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

2. 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

3. 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

4. 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

5. 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 % % T-Bond Rate at Closing % % Contract Capacity MW MW Coverage Ratio
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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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 the PPA shall no longer apply