DRAFT- April 3, 2001 Restructuring Proposal to Brazos Electric Power Cooperative, Inc. April 6, 2001 This Information is CONFIDENTIAL Per Section 5 of the Facilitation Agreement

Restructuring Concept DRAFT- April 3, 2001 Facility Acceptance and EWG Conversion Unit 1 of the Cleburne, TX facility meets all specifications set out under the current power purchase agreement (PPA) Unit 1 will be converted to an exempt wholesale generator (EWG) that provides service to Brazos under a modified PPA Capacity Payment Adjustments Annual capacity payments made by Brazos will be reduced to: (1) Resolve disputes relating to the interest rate adjustment (2) Resolve disputes pertaining to contract capacity units billed (3) Take into account O&M cost responsibilities assumed by Brazos (i.e., Alternative 2) Facility Operation and Maintenance Alternative 1 - Brazos will replace North American Energy Services Co. (NAESCo) as O&M service provider, retaining all benefits that would otherwise accrue to NAESCo through efficient operation of the facility Alternative 2 - Brazos will replace NAESCo as O&M service provider and will realize all efficiency gains stemming from: (1) EWG conversion (2) Other O&M cost reduction initiatives implemented by Brazos

Restructuring Concept DRAFT- April 3, 2001 Energy Payments Alternative 1 - Energy prices will be reset to reflect delivered gas costs and a sharing of heat rate benefits from the conversion of Unit 1 to EWG Alternative 2 - Energy payments made by Brazos will be replaced by the funding of all O&M costs by Brazos, including: (1) Payments to fuel service providers (2) Non-fuel O&M (3) Major maintenance costs Development Assets Brazos will acquire development assets that facilitate the development of Unit 2 (at Brazos’ sole discretion) at the Cleburne, TX site

Facility Acceptance and EWG Conversion DRAFT- April 3, 2001 The parties recognize that Unit 1 of the Cleburne, TX facility meets all technical specifications set out under the PPA, including (but not limited) with respect to: AGC Ramp rate Droop response The PPA will be modified to reflect the conversion of Unit 1 of the Cleburne, TX facility to EWG on a timeline that is agreed-to by the parties The conversion of Unit 1 is expected to result in a 3% heat rate efficiency gain Brazos will receive all distillation equipment upon conversion, and shall retain any economic benefit realized through the sale of these assets

Capacity Payment Adjustments DRAFT- April 3, 2001 Interest Rate Adjustment A modified interest rate adjustment will be used to determine the level of capacity revenue the partnership will receive for Baseload Capacity - Block 1 from the “Effective Date” forward The modified interest rate adjustment will be determined by using the calculation originally developed by the partnership with changes to the following key variables: Original Interpretation Settlement Interpretation Loan Balance Construction Loan Term Loan Index Rate 6.100% 6.100% T-Bond Rate at Closing 7.802% 7.802% Contract Capacity 240 MW 240 MW Coverage Ratio 1.25 1.00 The modified interest rate adjustment will be added to the capacity rates originally set out under Section 9.02(b) of the PPA, less the Apache demand charge rate adjustment, to determine a new $/kW-mo. rate The new $/kW-mo. rate will be applied to 240,000 kW to set a capacity “revenue target” for each year that will be used for purposes of designing new capacity rates for Baseload Capacity - Block 1

Capacity Payment Adjustments DRAFT- April 3, 2001 Capacity Units Billed Baseload Capacity - Block 1 (250 MW) The “revenue target” for each year (described on the previous slide) will be divided by 3,000,000 billing units (250,000 kW times 12 months) to determine the baseline capacity rate that will be in effect in each year from the Effective Date through 2019 for Baseload Capacity - Block 1 Beginning in 2020, the rate for Baseload Capacity - Block 1 (263,000 kW total) will be $1.00/kW-mo. The rate for Baseload Capacity - Block 1 will apply to 250,000 kW per month Baseload Capacity - Block 2 (Next 13 MW) A market-based rate of $5.47/kW-mo. will apply beginning on the Effective Date The rate for Baseload Capacity - Block 2 will escalate on January 1, 2002 and each January 1 thereafter through 2019 at the same rate of escalation implied by the capacity rates for Baseload Capacity - Block 1 Beginning in 2020, the rate for Baseload Capacity - Block 2 (263,000 kW total) will be $1.00/kW-mo. The rate for Baseload Capacity - Block 2 will apply to 13,000 kW per month As-Available Capacity (Next 17 MW) A market-based rate of $2.65/kW-mo. will apply beginning on the Effective Date The rate for As-Available Capacity will escalate on January 1, 2002 and each January 1 thereafter through 2019 at the same rate of escalation implied by the capacity rates for Baseload Capacity - Block 1 The rate for As-Available Capacity will apply to 17,000 kW per month

Capacity Payment Adjustments DRAFT- April 3, 2001 Other Terms and Conditions Brazos may elect, at any time during the primary term of the new PPA, to make “capacity prepayments” under the following terms: Capacity prepayments will be amortized over the remainder of the primary term of the new PPA at an APR agreed-to by the parties and set out under the new PPA Annual cost reductions attributable to capacity prepayments will be divided by 3,000,000 billing units (250,000 kW times 12 months) to determine the capacity rate adjustment that will be in effect in each calendar year from the effective date of the adjustment through 2019 Capacity rate adjustments attributable to capacity prepayments will be applied to 250,000 kW per month, the level of capacity billed as Baseload Capacity - Block 1 Brazos may elect, prior to the end of the primary term of the new PPA, to extinguish capacity payment obligations during the secondary term by paying a lump-sum amount equal to the present value of future capacity payments at an APR agreed-to by the parties One or more special purpose entity(ies) will be formed for purposes of collecting/administering Brazos’ capacity payment obligations Capacity payments will be firm and not subject to adjustment for (among other things) unit availability

Facility O&M/Energy Payments - Alternative 1 DRAFT- April 3, 2001 Brazos will step into the O&M contract between the partnership and NAESCo for purposes of operation and maintenance of the Cleburne, TX facility Brazos will pay all costs incurred, if any, to remove the O&M service provider from the site under the partnership’s agreement with NAESCo PPE/ENA will be responsible for all decisions with respect to ongoing relationships with Siemens-Westinghouse Power Company PPE/ENA will be responsible for all decisions with respect to the scheduling and timing of all outages for planned and unplanned maintenance Brazos will receive all incentives and profit margins paid NAESCo, which effectively serves to lower the overall cost of electricity delivered from the facility

Facility O&M/Energy Payments - Alternative 1 DRAFT- April 3, 2001 Energy From Baseload Capacity - Block 1 (Up to 250 MW) The energy rate through 2006 will be determined by multiplying (1) the average heat rate for the generation of energy from Baseload Capacity - Block 1 by (2) the delivered cost of gas associated with the generation of Baseload Capacity - Block 1, assuming a gas supply cost that is equal to 105% of the partnership’s cost of gas under its supply agreements with Apache & Williams Brazos will receive 50% of the benefit associated with the removal of water distillation equipment, or a 1.5% heat rate improvement over the status quo Beginning in 2007, energy pricing provisions of the PPA under Schedule 9.03 of the PPA shall apply with a 1.5% adjustment for heat rate improvement Energy From Baseload Capacity - Block 2 (Next 13 MW) The energy rate through 2019 will be determined by multiplying (1) the average heat rate for the generation of energy from Baseload Capacity - Block 2 by (2) the delivered cost of gas associated with the generation of Baseload Capacity - Block 2, assuming market cost of gas Energy From As-Available Capacity (Next 17 MW) The energy rate through 2019 will be determined by multiplying (1) the average heat rate for the generation of energy from As-Available Capacity by (2) the delivered cost of gas associated with the generation of As-Available Capacity assuming market cost of gas

Facility O&M/Energy Payments - Alternative 1 DRAFT- April 3, 2001 The pricing of gas sales to Brazos set out under Section 7.12 of the PPA remains unchanged (in effect continuing a sharing of “reverse toll” benefits associated with dynamic dispatch by Brazos through 2006) Heat rate degradation adjustments set out under Section 9.04(g) of the PPA shall continue to apply, as it is recognized that the near-term gas/power market warrant dynamic dispatch of the Cleburne, TX facility

Facility O&M/Energy Payments - Alternative 2 DRAFT- April 3, 2001 Brazos will replace NAESCo for purposes of operation and maintenance of the Cleburne, TX facility Brazos will pay all costs incurred, if any, to remove the O&M service provider from the site under the partnership’s agreement with NAESCo Brazos will be responsible for all decisions with respect to ongoing relationships with Siemens-Westinghouse Power Company Brazos will be responsible for all decisions with respect to the scheduling and timing of all outages for planned and unplanned maintenance In lieu of energy payments, Brazos will assume all O&M cost responsibility, including the funding of fuel costs, labor, general and administrative, insurance, and other non-fuel O&M (including major maintenance) and stands to benefit from all gains realized through efficient operation of the Cleburne, TX facility An O&M adjustment shall further reduce the rate for Baseload Capacity - Block 1, reflecting avoided costs to the partnership in conjunction with O&M cost responsibility assumed by Brazos

Development Assets DRAFT- April 3, 2001 Brazos purchases Cleburne, TX development assets for $15.0 MM Brazos will realize the economic benefits of any efficiencies stemming from the development of Unit 2 at the Cleburne, TX site

Other Matters DRAFT- April 3, 2001 Brazos agrees not to pursue legal claims against Tenaska IV Texas Partners, Ltd. and its current and previous affiliates and owners Restrictions as to assignment of interests under Section 14.02 the PPA shall no longer apply