VEPCO Tax Language

Nancy,

Please incorporate this language from Enron's Tax Guys.

Thanks,

Kay
---------------------- Forwarded by Kay Mann/Corp/Enron on 08/04/2000 12:48
PM ---------------------------

From: Matthew F Gockerman @ ECT 08/03/2000 08:02 PM

To: Heather Kroll/HOU/ECT@ECT
cc: Kay Mann/Corp/Enron@Enron

Subject: VEPCO Tax Language

Heather:

My recommendation is that we "tighten up" tax language in the ENA - Virginia
Electric and Power Company ("VEPCO") Power Purchase & Sale Agreement. Below
please find my recommendations. Please note that the New Tax burden is upon
VEPCO. This is in keeping with our standard power contracts.

- Matt
x33979

1) Replace the "Tax" definition with the following:

"Taxes" means any or all ad valorem, property, occupation, severance,
generation, first use, conservation, Btu or energy, transmission, utility,
gross receipts, privilege, sales, use, consumption, excise, lease,
transaction, and other taxes, governmental charges, licenses, fees, permits
and assessment, or increases therein, other than taxes based on net income or
net worth.

2) Insert definition for "New Taxes":

"New Taxes" means (i) any Taxes enacted and effective after the Effective
Date, including, without limitation, that portion of any Taxes or New Taxes
that constitutes an increase, or (ii) any law, order, rule or regulation, or
interpretation thereof, enacted and effective after the Effective Date
resulting in the application of any Taxes to a new or different class of
parties or transactions.

3) Replace Sec. 11.2 with the following:

Applicable Taxes The Contract Price shall include full reimbursement for,
and Seller is liable for and shall pay, or cause to be paid, or reimburse
Buyer if Buyer has paid, all Taxes applicable to a Transaction arising prior
to the Delivery Point. If Buyer is required to remit such Tax, the amount
shall be deducted from any sums due to Seller. Seller shall indemnify,
defend and hold harmless Buyer from any Claims for such Taxes. The Contract
Price does not include reimbursement for, and Buyer is liable for and shall
pay, cause to be paid, or reimburse Seller if Seller has paid, all Taxes
applicable to a Transaction arising at and from the Delivery Point, including
any Taxes imposed or collected by a taxing authority with jurisdiction over
Buyer. Buyer shall indemnify, defend and hold harmless Seller from any
Claims for such Taxes. Either Party, upon written request of the other, shall
provide a certificate of exemption or other reasonably satisfactory evidence
of exemption if either Party is exempt from taxes, and shall use reasonable
efforts to obtain and cooperate with obtaining any exemption from or
reduction of any Tax. Each Party shall use reasonable efforts to administer
this Agreement and implement the provisions in accordance with the intent to
minimize Taxes. Buyer shall be responsible for all New Taxes.