CenterPoint Energy will pay Project Sponsors in two installments each year the Standard Offer Agreement is in effect - a Scheduled Curtailment Payment and the Performance Period Payment. In the event a Project Sponsor fails materially to produce the demand savings as proposed in its Application, CenterPoint Energy reserves the right to decline to make any further incentive payments and to terminate the Standard Agreement.

CenterPoint Energy's payment of Incentive Payment(s) to Project Sponsor is expressly and specifically conditioned upon CenterPoint Energy receiving all required notices, submittals and materials from Project Sponsor within the applicable period specified in the Agreement. Failure by Project Sponsor to deliver any required notice, submittal, or material within the applicable period specified in the Agreement shall be deemed a material breach of the Agreement.

If verified demand savings differ from the demand savings estimated in the Application, the IDR data recordings by CenterPoint Energy will take precedence over any other information. If actual, verified demand savings are lower than those estimated in the Application, the associated reserved incentives may be adjusted accordingly, and excess incentive funds returned to the SOP budget. If actual, verified demand savings are higher than those estimated in the Application, the incentive payments will be based on the demand savings estimated in the Application and Standard Offer Agreement, unless CenterPoint Energy, at its sole discretion, allows a Project Sponsor to amend its estimated demand upward.

The Load Management Program is projected and planned to be a multi-year program, dependent on Public Utility Commission of Texas (PUCT) regulations and rulings. The CenterPoint Energy demand savings goal for 2008 is 12,500 kW (12.5 MW), and the goal may be increased in subsequent years. A Project Sponsor must provide at least 250 kW of estimated demand savings to be eligible. The incentive budget for each year of the SOP is $500,000 (12,500 kW x $40/kW).

The SOP rules provide standard incentive prices per kW for demand savings each year of participation. The total incentive cap includes the Performance Period Payment and the Scheduled Curtailment Payment. CenterPoint Energy will not be obligated to pay a Project Sponsor for verified demand savings that exceed the amount of estimated demand savings proposed in the Project Sponsor's Application, although at CenterPoint Energy's sole discretion and provided SOP funds are available, CenterPoint Energy may revise a Project Sponsor's estimate of proposed demand savings upward and may pay a Project Sponsor accordingly. The incentive rates applicable to kW savings are set forth in the following table, subject to final PUCT rules.

To ensure that incentives are available to multiple energy service providers, a Project Sponsor or its affiliates will be limited to 40% of the SOP incentive budget in a given budget year, unless there are insufficient Project Sponsor applications to fill CenterPoint Energy's annual demand savings goal. Project Sponsors will be required to verify their affiliate status through an affidavit attached to the Standard Agreement.

All Verification Process activities for a scheduled curtailment must be completed before the Project Sponsor will receive the Scheduled Curtailment Payment. After successful participation in the scheduled curtailment, verification of the IDR data and demand savings, CenterPoint Energy shall pay the Project Sponsor the then current incentive amount per kW for the Scheduled Curtailment Payment. CenterPoint Energy will typically make the Scheduled Curtailment Payment within thirty-five (35) days after the demand savings are calculated. The Scheduled Curtailment Payment will be based upon the verified demand savings using the following equation:

CenterPoint Energy will typically make the Performance Period Payment in November, at the conclusion of the Performance Period and after CenterPoint Energy's approval of the IDR data for the Agreement year.

The amount of the Performance Period Payment shall be calculated using the following formula:

In the event no unscheduled curtailments are performed, the Performance Period Payment will be calculated using verified kW savings of the scheduled curtailment for that Agreement year.