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Member has determined to utilize the CAPP aggregation method of electric energy procurement for meeting the electric energy needs of governmental facilities that are located within its deregulated jurisdictional boundaries, as provided in this Contract. CAPP has identified a source of Energy from selected units in the Big Brown generating station in Freestone County, Texas ("Big Brown Facility"), Martin Lake generating station located in Rusk County, Texas ("Martin Lake Faciliry"), and Oak Grove generating station located in Robertson County, Texas ("Oak Grove Facility") that are owned, respectively, by Big Brown Power Company, LLC, Luminant Generation Company LLC and Oak Grove Management Company, LLC (collectively, the "Facility Owners"), and that CAPP believes will assist Member in (i) mitigating potential price volatility of Energy, and (ii) accessing a wholesale power supply to meet the base load requirements of Member and Participating Members for twenty-four (24) years, commencing on January 1, 2009 at 12:00:00 a.m. CPT ("Service Commencement Date") and ending at one minute before 12:01 a.m. on January 1, 2033 unless the agreement for the procurement of such Energy is terminated sooner as therein provided ("Term"). The Big Brown Facility, Martin Lake Facility, and Oak Grove Facility are collectively called the "Facilities". CAPP has entered into a Power Purchase Agreement with the Facility Owners in substantially the form attached hereto as Exhibit "B" and incorporated by this reference herein for all purposes ("PPA"), pursuant to which PPA, CAPP will contract to obtain 150 megawatts of Contract Capacity ("Contract Capaciry") in the Facilities and access to wholesale power supplies to meet base load Energy needs of Member and Participating Members throughout the Term of the PPA. Certain obligations of the Facility Owners under the PPA have been partially guaranteed by Texas Competitive Electric Holdings Company, LLC ("TCEH") through execution of a Guaranty substantially in the form attached to the PPA, and TCEH and its subsidiaries have guaranteed the original leveraged buyout ("LBO") documents and the PPA is a secured obligation under such LBO documents and as such is subject to the guaranty provided therein. Member desires to acquire its Member Contract Energy Allocation in the Project from CAPP ("Member Capacity"). All Participating Members, including Member, have collectively contracted for and reserved the full Contract Capacity in the Facilities from CAPP. The PPA provides the terms for CAPP's purchase of all Contract Capacity from the Facility Owners for the benefit and on behalf of Member and Participating Members. As a result of negotiations with the Facility Owners it has been determined that substantial savings in energy costs based upon today's energy market and current forecasts of future market prices can be realized by purchasing capacity rights in the Facilities from the Facility Owners as provided in the PPA on or before the Service Commencement Date. 2 ~ Ot)t:f02i