Exhibit 10.25.1 NRG GENERATING (NEWARK) COGENERATION INC./ POWER OPERATIONS, INC. OPERATING AND MAINTENANCE AGREEMENT This System Operating and Maintenance Agreement ("Agreement") is made as of the 8th day of November 1996 between NRG Generating...

Exhibit 10.25.1

NRG GENERATING (NEWARK) COGENERATION INC./
POWER OPERATIONS, INC.
OPERATING AND MAINTENANCE AGREEMENT

This System Operating and Maintenance Agreement ("Agreement") is made
as of the 8th day of November 1996 between NRG Generating (NEWARK)
Cogeneration Inc., a Delaware corporation ("Owner"), and Power
Operations, Inc., a Delaware corporation ("Operator"), having its
principal place of business at Minneapolis, Minnesota, whose
obligations hereunder shall be fully guaranteed by NRG Generating
(U.S.) Inc. ("NRGG"), pursuant to a Guarantee required by Credit Suisse
per Credit Agreement dated May 17, 1996 in the form of Appendix I.

Owner and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ Operations, Inc. (SSOI) Operator entered
into an Operation & Maintenance Contract dated as of May 1, 1996 with
respect to the System (as defined below), a copy of which is attached
as Appendix II (the "Existing O&M Agreement").

In connection with the bankruptcy of Owner's parent, the existing
Electricity Purchase Agreement between Owner and Jersey Central Power &
Light Company relating to the System has been amended with an Third
Amendment to the Power Purchase Agreement (as defined below).

Owner desires to replace SSOI and Owner and Operator have negotiated
the terms and conditions of a new O&M Agreement and desire to enter
into this Agreement effective upon the Effective Date.

In consideration of the foregoing and the mutual covenants and benefits
contained herein, the parties hereby agree as follows:

I. DEFINITIONS

In this Agreement the following terms have the associated meaning:

1. Affiliate - With reference to a specified person, any other person
or entity, directly or indirectly through one or more
intermediaries, which controls, is controlled by, or is under
common control with, such person. A person or entity is
controlled by another person or entity if the second person or
entity holds a sufficient number of securities in the first person
or entity to elect a majority of the directors of the first person
or entity.

2. Agent - The agent for the lenders under the Financing Agreements.

3. Amended Power Purchase Agreement - The Amended and Restated
Agreement for Purchase and Sale of Electric Power, dated April
30, 1996, between Owner and Jersey Central Power & Light, a copy
of which is attached as Appendix III hereto.

4. Annual Operating Plan and Budget - As set forth in Article VI,
Section 6.

5. Bonus - As set forth in Exhibit A.

6. Change - Shall mean any of the following that are proposed by one
party to the other by a written notice to the other party: (i) a
change in the then current Annual Operating Plan and Budget; (ii)
a change in connection with the services to be provided by
Operator hereunder; (iii) a change made necessary to avoid injury
to persons or property or to mitigate losses as a result of the
occurrence of an Emergency; and (iv) a change enabling Operator to
accomplish or contract for a Major System Repair.

7. Change Order - Shall mean the written approval of a proposed
Change and the related Change Order Budget Statement by Operator and
Owner as further provided for in Article VI Section 7 (b).

8. Change Order Budget Statement - Shall mean the statement prepared
by Operator pursuant to Article VI, Section 7 (b) with respect to
a proposed Change setting forth in reasonable detail: (i) the
direct cost or savings to Owner of the proposed Change; (ii) the
indirect costs or savings of the proposed Change, including
without limitation, any loss of electricity revenues or steam host
revenues and any increased insurance, operating, maintenance or
other costs during or following the implementation of the proposed
Change; (iii) changes in the operating efficiency of the System;
and (iv) any other material effect on the operation, maintenance,
efficiency or profitability of the System or the provision of the
services hereunder.

9. Contract Year - As set forth in the Amended and Restated Power
Purchase Agreement.

10 Effective Date - November 8, 1996.

11. Emergency - Any event or occurrence which in the judgment of
Operator or Owner, as the case may be, requires immediate action
and which constitutes a serious hazard to the safety of persons or
property or may materially interfere with the safe, economical,
lawful or environmentally sound operation of the System.

12. Event of Default - As set forth in Article XII.

13. Existing O&M Agreement - as set forth in the Recitals.

14. Expenses - As set forth in Article VI, Section 2.

15. Financing Agreements - Any loan, lease financing, security or
related agreements entered into at any time by and among Owner and
the lending institutions providing financing for the System.

16. Force Majeure - Unforeseeable causes beyond the reasonable
control of and without the fault or negligence of the party
claiming Force Majeure, including but not limited to acts of God,
strike, flood, earthquake, storm, fire, lightning, epidemic, war,
riot, civil disturbance, sabotage, change in law or applicable
regulation subsequent to the date thereof and action or inaction
by any federal, state or local legislative, executive,
administrative or judicial agency or body which, in any of the
foregoing cases, by exercise of due foresight such party could not
reasonably have been expected to avoid, and which by the exercise
of due diligence, it is unable to overcome.

17. Legal and Contractual Requirements - All:

a. Laws, permits, approvals, regulations or orders of
governmental authorities applicable to the Amended and
Restated Power Purchase Agreement, the System, Owner's
obligations under this Agreement as owner of the System and
Operator's scope of work hereunder;

b. Provisions of the System Contracts;
c. Agreements, warranties and specifications of Operator's or Owner's
suppliers or vendors; and

d. Operating and maintenance manuals and procedures furnished by
Owner applicable to the System or the components thereof
(such operating manuals to reflect Sound Independent Power
Industry Practice)

18. Liquidated Damages - As set forth in Exhibit A.

19. MAJOR SYSTEM REPAIR -

The inspection, overhaul, repair or replacement of any piece of
equipment needed to operate the System where such inspection, overhaul,
repair or replacement is the result of: (i) an unscheduled breakdown,
repair, or failure of such equipment or (ii) a scheduled inspection,
overhaul, repair or replacement of such equipment (unless the
inspection, overhaul, repair or replacement has been incorporated into
the Annual Operating Plan and Budget) and further that such inspection,
overhaul, repair or replacement shall have a cost in excess of $10,000,
which includes labor and material costs, and shall be adjusted each
year by the increase or decrease in the Producer Price Index.
Equipment shall include the gas turbines, the generators, boilers, heat
steam recovery generators, chillers, load gears, exhaust ducting,
emissions equipment, water and waste water treatment, fuel treatment
facilities and interconnection facilities; provided, however, that a
Major System Repair shall not include the replacement of accessories,
equipment and consumables required in the ordinary course of Routine
Maintenance and preventative maintenance of the System reflecting Sound
Independent Power Industry Practice.

20. Operating Fee - As set forth in Article VI, Section 1.

21. Owner's Plan of Operation - Owner's instructions to Operator as to
the desired electricity and/or thermal energy production schedule
and other operating and maintenance objectives.

22. Owner's Representative - As set forth in Article V, Section 1(a).

23. Producer Price Index - The U.S. Producer Price Index for All
Items, as currently published in the United States Department of
Labor Bureau of Labor Statistic's monthly publication, PPI
Detailed Report or any successor publication of such information,
or if such index is no longer published or the method of
computation thereof is substantially modified, a mutually
agreeable alternative index.

24. Proprietary Information - All financial, technical and operating
information which the parties, directly or indirectly, acquire
from each other, and any other information which a party expressly
designates in writing to be confidential. However, Proprietary
Information shall exclude information falling into any of the
following categories:

a. Information that, at the time of disclosure thereof, is
in the public domain;

b. Information that, after disclosure thereof, enters the
public domain other than by breach of this Agreement;

c. Information that prior to disclosure thereof, was
already in the recipient's possession, either without
limitation on disclosure to others or subsequently becoming
free of such limitation;

d. Information obtained by the recipient from a third party
having an independent right to disclose such information;

e. Information that is available by independent research
without use of or access to the Proprietary Information
acquired from the other party; and

f. Information that a party is required by law or
governmental action to disclose, provided the disclosing
party notifies the party from whom the information originated
in advance and gives it the opportunity to resist the order.

25. Routine Maintenance - Those activities including the replacement
of accessories, equipment, and consumables required in the
ordinary course of routine and preventative maintenance of the
System and System Site in accordance with Sound Independent Power
Industry Practice.

26. Sound Independent Power Industry Practice - Those prudent
practices and methods in effect at the time of performance that
are customarily followed by operators of similarly situated plants
and equipment.

27. System - Owner's properties, plant and equipment located in
Sayreville, New Jersey, including a single gas turbine combined
cycle generating station with a nominal capacity of approximately
52 megawatts, more fully defined in Exhibit B.

28. System Contracts - Contracts and agreements to which Owner is a
party (including, without limitation, insurance policies) relating
to the operation and maintenance of the System, set forth on
Exhibit C.

II. ENGAGEMENT OF OPERATOR

1. Effective on the Effective Date, Owner engages Operator to operate
and maintain the System and perform certain duties, all as
hereinafter set forth in this Agreement, and Operator accepts such
engagement to operate and maintain the System and perform the
duties specified in this Agreement in accordance with its terms
and conditions.

2. All operating and management personnel involved in the operation
and maintenance of the System shall be employees of Operator or
its Affiliates and shall not for any purposes be deemed employees
of Owner.

III. TERM

The term of this Agreement shall become effective upon the Effective
Date and expire on the sixth (6th) anniversary of the Effective Date,
unless terminated earlier in accordance with Article XII of this
Agreement.

IV. OPERATING AND MAINTENANCE DUTIES OF OPERATOR

1. Subject to the terms of this Agreement, Operator shall operate and
maintain the System and shall control the details and means of
performing its obligations hereunder.

2. For the period prior to and including the Effective Date, Operator
shall assist Owner in preparing the System for operation under the
Amended and Restated Power Purchase Agreement. These services
will include but not be limited to:

a. Preparing a plan and schedule to staff the System;

b. Recruiting and training the staff which will operate and
maintain the System;

c. Responding, in a timely manner, to Owner's requests for
information;

d. Procuring, as agent for Owner, replacement of stock of
consumables, spare parts, tools, and supplies in accordance
with the Annual Operating Plan and Budget;

e. Appointing a plant manager (subject to Owner's approval)
who shall supervise the performance of Operator's employees
at the System site;

f. Reviewing plans, specifications and drawings of
machinery and equipment layouts and commenting to Owner
thereon with regard to matters affecting operation and
maintenance;

g. Observing and receiving training and instructions from
Owner, such training and instructions to be in accordance
with Sound Independent Power Industry Practice;

h. Performing for Owner such other services as may from
time to time be reasonably requested or are reasonably
necessary or appropriate in connection with the operation and
maintenance of the System; and

i. Reporting to and consulting with Owner about the
operation of the System on a scheduled basis, as reasonably
requested by Owner.

Such services shall be provided in a manner consistent
with all Legal and Contractual Requirements, Sound Independent
Power Industry Practice and the Annual Operating Plan and Budget.

3. All full time personnel whom Operator will provide for the
operation and maintenance of the System shall be at the site and
available full time for training and to perform services to
support System operation and maintenance as required by the
staffing plan to be developed by Operator and approved by Owner.

4. A written management program shall be developed by Operator for
approval by Owner to ensure optimal performance, responsiveness,
and cost-effectiveness in the operation and maintenance of the
System. The program shall include provisions regarding:

a. Budget tracking, analysis and adjustments;

b. Personnel policies, including policies regarding payroll,
compensation, pensions and other benefits;

c. Training;

d. Purchasing and inventory control;

e. A System safety and health program which will include
procedures and a manual;

f. An employee job-site handbook for Operator's employees
operating and maintaining the System;

g. A maintenance planning and scheduling system; and

h. A system for maintaining an inventory of consumables, spare
parts, tools and supplies.

5. Subsequent to the Effective Date, Operator shall provide all
operations and maintenance services necessary to efficiently
operate and maintain the System, including but not limited to
performing the following operating and maintenance services:

a. Operating and maintaining the System in compliance with
all Legal and Contractual Requirements, Sound Independent
Power Industry Practice and the Annual Operating Plan and
Budget;

b. Obtaining and maintaining in effect all licenses and
permits required by law to be obtained and maintained in
Operator's name and assisting Owner in obtaining and renewing
all licenses and permits required by law to be obtained and
maintained by Owner or in Owner's name;

c. Paying all its employees, agents and subcontractors
promptly and filing all reports and remitting all payments
required under labor statutes to the appropriate governmental
authorities, as the obligations arise;

d. Conducting the operations and maintenance of the System
including, but not limited to, entering into contracts with
third parties as agent for Owner (subject to Owner's approval
if not in the ordinary course of business);

e. Employing, and ensuring adequate training of, Operator
employees and employees of its Affiliates (duly licensed
where required by statute or regulation) for the operation
and maintenance of the System consistent with Sound
Independent Power Industry Practice, and planning and
administering all matters pertaining to employee relations,
salaries, wages, working conditions, hours of work,
termination of employment, employee benefits, employee
staffing, safety and related matters pertaining to such
employees, and maintaining records with respect to all such
matters;

f. Monitoring, preparing and maintaining records of the
operations and maintenance aspects of the System (including
records of financial, business, and sales tax aspects of the
System) in such form and covering such matters as Owner may
reasonably request, consistent with Sound Independent Power
Industry Practice, generally accepted accounting principles,
and applicable records retention requirements; and making
such records available for inspection and/or audit by Owner
and Owner's designees;

g. Implementing an inventory control system to identify,
catalog, and disburse spare parts for the maintenance of the
System and procuring, as agent for Owner, replacement spare
parts and refurbishing, where practical or economical, spare
parts to allow their reuse;

h. Operating and maintaining the System according to the
operations and maintenance programs prepared by Operator for
Owner and, if necessary, creating updates for such programs
and creating new programs as required for operation and
maintenance of the System;

i. Operating and maintaining the System to maximize the continuous,
reliable, safe and efficient generation of electrical and/or thermal
energy by the System so as to conserve fuel and financial resources
and to minimize unscheduled outages, and providing maintenance for the
System in a cost-effective manner to prevent deterioration beyond
normal wear and tear; provided, however, that Owner acknowledges such
efforts shall necessarily be limited by the operating life,

capacity and maintenance requirements of the System and by Legal and
Contractual Requirements;

j. Using all reasonable care necessary to keep the System
and the System site clean, orderly, and free from debris,
rubbish or waste to the extent consistent with the operation
of the System;

k. Taking necessary precautions and corrective actions in the event
of an Emergency;

l. Keeping the System and the System site free and clear of
all liens and encumbrances arising out of the acts,
omissions, or debts of Operator or its employees, agents or
subcontractors claiming by, through or under Operator (this
subsection shall not apply to mechanics liens and liens of
any nature arising by operation of law, provided such liens
are promptly removed by the payment of the debts they secure
when due; in the event of a dispute between Operator or its
subcontractors and a lienholder, Operator's obligation to
Owner pursuant to this provision may be satisfied by the
posting of an appropriate bond to the extent acceptable to
the Agent);

m. Within 30 days of its receipt of Owner's Plan of
Operation submitted in accordance with Article V, Section
1(c), preparing and submitting to Owner for Owner's approval
a written proposed Annual Operating Plan and Budget which
shall include all anticipated Expenses of the System to be
paid by Owner for each succeeding calendar year, all as more
fully described in Article VI, Section 6 or required by the
Agent;

n. Reporting to and consulting with Owner about the
operation of the System on a scheduled basis, as reasonably
requested by Owner;

o. Using reasonable commercial efforts to secure from
vendors, suppliers and subcontractors the best indemnities,
warranties and guarantees as may be commercially available
regarding supplies, equipment and services purchased for the
System, all of which shall be assigned to Owner (Operator
shall render reasonable assistance to Owner for the purpose
of enforcing such indemnities, warranties or guarantees of
which Owner is a beneficiary regarding the System);

p. Performing for Owner such other services as may from
time to time be reasonably requested or are necessary or
appropriate in connection with the operation and maintenance
of the System;

q. Promptly notifying Owner of:

i. Any condition, event or act which is likely to
result in a material deficiency in budgeted revenues, or
excess in budgeted costs, of Owner;

ii. Any forced outages or significant malfunction
of the System as soon as practicable;

iii. Any material failure to comply with any Legal
and Contractual Requirements or any event which is
reasonably expected to cause such material failure;

r. Promptly providing Owner with such information relative
to the System as Owner may reasonably request;

s. Establishing an effective maintenance planning and
scheduling system to optimize the availability, reliability
and heat rate of the System;

t. Assisting Owner in the compliance by Owner with the
terms of the Financing Agreements, as they relate to the
operation and maintenance of the System, including the
preparation of reports concerning operations and making
personnel available for discussions with the Agent or other
lender representatives;

u. Subject to Article XI, assisting Owner in selling or
otherwise disposing of used and/or unneeded parts and
supplies; and

v. Providing and maintaining written procedures, in a form reasonably
acceptable to Owner, required to enable Operator's employees to safely
and efficiently start-up, operate, and shut down the System equipment
and to perform preventative maintenance on the System equipment.

V. RESPONSIBILITIES OF OWNER

1. Subject to the terms of this Agreement, Owner shall, at its cost
and expense, perform and provide the following at the times
required to support the start-up, operation and maintenance of the
System:

a. Providing an Owner's Representative who shall represent
and bind Owner in all matters regarding this Agreement and
the performance of Owner hereunder;

b. Providing the System and System Site free and clear of
all liens and encumbrances (except for any liens or
encumbrances in favor of Agent or the lenders under the
Financing Agreements);

c. Preparing the Owner's Plan of Operation and delivering
the same to Operator on or before September 1 of each year;

d. With Operator's assistance, administering all System
Contracts;

e. Providing all required utility services, including
water, sewer, telephone, water/waste water treatment, waste
disposal, special waste disposal and electricity;

f. With Operator's assistance, obtaining and reviewing all
necessary licenses and permits except those required by law to be
obtained and maintained in Operator's name;

g. Providing manufacturer's operating and maintenance manuals
for the System;

h. With Operator's assistance, preparing and submitting any
special accounting and reporting documents that may be
required by governmental authorities;

i. Providing at its own expense, an office at the site for
use by Operator;

j. Within five days of its receipt thereof, providing
Operator complete copies of all technical, operational and
other System and System site related information, including
the System Contracts, as are in the possession, or under the
control, of Owner;

k. Being responsible for the billing and collection of
electricity revenues under the Amended and Power Purchase
Agreement and thermal revenues under the Steam Purchase
Contract with Newark Boxboard;

l. Being solely responsible for obtaining, maintaining and
renewing all licenses and permits necessary for: (i) Owner to
do business in the jurisdictions in which the System is
located and (ii) the ownership, operation and maintenance of
the System and System site;

m. Being responsible for arranging the disposal of hazardous
wastes generated by or at the System or System site; Operator
will coordinate removal of such waste from the System site
using subcontractors chosen by Owner.

n. Complying with, and diligently enforcing, all agreements
(including the System Contracts) to which Owner is a party
and which relate to or impact upon the System or Operator's
ability to perform its obligations hereunder; and

o. Timely paying all of Owner's vendors, suppliers and
contractors.

Such activities shall be provided in a manner consistent with
all Legal and Contractual Requirements, Sound Independent Power
Industry Practice and the Annual Operating Plan and Budget.

VI. EXPENSES, REIMBURSEMENTS, BUDGET, CONSIDERATION, COMPENSATION

1. As compensation to Operator for its performance of the services,
Owner shall pay Operator (a) the Expenses incurred by Operator
and (b) an annual fee ("Operator's Fee"). The Operator's Fee for
the first Contract Year shall be $150,000.00. The Operator's Fee
shall be payable in equal monthly installments in arrears. The
Operator's Fee shall be adjusted annually in accordance with the
following sentence. For each Contract Year after the first
Contract Year, the Operator's Fee shall be equal to the product
of: (i) the ratio of the Producer Price Index for the last month
of the then expiring Contract Year over the Producer Price Index
for the last month of the previous Contract Year and (ii) the
Operator's Fee for the then expiring Contract Year; provided,
however, that for any partial Contract Year, the Operator's Fee
shall be multiplied by a fraction, the numerator of which shall be
the total number of days in such Contract Year and the denominator
of which shall be 365 or 366, as the case may be. If Operator
fails to pay accrued, undisputed Liquidated Damages in any
Contract Year in accordance with the provisions herein, Owner may
elect to reduce the Operator's Fee in the subsequent Contract Year
by the amount of undisputed Liquidated Damages owed to Owner.

2. Owner shall directly pay, or promptly reimburse to Operator as the
case may be, the following expenses ("Expenses") relating to the
System:

a. Insurance and bond premiums for policies which are
required by Article VIII hereof;

b. Property and other taxes (including, without limitation,
sales taxes, gross receipts taxes, value added taxes, energy
taxes and capital taxes) related to Owner or the System, but
not including those based on Operator's income or capital;

c. The base salaries, straight time hourly wages and
overtime hourly wages of all of Operator's on-site personnel
plus (i) thirty eight percent (38%) of (x) the base salaries
and straight time hourly wages and (y) the straight time
hourly portion of the actual overtime wages for all hourly
employees, and (ii) five percent (5%) of the base salaries,
straight time hourly wages, and overtime hourly wages.

d. Transportation, travel, lodging, and (for employees
newly hired or newly assigned to the System site) relocation
expenses of persons employed by Operator or its Affiliates
performing the duties of Operator under this Agreement
subject to advance approval by Owner in writing;

e. Reasonably incurred legal and accounting fees relating
to the System, subject to advance approval by Owner in
writing;

f. Fuel expenses including fuel purchase, transportation,
handling and demurrage charges;

g. The expenses of purchased electric power, telephone and
other communication services, purchased potable water, waste
disposal, special waste disposal, lubricants and chemicals
necessary for the operation of the System;

h. Costs reasonably incurred or paid by Operator due to an
Emergency;

i. Training, including outside training services;

j. The costs of permits or licenses required for either
Owner, Operator or the System;

k. Costs associated with Routine Maintenance, Major System Repairs
(including scheduled and unscheduled) inspections, and overhauls,
outside contractor services and purchases of replacement equipment,
parts and components;

l. Spare parts, tools, supplies and consumables;

m. Capital costs approved by Owner for improvements,
alterations or additions to the System including those
required by governmental laws, regulations or orders
including without limitation, those arising from
environmental concerns; and

n. The cost of transportation of spare parts, tools,
supplies, consumables and any item which is a reimbursable
expense hereunder.

For all Expenses (other than relating to labor and legal and
accounting fees) incurred and paid by Operator for which Operator
is entitled to reimbursement hereunder, Owner additionally shall
pay Operator a general and administrative expense fee of five
percent (5%) of such Expenses.

3. a. For convenience and in order to save on expenses, Owner
will directly pay certain of the Expenses reimbursable to
Operator as set forth in the Annual Operating Plan and Budget
described in Article VI, Section 2 as practicable. To the
extent reasonably practical, the items covered by such
Article VI, Section 2 shall be procured through Operator's
issuance of an Owner purchase order and the cost of any such
items shall be paid directly by Owner to the vendor thereof.
Operator shall perform such duty as Owner's agent.

b. Without Owner's prior approval, Operator shall be
empowered to prepare and issue an Owner purchase order for
any material or service the cost of which would constitute an
Expense, so long as the total cost for such item is less than
or equal to $10,000. For any item or items whose cost is
greater than $10,000, Operator shall submit a written
requisition to Owner, and after receipt of written approval
from Owner, Operator shall be authorized as agent for Owner
to prepare and issue a purchase order on behalf of Owner on
Owner's purchase order form for such item. Operator shall
(i) verify the receipt at the System site of all materials
and services to be delivered to the System site covered by
Owner's purchase orders issued by Operator, (iii) verify the
accuracy of vendors' invoices in connection therewith, and
(iv) forward such invoices to Owner for approval, processing
and payment by Owner. Nothing in this Agreement shall
prevent Operator from procuring any material or service the
cost of which would constitute an Expense under Article VI
Section 2.

c. Operator shall periodically, but not more often than once a week,
deliver to Owner invoices received by Operator from third parties for
all direct Expenses, accompanied by a summary of all such invoices
which itemizes all such invoices by operating cost account number.
Such invoices shall also be accompanied by a statement from Operator
confirming that all such invoices are accurate, due and payable,
together with all relevant documentation reasonably necessary for

Owner to verify the accuracy thereof. Each invoice submitted to
Owner shall be paid by Owner directly to the payee of such invoice
on or before the date such invoice is due.

4. From time-to-time, Operator will prepare and send to Owner an
invoice, including expense statements, vouchers or such other
supporting information as Owner may reasonably require, for the amounts
then due for reimbursable Expenses and the monthly installment of the
Operator's Fee. Owner shall pay the amount due to Operator no later
than 30 days after receipt of the invoice. All payments shall be
made by wire transfer of immediately available funds to Norwest Bank,
Minneapolis, Minnesota Account No. (to be furnished later). Any
payment not made within 30 days after receipt of the invoice will bear
interest from the date on which payment was due at the rate of one and
one-half (1.5%) percent per month or the maximum rate permitted by law,
whichever is the lesser.

5. Operator shall maintain complete, true, and correct records in
connection with all Expenses incurred by Operator. Operator shall
retain all such records for five (5) years after Expense reimbursement
by Owner has been fulfilled or for any longer period of time required
by law. All documents and records relating to this Agreement shall be
available for inspection by Owner anytime during normal business hours.
Owner may audit all records of Operator relating to Expenses and
services performed hereunder. In the event the audit shows that the
payment by Owner to Operator exceeds the amount due Operator, Owner
shall disclose such information to Operator and Operator shall refund
the excess amount to Owner within five (5) business days of the
disclosure to Operator. In the event the audit shows that the payment
by Owner to Operator is greater than the amount due Operator under this
Agreement and such error was caused by Operator, Owner shall be
reimbursed its reasonable costs of performing the audit. In the event
the audit shows that the payment by Owner is less than the amount due
Operator, Owner shall disclose such information to Operator and pay the
underpayment amount to Operator within five (5) business days of the
disclosure to Operator.

6. On or before October 1 of each year, the Operator shall prepare
and submit to Owner a written Annual Operating Plan and Budget
which shall include all expenses of the System anticipated to be
paid by Owner as either a direct or reimbursable Expense during
the upcoming calendar year pursuant to subsection 1 of this
Article VI, together with a written operations and maintenance
plan for the same period of time. Such Annual Operating Plan and
Budget shall set forth the anticipated operations and maintenance
plan including projected electrical production from the System on
a monthly basis, and a complete schedule (to the extent
technically feasible) of Operator responsible Routine Maintenance
and all Owner-directed major maintenance tasks (including Major
System Repairs) to be accomplished during said year. Owner and
Operator shall agree upon the budget, operations and maintenance
plan, and persons to perform maintenance under the plan prior to
the start of the calendar year, and shall meet and exchange
information as is necessary and convenient to such end.

If the parties cannot reach agreement on the Annual Operating Plan
and Budget by the start of any calendar year, then, until such
time as agreement is reached or the dispute is resolved, the
Annual Operating Plan and Budget for such calendar year shall be
based on the Annual Operating Plan and Budget for the preceding
calendar year, as adjusted to reflect the net change, if any,
between the most recently published Producer Price Index available
on the first day of the calendar year in question and the
corresponding Producer Price Index in effect at the start of the
immediately preceding calendar year.

Operator has submitted, and Owner has accepted, the Annual
Operating Plan and Budget for the calendar year ending December
31, 1997, a copy of which is attached as

Exhibit F. All Annual Operating Plan and Budgets shall be in
substantially the form attached as Exhibit F. The amounts set
forth on Exhibit F shall be reduced pro rata based on the number
of days remaining in the calendar year from and after the
Effective Date. Likewise, the amounts set forth in the Annual
Operating Plan and Budget in effect during the calendar year in
which this Agreement expires or is terminated shall be reduced on
a pro rata basis based actual number of days elapsed during such
calendar year prior to the date of the expiration or termination
of this Agreement.

7. a. The parties recognize that Changes may be required
during the term of this Agreement. Either Owner or Operator
may by a written notice to the other party propose a Change.
The written notice shall describe the proposed Change in
reasonable detail and the reasons therefor.

b. The written notice of a Change proposed by Operator
shall be accompanied by a Change Order Budget Statement.
Upon receipt by Operator of any proposed Change from Owner,
Operator shall use its best efforts to prepare and submit to
Owner a Change Order Budget Statement with respect to such
proposed Change within fifteen (15) days of the receipt of
Owner's proposed Change. No proposed Change the cost of
which is in excess of $10,000 shall be implemented until a
Change Order has been executed by both parties approving the
Change and the related Change Order Budget Statement;
provided, however, that Operator shall be entitled to
implement a proposed Change without the prior approval of
Owner if such Change is required due to an Emergency. If
Operator implements a Change without the prior approval of
Owner due to an Emergency, Operator shall promptly notify
Owner of such Change and pursue Owner's approval thereof in
accordance with subsection c below. Operator acknowledges
that Owner's approval of any proposed Change and/or the
related Change Order Budget Statement may require the
approval of the Agent.

c. Owner and Operator shall diligently and in good faith
endeavor to reach agreement upon any proposed Change and the
related Change Order Budget Statement within thirty (30) days
after the date of the receipt of a proposed Change and
related Change Order Budget Statement. If a Change is
required as a result of an Emergency, then Operator shall
provide to Owner, as soon as practicable, notice of such
Change, together with a statement describing the Emergency
and a Change Order Budget Statement. If a Change due to an
Emergency causes the Annual Operating Plan and Budget to be
exceeded and Owner believes that an Emergency did not exist,
then Owner shall have the right to dispute the Change. If
Owner and Operator do not agree as to the resolution of such
dispute, then either party may submit the dispute to
arbitration in accordance with the provisions of Article
XVIII Sections 2 and 3.

8. Operator shall report to Owner in writing monthly on electrical
and thermal output and expenditures incurred to date; projected
electrical and thermal output and expenditures for the balance of
the calendar year; performance to date under the operations and
maintenance plan and such other matters as Owner may reasonably
request as to the operation and maintenance of the System. In
such report, Operator shall recommend such changes to the then
current budget and operations and maintenance plan as Operator
considers necessary or appropriate.

9. Operator shall use its best efforts to operate and maintain
the System each year within the budget approved by Owner (as amended by
Change Orders). For purposes of determining the approved budget for
the initial calendar year, the budget provided as Exhibit F in the
aggregate amount of $1,606,997, for operating and maintenance duties
set forth in Article IV, shall be adjusted by the ratio of the
remaining number of days from the Effective Date to year-end divided by
366. If for any calendar year the Expenses

(other than those Expenses set forth in Article VI, Section 2 (b)
and Expenses incurred in response to Emergencies), whether direct or
reimbursable, paid by Owner exceed the approved Annual Operating
Plan and Budget, as amended by Change Orders mutually agreed by
Owner and Operator, then Operator shall be solely responsible for
any such excess.

10. Operator's consideration for services performed and expenses paid
pursuant to this Agreement shall be the reimbursement of expenses
described in Section VI(2), the Operator's Fee, and, if applicable, the
Bonus.

VII. INDEMNIFICATION

1. Operator will protect, indemnify and hold harmless Owner, Owner's
Affiliates and Agent, and their respective directors, officers,
employees, agents and representatives against and from any and all
demands, losses, claims, actions or suits, including costs,
judgments, penalties, fines and attorney's fees, for or on account
of injury to or death of third persons, or for damage to or
destruction of property belonging to third persons or for
violation of law, in each case resulting from or arising out of
Operator's negligent maintenance or operation of the System or
Operator's willful act or omission, except to the extent caused by
System design or construction defect, by Owner's act or omission,
or the act or omission of third parties.

2. Owner will protect, indemnify and hold harmless Operator,
Operator's Affiliates, and their respective directors, officers,
employees, agents and representatives against and from any and all
demands, losses, claims, actions or suits, including costs,
judgments, penalties, fines and attorneys' fees, for or on account
of injury to or death of third persons, or for damage to or
destruction of property belonging to third persons, or for
violation of law, in each case resulting from or arising out of a
System design or construction defect, or the negligence or willful
act or omission of Owner.

3. The duty to indemnify under this Article will continue in full
force and effect, notwithstanding the expiration or termination of
this Agreement, with respect to any claim or action based on facts
or conditions which occurred prior to such termination.

4. If any indemnified party intends to seek indemnification under
this Article from any indemnifying party with respect to any
action or claim, the indemnified party shall give the indemnifying
party notice of such claim or action within thirty (30) days of
the commencement of, or actual knowledge by the indemnified party
of, such claim or action. The indemnifying party shall have no
liability under this Article for any claim or actions for which
such notice is not provided; provided, however, so long as the
indemnifying party is not materially harmed by the indemnified
party's failure to give timely notice of a claim or action, then
the indemnifying party's indemnity obligation shall be unaffected.
The indemnifying party shall, at its sole cost and expense, defend
any such claim or action; provided, however, that the indemnified
party shall, at its own cost and expense, have the right to
participate in the defense or settlement of any such claim or
action. The indemnified party shall not compromise or settle any
such claim or action without the prior written consent of the
indemnifying party, which consent shall not be unreasonably
withheld.

VIII. INSURANCE COVERAGE

1. Operator, on its behalf and on the behalf of all subcontractors of
Operator performing any on-site services in connection with the
operation and maintenance of the System or any of its appurtenant
equipment, shall procure and maintain in effect during the term
for which they perform services pursuant to this Agreement the
following minimum insurance coverages, in the given amounts:

a. Vehicle liability insurance covering all owned, non-
owned and hired automobiles, trucks, trailers and other
vehicles. Such insurance shall provide coverage not less
than that of the standard comprehensive automobile policy in
limits not less than $1,000,000 combined single limit each
occurrence for bodily injury and property damage. The Owner
and NRG Generating (U.S.) Inc. shall be named as additional
insureds.

b. Workers' Compensation Insurance that satisfies statutory
requirements and Employers' Liability Insurance with limits
of $1,000,000. This insurance shall include All States
Coverage and Longshoreman & Harbor Workers Compensation Act
coverage (if exposure exists) The Employer's Liability
Coverage shall not contain occupational disease exclusion.

c. Liability Insurance, on an "Occurrence" basis and in a
form providing coverage not less than that of the standard
Commercial General Liability, covering operations of the
System including independent contractors, products and
completed operations with broad form blanket contractual
liability coverage (for any written or oral contracts related
to the System) and personal injury liability coverage for
claims arising out of the operations of the System for bodily
injury and property damage (broad form, including completed
operations) in policy limits not less than $1,000,000
combined single limit each occurrence and $2,000,000
aggregate limit. The aggregate policy limits shall apply
solely to this project or site. Coverage shall include a
standard severability of interests clause and cross liability
coverage. The Owner and NRG Generating (U.S.) Inc. shall be
named as additional insureds.

d. Excess or umbrella liability Insurance, on an
"Occurrence" basis and with coverage at least as broad as the
vehicle liability, employers' liability and general liability
policies, to provide limits of insurance in excess of Owner's
vehicle liability, employers' liability and general liability
policies for not less than $10,000,000 combined single limit
each occurrence and in the aggregate for bodily injury,
property damage and personal injury. The aggregate policy
limits shall apply solely to this project or site. Coverage
shall include a standard severability of interests clause and
cross liability coverage. The Owner and NRG Generating
(U.S.) Inc. shall be named as additional insureds.

2. Owner shall procure and maintain in effect during the term of this
Agreement at its expense the following minimum insurance coverage:

a. Vehicle liability insurance covering all owned, non-
owned and hired automobiles, trucks, trailers and other
vehicles. Such insurance shall provide coverage not less
than that of the standard comprehensive automobile policy in
limits not less than $1,000,000 combined single limit each
occurrence for bodily injury and property damage. The
Operator and NRG Generating (U.S.) Inc. shall be named as
additional insureds.

c. Liability Insurance, on an "Occurrence" basis and in a form
providing coverage not less than that of the standard Commercial
General Liability, covering operations of the System including
independent contractors, products and completed operations with broad
form blanket contractual liability coverage (for any written or oral
contracts related to the System) and personal injury liability cover-
age for claims arising out of the operations of the System for bodily
injury and property damage (broad form, including completed opera-
tions) in policy limits not less than $1,000,000 combined single
limit each occurrence and $2,000,000

aggregate limit. The aggregate policy limits shall apply solely to
this project or site. Coverage shall include a standard
severability of interests clause and cross liability
coverage. The Operator and NRG Generating (U.S.) Inc. shall
be named as additional insureds.

d. Excess or umbrella liability Insurance, on an
"Occurrence" basis and with coverage at least as broad as the
vehicle liability, employers' liability and general liability
policies, to provide limits of insurance in excess of Owner's
vehicle liability, employers' liability and general liability
policies for not less than $10,000,000 combined single limit
each occurrence and in the aggregate for bodily injury,
property damage and personal injury. The aggregate policy
limits shall apply solely to this project or site. Coverage
shall include a standard severability of interests clause and
cross liability coverage. The Operator and NRG Generating
(U.S.) Inc. shall be named as additional insureds.

d. "All Risk" Property Insurance, including Boiler and
Machinery Insurance and difference in conditions coverage
(including flood perils), with an extension for Business
Interruption Coverage, and naming Operator and NRG as
additional insureds for all such insurance coverage as their
interests appear.

3. Within thirty (30) days after the date of execution of this
Agreement, each party shall provide to the other party, pursuant
to the notice provisions of Article XIV, properly executed
certificates of insurance, signed by an authorized representative
of the insurance carrier. These certificates shall provide the
following information:

a. Name of insurance company, policy number and expiration
date;

b. The coverage required and the limits on each, including
the amount of deductibles and self-insured retentions;

c. A statement indicating that sixty (60) days notice of
cancellation, non-renewal, or material change in coverage of
any of the policies shall be given to each named insured and
any additional insured; and

d. Named and additional insured.

4. Each party shall have the right to inspect and photocopy the
policies of insurance at the other party's place of business
during regular business hours, on reasonable prior written notice.

5. All insurance policies, including Workers' Compensation
Insurance, provided by Owner and Operator shall waive all rights
of subrogation against one another and NRG .

6. The provision of insurance shall not be construed to limit the
liability of any party to the other party.

7. All commercial insurance carriers providing insurance hereunder
must be rated A- or better, with a minimum size rating of VIII by
Bests Insurance Guide and Key Ratings or an equivalent rating by
another nationally recognized insurance rating agency of a standing
similar to Best.

8. All deductibles or self insured retentions associated with
policies required hereunder shall be the responsibility of the named
insured.

IX. ENGAGEMENT OF THIRD PARTIES

Operator may engage or subcontract in the ordinary course of business
and at Owner's expense such persons, corporations or other entities as
Operator deems advisable for the purpose of performing or carrying out
any of the obligations of Operator under this Agreement. Except in the
case of an Emergency, before incurring an Expense in excess of $10,000,
Operator shall obtain the prior written approval from Owner.

X. OPERATOR REPORTING OBLIGATIONS

Operator shall provide Owner with copies of all reports generated by
Operator's employees, agents, or subcontractors with respect to the
operation of the System that are filed with any federal, state, or
local agency or governmental entity. In addition, Operator shall
provide Owner with monthly compliance reports, summarizing Operator's
compliance with all System permits and licenses. All monthly
compliance reports shall be delivered to Owner within ten (10) days
after the last day of the relevant month.

XI. SPECIFIC LIMITATIONS

In the conduct of its duties hereunder, Operator shall not, without
first obtaining the written consent of Owner:

1. Limit on Expenditures. Under-take an expenditure outside
Operator's scope of responsibilities except that, in case of an
Emergency, Operator may make such immediate expenditures as may be
necessary, but notice of any such Emergency and expenditures shall
be given to Owner as promptly as possible, but in no case more
than 12 hours after the event.

2. Settlement of Claims. For any claim for which Owner is or may be
responsible, pay in excess of $10,000 in the settlement of any
claim for injury to or death of persons, or loss of or damage to
property, or in settlement of any contract or other dispute.

3. Disposition of Equipment. On Owner's behalf, sell or otherwise
dispose of any item of equipment which is part of or used in the
operating or maintaining the System if the current price of new
equipment similar thereto is in excess of $5,000.

4. Contracts with Affiliates. On Owner's behalf, enter into any
contract with an Affiliate of Operator with a value in excess of
$5,000.

XII. TERMINATION/DEFAULT

1. This Agreement may be terminated:

a. By the non-defaulting party at any time following the
occurrence of any Event of Default, as described in this
Article XII, if such Event of Default is not cured within the
period, if any, provided therefor;

b. By Operator, if, after Operator has taken all reasonable
efforts to avoid regulation as a public utility, Operator's
performance under this Agreement renders Operator subject to
regulation as a public utility by any federal, state or local
agency of any governmental entity, by delivery of thirty (30)
days' prior written notice to Owner;

c. By Operator, if Owner's action or inactions under this Agreement
renders Operator subject to regulation as a public utility by any
federal, state or local agency of any governmental entity, by delivery
of thirty (30) days' prior written

notice to Owner;

d. By Owner for its convenience, upon 90 days' written notice to
Operator, provided that Owner pays Operator the applicable termination
charge in accordance with the provisions of Exhibit D (no termination
of this Agreement under this provision may be effective until the
third anniversary of the Effective Date);

e. By Owner, if, at, on, or in connection with the operation and
maintenance of any part or all of either or both of (x) the System or
(y) the properties, plant or equipment operated by Operator for NRG
Generating (Newark) Cogeneration, Inc., Operator fails to comply in
all material respects with all applicable laws, permits, licenses,
regulations, or orders of any Governmental Authority; provided,
however, that no failure of Operator to perform its obligations under
this Article XII, Section 1(e) shall be grounds for termination if
such failure is the result of the negligence of a third party other
than subcontractors of or procured by Operator or Operator's affili-
ates or an act of Force Majeure, so long as Operator is diligently
pursuing a cure as required by this Agreement. Owner may exercise its
right of termination under this Article XII action 1(e), if and
when Owner believes that Operator has failed to achieve and main-
tain compliance with an applicable law, permit, license, regulation or
order, whether or not (s) a court or administrative agency with
competent jurisdiction has determined that there has been such a fail-
ure or (t) a dispute resolution process has determined that the fail-
ure was not the result of either negligence of a third party other
than subcontractors or an act of Force Majeure which Operator is
diligently attempting to cure; provided, however, that following any
termination by Owner under this Article XII Section 1(e), if (u) a
court or administrative agency, with competent jurisdiction to
assess a fine, penalty or other action for failures in
circumstances of the sort which were the basis of Owner's
termination, issues a final nonappealable order (or issues an order
for which all appeals periods have expired) determining as a matter
of both fact and law that the circumstances which were the basis of
Owner's termination did not constitute a violation of any law,
permit, license, regulation or order, or v) a dispute resolution
process under Article XVIII determines that the failure was the result
of negligence of a third party other than subcontractors or an act of
Force Majeure which Operator is diligently attempting to cure, then
Owner shall pay Operator the amount determined in accordance with
Exhibit E.;

f. By the mutual agreement of the parties; and

g. By Owner, if the Amended Power Purchase Agreement is
terminated for any reason other than a default by Owner or an
Owner Affiliate.

2. Owner shall be in default under this Agreement upon the happening
or occurrence of any of the following events or conditions, each
of which shall be deemed to be an Event of Default for purposes of
this Agreement:

a. Owner materially breaches any of Owner's obligations,
covenants, conditions, services or other responsibilities
under this Agreement unless within thirty (30) days after
notice from Operator specifying the nature of such breach,
Owner either cures such breach or, if such breach (other than
the failure to make payment obligations) cannot be cured
within thirty (30) days, Owner commences and diligently
pursues such cure and thereafter continues to diligently
pursue such cure. If the breach is not cured within 120 days
of the date of Operator's written notice to Owner, then
Operator may terminate this Agreement;

b. There is an assignment for the benefit of Owner's
creditors, or Owner or its parent company, NRG Generating
(U.S.) Inc., is adjudged bankrupt, or a petition is filed by
or against Owner or its parent company under the provisions
of any insolvency or bankruptcy laws (and such petition is
not dismissed within six months), or the business or
principal assets of Owner or its parent company are placed in
the hands of a receiver, assignee or trustee, or Owner is
dissolved, or Owner's existence is terminated or its business
is discontinued; or

c. Any material representation or warranty furnished by
Owner in connection with this Agreement was knowingly false
or misleading in any material respect at the time it was
made.

3. Operator shall be in default under this Agreement upon the
happening or occurrence of any of the following events or
conditions, each of which shall be deemed to be an Event of
Default for purposes of this Agreement:

a. Operator materially breaches or fails to observe or
timely perform any of Operator's obligations, covenants,
conditions, services or responsibilities under this
Agreement, unless within thirty (30) days after notice from
Owner specifying the nature of such breach or failure,
Operator either cures such breach or failure or, if such
breach cannot be cured within thirty (30) days, Operator
commences and diligently pursues such cure and thereafter
continues to diligently pursue such cure. If the breach is
not cured within 120 days of the date of Owner's written
notice to Operator, then Owner may terminate this Agreement;

b. There is an assignment for the benefit of Operator's
creditors, or Operator is adjudged bankrupt, or a petition is
filed by or against Operator under the provisions of any
insolvency or bankruptcy laws (and such petition is not
dismissed within six months), or the business or principal
assets of Operator are placed in the hands of a receiver,
assignee or trustee, or Operator is dissolved, or Operator's
existence is terminated or its business is discontinued; or

c. Any material representation or warranty furnished by
Operator in connection with this Agreement was knowingly
false or misleading in any material respect at the time when
made.

Notwithstanding subsection (a) above, Operator (i) shall not be
afforded any cure period, (ii) will not be permitted to invoke or
utilize the Article XVIII Dispute Resolution provisions, and (iii)
will be subject to immediate termination if the termination of
this Agreement is effected under the language of Article XII,
Section 1(e).

4. Upon the occurrence of an Event of Default, the non-defaulting
party may:

a. Without recourse to legal process, terminate this
Agreement by delivery of a written notice of termination to
the defaulting party or its assigns; and/or

b. Pursue, concurrently or separately, other remedies
existing in law, any provision of this Agreement, or
otherwise.

5. Upon termination or expiration of this Agreement, Operator
shall:

a. Deliver to Owner all books, records, operator logs, accounts and
manuals developed or maintained by Operator pursuant to this
Agreement, provided however, that Operator may retain copies of
such documents. Furthermore,

Owner shall have the right to take possession of all of the equipment,
spare parts and supplies purchased for the System and paid
for by Owner;

b. At Owner's request and expense, cooperate with Owner to
effect an orderly transition of the operations and
maintenance of the System, including, without limitation,
perform the following:

i. Continue to operate the System in accordance with
this Agreement for a period not to exceed 180 days while
Owner appoints and mobilizes a successor operator;

ii. Assist Owner in preparing an inventory of all
material, equipment, spare parts and supplies purchased
for the System; and

iii. Assign to Owner all Operator's contractual
agreements with third parties relating to the operations
or maintenance of the System, to the extent such
agreements are so assignable.

XIII. ACCESS TO SYSTEM

Operator and Owner and their agents, representatives, and employees
shall have full and free access at all times to the System.

XIV. NOTICES

1. Any notice required or permitted under this Agreement shall be in
writing and shall be valid and sufficient if delivered personally,
mailed by registered or certified mail, or sent by a recognized
private overnight express delivery service. In each case postage
prepaid, return receipt requested, addressed to the other party as
follows:

If to Operator:

NRG Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: NRG Asset Manager
Telephone: ▇▇▇-▇▇▇-▇▇▇▇

If to Owner:

NRG Generating (U.S.) Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇

2. Any party may change its address, or add additional addresses, by
notice given to the other parties in the manner set forth above.

XV. FURTHER ASSURANCES

1. Owner and Operator agree to execute, acknowledge and deliver any
and all such further documents and instruments and to take such action
as may reasonably be required in

order to allow the financing of the System to proceed, to
effectuate the purpose of this Agreement, and to obtain any
government permits, licenses, or approvals necessary or convenient
to accomplish the foregoing.

2. Title to all materials, equipment, supplies, consumables, spare
parts and other items purchased or obtained by Operator for the
System shall pass to and vest in Owner upon the passage of title
from the vendor or supplier thereof and the payment or
reimbursement of Operator's costs by Owner.

XVI. REPRESENTATIONS AND WARRANTIES

1. Owner represents and warrants to Operator as follows:

a. Owner is a corporation duly formed, validly existing,
and in good standing under the laws of Delaware, and it is
properly qualified to do business in New Jersey;

b. The execution of this Agreement has been duly authorized
and approved by Owner, and no other authorizations,
approvals, or consents are required in order for this
agreement to constitute a binding and enforceable legal
obligation of Owner;

c. The execution of this Agreement by Owner, and the
performance of Owner's obligations under this Agreement will
not conflict with, or result in a breach or default under,
any agreement, contract, or covenant to which Owner is a
party; provided, however, that this provision is modified to
be consistent with Section 7 of the Agreement which is being
executed contemporaneously herewith as an inducement to the
execution of this agreement; and

d. This Agreement, as executed, constitutes a binding legal
obligation of Owner that is enforceable in accordance with
its terms and conditions.

2. Operator represents and warrants to Owner as follows:

a. Operator is a corporation duly incorporated, validly
existing, and in good standing under the laws of Delaware,
and it is properly qualified to do business in New Jersey;

b. The execution of this Agreement by Operator has been
duly authorized an approved by Operator and no other
authorizations, approvals, or consents are required in order
for this Agreement to constitute a binding and enforceable
legal obligation of Operator;

c. The execution of this Agreement by Operator, and the
performance of its obligations under this Agreement will not
conflict with, or result in a breach or default under, any
agreement, contract, or covenant to which Operator is a
party; and

d. This Agreement as executed, constitutes a binding legal
obligation of Operator that is enforceable in accordance with
its terms and conditions.

XVII. FORCE MAJEURE

1. Except for the obligation of either party to make any required
payments hereunder, the parties shall be excused from performing their
respective obligations under this Agreement and shall not be liable in
damages or otherwise if and to the extent that they

are unable to so perform or are prevented from performing by a
Force Majeure, provided that:

a. The non-performing party, as promptly as practicable
after the occurrence of the Force Majeure, but in no event
later than 14 days thereafter, gives the other party written
notice describing the particulars of the occurrence;

b. The suspension of performance is of no greater scope and
of no longer duration than is reasonably required by the
Force Majeure;

c. The non-performing party uses its best efforts to remedy
its inability to perform; and

d. As soon as the non-performing party is able to resume
performance of its obligations excused as a result of the
occurrence, it shall give prompt written notification thereof
to the other party.

2. Neither party shall be required to settle any strike, walkout,
lockout or other labor dispute on terms which, in the sole judgment of
the party involved in the dispute, are contrary to its interest, it
being understood and agreed that the settlement of strikes, walkouts,
lockouts or other labor disputes shall be entirely within the
discretion of the party having such dispute.

XVIII DISPUTE RESOLUTION

1. Resolution by Parties.

a First Attempt. In the event that a dispute arises
hereunder between the parties, the parties shall attempt in
good faith to settle such dispute by mutual discussions
within 30 days after the date that a party gives written
notice of the dispute to the other party; provided, however,
that if the dispute involves any amount claimed under an
invoice and after 10 days of mutual discussion either party
believes in good faith that further discussion will not
resolve the dispute to its satisfaction, such party may
immediately refer the matter to arbitration in accordance
with subsection 2 of this Article XVIII.

b Chief Executive Officers. In the event that the dispute
is not resolved in accordance with subsection 1 (a) above,
either party may refer the dispute to the chief executive
officers or chief operating officers of the respective
parties for further consideration. In the event that such
individuals are unable to reach agreement within 15 days, or
such longer period as they may agree, then either party may
refer the matter to arbitration in accordance with subsection
2 of this Article XVIII.

2. Arbitration. In the event a dispute arises between Owner and
Operator which is not resolved pursuant to Section 1 of this Article
XVIII, shall be resolved by arbitration pursuant to the terms hereof.
As a condition to initiating arbitration proceedings, a party must
first have attempted to resolve the dispute under Section 1 of this
Article XVIII. All claims, disputes, and other matters in question
arising out of or relating to this Agreement or the breach thereof,
shall be decided by arbitrators selected as hereinafter provided and
shall be conducted in accordance with the Commercial arbitration Rules
of the American Arbitration Association then obtaining, unless the
parties mutually agree otherwise. The resolution of such disputes
shall not delay Operator's or Owner's performance of their undisputed
obligations under the terms of this Agreement. The arbitration shall
be held in Newark, New Jersey and any arbitration demand must be filed
with the American Arbitration Association office located closest to
Newark, New Jersey. If the claim or

defense of either party is determined to be frivolous, the
arbitrators may require that the party at fault pay or reimburse
the other party for (i) fees and expenses, including, attorneys
and expert fees and expenses, and (ii) reasonable out of pocket
expenses incurred by the other party in connection with the
arbitration proceedings. Notwithstanding the foregoing, a
termination of the Agreement under the language of Article XII,
Section 1(e) shall not, under any circumstances (except for
disputes relating to the settlement of payment obligations), be
subject to arbitration under this Article XVIII.

3. Selection of Arbitrators. Each dispute shall be submitted to
three arbitrators, one arbitrator being selected by Owner, one
arbitrator being selected by Operator, and the third arbitrator
being selected by the two so selected. The party initiating the
arbitration shall include in its notification under subsection 4
below the designation of its selected arbitrator and the party
receiving such notification shall designate its arbitrator within
fifteen (15) days thereafter by notify the initiating party and
its arbitrator of the selection. If the arbitrators selected by
Owner and Operator cannot agree on a third arbitrator within
fifteen (15) days after the second arbitrator is selected, the
third arbitrator shall be selected by the American Arbitration
Association. In the event the party receiving notification of a
demand for arbitration shall not have selected its arbitrator and
given notice thereof to the other party and its arbitrator within
fifteen (15) days after receiving such notification, such
arbitrator shall be selected by the American Arbitration
Association.

4. Notice. Notice of demand for arbitration shall be filed in
writing with the other party to this Agreement and with the
American Arbitration Association. The demand shall be made within
a reasonable time after the claim, dispute or other matter in
question has arisen. In no event shall the demand for arbitration
be made after the date when the applicable statute of limitations
would bar institution of a legal or equitable proceeding based on
such claim, dispute, or other matter in question.

5. Award. This agreement to arbitrate shall be specifically
enforceable under the prevailing arbitration law. The award
rendered by the arbitrators shall be final and judgment may be
entered upon it in accordance with applicable law in any court
having jurisdiction thereof.

6. Survival. This Article shall survive termination of this
Agreement.

XIX. GENERAL PROVISIONS

1. Governing Law. This Agreement shall be governed by and construed
under the laws of New Jersey.

2. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

3. Headings. Title and headings of the Articles and Sections of this
Agreement are for convenience of reference only and do not form a
part of and shall not in any way affect the interpretation of this
Agreement.

4. Amendment. No modification or amendment of this Agreement shall
be valid unless in writing and executed by both parties to this
Agreement.

5. Assignment. This Agreement may not be assigned by Operator
without the written consent of Owner and written agreement of
assignee whereby it expressly assumes and agrees to perform each
and every obligation of Operator hereunder. Any assignment by

Operator in violation hereof shall be null and void. Owner may,
without the consent of Operator, assign its rights (but not its
obligations) under this Agreement to or by a lender (including
finance lessor) providing funds to refinance the System.

6. Successors and Assigns. This Agreement shall be binding and inure
to the benefit of the parties hereto and their respective
successors and assigns, to the extent that assignment is permitted
under this Agreement.

7. Entire Agreement. This Agreement constitutes the entire agreement
between the parties, supersedes all prior representations,
documents or statements transmitted between the parties.

8. Consequential Damages. In no event will Owner or Operator have
the right, with or without legal process, to recover punitive or
special damages, or indirect or consequential damages, such as
loss of use, lost profits, costs incurred because of delays, cost
of replacement energy, "idle plant" costs, interest on borrowed
money, letters of credit, security deposits or bonds. In no event
will Owner or Operator be liable for representations, oral or
otherwise, as to the results intended to be achieved through its
undertakings pursuant to this Agreement, except as specifically
provided in this Agreement.

9. Other Provisions. Nothing in this Agreement shall be construed to
prevent or prohibit Operator from providing operating services to
any other person, organization, or entity.

10. Waiver. The waiver of any breach of any term or condition hereof
shall not be deemed a waiver of any other or subsequent breach,
whether of like or different nature.

11. Not for Benefit of Third Parties. This Agreement and each and
every provision thereof is for the exclusive benefit of the
parties to this Agreement and not for the benefit of any third
party.

12. Survival of Representations, Warranties and Indemnities. All
representations, warranties and indemnities of the parties set
forth in this Agreement shall survive the termination or
expiration of this Agreement.

13. Approval by Proposed Lender. If any provision of this Agreement
must be approved by a lender, lessor or equity investor in
connection with the financing of the System or any other action
contemplated hereby, and such lender requires any modification of
the provisions of this Agreement, neither Owner nor Operator shall
unreasonably withhold its approval and execution of any such
modifications.

14. Survival of Obligations. Termination of this Agreement for any
reason shall not relieve Owner or Operator of any obligation
accruing or arising prior to such termination.

15. Confidentiality. The parties shall hold in confidence, and shall
use only for the purposes of this Agreement, any and all
Proprietary Information disclosed to each other.

16. Severability. Should any section or subsection hereof be declared
invalid or unenforceable for any reason, the remaining sections
and subsections of this Agreement shall remain in full force an
effect, and the parties hereto agree to immediately renegotiate in
good faith such section or subsection as was declared invalid or
unenforceable.

17. Duty to Mitigate. Each party must use its best efforts to
mitigate the injury or damage caused by the other party's failure to
perform. When a party seeking damages fails to

make these efforts, the other party shall be entitled to have the
damages accordingly reduced.

18. Consent. Except in the case of an Emergency, when either party's
consent or approval is required, such consent or approval must be
in writing and given prior to the act for which such consent or
approval is sought.

19. Reasonableness. Except as expressly stated to be within the sole
discretion of any party, all consents or approvals required of
either party shall not be unreasonably withheld or delayed, nor
shall any acts or requests of a party be unreasonable in light of
the surrounding facts and circumstances.

20. Disclaimer. THE WARRANTIES EXPRESSLY PROVIDED BY OPERATOR
HEREUNDER ARE THE SOLE, INTENDED WARRANTIES AND OPERATOR HEREBY
DISCLAIMS ALL OTHER WARRANTIES OF ANY KIND, WHETHER STATUTORY,
ORAL, WRITTEN, EXPRESS OR IMPLIED, INCLUDING ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, AND ALL WARRANTIES ARISING FROM COURSE OF DEALING OR
USAGE OF TRADE.

21. Limits on Liability. Notwithstanding any provision contained in
this Agreement to the contrary, for any Contract Year, Operator
shall not be liable to Owner (whether by contract, warranty, tort,
statute or otherwise, including Liquidated Damages or penalties
owed by Operator under this Agreement) for any amounts that in the
aggregate exceed the amount of the Operating Fee and Bonuses paid
for the Contract Year in which the claim is made. If a claim(s)
is made after the end of the term, then the claim(s) shall be
deemed to have been made in the last Contract Year of the term.
The limits of liability set forth herein shall not apply to any
damages incurred by a party as a result of its gross negligence or
willful misconduct.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first set forth above.

OWNER: OPERATOR:

NRG Generating (Newark) Power Operations, Cogeneration Inc.

By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇

Its: President Its:Secretary

EXHIBIT A

BONUS/LIQUIDATED DAMAGES

For the purpose of determining the liquidated damages ("Liquidated
Damages") payable by Operator, or the bonus ("Bonus") payable by Owner
to Operator, the effectiveness of Operator under this Agreement shall
be measured in terms of both availability and heat rate. These
measurements shall be applied at the completion of each Contract Year
to determine the Liquidated Damages or Bonus for that Contract Year.

Availability. Operator shall undertake to operate the System to
maximize availability. Availability will be measured for Base Capacity
level, as defined as 52 Mwe (net). In each case the following formula
will be used:

Contract Availability = [Total Hours - (Equivalent Contract Unavailable
Hours)]
Total Hours

where:

Total Hours = total hours in the Contract Year; and

Equivalent Contract Unavailable Hours = total of all hours during
the Contract Year during which there occurred a full or partial
Planned, Forced, or Maintenance Outage, as those terms are defined
by Edison Electric Institute as Equivalent Availability (including
outages resulting from Force Majeure events, but excluding outages
resulting from (x) JCP&L's failure to supply natural gas to the
Facility during periods when PSE&G has not interrupted
transportation that it supplies under the PSE&G Gas Supply
Agreement and (y) JCP&L's failure to accept available Output from
the Facility). Partial outages are measured on an equivalency
basis, e.g., a 50% outage for one hour would be equivalent to a
full outage for one-half hour, and so forth.

Availability. For purposes of Bonus/Liquidated Damages availability
calculation, the target Base availability will be 95%, for the term of
this Contract. Each one tenth of one percent (0.1%) of availability
will have a value of $20,000 as a Bonus or Liquidated Damages for
availability measurement.

Heat Rate. For purposes of Bonus/Liquidated Damages heat rate
calculations, the heat rate incentive will be based on 9750 Btu per kwh
HHV, as calculated in accordance with Article A.9 of the Amended Power
Purchase Agreement, for the term of this Contract.

LIQUIDATED DAMAGES AND BONUS

The Liquidated Damages payable by Operator to Owner and the Bonus
payable by Owner to Operator shall be based on the Availability and
Heat Rate guarantees set forth in this Exhibit. For any Contract Year,
the maximum Liquidated Damages (in the aggregate for each category as
adjusted by the amounts of any Bonus payable to Operator) payable by
Operator shall be no more than one hundred percent (100%) of the
Operator's Fee for such Contract Year. For any Contract Year, once
the aggregate Bonuses payable to Operator (adjusted for the Liquidated
Damages, if any, owed by Operator) equal $250,000, then any amounts in
excess of $250,000 shall be payable to Operator at a rate of 40% of
such excess. The availability and heat rate bonus/penalty
calculations will be calculated monthly and payable to the end of the
Contract Year as set forth in the Third Amendment to Power Purchase
Agreement.

EXHIBIT B
DESCRIPTION OF THE SYSTEM

NEWARK SYSTEM

The facility is a combustion gas turbine-steam turbine combined-cycle,
topping cycle cogeneration facility.

The nominal rating is 52 MW electrical with average thermal output of
45,000 lbs/hr steam. The prime movers of the plant is one General
Electric Frame 6 dual fuel combustion turbine, driving a 54,000 kVA
synchronous generator with electrical output PH, 60 Hz and 13.8 kV.

The exhaust from the Frame 6 turbine is directed into a three drum (tri-
pressure) heat recovery steam generator ("HRSG"). The HRSG at full
turbine load and 59F ambient temperature produces when fired with 94.0
million BtuHHV an hour of auxiliary filing, 227,000 lbs/hr of 600 psig,
700 F steam; 23,000 lbs/hr of 285 psig/500 F steam; and 12,300 lbs/hr
of 30 psig D&S steam.

The 600 psig steam is directed to the condensing extraction steam
turbine which drives a 22,000 kVa synchronous generator with an
electrical output of 3PH, 60 Hz and 13.8 kV.

The 165 psig steam extracted from the steam turbine is directed into a
header from which 45,000 lbs/hr is directed to process to dry
paperboard.

Thermal loads of the system vary seasonally +/- 5,000 lbs from an
average of 45,000 lbs/hr over the course of an 8760 hour year.

The plant will operate on natural gas under normal circumstances other
then interruptions due to curtailment of supply on extremely cold days.
Kerosene fuel is used as the alternate, approximately 480 hr/yr.
Output of the combustion turbine is controlled by sensing and
maintaining a constant optimum turbine exhaust temperature.

NOX emission from the plant are controlled by a combination of
steam injection into the combustion turbine and Selective Catalytic
Reduction using anhydrous ammonia injection with a semi-precious metal
catalyst in the HRSG. The plant is equipped with Continuous Emission
Monitoring equipment.

EXHIBIT C

SYSTEM CONTRACTS

NEWARK

Power Purchase Agreement dated 04/30/96
Transmission Service and
Interconnection Agreement dated 11/17/87
Gas Service Agreement dated 04/30/96
Steam Purchase Agreement dated 10/03/86
Amended 03/08 & 07/20/88

Permits

Air Permit/Certification (Rental Boiler Stack) issued 03/11/93
Sewer Connection Permit issued 09/17/95
NJPDES General Permit issued N/A
Air Permit/Certification (▇▇▇▇▇▇ Boiler Stack) issued 03/28/94
Air Permit/Certification (Fuel Oil Storage Tank)issued 08/13/90
Air Permit/Certification (Stack #1) issued 12/10/87
Stormwater Discharge Permit issued 10/15/93

EXHIBIT D

TERMINATION FOR CONVENIENCE

Commencing on the third anniversary of the Effective Date, the Owner
may terminate this agreement as set forth in Article XII. The
termination fee shall be $200,000 pro-rated based on the number of
calendar days remaining in the Agreement term as the numerator and 1096
calendar days as the denominator. The termination fee will be adjusted
accordingly for any pro-rated undisputed bonus/liquidated damage
payments due the Operator on the Termination Date.

EXHIBIT E

Outstanding obligations under existing O&M Agreement

EXHIBIT F
1997 Budget

SEE ATTACHED

Exhibit 10.25.1 NRG GENERATING (NEWARK) COGENERATION INC./ POWER OPERATIONS, INC. OPERATING AND MAINTENANCE AGREEMENT This System Operating and Maintenance Agreement ("Agreement") is made as of the 8th day of November 1996 between NRG Generating...

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