UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2007

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Mirant Americas Generation, LLC

(Exact name of registrant as specified in its charter)

Delaware	N/A	51-0390520
(State or other jurisdiction of Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)
1155 Perimeter Center West, Suite 100, Atlanta, Georgia		30338
(Address of Principal Executive Offices)		(Zip Code)
(678) 579-5000
(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. o Large Accelerated Filer o Accelerated Filer x Non-accelerated Filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes x No

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. x Yes o No

All of our outstanding membership interests are held by our parent, Mirant Americas, Inc., so we have no membership interests held by nonaffiliates.

TABLE OF CONTENTS

		Page
	Glossary of Certain Defined Terms		i-iii
	Cautionary Statement Regarding Forward-Looking Information		3
	PART I—FINANCIAL INFORMATION
Item 1.	Interim Financial Statements (unaudited):
	Condensed Consolidated Statements of Operations		5
	Condensed Consolidated Balance Sheets		6
	Condensed Consolidated Statements of Member’s Equity		7
	Condensed Consolidated Statements of Cash Flows		8
	Notes to Condensed Consolidated Financial Statements		9
Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition		33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		47
Item 4.	Controls and Procedures		48
	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings		49
Item 1A.	Risk Factors		54
Item 6.	Exhibits		55

Glossary of Certain Defined Terms

ACO— Administrative Compliance Order.

APB— Accounting Principles Board.

APB No. 22— APB Opinion No. 22, Disclosure of Accounting Policies .

APSA— Asset Purchase and Sale Agreement.

Back-to-Back Agreement— Contractual agreement with Pepco with respect to certain PPAs.

Bankruptcy Code— United States Bankruptcy Code.

Bankruptcy Court— United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division.

Baseload Generating Units— Units that satisfy minimum baseload requirements of the system and produce electricity at an essentially constant rate and run continuously.

CAISO— California Independent System Operator.

Cal PX— California Power Exchange.

CFTC— Commodity Futures Trading Commission.

Clean Air Act— Federal Clean Air Act.

Clean Water Act— Federal Water Pollution Control Act.

CO— Carbon monoxide.

Company— Mirant Americas Generation, LLC and its subsidiaries.

CPUC— California Public Utilities Commission.

DOE— Department of Energy.

DOJ— Department of Justice.

DWR— California Department of Water Resources.

EBITDA— Earnings before interest, taxes, depreciation and amortization.

EITF— The Emerging Issues Task Force formed by the Financial Accounting Standards Board.

EITF 02-3— EITF Issue No. 02-3, Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities .

EITF 06-3— EITF Issue No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation) .

EOB— California Electricity Oversight Board.

EPA— Environmental Protection Agency.

FASB— Financial Accounting Standards Board.

FCM— Forward capacity market.

FERC— Federal Energy Regulatory Commission.

FIN— FASB Interpretation.

FIN 48— FIN No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109.

GAAP— Generally accepted accounting principles in the United States.

Gross Margin— Operating revenue less cost of fuel, electricity and other products.

Hudson Valley Gas— Hudson Valley Gas Corporation.

Intermediate Generating Units— Units that meet system requirements that are greater than baseload and less than peaking.

ISO— Independent System Operator.

LIBOR— London InterBank Offered Rate.

MAAC— Mid-Atlantic Area Council.

MDE— Maryland Department of the Environment.

Mirant— Old Mirant prior to January 3, 2006, and New Mirant on or after January 3, 2006.

Mirant Americas— Mirant Americas, Inc.

Mirant Americas Energy Marketing— Mirant Americas Energy Marketing, LP.

Mirant Americas Generation— Mirant Americas Generation, LLC.

Mirant Bowline— Mirant Bowline, LLC.

Mirant Chalk Point— Mirant Chalk Point, LLC.

Mirant Energy Trading— Mirant Energy Trading, LLC.

Mirant Kendall— Mirant Kendall, LLC.

Mirant Las Vegas— Mirant Las Vegas, LLC.

Mirant Lovett— Mirant Lovett, LLC.

Mirant Mid-Atlantic— Mirant Mid-Atlantic, LLC.

Mirant New York— Mirant New York, LLC (formerly, Mirant New York, Inc.).

Mirant North America— Mirant North America, LLC and its subsidiaries.

Mirant NY-Gen— Mirant NY-Gen, LLC.

Mirant Potomac River— Mirant Potomac River, LLC.

Mirant Power Purchase— Mirant Power Purchase, LLC.

Mirant Services— Mirant Services, LLC.

Mirant Sugar Creek— Mirant Sugar Creek, LLC.

Mirant West Georgia— Mirant West Georgia, LLC.

Mirant Wichita Falls— Mirant Wichita Falls, LLC.

MW— Megawatt.

MWh— Megawatt hour.

NAAQS— National ambient air quality standards.

New Mirant— Mirant Corporation on or after January 3, 2006.

NO2— Nitrogen dioxide.

NOL— Net operating loss.

NOV— Notice of violation.

NOx— Nitrogen oxides.

NSR— New source review.

NYISO— Independent System Operator of New York.

NYSDEC— New York State Department of Environmental Conservation.

Old Mirant— MC 2005, LLC, known as Mirant Corporation prior to January 3, 2006.

Orange and Rockland— Orange and Rockland Utilities, Inc.

Panda— Panda-Brandywine, LP.

Peaking Generating Units— Units used to meet demand requirements during the periods of greatest or peak load on the system.

Pepco— Potomac Electric Power Company.

PG&E— Pacific Gas & Electric Company.

PJM— Pennsylvania-New Jersey-Maryland Interconnection, LLC.

Plan— Plan of Reorganization effective on January 3, 2006, for Mirant and most of its subsidiaries that were debtors in the bankruptcy proceedings.

PM10— Particulate matter that is 10 microns or less in size.

PPA— Power purchase agreement.

Reserve Margin— Excess capacity over peak demand.

RMR— Reliability-must-run.

RPM— Reliability Pricing Model.

RTO— Regional transmission organization.

SCE— Southern California Edison Company.

SEC— U.S. Securities and Exchange Commission.

Securities Act— The Securities Act of 1933.

SFAS— Statement of Financial Accounting Standards.

SFAS No. 5— SFAS No. 5, Accounting for Contingencies .

SFAS No. 109— SFAS No. 109, Accounting for Income Taxes .

SFAS No. 144— SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets .

SFAS No. 155— SFAS No. 155, Accounting for Certain Hybrid Financial Instruments—an amendment of FASB Statements No. 133 and 140 .

SFAS No. 157— SFAS No. 157, Fair Value Measurements.

SFAS No. 159— SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No 115 .

Shady Hills— Shady Hills Power Company, L.L.C.

SO2— Sulfur dioxide.

SPDES— State Pollutant Discharge Elimination System.

Virginia DEQ— Virginia Department of Environmental Quality.

iii

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

The information presented in this Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, in addition to historical information. These statements involve known and unknown risks and uncertainties and relate to future events, our future financial performance or our projected business results. In some cases, one can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “estimate,” “predict,” “target,” “potential” or “continue” or the negative of these terms or other comparable terminology.

Forward-looking statements are only predictions. Actual events or results may differ materially from any forward-looking statement as a result of various factors, which include:

· legislative and regulatory initiatives regarding deregulation, regulation or restructuring of the industry of generating, transmitting and distributing electricity; changes in state, federal and other regulations (including rate and other regulations); changes in, or changes in the application of, environmental and other laws and regulations to which we and our subsidiaries and affiliates are or could become subject;

· failure of our assets to perform as expected, including outages for unscheduled maintenance or repair;

· changes in market conditions, including developments in the supply, demand, volume and pricing of electricity and other commodities in the energy markets, or the extent and timing of the entry of additional competition in our markets or those of our subsidiaries and affiliates;

· increased margin requirements, market volatility or other market conditions that could increase our obligations to post collateral beyond amounts that are expected;

· our inability to access effectively the over-the-counter and exchange-based commodity markets or changes in commodity market liquidity or other commodity market conditions, which may affect our ability to engage in asset management and proprietary trading activities as expected, or result in material extraordinary gains or losses from open positions in fuel oil or other commodities;

· deterioration in the financial condition of our counterparties and the resulting failure to pay amounts owed to us or to perform obligations or services due to us beyond collateral posted;

· hazards customary to the power generation industry and the possibility that we may not have adequate insurance to cover losses as a result of such hazards;

· price mitigation strategies employed by ISOs or RTOs that reduce our revenue and may result in a failure to compensate our generation units adequately for all of their costs;

· volatility in our gross margin as a result of our accounting for derivative financial instruments used in our asset management activities and volatility in our cash flow from operations resulting from working capital requirements, including collateral, to support our asset management and proprietary trading activities;

· our inability to enter into intermediate and long-term contracts to sell power and procure fuel, including its transportation, on terms and prices acceptable to us;

· the inability of our operating subsidiaries to generate sufficient cash flow to support our operations;

· our ability to borrow additional funds and access capital markets;

· strikes, union activity or labor unrest;

· weather and other natural phenomena, including hurricanes and earthquakes;

· the cost and availability of emissions allowances;

· our ability to obtain adequate supply and delivery of fuel for our facilities;

· curtailment of operations due to transmission constraints;

· environmental regulations that restrict our ability or render it uneconomic to operate our business, including regulations related to the emission of carbon dioxide and other greenhouse gases;

· our inability to complete construction of emissions reduction equipment by January 2010 to meet the requirements of the Maryland Healthy Air Act, which may result in reduced unit operations and reduced cash flows and revenues from operations;

· war, terrorist activities or the occurrence of a catastrophic loss;

· the fact that our Mirant Lovett subsidiary remains in bankruptcy;

· our substantial consolidated indebtedness and the possibility that we or our subsidiaries may incur additional indebtedness in the future;

· restrictions on the ability of our subsidiaries to pay dividends, make distributions or otherwise transfer funds to us, including restrictions on Mirant North America contained in its financing agreements and restrictions on Mirant Mid-Atlantic contained in its leveraged lease documents, which may affect our ability to access the cash flow of those subsidiaries to make debt service and other payments;

· the disposition of the pending litigation described in this Form 10-Q.

Many of these risks are beyond our ability to control or predict. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by cautionary statements contained throughout this report. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made.

Factors that Could Affect Future Performance

We undertake no obligation to update publicly or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this report.

In addition to the discussion of certain risks in Management’s Discussion and Analysis of Results of Operations and Financial Condition and the accompanying Notes to Mirant Americas Generation, LLC’s unaudited condensed consolidated financial statements, other factors that could affect the Company’s future performance (business, financial condition or results of operations and cash flows) are set forth in our Annual Report on Form 10-K for the year ended December 31, 2006.

Certain Terms

As used in this report, “we,” “us,” “our,” the “Company” and “Mirant Americas Generation” refer to Mirant Americas Generation, LLC and its subsidiaries, unless the context requires otherwise.

MIRANT AMERICAS GENERATION, LLC AND SUBSIDIARIES
(Wholly-Owned Indirect Subsidiary of Mirant Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended March 31,
	2007			2006
	(in millions)
Operating revenues—affiliate	$	33		$	3
Operating revenues—nonaffiliate	314			964
Total operating revenues	347			967
Cost of fuel, electricity and other products—affiliate	36			16
Cost of fuel, electricity and other products—nonaffiliate	278			306
Total cost of fuel, electricity and other products	314			322
Gross Margin	33			645
Operating Expenses:
Operations and maintenance—affiliate	65			69
Operations and maintenance—nonaffiliate	88			93
Depreciation and amortization	30			28
Gain on sales of assets, net	(2		)	—
Total operating expenses	181			190
Operating Income (Loss)	(148		)	455
Other Expense (Income), net:
Interest expense—nonaffiliate	65			75
Interest income—nonaffiliate	(12		)	(7		)
Other, net	—			(3		)
Total other expense, net	53			65
Income (Loss) From Continuing Operations Before Reorganization Items	(201		)	390
Reorganization items, net	(1		)	—
Income (Loss) From Continuing Operations	(200		)	390
Loss From Discontinued Operations	(5		)	(1		)
Net Income (Loss)	$	(205	)	$	389

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

MIRANT AMERICAS GENERATION, LLC AND SUBSIDIARIES
(Wholly-Owned Indirect Subsidiary of Mirant Corporation)

CONDENSED CONSOLIDATED BALANCE SHEETS

	At March 31,				At December 31,
	2007				2006
	(Unaudited)
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents		$	647			$	753
Funds on deposit		310				233
Receivables:
Affiliate		3				12
Nonaffiliate, less allowance for uncollectibles of $2 for 2007 and 2006		254				371
Price risk management assets—affiliate		3				3
Price risk management assets—nonaffiliate		369				728
Prepaid rent and other payments		122				131
Inventories		253				288
Assets held for sale		523				527
Total current assets		2,484				3,046
Property, Plant and Equipment, net		2,235				2,179
Noncurrent Assets:
Intangible assets, net		210				212
Price risk management assets—affiliate		1				1
Price risk management assets—nonaffiliate		72				104
Prepaid rent		194				218
Debt issuance costs, net		57				59
Other		9				18
Total noncurrent assets		543				612
Total assets		$	5,262			$	5,837
LIABILITIES AND EQUITY
Current Liabilities:
Notes payable—affiliate		$	19			$	13
Current portion of long-term debt		165				141
Claims payable and estimated claims accrual		17				5
Accounts payable and accrued liabilities		292				329
Payable to affiliate		31				48
Price risk management liabilities—affiliate		11				13
Price risk management liabilities—nonaffiliate		226				286
Accrued property taxes		1				75
Other		18				27
Total current liabilities		780				937
Noncurrent Liabilities:
Long-term debt		2,974				3,131
Price risk management liabilities—affiliate		1				4
Price risk management liabilities—nonaffiliate		73				39
Asset retirement obligations		42				41
Other		7				7
Total noncurrent liabilities		3,097				3,222
Liabilities Subject to Compromise		8				34
Commitments and Contingencies
Equity:
Member’s interest		1,721				1,983
Preferred stock in affiliate		(344		)		(339		)
Total equity		1,377				1,644
Total liabilities and equity		$	5,262			$	5,837

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

MIRANT AMERICAS GENERATION, LLC AND SUBSIDIARIES
(Wholly-Owned Indirect Subsidiary of Mirant Corporation)

CONDENSED CONSOLIDATED STATEMENTS OF MEMBER’S EQUITY (UNAUDITED)
(in millions)

					Preferred
	Member’s				Stock in
	Interest				Affiliate
Balance, December 31, 2006		$	1,983			$	(339	)
Net income (loss)		(205		)		—
Amortization of discount on preferred stock in affiliate		5				(5		)
Distribution to member		(116		)		—
Capital contribution pursuant to the Plan		2				—
Adoption of FIN 48		51				—
Effect of the Supplemental Plan		1				—
Balance, March 31, 2007		$	1,721			$	(344	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

MIRANT AMERICAS GENERATION, LLC AND SUBSIDIARIES
(Wholly-Owned Indirect Subsidiary of Mirant Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three Months Ended March 31,
	2007				2006
	(in millions)
Cash Flows from Operating Activities:
Net income (loss)		$	(205	)	$	389
Loss from discontinued operations		(5		)	(1		)
Income (loss) from continuing operations		(200		)	390
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities:
Depreciation and amortization		32			30
Gain on sales of assets and investments, net		(2		)	—
Price risk management activities, net		359			(282		)
Changes in operating assets and liabilities:
Affiliate accounts receivable, net		—			(6		)
Customer accounts receivable, net		117			237
Prepaid rent		24			24
Inventories		35			(36		)
Other assets		(67		)	197
Accounts payable and accrued liabilities		(17		)	(171		)
Settlement of claims payable		(3		)	(739		)
Payable to affiliate		(18		)	9
Property taxes accrued, nonaffiliate		(22		)	15
Other liabilities		(29		)	17
Total adjustments		409			(705		)
Net cash provided by (used in) operating activities of continuing operations		209			(315		)
Net cash provided by (used in) operating activities of discontinued operations		(2		)	5
Net cash provided by (used in) operating activities		207			(310		)
Cash Flows from Investing Activities:
Capital expenditures		(75		)	(20		)
Proceeds from the sales of assets and investments, net		2			2
Proceeds from property insurance		2			—
Net cash used in investing activities of continuing operations		(71		)	(18		)
Net cash used in investing activities of discontinued operations		—			(1		)
Net cash used in investing activities		(71		)	(19		)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt-affiliate		7			(16		)
Proceeds from issuance of long-term debt-nonaffiliate		—			2,015
Repayment of long-term debt-nonaffiliate		(133		)	(468		)
Settlement of debt under the Plan		—			(990		)
Debt issuance costs		—			(51		)
Payment to affiliate under the Plan		—			(250		)
Distribution to member		(116		)	—
Net cash provided by (used in) financing activities of continuing operations		(242		)	240
Net Decrease in Cash and Cash Equivalents		(106		)	(89		)
Cash and Cash Equivalents, beginning of period		753			424
Cash and Cash Equivalents, end of period		$	647		$	335
Supplemental Cash Flow Disclosures:
Cash paid for interest, net of amounts capitalized		$	44		$	19
Cash paid for claims and professional fees from bankruptcy		$	6		$	1,737
Financing Activity:
Effect of the Supplemental Plan—non-cash		$	1		$	—
Capital contribution pursuant to the Plan—non-cash		$	2		$	1

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

MIRANT AMERICAS GENERATION, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A. Description of Business

Mirant Americas Generation is a national independent power producer and an indirect wholly-owned subsidiary of Mirant. The Company generates revenues primarily through the production of electricity. The Company produces and sells substantially all of the output from its generating facilities in the forward and spot markets and the remainder under contracts with third parties. The Company uses derivative financial instruments, such as commodity forwards, futures, options and swaps to manage its exposure to fluctuations in electric energy and fuel prices. The Company is a Delaware limited liability company.

As of March 31, 2007, the Company owned or leased 12,099 MW of electric generating capacity. In the third quarter of 2006, Mirant commenced auction processes to sell six of its natural gas-fired plants, including the Company’s Zeeland (903 MW) and Bosque (546 MW) natural gas-fired plants totaling 1,449 MW. On May 1, 2007, the Company completed the sale of these natural gas-fired plants. See Note C for additional information regarding the accounting for these assets as discontinued operations. In addition, on May 7, 2007, the Company completed the sale of Mirant NY-Gen (121 MW).

Mirant Americas Generation’s continuing operations of 10,301 MW consist of the ownership, long-term lease and operation of power generation facilities located in markets in the Mid-Atlantic and Northeast regions of the United States and in California, and energy trading and marketing operations in Atlanta, Georgia.

On April 9, 2007, Mirant announced that its Board of Directors had decided to explore strategic alternatives to enhance stockholder value. In light of the status of the disposition program, the Board of Directors will consider in the exploration process whether the interests of stockholders would be best served by returning excess cash from the sale proceeds to stockholders, with Mirant continuing to operate its retained businesses or, alternatively, whether greater stockholder value would be achieved by entering into a transaction with another company, including a sale of Mirant in its entirety. Mirant does not expect to consider making an acquisition as part of this exploration process.

The Company has a number of service agreements for labor and administrative services with Mirant Services. In addition, Mirant Energy Trading provides services to other Mirant affiliates related to the sale of electric power and the procurement of fuel and emissions allowances.

B. Accounting and Reporting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Mirant Americas Generation and its wholly-owned subsidiaries have been prepared in accordance with GAAP for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

The accompanying unaudited condensed consolidated financial statements include the accounts of Mirant Americas Generation and its wholly-owned subsidiaries and have been prepared from records maintained by Mirant Americas Generation and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

In accordance with SFAS No. 144, the results of operations of the Company’s assets to be disposed of have been reclassified to discontinued operations, and the associated assets and liabilities have been reclassified to assets and liabilities held for sale for all periods presented. In addition, the accompanying unaudited condensed consolidated statements of cash flows present the cash flows from discontinued operations in each of the three major categories (operating, investing and financing activities). The unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2006, was revised to conform to this presentation.

Certain prior period amounts have been reclassified to conform to the current period financial statement presentation.

Recently Adopted Accounting Standards

Adoption of FIN 48

On July 13, 2006, the FASB issued FIN 48, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The evaluation of a tax position in accordance with FIN 48 is a two-step process. The first step is recognition based on a determination of whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the enterprise should presume that the position will be examined by the appropriate taxing authority having full knowledge of all relevant information. The second step is to measure a tax position that meets the more-likely-than-not threshold. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

On January 1, 2007, the Company adopted the provisions of FIN 48 for all uncertain tax positions. Only tax positions that met the more-likely-than-not recognition threshold at the effective date were recognized or will continue to be recognized. For continuing operations, the adoption of FIN 48 resulted in a decrease in accrued liabilities of $51 million with a corresponding increase to member’s interest of the same amount.

Adoptions of Other Standards

In February 2006, the FASB issued SFAS No. 155, which allows fair value measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. SFAS No. 155 is effective for all financial instruments acquired, issued or subject to a re-measurement event beginning in the first fiscal year after September 15, 2006. At the date of adoption, any difference between the total carrying amount of the existing bifurcated hybrid financial instrument and the fair value of the combined hybrid financial instrument will be recognized as a cumulative effect adjustment to beginning retained earnings. The Company adopted SFAS No. 155 on January 1, 2007. The adoption of SFAS No. 155 did not affect the Company’s statements of operations, financial position or cash flows.

On June 28, 2006, the FASB ratified the EITF’s consensus reached on EITF 06-3, which relates to the income statement presentation of taxes collected from customers and remitted to government authorities. The Task Force affirmed as a consensus on this issue that the presentation of taxes on either a gross basis or a net basis within the scope of EITF 06-3 is an accounting policy decision that should be disclosed pursuant to APB No. 22. A company should disclose the amount of those taxes that is recognized on a gross basis in interim and annual financial statements for each period for which an income statement is presented if those amounts are significant. The Company adopted EITF 06-3 on January 1, 2007. While the amounts are not material, the Company’s policy is to present such taxes on a net basis in the consolidated statements of operations.

New Accounting Standards Not Yet Adopted

On September 15, 2006, the FASB issued SFAS No. 157, which establishes a framework for measuring fair value under GAAP and expands disclosure about fair value measurement. SFAS No. 157 requires companies to disclose the fair value of their financial instruments according to a fair value hierarchy (i.e., levels 1, 2, and 3, as defined). Additionally, companies are required to provide enhanced disclosure regarding fair value measurements in the level 3 category, including a reconciliation of the beginning and ending balances separately for each major category of assets and liabilities accounted for at fair value. SFAS No. 157 is effective at the beginning of the first fiscal year after November 15, 2007. The Company will adopt SFAS No. 157 on January 1, 2008 and, as of that date, evaluate the fair value of its assets and liabilities according to the hierarchy established by the FASB and present the required disclosures. It is also expected that the adoption of SFAS No. 157 will affect the measurement of certain liabilities by incorporating the Company’s own credit standing and the accounting for inception gains and losses currently being deferred under EITF 02-3. The net deferred inception gains and losses at March 31, 2007, were not material. The Company has not yet determined the potential effect of SFAS No. 157 on its statements of operations, financial position or cash flows.

On February 15, 2007, the FASB issued SFAS No. 159, which permits an entity to measure many financial instruments and certain other items at fair value by electing a fair value option. Once elected, the fair value option may be applied on an instrument by instrument basis, is irrevocable and is applied only to entire instruments. SFAS No. 159 also requires companies with trading and available-for-sale securities to report the unrealized gains and losses for which the fair value option has been elected within earnings for the period presented. SFAS No. 159 is effective at the beginning of the first fiscal year after November 15, 2007. The Company will adopt SFAS No. 159 on January 1, 2008. The Company has not yet determined the potential effect of SFAS No. 159 on its statements of operations, financial position or cash flows.

C. Dispositions

Assets and Liabilities Held for Sale

Assets and liabilities held for sale include discontinued operations and other assets that the Company expects to dispose of in the next year.

On May 1, 2007, Mirant completed the sale of six U.S. natural gas-fired plants, including the Company’s Zeeland and Bosque natural gas-fired plants, to Broadway Generating Company, LLC (formerly called LS Power Acquisition Co. I), a member of the LS Power Group. The net proceeds to the Company from the sale after transaction costs were $524 million. In accordance with Mirant North America debt covenants, the proceeds from the sale will be reinvested in the business of Mirant North America.

At March 31, 2007 and December 31, 2006, assets and liabilities held for sale consisted of the planned dispositions discussed above and ancillary equipment included in the sale to the LS Power Group.

The table below presents the components of the balance sheet accounts classified as assets and liabilities held for sale (in millions):

	At March 31, 2007			At December 31, 2006
Current Assets		$	19		$	22
Property, Plant and Equipment		504			505
Total Assets		$	523		$	527
Current Liabilities		$	4		$	5
Noncurrent Liabilities		11			11
Total Liabilities		$	15		$	16

Discontinued Operations

The Company has reclassified amounts for prior periods in the financial statements to report separately, as discontinued operations, the revenues and expenses of components of the Company that met the required criteria for such classification at March 31, 2007.

A summary of the operating results for these discontinued operations is as follows (in millions):

	Three Months Ended March 31,
	2007				2006
Operating revenues		$	6			$	9
Operating expenses		11				10
Operating loss		(5		)		(1		)
Net loss		$	(5	)		$	(1	)

D. Price Risk Management Assets and Liabilities

The fair values of the Company’s price risk management assets and liabilities, net of credit reserves, at March 31, 2007 and December 31, 2006, are as follows (in millions):

	At March 31, 2007
	Assets							Liabilities
	Current				Noncurrent			Current				Noncurrent				Net Fair Value
Electricity		$	239			$	73		$	(216	)		$	(47	)		$	49
Natural Gas		14				—			(11		)		(1		)		2
Oil		112				—			(9		)		(26		)		77
Coal		10				—			(1		)		—				9
Other, including credit reserves		(3		)		—			—				—				(3		)
Total		$	372			$	73		$	(237	)		$	(74	)		$	134

	At December 31, 2006
	Assets							Liabilities
	Current				Noncurrent			Current				Noncurrent				Net Fair Value
Electricity		$	619			$	104		$	(260	)		$	(12	)		$	451
Natural Gas		21				1			(26		)		(2		)		(6		)
Oil		83				—			(10		)		(29		)		44
Coal		13				—			(3		)		—				10
Other, including credit reserves		(5		)		—			—				—				(5		)
Total		$	731			$	105		$	(299	)		$	(43	)		$	494

The following table represents the net price risk management assets and liabilities by tenor as of March 31, 2007 (in millions):

2007	$	182
2008	(49		)
2009	3
2010	(1		)
Thereafter	(1		)
Net assets (liabilities)	$	134

The volumetric weighted average maturity, or weighted average tenor, of the price risk management portfolio at March 31, 2007, was approximately 13 months. The net notional amount of the price risk management assets and liabilities at March 31, 2007, was a net short position of approximately 46 million equivalent MWh.

The following table provides a summary of the factors affecting the change in net fair value of the price risk management asset and (liability) accounts for the three months ended March 31, 2007 (in millions):

	Proprietary Trading and Fuel Oil Management				Asset Management				Total
Net fair value of portfolio at December 31, 2006		$	46			$	448		$	494
Changes in fair value, net		7				(195		)	(188		)
Contracts settled during the period, net		(5		)		(167		)	(172		)
Net fair value of portfolio at March 31, 2007		$	48			$	86		$	134

E. Debt

Long-term debt is as follows (in millions):

	At March 31,				At December 31,						Secured/
	2007				2006				Interest Rate		Unsecured
Long-term debt:
Mirant Americas Generation:
Senior notes:
Due 2011		$	850			$	850		8.30	%	Unsecured
Due 2021		450				450			8.50	%	Unsecured
Due 2031		400				400			9.125	%	Unsecured
Unamortized debt premium/discount		(4		)		(4		)
Mirant North America:
Term loan, due 2007 to 2013		560				693			LIBOR + 1.75	%	Secured
Notes, due 2013.		850				850			7.375	%	Unsecured
Other:
Mirant Chalk Point capital lease, due 2007 to 2015		33				33			8.19	%	—
Total		3,139				3,272
Less: current portion of long-term debt		(165		)		(141		)
Total long-term debt, excluding current portion		$	2,974			$	3,131

Senior Secured Credit Facilities

Mirant North America, a wholly-owned subsidiary of the Company, entered into senior secured credit facilities in January 2006, which are comprised of an $800 million six-year senior secured revolving credit facility and a $700 million seven-year senior secured term loan. The full amount of the senior secured revolving credit facility is available for cash draws or for the issuance of letters of credit. On January 3, 2006, Mirant North America drew $465 million under its senior secured revolving credit facility. All amounts were repaid during the first quarter of 2006. The senior secured term loan was fully drawn at closing and amortizes in quarterly installments aggregating 0.25% of the original principal of the term loan per quarter for the first 27 quarters, with the remainder payable on the final maturity date in January 2013. At the closing, $200 million drawn under the senior secured term loan was deposited into a cash collateral

account to support the issuance of up to $200 million of letters of credit. As of March 31, 2007, there were approximately $200 million of letters of credit outstanding under the senior secured term loan and $18 million outstanding under the senior secured revolving credit facility. The senior secured credit facilities are obligations of Mirant North America and the respective guarantors and are without recourse to any other Mirant Americas Generation entities.

In addition to the quarterly installments, Mirant North America is required to prepay a portion of the outstanding senior secured term loan principal balance once a year. The prepayment is based on an adjusted EBITDA calculation that determines excess free cash flows, as defined in the loan agreement. On March 30, 2007, the Company made a mandatory principal prepayment of approximately $131 million on the term loan. Based on projections for 2007, the current estimate of the mandatory principal prepayment of the term loan in March 2008 is approximately $155 million. This amount has been reclassified from long-term debt to current portion of long-term debt at March 31, 2007.

F. Bankruptcy Related Disclosures

Financial Statements of Subsidiaries in Bankruptcy

The Company’s New York subsidiaries, Mirant New York, Mirant Bowline, Mirant Lovett, Hudson Valley Gas and Mirant NY-Gen, remained in bankruptcy at December 31, 2006. On January 26, 2007, Mirant New York, Mirant Bowline, and Hudson Valley Gas (collectively the “Emerging New York Entities”) filed a Supplemental Joint Chapter 11 Plan of Reorganization with the Bankruptcy Court and subsequently filed amendments to that plan (as subsequently amended, the “Supplemental Plan”). The Supplemental Plan was confirmed by the Bankruptcy Court on March 23, 2007, and became effective on April 16, 2007, resulting in the Emerging New York Entities’ emergence from bankruptcy. For financial statement presentation purposes, Mirant Americas Generation recorded the effects of the Supplemental Plan on March 31, 2007.

At March 31, 2007, Mirant Lovett and Mirant NY-Gen remained in bankruptcy. On January 31, 2007, Mirant New York entered into an agreement with Alliance Energy Renewables, LLC for the sale of Mirant NY-Gen, which owns the Hillburn and Shoemaker gas turbine facilities and the Swinging Bridge, Rio and Mongaup hydroelectric generating facilities. The sale price of $5 million was subject to adjustments for working capital and certain dam remediation efforts that were ongoing at the Swinging Bridge facility. The sale closed on May 7, 2007, and Mirant NY-Gen emerged from bankruptcy under a plan of reorganization approved by the Bankruptcy Court on April 27, 2007, that incorporated the sale. The timing of the filing of a plan of reorganization for Mirant Lovett, and of its emergence from bankruptcy, is uncertain. Mirant Americas is providing Mirant Lovett with a debtor-in-possession credit facility for working capital. For further discussion see “Chapter 11 Proceedings” in Note J.

Unaudited condensed combined financial statements of the two New York subsidiaries, Mirant Lovett and Mirant NY-Gen, that remained in bankruptcy at March 31, 2007, are set forth below:

Mirant Lovett and Mirant NY-Gen
Unaudited Condensed Combined Statements of Operations

	For the Three Months Ended March 31,
	2007			2006
	(in millions)
Operating revenues		$	49		$	66
Total cost of fuel, electricity and other products		22			42
Operating expenses		20			24
Operating income		7			—
Other expense, net		1			—
Net Income		$	6		$	—

Mirant Lovett and Mirant NY-Gen
Unaudited Condensed Combined Balance Sheet Data

	At March 31,			At December 31,
	2007			2006
	(in millions)
Assets—affiliate		$	55		$	64
Assets—nonaffiliate		35			37
Property, plant and equipment, net		184			187
Total assets		$	274		$	288
Liabilities not subject to compromise
Liabilities—affiliate		$	17		$	11
Liabilities—nonaffiliate		22			50
Liabilities subject to compromise
Liabilities—affiliate		28			27
Liabilities—nonaffiliate		2			2
Member’s equity		205			198
Total liabilities and member’s equity		$	274		$	288

Mirant Lovett and Mirant NY-Gen
Unaudited Condensed Combined Statements of Cash Flows

	For the Three Months Ended March 31,
	2007			2006
	(in millions)
Net cash provided by (used in):
Operating activities	$	(15	)		$	(5	)
Investing activities	7				7
Financing activities	7				—
Net increase (decrease) in cash and cash equivalents	(1		)		2
Cash and cash equivalents, beginning of period	4				—
Cash and cash equivalents, end of period	$	3			$	2

G. Related Party Arrangements and Transactions

Management, Personnel and Services Agreement with Mirant Services

Mirant Services provides the Company with various management, personnel and other services. The Company reimburses Mirant Services for amounts equal to Mirant Services’ direct costs of providing such services.

The total costs incurred under the Management, Personnel and Services Agreement with Mirant Services have been included in the accompanying unaudited condensed consolidated statements of operations as follows (in millions):

	For the Three Months Ended March 31,
	2007		2006
Cost of fuel, electricity and other products—affiliate	$	2	$	2
Operations and maintenance expense—affiliate	38		37
Total	$	40	$	39

Services and Risk Management Agreements with Affiliates

For the three months ended March 31, 2007 and 2006, the Company provided energy marketing and fuel procurement services through Mirant Energy Trading to the following affiliates: Mirant Las Vegas, Mirant Sugar Creek, Shady Hills, Mirant West Georgia and Mirant Wichita Falls. For the three months ended March 31, 2007 and 2006, the Company recorded a reduction to operations and maintenance of approximately $1 million, related to these agreements.

Mirant Wichita Falls was sold by Mirant in the second quarter of 2006. On May 1, 2007, Mirant completed the sale of Mirant Las Vegas, Mirant Sugar Creek, Shady Hills and Mirant West Georgia. Subsequent to the sale of these affiliates, the Company will no longer recognize a reduction to operations and maintenance associated with providing services to these affiliates.

The Company’s gross margin for future periods is not expected to be materially affected by the sale of these affiliates. However, because the Company will discontinue providing energy marketing and fuel procurement services to these entities, the Company expects its operating revenues-affiliate and cost of fuel, electricity, and other products—affiliate to decrease or be eliminated subsequent to the sale of these affiliates. In addition, these decreases will result in corresponding decreases in cost of fuel, electricity, and other products—nonaffiliate and operating revenues-nonaffiliate, respectively, in the consolidated statements of operations in future periods.

Administration Arrangements with Mirant Services

Substantially all of Mirant’s corporate overhead costs are allocated to Mirant’s operating subsidiaries. For the three months ended March 31, 2007 and 2006, the Company incurred approximately $28 million and $33 million, respectively, in costs under these arrangements, which are included in operations and maintenance—affiliate in the accompanying unaudited condensed consolidated statements of operations.

The Company’s allocation of Mirant’s overhead costs is expected to increase as Mirant completes the dispositions of its Philippine and Caribbean businesses and six of its U. S. natural gas-fired assets in 2007.

Notes Payable to Affiliate

Mirant and certain of its subsidiaries participate in an intercompany cash management program whereby cash balances at Mirant and the participating subsidiaries are transferred to central concentration accounts to fund working capital and other needs. At March 31, 2007 and December 31, 2006, the Company had current notes payable to affiliate of $19 million and $13 million, respectively. Interest expense—affiliate was less than $1 million for the three months ended March 31, 2007 and 2006.

Payable to Mirant Americas Pursuant to the Plan

Pursuant to the Plan, Mirant North America, the Company’s wholly-owned subsidiary, was required to pay $250 million to Mirant Americas within five days of the effective date of the Plan in return for Mirant’s contribution of its interest in the following: Mirant Americas Energy Marketing, Mirant Americas Development, Inc., Mirant Americas Production Company, Mirant Americas Energy Capital, LLC, Mirant Americas Energy Capital Assets, LLC, Mirant Americas Development Capital, LLC, Mirant Americas Retail Energy Marketing, LP, and Mirant Americas Gas Marketing, I-XV, LLCs. This amount was paid in January 2006.

Mirant Guarantees

Mirant posted pre-petition letters of credit and a guarantee on behalf of Mirant Mid-Atlantic to provide for the rent payment reserve required in connection with Mirant Mid-Atlantic’s lease obligations in the event that it was unable to pay its lease payment obligations. On January 3, 2006, as part of the settlement and the Company’s emergence from bankruptcy, Mirant North America posted a $75 million letter of credit for the benefit of Mirant Mid-Atlantic to cover rent payment reserve obligations on Mirant Mid-Atlantic’s leases. Upon the posting of the letter of credit, the trustee returned $56 million of cash collateral to Mirant Mid-Atlantic.

Mirant posted a post-petition letter of credit in the amount of $5 million on behalf of Mirant Texas, LP (“Mirant Texas”) as of December 31, 2004, related to a tolling agreement. This post-petition letter of credit was set to expire in January 2006. Upon emergence from bankruptcy, Mirant North America replaced this post-petition letter of credit with a letter of credit issued under its senior secured credit facilities. The letter of credit expired in February 2007.

In July 2006, Mirant North America posted a letter of credit in the amount of $14 million on behalf of Mirant Delta, LLC related to a tolling agreement. This letter of credit expires in July 2007.

Prior to 2005, Mirant entered into pre-petition letters of credit to support the Company’s asset management activities. In September 2005, several of these letters of credit were drawn in the amount of $39 million. In January 2006, the remaining pre-petition letter of credit of $7 million was drawn in full. In addition, Mirant entered into post-petition letters of credit to support its asset management activities. In January 2006, letters of credit from the Mirant North America senior secured credit facilities replaced the eleven post-petition letters of credit outstanding at December 31, 2005.

Preferred Stock in Mirant Americas

Mirant Americas issued mandatorily redeemable Series A preferred shares to Mirant Mid-Atlantic for the purpose of funding future environmental capital expenditures. For the three months ended March 31, 2007, the company recorded $3 million in preferred stock in affiliate and member’s interest in the unaudited condensed consolidated balance sheet related to the amortization of the discount on the preferred stock in Mirant Americas.

Mirant Americas issued mandatorily redeemable Series B preferred shares to Mirant Mid-Atlantic for the purpose of supporting the refinancing of Mirant Americas Generation senior notes due in 2011. For the three months ended March 31, 2007, the company recorded $2 million in preferred stock in affiliate and member’s interest in the unaudited condensed consolidated balance sheet related to the amortization of the discount on the preferred stock in Mirant Americas.

Debtor in Possession Financing for New York Subsidiaries

Mirant North America and Mirant Americas Energy Marketing, (the “Primary DIP Lenders”) entered into an agreement (the “Primary New York DIP Agreement”) to make secured debtor-in-possession financing in an amount of (i) $20 million, plus (ii) an amount equal to the amount of credit support provided on behalf of Mirant New York, Mirant Bowline, Mirant Lovett, and Hudson Valley Gas (collectively, the “New York DIP Borrowers”), to the extent such amounts were collateralized with cash or cash equivalents by the New York DIP Borrowers. The New York DIP Borrowers had posted $21 million cash collateral with Mirant Energy Trading (successor to Mirant Americas Energy Marketing) in accordance with the March 31, 2007, collateral allocation performed in good faith by Mirant Energy Trading. This cash collateral amount was returned to the New York DIP Borrowers, and the Primary New York DIP Agreements were terminated in conjunction with the Emerging Subsidiaries emergence from bankruptcy on April 16, 2007.

The Bankruptcy Court approved a debtor-in-possession loan to Mirant NY-Gen from Mirant Americas under which Mirant Americas, subject to certain conditions, would lend up to $16.5 million to Mirant NY-Gen to provide funding for the repairs on the Swinging Bridge dam. When Mirant NY-Gen emerged from bankruptcy and was sold on May 7, 2007, all claims held by Mirant NY-Gen were assigned to Mirant Americas, Mirant Americas released all of its claims and liens against Mirant NY-Gen, and this loan was cancelled.

On April 18, 2007, a new DIP Agreement was established between Mirant Lovett and Mirant Americas to make secured debtor-in-possession financing in an amount of $20 million. The financing has a stated maturity of 180 days and bears interest at a rate of LIBOR plus 4.25%. In addition, Mirant Lovett posted $7 million of cash collateral with Mirant Energy Trading to collateralize Mirant Energy Trading for collateral that Mirant Energy Trading has posted on Mirant Lovett’s behalf.

H. Income Taxes

The Company is a limited liability company treated as a branch of Mirant Americas for income tax purposes. As a result, Mirant Americas and Mirant have direct liability for the majority of the federal and state income taxes relating to the Company’s operations. Through December 31, 2005, the Company has allocated current and deferred income taxes to each regarded corporate member entity of our consolidated group as if each regarded corporate entity member were a single taxpayer utilizing the asset and liability method to account for income taxes except with respect to recognizing certain current period tax benefits. Specifically, the Company did not record current period tax benefits on each regarded corporate entity’s ability to carry back its separate company current year net operating loss as realization of such losses were dependent on reimbursements from Mirant, which were at Mirant’s discretion under the tax sharing agreement.

Several significant changes to the Company’s tax posture occurred as a result of the Plan, including the conversion of certain of the Company’s regarded corporate entities to limited liability companies coupled with the liquidation and/or merger of these regarded corporate entities into other disregarded corporate entities for income tax purposes, and certain partnerships owned by the regarded corporate entities were also liquidated and now form part of these disregarded entities for income tax purposes. The result eliminates the Company’s recording of tax expense and benefit beginning January 1, 2006, with respect to the liquidated regarded corporate entities. Furthermore, with respect to those liquidated regarded corporate entities, all previously existing deferred tax assets and liabilities were eliminated as of December 31, 2005.

Certain of the Company’s other subsidiaries continue to exist as regarded corporate entities for income tax purposes. For those corporate regarded entities, the Company allocates current and deferred income taxes to each regarded corporate entity as if such entity were a single taxpayer utilizing the asset

and liability method to account for income taxes. To the extent the Company provides tax expense or benefit, any related tax payable or receivable to Mirant is reclassified to equity in the same period.

The Company adopted the provisions of FIN 48 on January 1, 2007. The Company has historically recognized contingent liabilities related to tax uncertainties when it was probable that a loss had occurred and the loss or range of loss could be reasonably estimated. The recognition of contingent losses for tax uncertainties required management to make significant assumptions about the expected outcomes of certain tax contingencies. Upon adoption of FIN 48, the Company changed its method to recognize only liabilities for uncertain tax positions that are less than or subject to the measurement threshold of the more-likely-than-not standard. As a result of the implementation of FIN 48, for continuing operations the Company recognized a decrease in accrued liabilities of approximately $51 million. The additional tax benefit resulted in an increase of the same amount to member’s interest. The unrecognized tax benefit as a result of adopting FIN 48 is an insignificant amount and would not materially affect the Company’s effective tax rate if it were to be recognized.

If the Company was to be allocated income taxes attributable to its operations, pro forma income tax expense attributable to income before tax would be $2 million and zero for the three months ended March 31, 2007 and 2006, respectively. The pro forma balance of the Company’s deferred income taxes would be zero as of March 31, 2007. The proforma increase in tax benefits that would have been recognized upon adoption of FIN 48 is $86 million. The proforma unrecognized tax benefit as a result of adopting FIN 48 is an insignificant amount and would not materially affect the company’s pro forma effective tax rate if it were recognized.

I. Segment Reporting

The Company has four operating segments: Mid-Atlantic, Northeast, California and Other Operations. Other Operations includes proprietary trading and fuel oil management. In the following tables, eliminations are primarily related to intercompany sales of emissions allowances and interest on intercompany notes receivable and notes payable.

Operating Segments

	Mid-Atlantic				Northeast				California				Other Operations				Eliminations				Total
	(in millions)
Three Months Ended March 31, 2007:
Operating revenues-affiliate		$	230			$	148			$	8			$	347			$	(700	)	$	33
Operating revenues-nonaffiliate		(173		)		7				37				443				—			314
Total operating revenues		57				155				45				790				(700		)	347
Cost of fuel, electricity and other products-affiliate		95				27				13				601				(700		)	36
Cost of fuel, electricity and other products-nonaffiliate		35				86				—				163				(6		)	278
Total cost of fuel, electricity and other products		130				113				13				764				(706		)	314
Gross margin		(73		)		42				32				26				6			33
Operating expenses:
Operations and maintenance-affiliate		33				18				9				5				—			65
Operations and maintenance-nonaffiliate		50				27				11				—				—			88
Depreciation and amortization		19				7				3				1				—			30
Gain on sales of assets, net		(1		)		(10		)		(1		)		—				10			(2		)
Total operating expenses		101				42				22				6				10			181
Operating income (loss)		(174		)		—				10				20				(4		)	(148		)
Total other expense (income), net		(1		)		(2		)		(3		)		59				—			53
Income (loss) from continuing operations before reorganization items		(173		)		2				13				(39		)		(4		)	(201		)
Reorganization items, net		—				(1		)		—				—				—			(1		)
Income (loss) from continuing operations		$	(173	)		$	3			$	13			$	(39	)		$	(4	)	$	(200	)
Total assets of continuing operations at March 31, 2007		$	3,288			$	1,133			$	456			$	1,462			$	(1,600	)	$	4,739

	Mid-Atlantic				Northeast				California			Other Operations				Eliminations				Total
	(in millions)
Three Months Ended March 31, 2006:
Operating revenues-affiliate		$	552			$	270			$	9		$	(67	)		$	(761	)	$	3
Operating revenues-nonaffiliate		27				7				35			895				—			964
Total operating revenues		579				277				44			828				(761		)	967
Cost of fuel, electricity and other products–affiliate		112				83				17			580				(776		)	16
Cost of fuel, electricity and other products–nonaffiliate		50				47				—			209				—			306
Total cost of fuel, electricity and other products		162				130				17			789				(776		)	322
Gross margin		417				147				27			39				15			645
Operating expenses:
Operations and maintenance–affiliate		34				19				10			6				—			69
Operations and maintenance– nonaffiliate		51				35				7			—				—			93
Depreciation and amortization		18				5				3			2				—			28
Gain on sales of assets, net		—				(33		)		—			—				33			—
Total operating expenses		103				26				20			8				33			190
Operating income		314				121				7			31				(18		)	455
Total other expense (income), net		(1		)		3				—			63				—			65
Income (loss) from continuing operations		$	315			$	118			$	7		$	(32	)		$	(18	)	$	390
Total assets of continuing operations at December 31, 2006		$	3,404			$	1,189			$	443		$	2,029			$	(1,755	)	$	5,310

J. Litigation and Other Contingencies

The Company is involved in a number of significant legal proceedings. In certain cases plaintiffs seek to recover large and sometimes unspecified damages, and some matters may be unresolved for several years. The Company cannot currently determine the outcome of the proceedings described below or the ultimate amount of potential losses and therefore has not made any provision for such matters unless specifically noted below. Pursuant to SFAS No. 5, management provides for estimated losses to the extent information becomes available indicating that losses are probable and that the amounts are reasonably estimable. Additional losses could have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

Chapter 11 Proceedings

On July 14, 2003, and various dates thereafter, Mirant Corporation and certain of its subsidiaries (collectively, the “Mirant Debtors”), including the Company and its subsidiaries, filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. Most of the material claims filed against the Mirant Debtors’ estates were disallowed or were resolved and became “allowed” claims before confirmation of the Plan that became effective for Mirant, the Company and most of the Mirant Debtors on January 3, 2006. Mirant, as the distribution agent under the Plan, has made distributions pursuant to the terms of the Plan on those allowed claims. Some claims, however, remain unresolved.

including subsidiaries of the Company, if approved by final order in the Chapter 11 proceedings, would result in the distribution of up to 18 million of the reserved shares to Pepco, as described below in Pepco Litigation . Under the terms of the Plan, to the extent other such unresolved claims are resolved now that the Company has emerged from bankruptcy, the claimants will be paid from the reserved shares on the same basis as if they had been paid when the Plan became effective. That means that their allowed claims will receive the same pro rata distributions of Mirant common stock, cash, or both common stock and cash as previously allowed claims in accordance with the terms of the Plan. To the extent the aggregate amount of the payouts determined to be due with respect to such disputed claims ultimately exceeds the amount of the funded claim reserve, Mirant would have to issue additional shares of common stock to address the shortfall, which would dilute existing Mirant shareholders, and Mirant and the Company would have to pay additional cash amounts as necessary under the terms of the Plan to satisfy such pre-petition claims.

The Company’s subsidiaries related to its New York business operations, Mirant New York, Mirant Bowline, Mirant Lovett, Hudson Valley Gas and Mirant NY-Gen, remained in bankruptcy at the end of 2006. On January 26, 2007, the Emerging New York Entities filed a Supplemental Joint Chapter 11 Plan of Reorganization of the Emerging New York Entities with the Bankruptcy Court and subsequently filed amendments to that plan. The Bankruptcy Court entered an order confirming the Supplemental Plan on March 23, 2007. The Supplemental Plan became effective on April 16, 2007, resulting in the emergence from bankruptcy of the Emerging New York Entities. The Supplemental Plan has two main components. First, the Supplemental Plan incorporates a settlement with various New York tax jurisdictions that resolved property tax disputes related to the Lovett and Bowline facilities. Second, the Supplemental Plan provides unsecured creditors of the Emerging New York Entities with the same treatment afforded holders of unsecured claims against the Company and its subsidiaries under the Plan. Such unsecured creditors of the Emerging New York Entities will receive their pro rata share of the pool of assets created under the Plan for the benefit of the unsecured creditors of the Company and its subsidiaries.

On October 19, 2006, Mirant Lovett notified the New York Public Service Commission, the NYISO, Orange and Rockland and certain other affected transmission and distribution companies in New York of its intent to discontinue operation of units 3 and 5 of the Lovett facility on April 30, 2007. The notice was prompted by the requirements of a June 11, 2003, Consent Decree (the “2003 Consent Decree”) among Mirant Lovett, the State of New York and the NYSDEC that requires Mirant Lovett to install certain environmental controls on unit 5 of the Lovett facility, convert the unit to operate exclusively on natural gas, or discontinue operation of that unit by April 30, 2007. The 2003 Consent Decree also requires that certain environmental controls be installed on unit 4 by April 30, 2008, or operations at that unit must be discontinued. Operations at unit 3 have been discontinued because it is uneconomic to continue to run unit 3. On April 30, 2007, and May 7, 2007, Mirant Lovett entered into two tolling agreements with the New York State Office of the Attorney General and the NYSDEC to allow the operation of unit 5 to continue on coal until May 14, 2007, while the parties sought to reach agreement on an amended consent decree. The second tolling agreement also required the temporary suspension of operations of unit 4. Mirant Lovett has advised the New York Public Service Commission, the NYISO, Orange and Rockland and other potentially affected transmission and distribution companies in New York of the changes in expected operating status of units 4 and 5. Mirant New York, Mirant Lovett and the State of New York on May 10, 2007, entered into an amendment to the 2003 Consent Decree that switches the deadlines for units 4 and 5 so that the deadline for compliance by unit 5 is extended until April 30, 2008, and the deadline for unit 4 is shortened so that it would discontinue operation as of May 7, 2007. On May 8, 2007, Mirant New York, Mirant Lovett, Mirant Bowline, and Hudson Valley Gas also entered into an agreement (the “Tax Assessments Agreement”) with the Town of Stony Point, the Town of Haverstraw, and the Village of Haverstraw to set the assessed values for the Lovett and Bowline facilities and the pipeline owned by Hudson Valley Gas for 2007 and 2008 for property tax purposes at the values established for 2006 under a settlement agreement entered into by the Mirant entities and those taxing authorities in December 2006 that resolved disputes regarding the assessed values of the facilities for 2006 and several earlier years. The amendment to the 2003 Consent Decree was subject to the approval of the United States

District Court for the Southern District of New York and the Bankruptcy Court. The Tax Assessments Agreement was subject to the approval of the Bankruptcy Court. The Bankruptcy Court approved the amendment to the 2003 Consent Decree and the Tax Assessments Agreement on May 10, 2007. The district court approved the amendment to the 2003 Consent Decree on May 11, 2007. The timing of the filing of a plan of reorganization for Mirant Lovett, and of its emergence from bankruptcy, is uncertain. Until Mirant Lovett emerges from bankruptcy, the Company will not have access to the cash from operations generated by Mirant Lovett.

Mirant NY-Gen, which owns hydroelectric facilities at Swinging Bridge, Rio and Mongaup, and small combustion turbine facilities at Hillburn and Shoemaker, has proceeded with the implementation of a remediation plan for the sinkhole discovered in May 2005 in the dam at the Swinging Bridge facility. The status of the remediation effort is discussed below in Other Contingencies . Mirant NY-Gen’s expenses have been funded under a debtor-in-possession facility provided by Mirant Americas with the approval of, and under the supervision of, the Bankruptcy Court.

On January 31, 2007, Mirant New York entered into an agreement to sell Mirant NY-Gen to Alliance Energy Renewables, LLC (the “Alliance Sale”). The sale price of approximately $5 million was subject to adjustments for working capital and certain ongoing dam remediation efforts at the Swinging Bridge facility. The Bankruptcy Court approved the Alliance Sale on March 8, 2007. On February 15, 2007, Mirant NY-Gen filed its proposed Chapter 11 Plan of Reorganization (the “Mirant NY-Gen Plan”), which incorporated the Alliance Sale. The Bankruptcy Court confirmed the Mirant NY-Gen Plan by order dated April 27, 2007. The Mirant NY-Gen Plan became effective and the Alliance Sale closed on May 7, 2007. Under the terms of the Mirant NY – Gen Plan and the confirmation order, approximately $2 million was reserved from the proceeds of the Alliance Sale to pay in full all the claims outstanding against Mirant NY – Gen other than claims arising from the debtor-in-possession loan provided by Mirant Americas to Mirant NY – Gen and intercompany claims. Mirant guarantees were substituted for $1.6 million of the amount to be reserved. The remaining sales proceeds were paid to Mirant Americas in partial satisfaction of the $16.5 million debtor-in-possession loan, all claims held by Mirant NY – Gen were assigned to Mirant Americas, and Mirant Americas released all of its claims and liens against Mirant NY – Gen.

Pepco Litigation

In 2000, Mirant purchased power generating facilities and other assets from Pepco, including certain PPAs between Pepco and third parties. Under the terms of the APSA, Mirant and Pepco entered into the Back-to-Back Agreement with respect to certain PPAs, including Pepco’s long-term PPA with Panda, under which (1) Pepco agreed to resell to Mirant all capacity, energy, ancillary services and other benefits to which it is entitled under those agreements and (2) Mirant agreed to pay Pepco each month all amounts due from Pepco to the sellers under those agreements for the immediately preceding month associated with such capacity, energy, ancillary services and other benefits. The Panda PPA runs until 2021, and the Back-to-Back Agreement does not expire until all obligations have been performed under the Panda PPA. Under the Back-to-Back Agreement, Mirant is obligated to purchase power from Pepco at prices that typically are higher than the market prices for power.

Mirant assigned its rights and obligations under the Back-to-Back Agreement to Mirant Americas Energy Marketing. In the Chapter 11 cases of the Mirant Debtors, Pepco asserted that an Assignment and Assumption Agreement dated December 19, 2000, that includes as parties Pepco and various of the Company’s subsidiaries causes the Company’s subsidiaries that are parties to the agreement to be jointly and severally liable to Pepco for various obligations, including the obligations under the Back-to-Back Agreement. The Mirant Debtors have sought to reject the APSA, the Back-to-Back Agreement, and the Assignment and Assumption Agreement, and the rejection motions have not been resolved. Under the Plan, the obligations of the Mirant Debtors under the APSA (including any other agreements executed pursuant to the terms of the APSA and found by a final court order to be part of the APSA), the Back-to-Back Agreement, and the Assignment and Assumption Agreement are to be performed by Mirant Power

Purchase, whose performance is guaranteed by Mirant. If any of the agreements is successfully rejected, the obligations of Mirant Power Purchase and Mirant’s guarantee obligations terminate with respect to that agreement, and Pepco would be entitled to a claim in the Chapter 11 proceedings for any resulting damages. That claim would then be addressed under the terms of the Plan. If the Bankruptcy Court were to conclude that the Assignment and Assumption Agreement imposed liability upon the Company’s subsidiaries for the obligations under the Back-to-Back Agreement and the Back-to-Back Agreement were to be rejected, the resulting rejection damages claim could result in a claim in the Chapter 11 proceedings against the Company’s subsidiaries but any such claim would be reduced by the amount recovered by Pepco on its comparable claim against Mirant.

On May 30, 2006, Mirant, Mirant Power Purchase, Old Mirant, various subsidiaries of Mirant (including subsidiaries of the Company), and a trust established pursuant to the Plan to which ownership of Old Mirant and Mirant Americas Energy Marketing was transferred (collectively the “Mirant Settling Parties”) entered into a Settlement Agreement and Release (the “Settlement Agreement”) with Pepco and various affiliates of Pepco (collectively the “Pepco Settling Parties”). Once it becomes effective, the Settlement Agreement will fully resolve the contract rejection motions that remain pending in the bankruptcy proceedings, as well as other matters currently disputed between Pepco and Mirant and its subsidiaries. The Pepco Settling Parties and the Mirant Settling Parties will release each other from all claims known as of May 30, 2006, including the fraudulent transfer claims brought by Old Mirant and several of its subsidiaries against Pepco in July 2005. The Settlement Agreement will become effective once it has been approved by the Bankruptcy Court and that approval order has become a final order no longer subject to appeal. On August 9, 2006, the Bankruptcy Court entered an order approving the Settlement Agreement, but certain holders of unsecured claims against Old Mirant in the bankruptcy proceedings appealed that order. On December 26, 2006, the United States District Court for the Northern District of Texas affirmed the bankruptcy court order approving the settlement, but the claims holders have appealed that ruling to the United States Court of Appeals for the Fifth Circuit, and the approval order has not yet become a final order.

Under the Settlement Agreement, Mirant Power Purchase will perform any remaining obligations under the APSA, and Mirant will guaranty its performance. The Back-to-Back Agreement will be rejected and terminated effective as of May 31, 2006, unless Mirant exercises an option given to it under the Settlement Agreement to have the Back-to-Back Agreement assumed under certain conditions. If the closing price of Mirant’s stock is less than $16.00 on four business days in a 20 consecutive business day period prior to any distribution of shares to Pepco on its claim, then Mirant can elect to have the Back-to-Back Agreement assumed and assigned to Mirant Power Purchase rather than rejecting it, and the claim received by Pepco will be reduced as described below.

With respect to the other agreements executed as part of the closing of the APSA (the “Ancillary Agreements”) and other agreements between Pepco and subsidiaries of Mirant, including subsidiaries of the Company, the Mirant subsidiary that is a party to each agreement will assume the agreement and Mirant will guaranty that subsidiary’s performance. Mirant Power Purchase’s obligations under the APSA do not include any obligations related to the Ancillary Agreements. If the Back-to-Back Agreement is rejected pursuant to the terms of the Settlement Agreement, the Settlement Agreement provides that a future breach of the APSA or any Ancillary Agreement by a party to such agreement will not entitle the non-defaulting party to terminate, suspend performance under, or exercise any other right or remedy under or with respect to any of the remainder of such agreements. If, however, Mirant elects to have the Back-to-Back Agreement assumed and assigned to Mirant Power Purchase under the conditions set out in the Settlement Agreement, then the Settlement Agreement provides that nothing in its terms prejudices the argument currently being made by Pepco in the contract rejection proceedings that the APSA, the Back-to-Back Agreement, and the Ancillary Agreements constitute a single non-severable agreement, the material breach of which would entitle Pepco to suspend or terminate its performance thereunder, or any defense of Mirant and its subsidiaries to such an argument by Pepco.

The Settlement Agreement grants Pepco a claim against Old Mirant in Old Mirant’s bankruptcy proceedings that will result in Pepco receiving common stock of Mirant and cash having a value, after liquidation of the stock by Pepco, equal to $520 million, subject to certain adjustments. Upon the Settlement Agreement becoming effective, Mirant will distribute up to 18 million shares of Mirant common stock to Pepco to satisfy its claim and Pepco will liquidate those shares. The shares to be distributed to Pepco will be determined by Mirant after the Settlement Agreement becomes effective so as to produce upon liquidation total net proceeds as near to $520 million as possible, subject to the overall cap on the shares to be distributed of 18 million shares. If the net proceeds received by Pepco from the liquidation of the shares are less than $520 million, Mirant will pay Pepco cash equal to the difference. If Mirant exercises the option to have the Back-to-Back Agreement assumed, then the $520 million is reduced to $70 million, Mirant Power Purchase would continue to perform the Back-to-Back Agreement through its expiration in 2021, and Mirant would guarantee its performance. The Settlement Agreement allocates the $70 million to various claims asserted by Pepco that do not arise from the rejection of the Back-to-Back Agreement, including claims asserted under the Local Area Support Agreement between Pepco and Mirant Potomac River that are discussed below in Pepco Assertion of Breach of Local Area Support Agreement .

California and Western Power Markets

FERC Refund Proceedings. On July 25, 2001, the FERC issued an order requiring proceedings (the “FERC Refund Proceedings”) to determine the amount of any refunds and amounts owed for sales made by market participants, including Mirant Americas Energy Marketing, to the CAISO or the Cal PX from October 2, 2000, through June 20, 2001 (the “Refund Period”). Various parties have appealed these FERC orders to the United States Court of Appeals for the Ninth Circuit (the “Ninth Circuit”) seeking review of a number of issues, including changing the Refund Period to include periods prior to October 2, 2000, and expanding the sales of electricity subject to potential refund to include bilateral sales made to the DWR and other parties. On August 2, 2006, the Ninth Circuit issued an opinion addressing some of the issues raised by these appeals. The Ninth Circuit remanded to the FERC for further proceedings the FERC’s denial of relief for sales of electricity made in the CAISO and Cal PX markets prior to October 2, 2000, at rates found to be unjust and directed the FERC to address the parties’ request for a market-wide remedy for tariff violations that may have occurred prior to October 2, 2000. In addition, the Ninth Circuit found that the FERC had not adequately supported its decision to exclude from the FERC Refund Proceedings (i) sales made in the CAISO and Cal PX that had a term of greater than 24 hours, and (ii) energy exchange transactions, and remanded these issues to the FERC for further proceedings. The Ninth Circuit affirmed the FERC’s decision to exclude bilateral sales to the DWR from the FERC Refund Proceeding. If the FERC grants the parties’ requested relief with respect to the issues remanded by the Ninth Circuit, any expansion of the Refund Period to include periods prior to October 2, 2000, or of the types of sales of electricity potentially subject to refund could increase the refund exposure of Mirant Americas Energy Marketing in this proceeding.

In the July 25, 2001, order, the FERC also ordered that a preliminary evidentiary proceeding be held to develop a factual record on whether there had been unjust and unreasonable charges for spot market bilateral sales in the Pacific Northwest from December 25, 2000, through June 20, 2001. In that proceeding, the California Attorney General, the CPUC and the EOB filed to recover certain refunds from parties, including Mirant Americas Energy Marketing, for bilateral sales of electricity to the DWR at the California/Oregon border, claiming that such sales took place in the Pacific Northwest. In an order issued June 25, 2003, the FERC ruled that no refunds were owed and terminated the proceeding. On November 10, 2003, the FERC denied requests for rehearing filed by various parties. Various parties appealed the FERC’s decision to the Ninth Circuit.

On September 9, 2004, the Ninth Circuit reversed the FERC’s dismissal of a complaint filed in 2002 by the California Attorney General that sought refunds for transactions conducted in markets

administered by the CAISO and the Cal PX outside the Refund Period set by the FERC and for transactions between the DWR and various owners of generation and power marketers, including Mirant Americas Energy Marketing and subsidiaries of the Company. The Ninth Circuit remanded the proceeding to the FERC for it to determine what remedies, including potential refunds, are appropriate where entities, including Mirant Americas Energy Marketing, purportedly did not comply with certain filing requirements for transactions conducted under market-based rate tariffs. On July 31, 2006, the Ninth Circuit denied a petition for rehearing filed by Mirant Americas Energy Marketing and other parties. Various parties to the proceeding have filed a petition for writ of certiorari with the United States Supreme Court requesting it to review the Ninth Circuit’s September 9, 2004, decision.

On January 14, 2005, Mirant and certain of its subsidiaries, including the Company, entered into a Settlement and Release of Claims Agreement (the “California Settlement”) with PG&E, SCE, San Diego Gas and Electric Company, the CPUC, the DWR, the EOB and the Attorney General of the State of California (collectively, the “California Parties”) and with the Office of Market Oversight and Investigations of the FERC. The California Settlement settled a number of disputed lawsuits and regulatory proceedings that were pursued originally in state and federal courts and before the FERC. The Mirant entities that are parties to the California Settlement (collectively, the “Mirant Settling Parties”) include Mirant Corporation, Mirant Americas Energy Marketing, the Company, and Mirant North America (as the successor to Mirant California Investments, Inc.). The California Settlement was approved by the FERC on April 13, 2005, and became effective April 15, 2005, upon its approval by the Bankruptcy Court. The California Settlement resulted in the release of most of Mirant Americas Energy Marketing’s potential liability (1) in the FERC Refund Proceedings for sales made in the CAISO or the Cal PX markets, (2) in the proceeding also initiated by the FERC in July 2001 to determine whether there had been unjust and unreasonable charges for spot market bilateral sales in the Pacific Northwest from December 25, 2000, through June 20, 2001, and (3) in any proceedings at the FERC resulting from the Ninth Circuit’s reversal of the FERC’s dismissal of the complaint filed in 2002 by the California Attorney General. Under the California Settlement, the California Parties and those other market participants who have opted into the settlement have released the Mirant Settling Parties from any liability for refunds related to sales of electricity and natural gas in the western markets from January 1, 1998, through July 14, 2003. Also, the California Parties have assumed the obligation of Mirant Americas Energy Marketing to pay any refunds determined by the FERC to be owed by Mirant Americas Energy Marketing to other parties that do not opt into the settlement for transactions in the CAISO and Cal PX markets during the Refund Period, with the liability of the California Parties for such refund obligation limited to the amount of certain receivables assigned by Mirant Americas Energy Marketing to the California Parties under the California Settlement. The settlement did not relieve Mirant Americas Energy Marketing of liability for any refunds that the FERC determines it to owe (1) to participants in the Cal PX and CAISO markets that are not California Parties (or that did not elect to opt into the settlement) for periods outside of the Refund Period and (2) to participants in bilateral transactions with Mirant Americas Energy Marketing that are not California Parties (or that did not elect to opt into the settlement).

The Company’s view is that the bulk of any obligations of Mirant Americas Energy Marketing to make refunds as a result of sales completed prior to July 14, 2003, in the CAISO or Cal PX markets or in bilateral transactions either have been addressed by the California Settlement or have been resolved as part of Mirant Americas Energy Marketing’s bankruptcy proceedings. To the extent that Mirant Americas Energy Marketing’s potential refund liability arises from contracts that were transferred to Mirant Energy Trading as part of the transfer of the trading and marketing business under the Plan, Mirant Energy Trading may have exposure to any refund liability related to transactions under those contracts.

FERC Show Cause Proceeding Relating to Trading Practices. On June 25, 2003, the FERC issued a show cause order (the “Trading Practices Order”) to more than 50 parties, including Mirant Americas Energy Marketing and subsidiaries of the Company, that a FERC staff report issued on March 26, 2003, identified as having potentially engaged in one or more trading strategies of the type employed by Enron

Corporation and its affiliates (“Enron”), as described in Enron memos released by the FERC in May 2002. The Trading Practices Order identified certain specific trading practices that the FERC indicated could constitute gaming or anomalous market behavior in violation of the CAISO and Cal PX tariffs. The Trading Practices Order requires the CAISO to identify transactions between January 1, 2000, and June 20, 2001, that may involve the identified trading strategies, and then requires the applicable sellers involved in those transactions to demonstrate why such transactions were not violations of the CAISO and Cal PX tariffs. On September 30, 2003, the Mirant entities filed with the FERC for approval of a settlement agreement (the “Trading Settlement Agreement”) entered into between certain Mirant entities and the FERC Trial Staff, under which Mirant Americas Energy Marketing would pay $332,411 to settle the show cause proceeding, except for an issue related to sales of ancillary services, which is discussed below. In a November 14, 2003, order in a different proceeding, the FERC ruled that certain allegations of improper trading conduct with respect to the selling of ancillary services during 2000 should be resolved in the show cause proceeding. On December 19, 2003, the Mirant entities filed with the FERC for approval of an amendment to the Trading Settlement Agreement reached with the FERC Trial Staff with respect to the sale of ancillary services. Under that amendment, the FERC would have an allowed unsecured claim in Mirant Americas Energy Marketing’s bankruptcy proceeding for $3.67 million in settlement of the allegations with respect to the sale of ancillary services. The FERC approved the Trading Settlement Agreement, as amended, on June 27, 2005, and the Bankruptcy Court approved it on August 24, 2005. Certain parties filed motions for rehearing, which the FERC denied on October 11, 2006. A party to the proceeding has appealed the FERC’s June 27, 2005, order to the Ninth Circuit.

Mirant Americas Energy Marketing Contract Dispute with Nevada Power. On December 5, 2001, Nevada Power Co. filed a complaint at the FERC seeking reformation of the purchase price of energy under a contract it had entered with Mirant Americas Energy Marketing, claiming that the prices under that contract were unjust and unreasonable because, when it entered into the contract, western power markets were dysfunctional and non-competitive markets. On June 25, 2003, the FERC dismissed this complaint. Nevada Power appealed that dismissal to the United States Court of Appeals for the Ninth Circuit, which on December 19, 2006, reversed the dismissal of the complaint and remanded the proceeding to the FERC. The sales made under the contract with Nevada Power have been completed, and the Company expects that any refund claim related to that contract, if not now barred, will be addressed in the Chapter 11 proceedings.

Mirant Americas Energy Marketing Contract Dispute with Southern California Water. On December 21, 2001, Southern California Water Co. filed a complaint at the FERC seeking reformation of the purchase price of energy under a long-term contract it had entered with Mirant Americas Energy Marketing, claiming that the prices under that contract were unjust and unreasonable because, when it entered the contract, western power markets were dysfunctional and non-competitive markets. The contract was for the purchase of 15 MWs during the period April 1, 2001, through December 31, 2006. On June 25, 2003, the FERC dismissed this proceeding. Southern California Water appealed that dismissal to the United States Court of Appeals for the Ninth Circuit, which on December 19, 2006, reversed the dismissal of the complaint and remanded the proceeding to the FERC. Upon the transfer of the assets of the trading and marketing business to Mirant Energy Trading under the Plan, Mirant Energy Trading assumed Mirant Americas Energy Marketing’s contract obligations to Southern California Water Company, including any potential refund obligations.

U.S. Government Inquiries

Department of Justice Inquiries. In November 2002, Mirant received a subpoena from the DOJ, acting through the United States Attorney’s office for the Northern District of California, requesting information about its activities and those of its subsidiaries for the period since January 1, 1998. The subpoena requested information related to the California energy markets and other topics, including the reporting of inaccurate information to trade publications that publish natural gas or electricity spot price

data. The subpoena was issued as part of a grand jury investigation. The DOJ’s investigation is based upon the same circumstances that were the subject of an investigation by the CFTC that was settled in December 2004, a s described in Mirant’s Annual Report on Form 10-K for the year ended December 31, 2004, in Legal Proceedings- Other Governmental Proceedings -CFTC Inquiry . On June 19, 2006, two former employees of Mirant pled guilty to charges of conspiracy to manipulate the price of natural gas in interstate commerce during the period from July 1, 2000, until November 1, 2000, while they were west region traders for Mirant Americas Energy Marketing. Mirant is discussing the disposition of this matter with the DOJ. If Mirant is unable to reach a consensual resolution with the DOJ, it is possible that the DOJ could seek indictments against one or more Mirant entities for alleged violations of the Commodity Exchange Act. A consensual resolution of this matter could involve a deferred prosecution agreement and payment of a fine or penalty. The Company’s current assessment is that any such fine or penalty would be paid by Mirant, not the Company or its subsidiaries.

Environmental Matters

EPA Information Request. In January 2001, the EPA issued a request for information to Mirant concerning the implications under the EPA’s NSR regulations promulgated under the Clean Air Act of past repair and maintenance activities at the Potomac River plant in Virginia and the Chalk Point, Dickerson and Morgantown plants in Maryland. The requested information concerns the period of operations that predates the Company subsidiaries’ ownership and lease of those plants. Mirant responded fully to this request. Under the APSA, Pepco is responsible for fines and penalties arising from any violation associated with operations prior to the Company subsidiaries’ acquisition or lease of the plants. If a violation is determined to have occurred at any of the plants, the Company subsidiary owning or leasing the plant may be responsible for the cost of purchasing and installing emissions control equipment, the cost of which may be material. The Company’s subsidiaries owning or leasing the Chalk Point, Dickerson and Morgantown plants in Maryland will be installing a variety of emissions control equipment on those plants to comply with the Maryland Healthy Air Act, but that equipment will not include all of the emissions control equipment that could be required if a violation of the EPA’s NSR regulations is determined to have occurred at one or more of those plants. If such a violation is determined to have occurred after the Company’s subsidiaries acquired or leased the plants or, if occurring prior to the acquisition or lease, is determined to constitute a continuing violation, the Company’s subsidiary owning or leasing the plant at issue could also be subject to fines and penalties by the state or federal government for the period after its acquisition or lease of the plant, the cost of which may be material, although applicable bankruptcy law may bar such liability for periods prior to January 3, 2006, when the Plan became effective for the Company and its subsidiaries that own or lease these plants.

Mirant Potomac River 2003 Notice of Violation. On September 10, 2003, the Virginia DEQ issued an NOV to Mirant Potomac River alleging that it violated its Virginia Stationary Source Permit to Operate by emitting NOx in excess of the “cap” established by the permit for the 2003 summer ozone season. Mirant Potomac River responded to the NOV, asserting that the cap was unenforceable, noting that when the cap was made part of the permit it could comply through the purchase of emissions allowances and raising other equitable defenses. Virginia’s civil enforcement statute provides for injunctive relief and penalties. On January 22, 2004, the EPA issued an NOV to Mirant Potomac River alleging the same violation of its Virginia Stationary Source Permit to Operate as set out in the NOV issued by the Virginia DEQ.

(2) comply with declining system-wide ozone season NOx emissions caps from 2004 through 2010, (3) comply with system-wide annual NOx emissions caps starting in 2004, (4) meet seasonal system average emissions rate targets in 2008 and (5) pay civil penalties and perform supplemental environmental projects in and around the Potomac River plant expected to achieve additional environmental benefits. Except for the installation of the controls planned for the Potomac River units and the installation of selective catalytic reduction (“SCR”) or equivalent technology at Mirant Mid-Atlantic’s Morgantown units 1 and 2 in 2007 and 2008, the Original Consent Decree would not have obligated the Company’s subsidiaries to install specifically designated technology, but rather to reduce emissions sufficiently to meet the various NOx caps. Moreover, as to the required installations of SCRs at Morgantown, Mirant Mid-Atlantic may choose not to install the technology by the applicable deadlines and leave the units off either permanently or until such time as the SCRs are installed. The Original Consent Decree was subject to the approval of the district court and the Bankruptcy Court. As described below, the Original Consent Decree was not approved and the parties filed an amended proposed consent decree that superseded the Original Consent Decree.

On July 22, 2005, the district court granted a motion filed by the City of Alexandria seeking to intervene in the district court action, although the district court imposed certain limitations on the City of Alexandria’s participation in the proceedings. On September 23, 2005, the City of Alexandria filed a motion seeking authority to file an amended complaint in the action seeking injunctive relief and civil penalties under the Clean Air Act for alleged violations by Mirant Potomac River of its Virginia Stationary Source Permit to Operate and the State of Virginia’s State Implementation Plan. Based upon a computer modeling described below in Mirant Potomac River Downwash Study , the City of Alexandria asserted that emissions from the Potomac River plant cause or contribute to exceedances of NAAQS for SO2, NO2 and particulate matter. The City of Alexandria also contended based on its modeling analysis that the plant’s emissions of hydrogen chloride and hydrogen fluoride exceed Virginia state standards. Mirant Potomac River disputes the City of Alexandria’s allegations that it has violated the Clean Air Act and Virginia law. On December 2, 2005, the district court denied the City of Alexandria’s motion seeking to file an amended complaint.

In early May 2006, the parties to the Original Consent Decree and Mirant Chalk Point entered into and filed for approval with the United States District Court for the Eastern District of Virginia an amended consent decree (the “Amended Consent Decree”) to resolve Mirant Potomac River’s potential liability for matters addressed in the NOVs previously issued by the Virginia DEQ and the EPA. The Amended Consent Decree includes the requirements that were to be imposed under the terms of the Original Consent Decree as described above. It also defines the rights and remedies of the parties in the event of a rejection in bankruptcy or other termination of any of the long-term leases under which Mirant Mid-Atlantic leases the coal units at the Dickerson and Morgantown plants. The Amended Consent Decree provides that if Mirant Mid-Atlantic rejects or otherwise loses one or more of its leasehold interests in the Morgantown and Dickerson plants and ceases to operate one or both of the plants, Mirant Mid-Atlantic, Mirant Chalk Point and/or Mirant Potomac River will (i) provide the EPA, Virginia DEQ and the MDE with the written agreement of the new owner or operator of the affected plant or plants to be bound by the obligations of the Amended Consent Decree and (ii) where the affected plant is the Morgantown plant, offer to any and all prospective owners and/or operators of the Morgantown plant to pay for completion of engineering, construction and installation of the SCRs required by the Amended Consent Decree. If the new owner or operator of the affected plant or plants does not agree to be bound by the obligations of the Amended Consent Decree, it requires Mirant Mid-Atlantic, Mirant Chalk Point and/or Mirant Potomac River to install an alternative suite of environmental controls at the plants they continue to own. The City of Alexandria and certain individuals and organizations opposed entry of the Amended Consent Order. The Bankruptcy Court approved the Amended Consent Decree on June 1, 2006. The district court approved the Amended Consent Decree on April 20, 2007.

Mirant Potomac River Downwash Study . On September 23, 2004, the Virginia DEQ and Mirant Potomac River entered into an order by consent with respect to the Potomac River plant under which Mirant Potomac River agreed to perform a modeling analysis to assess the potential effect of “downwash” from the plant (1) on ambient concentrations of SO2, NO2, CO and PM10 for comparison to the applicable NAAQS and (2) on ambient concentrations of mercury for comparison to Virginia Standards of Performance for Toxic Pollutants. Downwash is the effect that occurs when aerodynamic turbulence induced by nearby structures causes emissions from an elevated source, such as a smokestack, to move rapidly toward the ground resulting in higher ground-level concentrations of emissions.

The computer modeling analysis predicted that emissions from the Potomac River plant have the potential to contribute to localized, modeled instances of exceedances of the NAAQS for SO2, NO2 and PM10 under certain conditions. Based on those results, the Virginia DEQ issued a directive to Mirant Potomac River on August 19, 2005, to undertake immediately such action as was necessary to ensure protection of human health and the environment and eliminate NAAQS exceedances. On August 24, 2005, power production at all five units of the Potomac River generating facility was temporarily halted in response to the directive from the Virginia DEQ. On August 25, 2005, the District of Columbia Public Service Commission filed an emergency petition and complaint with the FERC and the DOE to prevent the shutdown of the Potomac River facility. The matter remains pending before the FERC and the DOE. On December 20, 2005, due to a determination by the DOE that an emergency situation existed with respect to the reliability of the supply of electricity to central Washington, D.C., the DOE ordered Mirant Potomac River to generate electricity at the Potomac River generating facility, as requested by PJM, during any period in which one or both of the transmission lines serving the central Washington, D.C. area are out of service due to a planned or unplanned outage. In addition, the DOE ordered Mirant Potomac River, at all other times, for electric reliability purposes, to keep as many units in operation as possible and to reduce the start-up time of units not in operation without contributing to any NAAQS exceedances. The DOE required Mirant Potomac River to submit a plan, on or before December 30, 2005, that met these requirements. The order further provides that Mirant Potomac River and its customers should agree to mutually satisfactory terms for any costs incurred by it under this order or just and reasonable terms shall be established by a supplemental order. Certain parties filed for rehearing of the DOE order, and on February 17, 2006, the DOE issued an order granting rehearing solely for purposes of considering further the rehearing requests. Mirant Potomac River submitted an operating plan in accordance with the order. On January 4, 2006, the DOE issued an interim response to Mirant Potomac River’s operating plan authorizing operation of the units of the Potomac River generating facility on a reduced basis, but making it possible to bring the entire plant into service within approximately 28 hours when necessary for reliability purposes. The DOE’s order expires July 1, 2007.

In a letter received December 30, 2005, the EPA invited Mirant Potomac River and the Virginia DEQ to work with the EPA to ensure that Mirant Potomac River’s operating plan submitted to the DOE adequately addressed NAAQS issues. The EPA also asserted in its letter that Mirant Potomac River did not immediately undertake action as directed by the Virginia DEQ’s August 19, 2005, letter and failed to comply with the requirements of the Virginia State Implementation Plan established by that letter. Mirant Potomac River received a second letter from the EPA on December 30, 2005, requiring Mirant to provide certain requested information as part of an EPA investigation to determine the Clean Air Act compliance status of the Potomac River generating facility.

service; (ii) requires the operation of trona injection units to reduce SO2 emissions; and (iii) requires Mirant Potomac River to undertake a model evaluation study to predict ambient air quality impacts from the facility’s operations. In accordance with the specified operating scenarios, the ACO permits the facility to operate using a daily predictive modeling protocol. This protocol allows Mirant Potomac River to schedule the facility’s level of operations based on whether computer modeling predicts a NAAQS exceedance, based on weather and certain operating parameters. On June 2, 2006, the DOE issued a letter modifying its January 6, 2006, order to direct Mirant Potomac River to comply with the ACO in order to ensure adequate electric reliability to the District of Columbia. Mirant Potomac River is operating the Potomac River facility in accordance with the ACO and has been able to operate all five units of the facility most of the time under the ACO. This ACO expires on June 1, 2007. Mirant Potomac River is in discussions with the Virginia DEQ and the Virginia State Air Pollution Control Board to determine the manner in which the Potomac River facility will be permitted to operate after the ACO expires.

New York State Administrative Claim . On January 24, 2006, the State of New York and the NYSDEC filed a notice of administrative claims in the Mirant Debtors’ Chapter 11 proceedings asserting a claim seeking to require the Mirant Debtors to provide funding to the Company’s subsidiaries owning generating facilities in New York to satisfy certain specified environmental compliance obligations. The State of New York alleges that during the pendency of the Chapter 11 proceedings the Mirant Debtors that emerged from bankruptcy in January 2006 made decisions on behalf of the Company’s subsidiaries owning generating facilities in New York and did not appropriately maintain the corporate separateness between themselves and those subsidiaries. The Company disputes those allegations. The State of New York cites various existing outstanding matters between the State and the Company’s subsidiaries owning generating facilities in New York related to compliance with environmental laws and regulations, most of which are not material. The most significant compliance obligation identified by the State of New York in its notice of administrative claim relates to the 2003 Consent Decree entered into by Mirant New York and Mirant Lovett with the State of New York to resolve issues related to NSR requirements under the Clean Air Act related to the Lovett plant. For further discussion of the status of the 2003 Consent Decree see “Chapter 11 Proceedings” above. The State of New York and the NYSDEC have executed a stipulated order with the Company’s New York subsidiaries and the other Mirant Debtors to stay resolution of this administrative claim. That stipulated order was approved by the Bankruptcy Court on February 23, 2006.

Riverkeeper Suit Against Mirant Lovett . On March 11, 2005, Riverkeeper, Inc. filed suit against Mirant Lovett in the United States District Court for the Southern District of New York under the Clean Water Act. The suit alleges that Mirant Lovett failed to implement a marine life exclusion system at its Lovett generating plant and to perform monitoring for the exclusion of certain aquatic organisms from the plant’s cooling water intake structures in violation of Mirant Lovett’s water discharge permit issued by the State of New York. The plaintiff requests the court to enjoin Mirant Lovett from continuing to operate the Lovett generating plant in a manner that allegedly violates the Clean Water Act, to impose civil penalties of $32,500 per day of violation, and to award the plaintiff attorneys’ fees. On April 20, 2005, the district court approved a stipulation agreed to by the plaintiff and Mirant Lovett that stays the suit until 60 days after entry of an order by the Bankruptcy Court confirming a plan of reorganization for Mirant Lovett becomes final and non-appealable.

City of Alexandria Zoning Action

the plant would be permitted during the seven-year period. The City Council also approved revocation of two special use permits issued in 1989 (the “1989 SUPs”), one applicable to the administrative office space at Mirant Potomac River’s plant and the other for the plant’s transportation management plan.

On January 18, 2005, Mirant Potomac River and Mirant Mid-Atlantic filed a complaint against the City of Alexandria and the City Council in the Circuit Court for the City of Alexandria seeking to overturn the actions taken by the City Council on December 18, 2004, on the grounds that those actions violated federal, state and city laws. On February 24, 2006, the court entered judgment in favor of Mirant Potomac River and Mirant Mid-Atlantic declaring the change in the zoning status of Mirant Potomac River’s generating plant to be invalid and vacating the City Council’s revocation of the 1989 SUPs. On April 20, 2007, the Virginia Supreme Court affirmed the rulings by the trial court. The City of Alexandria has indicated that it intends to file a motion for rehearing with the Virginia Supreme Court.

Pepco Assertion of Breach of Local Area Support Agreement

Following the shutdown of the Potomac River plant on August 24, 2005, Mirant Potomac River notified Pepco on August 30, 2005, that it considered the circumstances resulting in the shutdown of the plant to constitute a force majeure event under the Local Area Support Agreement dated December 19, 2000, between Pepco and Mirant Potomac River. That agreement imposes obligations upon Mirant Potomac River to dispatch the Potomac River plant under certain conditions, to give Pepco several years advance notice of any indefinite or permanent shutdown of the plant and to pay all or a portion of certain costs incurred by Pepco for transmission additions or upgrades when an indefinite or permanent shutdown of the plant occurs prior to December 19, 2010. On September 13, 2005, Pepco notified Mirant Potomac River that it considers Mirant Potomac River’s shutdown of the plant to be a material breach of the Local Area Support Agreement that is not excused under the force majeure provisions of the agreement. Pepco contends that Mirant Potomac River’s actions entitle Pepco to recover as damages the cost of constructing additional transmission facilities. Pepco, on January 24, 2006, filed a notice of administrative claims in the bankruptcy proceedings asserting that Mirant Potomac River’s shutdown of the Potomac River plant causes Mirant Potomac River to be liable for the cost of such transmission facilities, which cost it estimates to be in excess of $70 million. Mirant Potomac River disputes Pepco’s interpretation of the agreement. The outcome of this matter cannot be determined at this time.

If it is approved by a final order of the Bankruptcy Court, the Settlement Agreement entered into on May 30, 2006, by the Mirant Settling Parties and the Pepco Settling Parties would resolve all claims asserted by Pepco against Mirant Potomac River arising out of the suspension of operations of the Potomac River plant in August 2005. On August 9, 2006, the Bankruptcy Court entered an order approving the Settlement Agreement, but certain holders of unsecured claims in the bankruptcy proceedings have appealed that order, and the order has not yet become a final order. Under the Settlement Agreement, Pepco would release all claims it has asserted against Mirant Potomac River related to the shutdown of the plant in return for the claim Pepco receives in the Mirant bankruptcy proceeding.

Other Legal Matters

The Company is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Other Contingencies

Swinging Bridge . On May 5, 2005, Mirant NY-Gen discovered a sinkhole at its Swinging Bridge dam, located in Sullivan County, New York. In response, Mirant NY-Gen filled this sinkhole, inspected for

damage the dam’s slopes and the enclosed pipe that delivers water from the reservoir to the generator, drew down the lake level, and cleaned the diversion tunnel. Mirant NY-Gen’s analysis indicated that the most probable cause of the sinkhole was erosion of soil comprising the dam from water flow through a hole in the pipe that delivers water from the reservoir to the generator. The dam is currently stabilized, and Mirant NY-Gen has performed additional remediation repairs. By letter dated June 14, 2006, the FERC authorized Mirant NY-Gen to proceed with its remediation plan for the sinkhole. The FERC has also concurred with the results of Mirant NY-Gen’s flood study for its New York Swinging Bridge, Rio and Mongaup generation facilities, which study concluded that no additional remediation is required. The Bankruptcy Court authorized Mirant NY-Gen to proceed with implementation of the remediation plan on June 29, 2006. Through March 31, 2007, $27 million had been incurred to remediate the dam at Swinging Bridge. Upon the closing of the Alliance Sale on May 7, 2007, the new owner of Mirant NY-Gen assumed responsibility for completing the remediation work. Mirant Americas, which was assigned Mirant NY-Gen’s claims against third parties under Mirant NY-Gen’s plan of reorganization, expects to recover insurance proceeds for a portion of the repair costs incurred prior to the sale of Mirant NY-Gen.

Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition

The following discussion should be read in conjunction with our accompanying unaudited condensed consolidated financial statements and the notes thereto, which are included elsewhere in this report.

Overview

We are a competitive energy company that produces and sells electricity. We are an indirect wholly-owned subsidiary of Mirant. On May 1, 2007, Mirant completed the sale of six U.S. natural gas-fired intermediate and peaking plants, including our Zeeland and Bosque facilities. In addition, on May 7, 2007, we completed the sale of Mirant NY-Gen. Our continuing operations of 10,301 MW consist of the ownership, long-term lease and operation of power generation facilities located in markets in the Mid-Atlantic and Northeast regions of the United States and in California, and energy trading and marketing operations in Atlanta, Georgia.

Our Mid-Atlantic operations contributed 63% of our $392 million realized gross margin for the three months ended March 31, 2007. Our power plants located in the Mid-Atlantic region that sell power into the PJM market will participate in the RPM forward capacity market. Due to the increasing demand for power and the continuing reduction in available capacity in this area, the RPM is designed to provide prices for capacity that are intended to ensure that adequate resources are in place to meet the demand requirements. PJM held its first annual capacity auction in April 2007, for delivery of capacity from June 1, 2007 to May 31, 2008, and the resource clearing price in the Southwestern MAAC for delivery of capacity from June 1, 2007 to May 31, 2008, was $188.54 per MW-day. Two more auctions will be conducted this year and relate to the delivery periods for June 1, 2008 to May 31, 2009 and from June 1, 2009 to May 31, 2010. Thereafter, annual auctions will be conducted to procure capacity three years prior to the delivery period.

Results of Operations

The following discussion of our performance is organized by reportable segment, which is consistent with the way we manage our business.

Consolidated Financial Performance

We reported a net loss of $205 million and net income of $389 million for the periods ended March 31, 2007 and 2006, respectively. For the three months ended March 31, 2007, as compared to the same period in 2006, a decrease in unrealized gross margin reduced net income by $641 million. We engage in asset hedging activities to reduce our exposure to commodity price fluctuations and to achieve more predictable realized gross margins. The decrease in unrealized gross margins from these activities was principally due to rising power prices in the three months ended March 31, 2007, as compared to declining power prices during the three months ended March 31, 2006. For the same periods, all other activity combined resulted in a $47 million increase in net income. The change in net income is detailed as follows (in millions):

	For the Three Months Ended March 31,
	2007				2006				Increase/ (Decrease)
Realized gross margin		$	392			$	363			$	29
Unrealized gross margin		(359		)		282				(641		)
Total gross margin		33				645				(612		)
Operating expenses:
Operations and maintenance
Affiliate		65				69				(4		)
Nonaffiliate		88				93				(5		)
Depreciation and amortization		30				28				2
Gain on sales of assets, net		(2		)		—				(2		)
Total operating expenses		181				190				(9		)
Operating income (loss)		(148		)		455				(603		)
Other expense (income), net
Nonaffiliate		53				65				(12		)
Income (loss) from continuing operations before reorganization items, net		(201		)		390				(591		)
Reorganization items, net		(1		)		—				(1		)
Income (loss) from continuing operations		(200		)		390				(590		)
Loss from discontinued operations		(5		)		(1		)		(4		)
Net Income (Loss)		$	(205	)		$	389			$	(594	)

In the tables below, the Mid-Atlantic region includes our Chalk Point, Morgantown, Dickerson and Potomac River facilities. The Northeast region includes our Bowline, Canal, Lovett, Kendall, Hillburn, Shoemaker, Martha’s Vineyard, Swinging Bridge, Rio, Mongaup and Wyman facilities. The California region includes our Pittsburg, Contra Costa and Potrero facilities. Other Operations includes proprietary trading and fuel oil management activities.

Operating Statistics

The following table summarizes capacity factor (average percentage of full capacity used over a specific period) by region:

	Three Months Ended March 31
							Increase/
	2007			2006			(Decrease)
Mid-Atlantic		37	%		35	%		2	%
Northeast		27	%		15	%		12	%
California		3	%		5	%		(2	)%
Total		26	%		23	%		3	%

The following table summarizes power generation volumes by region (in gigawatt hours):

	Three Months Ended March 31,		Increase/
	2007	2006	(Decrease)
Mid-Atlantic	4,234	4,083		151
Northeast	1,777	994		783
California	145	243		(98	)
Total	6,156	5,320		836

Three Months Ended March 31, 2007 versus March 31, 2006

Gross Margin

The following table details gross margin by realized and unrealized margin (in millions):

	Three Months Ended March 31,
	2007										2006
	Realized			Unrealized				Total			Realized			Unrealized			Total
Mid-Atlantic		$	246		$	(319	)	$	(73	)		$	191		$	226	$	417
Northeast		91			(49		)	42				113			34		147
California		32			—			32				26			1		27
Other Operations		17			9			26				18			21		39
Eliminations		6			—			6				15			—		15
Total		$	392		$	(359	)	$	33			$	363		$	282	$	645

Gross margin for the three months ended March 31, 2007, is detailed as follows (in millions):

	Three Months Ended March 31, 2007
	Mid- Atlantic				Northeast				California			Other Operations			Eliminations			Total
Energy		$	165			$	31			$	1		$	17		$	6	$	220
Contracted and capacity		11				24				31			—			—		66
Incremental realized value of hedges		70				36				—			—			—		106
Unrealized gains (losses)		(319		)		(49		)		—			9			—		(359		)
Total		$	(73	)		$	42			$	32		$	26		$	6	$	33

Gross margin for the three months ended March 31, 2006, is detailed as follows (in millions):

	Three Months Ended March 31, 2006
	Mid- Atlantic			Northeast			California			Other Operations			Eliminations			Total
Energy		$	137		$	22		$	—		$	18		$	15	$	192
Contracted and capacity		14			12			26			—			—		52
Incremental realized value of hedges		40			79			—			—			—		119
Unrealized gains		226			34			1			21			—		282
Total		$	417		$	147		$	27		$	39		$	15	$	645

Energy represents gross margin from the generation of electricity, emissions allowances sales and purchases, fuel sales, fuel purchases and handling, steam sales and our proprietary trading and fuel oil management activities.

Contracted and capacity represents revenue received through RMR contracts and other installed capacity arrangements and revenue from ancillary services.

Incremental realized value of hedges represents the actual margin upon the settlement of our power and fuel hedging derivative contracts.

Unrealized gains/losses represent the unrealized portion of our derivative contracts.

Our gross margin for the three months ended March 31, 2007, was $33 million as compared to $645 million for the same period in 2006. Gross margin includes net unrealized gains and losses from our hedging activities. We engage in asset hedging activities to reduce our exposure to commodity price fluctuations and to achieve more predictable realized gross margins. Net unrealized losses from hedging activities were $359 million for the three months ended March 31, 2007, primarily due to rising power prices. Of this amount, $188 million is due to a decrease in value associated with forward power contracts for future periods as a result of increases in forward power prices in 2007 and $171 million is due to the settlement of power and fuel contracts during the period for which net unrealized gains had been recorded in prior periods. For the three months ended March 31, 2006, we recognized net unrealized gains from hedging activities of $282 million primarily due to declining power prices in that period. Our realized gross margin for the three months ended March 31, 2007, was $392 million, an increase of $29 million compared to the same period in 2006 primarily due to an increase in generation volumes and higher energy prices.

Mid-Atlantic

Our Mid-Atlantic segment, which accounts for approximately half our generating capacity, includes four generation facilities with total generation capacity of 5,256 MW. The following table summarizes our Mid-Atlantic segment (in millions):

	Three Months Ended March 31,								Increase /
	2007				2006				(Decrease)
Realized gross margin		$	246			$	191			$	55
Unrealized gross margin		(319		)		226				(545		)
Total gross margin		(73		)		417				(490		)
Operating expenses:
Operations and maintenance		83				85				(2		)
Depreciation and amortization		19				18				1
Gain on sales of assets, net		(1		)		—				(1		)
Total operating expenses		101				103				(2		)
Operating income (loss)		(174		)		314				(488		)
Total other income, net		(1		)		(1		)		—
Income (loss) from continuing operations before reorganization items and income taxes		$	(173	)		$	315			$	(488	)

Gross Margin

Gross margin decreased by $490 million for the three months ended March 31, 2007, compared to the same period for 2006 and is detailed as follows (in millions):

	Three Months Ended March 31,							Increase/
	2007				2006			(Decrease)
Energy		$	165			$	137		$	28
Contracted and capacity		11				14			(3		)
Incremental realized value of hedges		70				40			30
Unrealized gains (losses)		(319		)		226			(545		)
Total		$	(73	)		$	417		$	(490	)

The significant decrease in the gross margin for our Mid-Atlantic operations is primarily due to the following:

· a decrease of $545 million related to unrealized gains and losses on hedging activities. In 2007, unrealized losses of $319 million were primarily due to $197 million from a decrease in value associated with forward power contracts for future periods as a result of increases in forward power prices in 2007 and $122 million due to the settlement of power and fuel contracts during the period for which net unrealized gains had been recorded in prior periods. In 2006, unrealized gains of $226 million were primarily due to $175 million from an increase in value associated with forward power contracts for future periods due to decreases in power prices and $51 million due to the settlement of contracts during the period for which unrealized losses had been recorded in prior periods;

· an increase of $28 million in energy due to an increase in power prices and a slight increase in generation volumes. Average power prices increased by 7% and generation volumes increased by 4% for the three months ended March 31, 2007, compared to the same period in 2006. Our baseload coal units accounted for 92% of our generation volumes for the first quarter of 2007 compared to 98% in the first quarter of 2006; and

· an increase of $30 million in incremental realized value of hedges of our generation output primarily due to an increase in the amount by which the settlement value of power contracts exceeded market prices.

Northeast

Our Northeast segment is comprised of our assets located in New York and New England with total generation capacity of 3,047 MW. The following table summarizes the operations of our Northeast segment for the three months ended March 31, 2007 and 2006 (in millions):

	Three Months Ended March 31,								Increase/
	2007				2006				(Decrease)
Realized gross margin		$	91			$	113			$	(22	)
Unrealized gross margin		(49		)		34				(83		)
Total gross margin		42				147				(105		)
Operating expenses:
Operations and maintenance		45				54				(9		)
Depreciation and amortization		7				5				2
Gain on sales of assets, net		(10		)		(33		)		23
Total operating expenses		42				26				16
Operating income		—				121				(121		)
Total other expense (income), net		(2		)		3				(5		)
Income from continuing operations before reorganization items and income taxes		$	2			$	118			$	(116	)

Gross Margin

Gross margin decreased by $105 million for the three months ended March 31, 2007, compared to the same period for 2006 and is detailed as follows (in millions):

	Three Months Ended March 31,							Increase/
	2007				2006			(Decrease)
Energy		$	31			$	22		$	9
Contracted and capacity		24				12			12
Incremental realized value of hedges		36				79			(43		)
Unrealized gains (losses)		(49		)		34			(83		)
Total		$	42			$	147		$	(105	)

The decrease in gross margin is primarily due to the following:

· a decrease of $83 million related to unrealized gains and losses on hedging activities. In 2007, unrealized losses of $49 million were primarily due to the settlement of power and fuel contracts during the period for which unrealized gains had been recorded in prior periods. In 2006, unrealized gains of $34 million were primarily due to $29 million from an increase in value associated with forward power contracts for future periods due to decreases in power prices and $5 million due to the settlement of contracts during the period for which unrealized losses had been recorded in prior periods;

· a decrease of $43 million in incremental realized value of hedges of our generation output primarily due to a decrease in the amount by which the settlement value of power contracts exceeded market prices;

· an increase of $12 million in contracted and capacity primarily due to the implementation of FCM. See “Item 1. Regulatory Environment” in our Annual Report on Form 10-K for the year ended December 31, 2006, for further information on the implementation of FCM; and

· an increase of $9 million in energy due to higher generation volumes that resulted from colder weather and wider conversion spreads for our oil units. While average power prices decreased by 17%, volumes increased by 79%.

Operating Expenses

Gains on sales of assets decreased $23 million due to lower sales of emissions allowances to affiliates that are eliminated in the consolidated statement of operations. This amount is partially offset by a $9 million decrease in operations and maintenance expense, of which $8 million is due to a decrease in property taxes. For Mirant Bowline, Mirant Lovett and Hudson Valley Gas the property tax expense recognized for the three months ended March 31, 2006, was at the assessed level while the 2007 property tax expense is at the level reflected in a December 2006 property tax settlement.

California

Our California segment consists of the Pittsburg, Contra Costa and Potrero facilities with total generation capacity of 2,347 MW. The following table summarizes our California segment for the three months ended March 31, 2007 and 2006 (in millions):

	Three Months Ended March 31,							Increase/
	2007				2006			(Decrease)
Realized gross margin		$	32			$	26		$	6
Unrealized gross margin		—				1			(1		)
Total gross margin		32				27			5
Operating expenses:
Operations and maintenance		20				17			3
Depreciation and amortization		3				3			—
Gain on sales of assets. net		(1		)		—			(1		)
Total operating expenses		22				20			2
Operating income		10				7			3
Total other income, net		(3		)		—			(3		)
Income from continuing operations before reorganization items and income taxes		$	13			$	7		$	6

Gross Margin

Gross margin increased by $5 million for the three months ended March 31, 2007, compared to the same period for 2006 and is detailed as follows (in millions):

	Three Months Ended March 31,						Increase/
	2007			2006			(Decrease)
Energy		$	1		$	—		$	1
Contracted and capacity		31			26			5
Unrealized gains		—			1			(1		)
Total		$	32		$	27		$	5

The increase in our contracted and capacity gross margin is primarily due to the commencement of a new tolling agreement in the first quarter of 2007 at our Contra Costa and Pittsburg facilities. See “Item 1. Business Segments” in our Annual Report on Form 10-K for the year ended December 31, 2006, for additional information regarding the tolling agreement.

Other Operations

Other Operations includes proprietary trading and fuel oil management. The following table summarizes our Other Operations segment (in millions):

	Three Months Ended March 31,
	2007				2006				Decrease
Realized gross margin		$	17			$	18			$	(1	)
Unrealized gross margin		9				21				(12		)
Total gross margin		26				39				(13		)
Operating expenses:
Operations and maintenance		5				6				(1		)
Depreciation and amortization		1				2				(1		)
Total operating expenses		6				8				(2		)
Operating income		20				31				(11		)
Total other expense, net		59				63				(4		)
Loss from continuing operations before reorganization items and income taxes		$	(39	)		$	(32	)		$	(7	)

Gross Margin

Gross margin decreased by $13 million for the three months ended March 31, 2007, compared to the same period for 2006 and is detailed as follows (in millions):

	Three Months Ended March 31,
	2007			2006			Decrease
Energy		$	17		$	18		$	(1	)
Unrealized gains		9			21			(12		)
Total		$	26		$	39		$	(13	)

The decrease in gross margin is primarily due to a decrease of $12 million in unrealized gains on proprietary trading and fuel oil management activities compared to the same period in 2006.

Discontinued Operations

For the three months ended March 31, 2007 and 2006, loss from discontinued operations was $5 million and $1 million, respectively and included Mirant Zeeland, LLC and Mirant Texas. See Note C to our unaudited condensed consolidated financial statements for additional information related to planned dispositions and discontinued operations. The decrease of $4 million is primarily due to unrealized gains and losses on hedging activities.

Financial Condition

Liquidity and Capital Resources

Overview

Our liquidity and capital requirements are primarily a function of our debt maturities and debt service requirements, capital expenditures, collateral requirements, fuel procurement and power sale contract obligations, legal settlements and working capital needs. Net cash flow provided by operating activities for the three months ended March 31, 2007, totaled $207 million compared to cash used by operating activities of $310 million for the same period in 2006.

Debtor-in-Possession Financing for New York Subsidiaries

Mirant North America and Mirant Americas Energy Marketing, (the “Primary DIP Lenders”) entered into an agreement (the “Primary New York DIP Agreement”) to make secured debtor-in-possession financing in an amount of (i) $20 million, plus (ii) an amount equal to the amount of credit support provided on behalf of Mirant New York, Mirant Bowline, Mirant Lovett, and Hudson Valley Gas (collectively, the “New York DIP Borrowers”), to the extent such amounts were collateralized with cash or cash equivalents by the New York DIP Borrowers. The New York DIP Borrowers had posted $21 million cash collateral with Mirant Energy Trading (successor to Mirant Americas Energy Marketing) in accordance with the March 31, 2007, collateral allocation performed in good faith by Mirant Energy Trading. This cash collateral amount was returned to the New York DIP Borrowers and the Primary New York DIP Agreements were terminated in conjunction with the Emerging Subsidiaries emergence from bankruptcy on April 16, 2007.

Cash Flows

Continuing Operations

Operating Activities . Our cash provided by operating activities is affected by seasonality, changes in energy prices and fluctuations in our working capital requirements. Cash provided by operating activities from continuing operations increased $524 million for the three months ended March 31, 2007, compared to the same period in 2006, primarily due to the following:

· an increase in realized gross margin of $29 million in 2007, compared to the same period in 2006. See Results of Operations for additional discussion of our performance in 2007 compared to the same period in 2006;

· a decrease in bankruptcy related claims and expenses of $736 million. For the three months ended March 31, 2006, we paid $1.729 billion of bankruptcy claims, of which $739 million is reflected in cash from operations;

· an increase of $71 million related to changes in our fuel oil inventory. Our inventory levels increased in 2006 as a result of higher fuel oil prices and lower generation volumes in that period. In 2007, our fuel oil inventory levels decreased due to higher generation volumes from our oil units and emissions allowances decreased due to an increase in 2006 resulting from purchases and lower generation volumes;

· an increase due to the escrow deposit of $70 million in the first quarter of 2006 related to the transfer of our Contra Costa 8 asset to PG&E. The deposit was returned to us when the transfer was completed in the fourth quarter of 2006;

· an increase due to the receipt in 2007 of a net refund of $48 million related to the New York property tax settlement;

· a decrease of $314 million due to changes in posted collateral levels. For the three months ended March 31, 2007, we posted an additional $77 million of cash collateral to support energy marketing activities. For the three months ended March 31, 2006, we had a net reduction in collateral of $237 million comprised of a decrease in cash collateral to support energy marketing activities of $381 million, a reduction of $56 million in cash collateral posted in connection with the Mirant Mid-Atlantic lease upon posting $75 million of letters of credit, and the deposit of $200 million into a cash collateral account to support the issuance of letters of credit;

· a decrease of $58 million due to changes in accounts receivable and accounts payable; and

· a decrease of $46 million primarily due to the return in 2007 of deposits previously posted by our counterparties.

Investing Activities . Net cash used in investing activities from continuing operations was $71 million for the three months ended March 31, 2007, compared to $18 million in 2006. This difference was primarily due to an increase of $55 million in capital expenditures primarily due to our environmental capital expenditures for our Mid-Atlantic generation facilities.

Financing Activities . Net cash used in financing activities from continuing operations was $242 million for the three months ended March 31, 2007, compared to cash provided of $240 million for the same period in 2006. This difference was primarily due to the following:

· a decrease in proceeds from the issuance of long-term debt of approximately $2 billion. Proceeds from the issuance of long-term debt in 2006 included $850 million from the Mirant North America debt offering that was released from escrow on January 3, 2006, $700 million from the Mirant North America senior secured loan and $465 million drawn on the Mirant North America senior secured revolving credit facility. In 2006 we also incurred $51 million in debt issuance costs;

· a decrease of $1.3 billion in repayments of long-term debt. In 2007, we repaid $133 million on the Mirant North America senior secured term loan. In 2006 we repaid $465 million on the Mirant North America senior secured revolving credit facility and $990 million of principal payments for debt settled under the Plan;

· we made a payment of $250 million in 2006 under the Plan to Mirant Americas; and

· we distributed $116 million to our member in 2007.

Discontinued Operations

Cash used in operating activities from discontinued operations increased $7 million for the three months ended March 31, 2007, compared to the same period in 2006.

Total Cash, Cash Equivalents and Credit Facility Availability

At March 31, 2007, we had total cash, cash equivalents, and credit facility availability of approximately $1.3 billion. The table below sets forth total cash, cash equivalents and availability of credit facilities of Mirant Americas Generation and its subsidiaries (in millions):

	At March 31, 2007			At December 31, 2006
Cash and Cash Equivalents:
Mirant Americas Generation		$	19		$	—
Mirant North America		394			678
Mirant Mid-Atlantic		234			75
Total cash and cash equivalents		647			753
Less: Cash restricted due to bankruptcy of New York entities and reserved for working capital and other purposes(1)		133			102
Total available cash and cash equivalents		514			651
Available under credit facilities		783			796
Total cash, cash equivalents and credit facilities availability		$	1,297		$	1,447

(1) At March 31, 2007, this amount included approximately $118 million of cash related to the New York entities that emerged from bankruptcy on April 16, 2007. Post-emergence this cash was no longer restricted due to bankruptcy.

The ability of Mirant North America and its subsidiary Mirant Mid-Atlantic to pay dividends is restricted under the terms of their debt agreements and leverage lease documentation, respectively. At March 31, 2007, Mirant North America had distributed to its parent all available cash that was permitted to be distributed under the terms of its debt agreements, leaving approximately $628 million at Mirant North America and its subsidiaries. Approximately $234 million of such amount was held by Mirant Mid-Atlantic which, as of March 31, 2007, met the ratio tests under the leveraged lease documents for distribution to Mirant North America. After taking into account the financial results of Mirant North America for the three months ended March 31, 2007, we expect Mirant North America will be able to distribute approximately $142 million in May 2007.

Cash Collateral and Letters of Credit

In order to sell power and purchase fuel in the forward markets and perform other energy trading and marketing activities, we are often required to provide trade credit support to our counterparties or make deposits with brokers. In addition, we are often required to provide cash collateral or letters of credit for access to the transmission grid, to participate in power pools, to fund debt service reserves and for other operating activities. Trade credit support includes cash collateral, letters of credit and financial guarantees. In the event that we default, the counterparty can draw on a letter of credit or apply cash collateral held to satisfy the existing amounts outstanding under an open contract. At March 31, 2007, our outstanding issued letters of credit totaled $218 million.

The following table summarizes cash collateral posted with counterparties and brokers and letters of credit issued as of March 31, 2007 and December 31, 2006 (in millions):

	At March 31, 2007			At December 31, 2006
Cash collateral posted—energy trading and marketing		$	104		$	27
Cash collateral posted—other operating activities		11			11
Letters of credit—energy trading and marketing		120			100
Letters of credit—debt service and rent reserves		75			84
Letters of credit—other operating activities		23			15
		333			237
Discontinued operations:
Assets held for sale—letters of credit		—			5
Total		$	333		$	242

Critical Accounting Policies and Estimates

The sections below contain material updates to the summary of our critical accounting policies and estimates contained in Item 7, Management’s Discussion and Analysis of Results of Operations and Financial Condition in our Annual Report on Form 10-K for the year ended December 31, 2006.

Long-Lived Asset Impairments

Nature of Estimates Required . We evaluate our long-lived assets, including goodwill and indefinite-lived intangible assets for impairment in accordance with applicable accounting guidance. The amount of an impairment charge is calculated as the excess of the asset’s carrying value over its fair value, which generally represents the discounted expected future cash flows attributable to the asset or in the case of assets we expect to sell, at fair value less costs to sell.

SFAS No. 144 requires management to recognize an impairment charge if the sum of the undiscounted expected future cash flows from a long-lived asset or definite-lived intangible is less than the carrying value of that asset. We evaluate our long-lived assets (property, plant and equipment) and definite-lived intangibles for impairment whenever indicators of impairment exist or when we commit to sell the asset. These evaluations of long-lived assets and definite-lived intangibles may result from significant decreases in the market price of an asset, a significant adverse change in the extent or manner in which an asset is being used or in its physical condition, a significant adverse change in legal factors or in the business climate that could affect the value of an asset, as well as other economic or operations analyses. If the carrying amount is not recoverable, an impairment charge is recorded.

Key Assumptions and Approach Used . The fair value of an asset is the amount at which the asset could be bought or sold in a current transaction between willing parties, that is, other than in a forced or liquidation sale. Quoted market prices in active markets are the best evidence of fair value and are used as the basis for the measurement, when available. In the absence of quoted prices for identical or similar assets, fair value is estimated using various internal and external valuation methods. These methods include discounted cash flow analyses and reviewing available information on comparable transactions. The determination of fair value requires management to apply judgment in estimating future energy prices, environmental and maintenance expenditures and other cash flows. Our estimates of the fair value of the assets include significant assumptions about the timing of future cash flows, remaining useful lives and selecting a discount rate that reflects the risk inherent in future cash flows.

Continuing Operations

Under the 2003 Consent Decree, we were required to install certain environmental controls on units 5 and 4 of the Lovett facility or discontinue operation of those units by April 30, 2007 and April 30, 2008, respectively. On October 19, 2006, after Bankruptcy Court approval, we submitted notices of our intent to discontinue operations at units 3 and 5 of the Lovett facility on April 30, 2007, to the New York Public Service Commission, NYISO, Orange and Rockland and certain other affected transmission and distribution utilities in New York. On May 10, 2007, Mirant Lovett entered into an amendment to the 2003 Consent Decree with the State of New York that switches the deadlines for units 4 and 5 so that the deadline for compliance by unit 5 is extended until April 30, 2008, and the deadline for unit 4 is shortened so that it would discontinue operation as of May 7, 2007. Mirant Lovett also entered into an agreement (the “Tax Assessments Agreement”) that sets the assessed value of the Lovett facility for 2007 and 2008 for property tax purposes at the values established under the 2006 settlement agreement between Mirant Lovett, other Mirant entities and the local taxing authorities. The amendment to the 2003 Consent Decree was subject to the approval of the United States District Court for the Southern District of New York and the Bankruptcy Court. The Tax Assessments Agreement was subject to the approval of the Bankruptcy Court. The Bankruptcy Court approved the amendment and the Tax Assessments Agreement on May 10, 2007. The district court approved the amendment to the 2003 Consent Decree on May 11, 2007.

Based on the agreements above, we will test for recoverability of the Lovett facility under SFAS No. 144 in the second quarter of 2007. In addition, we will review the remaining useful life of the asset and adjust depreciation as appropriate. The carrying value of the Lovett facility as of March 31, 2007, is $181 million.

Discontinued Operations

On August 9, 2006, Mirant announced the planned sale of certain of its intermediate and peaking natural gas-fired plants which included our Zeeland and Bosque plants. The planned sales resulted in the reclassification of the long-lived assets related to these plants as held for sale at March 31, 2007.

On January 15, 2007, we entered into a definitive purchase and sale agreement with Broadway Generating Company, LLC, (formerly called LS Power Acquisition Co. I) a member of the LS Power Group., for the sale of our Zeeland and Bosque natural gas-fired plants and ancillary equipment for a purchase price of $512 million, which includes estimated working capital at the closing. The updated fair values along with changes to the working capital calculation in the draft purchase and sale agreement provided to the bidders, resulted in a net impairment loss of $8 million in 2006. We recorded an additional impairment of $1 million in the first quarter of 2007. The sale was completed on May 1, 2007. The net proceeds to the Company from the sale, after transaction costs, were $524 million.

Effect if Different Assumptions Used . The estimates and assumptions used to determine whether an impairment exists are subject to a high degree of uncertainty. The estimated fair value of an asset would

change if different estimates and assumptions were used in our applied valuation techniques, including estimated undiscounted cash flows, discount rates and remaining useful lives for assets held and used.

Income Taxes

We are a limited liability company treated as a branch for income tax purposes. As a result, Mirant Americas and Mirant have direct liability for the majority of the federal and state income taxes relating to our operations. Through December 31, 2005, we have allocated current and deferred income taxes to each regarded corporate member entity of our consolidated group as if each regarded corporate entity member were a single taxpayer utilizing the asset and liability method to account for income taxes except with respect to recognizing certain current period tax benefits. Specifically, we did not record current period tax benefits on each regarded corporate entity’s ability to carry back its separate company current year net operating loss as realization of such losses were dependent on reimbursements from Mirant, which were at Mirant’s discretion under the tax sharing agreement. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net tax operating losses and tax credit carryforwards. When necessary, deferred tax assets are reduced by a valuation allowance to reflect the amount that is estimated to be recoverable. In assessing the recoverability of our deferred tax assets, we consider whether it is likely that some portion or all of the deferred tax assets will be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted change.

The determination of a valuation allowance requires significant judgment as to the generation of future taxable income during future periods for which temporary differences are expected to be deductible. In making this determination, management considers all available positive and negative evidence affecting specific deferred tax assets, including our past and anticipated future performance, the reversal of deferred tax liabilities and the implementation of tax planning strategies.

Several significant changes to our tax posture occurred as a result of the Plan. Implementation of the Plan included the conversion of certain of our regarded corporate entities to limited liability companies coupled with the liquidation and/or merger of these regarded corporate entities into other disregarded corporate entities for income tax purposes. As a result, certain subsidiaries previously treated as regarded corporate entities for income tax purposes have either been liquidated or converted into disregarded entities for income tax purposes pursuant to the Plan. Additionally, certain partnerships owned by the regarded corporate entities were also liquidated, and now form part of these disregarded entities for income tax purposes. The result of the above Plan effects was to eliminate our recording of tax expense and benefit prospectively with respect to the liquidated regarded corporate entities. Furthermore, with respect to those liquidated regarded corporate entities, all previously existing deferred tax assets and liabilities were eliminated as of December 31, 2005. Certain of our other subsidiaries continue to exist as regarded corporate entities for income tax purposes, including Mirant New York, Hudson Valley Gas, Mirant Kendall and Mirant Special Procurement, Inc.

Additionally, we have not recognized any tax benefits relating to tax uncertainties arising in the ordinary course of business that are less than or subject to the measurement threshold of the more-likely-than-not standard prescribed in FIN 48. These unrecognized tax benefits may be either a tax liability or an adjustment to the Company’s NOLs based on the specific facts of each tax uncertainty. We periodically assess our tax uncertainties based on the latest information available. The amount of the unrecognized tax benefit requires management to make significant assumptions about the expected outcomes of certain tax positions included in the Company’s filed or yet to be filed tax returns. See Note B to our unaudited condensed consolidated financial statements for information about our adoption of FIN 48.

When it emerged from bankruptcy, Mirant terminated the tax sharing agreement with its direct and indirect wholly owned regarded corporate entities. As a result, Mirant’s direct and indirect wholly owned regarded corporate entities are no longer responsible for reimbursing Mirant for their intercompany tax obligations attributable to their operations. Accordingly, our income tax receivables and payables with Mirant or Mirant Americas were resolved pursuant to a global settlement under the Plan whereby intercompany receivables and payables received no distribution. Income tax payables and receivables related to Mirant New York which emerged from bankruptcy on April 16, 2007, were also resolved pursuant to the Mirant New York Plan.

For those subsidiaries that continue to exist as corporate regarded entities, we allocate current and deferred income taxes to each corporate regarded entity as if such entity were a single taxpayer utilizing the asset and liability method to account for income taxes. To the extent we provide tax expense or benefit, any related tax payable or receivable to Mirant is reclassified to equity in the same period.

Litigation

See “Part II. Item 1. Legal Proceedings” and Note J to our unaudited condensed consolidated financial statements for further information related to our legal proceedings.

We are currently involved in certain legal proceedings. We estimate the range of liability through discussions with applicable legal counsel and analysis of case law and legal precedents. We record our best estimate of a loss, or the low end of our range if no estimate is better than another estimate within a range of estimates, when the loss is considered probable. As additional information becomes available, we reassess the potential liability related to our pending litigation and revise our estimates. Revisions in our estimates of the potential liability could materially affect our results of operations, and the ultimate resolution may be materially different from the estimates that we make.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In connection with our power generating business, we are exposed to energy commodity price risk associated with the acquisition of fuel needed to generate electricity, as well as the electricity produced and sold. A portion of our fuel requirements is purchased in the spot market and a portion of the electricity we produce also is sold in the spot market. In addition, the open positions in our proprietary trading and fuel management portfolios expose us to risks associated with the changes in energy commodity prices. As a result, our financial performance varies depending on changes in the prices of energy and energy-related commodities. See “Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2006, for a discussion of the accounting treatment for our energy trading and marketing activities and see Note D to our unaudited condensed consolidated financial statements for detail of our price risk management assets and liabilities.

For a further discussion of market risks, our risk management policy and our use of Value at Risk to measure some of these risks, see Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2006.

Item 4 . Controls and Procedures

Inherent Limitations in Control Systems

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. As a result, our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures, or our internal control over financial reporting, will prevent all error and all fraud.

Effectiveness of Disclosure Controls and Procedures

As required by Exchange Act Rule 13a-15(b), our management, including our Chief Executive Officer and our Chief Financial Officer, conducted an assessment of the effectiveness of the design and operation of our disclosure controls and procedures (as defined by Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of March 31, 2007. Based upon this assessment, our management concluded that, as of March 31, 2007, the design and operation of these disclosure controls and procedures were effective.

Appearing as exhibits to this report are the certifications of the Chief Executive Officer and the Chief Financial Officer required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.

PART II

Item 1. Legal Proceedings

The descriptions below update and should be read in conjunction with the complete descriptions in the section titled “Legal Proceedings” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

Chapter 11 Proceedings

On July 14, 2003, and various dates thereafter, Mirant Corporation and certain of its subsidiaries (collectively, the “Mirant Debtors”), including us and our subsidiaries, filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. Most of the material claims filed against the Mirant Debtors’ estates were disallowed or were resolved and became “allowed” claims before confirmation of the Plan that became effective for Mirant, us and most of the Mirant Debtors on January 3, 2006. Mirant, as the distribution agent under the Plan, has made distributions pursuant to the terms of the Plan on those allowed claims. Some claims, however, remain unresolved.

As of March 31, 2007, approximately 21 million of the shares of Mirant common stock to be distributed under the Plan have not yet been distributed and have been reserved for distribution with respect to claims that are disputed by the Mirant Debtors and have not been resolved. A settlement entered into on May 30, 2006, among Pepco, Mirant, Old Mirant, and various subsidiaries of Mirant, including certain of our subsidiaries, if approved by final order in the Chapter 11 proceedings, would result in the distribution of up to 18 million of the reserved shares to Pepco, as described below in Pepco Litigation . Under the terms of the Plan, to the extent other such unresolved claims are resolved now that we have emerged from bankruptcy, the claimants will be paid from the reserved shares on the same basis as if they had been paid when the Plan became effective. That means that their allowed claims will receive the same pro rata distributions of Mirant common stock, cash, or both common stock and cash as previously allowed claims in accordance with the terms of the Plan. To the extent the aggregate amount of the payouts determined to be due with respect to such disputed claims ultimately exceeds the amount of the funded claim reserve, Mirant would have to issue additional shares of common stock to address the shortfall, which would dilute existing Mirant shareholders, and Mirant and we would have to pay additional cash amounts as necessary under the terms of the Plan to satisfy such pre-petition claims.

Our subsidiaries related to our New York business operations, Mirant New York, Mirant Bowline, Mirant Lovett, Hudson Valley Gas and Mirant NY-Gen, remained in bankruptcy at the end of 2006. On January 26, 2007, Mirant New York, Mirant Bowline, and Hudson Valley Gas (collectively the “Emerging New York Entities”) filed a Supplemental Joint Chapter 11 Plan of Reorganization of the Emerging New York Entities with the Bankruptcy Court and subsequently filed amendments to that plan (as subsequently amended, the “Supplemental Plan”). The Bankruptcy Court entered an order confirming the Supplemental Plan on March 23, 2007. The Supplemental Plan became effective on April 16, 2007, resulting in the emergence from bankruptcy of the Emerging New York Entities. The Supplemental Plan has two main components. First, the Supplemental Plan incorporates a settlement with various New York tax jurisdictions that resolved property tax disputes related to the Lovett and Bowline facilities. Second, the Supplemental Plan provides unsecured creditors of the Emerging New York Entities with the same treatment afforded holders of unsecured claims against us and our subsidiaries under the Plan. Such unsecured creditors of the Emerging New York Entities will receive their pro rata share of the pool of assets created under the Plan for the benefit of our unsecured creditors and those of our subsidiaries.

On October 19, 2006, Mirant Lovett notified the New York Public Service Commission, the NYISO, Orange and Rockland and certain other affected transmission and distribution companies in New York of

its intent to discontinue operation of units 3 and 5 of the Lovett facility on April 30, 2007. The notice was prompted by the requirements of a June 11, 2003, Consent Decree (the “2003 Consent Decree”) among Mirant Lovett, the State of New York and the NYSDEC that requires Mirant Lovett to install certain environmental controls on unit 5 of the Lovett facility, convert the unit to operate exclusively on natural gas, or discontinue operation of that unit by April 30, 2007. The 2003 Consent Decree also requires that certain environmental controls be installed on unit 4 by April 30, 2008, or operations at that unit must be discontinued. Operations at unit 3 have been discontinued because it is uneconomic to continue to run unit 3. On April 30, 2007, and May 7, 2007, Mirant Lovett entered into two tolling agreements with the New York State Office of the Attorney General and the NYSDEC to allow the operation of unit 5 to continue on coal until May 14, 2007, while the parties sought to reach agreement on an amended consent decree. The second tolling agreement also required the temporary suspension of operations of unit 4. Mirant Lovett has advised the New York Public Service Commission, the NYISO, Orange and Rockland and other potentially affected transmission and distribution companies in New York of the changes in expected operating status of units 4 and 5. Mirant New York, Mirant Lovett and the State of New York on May 10, 2007, entered into an amendment to the 2003 Consent Decree that switches the deadlines for units 4 and 5 so that the deadline for compliance by unit 5 is extended until April 30, 2008, and the deadline for unit 4 is shortened so that it would discontinue operation as of May 7, 2007. On May 8, 2007, Mirant New York, Mirant Lovett, Mirant Bowline, and Hudson Valley Gas also entered into an agreement (the “Tax Assessments Agreement”) with the Town of Stony Point, the Town of Haverstraw, and the Village of Haverstraw to set the assessed values for the Lovett and Bowline facilities and the pipeline owned by Hudson Valley Gas for 2007 and 2008 for property tax purposes at the values established for 2006 under a settlement agreement entered into by the Mirant entities and those taxing authorities in December 2006 that resolved disputes regarding the assessed values of the facilities for 2006 and several earlier years. The amendment to the 2003 Consent Decree was subject to the approval of the United States District Court for the Southern District of New York and the Bankruptcy Court. The Tax Assessments Agreement was subject to the approval of the Bankruptcy Court. The Bankruptcy Court approved the amendment to the 2003 Consent Decree and the Tax Assessments Agreement on May 10, 2007. The district court approved the amendment to the 2003 Consent Decree on May 11, 2007. The timing of the filing of a plan of reorganization for Mirant Lovett, and of its emergence from bankruptcy, is uncertain. Until Mirant Lovett emerges from bankruptcy, the Company will not have access to the cash from operations generated by Mirant Lovett.

Mirant NY-Gen, which owns hydroelectric facilities at Swinging Bridge, Rio and Mongaup, and small combustion turbine facilities at Hillburn and Shoemaker, has proceeded with the implementation of a remediation plan for the sinkhole discovered in May 2005 in the dam at the Swinging Bridge facility. The status of the remediation effort is discussed in “ Other Contingencies ” in Note J to the consolidated financial statements. Mirant NY-Gen’s expenses have been funded under a debtor-in-possession facility provided by Mirant Americas with the approval of, and under the supervision of, the Bankruptcy Court.

On January 31, 2007, Mirant New York entered into an agreement to sell Mirant NY-Gen to Alliance Energy Renewables, LLC (the “Alliance Sale”). The sale price of approximately $5 million was subject to adjustments for working capital and certain ongoing dam remediation efforts at the Swinging Bridge facility. The Bankruptcy Court approved the Alliance Sale on March 8, 2007. On February 15, 2007, Mirant NY-Gen filed its proposed Chapter 11 Plan of Reorganization (the “Mirant NY-Gen Plan”), which incorporated the Alliance Sale. The Bankruptcy Court confirmed the Mirant NY-Gen Plan by order dated April 27, 2007. The Mirant NY-Gen Plan became effective and the Alliance Sale closed on May 7, 2007. Under the terms of the Mirant NY-Gen Plan and the confirmation order, approximately $2 million was reserved from the proceeds of the Alliance Sale to pay in full all the claims outstanding against Mirant NY-Gen other than claims arising from the debtor-in-possession loan provided by Mirant Americas to Mirant NY-Gen and intercompany claims. Mirant guarantees were substituted for $1.6 million of the

amount to be reserved. The remaining sales proceeds were paid to Mirant Americas in partial satisfaction of the $16.5 million debtor-in-possession loan, all claims held by Mirant NY-Gen were assigned to Mirant Americas, and Mirant Americas released all of its claims and liens against Mirant NY-Gen.

Environmental Matters

On September 27, 2004, Mirant Potomac River, Mirant Mid-Atlantic, the Virginia DEQ, the MDE, the DOJ and the EPA entered into, and filed for approval with the United States District Court for the Eastern District of Virginia, a proposed consent decree (the “Original Consent Decree”) that, if approved, would have resolved Mirant Potomac River’s potential liability for matters addressed in the NOVs previously issued by the Virginia DEQ and the EPA. The Original Consent Decree would have required Mirant Potomac River and Mirant Mid-Atlantic to (1) install pollution control equipment at the Potomac River plant in Virginia and at the Morgantown plant in Maryland leased by Mirant Mid-Atlantic, (2) comply with declining system-wide ozone season NOx emissions caps from 2004 through 2010, (3) comply with system-wide annual NOx emissions caps starting in 2004, (4) meet seasonal system average emissions rate targets in 2008 and (5) pay civil penalties and perform supplemental environmental projects in and around the Potomac River plant expected to achieve additional environmental benefits. Except for the installation of the controls planned for the Potomac River units and the installation of selective catalytic reduction (“SCR”) or equivalent technology at Mirant Mid-Atlantic’s Morgantown units 1 and 2 in 2007 and 2008, the Original Consent Decree would not have obligated our subsidiaries to install specifically designated technology, but rather to reduce emissions sufficiently to meet the various NOx caps. Moreover, as to the required installations of SCRs at Morgantown, Mirant Mid-Atlantic may choose not to install the technology by the applicable deadlines and leave the units off either permanently or until such time as the SCRs are installed. The Original Consent Decree was subject to the approval of the district court and the Bankruptcy Court. As described below, the Original Consent Decree was not approved and the parties filed an amended proposed consent decree that superseded the Original Consent Decree.

Mirant Potomac River Downwash Study. On September 23, 2004, the Virginia DEQ and Mirant Potomac River entered into an order by consent with respect to the Potomac River plant under which Mirant Potomac River agreed to perform a modeling analysis to assess the potential effect of “downwash” from the plant (1) on ambient concentrations of SO2, NO2, CO and PM10 for comparison to the applicable NAAQS and (2) on ambient concentrations of mercury for comparison to Virginia Standards of Performance for Toxic Pollutants. Downwash is the effect that occurs when aerodynamic turbulence induced by nearby structures causes emissions from an elevated source, such as a smokestack, to move rapidly toward the ground resulting in higher ground-level concentrations of emissions.

be established by a supplemental order. Certain parties filed for rehearing of the DOE order, and on February 17, 2006, the DOE issued an order granting rehearing solely for purposes of considering further the rehearing requests. Mirant Potomac River submitted an operating plan in accordance with the order. On January 4, 2006, the DOE issued an interim response to Mirant Potomac River’s operating plan authorizing operation of the units of the Potomac River generating facility on a reduced basis, but making it possible to bring the entire plant into service within approximately 28 hours when necessary for reliability purposes. The DOE’s order expires July 1, 2007.

On June 1, 2006, Mirant Potomac River and the EPA executed an ACO by Consent to resolve the EPA’s allegations that Mirant Potomac River violated the Clean Air Act by not immediately shutting down all units at the Potomac River facility upon receipt of the Virginia DEQ’s August 19, 2005, letter and to assure an acceptable level of reliability to the District of Columbia. The ACO (i) specifies certain operating scenarios and SO2 emissions limits for the Potomac River facility, which scenarios and limits take into account whether one or both of the 230kV transmission lines serving Washington, D.C. are out of service; (ii) requires the operation of trona injection units to reduce SO2 emissions; and (iii) requires Mirant Potomac River to undertake a model evaluation study to predict ambient air quality impacts from the facility’s operations. In accordance with the specified operating scenarios, the ACO permits the facility to operate using a daily predictive modeling protocol. This protocol allows Mirant Potomac River to schedule the facility’s level of operations based on whether computer modeling predicts a NAAQS exceedance, based on weather and certain operating parameters. On June 2, 2006, the DOE issued a letter modifying its January 6, 2006, order to direct Mirant Potomac River to comply with the ACO in order to ensure adequate electric reliability to the District of Columbia. Mirant Potomac River is operating the Potomac River facility in accordance with the ACO and has been able to operate all five units of the facility most of the time under the ACO. This ACO expires on June 1, 2007. Mirant Potomac River is in discussions with the Virginia DEQ and the Virginia State Air Pollution Control Board to determine the manner in which the Potomac River facility will be permitted to operate after the ACO expires.

Mirant Potomac River NAAQS Exceedance. On March 23, 2007, the Virginia DEQ issued an NOV to Mirant Potomac River alleging that it violated Virginia’s Air Pollution Control Law and regulations on February 23, 2007, by operating the Potomac River facility in a manner that resulted in a monitored exceedance in a twenty-four hour period of the NAAQS for SO2. As noted in the NOV, Mirant Potomac River was operating on February 23, 2007, under the direction of PJM in accordance with the DOE order described above in Mirant Potomac River 2003 NOV during a scheduled outage of the Pepco transmission lines serving Washington, D.C. The NOV asserts that plant operators did not implement appropriate actions to minimize SO2 emissions. The NOV did not seek a specific penalty amount but noted that the violations identified could subject Mirant Mid-Atlantic to civil penalties of varying amounts under different provisions of the Virginia Code, including a potential civil fine of up to $100,000.

Lovett/Bowline SPDES Notices of Violation. On March 8, 2007, Mirant Lovett and Mirant Bowline received Notices of Violation from the NYSDEC alleging certain violations of their SPDES permits. On April 6, 2007, the NYSDEC filed a complaint against Mirant Lovett and Mirant Bowline based on these

allegations. The complaint seeks a penalty of $500,000. Mirant Lovett and Mirant Bowline have not yet responded to the complaint.

City of Alexandria Zoning Action

On December 18, 2004, the City Council for the City of Alexandria, Virginia (the “City Council”) adopted certain zoning ordinance amendments that resulted in the zoning status of Mirant Potomac River’s generating plant being changed from “noncomplying use” to “nonconforming use subject to abatement.” Under the nonconforming use status, unless Mirant Potomac River applied for and received a special use permit for the plant during the seven-year abatement period, the operation of the plant would have had to be terminated within a seven-year period, and no alterations that directly prolonged the life of the plant would be permitted during the seven-year period. The City Council also approved revocation of two special use permits issued in 1989 (the “1989 SUPs”), one applicable to the administrative office space at Mirant Potomac River’s plant and the other for the plant’s transportation management plan.

There have been no other material developments in legal proceedings involving the Company or its subsidiaries since those reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

Item 1A. Risk Factors

There have been no material changes in risk factors since those reported in Mirant Americas Generation’s Annual Report on Form 10-K for the year ended December 31, 2006.

Item 6. Exhibits

(a) Exhibits

Exhibit Number		Exhibit Name
2.1	*	Purchase and Sale Agreement, dated as of January 15, 2007, by and between Mirant Americas, Inc. and LS Power (Designated on Form 8-K dated January 18, 2007 as Exhibit 2.1)
3.1	*	Certificate of Formation for Mirant Americas Generation, LLC, filed with the Delaware Secretary of State on November 1, 2001(designated in Mirant Americas Generation, LLC Form 10-Q for the Quarter Ended September 30, 2001 as Exhibit 3.1)
3.2	*	Amended and Restated Limited Liability Company Agreement for Mirant Americas Generation, LLC dated January 3, 2006 (designated on Form10-Q for the quarter ended September 30, 2006, as Exhibit 3.2)
4.1		Form of Seventh Supplemental Indenture
10.1		Membership Interest Purchase and Sale Agreement, dated as of January 31, 2007, by and between Mirant New York, Inc. and Alliance Energy Renewables, LLC
31.1		Certification of Chief Executive Officer Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a))
31.2		Certification of Chief Financial Officer Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a))
32.1		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(b))
32.2		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(b))

* Asterisk indicates exhibits incorporated by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 14th day of May, 2007.

			Mirant Americas Generation, LLC



			By:	/s/ THOMAS E. LEGRO
				Thomas E. Legro
				Senior Vice President and Controller
				(Principal Accounting Officer)

Exhibit 4.1

Execution Copy

MIRANT AMERICAS GENERATION, LLC

WELLS FARGO BANK, NATIONAL ASSOCIATION,

SUCCESSOR INDENTURE TRUSTEE

SEVENTH SUPPLEMENTAL INDENTURE

DATED AS OF JANUARY 3, 2006

TO INDENTURE

DATED AS OF MAY 1, 2001

TABLE OF CONTENTS

ARTICLE I AMENDMENTS TO LONG-TERM NOTE SUPPLEMENTAL INDENTURES		2

Section 1.01	New Definitions in Long-term Note Supplemental Indentures	2
Section 1.02	Addition of Debt Covenant	5
Section 1.03	New Upstream Payments Provision	5
Section 1.04	Effective Time	5
Section 1.05	Enforcement of New Provisions	5

ARTICLE II MISCELLANEOUS PROVISIONS		5

Section 2.01	Recitals By Company	5
Section 2.02	Ratification And Incorporation	5
Section 2.03	Executed In Counterparts	6
Section 2.04	GOVERNING LAW	6

THIS SEVENTH SUPPLEMENTAL INDENTURE dated as of January 3, 2006 (the “Seventh Supplemental Indenture”), between MIRANT AMERICAS GENERATION, LLC, a Delaware limited liability company, formerly known as Mirant Americas Generation, Inc., having its principal office at 1155 Perimeter Center West, Atlanta, Georgia 30338 (the “Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, having its principal corporate trust office at MAC # N9303-120 Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, as successor indenture trustee (the “Successor Indenture Trustee”).

W I T N E S S E T H :

WHEREAS, the Company has heretofore entered into an Indenture, dated as of May 1, 2001 (the “Original Indenture”), with Bankers Trust Company, as indenture trustee (the “Original Indenture Trustee”);

WHEREAS, the Company and the Original Indenture Trustee have heretofore entered into a Second Supplemental Indenture dated as of May 1, 2001 (the “Second Supplemental Indenture”) pursuant to which the Company issued $850,000,000 aggregate principal amount of 8.3% Senior Notes due 2011 (the “2011 Notes”);

WHEREAS, the Company and the Original Indenture Trustee have heretofore entered into a Third Supplemental Indenture dated as of May 1, 2001 (the “Third Supplemental Indenture”) pursuant to which the Company issued $400,000,000 aggregate principal amount of 9.125% Senior Notes due 2031 (the “2031 Notes”);

WHEREAS, the Company and the Original Indenture Trustee have heretofore entered into a Fifth Supplemental Indenture dated as of October 9, 2001 (the “Fifth Supplemental Indenture,” and together with the Second Supplemental Indenture and the Third Supplemental Indenture, the “Long-term Note Supplemental Indentures”) pursuant to which the Company issued $450,000,000 aggregate principal amount of 8.5% Senior Notes due 2021 (the “2021 Notes,” and together with the 2011 Notes and the 2031 Notes, the “Long-term Notes”);

WHEREAS, the Company and the Original Indenture Trustee have heretofore entered into a Sixth Supplemental Indenture dated as of November 1, 2001 to reflect the conversion of the Company from a Delaware corporation to a Delaware limited liability company;

WHEREAS, the Successor Indenture Trustee is the successor to the Original Indenture Trustee, as indenture trustee under the Original Indenture and the Long-term Note Supplemental Indentures;

WHEREAS, the Company desires to add new covenants to the Long-term Note Supplemental Indentures for the benefit of the holders of the Long-term Notes as contemplated by the Second Amended Joint Chapter 11 Plan of Reorganization for Mirant Corporation and its Affiliated Debtors, dated September 30, 2005, In re Mirant Corporation, et al., No. 03-46590 (as amended, modified or waived from time to time, the “Plan”) and as provided for by the Order

Confirming the Second Amended Joint Chapter 11 Plan of Reorganization for Mirant Corporation and its Affiliated Debtors, dated December 9, 2005 and Section 901(2) of the Original Indenture;

WHEREAS, the Company warrants that all conditions necessary to authorize the execution and delivery of this Seventh Supplemental Indenture and to make it a valid and binding obligation of the Company have occurred or been performed.

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

AMENDMENTS TO LONG-TERM NOTE SUPPLEMENTAL INDENTURES

Section 1.01 New Definitions in Long-term Note Supplemental Indentures . The following definitions shall be incorporated into, and be made a part of, Section 102 of each Long-term Note Supplemental Indenture:

“2011 Notes” has the meaning assigned to such term in the Second Supplemental Indenture.

“Exit Facility” means (i) the credit facility evidenced by the credit facility agreement dated on or about the date of the Seventh Supplemental Indenture among Mirant North America, LLC, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and Deutsche Bank Securities Inc. and Goldman Sachs Credit Partners L.P., as co-syndication agents, as the same may be amended, supplemented or revised from time to time, and (ii) any credit facility indenture, notes or other financing arrangement entered into in connection with a refinancing or replacement thereof.

“MIRMA” means Mirant Mid-Atlantic, LLC, a Delaware limited liability company, formerly known as Southern Energy Mid-Atlantic, LLC.

“MIRMA Facility Lease Documents” means collectively: (i) the Participation Agreement, dated as of December 18, 2000, between Morgantown OL1 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP1 LLC and State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee; (ii) the Participation Agreement, dated as of December 18, 2000, between Morgantown OL2 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP2 LLC and State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee; (iii) the Participation Agreement, dated as of December 18, 2000, between Morgantown OL3 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP3 LLC and

State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee; (iv) the Participation Agreement, dated as of December 18, 2000, between Morgantown OL4 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP4 LLC and State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee; (v) the Participation Agreement, dated as of December 18, 2000, between Morgantown OL5 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP5 LLC and State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee; (vi) the Participation Agreement, dated as of December 18, 2000, between Morgantown OL6 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP6 LLC and State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee; (vii) the Participation Agreement, dated as of December 18, 2000, between Morgantown OL7 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP7 LLC and State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee; (viii) the Participation Agreement, dated as of December 18, 2000, between Dickerson OL1 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP3 LLC and State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee; (ix) the Participation Agreement, dated as of December 18, 2000, between Dickerson OL2 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP6 LLC and State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee; (x) the Participation Agreement, dated as of December 18, 2000, between Dickerson OL3 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP7 LLC and State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee; and (xi) the Participation Agreement, dated as of December 18, 2000, between Dickerson OL4 LLC, as owner lessor, MIRMA, as facility lessee, Wilmington Trust Company, as owner manager, SEMA OP8 LLC and State Street Bank and Trust Company of Connecticut, National Association, as lease indenture trustee and pass through trustee, in each case as the same may be amended, supplemented revised or replaced from time to time.

“Net Debt/EBITDA Ratio” means, as of the date being measured, the ratio of (i) Net Indebtedness as of the last day of the most recently completed four fiscal quarters for which financial statements have been delivered by the Company in accordance with either (a) the Exchange Act or (b) Section 1005 of the Original Indenture, to (ii) the Section 111(d) EBITDA of the Company and its consolidated Subsidiaries for the most recently completed four fiscal quarters for which financial statements have been delivered by the Company in accordance with either (a) the Exchange Act or (b) Section 1005 of the Original Indenture.

“Net Indebtedness” means, at any time, the aggregate principal amount of Indebtedness of the Company and its consolidated Subsidiaries outstanding at such time less (i) cash, cash equivalents and similar investments held by such Person, and (ii) broker, counterparty, and customer margin/collateral assets and deposits advanced to or held on behalf of such broker, counterparty or customer, as each of the foregoing items described in clauses (i) and (ii) appears on the consolidated balance sheet of the Company and its consolidated Subsidiaries, as either cash or accounts receivable.

“Section 111(d) EBITDA” means, for any period, with reference to the Company’s consolidated financial statements: (i) income from continuing operations before income taxes and minority interest; plus (ii) depreciation and amortization; plus (iii) interest expense on Indebtedness; provided, however that the amounts referred to in (i), (ii) and (iii) above for a consolidated Subsidiary of the Company will not be included to the extent that such Subsidiary is prohibited from making distributions or dividends as of the date of determination (unless such prohibition arises solely from the requirement under the MIRMA Facility Lease Documents that MIRMA and its Subsidiaries deliver financial statements for the most recently completed fiscal year or fiscal quarter, as the case may be, and the date of determination is less than 90 or 60 days, as the case may be, from the end of such fiscal year or fiscal quarter). “Section 111(d) EBITDA” shall not include the effect of: (A) gains or losses on sales or dispositions of assets; (B) non-recurring items (including, for the avoidance of doubt, restructuring expenses); or (C) non-cash expenses and non-cash gains or losses, including as a result of agreements being marked to market and the effects of “fresh start” accounting under SOP 90-7, but shall include cash payments and receipts from and in respect of such agreements.

“Section 111(d) Permitted Indebtedness” means (i) Indebtedness existing on the date of the Seventh Supplemental Indenture, (ii) Indebtedness incurred for working capital purposes, (iii) Indebtedness in respect of letters of credit, surety bonds or performance bonds or guarantees issued in the ordinary course of business, (iv) Subordinated Indebtedness, (v) with respect to MIRMA and its Subsidiaries, any and all Indebtedness other than Indebtedness prohibited by, or incurred in violation of, the MIRMA Facility Lease Documents, (vi) Indebtedness arising under or permitted by the Exit Facility (excluding (A) “Subordinated Debt” as defined in connection with the Exit Facility and (B) intercompany loans not made in the ordinary course of business), (vii) Indebtedness of the Company that is pari passu with the obligations under the Original Indenture and Long-term Note Supplemental Indentures, in an amount not to exceed $200,000,000 in the aggregate, and (viii) Indebtedness incurred in exchange for, or the net proceeds of which are used to refund, refinance or replace, Indebtedness permitted to be incurred pursuant to clauses (i) to (vii) above PROVIDED that the principal amount of the refinancing Indebtedness shall not exceed the principal amount of the Indebtedness refinanced plus a reasonable premium in connection with such refinancing and FURTHER PROVIDED that in addition to any unused portion of the $250,000,000 Permitted Pari Passu Debt (as defined in connection with, and

as permitted under the terms of, the Exit Facility) with respect to any refinancing of the 2011 Notes, Subsidiaries of the Company may incur only up to $250,000,000 of Indebtedness pursuant to this clause (viii).

Section 1.02 Addition of Debt Covenant . The following provision shall be added to Section 111 (Debt Incurrence Test) in each Long-term Note Supplemental Indenture.

(d) The Company shall not incur, and shall not cause or permit any of its Subsidiaries to incur, Indebtedness for borrowed money other than Section 111(d) Permitted Indebtedness unless the Net Debt/EBITDA Ratio is less than or equal to 6.75:1, based on the most recent financial statements delivered by the Company in accordance with either (i) the Exchange Act or (ii) Section 1005 of the Original Indenture.

Section 1.03 New Upstream Payments Provision . The following provision shall be inserted into each Long-term Note Supplemental Indenture.

Section 112 Upstream Payments . If there is any Indebtedness owing by the Company or any of its Subsidiaries to any direct or indirect parent of the Company, such amounts shall be repaid prior to the Company making any dividend or other distribution.

Section 1.04 Effective Time . Each of the provisions for the Long-term Supplemental Indentures set forth above shall take effect from the date of this Seventh Supplemental Indenture.

Section 1.05 Enforcement of New Provisions . The provisions for the Long-term Note Supplemental Indentures set forth above shall apply equally with all of the other rights and privileges under the Long-term Note Supplemental Indentures and the Original Indenture with respect to the Long-term Notes, and the Successor Indenture Trustee shall have the full power to enforce the same with the same force and effect as all other provisions in the Original Indenture and Long-term Note Supplemental Indentures; provided, however, that the Successor Indenture Trustee shall have no obligation to monitor compliance with any of the covenants set forth above.

ARTICLE II

MISCELLANEOUS PROVISIONS

Section 2.01 Recitals By Company . The recitals in this Seventh Supplemental Indenture are made by the Company only and not by the Successor Indenture Trustee, and all of the provisions contained in the Original Indenture and the Long-term Note Supplemental Indentures in respect of the rights, privileges, immunities, powers and duties of the Successor Indenture Trustee shall be applicable in respect of this Seventh Supplemental Indenture as fully and with like effect as if set forth herein in full.

Section 2.02 Ratification And Incorporation . Other than as amended and supplemented hereby, each Long-term Note Supplemental Indenture, and the Original Indenture,

is in all respects ratified and confirmed, and the Original Indenture, as supplemented by each of the Long-term Note Supplemental Indentures and this Seventh Supplemental Indenture, shall be read, taken and construed as one and the same instrument.

Section 2.03 Executed In Counterparts . This Seventh Supplemental Indenture may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument.

Section 2.04 GOVERNING LAW . THIS SEVENTH SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and behalf by its duly authorized officers, all as of the day and year first above written.

	MIRANT AMERICAS GENERATION, LLC


	By:
	Name:
	Title:


	WELLS FARGO BANK, NATIONAL
	ASSOCIATION, as Successor Indenture
	Trustee


	By:
	Name:
	Title:

Exhibit 10.1

EXECUTION COPY

MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

Dated

January 31, 2007

between

Alliance Energy Renewables, LLC

and

Mirant New York, Inc.

TABLE OF CONTENTS

		Page
ARTICLE I		2
1.A	Defined Terms	2
1.B.	Interpretation	10

ARTICLE II SALE AND PURCHASE OF THE MEMBERSHIP INTEREST		11
2.01	Membership Interest to be Sold	11
2.02	Purchase Price and Payment	11
2.03	Adjustments to the Purchase Price	11
2.04	Allocation of Purchase Price	14

ARTICLE III THE CLOSING		15
3.01	Time and Place; Effective Time of Transfer	15
3.02	Deliveries by Seller	15
3.03	Deliveries by Purchaser	16

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER		16
4.01	Power to Sell the Membership Interest	16
4.02	Corporate Organization	16
4.03	Due Authorization and Execution; Valid and Binding Agreement; No Violation	17
4.04	Capitalization	17
4.05	Licenses and Permits; Consents and Approvals of Governmental Authority	18
4.06	Financial Statements	18
4.07	No Undisclosed Liabilities	18
4.08	Absence of Certain Changes	18
4.09	Real Property Leases, Easements and Licenses	19
4.10	Litigation	19
4.11	Subsidiaries	19
4.12	Taxes	19
4.13	NYISO	19
4.14	Bank Accounts	19
4.15	Compliance with Law	20
4.16	Material Contracts; Contracts with Affiliates	20
4.17	Consents	20
4.18	Title to Assets	20
4.19	No Other Representations or Warranties; Disclaimer	21

ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER		22
5.01	Corporate Organization	22
5.02	Authorization	22
5.03	No Violation	22
5.04	Consents and Approvals of Governmental Authoritiess	22
5.05	Litigation	23

5.06	Brokers	23
5.07	“AS IS” SALE	23
5.08	Due Diligence Inspections and Reviews	23

ARTICLE VI CONDUCT OF BUSINESS PENDING THE CLOSING		23
6.01	Regular Course of Business	23
6.02	Amendments	23
6.03	Capital Changes	24
6.04	Environmental Remediation; Requirements of Governmental Authorities	24

ARTICLE VII COVENANTS OF THE PARTIES		24
7.01	Reasonable Access	24
7.02	Confidentiality	24
7.03	Hart-Scott-Rodino Act	25
7.04	Access to Records;	25
7.05	Regulatory and Other Authorizations and Consents	25
7.06	Employee Matters	26
7.07	No Public Announcement	26
7.08	Certain Amounts Owed To Seller and Its Affiliates	26
7.09	Provisions Relating to Treatment of Assets and Liabilities of the Company Under the Plan	26
7.10	Break-Up Fee	27
7.11	Further Assurances	27
7.12	Supplements to Schedules	27
7.13	Tax Matters	27
7.14	Required Consents	28
7.15	Bankruptcy Court Orders and Related Matters	29
7.16	Purchaser Contact with Vendors and Employees	32
7.17	Taxes, Prorations and Closing Costs	32
7.18	Acknowledgement by Purchaser	33
7.19	No Recourse	33
7.20	Advice of Changes	33
7.21	Casualty Loss	33
7.22	Post Closing — Information and Records	35
7.23	Insurance	35
7.24	Use of Certain Names	35
7.25	Settlement Agreement	36
7.26	Registration of Company with NYISO	36
7.27	Gas Transportation and Balancing Services Agreement	36
7.28	Air Title V Permits (Hillburn and Shoemaker Facilities)	37
7.29	Assignment of Certain Purchase Orders	37

ARTICLE VIII MUTUAL CONDITIONS		37
8.01	HSR Act	37
8.02	Regulatory and Other Authorizations and Consents	37
8.03	Orders	37

ARTICLE IX CONDITIONS TO PURCHASER’S OBLIGATIONS		38
9.01	Representations and Warranties True	38
9.02	Performance	38
9.03	Certificates; Evidence of Compliance	38
9.04	Board Resolutions	38
9.05	Bankruptcy Court Orders	38

ARTICLE X CONDITIONS TO SELLER’S OBLIGATIONS		38
10.01	Representations and Warranties True	38
10.02	Performance	39
10.03	Certificates	39
10.04	Board Resolutions	39
10.05	Pending Insurance Claims	39
10.06	Bankruptcy Court Orders	39
10.07	Termination of Gas Transportation Agreement	39
10.08	Modification of Title V Permits	39

ARTICLE XI SURVIVAL AND INDEMNIFICATION		39
11.01	Survival	39
11.02	Indemnification	40
11.03	Limitations on Indemnification	42
11.04	Purchaser’s Release of Seller	42
11.05	Mitigation and Limitation on Claims. Notwithstanding anything to the contrary contained in this Agreement:	43

ARTICLE XII TERMINATION AND REMEDIES		43
12.01	Rights To Terminate	43
12.02	Specific Performance	44
12.03	Purchaser’s Remedies	45
12.04	Seller’s Remedies	45
12.05	Effect of Termination	45

ARTICLE XIII MISCELLANEOUS PROVISIONS		46
13.01	Commissions and Finders’ Fees	46
13.02	Amendment and Modification	46
13.03	Waiver of Compliance	46
13.04	Expenses	46
13.05	Notices	46
13.06	Assignment	47
13.07	Governing Law	47
13.08	Jurisdiction of Bankruptcy Court	48
13.09	Effect of Closing Over Known Unsatisfied Conditions or Breached Representations, Warranties or Covenants	48
13.10	Dispute Resolution	48
13.11	Delays or Omissions	49
13.12	Conflicts	50
13.13	Counterparts	50

iii

13.14	Effectiveness; Binding Effect	50
13.15	Headings	50
13.16	Entire Agreement	50
13.17	No Recourse Against Others	50
13.18	Third Parties	50
13.19	Mutual Agreement	51
13.20	Severability	51

SCHEDULES


1.1		Seller’s Representatives
1.2		Purchaser’s Representatives
1.41		Escrow Agreement
1.45		Hydroelectric and Gas Turbine Generating Stations
2.03(c)		Pre-Approved Capital Expenditures
3.02		Form of Assignment for Membership Interest Transfer
3.02(d-1)		Assignment of Insurance Claims
3.02(d-2)		Assignment of Claims Against Third Parties
3.03( a)		Wire Transfer
4.03		Agreements Requiring Consent, Notification, Etc. (Seller)
4.05		Consents and Approvals of Governmental Authorities (Seller)
4.07		Certain Liabilities
4.08		Certain Changes
4.09		Real Property Leases, Easements and Licenses
4.10		Litigation
4.12		Taxes
4.14		Bank Accounts
4.15		Compliance with Law
4.16		Material Contracts
4.17		Consents
4.18		Title to Assets
5.04		Consents and Approvals of Governmental Authorities (Purchaser)
5.05		Litigation (Purchaser)
7.15(b)		Sale Procedures Order
7.15(c)		Sale Order
7.25		Cross-Indemnity Agreement

This MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT (this “Agreement”) is made, as of the 31st day of January, 2007, by and between Mirant New York, Inc., a corporation organized under the laws of the State of Delaware (“ Seller ”), and Alliance Energy Renewables, LLC, a limited liability company organized under the laws of the State of New York (“ Purchaser ”).

BACKGROUND

A. Seller owns a 100% membership interest (the “Membership Interest” ) in Mirant NY-Gen, LLC, a limited liability company organized under the laws of the State of Delaware (the “Company” or “Mirant NY-Gen” ) constituting all of the outstanding membership interests of the Company. This Agreement sets forth the terms and conditions upon which Purchaser will purchase the Membership Interest from Seller.

B. Subject to the entry of the Bankruptcy Court Orders (as hereinafter defined) and on the terms and conditions set forth herein, Seller desires to sell to Purchaser the Membership Interest and Purchaser desires to purchase the Membership Interest from Seller.

C. Seller has offered the Membership Interest pursuant to a competitive bidding process during which Purchaser viewed information concerning the Membership Interest and completed its Due Diligence Inspections and Reviews (as defined herein). The Parties recognize that the Assets (as defined herein) in these transactions are being sold on an “as is” basis and free and clear of all liens, claims, encumbrances and interests in accordance with the terms and conditions herein and that the liabilities of the Company now existing and hereafter arising through the Plan Effective Date (as defined herein) shall be satisfied and discharged pursuant to the Plan (as defined herein), at or prior to the Closing Date.

D. On July 14, 2003, Seller and certain of its Affiliates, including Mirant NY-Gen, filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (11 U.S.C. §§ 101, et seq.) (the “ Bankruptcy Code ”), commencing cases in the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division (the “ Bankruptcy Court ”), and continue to operate their respective businesses as debtors and debtors-in-possession.

E. The Parties recognize that it is in the best interest of Seller and its Affiliates to pursue the transactions contemplated herein.

F. Seller and Purchaser are entering into this Agreement to evidence their respective duties, obligations and responsibilities.

NOW, THEREFORE, in consideration of the respective representations, warranties, covenants and agreements contained in this Agreement, each of Seller and Purchaser agrees as follows:

ARTICLE I

CERTAIN DEFINITIONS

1.A Defined Terms . As used in this Agreement each of the following terms shall have the following meaning:

1.01 “Action” has the meaning set forth in Section 11.02(a) .

1.02 “ Affiliate ” of a Person means any other Person that (a) directly or indirectly controls the specified Person; (b) is controlled by or is under direct or indirect common control with the specified Person; or (c) is an officer, director, employee, representative or agent or subsidiary of the Person. For the purposes of this definition, “ control ,” when used with respect to any specified Person, means the power to direct the management or policies of the specified Person, directly or indirectly, whether through the ownership of voting securities, partnership or limited liability company interests, by contract or otherwise.

1.03 “ Agreement ” means this Membership Interest Purchase and Sale Agreement, together with the Schedules and Exhibits hereto.

1.04 “Air Permits” has the meaning set forth in Section 7.28 .

1.05 “ Assets” means all of the Company’s tangible and intangible assets underlying the presentation of such assets on the Company’s Interim Balance Sheet, as added to or removed during the period from such date to the Closing Date including, but not limited to, and the Company’s generating plant to the extent not reflected on said Interim Balance Sheet as a result of being fully written off or any other similarly situated properties of the Company.

1.06 “ Assignments” means, collectively, each of the assignments in the form annexed hereto as Schedule 3.02, Schedule 3.02(d)(1) and Schedule 3.02(d)(2) to be entered into pursuant to Section 2.01 and Section 2.03(f).

1.07 “Assumed Contracts” means the executory leases, contracts and other agreements assumed by the Company under the Plan, which agreements shall include, but not be limited to, any interconnection agreements to which the Company is a party prior to the Plan Effective Date, all such agreements to be included in a Schedule to be mutually agreed between the Parties and approved by the Bankruptcy Court.

1.08 “Auction” has the meaning set forth in Section 7.15(g) .

1.09 “ Bankruptcy Case ” means the voluntary petitions filed by Seller and Affiliates of Seller, under Chapter 11 of Title 11 of the United States Code, as amended and the resulting proceeding in the Bankruptcy Court.

1.10 “ Bankruptcy Code ” means the United States Bankruptcy Code, as the same may be amended from time to time, in each case as of the relevant date or dates.

1.11 “ Bankruptcy Court ” has the meaning set forth in paragraph D of the Recitals hereto.

1.12 “ Bankruptcy Court Orders ” has the meaning set forth in Section 7.15(a) .

1.13 “Break-Up Fee” has the meaning set forth in Section 7.15(b) .

1.14 “ Business Day ” means a day other than Saturday, Sunday or a day on which banks are legally required or permitted to be closed for business in the State of New York.

1.15 “ Capital Expenditure ” means any additions or changes to or replacements of property, plant and equipment and any other expenditures or repairs (including capitalized maintenance costs) that would be capitalized on Seller’s balance sheet in accordance with Seller’s capitalization policy.

1.16 “ Closing ” has the meaning set forth in Section 2.01 .

1.17 “ Closing Date ” has the meaning set forth in Section 3.01 .

1.18 “ Code ” has the meaning set forth in Section 2.04 .

1.19 “ Commercially Reasonable Efforts ” means those efforts (i) which are reasonably foreseeable by the Parties at the time of executing this Agreement, (ii) which a Party would reasonably expect the other Party to take under the circumstances in order to satisfy its obligations hereunder, and (iii) which a Party would undertake for its own benefit under similar circumstances in order to achieve the results contemplated by this Agreement; provided, however, that any efforts set forth in clauses (i)-(iii) will not require or include any expense or conduct not ordinarily incurred or engaged in by Persons seeking to implement transactions of the type contemplated by this Agreement.

1.20 “ Company ” has the meaning set forth in the Background section (A) of this Agreement.

1.21 “ConEd” has the meaning set forth in Section 7.27 .

1.22 “ Confidential Information ” has the meaning assigned to such term in the Confidentiality Agreement.

1.23 “ Confidentiality Agreement ” means that certain Confidentiality Agreement dated September 29, 2006 between Seller and Purchaser.

1.24 “Confirmation Order” means the order of the Bankruptcy Court confirming the Plan and approving the transactions contemplated therein.

1.25 “ Consent Order ” means the Consent Order dated July 22, 2005, between the Company and the New York Department of Environmental Conservation relating to certain

environmental remediation at the Hillburn Facility , as such Consent Order may be revised, amended or supplemented from time to time.

1.26 “ CPR ” means the Center For Public Resources, Inc.

1.27 “Cross Indemnity Agreement” has the meaning set forth in Section 7.24 .

1.28 “ Damages ” has the meaning set forth in Section 11.02(a) .

1.29 “DEC” means the New York State Department of Environmental Conservation.

1.30 “Disclosure Statement” has the meaning set forth in Section 7.15(a) .

1.31 “Disclosure Statement Order” has the meaning set forth in Section 7.15(a) .

1.32 “ Dispute ” has the meaning set forth in Section 13.07 .

1.33 “Disputed Claims” has the meaning set forth in Section 7.09 .

1.34 “ Down Payment ” has the meaning set forth in Section 2.02 .

1.35 “ Due Diligence Inspections and Reviews ” means any due diligence, inspection or review related to the Membership Interest and Assets and described in or conducted pursuant to the terms and conditions of the Confidentiality Agreement.

1.36 “Effective Date” means the date on which this Agreement is executed by the Parties.

1.37 “Encumbrances” means any mortgages, pledges, liens, security interests, conditional and installment sale agreements, activity and use limitations, conservation easements, deed restrictions, easements, encumbrances and charges of any kind.

1.38 “ Environmental Laws ” means any Governmental Rule relating to air emissions, storage and use of hazardous or toxic substances, generation, treatment, storage, and disposal of hazardous wastes, waste water discharges and similar environmental matters, including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq .), the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq .), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq .), the Federal Water Pollution Control Act (33 U.S. C. § 1251 et seq .), the Clean Air Act (42 U.S.C. § 7401 et seq .), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq .), the Oil Pollution Act (33 U.S.C. § 2701 et seq .) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et seq .).

1.39 “Escrow Agent ” means Hiscock & Barclay, LLP.

1.40 “ Escrow Agreement ” means the escrow agreement among Seller, Purchaser and Escrow Agent dated as of the date hereof substantially in the form of Schedule 1.41 hereto.

1.41 “ Event of Loss ” has the meaning set forth in Section 7.21(a) .

1.42 “Final Order(s) ” means an order of the Bankruptcy Court (i) that is not the subject of a pending appeal, petition for certiorari, motion for reconsideration or other proceedings for review, rehearing or reargument; (ii) that has not been reversed, vacated, modified or amended, is not stayed and remains in full force and effect; and (iii) respecting which the time to appeal, to petition for certiorari, to move for reconsideration or to seek review, rehearing or reargument shall have expired, as a result of which such order shall have become final in accordance with Bankruptcy Rule 8002; provided, however, that no order shall fail to be a Final Order solely because of the possibility that a motion pursuant to Rule 60 of the Federal Rules of Civil Procedure or Bankruptcy Rule 9024 may be filed with respect to such order.

1.43 “ Financial Statements ” has the meaning set forth in Section 4.06 .

1.44 “GAAP ” shall mean generally accepted accounting principles for financial reporting in the United States.

1.45 “Gas Transportation Agreement” has the meaning set forth in Section 7.27 .

1.46 “ Governmental Approval ” means any authorization, consent, approval, waiver, exception, variance, order, franchise, permit, license or exemption issued by, and any registration or filing with, any Governmental Authority.

1.47 “ Governmental Authority ” means any federal, state, local or other governmental, regulatory or administrative agency, governmental commission, department, board, subdivision, court, tribunal, or other governmental arbitrator, arbitral body or other authority having jurisdiction over the matter or Person in question.

1.48 “ Governmental Rule ” means, with respect to any Person, any applicable law (including, but not limited to, common law), statute, treaty, rule, regulation, ordinance, order, code, judgment, decree, directive, injunction, writ or similar binding action or decision duly implementing any of the foregoing by any Governmental Authority, but does not include Governmental Approvals.

1.49 “Grahamsville Generating Facility” means the approximately 18 MW hydroelectric electric generating station located on Route 55A, Grahamsville, New York, and formerly owned by Orange and Rockland Utilities Inc. and previously leased to Company, which lease expired on October 31, 2006.

1.50 “ Hazardous Substances ” means any chemical, material or substance that is listed or regulated under applicable Environmental Laws as a “hazardous” or “toxic” substance or waste, or as a “contaminant,” or is otherwise listed or regulated under applicable Environmental Laws because it poses a hazard to human health or the environment.

1.51 “Hillburn Air Permit” has the meaning set forth in Section 7.28 .

1.52 “Hillburn Facility” has the meaning set forth in item 1 on Schedule 1.45.

1.53 “ HSR Act ” has the meaning set forth in Section 7.03 .

1.54 “Hydroelectric and Gas Turbine Generating Stations” means those stations listed on Schedule 1.45 .

1.55 “ Indemnifying Party ” has the meaning set forth in Section 11.02(a) .

1.56 “ Indemnitee ” has the meaning set forth in Section 11.02(a) .

1.57 INTENTIONALLY OMITTED

1.58 “Intercompany Claims” means all claims and causes of action existing as of the Closing Date that the Company has or could have asserted against Seller or any Affiliate of Seller, including without limitation: (i) all “claims”, as defined in Section 101(5) of the Bankruptcy Code against Seller or any Affiliate of Seller, and all causes of action against Seller or any Affiliate of Seller arising under sections 542, 544, 545, 547, 548, 549, 550, 552(b) and 553 of the Bankruptcy Code or any comparable state law affecting creditors rights generally, and which constitute property of the Company’s chapter 11 estate and (ii) any claims arising with respect to any accounts receivable due to the Company from Seller or any Affiliate of Seller that have been assigned to Seller or its designee as further described in Sections 2.03(a)(i) and 2.03(f) of this Agreement.

1.59 “ Interim Balance Sheet ” has the meaning set forth in Section 4.06 (ii) .

1.60 “ Knowledge ” or similar phrases in this Agreement means: (i) in the case of Seller, the actual, current knowledge of Seller’s representatives or the Company’s representatives listed in Schedule 1.1 at the date of this Agreement (or, with respect to any certificate delivered pursuant to Section 9.03 , the date of delivery of such certificate), provided that, with respect to any third party claims against the Company, actual, current knowledge of the representatives listed on Schedule 1.1 shall be deemed to include actual, current knowledge of any actual claims or any contingent or potential claims against the Company; and (ii) in the case of Purchaser, the actual, current knowledge of Purchaser’s representatives listed in Schedule 1.2 at the date of this Agreement (or, with respect to the certificate delivered pursuant to Section 10.03 , the date of delivery of such certificate).

1.61 “ Major Loss ” has the meaning set forth in Section 7.21(a) .

1.62 “ Material Adverse Effect ” means a material adverse effect upon (a) the business, operations, assets, liabilities, condition (financial or otherwise) or results of operations of the Company, or (b) the ability of Seller to consummate the transactions contemplated by this Agreement.

1.63 “ Material Contract ” has the meaning set forth in Section 4.16 .

1.64 “ Membership Interest ” has the meaning set forth in the Background section at the beginning of this Agreement.

1.65 “MET” has the meaning set forth in Section 4.16 .

1.66 “ Minor Loss ” means an Event of Loss that is not a Major Loss.

1.67 “Mirant Energy Marketing” has the meaning set forth in Section 4.16 .

1.68 “Mirant Marketing Agreement” has the meaning set forth in Section 4.16 .

1.69 “Mirant NY-Gen” has the meaning set forth in the Recitals hereto.

1.70 “Mirant Services” has the meaning set forth in Section 4.16 .

1.71 “ Necessary Capital Expenditure ” means any Capital Expenditure other than a Pre-Approved Capital Expenditure or a Remediation Expenditure that, in the exercise of Prudent Utility Practices, is reasonably necessary for the continued operation or maintenance of the Hydroelectric and Gas Turbine Generating Stations or that is required by applicable law. Necessary Capital Expenditure does not include any Capital Expenditure undertaken primarily to expand or re-power the Hydroelectric and Gas Turbine Generating Stations.

1.72 “NO x Bubble” has the meaning set forth in Section 7.28 .

1.73 “NYISO” has the meaning set forth in Section 7.26 .

1.74 “O&R Settlement Agreement” has the meaning set forth in Section 7.25 .

1.75 “ Party ” means either Seller or Purchaser, as the context requires and “ Parties ” means, collectively, “Seller and Purchaser”.

1.76 “ Person ” means an individual, partnership, joint venture, corporation, limited liability company, trust, association or unincorporated organization, or any Governmental Authority.

1.77 “Plan” means the Chapter 11 plan for Mirant NY-Gen providing, inter alia, for (a) the discharge to the fullest extent permitted by the Bankruptcy Code of (i) all claims against Mirant NY-Gen existing on the Plan Effective Date with the exception of the Southern Company Claims, and (ii) all liens, claims, encumbrances and interests in any of the Assets existing on the Plan Effective Date, (b) the assumption of the Assumed Contracts, and (c) the retention by Seller of the Membership Interest, as the same may be amended, supplemented, or otherwise modified from time to time, together with the exhibits and schedules thereto, as the same may be in effect at the time such Chapter 11 plan is confirmed by the Bankruptcy Court.

1.78 “Plan Effective Date” means the effective date of the Plan as defined in the Plan, which shall in no event be sooner than the Closing Date.

1.79 “ Pre-Approved Capital Expenditures ” has the meaning set forth in Section 2.03(c) .

1.80 “Prevailing Bidder” has the meaning set forth in Section 7.15(g) .

1.81 “ Prudent Utility Practices ” means any of the practices, methods and acts engaged in or approved by a significant portion of the competitive electric generation industry for facilities similar to the Hydroelectric and Gas Turbine Generating Stations during the relevant time period or any of the practices, methods or acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety, law, regulation, environmental protection and expedition. Prudent Utility Practices are not intended to be limited to the optimum practices, methods or acts to the exclusion of all others, but rather, to be acceptable practices, methods or acts generally accepted in the industry.

1.82 “ Purchase Price ” means the consideration to be paid for the Membership Interest as set forth in Section 2.02 .

1.83 “ Purchaser ” has the meaning set forth in the introductory paragraph of this Agreement.

1.84 “ Purchaser Indemnified Parties” has the meaning set forth in Section 11.02(e) .

1.85 “ Purchaser Required Consents ” has the meaning set forth in Section 7.14(a) .

1.86 “ Records ” has the meaning set forth in Section 7.04 .

1.87 “Regulatory Approvals” means any regulatory approvals required from the Federal Energy Regulatory Commission and the New York Public Service Commission.

1.88 “ Related Agreements ” means the Confidentiality Agreement, the Assignments, and the Cross Indemnity Agreement (to the extent applicable).

1.89 “Remediation Expenditures” means expenditures made and to be made by the Company for remediation work conducted pursuant to (i) the Consent Order and (ii) the Swinging Bridge Remediation Plan.

1.90 “ Review Firm ” has the meaning set forth in Section 2.03(a) .

1.91 “Sale Motion” has the meaning set forth in Section 7.15(a) .

1.92 “Sale Order” has the meaning set forth in Section 7.15(c) .

1.93 “Sale Procedures Order” has the meaning set forth in Section 7.15(b) .

1.94 “ Schedules ” means the schedules to this Agreement.

1.95 “ Section ” means a numbered section of this Agreement included within the Article that begins with the same number as that section.

1.96 “ Seller ” has the meaning set forth in the introductory paragraph of this Agreement.

1.97 “Seller Marks” has the meaning set forth in Section 7.24 .

1.98 “Seller Required Consents” has the meaning set forth in Section 7.14(b) .

1.99 “Seller Taxes” has the meaning set forth in Section 7.15(c) .

1.100 “ Seller’s Estimate ” has the meaning set forth in Section 7. 21(a) .

1.101 “Shoemaker Air Permit” has the meaning set forth in Section 7.28 .

1.102 “ Southern Company Claims ” has the meaning set forth in Section 11.02(e) .

1.103 “ Station ” has the meaning set forth in Section 7.21(a) .

1.104 “Swinging Bridge Facility” has the meaning set forth in item 5 on Schedule 1.45.

1.105 “Swinging Bridge Basic Remediation” means the remediation work under the Swinging Bridge Remediation Plan other than the Unit 1 Fill-In.

1.106 “Swinging Bridge Remediation Plan” means the remediation plan for the Swinging Bridge Facility approved by the Federal Energy Regulatory Commission in its letter dated June 14, 2006, as such remediation plan may be revised, amended or supplemented from time to time. For purposes of this Agreement, the remediation work under the Swinging Bridge Remediation Plan shall consist of the Swinging Bridge Basic Remediation and the Unit 1 Fill-In.

1.107 “ Tax ” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Internal Revenue Code of 1986, as amended), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property (including assessments, fees or other charges based on the use or ownership of real property), personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated tax, or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not, including without limitation, any item for which a Person’s liability arises as a transferee or successor-in-interest.

1.108 “ Third Party Claim ” means a claim by a Person other than Seller or a Person related to Seller as described in Section 11.03 or Purchaser or related to Purchaser as described in Section 11.02 .

1.109 “ Third Party Sale ” has the meaning set forth in Section 7.15(g) .

1.110 “Unit 1 Fill-In” means that part of the Swinging Bridge Remediation Plan consisting of the volumetric “fill-in” of the penstock and tunnel of Unit 1 at the Swinging Bridge Facility.

1.111 “Unit 1 Fill-In Contract” has the meaning set forth in Section 2.03(d)(ii).

1.B. Interpretation . In this Agreement, unless a clear contrary intention appears:

(i) the singular number includes the plural number and vice versa;

(ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity;

(iii) reference to any gender includes each other gender;

(iv) reference to any agreement (including this Agreement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof;

(v) reference to any Article, Section, Schedule or Exhibit means such Article, Section, Schedule or Exhibit to this Agreement, and references in any Article, Section, Schedule, Exhibit or definition to any clause means such clause of such Article, Section, Schedule, Exhibit or definition;

(vi) “hereunder,” “hereof,” “hereto” and words of similar import are references to this Agreement as a whole and not to any particular Section or other provision hereof or thereof;

(vii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term;

(viii) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding,” and “through” means “through and including”;

(ix) the word “will” shall be construed to have the same meaning and effect as the word “shall”; and

(x) reference to any law (including statutes and ordinances) means such law as amended, modified codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder.

ARTICLE II

SALE AND PURCHASE OF THE MEMBERSHIP INTEREST

2.01 Membership Interest to be Sold . Subject to the terms and conditions of this Agreement, at the Closing provided for in Section 3.01 hereof (the “ Closing ”), Seller shall sell, transfer and deliver the Membership Interest to Purchaser, and Purchaser shall purchase the Membership Interest from Seller, pursuant to Section 363 of the Bankruptcy Code and the Sale Order.

2.02 Purchase Price and Payment . Subject to the terms and conditions of this Agreement, as consideration for the Membership Interest, Purchaser will pay to Seller in cash an aggregate of Three Million U.S. Dollars ($3,000,000) (the “ Purchase Price ”). Purchaser shall pay ten percent (10%) of such amount as a down payment (the “ Down Payment ”) to Escrow Agent within ten (10) Business Days of the Effective Date in accordance with the terms and provisions of the Escrow Agreement. The balance of the Purchase Price shall be payable by Purchaser at the Closing. Both payments shall be made by wire transfer in U.S. Dollars in immediately available funds to such account(s) as Seller will designate.

2.03 Adjustments to the Purchase Price . The Purchase Price is subject to adjustment in accordance with the following:

(a) Working Capital .

(i) Within ninety (90) days after the Closing, Seller shall calculate the amount of net working capital at the Company as of the Closing Date and provide written notice of such amount to Purchaser. To the extent that the amount of the net working capital is greater than zero, Purchaser shall pay Seller an adjustment within fifteen (15) days of receiving the notice from Seller; and to the extent that the amount of the net working capital is less than zero, Seller shall pay Purchaser an adjustment within fifteen (15) days of issuing such notice. For purposes hereof, “net working capital” shall mean cash and cash equivalents, accounts receivable (excluding accounts receivable due from its Affiliates that have been assigned to Seller or its designee pursuant to Section 2.03(f)), prepayments (including prepaid real estate Taxes covering the period after the Closing Date) and fuel inventory (at the higher of cost or market) less trade accounts payable and accruals (excluding trade accounts and accruals due to its Affiliates). Accounts receivable shall also exclude: Tax refunds that are subject to the terms of Section 2.03(b) below; and amounts related to insurance and other claims that are subject to the terms of Section 2.03(e) below. Trade accounts payable and accruals shall also exclude: the remediation work at the Swinging Bridge Facility that is subject to the terms of Section 2.03(d) below; amounts recorded for remediation and monitoring work at the Hillburn Facility; and asset retirement

obligations for all of the Company’s generating facilities. The market value of fuel inventory shall be determined by reference to the price listed in Platts US Marketscan, Atlantic Coast, Low Sulfur Jet, Barge Quote, published on the Closing Date, plus all applicable Taxes. If no price is published on the Closing Date, then the price shall be the average of (i) the price for the first day for which a price (as determined using the preceding methodology) is published that precedes the Closing Date and (ii) the price for the first day for which a price (as determined using the preceding methodology) is published that next follows the Closing Date. If Platts US Marketscan, or the relevant location or fuel type ceases to be published, the Parties shall agree on the appropriate index to be used.

(ii) In the event of a dispute with respect to Seller’s calculation of the amount of net working capital and any adjustment to be paid by Purchaser or Seller pursuant hereto, Purchaser and Seller shall attempt to reconcile their differences. If Purchaser and Seller are unable to do so within sixty (60) days of receipt by Purchaser of Seller’s written notice of the amount of its calculation, Purchaser and Seller shall submit the disputed items for resolution to Deloitte & Touche, LLP (Atlanta Office) (the “ Review Firm ”) which, within ninety (90) days from such submission, shall determine and report to the Parties upon such disputed items, and such report shall be final, binding and conclusive on the Parties hereto. In acting pursuant to this Section 2.03(a) , the Review Firm shall have the rights, privileges and immunities of an arbitrator, and its fees shall be paid one half by Purchaser and one half by Seller.

(b) Tax Refunds . All refunds of Taxes relating to the Company with respect to Tax periods ending on or before the Closing Date will be for the account of Seller. To the extent the Company receives any such refund after the Closing Date, Purchaser shall pay the amount of such refund to Seller within five (5) Business Days of receipt.

(c) Pre-Approved Capital Expenditures and Necessary Capital Expenditures . From the Effective Date through the Plan Effective Date, the Company may (without Purchaser’s consent) make: (i) the Capital Expenditures described on Schedule 2.03(c) (the “ Pre-Approved Capital Expenditures” ); and (ii) Necessary Capital Expenditures. Subject to the provisions of Section 7.21(a) , Purchaser will pay to Seller at Closing, as an addition to the Purchase Price, the amount of capital contributed by Seller to the Company during such period and expended by the Company on account of all Pre-Approved Capital Expenditures and Necessary Capital Expenditures made between the Effective Date and the Closing and not theretofore paid by Purchaser.

(d) Remediation Expenditures . From the Effective Date through the Closing, the Company may (without Purchaser’s consent) make the Remediation Expenditures; subject to the following:

(i) Purchaser shall not be liable to reimburse Seller for the Remediation Expenditures;

(ii) the Unit 1 Fill-In shall be done in accordance with a fixed price, lump sum contract for same to be entered into by the Company prior to Closing

(the “ Unit 1 Fill-In Contract ”), the requirements of the Federal Energy Regulatory Commission, and other applicable legal requirements. A copy of the proposed Unit I Fill-In Contract shall be provided to Purchaser for Purchaser’s comments within a reasonable time before it is to be finalized and it shall be attached to and, subject to any required approval of the Bankruptcy Court, become a part of this Agreement in accordance with Section 7.12(a) and Schedule 2.03(d)(ii). The Purchase Price shall be reduced by an amount equal to the difference between the amount stated in the Unit 1 Fill-In Contract for completion of the work described therein and the unpaid portion of that amount on the Closing Date. If the Company does not enter into the Unit 1 Fill-In Contract on or before the Closing, the Purchase Price shall be reduced by the estimated amount agreed to by Purchaser and Seller at or before the Closing as the cost for completion of the Unit 1 Fill-In. In the event the Parties cannot agree on the estimated amount as aforementioned, then the amount proposed by Seller shall prevail for purposes of the Closing; provided, however, that Purchaser shall be entitled to invoke the dispute resolution provisions contained in Section 13.10 hereof with respect to such estimated amount; and, provided further, that the Purchase Price shall be reduced by only such portion of the reduction determined pursuant to this Section 2.03(d)(ii) which, when aggregated with the Purchase Price reduction determined pursuant to Sections 2.03(d)(iii) and 2.03(e) and Seller’s liability under Section 11.03(b)(iii) hereof, does not exceed the Purchase Price.

(iii) Seller shall make a good faith effort to cause Company to complete the Swinging Bridge Basic Remediation on or before the Closing Date. If the Swinging Bridge Basic Remediation is not expected to be completed by the Closing Date, the Purchase Price shall be reduced in accordance with Section 2.03(e) below; and

(iv) INTENTIONALLY OMITTED

(v) INTENTIONALLY OMITTED

(vi) upon Closing and the adjustment of the Purchase Price in accordance with Sections 2.03(d) and 2.03(e), if any, the Company shall be responsible for completing the remediation in accordance with the applicable Consent Order, Swinging Bridge Remediation Plan, and applicable law and, following Closing and, except as provided in Section 2.03(e) below, Seller shall have no liability or obligation to Purchaser or Company for the costs of such completion.

(e) Remediation Shortfall . If the Company is not reasonably expected to complete the Swinging Bridge Basic Remediation on or before the Closing Date, then Seller shall notify Purchaser, within fifteen (15) days prior to the Closing, of Seller’s option to:

(i) reduce the Purchase Price for Seller’s good faith written estimate of amounts required to be expended to complete the applicable remediation, or

(ii) cause the Company to contract with a third party reasonably acceptable to Purchaser to complete the applicable remediation, in which case the Purchase Price shall be reduced by the amount payable to such third party under such contract;

provided, however, that in the case of either option specified in (i) or (ii) aforementioned, Seller’s liability shall be limited to an amount which, when aggregated with Seller’s liability under Section 2.03(d) hereof and Section 11.03(b)(iii) hereof, does not exceed the Purchase Price.

(f) Insurance Proceeds and Affirmative Claims Against Third Parties . Prior to the Closing Date, the Company will (i) assign to Seller (or such Affiliate of Seller as Seller may direct pursuant to the Plan) all of the Company’s pending insurance claims filed with respect to and related to its Remediation Expenditures at both the Swinging Bridge Facility and the Hillburn Facility, which may include, but shall not be limited to, claims in respect of property, business interruption, and environmental losses. To the extent an insurance carrier pays amounts related to such claims to the Company after Closing, the Company shall hold such amounts in trust for Seller (or Seller’s Affiliate, as the case may be) and Purchaser shall cause the Company to pay Seller or its Affiliate such amounts within five (5) Business Days of receipt, (ii) assign to Seller (or such Affiliate of Seller as Seller may direct pursuant to the Plan) the Company’s affirmative claims against any third parties (including, but not limited to, claims originally filed in the Bankruptcy Case against Orange and Rockland Utilities Inc. and Consolidated Edison, Inc. and/or any of their respective Affiliates) for actions or inactions arising prior to the Closing Date, and (iii) assign to Seller (or such Affiliate of Seller as Seller may direct pursuant to the Plan) all Intercompany Claims. If requested by Seller, Purchaser shall cause re-organized Mirant NY-Gen to cooperate with Seller (or Seller’s designated Affiliate) in the prosecution of such insurance and affirmative claims, including making personnel, records, and access to the Assets reasonably available as needed by Seller; provided, however, that the costs of prosecuting any such claims shall be borne by, and be for the account of, Seller. It is expressly understood that nothing herein shall affect any claims that the Company may or could have asserted against any Affiliate that is party to the O&R Settlement Agreement for setoff, contribution, reimbursement or indemnity under the O&R Settlement Agreement, or any claim or cause of action that Purchaser or the Company may assert against Seller or any other Affiliate of Seller arising under or related to this Agreement or any agreement entered into pursuant to or in connection with this Agreement.

2.04 Allocation of Purchase Price . Company is a disregarded entity under Section 7701 of the Internal Revenue Code, of 1986 as amended (the “ Code ”). This purchase constitutes an asset acquisition under Code Section 1060. The Purchaser and the Seller shall allocate the Purchase Price to the Assets of the Company within ninety (90) days after the Closing Date in a manner consistent with Section 1060 of the Code and the Treasury Regulations thereunder. Purchaser shall provide the initial draft of the allocation. Each of the Purchaser and the Seller agrees to file Internal Revenue Service Form 8594, and all federal, state, local and foreign Tax returns, in accordance with such allocation. Each of the Purchaser and the Seller shall report the transaction contemplated by this Agreement for federal income Tax and all other Tax purposes in a manner consistent with the allocation determined pursuant to this Section 2.04; provided, however, that if the Parties should fail to agree upon the allocation as herein described, then the matter shall be submitted to a nationally recognized valuation firm whose decision regarding the allocation will

be binding upon the Parties. Each of the Purchaser and the Seller agrees to provide the other promptly with any other information required to complete Form 8594. Each of the Purchaser and the Seller shall notify and provide the other with reasonable assistance in the event of an examination, audit or other proceeding regarding the agreed upon allocation of the Purchase Price.

ARTICLE III

THE CLOSING

3.01 Time and Place; Effective Time of Transfer .

(a) Except as provided by the Bankruptcy Code, Federal Rules of Bankruptcy Procedure, or any order by the Bankruptcy Court in the Bankruptcy Case, the Closing of the transactions contemplated by this Agreement will take place at the offices of Hiscock & Barclay, LLP, 50 Beaver Street, Albany, New York 12207-2830 at 10:00 A.M. local time, on the Closing Date (as hereinafter defined). Subject to Section 11.01 hereof, the Closing shall occur as soon as practicable after the conditions set forth in Articles VII, VIII, IX and X have been satisfied or waived, on a date specified in a written notice from Seller to Purchaser, given at least five days prior to such date (the “ Closing Date ”), provided, however, that such date shall not be sooner than the Plan Effective Date.

(b) For all purposes, the transfer of the Membership Interest by Seller to Purchaser pursuant to this Agreement shall be effective at 11:59 P.M. on the date of Closing.

3.02 Deliveries by Seller . At the Closing, Seller shall deliver the following to Purchaser:

(a) Assignment in the form of Schedule 3.02 hereto duly executed by Seller transferring the Membership Interest to Purchaser;

(b) a good standing certificate for the Company from the Secretary of State of the State of Delaware and from the Secretary of State of each jurisdiction in which the Company is authorized to do business as a foreign limited liability company bearing a date within fifteen (15) days of the Closing Date;

(c) resignations of the Company’s managers and officers, effective on the Closing Date;

(d) a copy of the assignments referred to in Section 2.03(f) in the forms attached as Schedules 3.02(d-1) and 3.02(d-2) hereto;

(e) the various certificates, documents and instruments referred to in Article IX hereof;

(f) the Cross Indemnity Agreement referred to in Section 7.25 hereof (to the extent applicable) in the form attached as Schedule 7.25 hereto; and

(g) such other items as Purchaser deems reasonably necessary to effectuate the transactions described in this Agreement; provided, however, that if any required action with respect

to the Gas Transportation Agreement as specified in Section 7.27 hereunder has not been completed, then the Company, Seller, Purchaser and the parties thereto shall enter into an arrangement to continue the Gas Transportation Agreement with respect to the Company under the same provisions as existed prior to the Closing until such time as the replacement agreement specified in Section 7.27 hereunder has been implemented, and provided, further that, if Seller should be required to pay a consideration to effectuate the obligations as provided in this clause (g), then Purchaser shall bear any costs other than nominal costs associated with the same.

(h) all documents delivered by Seller at Closing shall be effective as of 11:59 P.M. on the Closing Date.

3.03 Deliveries by Purchaser . At the Closing, Purchaser shall deliver the following to Seller:

(a) the amount of the Purchase Price to be paid at the Closing in accordance with Section 2.02 , by wire transfer to the account(s) indicated on Schedule 3.03(a) :

(b) a good standing certificate for Purchaser from the Secretary of State of the State of New York, bearing a date within fifteen (15) days of the Closing Date; and

(c) the various certificates, documents and instruments referred to in Article X hereof; and

(d) such other items as Seller deems reasonably necessary to effectuate the transactions described in this Agreement; provided, however, that if Purchaser is required to pay a consideration to obtain or otherwise provide any such other item, then Seller shall bear any costs other than nominal costs associated with the same.

(e) all documents delivered by Purchaser at Closing shall be effective as of 11:59 P.M. on the Closing Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Purchaser as follows:

4.01 Power to Sell the Membership Interest . Subject to prior approval by the Bankruptcy Court, Seller has the power to sell, assign, transfer and deliver to Purchaser good title to the Membership Interest, free and clear of all security interests, liens, pledges, assessments, options and encumbrances, and with no restriction on the voting rights and other incidents of record ownership pertaining thereto.

4.02 Corporate Organization .

(a) Seller is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and corporate authority to enter into this Agreement and to perform its obligations hereunder.

(b) The Company is a limited liability company validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and corporate authority to carry on its business as it is now being conducted and to own the properties and assets it now owns; and is duly qualified or licensed to do business as a foreign limited liability company in good standing in all jurisdictions in which the ownership of property or the conduct of its business requires such qualification, except where the failure to so qualify would not have a Material Adverse Effect.

4.03 Due Authorization and Execution; Valid and Binding Agreement; No Violation .

(a) Subject to prior approval by the Bankruptcy Court, the execution, delivery and performance by Seller of this Agreement have been duly authorized by all necessary corporate action required by law or by Seller’s and the Company’s organizational documents. This Agreement has been duly executed and delivered by Seller and, assuming due authorization, including prior approval of the Bankruptcy Court, and execution and delivery by Purchaser, constitutes a valid and binding agreement of Seller, enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors’ rights and rules of law governing specific performance, injunctive relief or other equitable remedies.

(b) Except as set forth on Schedule 4.05 and, assuming receipt of all consents and approvals required from (i) Governmental Authorities as disclosed in Schedule 4.03 and (ii) third parties other than Governmental Authorities as disclosed in Schedule 4.17 , neither the execution and delivery of this Agreement by Seller nor the consummation of the transactions contemplated hereby will violate any provision of the organizational documents of Seller or the Company or, to the Knowledge of Seller, violate, or be in conflict with, or constitute a default under, or cause the amendment, modification or acceleration of, or give any party the right to amend, modify or refuse to perform, or modify the time within which duties are to be performed or rights or benefits are to be received under, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any security interest, lien or other encumbrance upon any property or asset of Seller or the Company under any lease, agreement, understanding, restriction or commitment or any judgment, decree, or order of any court or Governmental Authority to which Seller or the Company is a party or by which Seller or the Company is bound, or to which the property of Seller or the Company is subject, except for violations, conflicts or defaults which would not have a Material Adverse Effect.

4.04 Capitalization . As of the date of this Agreement, the number of issued and outstanding membership interests of the Company consists of the Membership Interest. The Membership Interest is validly issued, fully paid and non-assessable; and the Membership Interest is owned of record by Seller. As of the date of this Agreement, there are no outstanding (a) securities convertible into, exchangeable for or evidencing the right to purchase any capital of the Company; (b) options, warrants, calls or other rights to purchase or subscribe to the Company’s

membership interests or securities convertible into, exchangeable for or evidencing the right to purchase any membership interests of the Company; or (c) contracts, commitments, agreements, understandings or arrangements of any kind relating to the issuance of any membership interests of the Company, any such convertible or exchangeable securities or any such other securities evidencing the right to purchase any such options, warrants or rights.

4.05 Licenses and Permits; Consents and Approvals of Governmental Authority .

(a) To the Knowledge of Seller, Section A of Schedule 4.05 is a list of all licenses and permits issued by a Governmental Authority to the Company relating to the operation of the Company’s business (“ Existing Licenses and Permits ”). Seller has no Knowledge that any license or permit from a Governmental Authority is required for such operation other than: (i) the Existing Licenses and Permits, and (ii) licenses and permits not presently held by the Company, if any, but with respect to which such failure does not have a Material Adverse Effect.

(b) To the Knowledge of Seller, the consent or approval of a Governmental Authority is required in connection with the execution, delivery and performance of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby with respect to: (i) those Existing Licenses and Permits listed in Section B of Schedule 4.05 including, but not limited to, an order by the Federal Energy Regulatory Commission (“FERC”) under Section 203 of the Federal Power Act (16 USC §824b, as amended) authorizing Purchaser’s acquisition of the Membership Interests, (ii) those Consent Orders and agreements with Governmental Authority listed in Section C of Schedule 4.05 , and (iii) the Bankruptcy Case. Seller disclaims any representation or warranty regarding the requirement for the approval or consent of a Governmental Authority in connection with the execution, delivery and performance of this Agreement by Seller or the consummation by Seller of the transactions contemplated hereby except to the extent set forth in this subparagraph (b) and as set forth on Schedule 4.05 .

4.06 Financial Statements . Seller has heretofore delivered to Purchaser the following (collectively, the “ Financial Statements ”): (a) unaudited balance sheets of the Company as at December 31, 2004 and December 31, 2005 and unaudited statements of operations, cash flow and members’ equity for each of the fiscal years then ended; and (ii) an unaudited balance sheet of the Company as at September 30, 2006 (the “ Interim Balance Sheet ”) and unaudited statements of operations, cash flow and stockholders’ equity for the nine (9) month period then ended. Such financial statements of the Company are all in accordance with GAAP.

4.07 No Undisclosed Liabilities . Except as disclosed in the Financial Statements, Schedule 4.07 , or otherwise in this Agreement and the Schedules hereto, and except for liabilities and obligations incurred since the date of the Interim Balance Sheet in the ordinary course of business, to the Knowledge of Seller, the Company has no liabilities of the type required to be reflected in financial statements in accordance with GAAP which would have a Material Adverse Effect which are not reflected or reserved against in the Interim Balance Sheet.

4.08 Absence of Certain Changes . To the Knowledge of Seller, except as disclosed on Schedule 4.08 or as may be required by the Bankruptcy Court, since the date of the Interim Balance Sheet, (a) there has not been any Material Adverse Effect, provided that, Seller makes no representations with respect to (i) business or economic conditions which are generally applicable

to companies in the Company’s industry, (ii) changes in general business or economic conditions; (iii) any change resulting from the announcement or pendency of any of the transactions contemplated by this Agreement; or (iv) any change resulting from compliance by the Seller with the terms of, or the taking of any action required by, this Agreement, and (b) the Company has not suffered any material damage or destruction to any of its Assets, which damage or destruction is not covered by insurance.

4.09 Real Property Leases, Easements and Licenses . Schedule 4.09 lists all: (a) leases pursuant to which the Company leases real property from or to other parties, and (b) easements and licenses pursuant to which the Company receives the right to use real property or grants the right to others to use real property, but does not list leases, easements or licenses the absence of which would not have a Material Adverse Effect . Copies of such leases and easements have been made available for review by Purchaser. Except as set forth on Schedule 4.09 , to the Knowledge of Seller, there are no existing defaults by the Company thereunder and no event of default has occurred which (whether with or without notice, lapse of time or the happening or occurrence of any other event) would constitute a default thereunder by the Company, except such defaults, events of default or other events that would not have a Material Adverse Effect.

4.10 Litigation . Except as disclosed on Schedule 4.10 , there is no action, suit, arbitration or proceeding pending or, to the Knowledge of Seller, threatened against the Company which, if adversely determined against the Company, would have a Material Adverse Effect.

4.11 Subsidiaries . The Company does not have any subsidiaries or own or have the contractual right to vote or to acquire equity interests or any option, right, warrant or other right or instrument convertible into or exchangeable or exercisable for any such equity interest of any entity, corporate or otherwise.

4.12 Taxes . The Company has filed all federal, state and local Tax returns required to be filed by it, all such Tax returns are correct and complete in all material respects and, except as disclosed on Schedule 4.12 , the Company has duly paid all Taxes shown to be due on such Tax returns and there are no claims or Encumbrances against the Company or any of its Assets due to any unpaid Taxes. The provisions for Taxes reflected in the Interim Balance Sheet are reasonable. There are no pending actions or proceedings for the assessment or collection of Taxes from the Company and, except as disclosed on Schedule 4.12 , there is currently no active or ongoing Tax audit.

4.13 NYISO . The Assets participate in the energy and capacity markets and certain ancillary services markets of the NYISO through Seller’s Affiliate, Mirant Energy Trading, LLC. The Assets currently are not eligible to participate in certain ancillary service markets of the NYISO, including voltage support, regulation, and black start services.

4.14 Bank Accounts . Schedule 4.14 sets forth the names of all banks, trust companies, savings and loan associations, brokerage houses and other financial institutions at which the Company maintains accounts of any nature, and the names of all individuals authorized to draw thereon or make withdrawals therefrom.

4.15 Compliance with Law . Except as set forth on Schedule 4.15 or otherwise in this Agreement and the Schedules hereto, to the Knowledge of Seller, the Company is in compliance in all material respects with all laws, ordinances, regulations, and orders applicable to them, the failure with which to comply would have a Material Adverse Effect. Except as set forth on Schedule 4.15 , to the Knowledge of Seller, all licenses, franchises, permits and other Governmental Approvals held by the Company are valid and sufficient to permit the operations thereof except where the failure to hold such licenses, franchises, permits and other Governmental Approvals would not have a Material Adverse Effect.

4.16 Material Contracts; Contracts with Affiliates . Schedule 4.16 lists each material, written contract or agreement of the Company that cannot be terminated on notice of thirty (30) days or less (each of which is herein referred to as a “ Material Contract ”) other than real property leases, easements and licenses referred to in Section 4.09, but does not list contracts or agreements the absence of which would not have a Material Adverse Affect. Except as set forth on Schedules 4.09 and 4.16 and except with respect to defaults based upon the filing of the Bankruptcy Case, to the Knowledge of Seller, with respect to the Material Contracts, there is no existing default or event of default by the Company or any event which, with or without due notice or lapse of time or both, would constitute a default or event of default by the Company, except such defaults, events of default and other events which, either individually or collectively, would not have a Material Adverse Effect. Except as set forth on Schedules 4.09, 4.16 and 4.17 , each of the Material Contracts is capable of being assumed by the Company. Effective no later than the Closing Date, all contracts and agreements between or among the Company and any Affiliate of the Company and/or Seller shall terminate, including without limitation: (i) that certain Power Sale, Fuel Supply and Services Agreement dated January 3, 2006, by and among the Company, Mirant Energy Trading, LLC (“ MET ”), as the transferee from Mirant Americas Energy Marketing, LP (“ Mirant Energy Marketing ”) and others (the “ Mirant Marketing Agreement ”) providing for, among other things, the sale by the Company to MET of all or a portion of the capacity, electricity, ancillary services and/or other related products generated by, or available from, the Company’s generating facilities, and (ii) that certain Administrative Services Agreement dated January 3, 2006, by and between the Company and Mirant Services, LLC (“ Mirant Services ”) providing for the procurement by the Company from Mirant Services of certain administrative, accounting and other similar services.

4.17 Consents . Except for approval by the Bankruptcy Court and as otherwise listed on Schedule 4.17 , to the Knowledge of Seller, no consent of any third party (other then consents of Governmental Authorities listed on Schedule 4.03 ) is necessary to the consummation of the transactions contemplated hereby, except consents whose failure to obtain would not have a Material Adverse Effect.

4.18 Title to Assets . Except as set forth on Schedule 4.18 , the Company has good and valid title to the Assets reflected in the Interim Balance Sheet, except Assets disposed of in the ordinary course of business or related to the transfer of the Grahamsville Generating Facility pursuant to the termination of the sublease for that facility, since the date of the Interim Balance Sheet. To Seller’s Knowledge, none of such Assets are subject to any encumbrance except (a) liens reflected on the Interim Balance Sheet; (b) liens of landlords and liens imposed by law, such as carriers’, warehousemen’s, mechanics’, materialmen’s and vendors’ liens incurred in the ordinary course of business consistent with past practice; (c) purchase money liens arising or created in the

ordinary course of business consistent with past practices; (d) minor imperfections of title, if any, none of which would, either individually or collectively, have a Material Adverse Effect; (e) liens for Taxes not yet due; and (f) leases, easements and licenses set forth on Schedule 4.09 or such other easements, leases and licenses that would not, either individually or collectively, have a Material Adverse Effect.

4.19 No Other Representations or Warranties; Disclaimer .

(a) Except for the representations and warranties contained in this Article IV, none of the Seller, the Company, nor any other Person acting on behalf thereof (including any of their respective Affiliates, officers, directors, employees, agents or representatives) makes any representation or warranty, express, implied, statutory or arising by operation of law, and Seller hereby disclaims any such representations or warranties other than those contained in this Article IV, whether by Seller, the Company, or any of their respective Affiliates, officers, directors, employees, agents or representatives or any other Person, notwithstanding the delivery or disclosure to Purchaser or any of its Affiliates, officers, directors, employees, agents or representatives or any other Person of any documentation or other information by Seller, the Company, or any of their respective Affiliates, officers, directors, employees, agents or representatives or any other Person. In connection with Purchaser’s investigation of the Company, Purchaser has received from Seller and the Company certain financial information. Purchaser agrees and acknowledges that Purchaser is taking full responsibility for making its own evaluation of the adequacy and accuracy of all financial information so furnished to it, and that Purchaser shall have no claim against Seller or any other Person with respect thereto, except as otherwise provided in this Agreement. Accordingly, except as expressly provided in this Article IV, Seller makes no representation or warranty with respect to such financial information.

(b) EXCEPT AS EXPRESSLY PROVIDED IN THIS ARTICLE IV, PURCHASER IS ACQUIRING THE MEMBERSHIP INTEREST AND THE COMPANY “AS IS”, “WHERE IS” AND “WITH ALL FAULTS”, AND SELLER EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY OR ARISING BY OPERATION OF LAW. SPECIFICALLY, WITH RESPECT TO COMPANY’S ASSETS, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE ASSETS OR AS TO THE PROSPECTS (FINANCIAL AND OTHERWISE) OR RISKS INCIDENTAL TO THE ASSETS. SELLER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR AS TO COMPLIANCE WITH ENVIRONMENTAL LAWS, OR AS TO THE CONDITION OF, OR COMPANY’S RIGHTS IN, OR ITS TITLE TO, THE ASSETS, OR ANY PART THEREOF, OR WHETHER COMPANY POSSESSES SUFFICIENT REAL PROPERTY AND PERSONAL PROPERTY INTERESTS TO OWN OR OPERATE THE ASSETS OR TO CONVEY THE ASSETS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT. SELLER FURTHER SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING THE ABSENCE OF HAZARDOUS

SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY ARISING UNDER ENVIRONMENTAL LAWS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND REGARDING THE CONDITION OF THE ASSETS OR THE SUITABILITY OF THE HYDROELECTRIC AND GAS TURBINE GENERATING STATIONS FOR OPERATION AS POWER PLANTS AND NO SCHEDULE OR EXHIBIT TO THIS AGREEMENT, NOR ANY OTHER MATERIAL OR INFORMATION PROVIDED BY OR COMMUNICATIONS MADE BY SELLER, WILL CAUSE OR CREATE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE ASSETS.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Seller as follows:

5.01 Corporate Organization . Purchaser is a limited liability company validly existing and in good standing under the laws of its jurisdiction of formation and has full corporate power and corporate authority to carry on its business as it is now being conducted and to own the properties and assets it now owns and to enter into this Agreement and to perform its obligations hereunder.

5.02 Authorization . Purchaser has taken all corporate action required by law or its organizational documents to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and this Agreement, assuming due authorization, execution and delivery by Seller, constitutes a valid and binding agreement of Purchaser enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors’ rights and rules of law governing specific performance, injunctive relief or other equitable remedies.

5.03 No Violation . Neither the execution and delivery of this Agreement by Purchaser nor the consummation of the transactions contemplated hereby will violate any provision of the organizational documents of Purchaser, or violate, or be in conflict with, or constitute a default under, or cause the amendment, modification or acceleration of, or give any Party the right to amend, modify or refuse to perform, or modify the time within which duties are to be performed or rights or benefits are to be received hereunder, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any security interest, lien or other encumbrance upon any property or asset of Purchaser under, any lease, agreement, understanding, restriction or commitment or any judgment, decree, or order of any court or governmental or regulatory authority or agency to which Purchaser is a party or by which Purchaser is bound or to which the property of Purchaser is subject.

5.04 Consents and Approvals of Governmental Authoritiess . Except for the Bankruptcy Court and as provided on Schedule 5.04 , no consent, approval or authorization of, or declaration, filing or registration with, any Governmental Authority is required in connection with

the execution, delivery and performance by Purchaser of this Agreement or the consummation by Purchaser of the transactions contemplated hereby.

5.05 Litigation . There is no pending or, to Purchaser’s Knowledge, threatened action, investigation or request for information by any Governmental Authority or third person which could result, or has resulted, in (a) the institution of legal proceedings to prohibit or restrain the performance of this Agreement or the consummation of the transactions contemplated hereby or thereby, or (b) a claim for damages as a result of this Agreement or the consummation of the transactions contemplated hereby or thereby. Except as set forth on Schedule 5.05 , Purchaser has no Knowledge of any pending or threatened litigation, claim, investigation or proceeding, private or governmental, which directly and specifically relates to the Membership Interest.

5.06 Brokers . All negotiations relating to this Agreement and the transactions contemplated hereby have been carried on by Purchaser without the intervention of any other Person and in such a manner as not to give rise to any valid claim against Seller (by reason of Purchaser’s actions) for a brokerage commission, finder’s fee or other like payment to any Person.

5.07 “ AS IS” SALE . EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, PURCHASER UNDERSTANDS AND AGREES THAT THE MEMBERSHIP INTEREST AND THE COMPANY’S ASSETS ARE BEING ACQUIRED “AS IS, WHERE IS” ON THE CLOSING DATE, AND IN THEIR CONDITION ON THE CLOSING DATE AND THAT PURCHASER IS RELYING ON ITS OWN EXAMINATION OF THE COMPANY AND ITS ASSETS.

5.08 Due Diligence Inspections and Reviews . Subject to any intentional misrepresentation, gross negligence or willful misconduct with respect to any information provided by Seller or its representatives, Purchaser acknowledges and agrees that it has, prior to its execution of this Agreement, fully completed to its satisfaction all of its due diligence inspections and reviews. Subject to the provisions of Section 12.02 hereof, Purchaser will bear all of its own costs, expenses and charges incurred in connection with its Due Diligence Inspections and Reviews.

ARTICLE VI

CONDUCT OF BUSINESS PENDING THE CLOSING

Pending the Closing, and except as otherwise consented to or approved by Purchaser in writing, Seller agrees to cause the Company to do the following:

6.01 Regular Course of Business . Except as otherwise provided in Sections 6.04, 7.27 and 7.28 below, the Company shall carry on its business diligently and substantially in the same manner as heretofore conducted, and the Company shall not institute any new methods of purchase, sale, lease, management, accounting or operation or engage in any transaction or activity, enter into any agreement or make any commitment, except in the ordinary course of business consistent with past practices or as required by the Bankruptcy Court.

6.02 Amendments . No change or amendment shall be made in the organizational documents of the Company.

6.03 Capital Changes . The Company will not issue or sell any membership interests or other securities, acquire directly or indirectly, by redemption or otherwise, any such membership interests, reclassify or split-up any such membership interests, declare or pay any distributions thereon or make any other distribution with respect thereto, or grant or enter into any options, warrants, calls or commitments of any kind with respect thereto.

6.04 Environmental Remediation; Requirements of Governmental Authorities . The Company shall operate in compliance with orders from and other requirements of Governmental Authorities, including the Consent Order dated July 22, 2005, with the New York Department of Environmental Conservation relating to certain environmental remediation at the Hillburn Facility and the remediation plan for the Swinging Bridge Facility approved by the Federal Energy Regulatory Commission in its letter dated June 14, 2006 (as such Consent Order and remediation plan may be revised, amended or supplemented from time to time).

ARTICLE VII

COVENANTS OF THE PARTIES

Seller hereby covenants and agrees with Purchaser, and Purchaser hereby covenants and agrees with Seller that:

7.01 Reasonable Access . Seller shall cause the Company to afford Purchaser and authorized representatives of Purchaser reasonable access to the books and records of the Company and to the employees working for the Company (all at reasonable times during regular business hours, upon prior notice to the Plant Manager of the Company listed on Schedule 1.1 hereto and in a manner so as not to interfere with the normal business operations of the Company) in order that Purchaser may have an opportunity to make such investigations as it shall desire into the Company and its business.

7.02 Confidentiality .

(a) General. Any Confidential Information furnished by Seller to Purchaser on and after the Effective Date shall be subject to the Confidentiality Agreement. In the event of any conflict between this Agreement and the Confidentiality Agreement, the provisions of the Confidentiality Agreement shall prevail.

(b) Regulatory Authorities and Court of Competent Jurisdiction . Either Party may disclose Confidential Information to any Governmental Authority or court of competent jurisdiction where such disclosure is necessary to comply with Section 7.13 hereof. To the extent permitted by applicable Governmental Rules, the disclosing Party shall seek confidential treatment for the Confidential Information provided to any Governmental Authority and the disclosing Party shall notify the other Party as far in advance as is practicable of its intention to release Confidential Information to any Governmental Authority to enable the other Party to seek injunctive relief.

(c) Disclaimer Regarding Tax Treatment. Notwithstanding anything in this Agreement or in any other written or oral understanding or agreement to which the Parties hereto may be bound, each Party may (i) consult any Tax advisor regarding the Tax treatment and Tax structure of the transactions contemplated by this Agreement, and (ii) at any time disclose to any

Person, insofar as required to comply with Treasury Regulations Section 1.6011-4(b)(3), the Tax treatment and Tax structure of such transactions and all materials of any kind (including opinions or other Tax analyses) that are provided relating to such Tax treatment or Tax structure. The preceding sentence is intended to satisfy the requirements for the transactions contemplated herein to avoid classification as a “confidential transaction” for purposes of Treasury Regulations Section 1.6011-4(b)(3) and shall be interpreted consistent with such intent. This authorization is not intended to permit disclosure of any information that is unrelated to the Tax treatment or Tax structure of any transactions contemplated hereby, including (i) the identities of participants or potential participants in any such transactions, (ii) the existence or status of any negotiations, and (iii) any pricing or financial information, except in each case to the extent such information is related to the Tax treatment or Tax structure of any such transactions. In addition, each Party acknowledges that it has no proprietary or exclusive rights to the federal Tax structure of such transactions or any federal Tax matter or federal Tax idea related to such transactions.

(d) Survival . The obligations of the Parties in this Section 7.02 will survive the termination of this Agreement, the discharge of all other obligations owed by the Parties to each other, any transfer of title to the Membership Interest, and the Closing of the transactions contemplated in this Agreement.

7.03 Hart-Scott-Rodino Act . If required, each Party shall promptly file any Notification and Report Form and related material that it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and shall, subject to Section 7.06 , use its best efforts to obtain an early termination of the applicable waiting period and make any further filings or information submissions pursuant thereto that may be reasonably necessary, proper or advisable.

7.04 Access to Records; .

(a) Prior to and following the Closing, Seller shall provide Purchaser, its counsel, accountants and other representatives with access to the books and records of the Company for periods ending on or before the Closing Date (collectively, the “ Records ”), upon reasonable notice during normal business hours. Seller shall not dispose of any Records for a period of seven (7) years after the Closing Date. Thereafter, Seller shall not dispose of any Records until it has given reasonable notice to Purchaser of its intention to do so and given Purchaser a reasonable opportunity to take possession of the Records to be disposed of.

(b) Following the Closing, Purchaser shall provide Seller, its counsel, accountants and other representatives with access to the books and records of the Company for periods ending on or before the Closing Date (collectively, the “ Records ”), upon reasonable notice during normal business hours. Purchaser shall not dispose of any Records for a period of seven (7) years after the Closing Date. Thereafter, Purchaser shall not dispose of any Records until it has given reasonable notice to Seller of its intention to do so and given Seller a reasonable opportunity to take possession of the Records to be disposed of.

7.05 Regulatory and Other Authorizations and Consents . Each Party will use its best efforts to obtain the authorizations, consents and approvals of federal, state or local regulatory

bodies or other Persons as the same may be necessary for that Party to comply with its obligations under this Agreement and to consummate the transactions contemplated hereby and will cooperate fully with the other Party in promptly seeking to obtain the authorizations, consents and approvals that are or may become necessary for such Party; provided, however, that neither Purchaser, on the one hand, nor Seller or the Company, on the other hand, shall be obligated to: (a) undertake any additional financial obligation, dispose of any property or surrender any material right; (b) otherwise consent to any arrangement or undertake any obligation that would, in its sole and reasonable judgment, materially adversely affect its business or properties; or (c) consent to the extension of the Closing Date of this Agreement beyond that provided in Section 12.01(a)(vi) of this Agreement. Without limiting the preceding portion of this Section 7.05, Purchaser shall be responsible for obtaining the approval of the New York State Public Service Commission and the Federal Energy Regulatory Commission for the transaction contemplated by this Agreement and agrees to file applications for such approvals within fifteen (15) days of the date of this Agreement. Seller agrees to join in such applications, and shall cause the Company to do the same, provided however, that Purchaser shall be solely responsible for pursuing and obtaining such approvals and for the cost thereof. The Parties hereto will not take any action that will or could have the effect of delaying, impairing or impeding the receipt of any required authorizations, consents or approvals.

7.06 Employee Matters . Nothing in this Agreement shall confer upon any employee of Seller or of Seller’s affiliates, subsidiaries and/or third party administrators (“Seller’s Employees”) the right to employment with Purchaser after the date of Closing. Further, Purchaser shall have no rights, liabilities or obligations with respect to Seller’s Employees or independent contractors for any period prior to Closing, nor will Purchaser have any rights, liabilities or obligations with respect to any agreements related to Seller’s Employees or independent contractors prior to Closing.

7.07 No Public Announcement . Neither Party shall issue any press release or make any other public announcement concerning this Agreement or the transactions contemplated hereby without the prior approval of the other Party, which approval shall not be unreasonably withheld. This Section 7.07 shall not apply to filings with the Bankruptcy Court in connection with the transactions contemplated by this Agreement.

7.08 Certain Amounts Owed To Seller and Its Affiliates . Subject to any requirements of the Bankruptcy Court or the Plan, at or prior to Closing, Seller shall cause the Company to fully repay or otherwise provide for the deemed resolution of any indebtedness owed by the Company to Seller or any other Affiliate of Seller, including but not limited to, indebtedness owed under the Debtor-In-Possession Credit Agreement dated as of February 28, 2006, between Mirant Americas, Inc. and the Company.

7.09 Provisions Relating to Treatment of Assets and Liabilities of the Company Under the Plan . The Plan shall provide for the discharge to the fullest extent permitted by the Bankruptcy Code of all claims (as defined in Section 101(5) of the Bankruptcy Code) against the Company existing on the Plan Effective Date, including, but not limited to, all pre- and post-petition secured, priority and unsecured claims of every kind and nature. The Plan shall provide that on the Plan Effective Date, all of the Assets of the Company shall be free and clear of all liens, claims, encumbrances, and interests existing on the Plan Effective Date, as if such Assets had been sold pursuant to Section 363 of the Bankruptcy Code. All payments and distributions provided for under

the Plan in respect to all allowed claims against the Company and all costs and expenses incurred in connection with the discharge of all liens, claims, encumbrances and interests in the Assets existing on the Plan Effective Date shall be paid or otherwise resolved in accordance with the Plan. To the extent that there are any disputed claims against the Company on the Plan Effective Date (the “ Disputed Claims ”), neither the reorganized Company nor Purchaser shall have any obligation under the Plan or for the Disputed Claims.

7.10 Break-Up Fee . In connection with the approval of the Sale Procedures Order, the Break-Up Fee shall be payable at the times provided in the Agreement.

7.11 Further Assurances . Each Party shall execute and deliver such instruments and take such other actions as the other Party may reasonably require in order to carry out the intent of this Agreement.

7.12 Supplements to Schedules .

(a) From time to time prior to the Closing, each Party shall promptly supplement or amend its Schedules hereto with respect to any matter hereafter arising which, if existing or occurring as at the Effective Date, would have been set forth or described in such Schedules.

(b) For purposes of determining the satisfaction of the conditions set forth in Sections 9.01 and 10.01 , respectively, and the accuracy of the representations and warranties of each Party contained in this Agreement, the Schedules shall be deemed to include the information contained therein on the Closing Date, as such Schedules may be supplemented or amended in accordance with Section 7.12(a) above.

7.13 Tax Matters .

(a) The Parties agree that after the Closing Date, Seller shall have the right to review drafts of and approve (which approval shall not be unreasonably withheld) all Tax returns of the Company relating to taxable periods ending (i) on or before the Closing Date and (ii) after the Closing Date, which encompass periods prior to the Closing Date. Copies of each draft Tax return shall be delivered to Seller at least twenty (20) days prior to the proposed filing date thereof. If Seller does not give Purchaser notice of any objection to such draft within five (5) days of receipt of the draft, Seller shall be deemed to have approved such draft. Purchaser shall, and shall cause the Company to, cooperate with Seller in the review of all such Tax returns and in connection therewith provide Seller and its accountants, attorneys and other representatives reasonable access to any and all books, records and data with respect to the Company relevant to such Tax returns, including, without limitation, financial statements, management accounts and work papers of the Company’s accounting department and the Company’s independent accountants.

(b) In the event of a dispute with respect to any such Tax return, Purchaser and Seller shall attempt to reconcile their differences. If Purchaser and Seller are unable to do so within ten (10) days, Purchaser and Seller shall submit the disputed items for resolution to the Review Firm, which, within fifteen (15) days from such submission, shall determine and report to the Parties upon such disputed items, and such report shall be final, binding and conclusive on the Parties hereto and such Tax return shall be filed on a basis which reflects such report. In acting pursuant to

this Section 7.13(b) , the Review Firm shall have the rights, privileges and immunities of an arbitrator, and its fees shall be paid one-half by Purchaser and one-half by Seller.

(c) The provisions of clauses (a) and (b) of this Section 7.13 or any approval of any Tax return by Seller notwithstanding, Seller shall have no liability pursuant to Article XI or otherwise arising from or relating to any Tax election or amended return filed by Purchaser or the Company or any change in the Company’s Tax accounting principles or policies after the Closing Date which recharacterizes, restates or otherwise affects any item for any taxable period ending on or prior to the Closing Date.

(d) Each Party will promptly notify the other in writing upon receipt by such Party of notice of any pending or threatened Tax audit or proceeding relating to Taxes of the Company for any (i) Tax period ending on or before the Closing Date or (ii) Tax period ending after the Closing Date but which includes the Closing Date. Seller will have the sole right to represent the interests of the Company in any audit or Tax proceeding related to Taxes for Tax periods ending on or prior to the Closing Date and to employ counsel of its choice at its expense, and Purchaser and Seller agree to cooperate in the defense of any claim in such audit or proceeding. Seller will have the right to participate at its expense in representing the interests of the Company in any audit or proceeding related to Taxes for any Tax period ending after the Closing Date, if and to the extent that such period includes any Tax period before the Closing Date, and to employ counsel of its choice at its expense. Seller and Purchaser agree to cooperate in the defense of any claim in such audit or proceeding.

7.14 Required Consents .

(a) Except as provided in Sections 4.05 , 7.05 and 7.15 , Purchaser is responsible for obtaining the following (collectively, the “ Purchaser Required Consents ”): all authorizations, consents, licenses, permits and approvals of Governmental Authorities and third Persons required by applicable law or required by any such third Persons in connection with the consummation of the transactions contemplated by this Agreement (including the approvals of the New York State Public Service Commission and the Federal Energy Regulatory Commission as provided in Section 7.05 and those consents listed on Schedule 5.04 ) and any related agreements and with Purchaser’s operation of the Hydroelectric and Gas Turbine Generating Stations.

(b) Seller is responsible for obtaining all authorizations, consents, licenses, permits and approvals referenced in Section 4.05 hereof to the extent Seller is required by law or under this Agreement to obtain same (collectively, the “Seller Required Consents” ).

(c) In connection with obtaining any Purchaser Required Consents or Seller Required Consents from third Persons, each Party will:

(i) promptly commence and use Commercially Reasonable Efforts to obtain all Purchaser Required Consents or Seller Required Consents, as the case may be;

(ii) provide the other Party with the opportunity to comment on drafts of all submissions to such third Persons sufficiently in advance of the submission thereof insofar as practicable;

(iii) consider any comments received from the other Party in good faith;

(iv) invite the other Party or its representative to attend all meetings with such third Persons;

(v) provide copies of all correspondence from such third Persons promptly after receipt thereof; and

(vi) promptly following any request from the other Party, provide a detailed report as to the status of each Purchaser Required Consent or Seller Required Consent (as the case may be) and its efforts to obtain the same.

(d) After the Closing, Purchaser will notify promptly all relevant Governmental Authorities and all other third Persons of the change in ownership of the Membership Interest resulting from the transactions contemplated herein to the extent required by applicable law or the specific underlying agreements.

7.15 Bankruptcy Court Orders and Related Matters . The Parties acknowledge and agree as follows:

(a) promptly after the execution of this Agreement, (i) Seller shall, in accordance with all applicable requirements of, and procedures under, the Bankruptcy Code, file with the Bankruptcy Court a motion (the “ Sale Motion ”) seeking approval of the (A) Sale Procedures Order (as defined below), and (B) Sale Order (as defined below) and (ii) the Company shall, in accordance with all applicable requirements of and procedures under, the Bankruptcy Code, file with the Bankruptcy Court a motion or motions seeking, among other things, an order (the “Disclosure Statement Order” ), approving the disclosure statement (the “ Disclosure Statement ”) with respect to the Plan (which shall be developed through meaningful and timely consultation between the parties, but with final submission to the Bankruptcy Court in the sole discretion of Seller), establishing procedures for solicitation of acceptances to the Plan and setting a hearing on confirmation of the Plan and seeking entry of the Confirmation Order (the Sale Procedures Order, the Sale Order, the Disclosure Statement Order and the Confirmation Order, herein collectively referred to as the “Bankruptcy Court Orders” ). Seller and the Company, as applicable, will use Commercially Reasonable Efforts to (1) cause such Sale Procedures Order, Sale Order, Disclosure Statement Order and Confirmation Order to be issued, entered and become Final Orders in, as applicable, Seller’s and the Company’s Bankruptcy Cases, and (2) timely serve copies of the notices setting forth the hearing date on the Sale Procedures Order, the Sale Order, Disclosure Statement Order and the Confirmation Order upon any and all parties in interest entitled or required to receive notice under all applicable laws, rules and regulations and orders of the Bankruptcy Court prior to the hearing on such motions (all such motions and actions relating to the Sales Procedures Order, the Sale Order, the Disclosure Statement Order and the Confirmation Order will be in form and substance reasonably acceptable to Purchaser and Seller and their respective counsel). Seller further agrees that it shall not take any action in the Bankruptcy Case which would be contrary to or inconsistent with this Agreement or any of the terms hereof, and any plan of reorganization of Seller or order confirming such plan shall in no way adversely affect the rights of Purchaser under this Agreement.

(b) Seller shall use its Commercially Reasonable Efforts so that the Bankruptcy Court enters a “ Sale Procedures Order ”, substantially in the form attached hereto as Schedule 7.15(b) (and which, as entered by the Bankruptcy Court, is in a form reasonably acceptable to Purchaser, Seller, and their respective counsel) that, among other things: (i) names Purchaser as the “stalking horse” with respect to the Membership Interest, (ii) if there is an overbid as provided herein, requires the payment of Two Hundred Fifty Thousand Dollars ($250,000) as a break up fee (the “Break-Up Fee” ) under the circumstances and in accordance with the terms of this Agreement, (iii) requires an initial overbid at least Five Hundred Thousand Dollars ($500,000) in cash greater than the Purchase Price, (iv) requires all overbids be accompanied by a down payment equal to ten percent (10%) of the purchase price offered by the overbidder, (v) requires that each bidder provide (A) written evidence satisfactory to Seller demonstrating that such bidder (1) has the financial ability to consummate the purchase of the Membership Interest and its obligations to perform under the definitive purchase and sale agreement described in 7.15(b)(vi) herein no later than ten (10) days following the hearing on the Sale Order; (2) is not affiliated with Purchaser or Seller (and such Person is not a creditor of Seller or Seller’s Affiliate) and (B) evidence to Seller and the Bankruptcy Court that it is a bona fide purchaser and is willing and able to cover its own legal counsel fees and other costs associated with the sale of the Membership Interest, (vi) requires the delivery to Seller of an executed copy of a definitive purchase and sale agreement having the same terms and conditions as those set forth in this Agreement (except for the purchase price, the terms of (i) through (ix) of this Subsection (b), and the reasonable extension of the dates set forth in Sub-Sections 12.01(a) (iii), (iv), and (vii) necessary or appropriate in light of such overbid) for a price that exceeds the purchase price by at least $500,000, no later than five (5) days prior to the hearing on the Sale Order, (vii) requires subsequent bidding increments of at least Two Hundred and Fifty Thousand Dollars ($250,000.00), (viii) requires that any qualified bid, other than Purchaser’s bid pursuant to this Agreement, be delivered to Seller and Purchaser on or before the deadline established by the Bankruptcy Court, and (ix) if Purchaser submits the successful overbid, permits Purchaser to credit the amount of the Break-Up Fee against such overbid.

(c) Seller shall use its Commercially Reasonable Efforts so that the Bankruptcy Court approves the Sale Order, substantially in the form attached hereto as Schedule 7.15(c) (and which, as entered by the Bankruptcy Court, is in a form reasonably acceptable to Purchaser and Seller and their respective counsel), which shall contain provisions, among other things, (i) approving the sale of the Membership Interest to Purchaser on the terms and conditions set forth in this Agreement, (ii) stating that any objections timely filed with respect to the sale of the Membership Interest, which have not been withdrawn, are overruled or the interests of such objections have been otherwise satisfied or adequately provided for by the Bankruptcy Court, (iii) finding that Purchaser is a good faith purchaser of the Membership Interest under Section 363(m) of the Bankruptcy Code and that the sale is not subject to avoidance under Section 363(n) of the Bankruptcy Code, (iv) providing that the sale of the Membership Interest to Purchaser shall be free and clear of any and all liens, claims, encumbrances and interests of any kind or nature whatsoever under Section 363 of the Bankruptcy Code and any other applicable sections of the Bankruptcy Code, (v) providing that the Bankruptcy Court shall retain jurisdiction for the purpose of enforcing the provisions of the Sale Order including, without limitation, compelling delivery of the Membership Interest to Purchaser and providing that any liens, claims, encumbrances and interests shall attach solely to the Purchase Price, (vi) providing that any liens, claims encumbrances and interests of any kind or nature whatsoever asserted under laws, rules, regulations or governmental or court orders imposing a stamp Tax, transfer Tax or similar Tax arising from the transfer of the

Membership Interest to Purchaser or any sales Tax and any other Taxes of Seller relating to a pre-Closing period (collectively, “Seller Taxes” ) shall be filed against Seller’s estate and shall not be asserted against Purchaser, (vii) providing, if Purchaser consents, that the Parties hereto shall be authorized to close this transaction immediately upon execution of the Sale Order and the Confirmation Order pursuant to Rule 6004(g) of the Federal Rules of Bankruptcy Procedure, (viii) authorizing and directing Seller to execute, deliver, perform under, consummate and implement this Agreement, together with all additional instruments and documents that may be reasonably necessary or desirable to implement the foregoing, and (ix) determining that Purchaser is not a successor to Seller or otherwise liable for any of the Liabilities of Seller and permanently enjoining all persons and entities from commencing, continuing or otherwise pursuing or enforcing any remedy, claim, cause of action or lien or Encumbrance against Purchaser or the Membership Interest to Purchaser (the “Sale Order” ).

(d) The Disclosure Statement Order and the Confirmation Order shall be in form and substance reasonably acceptable to Purchaser, Seller and their respective counsel. Seller and the Company shall use Commercially Reasonable Efforts to obtain entry of the Confirmation Order no later than seventy-five (75) days after execution of this Agreement by the Parties hereto. The Confirmation Order shall, among other things, approve the assumption of all Assumed Contracts and declare that all Assumed Contracts are valid and binding and in full force and effect, confirm the Plan pursuant to Section 1129 of the Bankruptcy Code, approve all documents and actions necessary to implementation of the Plan under Section 1123(a) of the Bankruptcy Code and provide that the transfer of the Membership Interest to Purchaser is exempt from Tax pursuant to Section 1146 (c) of the Bankruptcy Code.

(e) In the event an appeal is taken, or a stay pending appeal is requested or reconsideration is sought, from either the Sale Procedures Order, the Sale Order, the Disclosure Statement Order or the Confirmation Order, Seller will immediately notify Purchaser of such appeal or stay request and will provide to Purchaser within two (2) Business Days a copy of the related notice of appeal or order of stay or application for reconsideration. Seller will also provide Purchaser with written notice and copies of any other or further notice of appeal, motion or application filed in connection with any appeal from or application for reconsideration of, any of such orders and any related briefs.

(f) Seller will notify, as is required by the Bankruptcy Code and as may reasonably be requested by Purchaser, all parties entitled to notice of all motions, notices and orders required to consummate the transactions contemplated by this Agreement, including, without limitation, the Sale Procedures Order, the Sale Order, the Disclosure Statement Order and/or the Confirmation Order, as modified by orders in respect of notice which may be issued at any time and from time to time by the Bankruptcy Court.

(g) Purchaser acknowledges that the sale of the Membership Interest as contemplated by this Agreement is subject to Bankruptcy Court approval and to higher and better counteroffers and that the Membership Interest will be sold to the highest and best bidder at an auction to be conducted by Seller in connection with the hearing on the approval of the Sale Order (the “Auction” ). In the event that the highest and best offer, as determined by Seller is submitted at the Auction by a purchaser other than Purchaser that (i) is not affiliated with Purchaser or Seller (and such Person is not a creditor of Seller or Seller’s Affiliate), (ii) submits to Seller a valid,

irrevocable offer to purchase the Membership Interest on the same terms as this Agreement (except for the purchase price, the terms of (i) through (ix) of Subsection 7.15 (b), and the reasonable extension of the dates set forth in Sub-Sections 12.01(a) (iii), (iv), and (vii) necessary or appropriate in light of such overbid) for a purchase price that exceeds the Purchase Price by at least Five Hundred Thousand Dollars ($500,000), no later than five (5) days prior to the hearing on the Sale Order, (iii) executes all necessary and appropriate documents, in form and substance acceptable to Seller, to memorialize the sale (the “Third Party Sale” ) and has the financial ability to consummate the purchase of the Membership Interest and its obligations to perform under the definitive purchase and sale agreement described in 7.15(b)(vi) herein no later than ten (10) days following the hearing on the Sale Order, (iv) satisfies Seller and the Bankruptcy Court that it is a bona fide purchaser, and (v) is willing and able to cover its own legal counsel fees and costs associated with the Third Party Sale, Seller shall, upon approval of the Bankruptcy Court of a Sale Order naming such other purchaser as Purchaser and the related Confirmation Order, be entitled to close such Third Party Sale pursuant to such other offer; provided , however , that nothing contained herein shall prevent Purchaser from contesting that such other offer is the highest and best offer. Upon entry of the Sale Order authorizing a sale of the Membership Interest to a purchaser other than Purchaser (the “Prevailing Bidder” ), Seller shall direct the Escrow Agent to return to Purchaser the Down Payment (with all accrued interest thereon) and Seller shall pay to Purchaser the Break-Up Fee from the first cash proceeds of the Third Party Sale or any other sale of the Membership Interest within five (5) days after the closing of the Third Party Sale or any other disposition of the Membership Interest. In the event that Purchaser agrees to be a back-up bidder, Seller shall direct the Escrow Agent to return the Down Payment (with all accrued interest thereon) to Purchaser upon the earlier of closing of the sale to the Prevailing Bidder or a termination of this Agreement by Purchaser according to its terms. Upon the closing of the Third Party Sale, payment of the Break-Up Fee to Purchaser from the first cash proceeds of the Third Party Sale shall be made within five (5) days after the closing of the Third Party Sale.

7.16 Purchaser Contact with Vendors and Employees . Purchaser agrees that, prior to the Closing Date, it will not contact any vendors, suppliers, employees or other contracting parties of Seller or Seller’s Affiliates with respect to any aspect of the Company’s business or the transactions contemplated hereby without the prior written consent of Seller.

7.17 Taxes, Prorations and Closing Costs .

(a) Taxes .

(i) Purchaser will pay all Taxes, including sales, use, transfer and documentary transfer Taxes, arising in connection with the sale and transfer of the Membership Interest. Seller and Purchaser will each pay its own income Taxes. State and local real and personal property Taxes relating to the Company for the Tax year of the Closing will be prorated between Purchaser and Seller on the following basis: Seller is to be responsible for all such Taxes for the period up to the Closing; and Purchaser is to be responsible for all such Taxes for the period on and after the Closing. All Taxes assessed on an annual basis will be prorated on the assumption that an equal amount of Taxes applies to each day of the year, regardless of how any installment payments are billed or made, except that Purchaser will bear all supplemental or other state and local real and personal

property Taxes which arise out of a change in ownership of the Membership Interest.

(ii) After the Closing, Purchaser will notify Seller in writing, within fifteen (15) days after its receipt of any correspondence, notice or other communication from a taxing authority or any representative thereof, of any pending or threatened tax audit, or any pending or threatened judicial or administrative proceeding that involves Taxes relating to the Membership Interest for the period prior to the Closing, and will furnish Seller with copies of all correspondence received from any taxing authority in connection with any audit or information request with respect to any such Taxes relating to the Membership Interest for the period prior to the Closing.

(b) Purchaser’s Closing Costs . Purchaser will pay: (i) all costs of (1) any title policy and all endorsements thereto that Purchaser elects to obtain, (2) all filings required under the HSR Act, (3) Purchaser’s Due Diligence Inspections and Reviews, and (4) any Person (if any) that is entitled to a brokerage commission, finder’s fee or other like payment by reason of Purchaser’s actions, and (ii) one-half (1/2) of any document recordation costs, including any applicable deed transfer Tax.

7.18 Acknowledgement by Purchaser . Prior to its execution of this Agreement, Purchaser has conducted to its satisfaction an independent investigation and verification of the Company, including without limitation its Due Diligence Inspections and Reviews. In making its decision to execute this Agreement, and to purchase the Membership Interest, Purchaser has relied and will rely upon the results of its own independent investigation and verification. THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE IV OF THIS AGREEMENT CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF SELLER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY. There are no representations, warranties, covenants, understandings or agreements among the Parties regarding the Membership Interest or its transfer other than those set forth in this Agreement. Except for the representations and warranties expressly set forth in Article IV, Purchaser disclaims reliance on any representations, warranties or guarantees, either express or implied by Seller, its officers, directors, counsel, representatives or agents.

7.19 No Recourse . To the extent the transfer, conveyance, assignment and delivery of the Membership Interest to Purchaser as provided in this Agreement is accomplished by deeds, assignments, sublicenses, subleases, subcontracts or other instruments of transfer and conveyance, whether executed at the Closing or thereafter, these instruments are made without representation or warranty by, or recourse against, Seller, except as expressly provided in this Agreement.

7.20 Advice of Changes . Prior to Closing, each Party will promptly advise the other in writing with respect to any matter arising after execution of this Agreement of which that Party obtains knowledge and which, if existing or occurring at the date of this Agreement, would have been required to be set forth in any of the Schedules.

7.21 Casualty Loss .

(a) If, at any time following the Effective Date but prior to Closing, any of the Hydroelectric or Gas Turbine Generating Stations suffers (each of such Stations referred to herein as a “ Station ”) a total or partial casualty loss (an “ Event of Loss ”) that is reasonably estimated to cost in excess of One Million Dollars ($1,000,000) to repair or replace the damaged Station (a “ Major Loss ”), Seller will promptly inform Purchaser of the Major Loss. As soon as practicable following the Major Loss, Seller will provide to Purchaser its good faith, detailed written estimate (“ Seller’s Estimate ”) setting forth the amount required to repair or replace the damaged Station and the estimated time period for completion of such repair or replacement. Concurrently with the delivery of a Seller’s Estimate relating to a Major Loss, Seller will notify Purchaser whether it will repair or replace the Station. The completion of the repair or replacement of the Station relating to a Minor Loss and, if Seller elects to repair or replace the Station relating to a Major Loss, the completion of the work relating to a Major Loss, will be a condition to the Closing and the outside date for the Closing set forth in Section 12.01(a)(vii) will be extended by the estimated time period for completion of such repair or replacement plus thirty (30) days (provided that the overall number of estimated days for completion of such repair or replacement shall not exceed ninety (90) days , failing which Purchaser shall have the option to terminate this Agreement), and the costs thereof (less any insurance proceeds received by Seller in connection with such loss) will be deemed a Necessary Capital Expenditure, unless such costs shall exceed Fifty Thousand Dollars ($50,000), in which event any amount in excess of Fifty Thousand Dollars ($50,000) shall be for the account of Seller. If Seller elects not to repair or replace the Station relating to a Major Loss, the provisions of Section 7.21(b) will apply.

(b) Purchaser’s Election .

(i) Within the thirty (30) day period immediately following receipt of a Seller’s Estimate relating to a Major Loss and Seller’s election not to repair or replace the damaged Station, Purchaser will elect, by written notice to Seller, to either:

(1) terminate this Agreement pursuant to Section 12.01(a)(v) ; or

(2) require a reduction in the Purchase Price by an amount equal to Seller’s Estimate, in which case Seller will have no obligation to repair the Station as a result of such Event of Loss.

(ii) If Purchaser should fail to make the election set forth in this Section 7.21(b) within the thirty (30) day period immediately following receipt of Seller’s notice of a Major Loss, Purchaser will be deemed to have made the election contained in Section 7.21(b)(i)(2) . To the extent the thirty (30) day period described in this Section 7.21(b) extends past the outside date for the Closing set forth in Section 12.01(a)(vii) , the outside date for the Closing shall be extended by such time.

7.22 Post Closing — Information and Records .

(a) Purchaser agrees that, from and after the Closing Date, it will, promptly following the request of Seller, provide such information and administrative support as will be reasonably requested by Seller to enable Seller to comply with its obligations with respect to the issuance of Form 1099 and other Tax reports, reports and notices relating to income Tax returns, preparation of financial statements and completion of Seller’s audit for the three fiscal years ended December 31st following the Closing Date and other similar matters.

(b) Employees . Purchaser will make available to Seller on a reasonable basis and as requested from time to time by Seller after Closing, those employees of Purchaser with Knowledge of or relevant to the matters described in this Section 7.22 for the purpose of consultation, investigation and/or testimony in connection therewith.

7.23 Insurance . Seller shall maintain or cause to be maintained in full force and effect all policies of insurance applicable to the Hydroelectric and Gas Turbine Generating Stations as of the Effective Date. All such insurance policies shall terminate as of the Closing.

7.24 Use of Certain Names . Within thirty (30) days following the Closing, Purchaser shall cause the Company to cease using the name “Mirant,” and any word or expression similar thereto or constituting an abbreviation or extension thereof (the “ Seller Marks ”), including eliminating the Seller Marks from any Assets and disposing of any unused stationery and literature of the Company bearing the Seller Marks. Thereafter, neither Purchaser nor any of its Affiliates shall use the Seller Marks. Purchaser acknowledges that neither it nor its Affiliates has any rights whatsoever to use the Seller Marks after said thirty (30) day period. Without limiting the foregoing:

(i) Within five (5) Business Days after the Closing Date, Purchaser shall cause the Company to change its name to a name that does not contain any of the Seller Marks.

(ii) Within sixty (60) days after the Closing Date, Purchaser shall provide evidence to Seller, in a format that is reasonably acceptable to Seller, that Purchaser has made all governmental filings required pursuant to clause (i) above and has provided notice to all applicable Governmental Authorities and all counterparties to the Material Contracts regarding the change of the Company’s and a new address for the purpose of notice to the Company.

(iii) Notwithstanding Purchaser’s right to use the Seller Marks for the time periods set forth in this Section 7.24, Purchaser acknowledges and agrees as follows: (i) neither Purchaser nor any of its Affiliates (including the Company after the Closing Date) shall be deemed an agent, representative or joint venture partner of Seller; (ii) Seller shall retain sole and exclusive ownership of the Seller Marks, and all goodwill and rights related thereto; (iii) Purchaser and its Affiliates (including the Company after the Closing Date) shall not engage in any conduct or take part in any activity that would be reasonably likely to (A) impair the validity or enforceability of the Seller Marks, (B) dilute the distinctiveness of the

Seller Marks, (C) disparage the Seller Marks or (D) be considered unfair competition or an infringement or other violation of the rights of Seller or its Affiliates in the Seller Marks; (iv) Purchaser and its Affiliates (including the Company after the Closing Date) shall not co-brand any of their goods or services (or communications describing such goods or services) using any of the Seller Marks; and (v) notwithstanding anything to the contrary contained in Article XI, and irrespective of such Article XI, Purchaser shall indemnify, defend and hold harmless Seller from, against, and in respect of, any and all Damages incurred or suffered by Seller arising out of or relating to any use of any of the Seller Marks by Purchaser or any of its Affiliates (including the Company after the Closing Date).

7.25 Settlement Agreement . The Company is a party to a certain Settlement Agreement dated as of August 31, 2001, by and among Orange and Rockland Utilities Inc. (“O&R”), Mirant Bowline, LLC (“Bowline”), Mirant Lovett, LLC (“Lovett”), Hudson Valley Gas Corporation (“Hudson Valley”) and the Company (the “ O&R Settlement Agreement ”). On or before the Closing Date, unless O&R has released Company from liability under the O&R Settlement Agreement, each of the Company, Bowline, and Lovett shall enter into a cross indemnity agreement (the “Cross Indemnity Agreement” ) substantially in the form attached as Schedule 7.25 hereto, and the same shall have been finally approved by the Bankruptcy Court with respect to each proceeding applicable to each of the parties thereto.

7.26 Registration of Company with NYISO . Purchaser is responsible for registering prior to Closing the Company or Purchaser as representative of the Company as a market participant with the New York Independent System Operators (“ NYISO” ). Seller will cooperate with Purchaser and the Company in effecting such registration.

7.27 Gas Transportation and Balancing Services Agreement . The Company is a party to a certain Gas Transportation and Balancing Services Agreement dated December 9, 2002 by and among O&R, Bowline, Lovett, Company, Consolidated Edison Company of New York, Inc. (“ ConEd ”), and MET, as transferee of Mirant Energy Marketing, (the “ Gas Transportation Agreement ”). On or before the Closing Date, Seller shall cause the Company to enter into a written agreement with the other parties to the Gas Transportation Agreement terminating Company as a party thereto effective upon Closing. Seller shall cooperate with Purchaser so that, on or before the Closing Date, Purchaser may enter into a written agreement effective upon Closing replacing the operational supply arrangements available to Company under the Gas Transportation Agreement so as to allow for the full and complete operation of the Company and its Assets post-Closing consistent with its operations prior to Closing. Seller and Purchaser agree that such replacement agreement will provide for, inter alia , at least the same level of gas supply, capacity and transportation rights for Company under such replacement agreement as existed under the Gas Transportation Agreement prior to Closing, although the price and other terms therein may be different. Such replacement agreement shall be executed by the Company and any other parties thereto within seven (7) days prior to the Closing Date. Prior to Closing, all new written agreements referred to in this Section 7.27 shall have been timely filed with the New York State Public Service Commission and shall be finally approved by the Bankruptcy Court with respect to each proceeding therein applicable to the parties to such written agreements.

7.28 Air Title V Permits (Hillburn and Shoemaker Facilities) . Company is the holder of an Air Title V Permit issued by the New York State Department of Environmental Conservation (“ DEC ”) for the Hillburn Facility (Permit #3-3926-00059/00003) and the Shoemaker Facility (Permit #3-3309-00040/00004) (respectively, the “ Hillburn Air Permit ” and the “ Shoemaker Air Permit ”, collectively the “ Air Permits ” and individually each an “ Air Permit ”). After the Effective Date, Company shall apply for a modification of each Permit to remove the Hillburn and Shoemaker Facilities from the calculation of the system wide average of Nitrogen Oxide emissions used to determine compliance with the NO x RACT Limit (as defined in and required by each Permit) (such calculation being referred to herein as the “ NO x Bubble ”). Prior to filing any such application, Seller shall provide Purchaser with a copy thereof and accept comments from Purchaser for a reasonable time thereafter. Other than such comments to Seller, Purchaser shall take no action opposing Company’s applications for such modification. If Purchaser requests Seller to cause any such application to include a modification to a Permit which Purchaser determines is reasonably necessary to allow the Company to operate in compliance with the Nitrogen Oxide emission limits in the Permits after the amendment removing the relevant Facility from the NO x Bubble, Seller agrees to include such requested modification, provided that the implementation thereof shall not cause the Company to incur costs prior to the Closing. Seller and Purchaser shall cooperate in good faith to obtain modified Permits consistent with this Section 7.28 that shall be effective on the Closing Date.

7.29 Assignment of Certain Purchase Orders . Prior to the Closing Date, Seller shall cause Company to assign to Seller or Seller’s designee the following purchase orders: (a) Purchase Order No. NY-6867 between Company and Mead and Hunt, Inc. (item #9 on Schedule 4.16), and (b) Purchase Order No. NY-8296 between Company and Burns and Roe Enterprises, Inc. (item #13 on Schedule 4.16). Seller or Seller’s designee shall assume and perform all of Company’s obligations under said Purchase Orders for services performed by the other party thereto after the Effective Date.

ARTICLE VIII

MUTUAL CONDITIONS

The respective obligations of each Party to consummate the transactions contemplated by this Agreement are subject to the satisfaction, on or before the Closing Date, of each of the following conditions, unless waived in writing by each Party.

8.01 HSR Act . All applicable waiting periods (and any extensions thereof) under the HSR Act shall have expired or otherwise been terminated.

8.02 Regulatory and Other Authorizations and Consents . All authorizations, consents and approvals of Governmental Authorities, third parties and the Bankruptcy Court, shall have been obtained (other than Seller Required Consents and Purchaser Required Consents).

8.03 Orders . Other than the approval of the Bankruptcy Court, neither Party hereto shall be subject to any order or injunction of a court of competent jurisdiction which prohibits the consummation of the transactions contemplated by this Agreement.

ARTICLE IX

CONDITIONS TO PURCHASER’S OBLIGATIONS

Each and every obligation of Purchaser under this Agreement to be performed on or before the Closing Date shall be subject to the satisfaction, on or before the Closing Date, of each of the following conditions, unless waived in writing by Purchaser:

9.01 Representations and Warranties True . The representations and warranties of Seller contained in Article IV hereof shall be in all material respects true and accurate as of the date when made and at and as of the Closing Date as though such representations and warranties were made at and as of such date (unless expressly made at and as of an earlier date, in which case such representations and warranties shall be true in such respects only at and as of such earlier date), except for changes permitted or contemplated by the terms of this Agreement.

9.02 Performance . Seller shall have performed and complied with all agreements, obligations and conditions required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

9.03 Certificates; Evidence of Compliance . Seller shall have furnished Purchaser with such certificates of Seller and/or such other evidence as Purchaser may reasonably request to demonstrate compliance with the conditions set forth in this Article IX including, with respect to the indebtedness owed under the Debtor-In-Possession Credit Agreement dated as of February 28, 2006, between Mirant Americas, Inc. and the Company, notes marked “cancelled” and/or otherwise acknowledged by the holder(s) thereof to be discharged, proof of satisfaction of any mortgages filed against Company’s real property, and discharge of any liens on record against any Assets.

9.04 Board Resolutions . A certified copy of such resolutions of the Board of Directors of Seller as may be required to authorize the transactions contemplated by this Agreement and the Related Agreements and authorizing specified officers of Seller to execute and deliver this Agreement, the Related Agreements and any other documents or instruments which they deem necessary and appropriate in connection with this Agreement.

9.05 Bankruptcy Court Orders . The Bankruptcy Court Orders shall (a) have been entered by the Bankruptcy Court, with such changes as are reasonably acceptable to Seller and Purchaser and their respective counsel, and (b) become Final Orders.

ARTICLE X

CONDITIONS TO SELLER’S OBLIGATIONS

Each and every obligation of Seller under this Agreement to be performed on or before the Closing Date shall be subject to the satisfaction, on or before the Closing Date, of each of the following conditions, unless waived in writing by Seller:

10.01 Representations and Warranties True . The representations and warranties of Purchaser contained in Article V hereof shall be in all material respects true and accurate as of the

date when made and at and as of the Closing Date as though such representations and warranties were made at and as of such date (unless expressly made at and as of an earlier date, in which case such representations and warranties shall be true in such respects only at and as of such earlier date), except for changes permitted or contemplated by the terms of this Agreement.

10.02 Performance . Purchaser shall have performed and complied with all agreements, obligations and conditions required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

10.03 Certificates . Purchaser shall have furnished Seller with such certificates of its officers to evidence compliance with the conditions set forth in this Article X as may reasonably be requested by Seller.

10.04 Board Resolutions . A certified copy of such resolutions of Purchaser’s sole member as may be required to authorize the transactions contemplated by this Agreement and the Related Agreements and authorizing specified officers or representatives of Purchaser, as the case may be, to execute and deliver this Agreement, the Related Agreements and any other documents or instruments which they deem necessary and appropriate in connection with this Agreement.

10.05 Pending Insurance Claims . Written acknowledgment from each relevant insurance carrier or its broker or other designee that the Company’s pending claims for losses at the Swinging Bridge Facility and the Hillburn Facility shall be paid to Seller or such third party or third parties as the Seller or Company shall designate to each such carrier prior to Closing.

10.06 Bankruptcy Court Orders . The Bankruptcy Court Order s shall (i) have been entered by the Bankruptcy Court, with such changes as are reasonably acceptable to Seller and Purchaser and their respective counsel, and (ii) become Final Order s .

10.07 Termination of Gas Transportation Agreement . Company shall have entered into a written agreement effective upon Closing terminating the Gas Transportation Agreement as to Company, such written agreement shall have been timely filed with the New York State Public Service Commission, and all Bankruptcy Court approvals with respect to such agreement shall have become final and not subject to appeal, all in accordance with Section 7.27.

10.08 Modification of Title V Permits . The Air Permits have been modified in accordance with Section 7.28, effective upon Closing.

ARTICLE XI

SURVIVAL AND INDEMNIFICATION

11.01 Survival .

(a) All representations and warranties made by any Party in this Agreement shall survive the Closing hereunder for a period of ninety (90) days following the Closing. Anything in this Agreement to the contrary notwithstanding, no claim based upon misrepresentation or breach of representation or warranty shall be made, no action or litigation with respect thereto commenced, and no remedy shall be available unless written notice specifying with particularity the

misrepresentation or breach claimed shall have been delivered on or prior to the expiration of such period.

(b) All covenants and agreements made by any Party in this Agreement shall survive the Closing hereunder until all obligations set forth therein shall have been satisfied.

11.02 Indemnification .

(a) Each Party (each, a “Indemnifying Party ”), as a material inducement to the other party to enter into this Agreement, shall defend, indemnify, and hold harmless the other Party, such other Party’s successors and assigns, and all of such other Party’s officers, directors, lenders, shareholders, beneficial owners, trustees, partners, members, affiliates, agents and employees (each, an “Indemnitee” , collectively, the “Indemnitees” ) from and against any and all damages, claims, losses, judgments, awards, penalties, fines and forfeitures (each, an “Action” ), together with reasonable attorneys’ fees and related litigation or arbitration costs and expenses of such Indemnitees, of whatever kind or nature, without limitations being asserted against any of the Indemnitees (collectively, “Damages” ), which in any way arise or result from a breach of any representation, warranty, covenant or agreement of the Indemnifying Party under this Agreement.

(b) No indemnity pursuant to this Agreement shall be paid by the Indemnifying Party:

(i) on account of the Indemnitee’s conduct that is established in a final, non-appealable judgment by a court of competent jurisdiction as having been knowingly fraudulent, deliberately dishonest, reckless, grossly negligent or constituting willful misconduct;

(ii) on account of the Indemnitee’s conduct that is established in a final, non-appealable judgment by a court of competent jurisdiction as having constituted a breach of the Indemnitee’s duty of loyalty to the Indemnifying Party or as having resulted in any personal profit or advantage to the Indemnitee to which the Indemnitee was not legally entitled;

(iii) for which payment is actually made to the Indemnitee under a valid and collectible insurance policy or under another valid and enforceable indemnity clause or agreement, except in respect of any deficit in payment actually received under any such policy of insurance, indemnity clause or agreement; or

(iv) if indemnification is unlawful or has been determined by any regulatory or administrative body having jurisdiction over the Indemnifying Party to be against public policy.

(c) As a condition precedent to the Indemnitee’s rights of indemnification under this Agreement, the Indemnitee shall give the Indemnifying Party written notice as soon as reasonably practicable after becoming aware of any claim made against the Indemnitee for which indemnification will or could be sought under this Agreement. In addition, the Indemnitee shall give the Indemnifying Party such information and cooperation as the Indemnifying Party may

reasonably request to enable the Indemnifying Party to perform its obligations hereunder. Failure by the Indemnitee to give such notice shall not deprive the Indemnitee of a right to indemnification hereunder, provided that the Indemnifying Party has actual knowledge of the claim and/or is not adversely affected in its ability to defend the claim as a result of any such failure.

(d) With respect to the commencement of any Action of which the Indemnitee notifies the Indemnifying Party pursuant to clause (c) above:

(i) the Indemnifying Party will be entitled to participate therein at its own expense;

(ii) except as otherwise provided below, the Indemnifying Party may, at its option and jointly with any other indemnifying party similarly notified and electing to assume such defense, assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee. After written notice from the Indemnifying Party to the Indemnitee of its election to assume the defense thereof, the Indemnifying Party will not be liable to the Indemnitee under this Agreement for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof except for reasonable costs of investigation or as otherwise provided in this clause (d). The Indemnitee shall have the right to employ separate counsel in such Action, provided that the fees and expenses of such counsel incurred after written notice from the Indemnifying Party of its assumption of the defense thereof shall be at the expense of the Indemnitee unless: (1) the employment of such counsel has been authorized by the Indemnifying Party, (2) the Indemnitee shall have reasonably concluded, and so notified the Indemnifying Party, that there is an actual conflict of interest between the Indemnifying Party and the Indemnitee in the conduct of the defense of such Action, in which event the Indemnifying Party shall not be entitled to assume the defense of such Action, or (3) the Indemnifying Party shall not in fact have employed counsel to assume the defense of such Action.

(iii) the Indemnifying Party shall not be liable to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any Action effected by the Indemnitee without the Indemnifying Party’s prior written consent, which consent shall not be unreasonably withheld;

(iv) the Indemnifying Party shall be permitted to settle any Action, provided that it shall not settle any Action in any manner that would impose any penalty or limitation on the Indemnitee without the Indemnitee’s prior written consent, which consent shall not be unreasonably withheld.

(e) Seller shall indemnify, defend and hold harmless Purchaser, Purchaser’s successors and assigns, and all of Purchaser’s officers, directors, lenders, shareholders, beneficial owners, trustees, partners, members, affiliates, agents and employees (collectively, the “ Purchaser Indemnified Parties ”) from and against all damages, claims, losses, judgments, awards, penalties, fines and forfeitures, together with reasonable attorneys’ fees and related litigation or arbitration costs and expenses of such Purchaser Indemnified Parties, of whatever kind or nature, without

limitation, asserted against, incurred or suffered by any Purchaser Indemnified Party arising out of or resulting from the Southern Company Claims. For purposes hereof, “Southern Company Claims” means any liability of Company associated with the following proofs of claim filed by The Southern Company in the Bankruptcy Case: proofs of claim numbered 6398, 6442, 8159, and 8313. Seller’s obligations under this Section 11.02(e) shall not be subject to the limitations contained in Sections 11.03(b)(i), 11.03(b)(ii), 11.03(c) or any other provision of this Agreement.

(f) Each Indemnifying Party shall have the right to audit, inspect and copy the books and records of the Indemnitees with respect to a claim for indemnification under this Section 11.02. The Indemnitees shall cooperate in providing such Indemnifying Party with reasonable access to its books and records during normal business hours for this purpose. If the results of audit or inspection show an overpayment to any Indemnitee upon any such claim, then such Indemnifying Party shall repay the amount of such overpayment within fifteen (15) days of the completion of such audit or inspection.

11.03 Limitations on Indemnification .

(a) The remedies provided in this Article XI shall be exclusive and shall preclude assertion by either Party of any other rights or the seeking of any and all other remedies against the other for claims based on this Agreement.

(b) Any claims for indemnity under this Agreement shall be subject to the following limitations and adjustments: (i) the provisions of Section 11.02 shall be effective only when the aggregate amount of all Damages for which a Party may be liable under this Article XI exceeds two percent (2%) of the Purchase Price, in which case such Party shall be liable for only such amounts as exceed two percent (2%) of Purchase Price; (ii) the amount of any claim by either Party for indemnification shall be subject to adjustment to reflect (A) any actual direct or indirect income Tax benefit (taking into account the amount of any indemnification actually received) resulting therefrom to the Indemnitee, (B) any insurance coverage with respect thereto and (C) any amounts recoverable from third parties based on claims the Indemnitee has against such third parties which would reduce the damages that could otherwise be sustained; (iii) subject to the provisions of Section 11.03(c) hereof, in no event shall a Party be liable, in the aggregate, for indemnification hereunder in an amount greater than twenty percent (20%) of Purchase Price; and (iv) neither Party hereto shall be liable to the other Party for special, incidental, consequential or punitive damages.

(c) Seller’s liability under Section 11.03(b) shall be limited to an amount which, when aggregated with the Purchase Price reductions under Section 2.03(d) and (e) hereof, does not exceed the Purchase Price.

11.04 Purchaser’s Release of Seller . EXCEPT FOR THE RIGHTS OF PURCHASER SET FORTH IN THIS ARTICLE XI, COMMENCING ON THE CLOSING DATE, PURCHASER SHALL RELEASE, HOLD HARMLESS AND FOREVER DISCHARGE SELLER FROM ANY AND ALL CLAIMS, DEMANDS, LIABILITIES (INCLUDING FINES AND CIVIL PENALTIES), OR CAUSES OF ACTION AT LAW OR IN EQUITY (INCLUDING ANY ACTIONS ARISING UNDER ENVIRONMENTAL LAWS), DESTRUCTION, LOSS OR DAMAGE OF ANY KIND OR CHARACTER, WHETHER KNOWN OR UNKNOWN, VISIBLE OR INVISIBLE, TO THE PERSON OR

PROPERTY OF PURCHASER RESULTING FROM OR ARISING OUT OF THE PRESENCE OR RELEASE OF ANY HAZARDOUS SUBSTANCE AT, ON, UNDER, IN, ABOUT OR FROM COMPANY’S REAL PROPERTY. PURCHASER HEREBY ACKNOWLEDGES, AGREES, REPRESENTS, AND WARRANTS THAT FACTUAL MATTERS NOW UNKNOWN TO IT MAY HAVE GIVEN OR MAY HEREAFTER GIVE RISE TO CLAIMS THAT ARE PRESENTLY UNKNOWN, UNANTICIPATED AND UNSUSPECTED BY EITHER PARTY, AND PURCHASER FURTHER ACKNOWLEDGES, AGREES, REPRESENTS, AND WARRANTS THAT THIS RELEASE HAS BEEN NEGOTIATED AND AGREED UPON IN LIGHT OF SUCH UNDERSTANDING AND PURCHASER NEVERTHELESS HEREBY INTENDS TO RELEASE THE SELLER FROM THE CLAIMS, DEMANDS, AND LIABILITIES DESCRIBED IN THE FIRST SENTENCE OF THIS SECTION 11.04.

11.05 Mitigation and Limitation on Claims . Notwithstanding anything to the contrary contained in this Agreement:

(a) The Indemnitee will take all reasonable steps to mitigate all losses, damages and the like relating to an Action, including availing itself of any defenses, limitations, rights of contribution, claims against third Persons and other rights at law or equity, and will provide such evidence and documentation of the nature and extent of the Action as may be reasonably requested by the Indemnifying Party. The Indemnitee’s reasonable steps include the reasonable expenditure of money to mitigate or otherwise reduce or eliminate any loss or expense for which indemnification would otherwise be due under this Article XI , and the Indemnifying Party will reimburse the Indemnitee for the Indemnitee’s reasonable expenditures in undertaking the mitigation.

(b) The amount of any indemnity in relation to any Action is limited to the amount of actual damages sustained by the Indemnitee by reason of such breach or nonperformance, net of the dollar amount of any insurance proceeds or proceeds from third parties receivable by the Indemnitee or any of its Affiliates with respect to such Action.

ARTICLE XII

TERMINATION AND REMEDIES

12.01 Rights To Terminate . This Agreement may, by written notice given on or prior to the Closing Date, in the manner provided in Section 13.05 , be terminated at any time prior to the Closing Date:

(a) Seller/Purchaser Termination :

(i) by Seller, if there has been a material misrepresentation or a material default or material breach by Purchaser with respect to any of Purchaser’s representations and warranties in this Agreement or in any Related Agreement or the due and timely performance of any of Purchaser’s covenants and agreements contained in this Agreement or in any Related Agreement, and such misrepresentation, default or breach is not cured by the earlier of the Closing

Date or the date thirty (30) days after receipt by Purchaser of written notice specifying particularly such misrepresentation, default or breach;

(ii) by Purchaser, if there has been a material misrepresentation or a material default or breach by Seller with respect to Seller’s representations and warranties in this Agreement or in any Related Agreement or the due and timely performance prior to the Closing of any of Seller’s covenants and agreements contained in this Agreement or in any Related Agreement, and such misrepresentation, default or breach is not cured by the earlier of the Closing Date or the date thirty (30) days after receipt by Seller of written notice specifying particularly such misrepresentation, default or breach;

(iii) by Seller, on thirty (30) days prior written notice to Purchaser, if Seller shall not have received all Purchaser Required Consents by September 1, 2007;

(iv) by Purchaser, on thirty (30) days prior written notice to Seller if Purchaser shall not have received all Seller Required Consents by September 1, 2007;

(v) by Purchaser in accordance with Section 7.21(b) ;

(vi) by mutual agreement of Seller and Purchaser;

(vii) by Seller or Purchaser if (A) all of the orders referenced in clause (viii) below shall have become Final Orders and (B) the Closing has not occurred on or before the earlier of September 1, 2007, or the date which is thirty (30) days after the date upon which the last of all required Regulatory Approvals has been received, unless such time has been extended pursuant to Section 7.21(b) ;

(viii) by Seller or Purchaser if any of the Sale Procedures Order, Sale Order, Disclosure Statement Order and Confirmation Order has not been entered or become final in a sequence such that each of the same shall be a Final Order at or prior to the Closing Date by September 1, 2007; or

(ix) by Seller or Purchaser if at the time the written notice of termination is given, there is in effect a preliminary or permanent injunction enjoining consummation of the transactions contemplated hereby.

(b) Bankruptcy Court Termination . This Agreement shall automatically terminate at any time prior to the Closing upon entry by the Bankruptcy Court of the Sale Order that (i) approves and consummates a Third Party Sale; and (ii) becomes a Final Order. This Agreement also shall automatically terminate at any time prior to the Closing if the Bankruptcy Court should not approve the transactions contemplated by this Agreement.

12.02 Specific Performance . Any Party desiring to proceed with the Closing despite any failure or refusal of the other Party hereto to so proceed shall have the right to pursue the remedy of specific performance or to seek an injunction without the requirement of posting any bond.

12.03 Purchaser’s Remedies . If this Agreement is terminated by Purchaser pursuant to Section 12.01(a)(ii) because of Seller’s uncured default hereunder then, subject to the next sentence, Purchaser shall be entitled to recover the Down Payment and, subject to Bankruptcy Court approval, damages equal to Purchaser’s actual, reasonable out-of-pocket costs and expenses incurred in connection with the transactions contemplated by this Agreement and the costs of Purchaser’s claim against Seller, including but not limited to, reasonable legal expenses, plus costs and expenses associated with Purchaser’s Due Diligence Inspection and Reviews, provided that Purchaser’s total recovery in excess of the Down Payment shall not exceed One Hundred Thousand Dollars ($100,000.00). Prior to Purchaser’s exercise of its remedy pursuant to the previous sentence, Purchaser may seek specific performance of Seller’s obligations which (if awarded) will be Purchaser’s sole remedy for such default hereunder. Purchaser will have no other remedies, whether at law or in equity, for any such default by Seller hereunder (provided Purchaser will still be entitled to the benefit of any obligations, covenants and indemnities hereunder and under the Confidentiality Agreement and any other Related Agreements which expressly survive the termination of this Agreement with respect to any other defaults thereunder by Seller). Purchaser may only avail itself of the remedies in this Section 12.03 if, at the time of Seller’s default, Seller would not be permitted (whether at such time or as of the expiration of any applicable cure period) to terminate this Agreement pursuant to Section 12.01(a)(i) .

12.04 Seller’s Remedies . If the purchase of the Membership Interest is not consummated in accordance with this Agreement by the date set forth in Section 12.01(a)(vii) because of Purchaser’s default hereunder, or if Seller terminates this Agreement in accordance with Section 12.01(a)(i) , then Seller will have the right to pursue the remedy of specific performance under Section 12.02 herein which, if awarded, will be Seller’s sole remedy for such default. If Seller does not seek the remedy of specific performance for such default, then Seller will, as its sole remedy, have the right to retain the Down Payment as liquidated damages, and no other remedy, whether at law or in equity, for the failure to close by Purchaser hereunder; provided, however, that Seller will still be entitled to receive any costs and expenses due to Seller pursuant to this Agreement and the benefit of any obligations, covenants and indemnities hereunder and under the Confidentiality Agreement by Purchaser which expressly survive the termination of this Agreement with respect to any other defaults thereunder by Purchaser. Seller may only avail itself of the remedy in this Section 12.04 if, at the time of Purchaser’s default, Seller is not in material default hereunder. THE PARTIES EXPRESSLY AGREE AND ACKNOWLEDGE THAT SELLER’S ACTUAL DAMAGES WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO ASCERTAIN AND THAT THE DOWN PAYMENT REPRESENTS THE PARTIES’ REASONABLE ESTIMATE OF SUCH DAMAGES. SUCH LIQUIDATED DAMAGES ARE NOT INTENDED AS A FORFEITURE OR PENALTY.

12.05 Effect of Termination . Except as set forth in Section 12.03 above, any termination of this Agreement by any Party shall have the effect of causing this Agreement to thereupon become void and of no further force or effect whatsoever, and thereupon no Party will have any rights, duties, liabilities or obligations of any kind or nature whatsoever against any other Party hereto based upon either this Agreement or the transactions contemplated hereby, except in each case the obligations of each Party for its own expenses incurred in connection with the transactions contemplated by this Agreement as provided in Section 13.04 and the obligations of each party with respect to confidentiality set forth in Section 7.02 hereof and the Confidentiality Agreement.

ARTICLE XIII

MISCELLANEOUS PROVISIONS

13.01 Commissions and Finders’ Fees . Each of the Parties represents that the negotiations relative to this Agreement and the transactions contemplated hereby have been carried on by Seller directly with Purchaser in such manner as not to give rise to any claims against any of the Parties hereto for a brokerage commission, finders’ fee or other like payment. Insofar as any such claims are made which are alleged to be based on an agreement or arrangements made by, or on behalf of, a Party, such Party agrees to indemnify and hold the other Party harmless from and against all liability, loss, cost, charge or expense, including but not limited to, reasonable counsel fees, arising therefrom.

13.02 Amendment and Modification . This Agreement may only be amended, modified and supplemented by written agreement executed by Purchaser and Seller and, if the Bankruptcy Court has already approved this Agreement, with the approval of the Bankruptcy Court.

13.03 Waiver of Compliance . Any failure by Seller, on the one hand, or Purchaser, on the other hand, to comply with any obligation, covenant, agreement or condition herein may be expressly waived in writing by Purchaser or Seller, respectively, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

13.04 Expenses . Each of the Parties hereto will pay its own expenses incurred by it or on its behalf in connection with this Agreement or any transactions contemplated by this Agreement, whether or not such transactions shall be consummated. In addition, Purchaser shall bear the expense of any transfer Tax or sales Tax applicable to the transactions contemplated hereby.

13.05 Notices . All notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand, by recognized overnight courier service or facsimile transmission:

(a) If to Seller, to:

Mirant New York, Inc.

c/o Mirant Corporation

1155 Perimeter Center West

Atlanta, GA 30338-5416

Attention: Jeffrey Perry, President

Fax: (678) 579-3824

Email: jeffrey.perry@mirant.com

With a copy to:

Mirant New York, Inc.

c/o Mirant Corporation

1155 Perimeter Center West

Atlanta, GA 30338-5416

Attention: Sonnet Edmonds, Vice President

and Assistant General Counsel

Fax: (678) 579-5890

Email:

And

Hiscock & Barclay, LLP

One Park Place

300 South State Street

Syracuse, NY 13202

Attention: George S. Deptula, Esq.

Fax: (315) 425-8545

Email: gdeptula@hiscockbarclay.com

or to such other Person or address as Seller shall furnish to Purchaser in writing.

(b) If to Purchaser, to:

Alliance Energy Renewables, LLC

6941 Kassonta Drive

Jamesville, NY 13078

Attn: Samuel G. Nappi, President

Fax: 315-682-7089

Email: snappi@allianceenergy.us

With a copy to:

Troutman Sanders LLP
405 Lexington Avenue
New York, NY 10174
Attention: Howard L. Margulis, Esq.
Fax: 212-704-8330
Email:

or to such other Person or address as Purchaser shall furnish to Seller in writing.

13.06 Assignment . This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Party hereto without the prior written consent of the other Party; provided, however, that Purchaser may assign this Agreement and its rights, interests and obligations hereunder to any of Purchaser’s Affiliates. Any such assignment shall not release Purchaser from its obligations hereunder.

13.07 Governing Law . The validity, interpretation and effect of this Agreement are governed by and will be construed in accordance with the laws of the State of New York applicable to contracts made and performed in such state and without regard to conflicts of laws

rules, provided that, while the Bankruptcy Case is pending, as to any claim or dispute involving Seller or its Affiliates, or arising out of or relating to this Agreement or any Related Agreement (a “ Dispute ”), this Agreement shall be governed by and construed and enforced in accordance with the Bankruptcy Code and, to the extent not inconsistent with the Bankruptcy Code, the laws of the State of New York applicable to contracts made and performed in such state and without regard to conflicts of laws rules.

13.08 Jurisdiction of Bankruptcy Court . The Parties acknowledge and agree that the Bankruptcy Court shall have exclusive jurisdiction over this Agreement and that, while the Bankruptcy Case is pending, any Dispute shall be properly brought only before the Bankruptcy Court. Notwithstanding the provisions of this Section 13.08 , if and to the extent (i) the Bankruptcy Court refuses to accept jurisdiction over any Dispute, or (ii) the Bankruptcy Case is dismissed or closed and does not retain jurisdiction over a Dispute, the Parties consent to binding arbitration in accordance with the provisions of Section 13.09 .

13.09 Effect of Closing Over Known Unsatisfied Conditions or Breached Representations, Warranties or Covenants . If Seller or Purchaser elects to proceed with the Closing knowing of any failure to be satisfied of any condition in its favor or knowing of the breach of any representation, warranty or covenant by the other Party, the condition that is known to be unsatisfied or the representation, warranty or covenant which is known to be breached at the Closing Date will be deemed waived by such Party, and such Party will be deemed to fully release and forever discharge the other Party on account of any and all claims, demands or charges, known or unknown, with respect to the same.

13.10 Dispute Resolution .

(a) Except as otherwise provided in this Agreement, in the event of any Dispute, the Party wishing to declare a Dispute shall deliver to the other party a written notice identifying the disputed issue.

(b) Either Party may give the other Party written notice of any Dispute not resolved in the normal course of business. Executives of both Parties shall meet at a mutually acceptable time and place within ten (10) Business Days after delivery of such notice and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the Dispute. In such meetings and exchanges, a party shall have the right to designate as confidential any information that such Party offers. No confidential information exchanged in such meetings for the purpose of resolving a Dispute may be used by a Party in litigation against the other Party; provided that, if the same information is obtained by the Party seeking to use it through other lawful means, such as discovery under Section 13.10(c)(iv) below, this provision shall not bar the use of such information that is so obtained. If the matter has not been resolved in the aforementioned manner within thirty (30) days of the disputing Party’s notice having been delivered, or if the Parties fail to meet within ten (10) Business Days as required above, either Party may initiate binding arbitration in New York, New York, as hereafter provided in clause (c) below.

(c) The Parties agree that all disputes, controversies or claims that may arise out of the transactions contemplated by this Agreement, or the breach, termination or invalidity thereof,

including any requests for emergency or equitable relief and/or specific performance, shall be submitted to, and determined by, binding arbitration in accordance with the following procedures:

(i) Either Party may submit a dispute, controversy or claim to arbitration by giving the other Party written notice to such effect, which notice shall describe, in reasonable detail, the facts and legal grounds forming the basis for the filing Party’s request for relief. The arbitration shall be held before one (1) neutral arbitrator in New York, New York and a decision as to any matters submitted thereto shall be made by such arbitrator.

(ii) Within thirty (30) days after the other Party’s receipt of such demand, the Parties shall make a good faith effort to select such arbitrator. In the event of a failure to make such selection, and if the Parties cannot resolve their disagreements as to the same within thirty (30) days, such arbitrator shall be selected by the American Arbitration Association (“AAA”). In any event, the arbitrator shall have a background in, and knowledge of, transactions in the energy industry and shall otherwise be an appropriate person based on the nature of the dispute. If a person with experience in such matters is not available, the arbitrator shall be chosen from the retired federal judges pool maintained by AAA.

(iii) The arbitration shall be governed by the Commercial Arbitration Rules of the AAA.

(iv) All discovery shall be guided by the Federal Rules of Civil Procedure. All issues concerning discovery upon which the parties cannot agree shall be submitted to the arbitrator for determination.

(v) In rendering an award, the arbitrator shall determine the rights and obligations of the parties according to the substantive and procedural laws of the State of New York.

(vi) The decision of, and award rendered by, the arbitrator, shall be determined no more than sixty (60) days after the submission of the case to the arbitrator and shall be final and binding on the parties and shall not be subject to appeal. Judgment on the award may be entered in and enforced by any court of competent jurisdiction.

(vii) Each Party shall bear its own costs and expenses (including filing fees) with respect to the arbitration, including one-half of the fees and expenses of the arbitrator.

13.11 Delays or Omissions . Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any Party, upon any breach or default of the other Party to this Agreement, shall impair any such right, power or remedy of such Party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Except as

provided in Section 13.09, any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any Party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this agreement or by law or otherwise afforded to any Party, shall be cumulative and not alternative.

13.12 Conflicts . In the event of any conflicts or inconsistencies between the terms of this Agreement and the terms of any of the Related Agreements, the terms of this Agreement will govern and prevail.

13.13 Counterparts . This Agreement may be executed simultaneously in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The exchange of copies of this Agreement or other documents or agreements to be delivered pursuant to this Agreement, including executed signature pages, by electronic transmission will constitute effective execution and delivery of this Agreement or any such agreement or document for all purposes. Signatures transmitted electronically will constitute original signatures for all purposes.

13.14 Effectiveness; Binding Effect . This Agreement shall become effective as to each Party hereto when and only when this Agreement shall have been executed by such Party; provided , however , that this Agreement shall be null and void ab initio as to each Party hereto in the event that both Parties hereto shall not have executed this Agreement within five (5) days of the date upon which any Party hereto shall have executed this Agreement.

13.15 Headings . The headings of the Sections and Articles of this Agreement are inserted for convenience only and shall not constitute a part hereof.

13.16 Entire Agreement . This Agreement, including the Schedules and Exhibits hereto, sets forth the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein, and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, express or implied, by any officer, employee or representative of any party hereto, except the Confidentiality Agreement and any other Related Agreements, which remain in full force and effect.

13.17 No Recourse Against Others . This Agreement is solely and exclusively between Purchaser and Seller and any obligations of Seller created herein shall be the obligations solely of Seller. The directors, officers, employees, representatives and Affiliates of Seller or the Company shall have no liability for any obligations of Seller under this Agreement or for any Damages based on, in respect of or by reason of this Agreement or Seller’s obligations hereunder or any breach thereof. Purchaser, for itself and its affiliates (including, post-Closing, the Company), hereby waives, remises and releases each director, officer, employee, representative and affiliate of Seller and the Company from all such obligations and Damages.

13.18 Third Parties . Except as specifically set forth or referred to herein, nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity other than the Parties hereto and their successors or assigns, any rights or remedies under or by reason of this Agreement.

13.19 Mutual Agreement . This Agreement embodies the arm’s length negotiation and mutual agreement between the Parties hereto and shall not be construed against any Party as having been drafted by it.

13.20 Severability . If in any jurisdiction, any provision of this Agreement or its application to any Party or circumstance is restricted, prohibited or unenforceable, such provision shall, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition or unenforceability without invalidating the remaining provisions hereof and without affecting the validity or enforceability of such provision in any other jurisdiction or its application to the other Party or any other circumstances. In addition, if any one or more of the provisions contained in this Agreement shall for any reason in any jurisdiction be held to be excessively broad as to time, duration, geographical scope, activity or subject, it shall be construed, by limiting and reducing it, so as to be enforceable to the extent compatible with the applicable law of such jurisdiction as it shall then appear.

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, each by its duly authorized officer, all as of the day and year first above written.

	ALLIANCE ENERGY RENEWABLES, LLC


	By:	Samuel G. Nappi, Chairman and President of Alliance Energy, Inc., the Sole and Managing Member of Alliance Energy Renewables, LLC


	MIRANT NEW YORK, INC.


	By:	Jeffrey R. Perry, President

SCHEDULES

ALL CAPITALIZED TERMS USED IN THESE DISCLOSURE SCHEDULES HAVE THE MEANINGS SET FORTH IN THE MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT (THE “AGREEMENT”). THE DISCLOSURES MADE IN THESE DISCLOSURE SCHEDULES RELATE TO ANY AND ALL OF THE REPRESENTATIONS AND WARRANTIES MADE BY SELLER IN THIS AGREEMENT. SCHEDULE REFERENCES IN THESE DISCLOSURE SCHEDULES ARE FOR CONVENIENCE ONLY, AND THE DISCLOSURE OF ANY FACT OR ITEM IN ANY DISCLOSURE SCHEDULE REFERENCED BY A PARTICULAR SECTION OF THE AGREEMENT SHALL BE DEEMED TO HAVE BEEN DISCLOSED WITH RESPECT TO EVERY OTHER SECTION OF THE AGREEMENT.

MATTERS REFLECTED IN THESE DISCLOSURE SCHEDULES ARE NOT NECESSARILY LIMITED TO MATTERS REQUIRED BY THE AGREEMENT TO BE REFLECTED IN THE DISCLOSURE SCHEDULES. SUCH ADDITIONAL MATTERS ARE SET FORTH FOR INFORMATIONAL PURPOSES AND DO NOT NECESSARILY INCLUDE OTHER MATTERS OF A SIMILAR NATURE. IN NO EVENT SHALL THE INCLUSION OF ANY SUCH MATTER IN THESE DISCLOSURE SCHEDULES BE DEEMED OR INTERPRETED TO BROADEN SELLER’S REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS CONTAINED IN THE AGREEMENT. THE INCLUSION OF AN ITEM IN THE DISCLOSURE SCHEDULES SHALL NOT BE DEEMED AN ADMISSION THAT SUCH ITEM REPRESENTS A MATERIAL EXCEPTION OR FACT, EVENT OR CIRCUMSTANCE OR THAT SUCH ITEM IS REASONABLY LIKELY TO RESULT IN A MATERIAL ADVERSE EFFECT. CAPITALIZED TERMS USED IN THESE DISCLOSURE SCHEDULES AND NOT DEFINED HEREIN SHALL HAVE THE MEANING SET FORTH IN THE AGREEMENT.

Schedule 1.1

Seller’s Representatives

Amin M. Lakhani, Project Director, Sale of NY-Gen

Robert Dowd, Project Director, Swinging Bridge Remediation

Kevin McLeod, Plant Manager, NY-Gen

Schedule 1.2

Purchaser’s Representatives

Samuel J. Nappi, Chairman and President, Alliance Energy, Inc.

Joseph Klimaszewski, Regional Director, Alliance Energy, Inc.

Schedule 1.41

Form of Escrow Agreement

THIS ESCROW AGREEMENT , dated as of , 2007, by and between MIRANT NEW YORK, INC., a Delaware corporation having its principal place of business at 1155 Perimeter Center West, Atlanta, GA 30338 ( “Seller” ), ALLIANCE ENERGY RENEWABLES, LLC, a New York limited liability company having its principal place of business at 6941 Kassonta Drive, Jamesville, NY 13078 ( “Purchaser” ), and HISCOCK & BARCLAY, LLP ( “Escrow Agent” ). Each of Seller, Purchaser and Escrow Agent shall hereafter be referred to as a “Party” , together, the “Parties” .

WHEREAS , Purchaser and Seller have entered into that certain Membership Interest Purchase and Sale Agreement dated as of January ___, 2007 (the “ Agreement ”), which provides for the sale by Seller to Purchaser of one hundred percent (100%) of a Membership Interest held by Seller in Mirant NY-Gen, LLC. Capitalized terms used herein and not otherwise defined having the meanings assigned to them in the Agreement, and

WHEREAS , pursuant to Section 2.02 of the Agreement, Three Hundred Thousand Dollars ($300,000.00), comprising ten percent (10%) of the Purchase Price, is to be paid by Purchaser to Escrow Agent as a Down Payment and held in escrow by Escrow Agent in accordance with the terms hereof.

Accordingly, the Parties hereby agree as follows:

1. Appointment and Acceptance of Escrow Agent .

Seller appoints Hiscock & Barclay, LLP as Escrow Agent, and Hiscock & Barclay, LLP accepts such appointment and agrees to hold and dispose of the Escrow Amount (as defined in Section 2 below) in accordance with the terms of this Escrow Agreement. Purchaser consents to such appointment with knowledge that Escrow Agent is acting as counsel for Seller in connection with the transactions described in the Agreement. The duties and obligations of Escrow Agent are those specifically provided in this Escrow Agreement and no other, and Escrow Agent shall have no liability under, or duty to inquire into, the terms and provisions of any other agreement or instrument.

2. Funds to be Received by Escrow Agent .

The Escrow Agent hereby accepts the following funds from Purchaser on behalf of Seller:

Three Hundred Thousand Dollars ($300,000.00)

Upon being transferred to Escrow Agent, such funds shall be deposited in an interest bearing account in the name of Escrow Agent, as escrow agent, under the Employer

Identification Number of Purchaser. Such funds, together with all interest accrued thereon, shall be referred to herein as the “Escrow Amount” .

3. Release of Escrow Amount .

The Escrow Agent shall deliver the Escrow Amount as follows:

(a) Under Section 7.15(g) of the Agreement, Purchaser has acknowledged that the sale of the Membership Interest is subject to Bankruptcy Court approval and to higher and better counteroffers and that the Membership Interest will be sold to the highest and best bidder at an Auction, as therein described. Subject to the provisions contained in the final sentence of this clause (a), upon receipt of (i) written certification from Seller indicating that the Bankruptcy Court has entered a Sale Order authorizing a sale of the Membership Interest to such Prevailing Bidder in the circumstances described in Section 7.15(g) or , where Purchaser has been a back-up bidder, that the sale to the Prevailing Bidder has closed, together with (ii) a written payment instruction (a “Payment Instruction” ) signed by Seller, Escrow Agent shall return the Escrow Amount to Purchaser no later than the third Business Day after Escrow Agent’s receipt of said written certification and accompanying Payment Instruction. A copy of such written certification and Payment Instruction shall be delivered by Seller to Purchaser contemporaneously with delivery of the same to Escrow Agent. If Purchaser should exercise its right to terminate this Agreement as further described in clauses (b), (d) and (e) hereof and such right is exercised prior to the closing of the sale to the Prevailing Bidder, as referenced herein, then Escrow Agent shall return the Escrow Amount to Purchaser upon receipt from Purchaser of the written certifications and accompanying Payment Instructions referenced in such clauses.

(b) If the Agreement is terminated by Purchaser because of a material misrepresentation by Seller or a material default or breach by Seller with respect to Seller’s representations and warranties in the Agreement or any Related Agreement or the failure by Seller to perform in a due and timely manner prior to the Closing of any of Seller’s covenants and agreements contained in the Agreement or any Related Agreement, which misrepresentation, default or breach is not cured by the earlier of the Closing Date or the date thirty (30) days after receipt by Seller of written notice describing such misrepresentation, default or breach then, upon receipt of (i) written certification from Purchaser stating (A) the basis for the termination and describing the facts underlying same, and (B) that, to the best of Purchaser’s Knowledge, Seller is not entitled to terminate the Agreement due to any misrepresentation, default or breach by Purchaser, as described in Section 12.01(a)(i) of the Agreement, together with (ii) a Payment Instruction signed by Purchaser, Escrow Agent shall return the Escrow Amount to Purchaser no later than the third Business Day after Escrow Agent’s receipt of said written certification and accompanying Payment Instruction. A copy of such written certification and Payment Instruction shall be delivered by Purchaser to Seller contemporaneously with delivery of the same to Escrow Agent.

(c) If the Agreement is terminated by Seller because of a material misrepresentation by Purchaser or a material default or breach by Purchaser with respect to Purchaser’s representations and warranties in the Agreement or any Related Agreement or the failure by Purchaser to perform in a due and timely manner prior to the Closing of any of

Purchaser’s covenants and agreements contained in the Agreement or any Related Agreement, which misrepresentation, default or breach is not cured by the earlier of the Closing Date or the date thirty (30) days after receipt by Purchaser of written notice describing such misrepresentation, default or breach then, upon receipt of (i) written certification from Seller stating (A) the basis for the termination and describing the facts underlying same, and (B) that, to the best of Seller’s Knowledge, Purchaser is not entitled to terminate the Agreement due to any material default by Seller, together with (ii) a Payment Instruction signed by Seller, Escrow Agent shall release the Escrow Amount to Seller no later than the third Business Day after Escrow Agent’s receipt of said written certification and accompanying Payment Instruction. A copy of such written certification and Payment Instruction shall be delivered by Seller to Purchaser contemporaneously with delivery of the same to Escrow Agent.

(d) If the Agreement is terminated by Purchaser because Seller has elected not to repair or replace damage to the Station after a Major Loss then, no later than the third Business Day after Escrow Agent’s receipt of written certification of such event signed by Purchaser, together with a Payment Instruction signed by Purchaser, Escrow Agent shall return the Escrow Amount to Purchaser. A copy of such written certification and Payment Instruction shall be delivered by Purchaser to Seller contemporaneously with delivery of the same to Escrow Agent.

(e) If the Agreement is terminated by either Purchaser or Seller because: (i) all of the orders referenced in clause (ii) below have become Final Orders but the Closing has not occurred on or before the earlier of September 1, 2007, or the date which is thirty (30) days after the date upon which the last of all regulatory approvals has been received (which time has not been extended by agreement between the Parties), or (ii) any of the Sale Procedures Order, Sale Order, Disclosure Statement Order and Confirmation Order has not been entered or become final in a sequence such that each of the same shall be a Final Order at or prior to the Closing Date, as the same may have been extended as described in (i) aforementioned, or (iii) there is in effect a preliminary or permanent injunction enjoining consummation of the transactions contemplated under the Agreement at the time the written notice of termination is given then, no later than the third Business Day after Escrow Agent’s receipt of written certification from either Purchaser or Seller, as the case may be, of any such event, together with a Payment Instruction signed by the certifying Party, Escrow Agent shall release the Escrow Amount to the other Party. A copy of such written certification and Payment Instruction shall be delivered by the certifying Party to the other Party contemporaneously with delivery of the same to Escrow Agent.

(f) If, prior to making payment in accordance with this Escrow Agreement, Escrow Agent receives an objection to payment from either Purchaser or Seller, as the case may be, Escrow Agent shall not release any of the Escrow Amount pending receipt of either (i) a Payment Instruction signed by both Purchaser and Seller (a “Joint Payment Instruction” ) specifying the agreement of the Parties as to the action to be taken by Escrow Agent in respect of payment of the entire Escrow Amount or (ii) a notice from either Purchaser or Seller stating that the dispute over payment of the Escrow Amount has been submitted to the American Arbitration Association for resolution through the dispute resolution procedure set forth in Section 13.10(c) of the Agreement, and that a final decision of the arbitration in such proceeding has been rendered (the “ Arbitration Decision ”), a copy of which is attached to such notice. No later than the third Business Day after Escrow Agent’s receipt of such Payment Instruction or Arbitration Decision, as applicable, Escrow Agent shall release the Escrow Amount in accordance therewith. A copy of the notice and

Arbitration Decision referenced in clause (ii) aforementioned shall be delivered to the other Party by the Party issuing such notice contemporaneously with delivery of the same to Escrow Agent.

(g) If at any time, Escrow Agent shall receive a Joint Payment Instruction (including but not limited to, in the circumstances described in clause (f) above) then Escrow Agent shall release the Escrow Amount in accordance with such Joint Payment Instruction no later than the third Business Day after Escrow Agent’s receipt of such Joint Payment Instruction.

(h) If Escrow Agent receives written certification from Seller that the Closing under the Agreement has occurred, together with a Payment Instruction signed by Seller, Escrow Agent shall release the Escrow Amount to Seller no later than the third Business Day after Escrow Agent’s receipt of such written certification and Payment Instruction. A copy of such written certification and Payment Instruction shall be delivered by Seller to Purchaser contemporaneously with delivery of the same to Escrow Agent.

Upon any delivery of the Escrow Amount as provided in this Section 3, this Escrow Agreement shall terminate, and Escrow Agent shall be released and discharged from any further responsibility or obligation and from all liability under this Escrow Agreement.

4. Concerning Escrow Agent .

(a) Escrow Agent shall not have any liability to any Party or to any third party arising out of its services as Escrow Agent under this Escrow Agreement, except for damages directly resulting from Escrow Agent’s gross negligence or willful misconduct.

(b) Escrow Agent may consult with, and obtain advice from legal counsel in the event of any dispute or question as to the construction of any of the provisions hereof or its duties hereunder, and it shall incur no liability and shall be fully protected in acting in good faith in accordance with the advice of such counsel.

(c) Escrow Agent shall not be bound by any modification of this Escrow Agreement unless it shall have specifically consented thereto in writing.

(d) Seller shall indemnify Escrow Agent and hold it harmless against any loss, liability, damage or expense (including reasonable attorneys’ fees) or any tax, additions to tax, interest and penalties (including for failing to file proper tax returns or information reporting returns) that Escrow Agent may incur as a result of acting as escrow agent under this Escrow Agreement, except for any loss, liability, damage or expense arising from Escrow Agent’s own gross negligence or willful misconduct. For this purpose, if Escrow Agent is an attorney or firm of attorneys, the term “attorneys’ fees” means fees payable to any independent counsel retained by Escrow Agent in connection with its services under this Escrow Agreement.

(e) Escrow Agent shall be entitled to rely upon any judgment, notice, instrument or other writing delivered to it under this Escrow Agreement without being required to determine the authenticity of, or the correctness of any fact stated in, that writing. Escrow Agent may act in reliance upon any instrument or signature believed by it to be genuine and may assume that any

person purporting to give any notice or receipt of advice or make any statement or execute any document in connection with this Escrow Agreement has been duly authorized to do so.

(f) All of Escrow Agent’s rights of indemnification provided for in this Escrow Agreement shall survive the resignation of Escrow Agent, its replacement by a successor Escrow Agent, its delivery of the Escrow Amount in accordance with this Escrow Agreement, the termination of this Escrow Agreement and the escrow, and any other event that occurs after this date.

(g) Escrow Agent shall have no responsibility with respect to the sufficiency of the arrangements contemplated by this Escrow Agreement to accomplish the intentions of the Parties.

5. Representations .

Each of the Parties hereto represents and warrants to the other Parties hereto that it has full power and authority to enter into and perform this Escrow Agreement; that the execution and delivery of this Escrow Agreement by it was duly authorized by all necessary corporate or other action, as applicable; and that this Escrow Agreement is enforceable against it in accordance with its terms.

6. Resignation; Successor Escrow Agent .

Escrow Agent (and any successor escrow agent) may at any time resign as such upon fifteen (15) days’ prior written notice to Purchaser and Seller. Upon receipt of a notice of resignation, Seller shall select a successor escrow agent within twenty (20) days, but if within that twenty-day period Escrow Agent has not received a notice signed by Seller appointing a successor escrow agent and setting forth its name and address, Escrow Agent may (but shall not be obligated to) select on behalf of Seller a successor escrow agent. Seller shall be solely responsible for the fees and charges of Escrow Agent and any successor escrow agent. A successor escrow agent selected by the resigning Escrow Agent may become Escrow Agent by confirming in writing its acceptance of the position. Seller shall sign such other documents as the successor escrow agent reasonably requests in connection with its appointment. Escrow Agent shall deliver the Escrow Amount then held by it to the successor escrow agent selected pursuant to this provision and, upon such delivery, the successor escrow agent shall become Escrow Agent for all purposes under this Escrow Agreement and shall have all of the rights and obligations of Escrow Agent under this Escrow Agreement, and the resigning Escrow Agent shall have no further responsibilities or obligations and shall be released from all liability under this Escrow Agreement. Notwithstanding the foregoing, if no successor escrow agent has been designated within the twenty (20) day period referred to above, (a) Escrow Agent shall have the right to deposit or cause to be deposited the Escrow Amount with a court of competent jurisdiction, and the parties shall be required to accept a successor agent appointed by such court and; (b) all obligations of Escrow Agent hereunder shall thereupon cease and terminate.

7. Notices .

All notices, demands, instructions, objections or other communications under this Escrow Agreement shall be in writing and shall be deemed given when sent by United States certified mail, return receipt requested, or by nationally recognized overnight courier service (such as FedEx) to the respective Parties at the following addresses (or at such other address as a Party may specify by notice given in accordance with this Section 7):

If to Seller:

Mirant New York, Inc.

c/o Mirant Corporation

1155 Perimeter Center West

Atlanta, GA 30338-5416

Attention: Jeffrey Perry, President

Fax: (678) 579-3824

Email: jeffrey.perry@mirant.com

With a copy to:

Hiscock & Barclay, LLP

Financial Plaza

221 South Warren Street

Post Office Box 4878

Syracuse, NY 13221-4878

Attention: George S. Deptula, Esq.

Fax: (315) 425-8545

Email: gdeptula@hiscockbarclay.com

If to Purchaser:

Alliance Energy Renewables, LLC

6941 Kassonta Drive

Jamesville, NY 13078

Attn: Samuel G. Nappi, President

Fax: 315-682-7089

Email: snappi@allianceenergy.us

With a copy to:

Troutman Sanders LLP
405 Lexington Avenue
New York, NY 10174
Attention: Howard L. Margulis, Esq.
Fax: 212-704-8330
Email: howard.margulis@troutmansanders.com

If to Escrow Agent:

Hiscock & Barclay, LLP

Financial Plaza

221 South Warren Street

Post Office Box 4878

Syracuse, NY 13221-4878

Attention: George S. Deptula, Esq.

Fax: (315) 425-8545

Email: gdeptula@hiscockbarclay.com

8. Miscellaneous .

(a) Escrow Agent shall be reimbursed solely by Seller upon its request for all reasonable expenses, disbursements and advances incurred or made by it in accordance with the provisions of this Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel). Escrow Agent shall receive a fee for its services hereunder in an amount agreed to in writing by Escrow Agent and Seller.

(b) If any provision of this Escrow Agreement is determined by any court of competent jurisdiction to be invalid or unenforceable in any jurisdiction, the remaining provisions of this Escrow Agreement shall not be affected thereby, and the invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable that provision in any other jurisdiction. It is understood, however, that the parties intend each provision of this Escrow Agreement to be valid and enforceable and each of them waives all rights to object to any provision of this Escrow Agreement.

(c) This Escrow Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and permitted assigns. Except as expressly provided in Section 6 hereof, no Party may assign its rights or obligations under this Escrow Agreement or any interest in the Escrow Amount without the written consent of the other Parties, and any other purported assignment shall be void.

(d) This Escrow Agreement shall be governed by and construed in accordance with the law of the State of New York without regard to its conflicts-of-law rules or principles.

(e) The Parties hereby consent and agree that the Supreme Court of the State of New York for New York County, and the United States District Court for the Southern District of New York (Manhattan) each shall have personal jurisdiction and proper venue with respect to any dispute between the Parties; provided that that the foregoing consent shall not deprive any Party of the right in its discretion to voluntarily commence or participate in any other forum having jurisdiction and venue or deprive any Party of the right to appeal the decision of any such court to a proper appellate court located elsewhere. Each Party will not raise, and each Party hereby absolutely, unconditionally, irrevocably and expressly waives forever, any objection or defense in any such dispute to any such jurisdiction as an inconvenient forum.

(f) This Escrow Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof, supersedes all other prior agreements and undertakings, both written and oral, between the Parties with respect to the subject matter hereof, and cannot be changed or terminated orally. Any waiver of any provision of this Escrow Agreement must be in writing.

(g) This Escrow Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.

(h) The provisions of this Escrow Agreement shall be deemed to be for the exclusive benefit of Seller, Purchaser and Escrow Agent, and shall not be deemed to be for the benefit of, or enforceable by, any third party.

(i) Seller, Purchaser and Escrow Agent each acknowledge that this Escrow Agreement has been mutually drafted by the Parties and has been the subject of negotiation among the Parties.

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IN WITNESS WHEREOF, the Parties have executed this Escrow Agreement as of the date first above written.

PURCHASER


ALLIANCE ENERGY RENEWABLES, LLC



By:		Samuel G. Nappi
		Chairman and President of Alliance Energy, Inc.,
		Sole and Managing Member of Alliance Energy
		Renewables, LLC


SELLER


MIRANT NEW YORK, INC.



By:
Title:


ESCROW AGENT


HISCOCK & BARCLAY, LLP
By:
	George S. Deptula, Esq.

Schedule 1.45

Hydroelectric and Gas Turbine Generating Stations

1. Hillburn Gas Turbine Generating Station is the approximately 40 MW natural gas and jet fuel fired electric generating station located at Six 4 th Street, Hillburn, New York.

2. Shoemaker Gas Turbine Generating Station is the approximately 40 MW natural gas and jet fuel fired electric generating station located at 71 Poison Avenue, Middletown, New York.

3. Mongaup Hydroelectric Generating Station is the approximately 4 MW hydroelectric electric generating station located at 613 Plank Road, Forestburgh, New York. (Units 1, 2, and 3 are on outage on the Effective Date).

4. Rio Hydroelectric Generating Station is the approximately 10 MW hydroelectric electric generating station located at 72 Power House Road, Glen Spey, New York.

5. Swinging Bridge Hydroelectric Generating Station is the approximately 12 MW hydroelectric electric generating station located at 458 County Route 43, Forestburgh, New York. (Unit 1 is on outage on the Effective Date).

*All of the above references to capacity are nameplate. Actual capacity may differ depending on operating conditions.

Schedule 2.03(c)

Pre-Approved Capital Expenditures

None.

Schedule 3.02

Form of Assignment for Membership Interest Transfer

ASSIGNMENT OF MEMBERSHIP INTEREST

This Assignment of Membership Interest (the “Assignment”) is made and entered into as of , 2007, by and between MIRANT NEW YORK, INC., a Delaware corporation (“Assignor”), and ALLIANCE ENERGY RENEWABLES, LLC, a New York limited liability company (“Assignee”).

WHEREAS, Assignor and Assignee are parties to that certain Membership Interest Purchase and Sale Agreement dated as of January 31, 2007 (the “Purchase Agreement”), pursuant to which Assignee has agreed to purchase from Assignor and Assignor has agreed to sell to Assignee the 100% membership interest of Assignor in Mirant NY-Gen, LLC, a Delaware limited liability company (the “Membership Interest”); and

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration, the receipt, adequacy and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

1. Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings for such terms that are set forth in the Purchase Agreement.

2. Assignment of Membership Interest . Effective as of the date of this Assignment, Assignor hereby assigns, sells, transfers and sets over to Assignee all of Assignor’s right, title, benefits, privileges and interest in and to the Membership Interest, including without limitation all rights arising from said Membership Interest.

3. Terms of the Purchase Agreement . This Assignment is made pursuant and subject to the terms of the Purchase Agreement. Assignor and Assignee agree that such terms shall not be superseded hereby but shall remain in full force and effect to the full extent provided therein. In the event of any conflict or inconsistency between the terms of the Purchase Agreement and the terms hereof, the terms of the Purchase Agreement shall govern.

[The remainder of this page is intentionally left blank]

IN WITNESS WHEREOF, the parties have executed this Assignment as of the date first above written.

ASSIGNOR

ASSIGNEE

MIRANT NEW YORK, INC.

By:

Name:

Its:

Schedule 3.02(d-1)

Form of Assignment of Insurance Claims

This Assignment of Insurance Claims (the “Assignment” ) is made and entered into as of , 2007, by and between MIRANT NY-GEN, LLC, a Delaware limited liability company ( “Assignor” ), and MIRANT NEW YORK, INC., a Delaware corporation ( “Assignee” ). Capitalized terms used herein and not otherwise defined having the meanings assigned to them in that certain Membership Interest Purchase and Sale Agreement dated as of , 2007 (the “Agreement” ), between Assignee and Alliance Energy Renewables, LLC, a New York limited liability company ( “Alliance” ).

WHEREAS, pursuant to the Agreement, Alliance has agreed to purchase from Assignee and Assignee has agreed to sell to Alliance, one hundred percent (100%) of a Membership Interest in Assignor held by Assignee; and

WHEREAS, Section 2.03(f) of the Agreement provides that, prior to the Closing Date, Assignor shall assign to Assignee all rights pertaining to insurance claims filed in respect of losses, damages, and expenses relating to the occurrences giving rise to the Consent Order for the Hillburn Facility and the Swinging Bridge Remediation Plan.

1. Assignment . Effective as of the date of this Assignment, Assignor hereby assigns, sells, and transfers over to Assignee all of Assignor’s right, title, benefits, privileges and interest in and to insurance claims filed prior to the date hereof by or on behalf of Assignor based upon incidents and occurrences giving rise to the Remediation Expenditures at the Hillburn Facility and the Swinging Bridge Facility including, without limitation, claims in respect of property, business interruption, and environmental losses, damages, and expenses (collectively, the “Claims”). Without limiting the scope of the foregoing assignment, Claims shall include payments made by insurers with respect to the Claims and the right to receive such payments.

2. Covenants . To the extent an insurance carrier pays amounts related to the Claims to Assignor, Assignor shall hold such amounts in trust for Assignee and shall pay Assignee such amounts within five (5) Business Days of receipt. If requested by Assignee, Assignor shall cooperate with Assignee in the prosecution of the Claims, including making personnel, records, and access to the Assets available as needed by Assignee.

3. Application of Agreement Terms . This Assignment is made pursuant and subject to the terms of the Agreement. To the extent this Assignment is silent as to any provision in the Agreement that is relevant to this Assignment, Assignor and Assignee agree that each such corresponding provision applies to this Assignment. In the event of any conflict or inconsistency between the terms of the Agreement and the terms hereof, the terms of the Agreement shall prevail; such terms in the Agreement shall not be superseded hereby but shall remain in full force and effect to the full extent provided therein.

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of the date first above written.

ASSIGNOR		ASSIGNEE


MIRANT NY-GEN, LLC		MIRANT NEW YORK, INC.


By:	By:

Name:	Name:

Its:	Its:

Schedule 3.02 (d-2)

Assignment of Claims Against Third Parties

This Assignment of Claims Against Third Parties (the “Assignment” ) is made and entered into as of , 2007, by and between MIRANT NY-GEN, LLC, a Delaware limited liability company ( “Assignor” ), and MIRANT NEW YORK, INC., a Delaware corporation ( “Assignee” ). Capitalized terms used herein and not otherwise defined having the meanings assigned to them in that certain Membership Interest Purchase and Sale Agreement dated as of January 31, 2007 (the “Agreement” ), between Assignee and Alliance Energy Renewables, LLC, a New York limited liability company ( “Alliance” ).

WHEREAS, Section 2.03(f) of the Agreement provides that, prior to the Closing Date, Assignor shall assign to Assignee: (i) all rights pertaining to pending filed claims against O&R and ConEd and/or any of their respective Affiliates, and (ii) all Intercompany Claims.

1. Assignment . Effective as of the date of this Assignment, Assignor hereby assigns, sells, and transfers over to Assignee all of Assignor’s right, title, benefits, privileges and interest in and to: (a) Assignor’s rights and claims against O&R and ConEd and/or any of their respective Affiliates that are the subject of Adversary Case No. 06-04141 commenced in The United States Bankruptcy Court for the Northern District of Texas Fort Worth Division in Chapter 11 Case No. 03-46590 (DML) (the “Action”), including without limitation the right to pursue the Action as the assignee of Company, and (b) the Intercompany Claims.

2. Covenants . To the extent that: (a) O&R, ConEd and/or any of their respective Affiliates pay amounts related to the Action to Assignor, or (b) Assignee received payment of any amounts with respect to the Intercompany Claims, Assignor shall hold such amounts in trust for Assignee and shall pay Assignee such amounts within five (5) Business Days of receipt. If requested by Assignee, Assignor shall cooperate with Assignee in the prosecution of the Action and the Intercompany Claims, including making personnel, records, and access to the Assets available as needed by Assignee.

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of the date first above written.

ASSIGNOR

ASSIGNEE

MIRANT NY-GEN, LLC

MIRANT NEW YORK, INC.

By:

Name:

Its:

Schedule 3.03(a)

Wire Transfer Instructions

Mirant New York, Inc

Acct # 3752102211

Bank of America

ABA # 0260009593

Schedule 4.03

Governmental Authority Approvals

Governmental Authority Approvals:

1. New York Public Service Commission approval of transfer

2. Federal Energy Regulatory Commission Section 203 filing

3. Notification to Federal Energy Regulatory Commission regarding change of ownership of Company.

4. New York State Department of Environmental Conservation (“NYSDEC”) filing related to the modification to the Air Permits regarding the NO x Bubble.

5. The items listed on Schedules 4.05 (Section B) and all items listed on Schedule 4.17.

Schedule 4.05

Licenses and Permits

Section A (Licenses and Permits for Operation of Company’s Business):

1. Federal Energy Regulatory Commission Operating License dated April 14, 1992 for Project No. 10481 (Mongaup).

2. Federal Energy Regulatory Commission Operating License dated April 14, 1992 for Project No. 9690 (Rio).

3. Federal Energy Regulatory Commission Operating License dated April 14, 1992 for Project No. 10482 (Swinging Bridge), as amended. (additional amendment may be required by law for the Unit 1 Fill-In)

4. NYSDEC Petroleum Bulk Storage Certificate PBS Number 3-412694 issued on November 29, 2005 (Mongaup).

5. NYSDEC Petroleum Bulk Storage Certificate PBS Number 3-412643 issued on November 29, 2005 (Shoemaker).

6. NYSDEC Petroleum Bulk Storage Registration Certificate No. 3-990437 issued on January 6, 2006 (Hillburn).

7. Application for NYSDEC SPDES Permit for Discharge, No. NY-026 5055 (Swinging Bridge Station #1); application submitted on March 8, 2002.

8. Application for NYSDEC SPDES Permit for Discharge, No. NY-026 5063 (Swinging Bridge Station #2); application submitted on March 8, 2002.

9. Application for NYSDEC SPDES Permit for Discharge, No. NY-026 5047 (Rio); application submitted on January 9, 2003.

10. NYSDEC Air Permit ID 3-3926-00039/00003 (Hillburn)

11. NYSDEC Air Permit ID3-3309-00040/00004 (Shoemaker)

12. Section 401 Water Quality Certification - Swinging Bridge Project - FERC No. 10482 issued by NYSDEC on September 11, 1989.

13. Section 401 Water Quality Certification - Mongaup Falls Project - FERC 10481

issued by NYSDEC on September 11, 1989.

14. Section 401 Water Quality Certification - Rio Project – FERC 9690 issued by NYSDEC on September 11, 1989.

Section B (Licenses and Permits requiring Governmental Approval to Transfer):

1. Approval by NYSDEC of transfer of Petroleum Bulk Storage Certificates.

2. Notification to NYSDEC regarding change of ownership of Company for SPDES Permits, Air Permits and Section 401 Water Quality Certifications.

3. Notification to Delaware River Basin Commission regarding change of ownership of Company.

4. Notification to NYSDEC regarding change in notice provisions and contact information under the Consent Orders listed under Section C of this Schedule 4.05.

5. An order of the Federal Energy Regulatory Commission issued under Section 203 of the Federal Power Act (16 U.S.C. 824b as amended) authorizing Purchaser’s acquisition of the Membership Interest.

Section C (Consent Orders and Agreements with Governmental Authorities):

1. Consent Order (as defined in the Agreement)

2. Consent Order dated (DEC Index No. CO3-20050519-8-A, dated September 15, 2005 between the Company and the NYSDEC (Reimbursement and Environmental Audit).

3. Dissolved Oxygen Consent Order (as defined in Schedule 4.15)

Schedule 4.07

Certain Liabilities

None.

Schedule 4.08

Certain Changes

Transfer of the Grahamsville Hydroelectric Generating Facility on October 31, 2006 to Orange & Rockland Utilities, Inc.

Schedule 4.09

Real Property Leases, Easements and Licenses

1. Easement for electric transmission lines and distribution system dated April 30, 1941 and recorded May 19, 1946 in Liber 347 cp 23.

2. Grant of Easement dated March 11, 1982 and recorded March 12, 1982 in Liber 1034 cp 84.

3. Grant of Easement dated July 22, 1986 and recorded July 25, 1986 in Liber 1231 cp 230.

4. Grant of Easement dated July 22, 1986 and recorded July 25, 1986 in Liber 1231 cp 242.

5. Grant of Easement dated October 19, 1990 and recorded October 24, 1990 in Liber 1490 cp 117.

6. Grant of Easement dated September 14, 1990 and recorded December 3, 1990 in Liber 1497 cp 111.

7. Access and Patrol Easement and Restrictions dated October 31, 1990 and recorded December 3, 1990 in Liber 1497 cp 120.

8. Access and Patrol Easement and Restrictions dated September 14, 1990 and recorded December 3, 1990 in Liber 1497 cp 140.

9. Access and Patrol Easement and Restrictions dated October 4, 1990 and recorded April 5, 1991 in Liber 1515 cp 609.

10. Access and Patrol Easement and Restrictions dated October 4, 1990 and recorded April 5, 1991 in Liber 1515 cp 629.

11. Agreement recorded in Liber 1851 cp 25.

12. Easement dated April 30, 1941 and recorded May 19, 1946 in Liber 347 cp 23.

13. Agreement dated April 10, 1951 and recorded April 30, 1951 in Liber 450 cp 293.

14. Easement dated December 17, 1971 and recorded December 21, 1971 in Liber 761 cp 847 as assigned by Assignment of Easements dated June 30, 1994 and recorded in Liber 1757 cp 668.

15. Easement granted to People of State of New York dated October 24, 1990 and recorded October 24, 1990 in Liber 1490 cp 469.

16. Grant of Right of Way dated February 4, 1999 and recorded February 4, 1999 in Liber 2083 cp 514.

17. Indenture dated December 31, 1971 and recorded in Liber 765 cp 114 and Liber 1902 cp 106 (Orange County).

18. Easements in the Deed dated October 24, 1990 and recorded October 24, 1990 in Liber 1490 cp 398 and rights reserved in Deed at cp 404 and 405.

19. Right of Way recorded February 22, 1881 in Liber 80 cp 239, in Liber 80 cp 290 and November 18, 1889 in Liber 97 cp 326.

20. Unrecorded Easement as disclosed by Town of Forestburgh, Sullivan County Tax Map Section No. 37 dated September 23, 1965 last revised September 1, 1994.

21. Easement dated April 30, 1941 and recorded May 19, 1946 in Liber 347 cp 23.

22. Easement dated October 19, 1990 and recorded October 24, 1990 in Liber 3364 cp 118 Orange County.

23. Easement dated October 24, 1990 and recorded October 24, 1990 in Liber 1490 cp 597.

24. Easement recorded in Liber 3365 cp 1, Orange County.

25. Easement dated October 19, 1990 and recorded October 24, 1990 in Liber 3364 cp 235, Orange County.

26. Easement recorded in Liber 1624 cp 035, Liber 1667 cp 001 and Liber 1801 cp 152.

27. Deed dated February 16, 1999 and recorded March 24, 1999 in Liber 2093 cp 370.

28. License recorded April 21, 1999 in Liber 2100 cp 536 as assigned by Assignment dated June 30, 1999 recorded July 1, 1999 in Liber 2117 cp 448 Sullivan County.

29. Right of Way dated February 4, 1999 and recorded February 11, 1999 in Liber 2083 cp 514.

30. Recreational Area Option Agreement dated October 24, 1990 in Liber 1490 cp 644.

31. Provisions in the unrecorded (1) FERC Hydro License issued April 14, 1992 for Swinging Bridge Reservoir (License No. 10482); (2) Memorandum of Understanding between Orange and Rockland Utilities, Inc. and the New York State Department of Environmental Conservation transmitted by cover letter dated July 16, 1990; and (3) Section 401 Water Quality Certification for Swinging Bridge Reservoir dated September 11, 1989.

32. Deed in Liber 765 cp 114.

33. Easement in Liber 1490 cp 81.

34. Easement in Liber 1490 cp 99.

35. Easement dated October 2, 1990 recorded in Liber 1490 cp 539 as amended in Liber 1851 cp 420 and confirmed in Liber 2216 cp 435.

36. Easements in Liber 1490 cp 398.

37. Right of ways in Deed in Liber 765 cp 114.

38. Mines and mineral rights reserved in deeds of record to Orange and Rockland Utilities, Inc.

39. Deeds recorded in Liber 239 cp 278, Liber 240 cp 21, Liber 240 cp 23, Liber 240 cp 145, Liber 240 cp 146, Liber 241 cp 330, and Liber 243 cp 641.

40. Easement recorded in Liber 250 cp 534.

41. Recreational rights recorded in Liber 240 cp 210 and Court Order recorded in Liber 2489 cp 46.

42. Deed recorded in Liber 765 cp 114.

43. Easement as more particularly shown on Sheet 13 of Map of Lands Reserved by Orange and Rockland Utilities, Inc. which Maps are attached to Deed dated December 31, 1971,

recorded Apri1 12, 1972 at Book 765 of Deeds, Page 114 of the Sullivan County Clerk’s Office.

44. Easements dated June 30, 1999 recorded in Liber 2117, cp 498, Sullivan County.

45. Assignment and Assumption of Lease dated as of June 30, 1999 and recorded July 1, 1999 in Liber 2117 cp 453 (Sullivan County).

46. Unrecorded rights, if any, in favor of any electric light or telephone company to maintain guy wires extending from the described premises to poles located on the roads on which the described premises abut.

47. Underground encroachments and easements, if any, including pipes and drains, and such rights as may exist for entry upon said premises to maintain and repair the same.

48. License Agreement between Mirant New York-Gen, LLC and Russ A. Heyman dated March 23, 2005.

49. License Agreement between Mirant New York-Gen, LLC and Sylvia and Charles Broffman dated February 18, 2005.

50. License Agreement between Mirant New York-Gen, LLC and Allen K. Glass and Judy Glass dated March 23, 2005.

51. License Agreement between Mirant New York-Gen, LLC and Harvey Elgart dated March 23, 2005.

52. License Agreement between Mirant New York-Gen, LLC and R. Scott Clouston dated March 23, 2005.

53. License Agreement between Mirant New York-Gen, LLC and John Williams d/b/a Poppa John’s Weiner Wagon dated June 6, 2006.

54. License Agreement dated June 30, 1999 between Southern Energy NY-GEN, L.L.C. and Orange and Rockland Utilities, Inc.

55. Assignment and Assumption of License dated June 30, 1999, and recorded in Book 2117 at page 448.

56. License dated April 8, 1999 and recorded in Book 2100 at page 536.

57. License Agreements between Mirant New York-Gen, LLC and Woodstone Toronto Development, LLC dated October, 2003.

58. Right of Entry and Agreement of Indemnity dated May 12, 2005, by and between the Company and United Water New York, Inc., as extended by letter dated April 19, 2006.

59. Right of Entry and Agreement of Indemnity dated June 29, 2005, by and between the Company and the Village of Hillburn, New York, as extended by letter dated May 22, 2006.

60. License Agreement between the Company and Thomas Damiani dated November 13, 2006.

61. License Agreement between the Company and Julie Racenstein dated October 13, 2006.

62. License Agreement between the Company and Ernest F. Thiesing dated October 30, 2006.

63. License Agreement between the Company and Terry M. Geller dated October 13, 2006.

64. Various license agreements between the Company and landowners authorizing the erection of temporary structures on the Swinging Bridge Reservoir.

Schedule 4.10

Litigation

1. Barrett v. Watkins, Allen, Woodstone Lakes Development, LLC, Woodstone Toronto Development, LLC, Woodstone Crestwood Development, LLC, Mirant NY-Gen, LLC, and Dubrovsky, Case No. 948-06, Sullivan County Supreme Court. The Company’s FERC license requires the Company to provide certain public access to the Toronto reservoir. On or about March 1, 2006, FERC notified the Company in writing that the Company is not in compliance with its FERC license as a result of the Woodstone Companies having physically blocked certain public access to the reservoir. On or about March 31, 2006, Robert and June Barrett filed suit in the New York Supreme Court for Sullivan County relating to disputes arising out the Woodstone Companies’ efforts to restrict access to the Toronto reservoir behind the Swinging Bridge hydro-electric facility across a road, Pine Grove Road, over which the Company holds an easement for the purpose of allowing public access to the reservoir. On or about June 20, 2006, the Company cross-claimed against Woodstone Lakes Development, LLC, Woodstone Toronto Development, LLC, and Woodstone Crestwood Development, LLC seeking injunctive and declaratory relief. The Woodstone Companies answered the cross-claims of Company on September 27, 2006. On or about August 24, 2006, Dr. Goldfarb and Ms. Burke, private citizens, sought to intervene into the Barrett Suit (as additional plaintiffs), by filling an order to show cause. The Woodstone Companies opposed the order to show cause and cross-moved to dismiss the proposed complaint of Dr. Goldfarb and Ms. Burke. Company filed papers in response to the Woodstone Companies’ cross-motion in order to protect its rights and set forth its position with respect to this case. On October 26, 2006, a hearing for order to show cause to intervene was held in Monticello, New York, before Justice Sackett. Company participated in the hearing. Justice Sackett entertained arguments from all parties about the merits of the case. A decision from the judge on the merits of the motion to intervene is pending.

2. Proofs of claim filed by The Southern Company in the Bankruptcy Case.

3. Various pre-petition claims and administrative claims filed against the Company as part of the Chapter 11 bankruptcy case will be addressed in the Company’s plan of reorganization.

Schedule 4.12

Taxes

1. Nothing to disclose for the Company.

2. Seller is currently under a New York State Income Tax audit, for income Tax purposes, for years 2002, 2003 & 2004. Seller is the taxpayer and is the legal entity responsible for income Taxes. The Company is disregarded for income Tax purposes, and is therefore not obligated for Tax liabilities under the audit.

Schedule 4.14

Bank Accounts

1. Mirant NY Gen, LLC

Acct # 3752102224

Bank of America – Dallas

Authorized Signers: J. William Holden, III; Greg Weber

2. Mirant NY Gen, LLC

Acct # 4572828

Federal Investors, Money Market Fund Account

Authorized Traders: Greg Weber; Mark Crompton; Rex Croff

Schedule 4.15

Compliance With Law

1. FERC

On March 1, 2006, FERC issued a letter denying the Company’s request for an extension of time to provide FERC with documentation that the Company has rights to provide public access to the Toronto Dam boat launch on the Toronto Reservoir via a newly constructed bypass road. FERC found that the Company is “in non-compliance with [the Company’s] license and will continue to be in non-compliance until such time that [the Company] demonstrate[s] the area is available to the public.” The Company subsequently filed a cross-complaint in Barrett v. Woodstone et al. , (see description in Schedule 4.10), in order to secure its easement rights to the Toronto Dam boat launch. The cross-complaint is currently pending in New York State Supreme Court.

2. Environmental

(a) Dissolved Oxygen:

(i) The hydroelectric generating units have not had sufficient levels of dissolved oxygen.

(ii) On March 7, 2006, the Company entered into a Consent Order with the NYSDEC with respect to dissolved oxygen at the hydroelectric facilities (the “Dissolved Oxygen Consent Order.”) The Company committed to install certain turbine venting equipment at the hydroelectric generating units to improve dissolved oxygen conditions. The equipment has been installed at the units at Rio and Mongaup, but it has not been installed at Swinging Bridge Units 1 or 2. By the terms of the Dissolved Oxygen Consent Order, the equipment at Unit 2 should have been installed within thirty days of the effective date of such order. It has not been installed at Unit 2 because the equipment is not feasible for installation at the facility. The Dissolved Oxygen Consent Order does not require equipment to be installed at Unit 1 unless and until the unit again becomes operational.

(iii) The NYSDEC has orally alleged that there may be a violation of the water quality standards related to temperature levels at the reservoirs for the hydroelectric facilities.

(b) Kerosene Spill:

A kerosene spill occurred at the Hillburn generating facility. The spill is the subject of the Consent Order.

A sinkhole occurred at the Swinging Bridge dam. Repairs related to the sinkhole occurrence are the subject of the Swinging Bridge Remediation Plan.

3. License Amendment and Notification

An amendment to the Federal Energy Regulatory Commission Operating License and a notification to the New York State Public Service Commission may be required by law to reflect the penstock remediation on Swinging Bridge Unit #1.

Schedule 4.16
Material Contracts

1. Continuing Site/Interconnection Agreement between the Company and Orange and Rockland Utilities, Inc. dated November 24, 1998, as amended (the “Interconnection Agreement”).

2. Settlement Agreement between the Company, Mirant Lovett, LLC, Mirant Bowline, LLC, Hudson Valley Gas Corporation, and Orange and Rockland Utilities, Inc. dated August 15, 2001 (may be terminated as to Company or, in the alternative, may be subject to the Cross Indemnity Agreement, as provided in Section 7.25).

3. Power Sale, Fuel Supply and Services Agreement dated January 3, 2006 by and among the Company, Mirant Energy Trading, LLC (“MET”) (as transferee of Mirant Americas Energy Marketing, LP) and others (to be terminated on or before Closing).

4. Administrative Services Agreement dated January 3, 2006 by and between the Company and Mirant Services, LLC (to be terminated on or before Closing).

5. Environmental Services Agreement dated December 20, 2006, by and between the Company and Lightship Engineering, LLC (“Lightship”), and Purchase Order No. NY- 18884 between the Company and Lightship.

6. Gas Transportation and Balancing Services Agreement for the Mirant Generating Facilities dated December 9, 2002 (the “Gas Transportation and Balancing Agreement”) (Company to be removed as a party on or before Closing).

7. Purchase Order No. NY-6106 between Company and Advance Construction Techniques, Ltd. (may be supplemented by or replaced with the Unit 1 Fill-In Contract as provided in Section 2.03(d)(ii)).

8. Purchase Order Nos. NY-7557, NY-8089, NY-6478 between Company and Devine Tarbell and Associates, Inc.

9. Purchase Order No. NY-6867 between Company and Mead and Hunt, Inc. (To be assigned pursuant to Section 7.29).

10. Purchase Order Nos. NY-8904, NY-7138 and NY-7139 between Company and Megrant Properties, Inc.

11. Purchase Order No. NY-20204 between Company and Baker Technical Land Services.

12. Purchase Order No. NY-5677 between Company and All Bright Electric.

13. Purchase Order No. NY-8296 between Company and Burns and Roe Enterprises, Inc. (To be assigned pursuant to Section 7.29).

14. Purchase Order No. NY-6467 between Company and Conetec, Inc.

15. Purchase Order No. 8320 between Company and Devine Tarbell and Associates, Inc.

16. Purchase Order No. 5530 between Company and Miller Environmental Group, Inc.

17. Purchase Order No. 7806 between Company and Dominion Engineering, Inc.

18. Purchase Order No. 7810 between Company and OCS Industries, Inc.

19. Purchase Order No. 7552 between Company and Deerpark Oil and Heat Company.

20. Purchase Order No. 6490 between Company and All Bright Electric.

21. Purchase Order No. 7697 between Company and Henningson Durham and Richardson.

22. Purchase Order No. 20266 with Geosystems, LP (to be assigned to Company on or before Closing).

23. Purchase Order No. 20272 with Paul C. Rizzo Associates, Inc. (to be assigned to Company on or before Closing).

Schedule 4.17

Consents

1. The consent required under the Interconnection Agreement.

2. The consent required to remove the Company from the Gas Transportation and Balancing Agreement.

Schedule 4.18

Title to Assets

None.

Schedule 5.04

Consents and Approvals of Governmental Authorities

1. An order of the Federal Energy Regulatory Commission issued under Section 203 of the Federal Power Act (16 U.S.C. 824b as amended) authorizing Purchaser’s acquisition of the Membership Interest.

2. New York Public Service Commission approval of transfer.

Schedule 5.05

Litigation

None, other than the Bankruptcy Case, insofar as applicable to the Membership Interest.

Schedule 7.15(b)

Sale Procedures Order

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

	)
In re		)	Chapter 11 Case
		)
MIRANT CORPORATION, et al. ,		)	Case No. 03-46590 (DML)
		)	Chapter 11
		)	Jointly Administered
Debtors.		)
		)

ORDER (A) APPROVING THE SALE PROCEDURES IN CONNECTION WITH THE PROPOSED SALE OF MIRANT NEW YORK, INC.’S MEMBERSHIP INTEREST IN MIRANT NY-GEN, LLC; (B) APPROVING PAYMENT OF A BREAKUP FEE IN ACCORDANCE WITH THE TERMS OF THE MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT; (C) SCHEDULING A SALE HEARING AND AN AUCTION; AND (D) APPROVING THE FORM AND MANNER OF NOTICE OF THE SALE PROCEDURES AND THE SALE HEARING

Upon the motion, dated February 1, 2007 (the “ Sale Procedures Motion ”), of Mirant New York, Inc. (“ Mirant New York ” or the “ Seller ”), as debtor and debtor in possession, for an order (the “ Sale Procedures Order ”) (a) approving the Sale Procedures(1) in connection with the proposed sale, pursuant to sections 105(a), 363(b), (f), (m), and (n), and 1146(c) of title 11 of the United States Code (the “ Bankruptcy Code ”), of the Seller’s Membership Interest (the “ Membership Interest Sale ”) in Mirant NY-Gen, LLC (“ Mirant NY-Gen ” and, collectively with Mirant New York, the “ Debtors ”) to Alliance

(1) Unless otherwise defined in this Sale Procedures Order, capitalized terms used herein shall have the same meanings ascribed to such terms in the Sale Procedures Motion.

Energy Renewables, LLC (“ Alliance Energy ” or the “ Purchaser ”) pursuant to that certain Membership Interest Purchase and Sale Agreement between Mirant New York and Alliance Energy, dated as of January 31, 2007 (the “ Agreement ”); (b) approving the payment of a Breakup Fee (defined below) in accordance with the terms of the Agreement; (c) scheduling a hearing (the “ Sale Hearing ”) to consider approval of the Membership Interest Sale and an Auction (as defined below); and (d) approving the form and manner of notice of the Sale Procedures and the Sale Hearing; and no previous motion for similar relief having been made to this Court; and after due deliberation thereon; and sufficient cause appearing therefor,

IT IS HEREBY FOUND AND DETERMINED THAT:

1. This Court has jurisdiction to hear and determine this matter pursuant to 28 U.S.C. §§ 157(b) and 1334(b). This matter is a core proceeding within the meaning of 28 U.S.C. §§ 157(b)(2). Venue of this matter is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409(a).

2. This Order constitutes a final and appealable order within the meaning of 28 U.S.C. § 158(a).

3. Due and proper notice of the Sale Procedures Motion has been given and no further notice is required.

4. The Sale Procedures, in the form set forth in Exhibit 1 annexed hereto, shall govern the Auction of the Membership Interest to obtain the highest and best offer for the Membership Interest.

5. The Sale Procedures and the Breakup Fee provided for in the Agreement are within the reasonable business judgment of Mirant New York, are in the best interests

of Mirant New York and its chapter 11 estate, and are fair, reasonable, and appropriate in the circumstances.

6. The Notice of Auction and Sale Hearing as set forth in Exhibit 2 is reasonably calculated to provide adequate notice and opportunity for a hearing on any objections to the Sale Motion.

7. The terms and conditions of the payment to the Purchaser of the Breakup Fee as set forth in the Agreement are:

a. the product of arm’s length, good faith negotiations, between the Seller and the Purchaser;

b. a material component of, inducement for, and condition to, the Purchaser’s willingness to be a stalking horse bidder under the Agreement; and

c. within the reasonable business judgment of Mirant New York, is in the best interests of Mirant New York and its chapter 11 estate, and is fair, reasonable and appropriate in the circumstances to establish certainty on the existence and terms of a minimum bid subject to a reasonable competitive bidding process; and

d. not likely to adversely affect the Auction’s competitive bidding process.

ACCORDINGLY, IT IS HEREBY

ORDERED that the Sale Procedures as set forth in Exhibit 1 annexed hereto are hereby approved in all respects; and it is further

ORDERED that in the event of a competing bid for the Membership Interest, Alliance Energy will be entitled to credit bid the amount of $250,000.00 to any overbids in accordance with the terms of the Sale Procedures and the Sale Motion; and it is further

ORDERED that, in accordance with Section 7.15 of the Agreement, as a result of Seller entering into an agreement for a Third Party Sale pursuant to the Auction, Seller shall, upon entry of the Sale Order authorizing such Third Party Sale, return to Purchaser the Down Payment (as defined in the Agreement) with all interest accrued thereon and, within five (5) days of such Third Party Sale or any other sale of the Membership Interest, pay to the Purchaser the Breakup Fee of Two Hundred Fifty Thousand Dollars ($250,000.00) as an administrative expense of the Seller, from the first cash proceeds of any Third Party Sale or other sale of the Membership Interest.

ORDERED that Mirant New York shall serve within three (3) business days after entry of this Sale Procedures Order, the Notice of Auction and Sale Hearing upon (a) all parties entitled to receive notice as of the date hereof pursuant to the Order Clarifying Order Granting Complex Chapter 11 Bankruptcy Case Treatment, dated August 25, 2004, (b) all parties known to Mirant New York to have an interest in acquiring the Membership Interest and the Sale Assets, (c) all entities listed on the schedules of Mirant New York and Mirant NY-Gen, LLC as holding secured claims and all entities who recorded or filed proof(s) of claim as secured against Mirant NY-Gen or Mirant New York, (d) all entities who have recorded in the public record any lien, claim, encumbrance, or interest in or upon the Membership Interest or any of the assets of Mirant NY-Gen, (e) the Federal Energy Regulatory Commission, (f) the Delaware River Basin Commission, (g) the New York Public Service Commission, (h) the State of New

York Department of Environmental Conservation, (i) the New York City Department of Environmental Protection, (j) the Securities and Exchange Commission, (k) the United States Environmental Protection Agency, (l) the Office of the United States Attorney, (m) the United States Department of Justice, (n) the Internal Revenue Service, (o) all parties granting permits or licenses to Mirant NY-Gen, (p) the applicable state and local taxing authorities , and (q) all parties to Mirant NY-Gen’s executory contracts and unexpired leases, and it is further

ORDERED that the Sale Hearing shall be held on , March , 2007 at a.m. (Prevailing Central Time), or as soon thereafter as counsel may be heard, before the Honorable D. Michael Lynn, United States Bankruptcy Judge, in the United States Bankruptcy Court for the Northern District of Texas, Eldon B. Mahon U.S. Courthouse, 501 West Tenth Street, Fort Worth, TX 76102-3643; and it is further

ORDERED that the Sale Hearing may be adjourned from time to time without further notice other than an announcement by Mirant New York in the Court of such adjournment on the date scheduled for the Sale Hearing; and it is further

ORDERED that such notice as set forth in the preceding decretal paragraphs to the Notice Parties shall constitute good and sufficient notice of the Sale Motion as it relates to Mirant New York’s request for entry of the Sale Order, the Auction, and the Sale Hearing, and no other or further notice of the Sale Motion, the Auction, and the Sale Hearing shall be necessary or required; and it is further

ORDERED that responses or objections, if any, to the entry of the Sale Order granting the relief requested in the Sale Motion shall be filed with this Court and served, so as to be actually received no later than , February , 2007, at 4:00 p.m.

(Prevailing Central Time) on: (a) Hiscock & Barclay, LLP, One Park Place, Syracuse, New York 13215, Attn: George S. Deptula, Email: gdeptula@hiscockbarclay.com; (b) Forshey & Prostok LLP, 777 Main Street, Suite 1290, Fort Worth, Texas 76102, Attn: Jeff P. Prostok, Email: jprostok@forsheyprostok.com; (c) Mirant New York, Inc., c/o Mirant Corporation, 1155 Perimeter Center West, Atlanta, Georgia 30338, Attn: Sonnet Edmonds, Vice President and Assistant General Counsel, Email: sonnet.edmonds@mirant.com; (d) Hill Gilstrap, P.C., 1400 West Abram Street, Arlington, TX 76013, Attn: Frank Hill, Email: fhill@hillgilstrap.com, (e) Troutman Sanders LLP, 405 Lexington Avenue, New York, NY 10174, Attn: Hollace T. Cohen, Email: Hollace.Cohen@troutmansanders.com.

ORDERED that the Seller is authorized and empowered to take such steps, incur and pay such costs and expenses, and take such action as may be reasonably necessary to implement this Sale Procedures Order; and it is further

ORDERED that any objections to the entry of this Sale Procedures Order that have not been withdrawn, waived or settled, and all reservations of rights regarding the same, shall be and hereby are OVERRULED on the merits; and it is further

ORDERED that this Court shall retain jurisdiction over any matter or dispute arising from or relating to the Sale Procedures and the implementation of this Sale Procedures Order.

Dated: , 2007
	The Honorable D. Michael Lynn
		United States Bankruptcy Judge

EXHIBIT “1”

SALE PROCEDURES

The following procedures (the “ Sale Procedures ”) shall govern the auction (the “ Auction ”) of the Membership Interest held by Mirant New York, Inc. (the “ Seller ” or “ Mirant New York ”), as sole member of Mirant NY-Gen, LLC (“ Company ” or “ Mirant NY-Gen ” and, with Mirant New York, the “ Debtors ”). These Sale Procedures have been approved and authorized by order dated , 2007 (the “ Sale Procedures Order ”) of the United States Bankruptcy Court for the Northern District of Texas (the “ Bankruptcy Court ”) in the chapter 11 case of Mirant New York (Case No. 03-46641-DML-11).

The Seller has taken all reasonable steps to obtain the highest and best price for the Membership Interest. However, under title 11 of the United States Code (the “ Bankruptcy Code ”), the Seller must demonstrate that it has obtained the highest and best price for the Membership Interest; such a showing may include giving notice thereof to the creditors of the Company and other interested parties, providing information about the Membership Interest to prospective bidders (subject to appropriate confidentiality agreements), entertaining higher and better offers from such prospective bidders, and, if necessary, conducting an Auction.

1. Property to Be Sold . The Company’s assets include three hydroelectric power stations and two gas turbine generating facilities located in southeastern New York and certain real property, easements, permits, and contracts relating thereto as identified in the Agreement (the “ Sale Assets ”). As provided in the Sale Procedures Order, the sale of the Membership Interest (the “ Membership Interest Sale ”) is subject to a determination of which entity has submitted the highest or otherwise best bid pursuant to the procedures set forth herein (the “ Prevailing Bidder ”) (as defined in Section 8 below). Alliance Energy Renewables, LLC (the “ Proposed Purchaser ”) and Mirant New York have entered into the Membership Interest Purchase and Sale Agreement, dated as of January 31, 2007 (the “ Agreement ”). The Proposed Purchaser shall be treated as a Qualified Bidder (as defined in Section 3 below), and the executed Agreement shall be treated as a Qualified Bid (as defined in Section 5 below), for all purposes under the Sale Procedures.

2. Due Diligence . Upon receipt by Hiscock & Barclay, LLP (“ Hiscock & Barclay ”) or Forshey & Prostok LLP (“ Forshey & Prostok ”) of (i) an executed confidentiality agreement in form and substance satisfactory to the Seller in its sole discretion and (ii) financial disclosure acceptable to, and as requested by, the Seller, in its sole discretion, which information shall demonstrate the financial ability of the potential bidder to consummate the purchase of the Membership Interest and its obligations to perform under the Agreement, including but not limited to immediately available cash, or a binding commitment for financing, adequate to pay a price that exceeds the amount in the Marked Agreement (as defined in Section 5(a) below) by at least $500,000 in cash, a potential bidder shall be provided with additional information regarding the Membership

Interest and related Sale Assets, and be afforded the opportunity to inspect the Sale Assets. In addition, all reasonable efforts will be made to provide a potential bidder, who has satisfied the conditions of this Section 2, with such information as such potential bidder may determine is necessary or relevant to the formulation of its bid.

NEITHER HISCOCK & BARCLAY, FORSHEY & PROSTOK, NOR ANY OF THEIR RESPECTIVE PARTNERS, MEMBERS, COUNSEL, OR ATTORNEYS (COLLECTIVELY, THE “DEBTORS’ ATTORNEYS”) HAS PREPARED ANY OF THE INFORMATION REGARDING MIRANT NEW YORK OR MIRANT NY-GEN, OR ANY OF THEIR OPERATIONS, SCHEDULED ASSETS, OR FINANCIAL CONDITION TO BE PROVIDED TO A POTENTIAL BIDDER IN CONNECTION WITH THE SALE PROCEDURES SET FORTH HEREIN. CONSEQUENTLY, NO REPRESENTATION IS MADE BY ANY OF THE DEBTORS’ ATTORNEYS REGARDING THE ACCURACY, RELIABILITY, VERACITY, ADEQUACY, OR COMPLETENESS OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE SALE PROCEDURES, AND ALL POTENTIAL BIDDERS ARE ENCOURAGED TO CONSULT WITH THEIR OWN ADVISORS REGARDING ANY SUCH INFORMATION.

3. Qualified Bidders .

(a) A potential bidder that satisfies the following requirements, and that the Seller determines, in its sole discretion, is reasonably likely to be able to consummate a purchase of the Membership Interest (including all Purchaser Required Consents set forth in Section 7.14 of the Agreement) shall be considered a “ Qualified Bidder .” Within three (3) business days of each potential bidder’s delivery of all of the material required in subsections (b)(i) through (b)(v) below, the Seller shall notify such potential bidder in writing as to whether such potential bidder shall be considered a Qualified Bidder.

(b) Unless otherwise ordered by the Bankruptcy Court for cause shown, no bid for the Membership Interest will be considered unless prior to or in conjunction with making such bid, the bidder delivers the following items to: Hiscock & Barclay, LLP, 50 Beaver Street, Albany, New York 12207, Attn: George S. Deptula.

(i) if the potential overbidder has not already entered into a confidentiality agreement with the Seller, an executed confidentiality agreement (to be provided upon request) in form and substance satisfactory to Mirant New York in its sole discretion;

(ii) financial disclosure in writing acceptable to, and as requested by, Mirant New York, in its sole discretion, which information shall demonstrate that the potential bidder has the financial ability to consummate the purchase of the Membership Interest and its obligations to perform under the Membership Interest Purchase and Sale Agreement no later than ten (10) days

following the hearing on the Sale Order including, but not limited to, immediately available cash or a binding commitment for financing and the willingness and ability to cover all of the potential bidder’s legal counsel fees and other costs associated with the sale of the Membership Interest;

(iii) written evidence demonstrating that such potential bidder is not affiliated with the Proposed Purchaser or Mirant New York (and such potential bidder is not a creditor of Mirant New York or Mirant NY-Gen);

(iv) written evidence that the potential bidder has the internal authorizations and approvals necessary to engage in the transaction without the consent of any entity that has not already been obtained and that the potential bidder is a bona fide purchaser; and

(v) a cashier’s check made payable to Mirant New York, or cash, or an irrevocable letter of credit for ten percent (10 %) (the “ Deposit ”) of the amount of the Proposed Consideration (as defined in Section 5(b) below). If the bidder delivers a letter of credit to the Seller, such letter of credit must (1) have an expiration date of not earlier than October 1, 2007, or fifteen (15) days after such other date proposed in Section 12.01(vii) of the Marked Agreement, and (2) be drawable upon presentment of an officer’s certificate from Mirant New York stating only that Mirant New York is entitled to draw on the letter of credit. The bidder shall forfeit the Deposit and, to the extent applicable, the Seller may draw on the letter of credit if (1) the bidder is determined to be a Qualified Bidder and withdraws or modifies its bid or any subsequent Increased Bid (as defined in Section 7 below), without the Seller’s consent other than as provided herein before the selection of the Prevailing Bidder, and/or (2) the bidder is determined to be the Prevailing Bidder and (A) modifies or withdraws the bid or any subsequent Increased Bid without the Seller’s consent before the consummation of the sale contemplated by the Marked Agreement (as defined in Section 5(a) below) or (B) breaches the Marked Agreement. The Deposit shall be returned to the bidder (1) if the bidder is determined not to be a Qualified Bidder or (2) under the circumstances contemplated by Section 12 hereof.

4. Time for Submission of Bids . Any Qualified Bidder that desires to participate in the Auction shall deliver a copy of its bid so it is received by Seller not later than 4:00 p.m. (Prevailing Central Time) on Wednesday, February 28, 2007 (the “ Initial Bid Deadline ”). Seller shall provide Purchaser with a copy of all Qualified Bids accompanied by notice of the Seller’s determination of the Opening Bid (as defined below) no less than four (4) days prior to the Auction. If there are no Qualified Bids, the Purchaser shall be deemed to be the Prevailing Bidder at the Auction.

5. Form and Contents of Bids . To constitute a “ Qualified Bid ,” a bid must satisfy the following requirements:

(a) the bid must include an executed irrevocable Membership Interest purchase and sale agreement made upon the same terms and conditions as those contained in the Agreement (excepting the purchase price and terms and conditions related to the bankruptcy procedures and deadlines for satisfying conditions precedent to the closing of the transaction in Section 7.15(b) of the Agreement, and the reasonable extension of certain dates set forth in Sections 12.01(iii), (iv), and (vii) of the Agreement necessary or appropriate in light of such overbid which shall be no less favorable to the Seller than the terms of the Agreement, and shall set forth any amendments and modifications to the Agreement, including price, terms, and any change in the list of agreements to be assumed by Mirant NY-Gen, which such bidder would propose if it were selected as the Prevailing Bidder (the “ Marked Agreement ”). All modifications or amendments to the Agreement that are contained in the Marked Agreement must be “redlined” in order for the Seller to consider the Marked Agreement;

(b) the Marked Agreement must provide for total net cash consideration to the Seller’s chapter 11 estate of not less than $500,000.00 greater than the purchase price of the Agreement (the “ Proposed Consideration ”);

(c) the Marked Agreement must not be conditioned upon the ability of the bidder to obtain financing or the outcome of unperformed due diligence by the bidder. In the event that the Marked Agreement contains any additional conditions to the closing of the Membership Interest Sale (the “ Closing ”), none of such conditions shall be materially more burdensome or unfavorable to the Seller than those set forth in the Agreement;

(d) the Marked Agreement must be accompanied by a letter affirmatively (i) setting forth the identity of the bidder and the contact information for such bidder, (ii) stating that the bidder offers to purchase the Membership Interest upon the terms and conditions set forth in the Marked Agreement, (iii) summarizing the Proposed Consideration the bidder proposes to pay under the Marked Agreement, (iv) identifying any change in the contracts that the bidder proposes Mirant NY-Gen assume and any additional cure amount therefor, (v) stating the aggregate value of the consideration the bidder proposes to pay under the Marked Agreement (which statement of value shall not be binding on the Seller, the Purchaser, or the Court), and (vi) stating the form of the Deposit ( i.e., letter of credit, cashier’s check, or cash) made by the bidder; and

(e) the foregoing materials must be received by Seller on or before Wednesday, February 28, 2007 at 4:00 p.m. (Prevailing Central Time) (the “ Initial Bid Deadline ”). The Purchaser will receive from the Seller a copy of all Qualified Bids accompanied by notice of the Seller’s determination of the Opening Bid (as defined below) no less than four (4) days prior to the Auction.

6. Notification of Opening Bid . At the commencement of the Auction, the Seller will identify the opening bid (the “ Opening Bid ”), which will be the highest or otherwise best Qualified Bid, as determined by the Seller in its sole discretion. If no

timely Qualified Bid is submitted as determined by the Seller, or if the Purchaser is the Prevailing Bidder (as defined herein), the Seller shall request at the Sale Hearing that the Bankruptcy Court approve the sale of the Membership Interest to the Purchaser.

7. The Auction .

(a) The Auction shall commence at a.m. (Prevailing Central Time) on , , 2007 at the United States Bankruptcy Court, Eldon B. Mahon U.S. Courthouse, 501 West Tenth Street, Fort Worth, Texas 76102. Qualified Bidders must attend the Auction in person or through an authorized representative or agent with actual authority to participate in the Auction and bind such Qualified Bidder. During the Auction, any Qualified Bidder may increase its qualified Bid by another Qualified Bid that:

i. provides for cash consideration that exceeds by not less than $250,000.00 the cash consideration to be paid pursuant to the then highest Qualified Bid or Increased Bid, if any;

ii. identifies specifically any other changes made to the Qualified Bid; and

iii. satisfies the requirements of Sections 3(b) and 5 above.

Any bid received from a Qualified Bidder during the Auction that satisfies the requirements set forth in subsections (a)(i) through (a)(iii) above, shall constitute an “ Increased Bid .” If the Proposed Purchaser submits the successful overbid, the Purchaser shall be entitled to credit the amount of $250,000.00 against such overbid.

(b) The Seller shall adopt such rules for bidding at the Auction as it deems appropriate in its sole discretion that will better promote the goals of the bidding process, allow all Qualified Bidders reasonable notice and opportunity to submit Increased Bids, and are not otherwise inconsistent with any order of the Bankruptcy Court or the Agreement.

8. Selection of Prevailing Bidder . At the Auction, the Seller shall review and consider each, if any, of the Qualified Bids and the Increased Bids. Seller shall determine in its sole discretion which of the Qualified Bids or Increased Bids constitute the highest and otherwise best bid for the Membership Interest, provided however, that nothing contained herein shall prevent the Purchaser from contesting that the bid selected by the Seller of the Prevailing Bidder is the highest and best offer. The bidder making the bid that is selected as the highest or otherwise best bid by the Seller shall be considered the “ Prevailing Bidder .” At the conclusion of the Auction and after such review, the Seller shall inform each of the Qualified Bidders of the decision regarding who is the Prevailing Bidder and who made the second highest or otherwise best bid (the “ Backup Bidder ”).

9. Release of Down Payment . Upon entry of the Sale Order authorizing a sale of the Membership Interest to a purchaser other than Purchaser, Seller shall direct Escrow Agent to return to Purchaser the Down Payment (as defined in the Agreement) with all accrued interest thereon; provided that, if Purchaser agrees to be the Backup Bidder, Seller shall direct the Escrow Agent to return the Down Payment (with all accrued interest thereon) to Purchaser upon the earlier of the closing of the Membership Interest Sale to the Prevailing Bidder or termination of the Agreement by Purchaser according to the terms of the Agreement.

10. Failure to Consummate Purchase . If for any reason the Prevailing Bidder fails to consummate the Membership Interest Sale, the Seller reserves the right to consummate the Membership Interest Sale with the Backup Bidder. If such failure to consummate the purchase is the result of a breach of the Agreement by the Proposed Purchaser or the Marked Agreement by the Prevailing Bidder, the Down Payment (as defined in the Agreement) of the Proposed Purchaser or the Deposit of such Prevailing Bidder as the case may be shall be forfeited to the Seller. The Seller specifically reserves the right to seek all available damages from the defaulting bidder; provided that in the case of the Proposed Purchaser, the damages shall be limited as provided in Section 12.04 of the Agreement.

11. Bankruptcy Court Approval of the Prevailing Bidder . An evidentiary hearing on all of the relief requested in the Seller’s Motion (the “ Sale Motion ”) to approve the Membership Interest Sale and to conduct the Auction (the “ Sale Hearing ”) shall be held before the Bankruptcy Court on , , 2007 at .m. (Prevailing Central Time).

12. Return of Deposits . Within five (5) business days after the closing of the Membership Interest Sale, the Deposit submitted by each Qualified Bidder shall be returned, except for those submitted by (a) the Prevailing Bidder and (b) any bidders that forfeited their Deposit under Section 3(b)(v) above. Except as otherwise provided for herein, in the event the Seller cancels the proposed sale or withdraws its motion to approve the sale of the Membership Interest, the Deposit submitted by all of the Qualified Bidders shall be immediately returned.

13. Business Judgment of the Seller . The Seller reserves the right (a) to determine in its sole discretion whether the amendments and changes contained in each Marked Agreement are acceptable as terms and conditions to the sale; (b) to determine, in its sole discretion, which Qualified Bid, if any, is the highest or otherwise best offer for the Membership Interest; (c) to reject at any time prior to entry of an order of the Bankruptcy Court approving the sale to the Prevailing Bidder, any bid which the Seller, in its sole discretion, deems to be (i) inadequate or insufficient, or (ii) not in conformity with the requirements of the Bankruptcy Code or the Sale Procedures; and/or (d) to modify these Sale Procedures in any manner in its sole discretion which is not otherwise inconsistent with any order of the Bankruptcy Court or the Agreement.

EXHIBIT “2”

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

	)
In re		)	Chapter 11 Case
		)
MIRANT CORPORATION, et al. ,		)	Case No. 03-46590 (DML)
		)	Chapter 11
		)	Jointly Administered
Debtors.		)
		)	Hearing Set:

NOTICE OF AUCTION AND SALE HEARING REGARDING

MOTION OF EXCLUDED DEBTORS FOR ENTRY OF AN

ORDER (I) AUTHORIZING AND APPROVING THE SALE OF ALL

MEMBERSHIP INTERESTS IN MIRANT NY-GEN, LLC, BY MIRANT NEW

YORK, INC. TO ALLIANCE ENERGY RENEWABLES, LLC, OR

ALTERNATIVELY TO PREVAILING OVERBIDDER, FREE AND CLEAR OF

ALL LIENS, CLAIMS, ENCUMBRANCES, AND INTERESTS, (II) APPROVING

THE MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

BETWEEN MIRANT NEW YORK, INC., AS SELLER, AND ALLIANCE

ENERGY RENEWABLES, LLC, AS PROPOSED PURCHASER, AND

AUTHORIZING THE DEBTORS TO PERFORM THE TERMS THEREOF, AND

(III) AUTHORIZING CERTAIN EXCLUDED DEBTORS TO ENTER INTO,

MODIFY OR TERMINATE CONTRACTS AND LEASES PURSUANT TO THE
MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

TO ALL INTERESTED PARTIES:

PLEASE TAKE NOTICE that on February 1, 2007, Mirant New York, Inc. (“ Seller ” or “ Mirant New York ”), Mirant NY-Gen, LLC (“ NY-Gen ”), Mirant Bowline, LLC, Mirant Lovett, LLC, and Hudson Valley Gas Corporation (collectively, the “ Excluded Debtors ”), as debtors and debtors in possession, filed a motion (the “ Sale Motion ”) with the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division (the “ Bankruptcy Court ”), requesting entry of an order (the “ Sale Order ”), pursuant to sections 105(a), 363, and 1146(c) of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, 9006, 9007, 9008, 9013, 9014, and 9036 (a) authorizing and approving the sale by Mirant New York of the Membership Interest(1) to Alliance Energy Renewables, LLC (“ Alliance Energy ” or the “ Purchaser ”), or alternatively to

(1) Except as otherwise defined herein, all capitalized terms shall have the same meanings ascribed to such terms in the Sale Motion.

prevailing overbidder, free and clear of all liens, claims, encumbrances and interests pursuant to the terms of the Agreement; (b) authorizing and approving the Membership Interest Purchase and Sale Agreement (including all related instruments, documents, exhibits, schedules, lists, and agreements thereto) between Seller and Purchaser dated January 31, 2007 (the “ Agreement ”), which provides for the (i) sale, conveyance, assignment, transfer, and delivery of the Membership Interest in Mirant NY-Gen to the Purchaser free and clear of all liens, claims, encumbrances, and interests, and (ii) performance of related transactions as set forth in the Agreement; and (c) authorizing the Excluded Debtors to enter into, terminate or modify certain contracts and leases in connection with the performance and closing of the Agreement. Concurrently, a motion for approval of certain sale procedures (“ Sales Procedures Motion ”) was filed with the Sale Motion.

PLEASE TAKE FURTHER NOTICE:

A. Pursuant to an order, dated , 2007, granting certain of the relief related to, among other things, the Sale Procedures requested in the Sale Procedures Motion (the “ Sale Procedures Order ”), Mirant New York will conduct an auction (the “ Auction ”) before the Honorable D. Michael Lynn in the United States Bankruptcy Court for the Northern District of Texas, Eldon B. Mahon U.S. Courthouse, 501 West Tenth Street, Fort Worth, Texas 76102-3643 on , 2007 at (Prevailing Central Time), for the sale of the Membership Interest. Parties wishing to participate in the Auction must become a Qualified Bidder and submit a “ Qualified Bid ” so it is received by Seller not later than 4:00 p.m. (Prevailing Central Time) on Wednesday, February 28, 2007 (the “ Initial Bid Deadline ”), to the party specified in the Sale Procedures Order and provide for total consideration to Mirant New York of not less than $500,000 in cash in excess of the Purchase Price. The Sale Procedures Order also sets forth, among other things, the specific requirements for a bidder to be a Qualified Bidder and a bid to be a Qualified Bid.

B. A hearing (the “ Sale Hearing ”) will be held on , 2007, at .m. (Prevailing Central Time), or as soon thereafter as counsel can be heard, before the Honorable D. Michael Lynn in the United States Bankruptcy Court for the Northern District of Texas, Eldon B. Mahon U.S. Courthouse, 501 West Tenth Street, Fort Worth, Texas 76102-3643, at which time Mirant New York will seek entry of an order granting the remaining relief requested in the Sale Motion in accordance with the Sale Procedures Order and the Agreement.

C. Mirant New York has selected Alliance Energy as the stalking horse bidder pursuant to the terms of the Agreement, which Agreement provides, among other things, for the sale of the Membership Interest to Alliance Energy free and clear of liens, claims, encumbrances, and interests.

D. Any entity that wishes to submit a bid for the purchase of the Membership Interest must comply in all respects with the terms and conditions established by the Sale Procedures Order. Copies of the Sale Motion, the Sale Procedures Order, and the

Agreement are available upon request by contacting George S. Deptula, Hiscock & Barclay, LLP, One Park Place, 300 South State Street, Syracuse, New York 13202 or Jeff P. Prostok, Forshey & Prostok LLP, 777 Main Street, Suite 1290, Fort Worth, Texas 76102.

PLEASE TAKE FURTHER NOTICE that objections, if any, to entry of an order granting the remaining relief requested in the Sale Motion, must be made in writing, filed with the Bankruptcy Court, and served in accordance with the terms and conditions established by the Sale Procedures Order so as to be actually received by the parties specified in the Sale Procedures Order by 4:00 p.m. (Prevailing Eastern Time) on , 2007.

PLEASE TAKE FURTHER NOTICE that in the absence of any timely objection, Mirant New York will submit to the Bankruptcy Court a form of order setting forth, among other things, that (i) the notice procedures of the Sale Motion have been satisfied, (ii) no objection to the Sale Motion was timely made or such objection has been resolved, and (iii) Mirant New York may proceed with the remaining relief requested in the Sale Motion. The form of order will also provide that to the extent any person or entity has any lien, claim, encumbrance, or other interest (“ Interest ”) in the Membership Interest, pursuant to the Sale Motion, such Interest will attach to the proceeds derived by Mirant New York from the sale of the Membership Interest in order of their priority and with the same validity, force, and effect that such Interest has now against the Membership Interest, if any, subject to all rights and defenses that Mirant New York may have.

IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE BANKRUPTCY COURT MAY GRANT THE REMAINING RELIEF REQUESTED IN THE SALE MOTION WITHOUT FURTHER NOTICE TO YOU OR THE OPPORTUNITY TO OBJECT.

Dated: Fort Worth Texas

February , 2007

Jeff P. Prostok		George S. Deptula
	J. Robert Forshey		Hiscock & Barclay, LLP
	Forshey & Prostok LLP		One Park Place
	777 Main Street, Suite 1290		300 South State Street
	Fort Worth, Texas 76102		Syracuse, New York 13202
	Telephone: 817/877-8855		Telephone: 315/425-2725
	Facsimile: 817/877-4151		Facsimile: 315/425-8545

Schedule 7.15(c)

Sale Order

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

	)
In re	)	Chapter 11 Case
	)
MIRANT CORPORATION, et al. ,	)	Case No. 03-46590 (DML)
	)	Chapter 11
Debtors.	)	Jointly Administered
	)

ORDER (I) AUTHORIZING AND APPROVING SALE OF MEMBERSHIP INTEREST IN MIRANT NY-GEN, LLC, BY MIRANT NEW YORK, INC. TO ALLIANCE ENERGY RENEWABLES, LLC, FREE AND CLEAR OF ALL LIENS, CLAIMS, ENCUMBRANCES AND INTERESTS, (II) AUTHORIZING AND APPROVING MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT AND THE PERFORMANCE BY THE DEBTORS OF THE TERMS THEREOF, AND (III) AUTHORIZING DEBTORS TO ENTER INTO, MODIFY OR TERMINATE CONTRACTS AND LEASES PURSUANT TO THE MEMBERSHIP INTEREST PURCHASE AND SALE AGREEMENT

Upon the motion dated February 1, 2007 (the “ Sale Motion ”)(3) of Mirant New York, Inc. (“ Mirant New York ” or the “ Seller ”), Mirant NY-Gen, LLC (“ NY-Gen ” or “ Company ”), Mirant Bowline, LLC (“ Mirant Bowline ”), Mirant Lovett, LLC (“ Mirant Lovett ”), and Hudson Valley Gas Corporation (“ Hudson Valley ”) (collectively, the “ Excluded Debtors ” or “ Debtors ”), as debtors and debtors in possession, for entry of an order pursuant to sections 105(a), 363, and 1146(c) of title 11 of the United States Code (the “ Bankruptcy Code ”) and Rules 2002, 6004, 9006, 9007, 9008, 9013, 9014, and 9036 of the Federal Rules of Bankruptcy Procedure (the

(3) Terms used herein and not otherwise defined shall have the meanings ascribed to them in the Sale Motion or the Membership Interest Purchase and Sale Agreement between Mirant New York, Inc. and Alliance Energy Renewables, LLC, dated January 31, 2007 (the “ Agreement ”).

“ Bankruptcy Rules ”) (a) authorizing and approving the sale by Mirant New York of the Membership Interest in Mirant NY-Gen to Alliance Energy Renewables, LLC (“ Alliance Energy ” or the “ Purchaser ”), or alternatively to prevailing overbidder, free and clear of all liens, claims, encumbrances and interests pursuant to the terms of the Agreement; (b) authorizing and approving the Agreement (including all related instruments, documents, exhibits, schedules, lists, and agreements thereto) which provides for the (i) sale, conveyance, assignment, transfer, and delivery of the Membership Interest in Mirant NY-Gen to the Purchaser free and clear of all liens, claims, encumbrances, and interests, and (ii) performance of related Transactions as set forth in the Agreement; and (c) authorizing the Excluded Debtors to enter into, terminate or modify certain contracts and leases in connection with the performance and Closing of the Agreement; and adequate and sufficient notice of the Sale Motion, the Auction, the hearing on the Sale Motion (the “ Sale Hearing ”), all Transactions contemplated thereunder, and this Order having been given; and all parties in interest having been heard, or having had the opportunity to be heard, regarding the matters raised by the Sale Motion and relief related thereto; and the Court having reviewed and considered (i) the Sale Motion and any objections thereto (the “ Objections ”), and (ii) the arguments of counsel, and the evidence proffered or adduced at the Sale Hearing; and it appearing from the affidavits of service heretofore filed with the Court that due and sufficient notice of the Sale Motion, the Auction, the Sale Hearing, and the relief sought in connection therewith have been provided to all parties in interest; and it further appearing that no other or further notice hereof is required; and it appearing that the relief requested in the Sale Motion is in the best interests of the Debtors, their chapter 11 estates, their creditors, and other parties in interest; and upon the record of the Sale Hearing, including the decision of the Court to approve the Sale Motion as reflected on the record thereof; and after due deliberation and good

and sufficient cause appearing therefore, this Court hereby makes the following Findings of Fact and Conclusions of Law:(4)

FINDINGS OF FACT

IT IS HEREBY FOUND AND DETERMINED THAT:

Jurisdiction, Final Order, and Statutory Predicates

A. The Court has jurisdiction to hear and determine the Sale Motion and to grant the relief requested therein, pursuant to 28 U.S.C. §§ 157(b) and 1334. This matter is a core proceeding within the meaning of 28 U.S.C. §§ 157(b)(2)(A), (K), (N), and (O). Venue of the chapter 11 cases and the Sale Motion is proper in this district under 28 U.S.C. §§ 1408 and 1409(a).

B. This Court entered the Sale Procedures Order on , 2007, under which, among other things, this Court approved certain Sale Procedures. The Sale Procedures Order has become a final and non-appealable order and remains in full force and effect.

C. This Sale Order constitutes a final and appealable order within the meaning of 28 U.S.C. § 158(a).

D. The statutory predicates for the relief sought in the Sale Motion are sections 105(a), 363(b), (f), (m), and (n), and 1146(c) of the Bankruptcy Code, as complemented by Bankruptcy Rules 2002(a)(2), (c)(1), (g), (j), (k), (l), (m), and (n), 6004(a), (b), (c), (e), (f), and (g), 9006, 9007, 9008, 9013, 9014, and 9036.

(4) Findings of fact shall be construed as conclusions of law, and conclusions of law shall be construed as findings of fact when appropriate. See Fed. R. Bankr. P. 7052. Any statements of the Court at the hearing on the Sale Motion shall constitute additional findings of fact and conclusions of law as appropriate and are expressly incorporated by reference into this Order.

The Mirant Plan and the Excluded Debtors

E. In an order dated December 9, 2005, the Bankruptcy Court confirmed the Debtors’ Amended and Restated Second Amended Joint Chapter 11 Plan of Reorganization for Mirant Corporation and its Affiliated Debtors Dated December 9, 2005 (the “ Mirant Plan ”) with respect to all of the Mirant Debtors (collectively, the “ New Mirant Entities ”), except the Excluded Debtors.

F. On January 3, 2006, the New Mirant Entities emerged from Chapter 11. The Excluded Debtors continue to manage and operate their businesses as debtors-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.

Retention of Jurisdiction

G. It is necessary and appropriate for the Court to retain jurisdiction as provided in the Agreement to, among other things, interpret and enforce the terms and provisions of this Order and the Agreement, and to adjudicate, if necessary, any and all disputes involving the Debtors concerning or relating in any way to, or affecting, the Membership Interest Sale including, but not limited to, the Sale Motion, the Auction, and the Sale Hearing.

Corporate Authority; Consents and Approvals

H. The Seller has full corporate power and authority to execute and deliver the Agreement and all other documents contemplated thereby and to consummate the Membership Interest Sale. The Membership Interest Sale has been duly and validly authorized by all necessary corporate actions of the Seller. No additional consents or approvals other than the authorization and approval of this Court and certain Governmental Approvals (as defined in the Agreement) are required for the Seller to consummate the Membership Interest Sale. Each of the Excluded Debtors has full corporate power and authority to execute and deliver all documents and agreements to which they are a party required or contemplated by the Agreement.

Notice of the Sale Motion

I. As evidenced by the affidavits of service previously filed with this Court (the “ Notice Affidavits ”) and based upon representations of counsel at the Sale Hearing: (i) due, proper, timely, adequate, and sufficient notice of the Sale Motion, the Auction, and the Sale Hearing has been provided in accordance with sections 105, 363, and 1146 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, 9006, 9007, 9008, 9013, 9014, and 9036, and in compliance with the Sale Procedures Order, (ii) such notice was good and sufficient, and appropriate under the circumstances, and (iii) no other or further notice of the Sale Motion, the Auction, the Sale Hearing, or the relief sought with respect thereto shall be required.

J. A reasonable opportunity to object or to be heard with respect to the Sale Motion, the Auction, and the Sale Hearing has been afforded to all interested persons and entities, including: (a) all parties entitled to receive notice as of the date hereof pursuant to the Order Clarifying Order Granting Complex Chapter 11 Bankruptcy Case Treatment, dated August 25, 2004, (b) all parties known to Mirant New York to have an interest in acquiring the Membership Interest and the Sale Assets, (c) all entities listed on the schedules of Mirant New York and Mirant NY-Gen, LLC as holding secured claims and all entities who recorded or filed proof(s) of claim as secured against Mirant NY-Gen or Mirant New York, (d) all entities who have recorded in the public record any lien, claim, encumbrance, or interest in or upon the Membership Interest or any of the assets of Mirant NY-Gen, (e) the Federal Energy Regulatory Commission, (f) the Delaware River Basin Commission, (g) the New York Public Service Commission, (h) the State of New York Department of Environmental Conservation, (i) the New York City Department of Environmental Protection, (j) the Securities and Exchange Commission, (k) the United

States Environmental Protection Agency, (l) the Office of the United States Attorney, (m) the United States Department of Justice, (n) the Internal Revenue Service, (o) all parties granting permits or licenses to Mirant NY-Gen, (p) the applicable state and local taxing authorities , and (q) all parties to Mirant NY-Gen’s executory contracts and unexpired leases.

Sound Business Purpose for the Sale of the Membership Interest

K. Good and sufficient reasons for approval of the Agreement and the Membership Interest Sale have been articulated. The relief requested in the Sale Motion is within the reasonable business judgment of the Seller and is in the best interests of the Debtors, their respective chapter 11 estates and their creditors, and other parties in interest.

L. The Seller has demonstrated both (i) good, sufficient, and sound business purpose and justification and (ii) sufficient circumstances for the entry into the Agreement and the consummation of the Membership Interest Sale pursuant to section 363(b) of the Bankruptcy Code, in that, among other things, the consummation of the Membership Interest Sale to the Purchaser is necessary and appropriate to maximize the value to the estates of Mirant New York and Mirant NY-Gen and the Membership Interest Sale will facilitate confirmation of Mirant NY-Gen’s Plan.

Auction

M. On , 2007, in connection with the Sale Hearing, the Bankruptcy Court conducted an Auction, in accordance with the Sale Procedures Order entered by the Court. At the conclusion of the Auction, the Seller determined that the Purchaser was the Prevailing Bidder (as defined in the Agreement) for the Membership Interest pursuant to the terms of the Agreement. The Court approved the results of the Auction at the Sale Hearing on , 2007.

Good Faith of the Purchaser

N. The terms and conditions set forth in the Agreement are fair and reasonable. The Seller and the Purchaser extensively negotiated the terms and conditions of the Agreement in good faith and at arm’s length, and the Purchaser is entering into the Agreement in good faith and is a good faith purchaser within the meaning of section 363(m) of the Bankruptcy Code, and is therefore entitled to the protections afforded thereby.

O. The Purchaser is not an “insider” (as that term is defined in section 101 of the Bankruptcy Code) of Mirant New York or Mirant NY-Gen. Mirant New York and the Purchaser have not engaged in any conduct that would cause or permit the Agreement to be avoided under section 363(n) of the Bankruptcy Code.

Highest and Best Offer

P. The Agreement constitutes the highest and best offer for the Membership Interest.

Q. The Seller’s determination that the Agreement constitutes the highest and best offer for the Membership Interest constitutes a valid and sound exercise of the Seller’s business judgment. The Agreement represents a fair and reasonable offer to purchase the Membership Interest. No other entity has submitted a qualified bid providing greater economic value for the Membership Interest than the Purchaser.

Validity of the Transfer of the Membership Interest

R. The transfer of the Membership Interest to the Purchaser pursuant to the Agreement is a legal, valid, and effective transfer of good and marketable title of the Membership Interest and vests or will vest the Purchaser with all of the Seller’s rights, title, and interest in the Membership Interest as of the Closing Date free and clear of all liens, claims, encumbrances, and interests against the Membership Interest, and pursuant to section 363(f) of

the Bankruptcy Code.

S. The Purchaser is purchasing Mirant New York’s Membership Interest and is not purchasing any of Mirant New York’s other assets. Additionally, the Agreement provides that prior to the Closing Date, Mirant NY-Gen will assign to Mirant New York (or such Affiliate of Mirant New York as Mirant New York may direct pursuant to the Mirant NY-Gen Plan) all of Mirant NY-Gen’s pending insurance claims for losses with respect to the Swinging Bridge Facility and the Hillburn Facility (which may include, but shall not be limited to, property, business interruption, and environmental losses), intercompany receivables and intercompany claims as of the Closing Date, claims against third parties for actions or inactions arising prior to the Closing Date (including, but not limited to, claims filed against Orange & Rockland Utilities, Inc. and Consolidated Edison, Inc. and/or any of their respective Affiliates), and certain purchase orders, which such assignments are hereby specifically authorized.

Section 363(f) of the Bankruptcy Code is Satisfied

T. The transfer of the Membership Interest pursuant to the Agreement is authorized pursuant to one or more of the standards set forth in section 363(f)(1) through (f)(5) of the Bankruptcy Code and, accordingly, the Seller may sell the Membership Interest to Purchaser free and clear of all liens, claims, encumbrances, and interests against the Membership Interest, Mirant New York, and its chapter 11 estate. The holders of such liens, claims, encumbrances, and interests against Mirant New York, its chapter 11 estate, or the Membership Interest, and non-Debtor parties to any related agreements who did not object, or who withdrew their Objections, to the Sale Motion, are deemed to have consented pursuant to section 363(f)(2) of the Bankruptcy Code. Holders of liens, claims, encumbrances, or interests and who asserted an Objection at the Sale Hearing, if any, fall within one or more of the other subsections of section

363(f) and are adequately protected by having their liens, claims, encumbrances, and interests, if any, against Mirant New York, its chapter 11 estate, or the Membership Interest, attach to the cash proceeds to be received by the Seller under the Agreement, subject to the same priority and validity (and defenses and objections of the Seller and other parties in interest, if any, with respect thereto) as are presently existing against the Membership Interest in which they allege such a lien, claim, encumbrance, or interest.

Transfer Taxes

U. The transfer of the Membership Interest by Mirant New York to the Purchaser, and to the extent that the Membership Interest Sale is considered a transfer of the Sale Assets by Mirant NY-Gen, is and shall constitute a transfer pursuant to section 1146(c) of the Bankruptcy Code and, accordingly, shall not be taxed under any law imposing a stamp tax or a sales, use, transfer, duty, value added, or any other similar tax, including without limitation, any bulk sales tax under New York law.

Assignment of the Membership Interest

V. The Seller has demonstrated that assignment of the Membership Interest in connection with the Membership Interest Sale is an exercise of its sound business judgment, and that such assignment is in the best interests of the chapter 11 estates of Mirant New York and Mirant NY-Gen.

Authorization to Enter Into, Modify

or Terminate Ancillary Contracts and Leases

W. The Debtors have demonstrated that the execution, modification or termination of certain Ancillary Agreements pursuant to the terms of the Agreement are in the best interest of their respective bankruptcy estates and should be authorized, as applicable, pursuant to Section 363 of the Bankruptcy Code.

X. To the extent any Findings of Fact set forth above constitute a Conclusion of Law, the Court so concludes.

CONCLUSIONS OF LAW

Based upon the foregoing Findings of Fact, IT IS HEREBY ORDERED, ADJUDGED AND DECREED AS FOLLOWS:

1. To the extent any Conclusion of Law set forth below herein constitutes a Finding of Fact, this Court so finds.

General Provisions

2. Except to the extent that relief was previously granted in the Sale Procedures Order, the relief requested in the Sale Motion is granted and approved in all respects. The sale of the Membership Interest to Purchaser on the terms and conditions set forth in the Agreement is approved.

3. For the reasons set forth on the record at the Sale Hearing, any Objections to the Sale Motion, and the relief requested therein that have not been withdrawn, waived, or settled, (a) are denied and overruled on the merits with prejudice or (b) the interests of such parties filing Objections have otherwise been satisfied or adequately provided for under the terms of this Order.

4. The terms and provisions of this Order shall be binding in all respects upon, to the extent applicable, the Debtors, their chapter 11 estates, creditors, members, managers, shareholders, officers, and directors, and upon all interested parties, and their respective successors and assigns, including, but not limited to, all non-Debtor parties asserting any liens, claims, encumbrances and/or interests in the Membership Interest.

Approval of the Agreement

5. Pursuant to sections 363(b) and (f) of the Bankruptcy Code and the Agreement, the Debtors are authorized and empowered to (i) take any and all actions necessary or appropriate to effect, consummate, and close (a) the assignment, transfer, and conveyance of the Membership Interest to the Purchaser, (b) the Membership Interest Sale, and (c) this Order, and (ii) execute and deliver, perform under, consummate, implement, and close fully the Agreement and the Ancillary Agreements (as defined in the Sale Motion), together with all additional instruments and documents that may be reasonably necessary or desirable to implement the Membership Interest Sale.

6. Pursuant to sections 105(a) and 363(f) of the Bankruptcy Code and on the terms set forth in the Agreement, upon the Closing provided in the Agreement, the Membership Interest shall be and hereby is deemed transferred and assigned to the Purchaser effective as of 11:59 p.m. (Prevailing Central Time) on the Closing Date, free and clear of all liens, claims, encumbrances, and interests arising or relating to the period prior to the Closing.

7. All persons and entities holding liens, claims, encumbrances, and interests of any kind and nature accruing, arising or relating to a period on or prior to the Closing Date with respect to the Membership Interest will be barred, estopped, and permanently enjoined as of Closing from asserting such liens, claims, encumbrances, and interests against the Membership Interest or against the Purchaser and any of its affiliates, stockholders, members, managers, partners, parent entities, successors, assigns, officers, directors or employees, agents, representatives, and attorneys, and the Purchaser shall have no liability or responsibility for any lien, claim, encumbrance, or interest arising, accruing, or relating to the Membership Interest for a period on or prior to Closing.

8. The transfer of the Membership Interest to the Purchaser pursuant to the Agreement constitutes a legal, valid, and effective transfer of good and marketable title of the Membership Interest, and vests or will vest the Purchaser with all right, title, and interest in and to the Membership Interest, free and clear of all liens, claims, encumbrances, and interests. Each non-Debtor party to any agreements with Mirant NY-Gen that are not assumed by Mirant NY-Gen pursuant to the Mirant NY-Gen Plan will, as of Closing, be barred, estopped, and permanently enjoined from asserting against the Purchaser or Mirant NY-Gen any default, claim, or liability existing, accrued, arising, or relating to any such agreements.

9. On the Closing Date, this Order shall be construed and shall constitute for any and all purposes a full and complete general assignment, conveyance, and transfer of the Membership Interest or a bill of sale that transferred good and marketable title of the Membership Interest to the Purchaser. Each and every federal, state, and local governmental agency or department is hereby directed to accept any and all documents and instruments presented by the Seller or Purchaser which are necessary or appropriate to consummate the Membership Interest Sale.

10. Pursuant to sections 105(a) and 363 of the Bankruptcy Code, and on the terms set forth in the Agreement, the Debtors are authorized to enter into, modify or terminate the Ancillary Agreements.

Additional Provisions

11. This Order is and shall be binding upon and shall govern the acts of all entities including, without limitation, all filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, administrative agencies, governmental units, secretaries of state, federal, state, and local officials, and all other persons and entities who may

be required by operation of law, the duties of their office, or contract, to accept, file, register, or otherwise record or release any documents or instruments, or who may be required to report or insure any title or state of title in or to the Membership Interest. All liens, claims, encumbrances, and interests against the Membership Interest as of the date of this Order shall forthwith, upon the occurrence of the Closing on the Closing Date with respect to the Membership Interest, be removed and stricken as against such Membership Interest, without further order of the Court or act of any party. All liens, claims, encumbrances, and interests against the Membership Interest as of the date of this Order shall attach solely to the proceeds of the sale with the same validity (and subject to the same defenses), priority, force and effect that such liens, claims, encumbrances and interests had in and to the Membership Interest immediately prior to Closing. Upon the Closing Date, the entities listed above in this paragraph are authorized and specifically directed to strike all such recorded liens or claims against the Membership Interest as provided for herein from their records, official and otherwise (including those asserted by a secured lender).

12. Each and every federal, state, and local governmental agency, unit or department is hereby directed to accept this Order as sole and sufficient evidence of the transfer of title of the Membership Interest and such agency or department may rely upon this Order in connection with the Membership Interest Sale.

13. After the Closing Date, no person or entity, including without limitation, any federal, state or local taxing authority, may (a) attach or perfect a lien or security interest against the Membership Interest on account of, or (b) collect or attempt to collect from the Purchaser or any of its affiliates, any tax or other amount alleged to be owing by Mirant New York on behalf of Mirant NY-Gen or Mirant Services, LLC on behalf of Mirant NY-Gen (i) for any period

commencing before and concluding prior to or after the Closing, or (ii) assessed prior to and payable after the Closing Date, except as otherwise specifically provided in the Agreement.

14. The Purchaser is not a successor to Mirant New York or otherwise liable for any of the liens, claims, encumbrances, interests, or other liabilities against Mirant New York and all persons and entities are permanently enjoined from commencing, continuing, or otherwise pursuing or enforcing any remedy, claim, cause of action, lien, or encumbrance against Purchaser, the Membership Interest, or Mirant New York.

15. The transfer of the Membership Interest by Mirant New York to the Purchaser, and to the extent that the Membership Interest Sale is considered a transfer by Mirant NY-Gen of the Sale Assets, is a transfer pursuant to section 1146(c) of the Bankruptcy Code and, accordingly, shall not be taxed under any law imposing a stamp tax or a sales, use, transfer, duty, value added, or any other similar tax, including without limitation any bulk sales tax under the state law of New York or other applicable laws.

16. This Court retains jurisdiction to, among other things:

i. interpret, implement, and enforce the terms and provisions of this Order and the terms of the Agreement and any Ancillary Agreements, all amendments thereto and any waivers and consents thereunder and of each of the agreements executed in connection therewith;

ii. enter orders in aid or furtherance of the Membership Interest Sale;

iii. resolve any disputes arising under or related to the Agreement or the Membership Interest Sale and to ensure peaceful use and enjoyment of the Membership Interest;

iv. adjudicate any and all issues and/or disputes, if any, relating to the Purchaser’s or the Seller’s right, title, or interest in, to and under the Agreement and related agreements, and the Purchaser’s or other Debtors’ right, title or interest in, to and under the Ancillary Agreements to which they are a party;

v. adjudicate all issues concerning prorations under the Agreement (including taxes) consistent with the terms of the Agreement;

vi. hear and resolve any application (or disputes or issues relating thereto) to construe the Agreement;

vii. adjudicate any and all issues and/or disputes relating to the Seller’s right, title, or interest in the Membership Interest and the proceeds thereof, the Sale Motion and/or the Agreement;

viii. adjudicate any and all issues and/or disputes relating to the enforcement of this Sale Order including those terms, without limitation, which compel delivery of the Membership Interest to Purchaser and provide that any liens, claims, encumbrances, and interests shall attach solely to the proceeds of the Membership Interest Sale; and

ix. re-open the Debtors’ chapter 11 cases to enforce the provisions of this Order.

17. The consideration provided by the Purchaser for the Membership Interest under the Agreement is fair and reasonable and may not be avoided under section 363(n) of the Bankruptcy Code. Each and every person or entity is hereby barred, estopped, and permanently enjoined from commencing or continuing an action seeking relief under section 363(n) of the Bankruptcy Code.

18. The Seller has undertaken the Membership Interest Sale in good faith (as that term is used in section 363(m) of the Bankruptcy Code), and the Purchaser is and shall continue to be in good faith (as that term is used in section 363(m) of the Bankruptcy Code) by proceeding to close the Membership Interest Sale. Accordingly, the reversal or modification on appeal of the authorization to consummate the Membership Interest Sale approved hereby shall not affect the validity and enforceability of such Membership Interest Sale, unless such authorization is duly stayed pending such appeal. The Purchaser is a good faith purchaser of the Membership Interest and entitled to all of the protections afforded by section 363(m) of the Bankruptcy Code.

19. The sale of the Membership Interest to Purchaser under the Agreement will constitute a transfer for reasonably equivalent value and fair consideration under the Bankruptcy Code and the laws of all applicable jurisdictions.

20. The failure specifically to include any particular provision of the Agreement in this Order shall not diminish or impair the efficacy of such provision, it being the intent of this Court that the Agreement and each and every provision, term, and condition thereof be authorized and approved in its entirety.

21. Notwithstanding Bankruptcy Rules 6004(g) and 7062, to the extent applicable, the Seller and the Purchaser may consummate the Agreement at any time after entry of the Order by waiving any and all closing conditions set forth in the Agreement that have not been satisfied and by proceeding to close the Membership Interest Sale without any notice to the Court, any prepetition or postpetition creditor of Mirant New York or Mirant NY-Gen, and/or any other party in interest.

22. The Agreement and any related agreements, documents, or other instruments may be modified, amended, or supplemented by the parties thereto, in a writing signed by such parties

in accordance with the terms thereof, without further order of the Court, provided that any such modification, amendment, or supplement is not material.

23. The provisions of this Order are non-severable and mutually dependent.

Dated: Fort Worth, Texas
, 2007
	The Honorable D. Michael Lynn
	United States Bankruptcy Judge

Schedule 7.25

Form of Cross-Indemnity Agreement

CROSS-INDEMNIFICATION AGREEMENT

THIS CROSS-INDEMNIFICATION AGREEMENT (the “Agreement” ), is entered into this day of , 2007, is by and among MIRANT BOWLINE, LLC (“ Bowline ”), MIRANT NY-GEN, LLC (“ N.Y. Gen ”), MIRANT LOVETT, LLC (“ Lovett ”) (Bowline, N.Y. Gen and Lovett each a “ Party ” and collectively, the “ Parties ”).

WHEREAS, the Parties are signatories to a certain settlement agreement dated August 31, 2001, with Orange and Rockland Utilities, Inc. (“ O&R ”) (the “ O&R Settlement Agreement ”);

WHEREAS, each Party or all of the Parties may face liability under the O&R Settlement Agreement; and

WHEREAS , the Parties wish to enter into an agreement providing that any liability under the O&R Settlement Agreement will be borne solely by the Party or Parties whose failure to perform its or their obligations under the O&R Settlement Agreement gave rise to the liability (each such responsible Party being hereafter referred to as an “Indemnitor” , collectively, the “Indemnitors” ).

NOW, THEREFORE, the Parties agree as follows:

1. Definitions . As used in this Agreement, capitalized terms and non-capitalized words and phrases shall have the meanings respectively assigned to them in Schedule I hereto.

2. Exculpation and Indemnification .

(a) Each Indemnitor agrees (i) to perform its obligations under this Agreement and the O&R Settlement Agreement (subject to the right of any Party to reject the O&R Settlement Agreement under the United States Bankruptcy Code); and (ii) to indemnify the other Parties in accordance with the provisions of this Agreement for any Losses that the other Parties may incur due to the Indemnitor’s failure to perform its obligations as described in clause (i) aforementioned; provided, however, that the Indemnitor’s indemnification obligations as herein described shall only apply to the extent that the Losses incurred by the Party who makes a indemnification claim against the Indemnitor are disproportionate to those for which such Party would otherwise be liable under the terms of the O&R Settlement Agreement.

(b) Subject to the provisions of Section 2(a) hereof, each Party, its Affiliates and each of their respective Representatives who incurs any liability for any acts or omissions of an Indemnitor which constitute a failure by such Indemnitor to comply with its obligation under Section 2(a) hereof (each such Party being

individually referred to as an “Indemnitee” , collectively, the “Indemnitees” ) shall be indemnified, reimbursed and held harmless by each Indemnitor (on a joint and several basis if there is more than one Indemnitor) upon demand, and defend at the expense of the Indemnitor (on a joint and several basis if there is more than one Indemnitor) with counsel selected by the Indemnitor, from and against any and all claims, liabilities, expenses (including, without limitation, the disbursements, expenses and reasonable attorneys’ fees) and other Losses that may be imposed upon, incurred by or asserted against any Indemnitee resulting from, arising out of or directly or indirectly related to: (i) any Indemnity Obligation; (ii) any inaccuracy in or omission from any representation, warranty or other information contained in the O&R Settlement Agreement signed or accepted by any Indemnitee or any of its Representatives or in any certificate, report, statement, schedule or other document delivered by or on behalf of any Indemnitee pursuant to the O&R Settlement Agreement, (iii) any default (whether in whole or in part) in the due or timely observance, performance or satisfaction of any covenant or other term or provision of this Agreement or the O&R Settlement Agreement by the Indemnitor in each case whether or not disclosed or known to the Indemnitee and whether or not the Indemnitee relied thereon or had knowledge thereof; and each Indemnitor hereby absolutely, unconditionally, irrevocably and expressly waives and releases forever any and all related claims and actions against each such Indemnitee to the extent such claims or actions arise out of the acts or omissions of the Indemnitor.

(c) The Parties understand and agree that this Section is not intended, and shall not be deemed or construed, to in any way (i) impose any Indemnity Obligation of any Indemnitor on any Indemnitee for any purpose whatsoever, (ii) entitle anyone other than an Indemnitee to any indemnity, reimbursement or other recovery or benefit under this Section or any other applicable provision of this Agreement or the O&R Settlement Agreement, or (iii) apply to any Losses arising under subsections (b)(ii) or (b)(iii) of this Section to the extent occasioned by any acts or omissions of any Indemnitee amounting to bad faith, gross negligence or willful misconduct as finally determined pursuant to Applicable Law by an Authority having jurisdiction. The preceding exception for bad faith, gross negligence or willful misconduct is limited to this Section and is not intended (and shall not be deemed or construed) to in any way qualify, condition, diminish, restrict, limit or otherwise affect any other exculpation, indemnification, release, waiver, consent, acknowledgment, authorization or other term or provision of this Agreement or the O&R Settlement Agreement.

(d) Any payment due to an Indemnitor from any Indemnitee (including any payment from any escrow) shall be subject to offset and reduction for any such indemnification, reimbursement and/or defense and any related Loss owed to the Indemnitee (on behalf of itself and/or any of its Affiliates).

(e) Each Indemnitee shall endeavor to give the Indemnitor prompt notice of any action, suit, proceeding or investigation against or involving either the Indemnitee or the Indemnitor or any of their respective assets or properties that would be

reasonably likely to give rise to such an indemnification, reimbursement or defense (each a “ Proceeding ”); provided , however , that the failure to give such notice shall not in any way diminish, reduce or otherwise affect the indemnification, defense or reimbursement obligations of any Indemnitee with respect thereto under this Agreement, the O&R Settlement Agreement, or Applicable Law. Each Indemnitee shall have the right to employ separate counsel of its choice in any Proceeding and to participate in the defense and settlement thereof. The Indemnitor shall not be required to pay the fees and expenses of counsel selected by any Indemnitee unless any of the following shall occur: (i) the Indemnitor has given written authorization permitting the Indemnitee to select and retain counsel to represent the Indemnitee and agreeing that the fees and expenses of such counsel will be paid by the Indemnitor; (ii) the named parties to any Proceeding (including impleaded parties) include or are reasonably likely to include the Indemnitee or any of its Affiliates or Representatives, and the Indemnitee notifies the Indemnitor that counsel to the Indemnitee (or counsel to any other Indemnitee) has advised that, in the professional judgment of such counsel, (x) one or more legal defenses or counterclaims may be available to such Indemnitee that may be inconsistent with, different from, or additional to those available to the Indemnitor or any other Indemnitee or (y) use of counsel selected by the Indemnitor could reasonably be expected to give rise to a conflict of interest; or (iii) within five (5) Business Days after any request therefor by the Indemnitee (which notice may be made with or at any time after the notice required in the first sentence of this subsection is given), the Indemnitor shall have failed to deliver to the Indemnitee (on behalf of such Indemnitee and each other Indemnitee) the written agreement of the Indemnitor to assume at its expense the defense of any Proceeding, specifying the counsel proposed to be retained. If the counsel so proposed by the Indemnitor is not acceptable to the Indemnitee in its reasonable discretion, then the Indemnitee shall so notify the Indemnitor within five (5) Business Days and, thereafter, the Indemnitee shall promptly propose other suitable counsel. When counsel acceptable to the Indemnitee has been selected, such counsel shall promptly deliver to the Indemnitee (on behalf of such Indemnitee and all other Indemnitees) written confirmation that it is representing the Indemnitee and each other Indemnitee and their interests in such defense, all at the expense of the Indemnitor, which confirmation shall disclose any other parties such counsel may represent in such defense or any related matter. In no event shall the Indemnitor be required under this Section (absent its consent) to pay the fees and expenses of more than one counsel separate from the counsel selected by the Indemnitor to represent all Indemnitees in any Proceeding.

(f) Neither the Indemnitor nor any of its Representatives on its behalf may settle any Proceeding, or offer or agree to do so, without the prior written consent of the Indemnitee, which consent will not be unreasonably withheld. Likewise, neither the Indemnitee nor any of its Representatives on its behalf may settle any Proceeding, or offer or agree to do so, without the prior written consent of the Indemnitor, which consent will not be unreasonably withheld, in each case unless (i) such settlement is without any further cost, liability or obligation to the

Indemnitor, or (ii) the Indemnitor is then in default with respect to any of its obligations under this Agreement.

(g) No Party referenced in clause (f) above shall, without the prior written consent of the other Party referenced therein: (i) settle or compromise any Proceeding or consent to the entry of any judgment or order that does not include (as an unconditional term thereof) the delivery by the plaintiff or other claimant to such other Party of a full and complete written release of such other Party (in form, scope and substance satisfactory to the other Party in its reasonable discretion) from any and all obligations and liabilities in respect of such Proceeding and a dismissal with prejudice of such Proceeding, or (ii) settle or compromise any Proceeding in any manner that may adversely affect such other Party or obligate such other Party to pay any sum or perform any obligation whatsoever, each as determined by such other Party in its reasonable discretion.

(h) All Losses shall be immediately reimbursable to the Indemnitee(s) when and as incurred and, in the event of any Proceeding, without the requirement of awaiting the ultimate outcome of such Proceeding. The Indemnitor shall pay to the Indemnitee(s) any and all Losses within ten (10) days after written notice from the Indemnitee(s) itemizing the amounts thereof incurred to the date of such notice. In addition to any other remedy available for the failure of the Indemnitor to periodically pay such Losses, such Losses, if not paid within said ten (10) day period, shall bear interest at the annual rate of eighteen (18) percent per annum until paid in full.

3. Further Assurances . Each Party agrees to do such further acts and things and to execute and deliver such statements, assignments, agreements, instruments and other documents as the other Party from time to time reasonably may request (a) in order to evidence or confirm the priorities, subordinations, reservations of right and other agreements made hereunder, or (b) in order to effectuate the purpose and the terms and provisions of this Agreement, each in such form and substance consistent with this Agreement as may be reasonably acceptable to the Parties and each at the sole cost and expense of the requesting Party.

4. Agreement Absolute, Survival of Representations, Etc. Except as otherwise expressly provided in this Agreement, each of the covenants and other agreements and obligations of each Party contained in this Agreement: (a) are and shall be absolute, irrevocable and unconditional, and shall survive and remain and continue in full force and effect in accordance with their respective terms and provisions, in each case without regard to (among other things) any invalidity, illegality, non-binding effect or unenforceability (in whole or in part) for any reason whatsoever of any of the other terms and provisions of this Agreement or the O&R Settlement Agreement, including (without limitation) by reason of the absence (in whole or in part) of any required authentication, authority, capacity, consent, consideration, disclosure, equivalent value, filing, notice, recordation, signature, writing or other action, or the presence (in whole or in part) of any contractual conflict, defense, illegality, misconduct, misrepresentation, mistake, prohibition, restriction or right of reimbursement, recoupment or setoff; (b) are and shall be absolute,

irrevocable and unconditional with regard to, and shall survive and remain and continue in full force and effect in accordance with their respective terms and provisions following and without regard to, each of the following (among other things): (i) any extension, stay, moratorium or statute of limitations or similar time constraint under any Applicable Law, (ii) any sale, conveyance, assignment, participation or other transfer by any Party (in whole or in part) to any other Person of any one or more of this Agreement, the O&R Settlement Agreement, or any one or more of the rights, powers, privileges, remedies or interests of any Party herein or therein, other than as expressly prohibited by this Agreement, or (iii) any act or omission on the part of any Party or any other Person or any other event that otherwise might constitute a legal or equitable defense or counterclaim; in each case in such manner and order, upon such terms and provisions and subject to such conditions as any Party may deem necessary or desirable in its sole and absolute discretion, without notice to or further assent from any other Party (except for such notices and actions as may be expressly required under this Agreement or by Applicable Law), and without affecting any of the rights, powers, privileges, remedies and other interests of any Party under this Agreement, the O&R Settlement Agreement, and Applicable Law; (c) shall not be subject to any defense, counterclaim, set-off, right of recoupment, abatement, reduction or other claim or determination that any Party may have against any other Party or any other Person; (d) shall not be diminished or qualified by the dissolution, reorganization, insolvency, bankruptcy, custodianship or receivership of any other Party or the inability of any of them to pay their respective debts or perform or otherwise satisfy their respective obligations as they become due for any reason whatsoever; and (e) shall remain and continue in full force and effect without regard to any of the foregoing events until all obligations under this Agreement and the O&R Settlement Agreement, as the case may be, have been fully paid and satisfied.

5. Termination . Notwithstanding the terms in Section 4 hereof or in any other provision in this Agreement, this Agreement shall terminate upon the termination of the O&R Settlement Agreement or the release of N.Y. Gen from its rights and obligations under the O&R Settlement Agreement, except as to matters arising prior to such termination or release.

6. Waivers of Notice, Etc. Except for notices to a Party expressly required to be given by the other Party under this Agreement (and without in any way waiving or affecting any notice or other action described in this Section and required to or from any other Person under the O&R Settlement Agreement or Applicable Law), each Party hereby absolutely, unconditionally, irrevocably and expressly waives forever each and all of the following from the other Party: (a) acceptance and notice of any acceptance of this Agreement or the O&R Settlement Agreement; (b) notice of any action taken or omitted in reliance hereon; (c) presentment and notice of any presentment; (d) demand for payment and notice of any such demand; (e) dishonor and notice of any dishonor; (f) protest and notice of any protest; (h) notice of any material and adverse effect, whether individually or in the aggregate, or other information respecting (i) the assets, business, cash flow, expenses, income, liabilities, operations, properties, prospects, reputation or condition (financial or otherwise) of any Person, and (ii) the ability of any Person to pay or otherwise satisfy (as and when due) any of their respective obligations; and (g) any other proof, notice or demand of any kind whatsoever with respect to any or all of the

Indemnity Obligations. No act or omission of any kind in connection with any of the foregoing shall in any way impair or otherwise affect the legality, validity, binding effect or enforceability of any term or provision of this Agreement, the O&R Settlement Agreement, or any of the Indemnity Obligations.

7. Enforcement, Etc. Each Party, in its sole discretion, may proceed to exercise or enforce any right, power, privilege, remedy or interest that it may have under this Agreement, the O&R Settlement Agreement, or Applicable Law: (a) at law, in equity or in any other forum available under Applicable Law; (b) without notice except as otherwise expressly provided herein; (c) without pursuing, exhausting or otherwise exercising or enforcing any other right, power, privilege, remedy or interest that it may have against or in respect of any Person or thing; and (d) in such order and at such times as a Party may elect in its sole and absolute discretion.

8. Consent to New York Jurisdiction and Venue, Etc. The Parties hereby consent and agree that the Supreme Court of the State of New York for New York County, and the United States District Court for the Southern District of New York (Manhattan) each shall have personal jurisdiction and proper venue with respect to any dispute between the Parties; provided that that the foregoing consent shall not deprive any Party of the right in its discretion to voluntarily commence or participate in any other forum having jurisdiction and venue or deprive any Party of the right to appeal the decision of any such court to a proper appellate court located elsewhere. Each Party will not raise, and each Party hereby absolutely, unconditionally, irrevocably and expressly waives forever, any objection or defense in any such dispute to any such jurisdiction as an inconvenient forum. The preceding consents to jurisdiction and venue in New York State’s Supreme Court have been made by the Parties in reliance (at least in part) on Section 5-1402 of the General Obligations Law of the State of New York, as amended (as and to the extent applicable), and other Applicable Law. Each Party acknowledges and agrees that a final judgment in any action, suit, or proceeding between the Parties shall be conclusive and binding upon the Parties and may be enforced against the applicable Party in any other appropriate jurisdiction by an action, suit or proceeding in such other jurisdiction. To the extent that a Party may be entitled to immunity (whether by reason of sovereignty or otherwise) from suit in any jurisdiction, from the jurisdiction of any court or from any other legal process, each Party hereby absolutely, unconditionally, irrevocably and expressly waives forever such immunity.

9. No Fiduciary Relationship, Etc. Each Party represents and warrants to and acknowledges and agrees with the other Party that: (a) the Parties’ sole relationship with each other under this Agreement is that of arm’s-length counter-party; (b) no term or provision of this Agreement is intended, nor deemed or construed, to (i) impose on any Party any trust (other than as expressly provided herein), fiduciary, franchise, agency, advisory or similar duty to or relationship with any other Party or any of its Representatives, or (ii) make any Party a partner, joint venturer, Affiliate, agent or other Representative of any other Party, and each such duty, relationship, status, benefit or right that would otherwise be imposed by Applicable Law with respect to this Agreement is hereby absolutely, irrevocably, unconditionally, expressly and forever waived by each Party except as otherwise expressly provided herein; and (c) each Party has received and independently

and fully reviewed and evaluated this Agreement, the obligations and transactions contemplated hereunder and the potential effects of such obligations and transactions on its own business attributes.

10. Reliance . Each Party shall be entitled to rely upon any notice, consent, certificate, affidavit, statement, paper, document, writing or other communication (which to the extent permitted hereunder may be by telecopy or telephone) reasonably believed by such Party to be genuine and to have been signed, sent or made by the proper Person or Persons, and upon opinions and advice of legal counsel, independent public accountants and other experts selected by any Party.

11. Notice . Any notice, request, demand or other communication permitted or required to be given to a Party under this Agreement or the O&R Settlement Agreement shall be in writing and shall be sent to the addressee at the address set forth in Schedule II attached hereto (or at such other address as shall be designated by notice to the other Party and Persons receiving copies), effective upon actual receipt (or refusal to accept delivery) by the addressee on any Business Day, or the first Business Day following receipt after the close of normal business hours or on any non-Business Day, by (a) FedEx (or other equivalent national or international overnight courier) or United States Express Mail, (b) certified, registered, priority or express United States mail, return receipt requested, (c) telecopy or (d) messenger, by hand or any other means of actual delivery.

12. Expenses . Except as otherwise expressly provided in this Agreement or the O&R Settlement Agreement, all costs, fees and expenses incurred in connection with, or in anticipation, administration or enforcement of, this Agreement shall be paid by the Party incurring such expenses. However, this Section is not intended, and shall not be deemed or construed, to in any way modify or limit any obligation or liability of any other Person for any such costs, fees or expenses under any instrument, agreement or document in favor of any Indemnitee or Indemnitor.

13. Interpretation, Severability, Etc . The Parties acknowledge and agree that the terms and provisions of this Agreement have been negotiated, shall be construed fairly as to all Parties hereto, and shall not be construed in favor of or against any Party. In the event that any term or provision of this Agreement shall be determined to be superseded, invalid, illegal or otherwise unenforceable pursuant to Applicable Law by an Authority having jurisdiction and venue: (a) that determination shall not impair or otherwise affect the validity, legality or enforceability by or before that Authority of the remaining terms and provisions of this Agreement; (b) if that determination was due to the scope or duration of any such term or provision, the Parties agree that such Authority shall have the power (and is hereby requested by the Parties) to limit the scope or duration of such term or provision to the maximum permissible under Applicable Law so that said provision shall be enforceable in such limited form; and (c) this Agreement shall be enforced as if the unenforceable provision were so deleted or limited to the greatest extent permitted by Applicable Law; in each case except to the extent the deletion or limitation thereof could reasonably be expected to impair the practical realization of the principal rights and benefits hereunder of any Party. No such determination shall impair or otherwise affect the validity, legality or enforceability of any term or provision of this

Agreement by or before any other Authority.

14. Successors and Assigns; Assignment; Intended Beneficiaries . Whenever in this Agreement reference is made to any Person, such reference shall be deemed to include the successors, permitted assigns, heirs and legal representatives of such Person and, without limiting the generality of the foregoing, all representations, warranties, covenants and other agreements made by or on behalf of each Party in this Agreement shall inure to the benefit of the successors, permitted assigns (including, without limitation, participants and any Person for whom such Party may be acting as Agent, as applicable) and legal representatives of the other Party; provided , however , that nothing herein shall be deemed to authorize or permit any Party to assign any of its obligations under this Agreement, and no party shall make any such assignment. The terms and provisions of this Agreement are for the exclusive benefit of the Parties hereto, and no other Person (including, without limitation, creditors of any Party hereto) shall have any right or claim against any Party by reason of any of those terms and provisions or be entitled to enforce any of those terms and provisions against any Party.

15. No Waiver by Action, Cumulative Rights, Etc. Any waiver or consent respecting this Agreement shall be effective only if in writing and signed by each applicable Party against whom enforcement may be sought and then only in the specific instance and for the specific purpose for which given. No waiver or consent shall be deemed (regardless of frequency given) to be a further or continuing waiver or consent. The failure or delay (in whole or in part) of any Party to require performance of, or to exercise or otherwise enforce any of the rights or remedies of such Party with respect to, any term or provision of this Agreement shall in no way affect the right of any Party at a later time to exercise or otherwise enforce any such term or provision. No notice to or demand on any Party or other Person in any case shall entitle such Party or Person to any other or further notice or demand. All representations, warranties, covenants, agreements and obligations of each Party (whether individual, joint, several or otherwise) in this Agreement and all rights, powers, privileges, remedies and other interests of each Party under this Agreement or Applicable Law are cumulative and not alternatives.

16. Governing Law . This Agreement shall be governed by and construed in accordance with the applicable federal law of the United States of America, and to the extent not preempted by such federal law, by the applicable law of the State of New York (other than those conflict of law rules that would defer to the substantive laws of another jurisdiction). This governing law election has been made by the parties in reliance (at least in part) on Section 5-1401 of the General Obligations Law of the State of New York, as amended (as and to the extent applicable), and other applicable law.

17. Counterparts, Amendments, Etc . This Agreement or any supplement, modification, amendment, restatement or waiver respecting this Agreement may be executed in two (2) or more counterpart copies of the entire document or of signature pages to the document, each of which may have been executed by one or more of the signatories hereto or thereto and delivered by mail, courier, telecopy, pdf file or other electronic means, but all of which, when taken together, shall constitute a single instrument or agreement binding upon all of the signatories hereto or thereto, as the case may be. Each and every

supplement, modification or amendment to or restatement of this Agreement shall be in writing and signed by all of the Parties hereto, as applicable, and each and every waiver of, or consent to any departure from, any term or provision of this Agreement shall be in writing and signed by each Party against whom enforcement thereof may be sought.

IN WITNESS WHEREOF , the undersigned have signed this Agreement or caused it to be signed by their duly authorized signatories effective as of the date first written above.

	MIRANT BOWLINE, LLC


	By:
		Its:


	MIRANT NY-GEN, LLC


	By:
		Its:


	MIRANT LOVETT, LLC


	By:
		Its:

SCHEDULE I

Definitions and Interpretation

1. Defined Terms.

“ Affiliate ” of a referenced Person shall mean (a) another Person controlling, controlled by or under common control with such referenced Person, (b) any other Person beneficially owning or controlling ten percent (10%) or more of the outstanding voting securities, rights or interests in the capital, distributions or profits of the referenced Person or (c) any officer or director of or partner in the referenced Person. The terms “ control ”, “ controlling ”, “ controlled ” and the like shall mean the direct or indirect possession of the power to direct or cause the direction of the management or policies of a Person or the disposition of its assets or properties, whether through ownership, by contract, arrangement or understanding, or otherwise. None of the Parties shall be deemed to be Affiliates of each other.

“ Agreement ” means the Cross-Indemnification Agreement among Mirant Bowline LLC, Mirant NY-Gen, LLC, and Mirant Lovett, LLC dated the day of , 2007.

“ Applicable Law ” shall mean any applicable law, including (without limitation) any applicable: (a) federal, state, provincial, territorial, county, municipal, local or other governmental or quasi-governmental law, statute, ordinance, rule, regulation, requirement, policy or use or disposal classification or restriction or interpretation thereof; (b) judicial, administrative or other governmental or quasi-governmental order, injunction, writ, judgment, decree, ruling, interpretation, guideline, finding or other directive; (c) common law or other legal or quasi-legal precedent; (d) arbitrator’s, mediator’s or referee’s decision, finding, award or recommendation; or (e) charter, rule, regulation or other organizational or governance document of any national securities exchange or market or other self-regulatory or governing body or organization; in each case (i) whether domestic or foreign, (ii) whether at law, in equity or otherwise, and (iii) as the same may be adopted, supplemented, modified, amended, restated or replaced from time to time or any corresponding or succeeding provisions thereof.

“ Authority ” shall mean any governmental, quasi-governmental or industry authority, including (without limitation) any federal, state, provincial, territorial, county, municipal, local or other government or governmental or quasi-governmental agency, board, branch, bureau, commission, court, department or other instrumentality or political unit or subdivision, whether domestic or foreign, any national securities exchange or market, or any accreditation, self-regulatory or governing body, center, commission or similar organization.

“ Business Day ” means a day other than Saturday, Sunday or a day on which banks are legally required or permitted to be closed for business in the State of New York.

“ Indemnitee(s) ” has the meaning attributed thereto in Section 2(b) of the Agreement.

“ Indemnitor(s) ” has the meaning attributed thereto in the recitals to the Agreement.

“ Indemnity Obligation(s) ” shall mean an Indemnitor’s obligations to indemnify and reimburse any Indemnitees for any and all of their respective Losses under this Agreement.

“ Loss ” shall mean any loss, damage, injury, harm, detriment, decline in value, lost opportunity, liability, exposure, claim, demand, action, suit, proceeding, arbitration, mediation, investigation, audit, review, payment, settlement, judgment, award, fine, penalty, tax, fee, charge, cost or expense (including, without limitation, any liability payment, any disbursement, expense or fee or other amount paid to any attorney or other professional advisor, and any costs of investigation or remediation).

“ O&R ” has the meaning attributed thereto in the recitals to the Agreement.

“ O&R Settlement Agreement ” has the meaning attributed thereto in the recitals to the Agreement.

“ Party ” and “ Parties ” shall have the meanings respectively assigned to them in the opening paragraph of the Agreement.

“ Person ” shall include (without limitation) any manner of association, business trust, company, corporation, estate, governmental or other Authority, group (including one under Section 13(d)(3) of the Securities Exchange Act), joint venture, limited liability company, natural person, partnership, syndicate, trust or other entity.

“ Proceeding ” has the meaning attributed thereto in Section 2(e) of the Agreement.

“ Representative ” of a referenced Person shall mean any subsidiary or other Affiliate of the referenced Person or any equity-holder, partner, equity holder, member, director, officer, manager, employee, subcontractor or consultant, agent, attorney, accountant, financial or other advisor or representative of the referenced Person or of any of its subsidiaries or other Affiliates.

2. Rules of Interpretation .

In the Agreement, the meaning of each capitalized term or other word or phrase defined in singular form also shall apply to the plural form of such term, word or phrase, and vice versa; each singular pronoun shall be deemed to include the plural variation thereof, and vice versa; and each gender specific pronoun shall be deemed to include the neuter, masculine and feminine, in each case as the context may permit or required. Any table of contents or caption, section or other heading is for reference purposes only and shall not affect the meaning or interpretation of such document; and each reference to any Section, subsection, and the like shall mean those of or attached to such document unless otherwise expressly provided. The word “ event ” shall include (without limitation) any

event, occurrence, circumstance, condition or state of facts; the words “ hereof ”, “ herein ” and “ hereunder ” and words of similar import shall refer to such document as a whole and not to any particular provision of such document; the words “ include ”, “ includes ” and “ including ” shall be deemed to be followed by the phrase “(without limitation)”, whether or not so stated, and in any event shall not in any way (i) limit the generality of the provision preceding such word, (ii) preclude any other applicable item encompassed by the provision preceding such word, or (iii) be deemed or construed to do so; and unless the context clearly requires otherwise, the word “ or ” shall have both the inclusive and alternative meaning represented by the phrase “ and/or ”. Reference to any Applicable Law, whether generically or specifically, shall mean such Applicable Law as adopted, supplemented, modified, amended, restated, codified, replaced or reenacted, in whole or in part, and then in effect; and each reference to any instrument, Agreement or other document (including any defined term) in this agreement shall mean such instrument, lease, agreement or other document as the same may have been and hereafter may be executed, amended, restated, replaced, supplemented or otherwise modified.

SCHEDULE II

Addresses of the Parties

EXHIBIT 31.1

I, Robert E. Driscoll, certify that:

1. I have reviewed this Form 10-Q for the period ended March 31, 2007, of Mirant Americas Generation, LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the registrant’s board of managers (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2007

By:	/s/ ROBERT E. DRISCOLL
	Robert E. Driscoll
	President and Chief Executive Officer
	(Principal Executive Officer)

EXHIBIT 31.2

I, J. William Holden, III, certify that:

1. I have reviewed this Form 10-Q for the period ended March 31, 2007, of Mirant Americas Generation, LLC;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2007

By:	/s/ J. WILLIAM HOLDEN, III
	J. William Holden III
	Senior Vice President, Chief Financial Officer and
	Treasurer (Principal Financial Officer)

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

May 14, 2007

U. S. Securities and Exchange Commission
100 F Street, N. E.
Washington, D.C. 20549

Ladies and Gentlemen:

The certification set forth below is being submitted to the Securities and Exchange Commission solely for the purpose of complying with Section 1350 of Chapter 63 of Title 18 of the United States Code. This certification is not to be deemed to be filed pursuant to the Securities Exchange Act of 1934 and does not constitute a part of the Quarterly Report on Form 10-Q (the “Report”) accompanying this letter and is not to be incorporated by reference into any filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

I, Robert E. Driscoll, the President and Chief Executive Officer of Mirant Americas Generation, LLC (the “Company”), certify that, subject to the qualifications noted below, to the best of my knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of Mirant Americas Generation, LLC.

Name:		/s/ ROBERT E. DRISCOLL
		Robert E. Driscoll
		President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Mirant Americas Generation, LLC and will be retained by Mirant Americas Generation, LLC and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

May 14, 2007

U. S. Securities and Exchange Commission
100 F Street, N. E.
Washington, D.C. 20549

Ladies and Gentlemen:

I, J. William Holden, III, the Senior Vice President, Chief Financial Officer and Treasurer of Mirant Americas Generation, LLC (the “Company”), certify that, subject to the qualifications noted below, to the best of my knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of Mirant Americas Generation, LLC.

Name:		/s/ J. WILLIAM HOLDEN, III
		J. William Holden, III
		Senior Vice President, Chief Financial Officer
		and Treasurer