capacity

The term "Normal Transmission Capacity" means the maximum electrical
power transfer capability of the Project, expressed in megawatts, available to
transmit electrical power to Edison's Mirage substation. Such transfer
capability as determined by IID, in its sole judgment, shall be consistent with
prudent operating procedures and with generally accepted engineering and
operating practices in the electric utility industry and shall be contingent on
the ability of Edison's Electric System to accept the amount of electric power
received at Edison's Mirage substation from IID's Transmission System. It is
understood that, unless IID agrees otherwise, no more than one-half of the
Normal Transmission Capacity can be utilized by generation connected to the
Highline substation.

Original Capacity Nomination

The term "Original Capacity Nomination" means the Capacity Nomination
specified by each Participant at the time this Agreement is originally executed,
as shown in Exhibit 1, or prior to the Completion Date pursuant to Section 8.02
(as modified by Section 8.09) or Section 8.08(b), as such Original Capacity
Nomination may be adjusted pursuant to Section 3.07.

Participant

The term "Participant" means a person which has executed and is a
party to this Agreement, including both

-7-

the Participants which originally executed this Agreement and any Additional
Participants and, unless otherwise specified, any Participants in default
hereunder.

Person

The term "person" (whether or not the initial letter is capitalized)
means an individual, corporation, partnership, association, trust, government,
governmental agency or other entity.

Plant Connection Agreement

The term "Plant Connection Agreement" means an agreement between IID
and a Participant or its Associated Producer substantially similar to the form
of Exhibit 6.

Prime Rate

The term "Prime Rate" means the prime rate for U.S. banks on the
relevant date, as published in the "Money Rates" column of the Wall Street
Journal. If the date on which the Prime Rate is to be determined is a Saturday,
Sunday or legal holiday, the Prime Rate shall be determined on the last business
day prior thereto.

Project Contribution

The term "Project Contribution" means a contribution to the cost of the
Transmission Project to be made by or on behalf of a Participant (i) pursuant to
Section 3.02 in response to a cash call, (ii) pursuant to any agreement or
understanding among the Participants to make such contributions in the event of
the default of one or more other Participants hereunder or (iii) with respect to
Additional

-8-

Participants which become such before the Completion Date, pursuant to Section
8.02 (as modified by Section 8.09). The term "Project Contribution" shall not
include any interest payable pursuant to Section 3.05 or insurance proceeds
remitted to IID pursuant to Section 2.08(b), and in computing the total amount
of Project Contributions made by a Participant a deduction shall be made for any
amounts received by such Participant from Additional Participants which become
such before the Completion Date, pursuant to Section 8.02 (as modified by
Section 8.09).

Project Cost

The term "Project Cost" means a dollar amount equal to the total of
all costs in respect of which the Participants are to receive Transmission
Credits, as provided in Section 7.01.

Project Share

The term "Project Share" means the Original Capacity Nomination of a
Participant as a percentage of the aggregate Original Capacity Nominations of
all Participants, as shown in Exhibit 1, as such Project Share may be recomputed
pursuant to Section 8.09(b).

Qualifying Facility

The term "Qualifying Facility" means a small power producing facility
in the Imperial Valley which is a "Qualifying Facility" within the meaning of
the Public Utility Regulatory Policies Act of 1978 and regulations issued
thereunder.

-9-

Shared Costs

The term "Shared Costs" means the costs of the Transmission Project
which the Participants have agreed to share, as defined in Section 3.01.

Standard Form Transmission Agreement

The term "Standard Form Transmission Agreement" means a Transmission
Agreement between IID and a Participant or its Associated Producer substantially
in the form of Exhibit 2.

Total Budget

The term "Total Budget" means the total budgeted cost of the
Transmission Project as shown in Exhibit 4, as the same may be modified pursuant
to Section 4.01.

Transmission Agreement

The term "Transmission Agreement" means an agreement between IID and
another person which provides for the transmission of electric power over IID's
Transmission System for delivery to Edison's Electric System. The Standard Form
Transmission Agreement is one form of Transmission Agreement.

Transmission Credits

The term "Transmission Credits" means the credits against transmission
charges payable under a Transmission Agreement which are to be received by the
Participants pursuant to Section 7.01.

-10-

Transmission Project or Project

The terms "Transmission Project" or "Project" mean the 230-kV and
92-kV transmission lines to be funded and constructed pursuant to this
Agreement, including the facilities described in Exhibit 3 and all real property
interests and other property and rights associated therewith.

Transmission Service Entitlement

The term "Transmission Service Entitlement" means the total amount of
electric power transmission service, expressed in megawatts, which is to be
provided by IID and paid for by the other party pursuant to a Transmission
Agreement, for all Qualifying Facilities covered thereby; provided that prior to
the end of the Trial Period (as defined in the Standard Form Transmission
Agreement) for any Qualifying Facility, the amount of electric power
transmission service to be provided by IID with respect to such Qualifying
Facility shall be deemed for purposes of this definition to be the Maximum
Transmission Service Entitlement therefor, as set forth in said Standard Form
Transmission Agreement.

ARTICLE II

The Transmission Project

Section 2.01. Description of the Project. The Project shall consist of
transmission lines and associated

-11-

facilities extending from Edison's Mirage substation in the north through Niland
to the Heber area in the south, as described and specified in Exhibit 3. The
Normal Transmission Capacity of the Project upon completion is estimated to be
four hundred (400) megawatts. The Project does not include the existing single
circuit, single 1033 mcm ACSR conductor presently in place from Edison's Mirage
substation to IID's Coachella Valley substation (the "existing circuit") or the
existing facilities at the Coachella Valley substation, but IID shall reserve
sufficient capacity in the existing circuit to assure the Participants that a
transmission capacity at least equal to the Normal Transmission Capacity less
IID's Reserved Capacity is available to the Participants and their Associated
Producers, as well as any persons who desire to become Additional Participants,
for the transmission of electric power to Edison's Mirage substation. The
Transmission Project shall be constructed in accordance with the standards
contained in General Order 95 of the Public Utilities Commission of the State of
California. IID shall own, operate and maintain the Transmission Project.

Section 2.02. Contract and Bidding Procedures. IID shall acquire all
lands and interests therein necessary for the construction of the Project, using
its power of eminent domain where necessary, and shall enter into one or more
contracts providing for the supply of all materials and services necessary to
complete the construction of the

-12-

Project. To the extent possible, such contracts shall be firm-price contracts.
As soon as practicable, IID shall prepare one or more requests for proposals for
all materials and services necessary to acquire and complete the Transmission
Project. Such requests for proposals may be sent to any firm which is designated
by either IID or a Participant. In response to each request for proposals, IID
shall accept the lowest evaluated (responsive and responsible) bid from a
qualified firm.

Section 2.03. Construction Schedule. IID shall use reasonable efforts
to acquire all necessary materials, services and real property interests so as
to insure that the Project is constructed and completed in accordance with the
following schedule:

August 1985 Begin preparation of Environmental Impact Report (EIR).

February 1987 Begin right-of-way acquisition activity.

May 1987 Obtain EIR certification.

November 1987 Complete right-of-way acquisition for Coachella Valley-Midway
corridor and begin construction of transmission line on said
corridor and on Midway substation.

March 1988 Complete right-of-way acquisition for Midway-Highline corridor,
and begin construction on said corridor and on Highline
substation.

October 1988 Complete construction on Coachella Valley-Midway corridor, and
energize Midway substation.

-13-

December 1988 Complete construction on Midway-
Highline corridor, and energize
Highline substation.

Section 2.04. Review and Consultation. The Participants shall have the
right, through the Manager or a consultant, to consult with and make suggestions
to IID concerning any aspect of the Project. The Participants shall be entitled
to receive from IID

(a) at least monthly, a written status report on the Project,
including the current status of engineering, procurement, and construction
(including but not limited to the number of towers constructed, the miles
of conductors strung and the status of substation construction) and the
amount of expenditures to date and a forecast of the expenditures necessary
to complete the Project; and

(b) oral briefings on the status of the Project, conducted
periodically as agreed by IID and the Manager.

IID shall include appropriate provisions in its contract with the general
contractor to secure the foregoing rights for the Participants. With the prior
approval of IID's representatives, IID shall grant the Participants and their
representatives (including the Manager) reasonable access to areas where
construction of the Project is taking place and to supplies and equipment to be
used in constructing the Project.

-14-

Section 2.05. Standard of Care. In the handling and disbursement of
funds needed for the acquisition and construction of the Project and in carrying
out its other responsibilities under this Article II, IID shall act with the
same degree of diligence, care and skill that an ordinary prudent businessman
would exercise in the management of his own personal business affairs. Without
limiting the generality of the foregoing,

(a) except where the acquisition of a fee interest is necessary for
the proper operation of the Project, the District will acquire appropriate
easements in the real property on which the Project is to be located; and

(b) IID shall employ sound cash management practices in the payment of
bills for materials and services acquired for the Project.

Section 2.06. Indemnification. (a) Subject to the Participants'
obligation to pay the Shared Costs as provided in Section 3.01, IID shall
indemnify, defend and hold harmless each Participant, its Associated Producer
and their respective officers, directors, employees, shareholders, partners and
Affiliates from and against any loss, damage, liability or expense, including
attorneys' fees, which arises or results from any claim, lawsuit or other legal
proceeding brought by any person not a party to this Agreement and which relates
in any manner to the acquisition or construction of the Transmission Project or
any portion

-15-

thereof (whether or not such claim, lawsuit or other legal proceeding is based
on the alleged active or passive negligence of IID, its officers, employees or
agents or any other person not a party to this Agreement), including without
limitation any loss or expense which arises or results from the injury to or
death of any individual in connection with the acquisition or construction of
the Project (including the employees and agents of IID and the Participants) or
any damage to or loss of property in connection with the acquisition or
construction of the Project. Each Participant shall promptly notify IID of any
such claim, lawsuit or other legal proceeding and shall allow IID to control the
defense thereof at IID's expense. Any such Participant shall be entitled to
monitor such claim, lawsuit or other legal proceeding, and shall be entitled to
employ an attorney for such purpose at its own expense. To the extent that IID
includes provisions in any contracts awarded by it for the acquisition of
materials or services in connection with the Project under which IID is
indemnified against or released from liability in specified situations or
circumstances, IID shall include language in each such contract granting each
Participant protection equivalent to the protection provided to IID.

(b) Notwithstanding anything in this Section 2.06 to the contrary, each
Participant shall indemnify, defend and hold harmless IID and the other
Participants, and their respective officers, directors, employees, shareholders,

-16-

partners and Affiliates, from and against any loss, damage, liability or
expense, including attorneys' fees, and any claim thereof, which relates to the
acquisition or construction of the Project and results or arises from the active
or passive negligence or willful misconduct of the indemnifying Participant, its
Associated Producer or their respective officers, employees or agents.

Section 2.07. Maintenance of Transmission Project. IID shall operate
and maintain the Transmission Project in accordance with generally accepted
engineering and operating practices in the electric utility industry. In the
event of any loss or destruction of the Transmission Project or any portion
thereof, or the partial or complete loss of the use thereof, on or after the
Completion Date, by reason of an "uncontrollable force" as defined in Section 16
of the Standard Form Transmission Agreement, IID shall exercise due diligence to
remedy such loss or destruction with all reasonable dispatch; provided that IID
shall not be obligated to expend more than $250,000 in repairing or
reconstructing the Transmission Project as a result of any single occurrence
which occurs prior to the end of the Credit Installment Period. Subject to
Section 3.01(a)(9), the costs of repairing or rebuilding the Project as a result
of damage or destruction which occurs prior to the Completion Date shall be
treated as Shared Costs.

Section 2.08. Insurance. (a) Without limiting IID's obligations under
Section 2.06, prior to the commence-

-17-

ment of the construction of the Project IID shall obtain and, until the
Completion Date shall maintain in force, comprehensive general liability and
property insurance with respect to the Transmission Project, with limits of
$20,000,000 and $40,000,000, respectively. Beginning on the Completion Date and
continuing until the end of the Credit Installment Period, IID shall maintain in
force, property insurance with respect to the Transmission Project, with a
deductible of $250,000 for each occurrence. IID and the Manager shall consult
with respect to the limits, deductibles (except as specifically provided in the
preceding sentence) and exclusions under all such property insurance, and in
this regard IID shall abide by the decision of the Management Committee, which
decision may be modified from time to time. Such insurance (i) shall be placed
with an insurer or insurers of recognized reputation and responsibility, (ii)
shall name IID as the insured and each Participant as an additional insured and
(iii) shall provide that if such insurance is cancelled or materially changed,
or allowed to lapse for nonpayment of premium, such cancellation, change or
lapse shall not be effective as to any Participant until thirty (30) days after
receipt by such Participant of written notice by the insurer of such
cancellation or lapse or of any material change in policy terms or conditions.
Upon request by any Participant at any time, IID shall provide a certificate
from the insurer stating that such insurance is in effect.

-18-

(b) IID shall use any insurance proceeds received by it as a result of
damage to or destruction of the Project to repair or rebuild the same. If any
Participant receives proceeds from the property insurance provided for in this
Section 2.08 as a result of damage to or destruction of the Project, such
Participant shall promptly remit such proceeds to IID for IID's use in repairing
or rebuilding the Project. The amount of any such remittance shall not be deemed
a Project Contribution. If any of the proceeds from such insurance are not
needed for the repair or rebuilding of the Project, IID shall apply the same to
any of the costs described in Section 3.01(a) so as to reduce the amount
requested in cash calls issued by IID pursuant to Section 3.02.

ARTICLE III

Funding of Transmission Project

Section 3.01. Shared Costs. Subject to the terms of this Article III,
the Participants shall bear the following costs associated with the Transmission
Project,

(a) All out-of-pocket costs incurred by IID, whether incurred prior to
or after the date of this Agreement, in order to plan, permit, design,
engineer, acquire and construct the Transmission Project and to acquire the
right of way for the Transmission Project, including by way of illustration
and not limitation, the following:

-19-

(1) The cost of acquisition of all lands, rights, rights of way,
easements and interests acquuired or used for the Transmission
Project, including the cost of any mitigation requirements; provided,
however, that any real property interests owned by IID and necessary
or useful for the Project shall be contributed by IID at no charge and
shall not be included in the Shared Costs.

(2) The cost of all materials, supplies, machinery and equipment
and of all labor and services necessary to construct the Transmission
Project.

(3) The cost of engineering, financial services, plans,
specifications, studies, surveys, expenses of recordation and
printing, and other expenses necessary or incident to determining the
feasibility of constructing the Transmission Project or incident to
the construction thereof.

(4) The cost of (i) comprehensive general liability and property
insurance with respect to the Project, as required by Section 2.08,
for the period prior to

-20-

the Completion Date, and (ii) property insurance with respect to the
Project, as required by Section 2.08, for the period from the
Completion Date until the end of the Credit Installment Period. If the
property insurance referred to in (ii) above can reasonably be
purchased for a single lump-sum premium payable in advance, the cost
of such insurance shall be the amount of such premium. If the property
insurance referred to in (ii) above cannot reasonably be purchased for
a lump-sum premium payable in advance, the cost of such insurance for
purposes of this paragraph (4) shall be deemed to be an amount equal
to 6.7 times the annual premium payable therefor for coverage during
the first year following the Completion Date.

(5) The cost of legal services and court costs necessary or
incident to the planning or construction of the Project, unless IID is
reimbursed for such costs by insurance or otherwise, provided that any
such costs incurred in connection

-21-

with legal actions brought against IID with respect to personal injury
or property damage shall be included in the Shared Costs only if IID
is ultimately successful in defending the action.

(6) The cost of expanding the interconnection facilities at
Edison's Mirage substation to accommodate the electric power to be
delivered by the Participants or their Associated Producers to Edison,
in an amount up to the Normal Transmission Capacity of the Project,
whether such work is performed by or on behalf of IID or by or on
behalf of Edison and reimbursed by IID.

(7) The cost of relocating IID's "E" line to accommodate a
portion of the Project, if such relocation is necessary.

(8) In the event of the termination of the Project pursuant to
Section 3.08, any costs incurred in (i) maintaining and holding the
property related to the Project for the three (3) year period referred
to in paragraph (b) thereof or (ii) restoring real property

-22-

to its original condition as provided in paragraph (b) thereof.

(9) In the event of damage to or destruction of the Project or
any portion thereof prior to the Completion Date, any of the foregoing
costs or expenses incurred in repairing or rebuilding the Project and
not paid with the proceeds of an insurance policy.

(b) The salary and other employee costs incurred by IID as a result of
the activities of IID's accounting and financial personnel in implementing
the cash call procedure set forth in this Article III and otherwise in
conducting IID's relations with the Participants in connection with their
Project Contributions;

(c) Although it is not contemplated that IID will advance its own
funds to pay the costs referred to in paragraph (a) of this Section 3.01,
if IID should elect to do so, interest on any such advance at the Prime
Rate (or the maximum rate allowed by law, whichever is less) in effect on
the date thereof, until the date on which IID is reimbursed for such
advance by the Participants;

(d) The following costs incurred by the Participants and their
Affiliates in connection with the planning and construction of the Project:

-23-

(1) All costs incurred by way of cash contributions to the
Imperial Valley Transmission Study Group (the "IVTSG").

(2) All transportation, lodging and meal expenses incurred in
connection with the attendance of personnel at meetings of the IVTSG
on or after October 16, 1985 and at meetings held to organize the
IVTSG on the following dates in 1985: March 22, April 12, June 19,
July 12 and 19, August 12 and September 16.

(3) All transportation, lodging, meal, reproduction and
miscellaneous out-of-pocket expenses incurred in furtherance of the
business of the IVTSG, including expenses related to negotiation or
informational meetings with IID, Edison, Associated Southern
Engineers, David A. Hodges or R. W. Beck.

(4) Any other costs actually incurred in connection with the
planning and construction of the Project, if approved by the
Management Committee.

The Manager shall bill the District for such costs as soon as practicable
after the date of this

-24-

Agreement, including with such bill such supporting documentation as the
District may reasonably require. Such bill shall be payable within thirty
(30) days after receipt. The payment for such costs shall be distributed to
each Participant in accordance with the amount paid by such Participant and
its Affiliates.

(e) The fees and expenses of the Manager and of any consultant
retained by the Participants to monitor the construction of the Project,
including in such expenses the costs of travel, telephone and supplies. The
Manager shall bill IID for such fees and expenses at the end of each month,
including with the bill such supporting documentation as IID may reasonably
request. Such bills shall be payable within thirty (30) days after receipt.

Notwithstanding the foregoing, the Shared Costs shall not include any loss or
expense (including attorneys' fees, except as provided in paragraph (a)(5)
above) which arises or results from the injury to or death of any individual in
connection with the acquisition or construction of the Project (including the
employees and agents of IID and the Participants) or, except as provided in
paragraph (a)(9) above, from any damage to or loss of property or property
rights in connection with the acquisition or construction of the Project (other
than real property and interests therein

-25-

on which the Project is to be located), or any loss or expense which is
attributable to the gross negligence or willful misconduct of IID or its
officers, employees or agents.

The Project Budget contained in Exhibit 4 includes all costs referred
to in this Section 3.01 which IID and the Participants presently anticipate will
be incurred.

Section 3.02. Cash Call Procedure. (a) On the first business day of
each month IID shall issue a cash call to the Manager. The amount of such cash
call shall be equal to the sum of (i) the anticipated Shared Costs to be
incurred by the District from the due date thereof (as set forth below) until
the due date for the next succeeding cash call, (ii) any amount of Shared Costs
paid or to be paid by IID prior to the due date thereof and not covered by
earlier cash calls and (iii) a reasonable margin for unanticipated expenses and
cost overruns. The cumulative total of all cash calls issued by IID up to any
date shall be consistent with the anticipated progress on the Project up to such
date, as set forth in the construction and supply contracts entered into by IID.

(b) Within three (3) business days after receipt of a cash call from
IID the Manager shall issue an individual cash call to each Participant
(including the Manager itself if the Manager is a Participant) other than any
Participant which is in default hereunder and has failed to cure such default as
provided in Section 3.05. The

-26-

Manager shall send a copy of each individual cash call issued to a Participant
to such Participant's bank or other lender, if so indicated in Exhibit 7. The
Participants shall pay or cause to be paid the amounts indicated in such
individual cash calls so that the funds are received by IID no later than the
fifteenth (15th) day of the calendar month after the month of issuance thereof,
or if such day falls on a Saturday, Sunday or legal holiday the next succeeding
business day (the "due date"). The amount of the individual cash call issued by
the Manager to each Participant shall be equa1 to

C(t) X PS(i)
-----
100%

where C(t) is the amount of the cash call received from IID and PS(i) is the
Project Share of the Participant to which the individual cash call is issued.

(c) The Manager shall send IID a copy of each individual cash call
issued by it to any Participant, whether the same is issued pursuant to this
Section 3.02 or pursuant to any understanding or agreement among the
Participants to make Project Contributions in the event of the default of any
Participant.

(d) All Project Contributions received by IID from any Participant
shall be applied to individual cash calls issued to such Participant (whether
the same were issued pursuant to this Section 3.02 or in respect of the

-27-

default of another Participant) in the chronological order in which such
individual cash calls were issued.

Section 3.03. Obligation Unconditional. The obligation of each
Participant to respond to individual cash calls as set forth in Section 3.02
shall be irrevocable and unconditional except as this Agreement may specifically
provide otherwise. Without limiting the generality of the foregoing, such
obligation shall not be affected by the modification or abandonment of the
Participant's (or its Associated Producer's) plans to construct a Qualifying
Facility or by the partial or complete failure or a Qualifying Facility owned or
operated by the Participant or its Associated Producer, or of any equipment,
plant, geothermal resource, or facility associated therewith.

Section 3.04. Deposit of Cash Call Funds. IID shall promptly deposit
all funds it receives in response to any cash call into an interest-bearing
account at the Bank of America or such other bank as may be agreed to from time
to time by the Management Committee and IID. Interest on the funds on deposit in
such account shall be retained in the account and used to pay Shared Costs of
the Project. IID shall make withdrawals from such account only as necessary to
pay Shared Costs. Any funds remaining in such account after all of the Shared
Costs to be paid hereunder have been paid shall be refunded to the Participants
in accordance with their respective Project Shares.

-28-

Section 3.05. Failure To Respond to Cash Call. If any participant
shall fail to cause funds indicated in an individual cash call (including any
individual cash call issued as a consequence of another Participant's default)
to be delivered to IID by the fifteenth (15th) day of the calendar month after
the month of issuance thereof (or if such day falls on a Saturday, Sunday or
legal holiday, the next succeeding business day), or by such earlier due date as
may be indicated on the face of the individual cash call, such Participant shall
be deemed to be in default hereunder, and IID shall promptly send a notice of
default to such Participant, with a copy to the Manager (or, in the case of such
a default by the Manager, to any person which the Participants, by written
notice in the form described in Section 5.02, have informed IID is acting as
Alternate Manager). The Participant in default shall have fifteen (15) days
after IID's transmittal of the notice of default in which to cure the default by
causing to be paid the amount in default plus interest for each day after the
due date to and including the date payment is received by the District at a rate
equal to 125% of the Prime Rate (or the maximum rate allowed by law, whichever
is less) in effect on the due date. No Participant shall be entitled to cure a
default under this Agreement as of right except as specifically provided in this
Section 3.05. After the fifteen (15) day period specified above, a Participant
in default shall be permitted to cure its default only with the

-29-

approval of and on such terms as may be specified by the Management Committee,
one of such terms being that the defaulting Participant shall pay or cause to be
paid the amount in default plus interest thereon at a rate equal to 125% of the
Prime Rate (or the maximum rate allowed by law, whichever is less), determined
on the due date and on the first business day of each calendar quarter
thereafter, for the period during which the payment was in default. Any payment
of a Project Contribution made by or on behalf of a Participant after the due
date therefor shall be accompanied by interest calculated as provided in this
Section 3.05, and any such payment received by IID after the due date shall, as
necessary, be allocated between the Project Contribution and the intereste due
thereon calculated as provided herein. Upon the payment of any Project
Contribution by or on behalf of a Participant after the fifteen (15) day cure
period with respect thereto has expired, IID shall promptly refund to every
other Participant an amount equal to the total of any Project Contributions
which it made as a result of the failure of such Project Contribution to be made
by the end of the fifteen (15) day cure period, plus interest calculated as
provided herein.

Section 3.06. Failure To Cure Default. If a Participant shall fail to
cure a default within the fiteen (15) day period provided in Section 3.05, IID
shall promptly notify the Manager in writing of such failure. The Participants
or any of them shall be entitled to cause the amount

-30-

in default to be paid, in which case IID shall be obligated to continue the
acquisition and construction of the Project as provided in this Agreement.
Notwithstanding the foregoing, IID and each of the Participants shall have the
right to obtain any remedy available at law or in equity in consequence of the
default of IID or any Participant under this Agreement, including damages or
specific performance where appropriate. Subject to Section 3.10, a Participant
in default hereunder shall be liable for all unpaid amounts included in
individual cash calls issued to such Participant as well as all amounts which
would have been included in individual cash calls issued to such Participant
pursuant to Section 3.02 if such default had not occurred.

Section 3.07. Automatic Adjustment of Original Capacity
Nominations. If one or more Participants shall fail to cure a default as
provided in Section 3.05, the Original Capacity Nomination of each Participant
(including any Participant in default] shall, after all Project Contributions
have been made, be automatically adjusted to an amount, expressed in megawatts,
equal to

PC(i)
OCN(i) = OCN(t) X -----
PC(t)
where OCN(i) is the adjusted Original Capacity Nomination of the Participant,
OCN(t) is the total of the Original Capacity Nominations of all Participants,
PC(i) is the total

-31-

of the Project Contributions made by such Participant, and PC(t) is the total of
the Project Contributions made by all Participants (including any Participants
in default).

Section 3.08. Termination of Project. (a) The Participants shall be
entitled to cease making Project Contributions at any time and for any reason,
subject to the following:

(i) All of the Participants shall execute and deliver to IID a
document stating their intention to terminate the Project pursuant to this
Section 3.08.

(ii) In accordance with the procedures set forth in this Article III,
the Participants shall pay all Shared Costs which are committed to be paid
and the payment of which cannot be avoided. For this purpose, any costs
incurred by IID as a result of such termination shall be deemed to be
included in the Shared Costs.

(b) IID shall retain all rights, interests and property, real and
personal, acquired for the Project for a period of three (3) years following the
delivery of the document referred to in paragraph (a)(i) above, to enable the
Participants or any of them to find a suitable means of financing the completion
of the Project. Upon notice executed and delivered to IID by the Participants
during such three (3) year period, IID shall transfer to the Participants or
their designee all right, title and interest in

-32-

and to all or any portion of the towers, cable, transformers and other tangible
personal property and fixtures the acquisition of which was funded by the
Participants pursuant to this Agreement and which is specified in such notice
(the "acquired equipment"). The acquired equipment, if acquired by the
Participants, shall be transferred to and held by the Participants in fractional
undivided interests equal to the following:

PC(i)
I(i) = ------
PC(tn)

where I(i) is the Participant's interest, PC(i) is the total of the Project
Contributions made by the Participant, and PC(tn) is the total of the Project
Contributions made by all Participants not in default. Within sixty (60) days
after its receipt of the notice referred to in this paragraph (b), IID may, at
its option and upon written notice given to the Manager, elect to compensate the
Participants for all amounts paid by IID in connection with the acquisition of
the acquired equipment and included in cash calls issued by IID pursuant to
Section 3.02 (including taxes, freight and the cost of installing the towers and
any other fixtures). Such compensation shall be paid to the Manager and shall be
distributed among the Participants in accordance with the foregoing formula.
Following the transfer of the acquired equipment or the payment of compensation
by IID as provided in this paragraph (b), or the elapse of the foregoing three
(3) year period, IID shall have no further obligation under

-33-

this Agreement to any Participant with respect to any property, rights or
interests acquired by IID pursuant to this Agreement, and as requested by IID
the Participants shall pay the cost of restoring any real property disturbed by
the construction of the Project to its condition prior to the commencement of
such construction.

(c) For purposes of this Section 3.08 the term "Participants" shall
mean all Participants which are not in default under this Agreement on the date
of delivery of the document referred to in paragraph (a)(i) above.

Section 3.09. IID's Obligation Contingent. Notwithstanding any other
provision of this Agreement, IID shall be obligated to proceed with the
acquisition and construction of the Project if, but only if, the Participants
provide all of the Shared Costs as required by this Article III. If the
Participants fail to provide all of the Shared Costs as required by this Article
III, IID may terminate the Projuect upon ninety (90) days' written notice to
each Participant, unless the Participants shall cause any Shared Costs due and
owing to be paid within the ninety (90) day period, and subject to the rights of
the Participants to deliver the document referred to in Section 3.08(a)(i) prior
to the end of the ninety (90) day period and thereupon exercise their rights
under said Section.

Section 3.10. Limit on Contributions. Notwithstanding any other
provision of this Agreement, in no event shall any Participant be required to
make any Project

-34-

Contribution after the cumulative total of Project Contributions made by or on
behalf of that Participant equals

PS(i)
TB x ----- x 1.2
100%

where TB is the Total Budget as of the date of this Agreement and PS(i) is the
Project Share of that Participant.

Section 3.11. Right To Audit. Each party to this Agreement shall
maintain true and correct records of all expenses incurred, amounts charged, and
other transactions in connection with this Agreement until the expiration of
three (3) years after the Completion Date. Upon request, each party (the
"audited party") shall permit any other party or its representative to audit any
or all of such records in the audited party's possession or control for the
purpose of determining the accuracy of any amount charged by the audited party
or otherwise determining whether a party has complied with the terms of this
Agreement. The cost of any such audit shall be borne by the party or parties
requesting the same.

Section 3.12. Payment of All Shared Costs. When all Shared Costs paid
or to become payable by the Participants have been paid, IID shall promptly send
a letter to the Manager so stating, signed by its General Manager.

ARTICLE IV

Cost Controls

Section 4.01. Budget. Exhibit 4 contains a budget for the acquisition
and construction of the Transmis-

-35-

sion Project. IID may modify such budget from time to time by giving notice to
the Manager, provided that any increase in the Total Budget shall require the
approval of the IID Board of Directors acting in public session if the amount of
such increase, plus the aggregate of all budget increases since the date hereof
or the last such approval, whichever is later, exceeds $100,000. Under no
circumstances shall the cumulative total of the cash calls issued by IID
pursuant to Section 3.02 exceed the Total Budget.

Section 4.02. Relations with Contractors. IID shall actively enforce
the provisions of the contracts into which it will enter with respect to the
acquisition and construction of the Project so as to minimize the cost of the
Project to the Participants. At the request of the Manager, IID will consult on
matters concerning the administration and enforcement of any such contract.

ARTICLE V

Administration

Section 5.01 Management Committee. (a) The implementation of this
Agreement on behalf of the Participants shall be undertaken by a Management
Committee. The Management Committee shall consist of one regular member
representing each Participant. In addition, each Participant shall be entitled
to designate one alternate member who shall be entitled to attend meetings of
the Management Committee in the absence of its regular member. Notwith-

-36-

standing the foregoing, no Participant which is in default hereunder shall be
entitled to be represented on the Management Committee.

(b) The Management Committee shall hold regular meetings at such times
and places as it may determine. Special meetings may be called at any time by
the Manager at its own instance or at the request of a Participant. Whenever a
Participant is acting as Manager, the member or alternate member representing
such Participant shall serve as the chairman of the Management Committee.
Whenever a person other than a Participant is acting as Manager, the chairman of
the Management Committee shall be chosen by a vote of the Management Committee.
Except as specifically provided herein, the Management Committee shall be free
to determine its rules of procedure.

(c) Each member or alternate member of the Management Committee shall
have a vote commensurate with the Project Share of the Participant which he
represents. Except as may otherwise be provided in this Agreement, all decisions
of the Management Committee shall be by an affirmative vote of members (or
alternate members) representing Participants whose aggregate Project Shares
equal or exceed 66-2/3% of the aggregate Project Shares of the Participants
entitled to be represented on the Management Committee.

Section 5.02 Manager. The Participants shall designate one of their
number or another person to act as Manager. The Manager shall serve at the
pleasure of the

-37-

Management Committee, which shall have the power to remove the Manager at any
time with or without cause; provided, however, that a Participant shall be
automatically disqualified from serving as Manager if it is in default
hereunder. Upon the removal, disqualification or resignation of the Manager, the
Management Committee shall designate a successor. The initial Manager shall be
Rosendo J. Pont. IID shall be entitled to consider such person (and any of its
successors as Manager) to continue as the Manager until such time as the
District receives a written notice designating a successor Manager and signed by
Participants who represent in such notice that their aggregate Project Shares
equal or exceed 66-2/3% of the aggregate Project Shares of the Participants
entitled to be represented on the Management Committee.

Section 5.03. Duties of Manager. The Manager shall be entitled to
represent to IID the views of the Participants on any issue or other matter
which may arise in connection with the funding or construction of the Project,
including the decisions of the Management Committee, and to undertake such other
duties as are stated in this Agreement or as may be specified by the Management
Committee from time to time. Nothing in this Article V shall be construed as
prohibiting the District and any Participant or Participants from consulting or
holding discussions concerning any aspect of the funding or construction of the
Project.

-38-

Section 5.04. Copies of Correspondence; Reports. IID shall send the
Manager

(a) copies of all notices, letters, and other communications directed
by it to any Participant and pertaining to the Transmission Project;

(b) copies of all notices, reports, letters and other communications
received by it from, or transmitted by it to, any contractor or supplier
and pertaining to the Transmission Project;

(c) copies of all contracts, and all amendments and supplements
thereto, entered into with any contractor or other person in connection
with the Transmission Project; and

(d) at the end of each month, a report showing the total amount of
funds theretofore received in response to cash calls, uses of such funds,
cash on hand, and interest income.

ARTICLE VI

Transmission Agreements

Section 6.01. Agreement To Execute. (a) In consideration of the
funds to be provided hereunder by the Participants, at any time on or after the
date hereof IID shall upon the request of any Participant or its Associated
Producer enter into (i) a Standard Form Transmission Agreement which gives such
Participant or its Associated Producer the right to transmission service over
IID's Transmission

-39-

System to Edison's Electric System in an aggregate amount equal to such
Participant's Capacity Nomination, and (ii) Plant Connection Agreements which
allow such Participant or its Associated Producer to connect each of its
Qualifying Facilities listed in Exhibit 1 to IID's Transmission System. The
amount of transmission service to which a Participant or its Associated Producer
is entitled shall be reflected as the sum of the Maximum Transmission Service
Entitlements (as defined in the Standard Form Transmission Agreement) entered in
clause 4 of Exhibit II and any succeeding Exhibits to the Standard Form
Transmission Agreement, and shall be subject to adjustment as provided therein.
The amount of transmission service available to each Qualifying Facility
associated with a Participant or its Associated Producer shall be as indicated
in Exhibit 1, as the same may be amended from time to time, and shall be entered
as the Maximum Transmission Service Entitlement in an appropriate Exhibit to the
Standard Form Transmission Agreement. At the request of a Participant, Exhibit 1
shall be amended so as to add or delete Qualified Facilities, to add to or
reduce the transmission capacity available to one or more Qualified Facilities,
or to shift transmission capacity from one Qualified Facility to another;
provided that all such Qualified Facilities shall be Qualified Facilities owned
or operated by such Participant or one or more of its Associated Producers; and
provided further that the total of the Maximum Transmission Service

-40-

Entitlements designated for such Qualified Facilities in Exhibit 1 shall not
exceed the Participant's then current Capacity Nomination; and provided further
that, unless IID agrees otherwise, no such amendment of Exhibit 1 shall result
in an increase of the sum of IID's Reserved Capacity and the Maximum
Transmission Service Entitlements of all Qualifying Facilities connected to the
Highline substation to a level greater than one-half the Normal Transmission
Capacity. At the request of a Participant, IID shall from time to time enter
into such Standard Form Transmission Agreements and agree to such amendments or
terminations thereof as are necessary to secure for such Participant and its
Associated Producers the rights to transmission service indicated in Exhibit 1,
as the same may be amended from time to time.

(b) The effectiveness of each Standard Form Transmission Agreement
shall be contingent upon the completion of the Project, and if the Original
Capacity Nomination of any Participant is adjusted pursuant to Section 3.07, the
Standard Form Transmission Agreement entered into by such Participant or its
Associated Producer shall be amended to provide for an amount of transmission
service (reflected as described above) equal to such Participant's Original
Capacity Nomination as so adjusted.

Section 6.02. Future Transmission Agreements. IID agrees that, prior
to the end of the Credit Installment

-41-

Period, and so long as the Additional Capacity is greater than zero, it will not

(a) grant any Participant or its Associated Producer a Transmission
Service Entitlement under a Transmission Agreement if the sum obtained by
adding such Transmission Service Entitlement to the Transmission Service
Entitlements granted under any other Transmission Agreements in effect
between such Participant or its Associated Producer and IID would be
greater than such Participant's Capacity Nomination, as the same may be
increased pursuant to Section 8.06; or

(b) enter into a Transmission Agreement with any person other than a
Participant or its Associated Producer unless such person has complied with
the provisions of Article VIII and has specified a Capacity Nomination
pursuant to Section 8.02 which is at least as large as the maximum amount
of transmission service allowed under such Transmission Agreement;
provided, however, that nothing in this Agreement shall prevent or
restrict IID from entering into a Transmission Agreement with Colmac Energy
Inc. providing for the transmission of up to 50 megawatts of electric power
for delivery to Edison via the Coachella Valley substation and the
Coachella Valley-Mirage transmission line; and provided, further, that the
foregoing shall not

-42-

alter IID's obligations under the third sentence of Section 2.01.

For purposes of this Section 6.02, the term "Transmission Agreement"
shall include any agreement providing for a buy-sell transaction or other
arrangement under which IID is to act functionally as a provider of transmission
service over IID's Transmission System to Edison's Electric System, but shall
not include (i) any agreement providing for the exchange of electric power
between IID and another utility unless the power received by IID pursuant to the
exchange is generated by a Qualifying Facility which is located in IID's service
area and is constructed after the date of this Agreement or (ii) any agreement
with another utility which provides for the transmission of electrical power to
Edison's Electrical System during an emergency. Except as specifically provided
herein, nothing herein shall alter or affect the rights and obligations under
any Transmission Agreement or other agreement providing for the transmission of
electric power over IID's Transmission System for delivery to Edison's Electric
System entered into prior to the date of this Agreement.

Section 6.03. Written Agreement Required. Prior to the end of the
Credit Installment Period, and so long as the Additional Capacity is greater
than zero, IID shall not transmit electric power over IID's Transmission System
for delivery to Edison's Electric System for any person (other

-43-

than itself) except pursuant to a written agreement providing for such
transmission.

Section 6.04. Nondiscrimination. Each Transmission Agreement entered
into with a Participant or its Associated Producer shall be substantially in the
form of the Standard Form Transmission Agreement and shall be non-discriminatory
among the Participants.

Section 6.05. IID's Use of the Project. IID shall have the unrestricted
right to use the Transmission Project for the transmission of electric power up
to IID's Reserved Capacity, which shall be a transmission capacity equal to the
greater of (i) six and two-thirds percent (6-2/3%) of the Normal Transmission
Capacity or (ii) the difference between the Normal Transmission Capacity and the
sum of the Capacity Nominations of all Participants; provided that in no event
shall IID's Reserved Capacity be less than twenty-six (26) megawatts or greater
than forty (40) megawatts. IID's Reserved Capacity may increase within the
limits set forth in the foregoing sentence, but in no event shall IID's Reserve
Capacity decrease from the level in existence at any given time. IID shall have
the right to use the Project at all times for the transmission of electric power
in excess of IID's Reserved Capacity, provided that such transmission does not
conflict with the transmission of electric power for any Participant (including
any Additional Participant) or its Associated Producer in accordance with

-44-

the terms of one or more Transmission Agreements entered into by such
Participant or its Associated Producer.

Section 6.06. Transmission Under Existing IID-Edison Agreement. To the
extent that electric power produced by a Participant or its Associated Producer
is being transmitted to Edison's Electric System pursuant to the IID-Edison
Agreement, such Participant or its Associated Producer may elect to continue
such transmission pursuant to the IID-Edison Agreement in lieu of transmission
pursuant to a Transmission Agreement entered into by such Participant or its
Associated Producer and IID pursuant to Section 6.01 or Section 8.08. A
Participant or Associated Producer may make the foregoing election only with
respect to the entire output of a particular Qualifying Facility, and each
Participant agrees that neither it nor its Associated Producer will designate
electric power from any such Qualifying Facility for transmission pursuant to
the IID-Edison Agreement in an amount larger than the Maximum Transmission
Service Entitlement for such Qualifying Facility, as shown in Exhibit 1. If a
Participant or its Associated Producer makes an election pursuant to this
Section 6.06, the right of such Participant or its Associated Producer to
transmission service under a Transmission Agreement entered into pursuant to
Section 6.01 or Section 8.08 shall, so long as such election remains in effect,
be reduced by an amount equal to the Maximum Transmission Service Entitlement
for

-45-

any Qualifying Facility with respect to which such election was made, as shown
in Exhibit 1.

Section 6.07. Existing Plant Connection Agreements. Upon the execution
of a Plant Connection Agreement between a Participant or its Associated Producer
and IID with respect to a particular Qualifying Facility, pursuant to Section
6.01 or Section 8.08, the parties shall terminate any existing plant connection
agreement relating to such Qualifying Facility; provided, however, that a
Participant or its Associated Producer which makes an election pursuant to
Section 6.06 with respect to such Qualifying Facility may elect at its option to
continue in effect the existing plant connection agreement for such Qualifying
Facility, but IID may require such existing plant connection agreement to be
amended so as to provide for the connection of such Qualifying Facility to the
Transmission Project.

ARTICLE VII

Credits Against Transmission Service Charges

Section 7.01. Amount of Credits. IID shall grant each Participant
(including any Participants in default) Transmission Credits equal in dollar
value to the sum of the following:

(a) The total amount of the Project Contributions made by or on behalf
of the Participant; and

-46-

(b) The construction period financing costs incurred by the
Participant, computed from the date of each Project Contribution to the
Completion Date. Such financing costs shall be calculated by applying the
following interest rates:

(1) If the Participant financed its Project Contributions by
arrangement with a bank or other lender, its financing costs shall
be calculated at the interest rate actually in effect from time to
time under the terms of such financing arrangement with the bank or
other lender.

(2) If the Participant did not so finance its Project
Contributions, its financing costs for each calendar quarter or
portion thereof shall be calculated at a rate equal to 125% of the
Prime Rate (or the maximum rate allowed by law, whichever is less) in
effect on the first day of the quarter; and

(c) Any fee paid by the Participant or its Affiliate to an investment
banking or other firm for providing financial advisory services or
arranging financing for such Participant's Project Contributions and any
fee paid by the Participant or its Affiliate to obtain a letter of credit
from

-47-

a bank or other financial institution in support of such Participant's
obligation to make Project Contributions, provided that the amount of
Transmission Credits granted to a Participant pursuant to this paragraph
(c) shall not exceed the lesser of $250,000 or 3% of the limit on Project
Contributions for that Participant determined pursuant to Section 3.10 as
of the date hereof. Any fee paid by a Participant or its Affiliate to an
investment banking or other firm for arranging financing for such
Participant's Project Contributions as well as other financing required by
such Participant or its Affiliate shall, for purposes of this paragraph
(c), be allocated to such Participant's Project Contributions on a pro rata
basis, in proportion to the relative magnitude of such Project
Contributions and other financing.

Following the Completion Date, each Participant shall present IID with
such documentation as the District may reasonably require to support the amounts
referred to in items (b) and (c) above, if applicable. IID shall promptly issue
a letter to each such Participant confirming the amount of Transmission Credits
available to such Participant.

Section 7.02. Use of Credits. The Transmission Credits shall be
applicable on a dollar-for-dollar basis

-48-

against any charges or fees imposed on a Participant or its Associated Producer
under any Transmission Agreement entered into by such Participant or Associated
Producer and IID. Each Participant shall inform IID of the persons, selected
from among itself and its Associated Producers, which are to use the
Transmission Credits issued to it. Such selections will be subject to change
upon written notice to IID. If a Participant or its Associated Producer elects
to continue transmission under the IID-Edison Agreement, as provided in Section
6.06, IID shall, at the request of such Participant or its Associated Producer,
apply transmission credits held by such Participant or its Associated Producer
so as to reduce IID's charges to Edison for the transmission of electric power
on behalf of such Participant or its Associated Producer under the IID-Edison
Agreement.

Section 7.03. Schedule of Availability. The Transmission Credits
received by each Participant shall be divided into ten (10) equal installments,
and a single such installment shall become available for use during each
successive Credit Installment Year. Any Transmission Credits which are available
for use but are not used in a given Credit Installment Year may be carried
forward and used in later Credit Installment Years, provided that any
Transmission Credits not applied against charges or fees due and payable under a
Transmission Agreement within fifteen (15) years after the beginning of the
Credit Installment Period shall expire and be of no further force or effect.

-49-

Section 7.04. Assignability of Credits. During the Credit Installment
Period the Transmission Credits shall not be assignable by any holder thereof
except to (i) a Participant (including an Additional Participant) for
application against amounts payable under a Transmission Agreement entered into
by such Participant or its Associated Producer, (ii) a bank or other lender, as
security for a loan or letter of credit provided by such person to finance or
provide credit support for a Participant's Project Contributions, or (iii) an
assignee of a Participant's interest in this Agreement as permitted by Section
9.04, in conjunction with the assignment of such interest, for application
against amounts payable under a Transmission Agreement entered into or assumed
by such assignee or its Associated Producer. Following the Credit Installment
Period, the Transmission Credits shall be assignable to any person for
application against any charges or fees payable to IID for the transmission of
electric power to Edison's Electric System. No assignment of Transmission
Credits shall change the Credit Installment Year in which they become available
for use pursuant to Section 7.03. No assignment of Transmission Credits (except
an assignment for security purposes) shall be effective unless and until the
assignor gives IID a written notice thereof. The right to receive payments in
exchange for Transmission Credits, as provided in Sections 8.02 and 8.03, may be
assigned in conjunction with an assignment of Transmission Credits, and

-50-

the foregoing notice to IID shall indicate whether such right is being assigned.

Section 7.05. Addition of Cost of Project to Rate Base. For purposes
of determining the transmission service charges payable under the Transmission
Agreements entered into by the Participants (as set forth in Exhibit I to the
Standard Form Transmission Agreement), IID shall add the cost of the
Transmission Project to its investment in plant as shown on its books
("Transmission Plant") as follows. IID shall on each January 1 prior to the
fifteenth (15th) anniversary of the beginning of the Credit Installment Period
add an amount to its Transmission Plant equal to the following:

DC - IRC
TPA = C(t) x --------
DC

where TPA is the amount to be added to IID's Transmission Plant, C(t) is the
total amount of Transmission Credits applied by the Participants or their
Associated Producers or any permitted assignees thereof against transmission
charges and fees due and payable in the preceding calendar year, DC is the
Deemed Capacity, and IRC is IID's Reserved Capacity, which for purposes of this
Section 7.05 only shall be deemed to be forty (40) megawatts. On the first
January 1 on or after the fifteenth (15th) anniversary of the beginning of

-51-

the Credit Installment Period, IID shall add an amount to its Transmission Plan
equal to the following:

DC - IRC
TPA = (P-C(p)) x --------
DC

where TPA, DC, and IRC are defined as above, P is the Project Cost, and C(p) is
the amount previously added to IID's Transmission Plant with respect to the
application of Transmission Credits by the Participants or their Associated
Producers or any permitted assignees thereof against transmission charges and
fees. The amount to be added by IID to its Transmission Plant with respect to
the acquisition and construction of the Project shall not exceed the Project
Cost multiplied by

DC - IRC ,
--------
DC

where DC and IRC are defined as above.

Section 7.06. Record of Transmission Credits. IID shall be responsible
for keeping a record on its books of the amount of Transmission Credits used and
remaining for use, as well as the dates of availability, for each holder of
Transmission Credits. Such information shall be available on request to any
holder or prospective holder of Transmission Credits.

-52-

ARTICLE VIII

Additional Participants

Section 8.01. Obligation To Become Additional Participant. Prior to
the end of the Credit Installment Period, and so long as the Additional Capacity
is greater than zero, any person which desires to enter into a Transmission
Agreement shall become an Additional Participant by following the procedure
set forth in this Article VIII.

Section 8.02. Reallocation of Costs. To become an Additional
Participant, such person shall specify a Capacity Nomination of no less than one
(1) megawatt and shall bear a portion of the Project Cost equal to:

M(r) CN(i)
P(i) = P X ---- X ------------
M(t) CN(t) + CN(i)

where P(i) is the portion of the Project Cost to be borne by the Additional
Participant, P is the Project Cost, M(r) is the number of full calendar months
remaining in the Credit Installment Period, M(t) is the total number of months
in the Credit Installment Period, CN(i) is the Capacity Nomination of the
Additional Participant, and CN(t) is the total of the Capacity Nominations of
all existing Participants (including any other Additional Participants). The
Additional Participant shall remit the foregoing sum to IID, which shall
within thirty (30) days after receipt distribute such amount among the
Participants (including any other

-53-

Additional Participants) in accordance with the following formula:

C(i)
D(i) = P(i) x ----
C(t)

where D(i) is the amount to be distributed to a particular Participant, P(i) is
the total amount to be distributed, C(i) is the total amount of unused
Transmission Credits held by the Participant receiving such distribution
immediately prior to the payment of the foregoing sum by the Additional
Participant, and C(t) is the total amount of unused Transmission Credits held by
all Participants immediately prior to the payment of the foregoing sum by the
Additional Participant. All unused transmission credits usable by a Participant
or its Associated Producers, regardless of when they first become available for
use under Section 7.03, shall be deemed "held" by the Participant for purposes
of this Section 8.02 and Section 8.05.

Section 8.03. Transfer of Transmission Credits to Additional
Participant. In return for the payment received from the Additional Participant
as provided in Section 8.02, IID shall transfer unused Transmission Credits on
its books from each of the existing Participants to the Additional Participant.
The dollar value of Transmission Credits received by the Additional Participant
shall be equal to the amount of its payment to IID pursuant to Section 8.02. The
dollar value of unused Transmission Credits transferred from each existing
Participant shall be equal to the payment received by such Participant pursuant
to Section 8.02.

-54-

Transmission Credits shall be transferred from each existing Participant in the
following order of priority:

(a) Unused Transmission Credits which became available for use in
prior Credit Installment Years or in the present Credit Installment Year
shall first be transferred.

(b) Transmission Credits which will become available for use in later
Credit Installment Years shall then be transferred in equal dollar amounts
for each such year.

The Credit Installment Year in which any Transmission Credit shall become
available for use shall not be affected by the transfer of such Transmission
Credit to an Additional Participant pursuant to this Section 8.03. In the event
that the dollar amount to be distributed to a Participant pursuant to Section
8.02 exceeds the dollar value of Transmission Credits held by such Participant,
the excess shall not be distributed to such Participant and shall be refunded to
the Additional Participant.

Section 8.04. Risk Compensation. In order to compensate each of the
Participants whose name appears in the list of Participants in Exhibit 1 at the
time this Agreement is originally executed (the "Original Participants") for the
substantial risk it incurred in funding the planning, engineering and
construction of the Transmission Project, an Additional Participant shall pay
IID additional sum equal to fifteen percent (15%) of the amount

-55-

paid by it pursuant to Section 8.02 (without regard to any amount refunded to
the Additional Participant pursuant to Section 8.03). IID shall distribute such
amount among the Original Participants as follows:

PC(i)
A(i) = A(t) x -----
PC(t)

where A(i) is the amount to be distributed to each Original Participant, A(t) is
the total amount to be distributed to all Original Participants pursuant to this
Section 8.04, PC(i) is the total of the Project Contributions made by the
Original Participant receiving the distribution as of the date of such
distribution, and PC(t) is the total of the Project Contributions made by all
Original Participants as of such date.

Section 8.05. Special Rule in Case of Preemption. Notwithstanding
anything to the contrary in Sections 8.02 through 8.04, the following rule shall
apply to the extent that the Capacity Nomination specified by an Additional
Participant preempts transmission capacity which was formerly held by another
Participant by operation of Section 6.3 of the Standard Form Transmission
Agreement or a provision of another form of Transmission Agreement similar in
substance thereto. The Additional Participant shall remit to IID for
distribution to the Participant whose capacity was so preempted (the "preempted
Participant") an amount equal to the lesser of (a) the dollar value of the
Transmission

-56-

Credits then held by the preempted Participant or (b) a dollar amount equal to:

M(r) CP
P X ---- X ---------
M(t) NTC - IRC

Where P, M(r) and M(t) are defined as in Section 8.02, CP is the amount of
capacity so preempted from the preempted Participant, NTC is the Normal
Transmission Capacity of the Project at the time in question, and IRC is IID's
Reserved Capacity. In return for such payment, IID shall transfer unused
Transmission Credits on its books from the preempted Participant to the
Additional Participant in an amount equal to the dollar amount so paid by the
Additional Participant. In lieu of the payment and distribution required by
Section 8.04, if the preempted Participant is an Original Participant and the
capacity so preempted is part of its Original Capacity Nomination, the
Additional Participant shall in addition pay IID for distribution to the
preempted Participant an amount equal to fifteen percent (15%) of the amount
calculated pursuant to the formula set forth in clause (b) above. For purposes
of the foregoing sentence, capacity shall be deemed to be preempted from an
Original Participant in the following order of priority: first, capacity, if
any, which is part of an Original Participant's increase in Capacity Nomination
pursuant to Section 8.06, and second, capacity which is part of an Original
Participant's Original Capacity Nomination. An example of the operation of the
foregoing is set forth in Exhibit 5.

-57-

Section 8.06. Increases in Capacity Nominations. Any Participant which
prior to the end of the Credit Installment Period wishes to increase its
Capacity Nomination shall be treated as an Additional Participant as to such
increase and shall follow all of the procedures set forth in this Article VIII
(including without limitation the obligation to make the payments required by
Section 8.02 and Section 8.04). For purposes of calculating the payments and
Transmission Credit transfers required by this Article VIII, the increase in
Capacity Nomination requested by such Participant shall be treated as its
Capacity Nomination (CN(i) in Section 8.02) and its Capacity Nomination prior to
the increase shall be treated as part of the Capacity Nominations of the
existing Participants (CN(t) in Section 8.02).

Section 8.07. Execution of Agreement. Each Additional Participant shall
execute and become a party to this Agreement and, except as specifically
provided herein, shall have the rights and duties of a Participant under every
provision of this Agreement other than those provisions which by their terms
apply only to the Original Participants.

Section 8.08. Commitment of IID. IID agrees that the foregoing
provisions represent a reasonable means of assuring that the Participants are
fairly compensated for the costs and risks they incurred in connection with the
construction of the Transmission Project. To protect the

-58-

Participants' rights to such compensation, IID agrees that, prior to the end of
the Credit Installment Period,

(a) it will not grant a Transmission Service Entitlement or enter into
any Transmission Agreement except as provided in Section 6.02, and

(b) so long as the Additional Capacity is greater than zero, it will
(i) enter into a Transmission Agreement (and appropriate Plant Connection
Agreement) with any person which desires to do so and (ii) allow any
Participant upon request to increase its Capacity Nomination as provided by
Section 8.06, provided that such person or Participant complies with the
procedure set forth in this Article VIII (including the obligation to pay
for such capital additions as IID may require pursuant to Section 8.11).

Section 8.09. Additional Participants Prior to Completion Date. All of
the provisions of this Article VIII shall apply to a person which desires to
become an Additional Participant prior to the Completion Date, with the
following modifications and adjustments:

(a) For purposes of Section 8.02, the term "Project Cost" shall mean
the total of the costs referred to in Section 7.01 incurred by the
Participants on or before the date of such person's payment pursuant to
Section 8.02, and the term "unused Transmission Credits" shall mean the

-59-

portion of the Project Cost, so defined, incurred by each Participant prior
to the date of such payment. The fraction C(i)/C(t) in the second formula
therein, shall be computed as of the date of such person's remittance to
IID pursuant to Section 8.02. In computing the total amount of Project
Contributions made by a Participant, there shall be a deduction for any
amounts received by such Participant from payments made by an Additional
Participant pursuant to Section 8.02, as modified by this paragraph (a).

(b) The Project Shares of all Participants shall be recomputed as of
the date of such person's remittance to IID pursuant to Section 8.02, the
Capacity Nomination specificed by such person pursuant to Section 8.02
being deemed such person's Original Capacity Nomination for this purpose
and for purposes of Section 3.07.

(c) Such person shall respond to all cash calls from IID due after the
date of such person's remittance to IID pursuant to Section 8.02, in
accordance with the terms of this Agreement. The Manager shall issue
appropriate adjusted individual cash calls with respect to any cash call
issued by IID before, but due after, the date of such remittance.

-60-

(d) With respect to Section 8.03, such person shall be entitled to
receive Transmission Credits, in accordance with the terms of this
Agreement, in an amount equal to the amount of its remittance to IID
pursuant to Section 8.02. The entitlements of the remaining Participants to
Transmission Credits shall be reduced by the amount of the distribution
received by each of them, respectively, pursuant to Section 8.02.

(e) Such person shall make the payment required by Section 8.04,
calculated as provided therein.

(f) With respect to Section 8.07, such person shall be required in
addition to execute and become a party to and satisfy the requirements of
any other agreement among the Participants relating to the funding and
construction of the Transmission Project.

(g) Exhibit 1 shall be amended to reflect such person's Capacity
Nomination, the name(s) of its Qualifying Facility(ies), its Maximum
Transmission Service Entitlement(s) and its Project Share.

Section 8.10. Study Group Costs of Additional Participants.
Notwithstanding anything to the contrary in this Agreement, an Additional
Participant shall be entitled to be reimbursed for costs incurred by it and its
Affiliates

-61-

pursuant to Section 3.01(d) if, but only if, such Additional Participant
executes this Agreement and makes the payments required by Sections 8.02 and
8.04 (as modified by Section 8.09) on or before December 31, 1987. The Manager
shall bill IID for such costs as soon as practicable after the date on which
such payments are made.

Section 8.11. Capital Additions to Project. The parties understand and
acknowledge that certain capital additions to the Project may be necessary to
enable the Project to transmit power for an Additional Participant or its
Associated Producer. The parties agree that, notwithstanding any other provision
of this Agreement, IID may at its option require any Additional Participant to
pay for any capital additions to the Project which are necessary to transmit the
electric power to be generated by such Additional Participant or its Associated
Producer. The obligation of such Additional Participant to pay for such capital
additions shall not alter or affect in any way its obligation under this Article
VIII or the other provisions of this Agreement, nor shall the Participants which
are then parties to this Agreement be required to pay any portion of the cost of
such capital additions as a consequence of the transmission of electric power
within their Capacity Nominations.

-62-

ARTICLE IX

General

Section 9.01. Governing Law. This Agreement and the performance of the
obligations created herein shall be governed by and construed and enforced in
accordance with the laws of California, without reference to any rules or
principles relating to conflicts of law.

Section 9.02. Entire Agreement. This Agreement and the Exhibits and
other attachments hereto set forth the entire Agreement and understanding of the
Participants and IID in respect of the transactions contemplated hereby. This
Agreement supersedes all prior agreements, arrangements and understandings
relating to the subject matter hereof, including without limitation that certain
Memorandum of Understanding among IID and certain of the Participants dated
August 1, 1986, as amended. No representation, promise, inducement or statement
of intention has been made by IID to any Participant or by any Participant to
IID on the subject matter hereof except as specifically stated herein, and
neither IID nor any Participant shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention not so set forth.

Section 9.03. Amendment; Waiver. This Agreement may be amended,
modified, superseded or cancelled, and any of the terms, covenants,
representations or conditions hereof may be waived, only by a written instrument
executed by IID and each Participant not in default hereunder, or in

-63-

the case of a waiver, by or on behalf of the party waiving compliance; provided,
however, that no such amendment or modification may adversely affect the rights
of a defaulting Participant without its written consent unless the rights of all
Participants are similarly affected. The failure of any party hereto at any time
or times to require performance of any provisions hereof shall in no manner
affect the right at a later time to enforce the same. No waiver by any party of
any condition, or of any breach of any term, covenant, representation or
warranty contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of any breach of any
other term, covenant or representation.

Section 9.04. Assignment. Except as herein provided, neither this
Agreement nor any right, privilege, duty or obligation created herein may be
assigned by any party to any other person, voluntarily or by operation of law,
without the prior written consent of each of the other parties (excluding any
Participants in default), which consent shall not be unreasonably withheld. Any
attempted assignment by any party without such consent shall be void and of no
force or effect. Notwithstanding the foregoing, without such consent

(a) a Participant shall be entitled to assign its entire or a partial
interest in this Agreement (i) to its Affiliate, (ii) to a person

-64-

with which such Participant has an agreement or relationship involving
sharing in a Qualifying Facility or in the proceeds therefrom or in the
resources supplying such facility or in the proceeds from the sale of such
resources to a Qualifying Facility or to a purchaser of an interest in any
of the foregoing or (iii) to a bank or other lender, as security for a loan
or letter of credit provided by such person to finance or provide credit
support for such Participant's Project Contributions;

(b) Transmission Credits may be separately assigned as provided in
Section 7.04 and Article VIII but in no other manner; and

(c) the Participants as a group shall be entitled to assign any or all
of their rights and obligations under this Agreement to any California
public utility which is authorized by the California Public utilities
Commission to fund the cost of constructing the Transmission Project,
provided that no such assignment shall affect the rights of the
Participants or their Associated Producers to enter into the Standard Form
Transmission Agreement as provided in Article VI.

Notwithstanding the foregoing, the right of a Participant or its Associated
Producer to enter into a Transmission Agreement as provided in Article VI shall
not be assignable

-65-

except (i) to a co-owner, operator or purchaser of the Qualifying Facility to
which such right relates, and then only to the extent of the amount of
transmission service to be provided for such Qualifying Facility, all as set
forth in Exhibit 1, (ii) to an Affiliate of such Participant or (iii) to a bank
or other lender, as security for a loan or letter of credit provided by such
person to finance or provide credit support for such Participant's Project
Contributions, it being the intention of the Participants that the assignment of
such right not be used as a means of circumventing the obligation of nonparties
to become Additional Participants as a condition of receiving the benefits of
Transmission Agreements. No assignment permitted under this Section 9.04 shall
operate to relieve the assignor of any duty or obligation under this Agreement,
unless the assignor is released therefrom by every other party hereto, and
unless the assignee shall expressly and in writing assume all such duties and
obligations of the assignor. Subject to the foregoing restrictions on
assignment, all of the terms, covenants, representations and conditions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by, each of the parties and their respective successors, permitted assigns and
legal representatives.

Section 9.05. Intent Concerning Regulation. It is the Participants'
understanding, and IID confirms and represents, that IID and IID's Transmission
System are free

-66-

from public utility rate regulation, either under the California Public
Utilities Code or the Federal Power Act. If any regulatory authority hereafter
asserts that any Participant is a public utility and is subject to regulation by
reason of its participation in the construction and funding of the Transmission
Project as provided herein, the parties will meet to consider how to proceed so
that such Participant may be shown not to be a public utility, while still
preserving, to the extent possible, the economic effect of the proposed
transactions for all Participants and IID. Notwithstanding anything to the
contrary herein, no Participant shall be obligated to continue its performance
under this Agreement if any regulatory agency has issued a final order or other
instrument alleging or declaring that such Participant is a public utility on
account of its involvement in the funding, construction or use of the
Transmission Project.

Section 9.06. Term. This Agreement shall be effective when executed by
the Original Participants and IID and shall continue in effect until such time
as all duties and all obligations of the parties hereunder have been satisfied
or discharged.

Section 9.07. Notices. All notices, requests, demands and
communications required or permitted to be given hereunder shall be given in
writing and delivered personally, or mailed first-class mail, postage prepaid,
or transmitted by telecopier, to the addresses of the parties

-67-

and the Manager as shown in Exhibit 7. Any party or the Manager may change the
address to which such communications are to be directed to it by giving written
notice to each of the other parties and the Manager in the manner provided
above.

Section 9.08. No Partnership, etc. Nothing in this Agreement shall be
construed as creating a partnership, association, agency, trust or other entity
among the parties hereto or any of them. In entering into and performing this
Agreement, the parties are acting solely as independent contractors. The
obligations of the parties under this Agreement shall be several and not joint
or joint and several.

Section 9.09. No Third Party Beneficiaries. Except as specifically
provided in Section 8.08(b) with respect to a person who desires to enter into a
Transmission Agreement, this Agreement is solely for the benefit of the parties
and their successors and permitted assigns and shall not be construed to create
any rights or privileges in any other person or entity (including without
limitation any person not a party hereto who entered into a Transmission
Agreement prior to the date hereof).

Section 9.10. Headings; Counterparts. The article and section headings
contained in this Agreement are for convenient reference only, and shall not in
any way affect the meaning or interpretation of this Agreement. This Agreement
may be executed in two or more counterparts,

-68-

each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.

IMPERIAL IRRIGATION DISTRICT

By /s/ Illegible
-----------------------------------

CHEVRON GEOTHERMAL DESERT POWER COMPANY
COMPANY OF CALIFORNIA

By /s/ Illegible
By /s/ Illegible ------------------------------------
-----------------------------------

GEO EAST MESA NO. 2, INC.
EARTH ENERGY, INC.

By /s/ Illegible
By /s/ Illegible ------------------------------------
-----------------------------------

HEBER GEOTHERMAL COMPANY
GEO EAST MESA NO. 3, INC.

By /s/ Illegible
By /s/ Illegible ------------------------------------
-----------------------------------

ORMESA GEOTHERMAL
MAGMA POWER COMPANY

By /s/ Illegible
By /s/ Illegible ------------------------------------
-----------------------------------

-69-

ORMESA GEOTHERMAL II UNION OIL COMPANY OF
CALIFORNIA

By /s/ Illegible By /s/ Illegible
----------------------------------- -----------------------------------

VULCAN/BN GEOTHERMAL
POWER COMPANY

By
-----------------------------------

-70-

EXHIBIT 1

Maximum
Transmission Original
Service Capacity Project
Participant QF Entitlement Nomination Share
----------- -- ----------- ---------- -----

Chevron Geothermal HGC Power 15.8 MW 15.8 MW 4.225%
Company of California Plant

Desert Power Company Salton Sea No. 3 50.0 MW 50.0 MW 13.369%

Earth Energy, Inc. Salton Sea No. 1 26.0 MW 26.0 MW 6.952%
and No. 2

GEO East GEO East 27.5 MW 27.5 MW 7.353%
Mesa No. 2, Inc. Mesa No. 2

GEO East GEO East 27.5 MW 27.5 MW 7.353%
Mesa No. 3, Inc. Mesa No. 3

Heber Geothermal Company HGC Power Plant 23.5 MW 23.5 MW 6.283%

Magma Power Company Del Ranch Power Plant 38.0 MW

J. J. Elmore 38.0 MW
Power Plant

J. M. Leathers 38.0 MW 114.0 MW 30.481%
Power Plant

Ormesa Geothermal Ormesa 24.0 MW

Ormesa IE 6.0 MW 30.0 MW 8.021%

Ormesa Geothermal II Ormesa II 18.0 MW 18.0 MW 4.813%

Page 1 of 2

Maximum
Transmission Original
Service Capacity Project
Participant QF Entitlement Nomination Share
----------- -- ----------- ---------- -----

Union Oil Company of HGC Power Plant 7.7 MW 7.7 MW 2.059%
California

Vulcan/BN Geothermal Vulcan Plant 34.0 MW 34.0 MW 9.091%
Power Company -------- --------
374.0 MW 100.0%

Page 2 of 2

EXHIBIT 2
---------

TRANSMISSION SERVICE

FOR THE POWER PLANT UNIT NO.
-------------------- -------------------------

EII-1. DESCRIPTION:

EII-2. APPLICABILITY: Applicable to the transmission service to be provided by
IID to Producer for transmitting the electrical output from
the______________________________________________________________ Point
of Receipt to the Point(s) of Delivery.

EII-3. PLANT CONNECTION AGREEMENT: The__________________________ Plant
Connection Agreement to be executed between IID and Producer.

EII-4. MAXIMUM TRANSMISSION SERVICE ENTITLEMENT: __ MW.

TRANSMISSION SERVICE ENTITLEMENT: __ MW, as specified in accordance
with Sections 6.2 and 6.3.

EII-5. POINT OF RECEIPT:

EII-6. POINT(S) OF DELIVERY:

EII-7. TERM: The term of the Transmission Service Entitlement for the
_________________________________________________________________ shall
be effective from the Date of Initial Service and shall terminate
on__________________________________________________ [*]

EII-8. TRANSMISSION SERVICE CHARGE: $ per kilowatt-month, or as revised in
accordance with Section 8.2, times Transmission Service Entitlement.

EII-9. SCHEDULING FEE: $________________________________________ per month or
as revised in accordance with Section 8.3.

EII-10. TRANSMISSION LOSSES: ____% or as revised in accordance with Section 7.

[* Insert expiration date of applicable power sales contract between
Producer and Edison.]

EXHIBIT 3

Description of Project

Scope

The project includes upgrading the Mirage-Coachella Valey link, constructing a
new 230-kV line from IID's Coachella Valey substation to the (new) Highline
substation, constructing said substation and a new substation (Midway) in the
Niland area, and constructing 92-kV transmission lines from the Midway
substation to the Salton Sea KGRA and from the Highline substation to the Heber
KGRA.

The major project scope components are as follows:

1. Existing Facilities Upgrade

One new circuit added on existing structures between the Mirage and
Coachella Valey substations, using bundled 1033 MCM ACSR conductor.
Length: 20 miles

Breakers and appurtances as necessary, including relays and controls, for
looping additional 230-kV circuits in and out of the Mirage and Coachella
Valey substations.

2. Coachella Valley-Midway Transmission Line

A double circuit transmission line using steel lattice towers and steel
poles from the Coachella Valley substation to the Midway substation,
capable of carrying two bundled circuits of 1033 MCM ACSR but carrying only
one bundled and one unbundled circuit.
Length: Approximately 53 miles

3. 92-kV Transmission Line Extensions

(a) Two (2) double circuit 92-kV transmission lines, using 795 MCM
all-aluminum conductor on wooden poles, from the intersection of
English and Simpson Roads to the Midway substation.
Length: Approximately 5-1/2 miles

(b) One single circuit 92-kV transmission line using 795 MCM all-aluminum
conductor on wooden pooles capable of eventually carrying two (2)
circuits, from the Highline substation to a location to be determined
by IID near the intersection of Pitzer and Correll roads.

Page 1 of 3

Length: Approximately 17 miles

4. Midway Substation

230-kV/92-kV electrical substation utilizing two (2) three-phase
transformers with a top rating of 225 MVA and two (2) 92-kV bays per each
transformer. Substation is to be located at the approximate northwest
intersection of Simpson Road and the East Highline Canal.

5. Midway-Highline Transmission Line

A transmission line using steel poles from the Midway substation
paralleling approximately the west bank of the East Highline Canal south to
the Highline substation, capable of carrying two (2) circuists of single
1033 MCM ACSR conductor, but carrying only one such circuit.
Length: Approximately 30 miles

6. Highline Substation

230 kV/92-kV electrical substation capable of accommodating two (2)
three-phase transformers with a top rating of 225 MVA and two (2) 92-kV
bays per each transformer. Only one such transformer and two (2) 92-kV bays
are included in the Transmission Project.

SUMMARY OF PROPOSED TRANSMISSION LINE FACILITIES

Facility Description
-------- -----------

Structure: Lattice steel towers and multi-sided hollow tubular
steel poles. See Figures 3.1 and 3.2 for typical
configurations and dimensions. Strength requirements
shall be in accordance with General Order 95 of the
Public Utilities Commission of the State of California
("G.O. 95").

Footings: Concrete piles cast in place. Strength requirements
shall be in accordance with G.O. 95.

Conductors: Bundled or unbundled, 1033 MCM, Aluminum Conductor,
Steel Reinforced (ACSR) cable. Strength requirements
shall be in accordance with G.O. 95.

Page 2 of 3

Groundwire: One groundwire, approximately 0.5 inch in diameter,
attached to the top of tower or pole.

Insulator/Hardware
Assemblies: Vertical ("V" or "I") configuration of 15 to 18
porcelain insulators per phase for tangent towers. Two
strings in parallel of 17 to 20 insulators each per
phase for dead-end towers.

Access Roads: Existing roads will be utilized and improved only if
necessary. Approximately 15 miles of new bladed roads
will be needed where line crosses undeveloped areas.

Substations: Two new and one existing substations are involved. Each
new substation uses 225 MVA 230-kV/92-kV transformer
banks with 230-kV and 92-kV switchyards. Each switchrack
includes wide flange steel structures for line, bus and
transformer dead-ends, a suspension bus system with
mid-span taps for line and transformer connections,
circuit breakers and air disconnets for line and
equipment switching, fault protection and isolation
during maintenance and necessary coupling capacitors,
wave traps and potential devices for metering and
control. Each substation will have a relay/control house
equippedd for remote operation.

Page 3 of 3

EXHIBIT 4

Project Budget

Item Budgeted Amount
---- ---------------

Right of Way Acquisition $ 1,417,000

Right of Way Purchase Cost 4,500,000

Land clearing and facility relocation 1,900,000

Environmental Mitigation 543,000

1,250,000
Modifications to Edison Mirage substation
Engineering and Construction
Item 1 of Project Description $ 3,395,000
Item 2 of Project Description 14,578,000
Item 3a of Project Description 1,203,000
Item 3b of Project Description 1,870,000
Item 4 of Project Description 9,163,000
Item 5 of Project Description 5,516,000
Item 6 of Project Description 4,545,000
-----------
Subtotal $40,271,000 40,271,000
Insurance Charges 500,000
IID Administrative Costs 250,000
Participants' Costs 1,000,000
Manager fees and expenses 100,000
-----------

Subtotal $51,731,000

Contingency allowance (5%) 2,586,000

Total Budget $54,317,000

Page 1 of 1

EXHIBIT 5

Example of Operation of Section 8.05

Assumptions:

1. The Transmission Project has a Normal Transmission Capacity of 140
MW.

2. There are three Participants with the following Capacity Nominations
and Transmission Service Entitlements (under their Transmission Agreements).

Capacity Transmission
Participant Nomination Service Entitlement
---------- ---------- -------------------

A 30 MW 30 MW
B 30 MW 20 MW
C 30 MW 20 MW

3. Since the sum of the Capacity Nominations of the Participants is 90
MW, under the formula of Section 6.05 IID's Reserved Capacity is 40 MW.

4. The Project Cost was $50 million. The Credit Installment Period is
10 years (120 months) of which 5 years (60 months) remain.

5. D desires to become an Additional Participant and to connect to
the Midway substation with a Capacity Nomination of 20 MW.

Calculation:

There remain 10 MW of capacity in the Project over and above the
Capacity Nominations of the Participants (total of 90 MW) and IID's Reserved
Capacity (40 MW). As to this capacity no preemption is required and, under the
first formula in Section 8.02, $2.5M is collectede by IID and distributed among
A, B and C:

$50M x 60 months x 10 MW = $2.5 M
---------- -------------
120 months 90 MW + 10 MW

The distribution to A, B and C takes place in accordance with the second
formula in Section 8.02.

In addition, under Section 8.04 an amount equal to 15%T of $2.5M
($375,000) is collected from D by IID and, assuming A, B and C are all Original
Participants, is split equally among them.

Page 1 of 2

As for the remaining 10 MW desired by D, this capacity cannot be
obtained without preempting a portion of the Capacity Nominations of B and C.
(A is protected from preemption because its Transmission Service Entitlement
(under its Transmission Agreement) covers its entire Capacity Nomination.)

Assume that after following the procedure set forth in Section 6.3 of
the Standard Form Transmission Agreement, IID preempts 5 MW of capacity from B
and 5 MW of capacity from CD, for use by D.

Under Section 8.05, $1.25M is distributed to B and C each, assuming
that each of them has $1.25M in Transmission Credits left. This is obtained
as follows:

$50M x 60 months x 5 MW = $1.25 M
---------- --------------
120 months 140 MW - 40 MW

In addition, B and C each receive an amount equal to 15% of $1.25M, or
$187,500.

In summary, as a result of this cost reallocation A, B and C have
received the following amounts:

A B C

$833,333,33* $ 833,333.33* $ 833,333.33*
125,000.00 125,000.00 125,000.00
1,250,000.00 1,250,000.00
187,500.00 187,500.00
----------- ------------- -------------

$958,333.33 $2,395,833.33 $2,395,833.33

for a total of $5,750,000; and they have transferred to D $5,000,000 in
Transmission Credits.

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

* This assumes that the amount of unused Transmission Credits held by each
Participant (C(i) in the second formula of Section 8.02) is the same and equals
or exceeds $833,333.33.

Page 2 of 2

EXHIBIT 6

PLANT CONNECTION AGREEMENT

FOR THE

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

BETWEEN

IMPERIAL IRRIGATION DISTRICT

AND

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

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

SECTION TITLE PAGE
------- ----- ----
1 PARTIES ............................................................. 1

2 RECITALS ............................................................ 1

3 AGREEMENT ........................................................... 2

4 DEFINITIONS ......................................................... 2

5 EFFECTIVE DATE AND TERM ............................................. 3

6 CONNECTION OF PLANT ................................................. 3

7 ELECTRIC SERVICE TO PRODUCER ........................................ 3

8 METERING OF ENERGY DELIVERIES ....................................... 4

9 PRODUCER'S DELIVERY AND IID ACCEPTANCE OF ENERGY FROM PLANT ......... 4

10 PRODUCER'S GENERAL OBLIGATIONS ...................................... 4

11 IID'S GENERAL OBLIGATIONS ........................................... 5

12 BILLING ............................................................. 6

13 AUTHORIZED REPRESENTATIVES .......................................... 7

14 METERS .............................................................. 7

15 CONTINUITY OF SERVICE ............................................... 9

16 LIABILITY ........................................................... 9

17 UNCONTROLLABLE FORCES ............................................... 11

18 INTEGRATION AND AMENDMENTS .......................................... 12

19 NON-WAIVER .......................................................... 12

20 NO DEDICATION OF FACILITIES ......................................... 12

21 SUCCESSORS AND ASSIGNS .............................................. 13

22 EFFECT OF SECTION HEADINGS .......................................... 13

23 GOVERNING LAW ....................................................... 13

24 ARBITRATION ......................................................... 13

25 ENTIRE AGREEMENT .................................................... 15

26 NOTICES ............................................................. 15

27 SEVERAL OBLIGATIONS ................................................. 15

28 SIGNATURE CLAUSE .................................................... 17

ATTACHMENTS
-----------

EXHIBIT "A" ......................................................... 18

EXHIBIT "B" ......................................................... 22

1. PARTIES

The parties to this Agreement are IMPERIAL IRRIGATION DISTRICT ("IID"),
organized under the Water Code of the State of California and ____ ("Producer"),
hereinafter referred to individually as "Party", and collectively as "Parties".

2. RECITALS

2.1 Producer intends to construct and operate, as owner or lessee, a
______________ generating facility with a maximum________ megawatt net operating
capacity at the__________________________________________ and to sell the Plant
electrical output to Southern California Edison Company ("SCE").

2.2 SCE has entered into the Power Purchase Agreement dated
___________________, ("Purchase Agreement") with Producer, to purchase all the
electrical output from the Plant.

2.4 Since the Plant will be built in the IID service territory, it will
be convenient to connect the Plant to the IID electric system.

Producer hereby grants the IID the right to enter the Plant site for
any reasonable purposes connected with this Agreement, by previous arrangements
with the Plant manager. Those reasonable purposes include maintenance and
repairs to IID equipment in Producer's facilities, observing tests of said
facilities, reading of kilowatt-hour meters, and the like.

-1-

3. AGREEMENT

The Parties agree as follows:

4. DEFINITIONS

4.1 Agreement: This Plant Connection Agreement between IID and
Producer, and all Exhibits hereto, as may be amended from time to time.

4.2 Authorized Representative: The representative of a Party designated
in accordance with Section 13.

4.3 Energy: Electric energy in excess of Producer's electric energy
requirements, expressed in kilowatt-hours, generated by the Plant and measured
and delivered to the Point of Delivery.

4.4 Funding and Construction Agreement: An agreement entered into by
IID and others dated ____, 1987, providing for the funding and construction of
the Heber-Mirage Transmission Project, to which a form of this Agreement is
attached as Exhibit 6.

4.5 Operation Date: The day on which the Plant Energy is first accepted
by IID for delivery to SCE.

4.6 Plant: A maximum of____________________________MW net operating
capacity facility operated by Producer, as owner or lessee, including all
associated equipment and improvements necessary for generating electric energy
and transmitting it to the high voltage side of the power transformer.

4.7 Point of Delivery: The point on the high voltage side of Producer's
switchyard where IID's metering equipment measures the delivery of Energy to the
IID system as shown on Exhibit "B".

-2-

4.8 System Emergency: A condition on IID's system which is likely to
result in imminent significant disruption of service to customers or is
imminently likely to endanger life or property.

5. EFFECTIVE DATE AND TERM

This Agreement shall become effective upon the Operation Date of the
Plant, and shall remain in effect until the earlier of (i) __*__ or (ii) thirty
six (36) months from the date the Plant has ceased to operate at the option of
IID. It is understood that (i) if the Completion Date, as the term Completion
Date is defined in Article I of Funding and Construction Agreement does not
occur, or (ii) if the Operation Date does not occur within five (5) years after
the date this Agreement was executed, this Agreement shall be of no force or
effect.

6. CONNECTION OF PLANT

6.1 Producer may electrically connect its Plant, in accordance with the
provisions of this Agreement, so that it can operate in parallel with the IID
electric system. Parallel operation will not commence until IID has inspected
and approved the interconnection facilities and operational procedures.

6.2 Notwithstanding the provision that Producer has furnished the high
voltage switchyard complete, including the high voltage oil circuit breakers and
disconnect switches, the control of the high voltage oil circuit breakers and
disconnect switches shall be under the control of the IID dispatcher.

7. ELECTRIC SERVICE TO PRODUCER

IID shall provide electric service to Producer pursuant to Section 12.

(* Insert expiration date of applicable power sales agreement between Producer
and SCE.)

-3-

8. METERING OF ENERGY DELIVERIES

Metering for electric service to Producer and for energy deliveries by
Producer to IID for delivery to SCE shall be at the Point of Delivery as shown
on Exhibit "B". Four meters shall be installed which shall measure and record
flows in each direction as shown on Exhibit "B".

9. PRODUCER'S DELIVERY AND IID ACCEPTANCE OF ENERGY FROM PLANT

10. PRODUCER'S GENERAL OBLIGATIONS

Producer shall:

10.2 Deliver the Plant's net electrical output to IID for the account
of SCE at the Point of Delivery.

10.4 Coordinate, to the greatest extent practicable, major overhaul and
inspection outages of the Plant with IID.

10.5 Give IID a written schedule on or before June 1, and December 1,
each year of the estimated amounts and rates of delivery of energy to be deli-

-4-

vered to IID for the account of SCE at the Point of Delivery during each month
of the succeeding twelve-month (12) period commencing July 1, and January 1.

10.8 Provide IID any reasonable rights-of-way and access required for
testing and reading of meters by previous arrangement with the Plant manager.

10.9 Carry out the directions of the Authorized Representatives with
respect to the matters set forth in this Agreement.

11. IID'S GENERAL OBLIGATIONS

IID shall:

11.1 Design, acquire, construct, operate and maintain, or cause to be
designed, acquired, constructed, operated and maintained, and shall own, a
connecting transmission line between IID's transmission system and the Plant.
Following the completion of such line, IID may bill and Producer shall pay IID's
costs of designing, acquiring and constructing such line. Producer shall have
the right to audit IID's records and accounts to verify the cost of such line.

11.2 Accept the Plant's net electrical output for the account of SCE at
the Point of Delivery and simultaneously deliver an equal amount of electric

-5-

energy (less applicable transmission losses) to the SCE system at IID/SCE
point(s) of interconnection.

11.3 Coordinate, to the greatest extent practicable, major overhaul and
inspection outages of IID transmission facilities with Producer and notify
Producer of any changes as far in advance as possible.

11.4 Carry out the directions of the Authorized Representative with
respect to the matters set forth in this Agreement.

11.5 Operate its system in a manner consistent with applicable utility
industry standards and good engineering practices.

12. BILLING

12.3 If Producer disputes a bill, payment shall be made as if no
dispute existed pending resolution of the dispute by the Authorized
Representatives. If the bill is determined to be in error, the disputed amount
shall be refunded by IID including interest at the rate of one and one-half
percent (1-1/2%) per month, compounded monthly, from the date of payment to the
date the refund check or adjusted bill is mailed.

-6-

13. AUTHORIZED REPRESENTATIVES

13.1 Within thirty (30) days after the date this Agreement is signed,
each Party shall designate, by written notice to the other Party, an Authorized
Representative who is authorized to act in its behalf in the implementation of
this Agreement and with respect to those matters contained herein which are the
functions and responsibilities for the Authorized Representatives. Either Party
may, at any time, change the designation of its Authorized Representative by
written notice to the other Party.

13.3 The Authorized Representative shall have no authority to modify any
of the provisions of this Agreement.

14. METERS

14.1 All meters shall be sealed and the seal shall be broken only upon
occasions when the meters are to be inspected, tested or adjusted.

-7-

to register inaccurately by more than two percent (2%) from the measurement made
by a standard meter. Each Party shall give reasonable notice to the other Party
of the time when any inspection or test shall take place and that Party may have
representatives present at the test or inspection. If a meter is found to be
inaccurate or defective, it shall be adjusted, repaired or replaced in order to
provide accurate metering. All adjustments due to inaccurate meters shall be
limited to the preceding six (6) months.

14.3 If a meter fails to register, or if the measurement made by a meter
during a test varies by more than two percent (2%) from the measurement made by
the standard meter used in the test, adjustment shall be made correcting all
measurements made by the inaccurate meter for:

(i) the actual period during which inaccurate measurements were
made, if the period can be determined, or if not,

(ii) the period immediately preceding the test of the meter equal
to one-half (1/2) the time from the date of the last previous
test of the meter; provided, however, that the period covered
by the correction shall not exceed six (6) months.

-8-

and installation of said equipment. Producer shall have the right to audit IID's
records and accounts to verify the cost of said equipment.

15. CONTINUITY OF SERVICE

16. LIABILITY

-9-

Action, each Party releases the other Party, its directors or other governing
body, officers and employees from any such liability.

16.2.3 Action which is knowingly or intentionally taken or not taken
with the knowledge that such action taken or not taken is a material default
under this Agreement.

16.3 Willful Action does not include any act or failure to act which is
merely involuntary, accidental or negligent.

16.4 The phrase "employees having management or administrative
responsibility," as used in Section 16.2, means the employees of a Party who are
responsible for one or more of the executive functions of planning, organizing,
coordinating, directing, controlling and supervising such Party's performance
under this Agreement with responsibility for results.

-10-

16.5 Subject to the foregoing provisions of this Section 16, each Party
agrees to defend, indemnify and save harmless the other Party, its officers,
agents, or employees against all losses, claims, demands, costs or expenses for
loss of or damage to property, or injury or death of persons, which directly or
indirectly arise out of the indemnifying Party's performance pursuant to this
Agreement; provided, however, that a Party shall be solely responsible for any
such losses, claims, demands, costs or expenses which result from its sole
negligence or Willful Action.

17. UNCONTROLLABLE FORCES

Neither Party shall be considered to be in default in the performance
of any of its obligations under this Agreement when a failure of performance
shall be due to an uncontrollable force. The term "uncontrollable force" shall
mean any cause beyond the control of the Party affected including, but not
restricted to, failure of or threat of failure of facilities which have been
maintained in accordance with generally-accepted engineering and operating
practices in the electrical utility industry, flood, drought, earthquake,
tornado, storm fire, pestilence, lightning and other natural catastrophes,
epidemic, war, riot, civil disturbance or disobedience, strike, labor dispute,
labor or material shortage, sabotage, government priorities and restraint by
court order or public authority (whether valid or invalid) and actions or
nonaction by or inability to obtain or keep the necessary authorizations or
approvals from any governmental agency or authority, which by exercise of due
diligence such Party could not reasonably have been expected to avoid and which
by exercise of due diligence it has been unable to overcome. Nothing contained
herein shall be construed as to require a Party to settle any strike or labor
dispute in which it may be involved. Either Party rendered unable to fulfill any
of its obligations under this Agreement by reason

-11-

of an uncontrollable force shall give prompt written notice of such fact to the
other Party and shall exercise due diligence to remove such inability with all
reasonable dispatch.

18. INTEGRATION AND AMENDMENTS

19. NON-WAIVER

20. NO DEDICATION OF FACILITIES

-12-

21. SUCCESSORS AND ASSIGNS

21.1 This Agreement shall be binding upon and inure to the benefit of
the respective successors and assigns of the Parties.

21.2 This Agreement may be assigned by Producer only (i) to a purchaser
or co-owner of the Plant or to a person who will operate the Plant pursuant to a
contract or other arrangement with such purchaser and in either case with the
prior written consent of IID (which shall not be unreasonably withheld) or (ii)
for security purposes, to a bank or other entity which provides financing for
the Plant or any electrical transmission facilities associated therewith.
Producer and IID agree that nothing in this Section 21.2 may be amended,
modified or waived without the prior written consent of each and every Party to
the Funding and Construction Agreement (except for any Parties in default
thereunder.)

22. EFFECT OF SECTION HEADINGS

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

23. GOVERNING LAW

This Agreement shall be interpreted, governed and construed under the
laws of the State of California or the laws of the United States, as applicable.

24. ARBITRATION

24.1 Any dispute arising out of or relating to this Agreement, or the
breach thereof, which is not resolved by the Parties acting through their
Authorized Representatives shall be settled by arbitration to the extent
permitted by the laws applicable to the Parties; provided, however, that no
Party to the dispute shall be bound to any greater extent than any other Party
to the dispute. Arbitration shall not apply to any dispute or matter that is
within the jurisdiction of any regulatory agency.

-13-

24.2 Any demand for arbitration shall be made by written notice to the
other Party setting forth in adequate detail the nature of the dispute, the
issues to be arbitrated, the amount or amounts, if any, involved in the dispute,
and the remedy sought. Within twenty (20) days from the receipt of such notice,
the other Party may submit its own written statement of the dispute and may set
forth in adequate detail any additional related matters or issues to be
arbitrated.

24.3 Within thirty (30) days after delivery of the written notice
demanding arbitration, the Parties acting through their Authorized
Representatives shall meet for the purpose of selecting an arbitrator. The
Parties may agree upon a single arbitrator, but in the event that they cannot
agree, three arbitrators shall be used. Each Party shall designate one
arbitrator, and the two arbitrators shall then select a third arbitrator. All
arbitrators shall be persons skilled and experienced in the field in which the
dispute has arisen and no person shall be eligible for appointment as an
arbitrator who is or has been an officer or employee of either of the Parties or
otherwise interested in the matter to be arbitrated. Should either party refuse
or neglect to appoint an arbitrator or to furnish the arbitrators with any
papers or information demanded, the arbitrators are empowered, by both Parties,
to proceed without the participation or assistance of that Party.

24.5 Arbitration proceedings shall be held in Imperial, California, at
a time and place to be selected by the arbitrators. The arbitrators shall hear
evidence submitted by the Parties and may call for additional information

-14-

which shall be furnished by the Party having such information. The arbitrators
shall have no authority to call for information not related to the issues
included in the dispute or to determine other issues not in dispute.

24.6 If there is only one arbitrator, his decision shall be binding and
conclusive on the Parties. If there are three arbitrators, the decision of any
two shall be binding and conclusive. The decision of the arbitrators shall
contain findings regarding the issues involved in the dispute, including the
merits of the positions of the Parties, the materiality of any default, and the
remedy or relief to which a Party shall be entitled. The arbitrators may not
grant any remedy or relief which is inconsistent with this Agreement, nor shall
the arbitrators make findings or decide issues not in dispute.

24.8 Any decision or award granted by the arbitrators shall be final
and judgement may be entered on it in any court of competent jurisdiction. This
agreement to arbitrate shall be specifically enforceable.

25. ENTIRE AGREEMENT

-15-

26. NOTICES

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

IMPERIAL IRRIGATION DISTRICT
c/o General Manager
P. O. Box 937
Imperial, California 92251

27. SEVERAL OBLIGATIONS

-16-

28. SIGNATURE CLAUSE

The Parties have caused this Agreement to be executed in their
respective names, in duplicate, by their respective officers hereunto this
________ day of _______________________________, 1987.

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

By
--------------------------------------

ATTEST:

By
-----------------------------
Secretary

IMPERIAL IRRIGATION DISTRICT

By
--------------------------------------
President, Board of Directors

ATTEST:

By
-----------------------------
Secretary

-17-

EXHIBIT "A"
IMPERIAL IRRIGATION DISTRICT Revised Sheet No. 166
Imperial, California Cancelling Sheet No. 139

SCHEDULE A-2
GENERAL WHOLESALE POWER SERVICE

APPLICABILITY

Applicable to general wholesale power service for industrial,
commercial and agricultural purposes, subject to special conditions
hereinafter stated.

Applicable to standby or breakdown service where the entire electric
power requirements on the customer's premises are not regularly
supplied by the District.

MONTHLY RATE

The monthly rate shall be the sum of A, B, C and D.

A. Demand Charge .............................$2.52 per kilowatt of Billing Demand

B. Energy Charge ...............................5.60(cents) per kwh.

C. Energy Cost Adjustment -
The amount computed in accordance with Schedule ECA.

D. Power Factor Adjustment -
A charge of $0.25 per kilovar of reactive demand as measured by the
incoming kilovar demand meter for each kilovar in excess of .60 times
the kilowatt demand measured and supplied by the District.

MINIMUM CHARGE

The minimum charge shall be the demand charge, but in no case shall the
minimum charge be less than the demand charge (A) multiplied by 75% of
the highest maximum demand established in the preceding 11 months.

SPECIAL CONDITIONS

(a) Voltage: This schedule applies to service rendered at a
transmission voltage of 34.5-kV or above. It shall be the
responsibility of the customer to furnish transformation to any
other voltages required.

(b) Billing Demand: The billing demand shall be the kilowatts of
measured maximum demand but in no case less than 75 percent of the
highest maximum demand established in the preceding 11 months. The
measured maximum demand in any month will be the average kilowatt
delivery indicated or recorded by the District's demand meter in
the 15-minute interval in which such delivery is greater than any
other 15-minute interval. In case the load is intermittent or
subject to violent fluctuations, the District may base the demand
upon a 5-minute interval instead of a 15-minute interval.

-18-

Board Resolution Date; Effective
July 3, 1984 August 1, 1984

IMPERIAL IRRIGATION DISTRICT Revised Sheet No. 167
Imperial, California Cancelling Sheet No. 139

SCHEDULE A-2 (Continued)
GENERAL WHOLESALE POWER SERVICE

(e) Metering: The District will provide the normal metering equipment
for the size and type of load served. Additional metering which
may be required by the District shall be furnished by the customer
and tested in accordance with requirements of the District. Meters
shall not allow reverse registration.

(f) Regulations Governing Sale of Electric Energy: Service under this
rate schedule is subject to the District's Regulations Governing
the Sale of Electric Energy.

-19-

Board Resolution Date Effective
July 3, 1984 August,1,1984

EXHIBIT "A"
IMPERIAL IRRIGATION DISTRICT Revised Sheet No. 152
Imperial, California Cancelling Sheet No. 137

SCHEDULE GL
LARGE GENERAL SERVICE

APPLICABILITY

Applicable to general service having a demand of 100 kilowatts or
higher. Not applicable for standby, supplemental or resale
service.

MONTHLY RATE

The monthly rate shall be the sum of A, B and C.

A. Demand Charge ...................$2.65 per kilowatt of Billing Demand

B. Energy Charge ...................5.90(cents) per kwh

C. Energy Cost Adjustment -
The amount computed in accordance with Schedule ECA.

SPECIAL CONDITIONS

(a) Voltage: Service under this schedule normally will be supplied at
standard voltage available at the location. Where 240-volt
three-phase power is to be combined with single-phase, and 4-wire
service is available, service will be supplied through one meter.
In 240-volt areas, where, as determined by District, it is not
practical to provide a 4-wire service, such single-phase and
three-phase service will be supplied and metered separately, the
meter readings, both kwh and demands, being combined for the
purpose of computing charges on this schedule. Where service is
taken at 480-volts or higher, a three-phase service at one voltage
only will be supplied.

(b) Billing Demand: The billing demand shall be the higher of (i) the
highest 15-minute integrated or thermal kilowatt demand measured
during the billing period, or (ii) 50% of highest demand measured
during the five summer months (May-September) of the 12 months
ending with the current month, or (iii) 20% of the highest
measured demand during the seven winter months (October-April) of
the 12 months ending with the current month, or (iv) the demand
specified in a contract, or (v) 50 kilowatts.

When the monthly demand exceeds 100 KW in any billing month,
billing will be under Rate Schedule GL, and thereafter continue
under Rate Schedule GL until monthly demands have been less than
100 KW for a period of twelve consecutive months.

-20-

Board Resolution Date Effective
January 18, 1983 February 1, 1983

IMPERIAL IRRIGATION DISTRICT Revised Sheet No. 153
Imperial, California Cancelling Sheet No. 138

SCHEDULE GL (Continued)

(c) Seasonal Loads: When any customer disconnects service and resumes
service within 12 months from date of last disconnection, the
customer will be required to pay all charges which would have been
billed if the customer had not been disconnected.

(d) Wind Machines: Wind machines for frost protection may be served
under this schedule provided the load will be limited to existing
unused capacity of lines and substations as determined by the
District. Provisions (ii), (iii) and (v) of (b) shall not apply to
wind machines.

(e) Vacuum Cooling Loads: Portable vacuum cooling loads will be served
on existing facilities where adequate capacity is available
provided the customer pays any up-and-down cost necessary to
provide service and deposits a nonrefundable amount equal to the
minimum charge for the succeeding 12-month period. One twelfth of
such deposit will be applied or prorated to any monthly billing
during the 12-month period.

(f) Regulations Governing Sale of Electric Energy: Service under this
rate schedule is subject to the District's Regulations Governing
the Sale of Electric Energy.

-21-

Board Resolution Date Effective
January 18, 1983 February 1, 1983

EXHIBIT "B"

[METERING ONE-LINE DIAGRAM]

-22-

EXHIBIT 7

Addresses of Parties

Imperial Irrigation District:
Operating Headquarters
P.O. Box 937
Imperial, California 92251

Telecopier: (619) 339-9423

Chevron Geothermal Company of California:

P.O. Box 7147
San Francisco, California 94120-7147

Telecopier: (415) 894-8930

Desert Power Company:

1201 West 5th Street
P.O. Box 7600
Los Angeles, California 90051

Telecopier: (213) 977-6402

Earth Energy, Inc.:

1201 West 5th Street
P.O. Box 7600
Los Angeles, California 90051

Telecopier: (213) 977-6402

GEO East Mesa No. 2, Inc.:

1825 South Grant Street
Suite 900
San Mateo, California 94403

Telecopier: (415) 349-4801

GEO East Mesa No. 3, Inc.:

1825 South Grant Street
Suite 900
San Mateo, California 94403

Telecopier: (415) 349-4801

Page 1 of 2

Heber Geothermal Company:

P.O. Box 2857
El Centro, California 92244

Telecopier: (619) 353-8852

Magma Power Company:

11770 Bernardo Plaza Court
Suite 366
San Diego, California 92128

Telecopier: (619) 487-9416

Ormesa Geothermal:

500 Dermody Way
Sparks, Nevada 89431

Telecopier: (702) 356-9125

Ormesa Geothermal II:

500 Dermody Way
Sparks, Nevada 89431

Telecopier: (702) 356-9125

Union Oil Company of California:

1201 West 5th Street
P.O. Box 7600
Los Angeles, California 90051

Telecopier: (213) 977-6402

Vulcan/BN Geothermal Power Company:

11770 Bernardo Plaza Court
Suite 366
San Diego, California 92128

Telecopier: (619) 487-9416

Manager:
Mr. Rosendo J. Pont
c/o Centennial Energy, Inc.
650 California Street
32nd Floor
San Francisco, CA 94108
Telecopier: (415) 982-7374

Page 2 of 2