Interconnection Agreement

Interconnection Agmt. INT01-130A

INTERCONNECTION AGREEMENT

This Interconnection Agreement (“Agreement”) is made and entered into this 4th day of May, 2001, by TXU ELECTRIC COMPANY (“TXU ELECTRIC”), a Texas corporation, and RELIANT ENERGY HL&P, a Division of Reliant Energy, Inc., a Texas corporation, each hereinafter sometimes referred to individually as “Party” or both referred to collectively as the “Parties”. In consideration of the mutual covenants set forth herein, the Parties agree as follows:

1. Establishment of Points of Interconnection -- TXU ELECTRIC and RELIANT ENERGY HL&P agree to interconnect their facilities at the locations, and in accordance with the terms and conditions, specified in Exhibit A hereto and the attached Facility Schedules (the “Points of Interconnection”). The responsibilities of the Parties for the costs associated with the establishment of each such Point of Interconnection shall be as specified on the Facility Schedule applicable to the Point of Interconnection.

2. Construction, Operation and Maintenance of Facilities, and Protective Devices -- Each Party will, at its own cost and expense, construct, operate, maintain, repair, test and inspect, and shall be fully responsible for liabilities related to, the transmission and distribution lines and related facilities which it now or hereafter may own located at or connected to each Point of Interconnection, unless otherwise specified in the applicable Facility Schedule. The Parties agree to construct, operate and maintain their systems, including metering, telemetry, and communications facilities, in accordance with Good Utility Practice, the National Electrical Safety Code, applicable provisions of the ERCOT Operating Guides, Protocols, and procedures, applicable PUCT Substantive Rules or their successors in function, and all applicable laws and regulations. “Good Utility Practice” shall have the meaning as ascribed thereto in Public Utility Commission of Texas (“PUCT”) Substantive Rule 25.5(31), or its successor in function. 2.1 Timing and Notice of Maintenance -- Subject to any necessary ERCOT approval, each Party shall provide necessary equipment outages to allow the other Party to perform periodic maintenance, repair, or replacement of its facilities. Maintenance by either Party that will cause a deviation from normal power and energy flow at a Point of Interconnection will be scheduled with ERCOT approval, at a mutually agreeable time, unless conditions exist which a Party believes, in accordance with Good Utility Practice, may endanger persons or property. 2.2 Testing -- All testing of the Parties’ facilities that affects the operation of the Point of Interconnection shall be coordinated between the Parties. Clearances, switching, and tagging shall be scheduled and coordinated as mutually agreed to by the Parties’ respective system operators, in accordance with Good Utility Practice. 2.3 Changes in Design, Construction, or Operation -- No changes will be made in the design, construction, or normal operation of a Point of Interconnection without the mutual agreement of the Parties, except as otherwise provided herein or in TXU ELECTRIC’s Tariff for Transmission Service or RELIANT ENERGY HL&P’s Tariff for Transmission Service. 2.4 Protective Device Coordination -- Each Party will coordinate the protective devices of the lines and facilities it owns and operates that are interconnected with its system with the protective devices of the other Party’s system. 2.5 Data Requirements -- Each Party shall furnish to the other Party appropriate and reasonable real-time data for each Point of Interconnection for operational or other purposes consistent with Good Utility Practice.

3. System Operations -- Each Party covenants and agrees to design, install, maintain, and operate, or cause the design, installation, maintenance, and operation of its transmission and distribution system and related facilities so as to reasonably minimize the likelihood of a disturbance, originating in the system of one Party, affecting or impairing the system of the other Party, or other systems with which the Party is interconnected.

4. Interconnection or Parallel Operations -- Interconnection and parallel operations at each Point of Interconnection shall be as specified on the applicable Facility Schedule.

5. Term, Termination, and Regulatory Filing -- This Agreement becomes effective on the date of execution by both Parties and will remain in effect until terminated in writing by the mutual agreement of both

1 Parties. After execution by both Parties, the Parties will file this Agreement with the PUCT, as required by PUCT Substantive Rule 25.195(g), or its successor in function.

6. Other Services -- This Agreement is applicable only to the interconnection of the facilities of the Parties at the Points of Interconnection and does not obligate either Party to provide, or entitle either Party to receive, any service not expressly provided for herein. Each Party is responsible for making the arrangements necessary to receive any other service that it may desire from the other Party or any third party.

7. Service Regulations -- This Agreement and the Parties’ obligations hereunder are subject to the Service Regulations of TXU ELECTRIC’s Tariff for Transmission Service and RELIANT ENERGY HL&P’s tariff for transmission service, as they may from time to time be fixed and approved by the PUCT.

8. Governing Law and Regulatory Authority -- This Agreement was executed in the State of Texas and must in all respects be governed by, interpreted, construed, and enforced in accordance with the laws thereof. This Agreement is subject to all valid, applicable federal, state, and local laws, ordinances, and rules and regulations of duly constituted regulatory authorities having jurisdiction.

9. Amendment -- This Agreement may be amended only upon mutual agreement of the Parties, which amendment will not be effective until reduced to writing and executed by the Parties.

10. Entirety of Agreement and Prior Agreements Superseded -- This Agreement, including all attached Exhibits and Facility Schedules, which are expressly made a part hereof for all purposes, constitutes the entire agreement and understanding between the Parties with regard to the interconnection of the facilities of the Parties at the Point(s) of Interconnection expressly provided for in this Agreement. The Parties are not bound by or liable for any statement, representation, promise, inducement, understanding, or undertaking of any kind or nature (whether written or oral) with regard to the subject matter hereof not set forth or provided for herein. This agreement replaces all prior agreements and undertakings, oral or written, between the Parties with regard to the subject matter hereof, and all such agreements and undertakings are agreed by the Parties to no longer be of any force or effect. It is expressly acknowledged that the Parties may have other agreements covering other services not expressly provided for herein, which agreements are unaffected by this Agreement.

11. Notices -- Notices given under this Agreement are deemed to have been duly delivered if hand delivered or sent by United States certified mail, return receipt requested, postage prepaid, to:

(a) If to TXU ELECTRIC:

Attn: Jeffrey B. Herring Transmission Services Manager Energy Plaza 1601 Bryan Street, 19th Floor Dallas, Texas 75201- 3402

(b) If to RELIANT ENERGY HL&P:

Attn: Manager, Transmission Market Operations P.O. Box 1700 Houston, Texas 77251-1700

The above-listed names, titles, and addresses of either Party may be changed by written notification to the other.

2 12. Invoicing and Payment -- Invoices for sums due hereunder will be rendered monthly by each Party to the other at the following address (or such other address directed in writing by either Party):

(a) If to TXU ELECTRIC:

Attn: Jeffrey B. Herring Transmission Services Manager Energy Plaza 1601 Bryan Street, 19th Floor Dallas, Texas 75201- 3402

(b) If to RELIANT ENERGY HL&P:

Attn: Manager, Transmission Market Operations P.O. Box 1700 Houston, Texas 77251-1700

Parties must receive payment by the 20th calendar day after the date of issuance of the bill, unless the Parties agree on another mutually acceptable deadline, in accordance with PUCT Substantive Rule 25.202(a)(1), or its successor in function. Interest will accrue on any unpaid amount, calculated in accordance with PUCT Substantive Rule 25.202(a)(2), or its successor in function. When payments are made by mail, bills are considered as having been paid on the date of receipt by the Party. Payments by RELIANT ENERGY HL&P to TXU ELECTRIC under this Agreement must be made in immediately available funds payable to TXU ELECTRIC or by wire transfer to Bank of America, Dallas, ABA No. 111000025, for credit to TXU ELECTRIC Account No. 1254814525 with sufficient information to identify the source and application of the funds, or to such other bank account so directed in writing by TXU ELECTRIC. Payments by TXU ELECTRIC to RELIANT ENERGY HL&P under this Agreement must be made in immediately available funds payable to RELIANT ENERGY HL&P or by wire transfer to Chase Bank of Texas, Houston, Texas, ABA No. 113000609, for credit to RELIANT ENERGY HL&P Account No. 0010-097- 0798 with sufficient information to identify the source and application of the funds, or to such other bank account so directed in writing by RELIANT ENERGY HL&P.

13. No Third-Party Beneficiaries -- This Agreement is not intended to and does not create rights, remedies, or benefits of any character whatsoever in favor of any persons, corporations, associations, or entities other than the Parties, and the obligations herein assumed are solely for the use and benefit of the Parties, their successors in interest and, where permitted, their assigns.

14. No Waiver -- The failure of a Party to this Agreement to insist, on any occasion, upon strict performance of any provision of this Agreement will not be considered to waive the obligations, rights, or duties imposed upon the Parties.

15. Taxes -- All present or future federal, state, municipal, or other lawful taxes (other than federal income taxes) applicable by reason of any service performed by TXU ELECTRIC, or any compensation paid to TXU ELECTRIC, hereunder must be paid by RELIANT ENERGY HL&P. All present or future federal, state, municipal, or other lawful taxes (other than federal income taxes) applicable by reason of any service performed by RELIANT ENERGY HL&P, or any compensation paid to RELIANT ENERGY HL&P, hereunder must be paid by TXU ELECTRIC.

16. Headings -- The descriptive headings of the various articles and sections of this Agreement have been inserted for convenience of reference only and are to be afforded no significance in the interpretation or construction of this Agreement.

17. Multiple Counterparts -- This Agreement may be executed in two or more counterparts, each of which is deemed an original but all constitute one and the same instrument.

5 EXHIBIT A

LIST OF FACILITY SCHEDULES AND POINTS OF INTERCONNECTION

Facility Schedule No. Name of Point of Interconnection

1 Limestone-Watermill 345 kV Interconnection

6 FACILITY SCHEDULE NO. 1

1) Name of Point of Interconnection: Limestone-Watermill 345 kV Interconnection 2) Point of Interconnection location: RELIANT ENERGY HL&P’s Limestone Substation, Limestone County, Texas. a) The Point of Interconnection location is defined as the physical junctions between TXU ELECTRIC’s Limestone-Watermill double-circuit 345 kV transmission line (“Transmission Line”) circuit conductor connectors and RELIANT ENERGY HL&P’s 345 kV jumpers located on RELIANT ENERGY HL&P’s Limestone Substation deadend structure. b) TXU ELECTRIC’s interconnecting transmission circuits are designated as “345KV CKT. 75 TO TXU- WATERMILL” and “345KV CKT. 99 TO TXU-WATERMILL” on the attached “LIMESTONE SUBSTATION 345KV BASIC ONE LINE DIAGRAM”. 3) Interconnection Voltage: 345 kV 4) Metering, Telemetry and Communications: a) Except as otherwise specified herein, RELIANT ENERGY HL&P will design, procure, install, own, operate, test, calibrate and maintain the metering, telemetry, and communications equipment for the Point of Interconnection, including the meters, panels, remote terminal unit (“RTU”), current transformers, potential transformers, hardware, conduit, cable and any other associated equipment. Any changes to the metering, telemetry, or communications equipment, which will affect the data being received by the Parties must be mutually agreed to by the Parties. Each Party will promptly advise the other Party if it detects or otherwise learns of any metering, telemetry, communications equipment or situation that requires attention and/or correction by the other Party. b) For the period of time beginning when the Point of Interconnection is placed into service until ERCOT transitions to a single control area, the metering, telemetry, and communications provisions contained in the attached Supplemental Terms and Conditions to Facility Schedule No. 1 shall apply to the Point of Interconnection. The Parties hereby agree that upon ERCOT’s transition to a single control area the attached Supplemental Terms and Conditions to Facility Schedule No. 1 will no longer apply to the Point of Interconnection and shall automatically be deleted from this Agreement. c) RELIANT ENERGY HL&P will install and make available to TXU ELECTRIC two communication ports with TXU ELECTRIC’s protocol in RELIANT ENERGY HL&P’s Limestone Substation SCADA RTU and TXU ELECTRIC will install and make available to RELIANT ENERGY HL&P one communication port with RELIANT ENERGY HL&P’s protocol in TXU ELECTRIC’s Watermill Substation SCADA RTU. RELIANT ENERGY HL&P and TXU ELECTRIC will each make available to the other at its SCADA RTU all data monitored by such RTU, including, but not limited to, all power and energy flows, breaker and switch status, currents, and voltages.

5) Normally Closed (check one): X yes; no

1 6) One line diagram attached (check one): X yes; no 7) Facilities to be furnished by RELIANT ENERGY HL&P: RELIANT ENERGY HL&P, at RELIANT ENERGY HL&P’s expense, will design, purchase, construct, install, set, own, operate, maintain, and control all necessary and desirable substation improvements to the RELIANT ENERGY HL&P Limestone Substation required to establish the Point of Interconnection including, but not limited to, the following: a) 345 kV circuit breaker additions; b) 345 kV current transformers and potential transformers for interconnect metering and protective relaying; c) primary and backup electronic kWH interconnect meters with “dial-up” capability; d) multi-ported SCADA RTU (Systems Northwest 8600), including modems, with RELIANT ENERGY HL&P and TXU ELECTRIC protocols; e) telemetry equipment including communication channel to RELIANT ENERGY HL&P control center; f) directional comparison blocking primary relaying scheme for use with a power line carrier communications channel for the Transmission Line utilizing zero sequence voltage polarized ground overcurrent relaying; g) “ ON-OFF” power line carrier communications channel equipment including phase-to-ground coupling (RELIANT ENERGY HL&P “C” phase) with automatic check-back system; h) non-pilot phase and ground fault backup relaying scheme for the Transmission Line; i) incorporate breaker failure relay for added breaker into existing local breaker failure relaying scheme; j) multi-shot reclosing relaying scheme for the Transmission Line with Live Bus/Dead Line and Live Bus/Live Line control utilizing synchronism check supervision; k) separately protected DC branch circuits to supply the primary and backup relaying for the Transmission Line; l) dead-end structures; and m) dual channel transfer trip/transmitter equipment. 8) Facilities to be furnished by TXU ELECTRIC: a) TXU Electric, at its own expense, will design, purchase, construct, install, set, own, operate, maintain, and control the Transmission Line. TXU ELECTRIC will provide line termination fittings to and including four hole NEMA pads to connect RELIANT ENERGY HL&P’s jumpers to the Transmission Line at RELIANT ENERGY HL&P’s Limestone Substation. b) TXU ELECTRIC, at its own expense, will design, purchase, construct, install, set, own, operate, maintain, and control necessary and desirable substation improvements to TXU ELECTRIC’s Watermill Substation required to establish the Limestone-Watermill Interconnection, including but not limited to: (1) 345 kV circuit breaker additions; (2) multi-ported SCADA RTU, including modems, with RELIANT ENERGY HL&P and TXU ELECTRIC protocols;

(3) directional comparison blocking primary relaying for use with power line carrier communications channels for the circuits to RELIANT ENERGY HL&P’s Limestone Substation utilizing zero

2 sequence voltage polarized ground overcurrent relaying; (4) “ ON-OFF” power line carrier communications channel equipment (phase-to-ground coupling, RELIANT ENERGY HL&P’s “C” phase); (5) non-pilot phase and ground fault backup relaying for the circuits to RELIANT ENERGY HL&P’s Limestone Substation; (6) multi-shot reclosing relaying for the circuits to RELIANT ENERGY HL&P’s Limestone Substation; (7) separately protected DC branch circuits to supply the primary and backup relaying for the circuits to RELIANT ENERGY HL&P’s Limestone Substation; and (8) dual channel transfer trip/receiver equipment 9. Cost Responsibility: The Parties hereby agree that all work performed by RELIANT ENERGY HL&P and all equipment purchased by RELIANT ENERGY HL&P in establishing the Point of Interconnection shall be at RELIANT ENERGY HL&P’s expense and all work performed by TXU ELECTRIC and all equipment purchased by TXU ELECTRIC in establishing the Point of Interconnection shall be at TXU ELECTRIC’s expense. RELIANT ENERGY HL&P shall be responsible for the design, purchase, lease, installation, operation, and maintenance of the equipment and circuits carrying telemetry data from the RELIANT ENERGY HL&P RTU to RELIANT ENERGY HL&P’s control center(s). TXU ELECTRIC shall be responsible for the design, purchase, lease, installation, operation, and maintenance of the equipment and circuits carrying telemetry data from the RELIANT ENERGY HL&P RTU to TXU ELECTRIC’s control center(s). It is the specific intent of the Parties that neither Party shall be responsible for any expense or work performed by the other Party. 10. Control Area Interchange Point (check one): X yes; ______no: The Point of Interconnection will be a control area interchange point until ERCOT transitions to a single control area. 11. Supplemental Terms and Conditions attached (check one): X yes; ______no

3 4 SUPPLEMENTAL TERMS AND CONDITIONS TO FACILITY SCHEDULE NO. 1

The following Supplemental Terms and Conditions to Facility Schedule No. 1 are applicable only for the time period beginning when the Point of Interconnection is placed into service until ERCOT transitions to a single control area, at which time these Supplemental Terms and Conditions will no longer be in force.

TXU ELECTRIC and RELIANT ENERGY HL&P will control to the real-time analog MW power flow values metered at the Point of Interconnection. These real-time power flow values will be received at the Parties’ system control centers from a common RTU. The RTU equipment will provide both accumulator energy measurements and real-time power flow values. To receive real-time telemetered MW and MVAR power flow values, both RELIANT ENERGY HL&P and TXU ELECTRIC will poll the RTU every 2-4 seconds (on a nominal basis), or such other scanning interval as mutually agreed.

METERING

Metering at the Point of Interconnection will be accomplished in accordance with the ERCOT Operating Guides. Power and energy will be measured using primary meter and back-up meters equipped with pulse and analog outputs. The interchange meters shall be identical with common multipliers and scalers. The primary meters shall be Scientific Columbus, Inc. JEM I, JEM II, or equivalent, bi-directional, 3-phase, 3-element, 4-wire meters.

The interchange meters shall be equipped with pulse outputs for transmitting metered MWH and MVARH values and analog outputs for transmitting metered MW and MVAR values. The outputs of these meters will provide inputs to the RTU. The back-up meter will verify the accuracy of the primary meter, monitor power and energy flow during primary meter tests, and replace the primary meter, if necessary.

The meters shall be capable of displaying real-time interchange metering values. Interchange meter registers shall maintain i) MWH delivered, ii) MWH received, iii) MVARH delivered, and iv) MVARH received. Interrogation of the interchange meters shall not clear, reset, or in any way affect any registers which are transmitted during interrogation.

ACCOUNTING

If available, analog MW and MVAR flows, accumulator MWH and MVARH measurement, and interconnection switching device status, including circuit breakers and switches, and bus voltage will be supplied to both Parties from the RTU equipment.

Each hour, RELIANT ENERGY HL&P will compare the integrated MWH interchange energy measurement against the MWH accumulator energy measurement received from the RTU .

Each hour, RELIANT ENERGY HL&P will transmit its MWH accumulator energy measurements to TXU ELECTRIC to verify that both Parties are using the same values. In the event that either Party discovers a significant discrepancy in the values, RELIANT ENERGY HL&P will promptly make an investigation to determine the cause and the Parties will use their best efforts to take corrective action as quickly as is reasonably possible.

In the event that either Party discovers an equipment malfunction or failure, such Party will promptly notify the other Party, and the control area operators will manually enter mutually agreed upon values in their respective control systems until such equipment malfunction or failure is corrected by the Party responsible for the equipment.

Each week, or such other time period as otherwise agreed to by the Parties, RELIANT ENERGY HL&P shall, at its discretion, perform an onsite or remotely interrogated MWH reading of the interchange meters . Any differences between the logged hourly values and weekly readings shall be reconciled by the Parties at least once per month. Any discrepancy in the amount of energy interchanged at the Point of Interconnection shall be resolved in accordance with the Interchange Energy Accounting procedures contained in the ERCOT Operating Guides.

1 RELIANT ENERGY HL&P shall maintain log sheets, metering records, telemetry records, and any other information as may be needed to afford a record of movement of the power and energy between the control areas. RELIANT ENERGY HL&P will maintain and make available to TXU ELECTRIC upon request the following information: (a) hourly MWH accumulator energy measurements, (b) weekly MWH accumulator energy measurements, (c) weekly metered MWH energy measurements from on-site or remote meter readings, and (d) hourly MVAR measurements. RELIANT ENERGY HL&P shall not be required to maintain such information for a period longer than 18 months. All records shall be kept in accordance with normal accounting procedures and will be open to inspection by TXU ELECTRIC during normal business hours.

Each Party shall furnish to the other Party appropriate and reasonable data from the records to be maintained hereunder when such data is needed for settlement, operations, maintenance, tests, calibrations, or other purposes consistent with the Interconnection Agreement. Each Party shall be responsive in furnishing the requested data, which response shall not exceed seven (7) working days, unless otherwise agreed to by the Parties. RELIANT ENERGY HL&P shall be responsible for all applicable ERCOT reporting requirements associated with the Point of Interconnection.

TELEMETRY

Inter-control area telemetry shall be accomplished in accordance with the ERCOT Operating Guides. RELIANT ENERGY HL&P will install multi-ported RTU equipment powered from a DC source to monitor power and energy flows, device status, and (when available)bus voltage , and will transmit such data to TXU ELECTRIC’s and RELIANT ENERGY HL&P’s control centers. The DC source will be sized to maintain all necessary RTU equipment. All RTU equipment will be connected to a common set of instrument current transformers and instrument potential transformers.

RELIANT ENERGY HL&P will provide two RTU communication ports for TXU ELECTRIC and one RTU communication port for RELIANT ENERGY HL&P. Each communication port will be polled by the Parties via separate communication circuits. All communication ports shall be compatible with the protocol of the master stations from which they are polled. For TXU ELECTRIC the protocol will be VanCom/Alert, or as otherwise designated by TXU ELECTRIC. For RELIANT ENERGY HL&P the protocol will be as designated by RELIANT ENERGY HL&P.

COMMUNICATIONS

Inter-control area communications will be accomplished in accordance with the ERCOT Operating Guides.

Each Party will provide a four-wire Bell Standard Type 420, or equivalent data circuit for each RTU communication port that it uses. Each Party will pay the maintenance and monthly charges of all leased data circuits it uses.

The communications equipment shall be powered from a DC battery source and the source shall be sized to maintain all necessary communications equipment.

CURRENT TRANSFORMERS AND POTENTIAL TRANSFORMERS

Current transformers and potential transformers shall meet the accuracy rating/class specified in the ERCOT Operating Guides.

ACCEPTANCE TESTS

Prior to the implementation of the inter-control area metering for the Point of Interconnection, acceptance tests will be performed by TXU ELECTRIC and RELIANT ENERGY HL&P to ensure the proper functioning of all inter- control area metering, telemetry, and communications, equipment, and to verify the accuracy of data being received at each Party’s system control center. All acceptance tests will be performed by TXU ELECTRIC and RELIANT ENERGY HL&P consistent with standard ERCOT procedures.

2 METER TESTING

RELIANT ENERGY HL&P will test and calibrate the interchange meters annually and will record such tests on standard ERCOT forms and will notify TXU ELECTRIC at least 5 working days in advance of any planned testing or calibration of such metering equipment. TXU ELECTRIC shall have the right to be present and to receive copies of any documents related to the tests.