
<PAGE>


                                  EXHIBIT  10.31

                 STANDARD OFFER CONTRACT FOR THE PURCHASE OF
             FIRM ENERGY AND CAPACITY FROM A QUALIFYING FACILITY

            THIS  AGREEMENT  is made and entered into this 31st day of December,
1984 by and between Timber Energy Resources,  Inc.,  hereinafter  referred to as
"QF", and Florida Power Corporation, hereinafter referred to as "the Company", a
private  utility  corporation  organized under the laws of the State of Florida.
The QF  and  the  Company  shall  collectively  be  referred  to  herein  as the
"Parties".

                              W I T N E S S E T H:

            WHEREAS,  QF desires to sell, and the Company desires to purchase,
electricity  to be generated by the QF consistent  with Florida Public Service
Commission  (FPSC)  Rules  25-17.80  through  25-17.89  adopted  in Order  No.
12443, Docket No.  820406-EU; and

            WHEREAS, QF has signed an Interconnection Agreement with the utility
in whose service territory the point of interconnection with the QF's generating
facility is located, attached hereto as Appendix A; and

            WHEREAS,  the terms and conditions of this  Agreement  substantially
conform with the standard form terms and conditions approved by the FPSC for the
purchase of Firm Energy and  Capacity  from a  Qualifying  Facility,  except for
certain  revisions  agreed to by the Parties set forth in  paragraphs  2 and 9.4
hereof.

            NOW  THEREFORE,  for  mutual  consideration  the  Parties  agree  as
follows:

      1.    FACILITY

            QF  contemplates  installing  and  operating a 16,482 KVA  generator
located at Telogia,  Florida.  The generator is designed to produce a maximum of
14.01  megawatts  (MW),  or 14,010  kilowatts  (KW) of electric  power at an 85%
lagging  power  factor,   such  equipment  being  hereinafter   referred  to  as
"Facility".

      2.    TERM OF THE AGREEMENT

            This  Agreement  shall begin  immediately  upon its execution by the
parties and shall end at 12:01 a.m. April 1, 2002; provided,  however,  that the
parties  agree that upon the demand of either  party  they will  undertake  good
faith  negotiations  with  respect  to  extended  terms and  conditions  of this
Agreement.  It is agreed that the schedule of capacity  payments attached hereto
as Exhibit "A" shall govern the obligations of the Company to make such capacity
payments  during  the  initial  term  of this  contract;  subject,  however,  to
modification as provided in paragraph 9.3 hereof.

<PAGE>

            Notwithstanding   the  foregoing  if  construction   and  commercial
operation of the Facility are not  accomplished by QF before April 1, 1992, this
Agreement shall be rendered of no force and effect.

      3.    SALE OF ELECTRICITY BY QF

            The Company agrees to purchase all of the electric  power  generated
at the Facility and  transmitted  to the Company by QF. The purchase and sale of
electricity  pursuant  to this  Agreement  shall be  construed  as a Net Billing
Arrangement.  The billing methodology may be changed to a Simultaneous  Purchase
and  Sale  Arrangement  at  the  option  of the  QF,  subject  to the  following
provisions:

            (a)   not more frequently than once every twelve months;

            (b) to coincide with the next Fuel and Purchased Power Cost Recovery
Factor billing period;

            (c) upon at least thirty days advance written notice to the Company;

            (d) upon  the  installation  of any  additional  metering  equipment
reasonably  required to effect the change in billing and upon  payment by the QF
for such metering equipment and its installation;

            (e)  upon   completion  and  approval  of  any  alterations  to  the
interconnection  reasonably  required  to effect the change in billing  and upon
payment by the QF for such alterations; and

            (f) where the election to change billing methods will not contravene
the  provisions  of the tariff  under  which the  Facility  receives  electrical
service, or any previously agreed upon contractual  provision between the QF and
the Company.

      4.    PAYMENT FOR ELECTRICITY PRODUCED BY QF

            4.1   Energy

                  The  Company  agrees to pay the QF for energy  produced by the
Facility  and  delivered  to the  Company  in  accordance  with  the  rates  and
procedures  contained in Rate Schedule COG-2 attached  hereto as Appendix B, and
as may be  amended  from time to time.  Prior to April 1,  1992 QF will  receive
energy payments based on the Company's actual avoided energy costs.  After April
1, 1992 QF's energy payments will be based on the lesser of the Company's actual
avoided  energy costs or the fuel cost of the Statewide  Avoided Unit as defined
in COG-2, such comparison to be made hourly.

            4.2   Capacity

                  4.2.1  Anticipated  Committed  Capacity.  QF  expects  to sell
approximately 13.466 MW or 13,466 KW of capacity,  beginning on or about July 1,
1986.

                                      -2-
<PAGE>

                  QF may finalize its Committed  Capacity after initial Facility
testing,  and  specify  when  capacity  payments  are to  begin,  by  completing
paragraph 4.2.2 at a later time.  However,  QF must complete  Paragraph 4.2.2 by
April 1, 1990 in order to be entitled to any capacity  payments pursuant to this
Agreement.

                  4.2.2 Actual Committed Capacity.  The capacity committed by QF
for the  purposes  of this  Agreement  is 12.765  MW or 12,765  KW. QF elects to
receive,  and the Company agrees to commence  calculating,  capacity payments in
accordance  with this Agreement  starting with the first billing month following
April 1 ,1992

                  4.2.3  Capacity  Payments.  QF  chooses  to  receive  capacity
payments from the Company under Option A of Rate Schedule COG-2.

                  At the end of each billing  month,  beginning with the billing
month specified in Paragraph  4.2.2,  the Company will calculate the most recent
twelve  month  rolling  average  capacity  factor for such  month  based on QF's
Committed Capacity.  If the capacity factor thus calculated is 70% or more, then
the  Company  agrees to pay QF a capacity  payment  that is the  product of QF's
Committed  Capacity and the applicable  rate from QF's chosen  capacity  payment
Option.

                  The  capacity  payment  for a given month will be added to the
energy  payment  for such month and  tendered  by the  Company to QF as a single
payment  as  promptly  as  possible,  normally  by the  twentieth  business  day
following the day the meter is read.

      5.    ELECTRICITY PRODUCTION SCHEDULE

            During the term of this Agreement, QF agrees to:

            (a) Provide the Company  prior to October 1 of each calendar year an
estimate  of the amount of  electricity  to be  generated  by the  Facility  and
delivered  to the  Company  for  each  month  of the  following  calendar  year,
including the time,  duration and magnitude of any planned outages or reductions
in capacity;

            (b) Promptly update the yearly  generation  schedule and maintenance
schedule as and when any changes may be determined necessary;

            (c) Coordinate its scheduled Facility outages with the Company;

            (d) Comply with  reasonable  requirements  of the Company  regarding
day-to-day or hour-by-hour  communications  between the parties  relative to the
performance of this Agreement; and

            (e) Adjust  reactive power flow at the point of  interconnection  as
may be reasonably  required by the Company within the range of an 85% leading to
an 85% lagging power factor.

                                      -3-
<PAGE>


      6.    QF'S OBLIGATION IF QF RECEIVES EARLY CAPACITY PAYMENTS

            The QF's  payment  option  choice  pursuant to  paragraph  4.2.3 may
result in payment by the Company for capacity  delivered prior to April 1, 1992.
The Parties recognize that capacity payments paid through March 31, 1992, are in
the nature of an "early payment" for a future  capacity  benefit to the Company.
To ensure  that the  Company  will  receive a capacity  benefit  for which early
capacity payments have been made, or  alternatively,  that the QF will repay the
amount of early  payments  received to the extent the  capacity  benefit has not
been conferred, the following provisions will apply:

            The Company  shall  establish a Capacity  Account.  Amounts shall be
credited to the Capacity  Account each month through March,  1992, in the amount
of the  Company's  capacity  payments  made to the QF  pursuant  to QF's  chosen
payment  option from Rate Schedule  COG-2.  The monthly  balance in the Capacity
Account shall accrue interest at an annual rate of 10.5%. Commencing on April 1,
1992,  there shall be debited from the Capacity  Account an Early Payment Offset
Amount to reduce the balance in the Capacity Account.  Such Early Payment Offset
Amount  shall be equal to that  amount  which the  Company  would  have paid for
capacity in that month if the capacity  payment had been calculated  pursuant to
Option A in Rate  Schedule  COG-2  and the QF had  elected  to  begin  receiving
payment on April 1, 1992,  minus the monthly  capacity payment the Company makes
to QF pursuant to the capacity payment option chosen by QF in paragraph 4.2.3.

            The QF shall owe the Company and be liable for the credit balance in
the Capacity Account.  The Company agrees to notify QF monthly as to the current
Capacity Account balance.  Prior to, receipt of advance capacity payments the QF
shall execute a promise to repay any credit  balance in the Capacity  Account in
the event the QF defaults  pursuant to this  Agreement.  Such  promise  shall be
secured by means mutually  acceptable to the Parties and in accordance  with the
provisions of Rate Schedule COG-2. The specific  repayment  assurances  selected
for purposes of this Agreement are an irrevocable letter of credit, surety bond,
or other means of assurance  mutually  acceptable to both parties and determined
prior to first  capacity  payments.  The total  Capacity  Account credit balance
shall immediately  become due and payable in the event of default by the QF. The
QF's obligation to pay the credit balance in the Capacity  Account shall survive
termination of this Agreement.

      7.    NON-PERFORMANCE PROVISIONS

            QF shall not  receive a capacity  payment  during any month in which
the twelve months rolling  average of the QF's capacity factor does not equal or
exceed 70% as defined in Rate  Schedule  COG-2.  In  addition,  if for any month
after April 1, 1992, the QF fails to achieve a 70% capacity factor on a 12 month
rolling average basis and the QF has received  capacity  payments prior to April
1, 1992, the QF shall be liable for and shall pay the Company an amount equal to
the Early Payment  Offset  Amount for the month;  provided,  however,  that such
calculation  shall  assume  that the QF  achieved  a 70%  capacity  factor.  Any
payments thus  required of QF shall be separately  invoiced by the Company to QF
after each month for which such payment is due and shall be paid by QF within 20
days after receipt of such invoice by QF. Such payment shall be debited from the
Capacity Account as an Early Payment Offset Amount.

                                      -4-
<PAGE>


            In no event shall the QF pay to the Company for non-performance such
amounts which exceed the current credit balance in the Capacity Account.

      8.    DEFAULT

            8.1  Mandatory  Default.  The QF  shall  be in  default  under  this
Agreement if: (1) the QF voluntarily declares  bankruptcy,  or (2) the QF ceases
all electric generation from the Facility for 12 consecutive months.

            8.2  Optional  Default.  The  Company  may  declare  the QF to be in
default:  (1) if at any time prior to April 1, 1992 and after capacity  payments
have begun the Company has sufficient reason to believe that the QF is unable to
deliver  its  Committed  Capacity,  or (2)  after  April 1, 1992 the QF fails to
maintain a 70% capacity  factor on a twelve month  rolling  average basis for 24
consecutive months, or (3) because of a QF's refusal,  inability or anticipatory
breach of obligation to deliver its Committed Capacity after April 1, 1992.

            8.3 Default Remedy. Once this contract is declared to be in default,
upon written notice to the QF, the  then-current  credit balance of the Capacity
Account shall be paid to the Company.

      9.    GENERAL PROVISIONS

            9.1  Permits.  QF  hereby  agrees  to  seek  to  obtain  any and all
governmental  permits,  certifications,  or other  authority  QF is  required to
obtain as a  prerequisite  to engaging in the  activities  provided  for in this
Agreement. The Company hereby agrees, at QF's expense, to seek to obtain any and
all  governmental  permits,  certifications  or other  authority  the Company is
required to obtain as a prerequisite to engaging in the activities  provided for
in this Agreement.

            9.2  Indemnification.  QF agrees to indemnify  and save harmless the
Company,  its  subsidiaries  and  affiliates,  and their  respective  employees,
officers,  and directors against any and all liability,  loss, damage,  costs or
expense which the Company, its subsidiaries and affiliates, and their respective
employees,  officers and directors may hereafter incur, suffer or be required to
pay by reason of  negligence  on the part of QF in  performing  its  obligations
pursuant to this  Agreement or QF's failure to abide by the  provisions  of this
Agreement.  The Company agrees to indemnify and save harmless QF against any and
all  liability,  loss,  damage,  cost or expense which QF may  hereafter  incur,
suffer, or be required to pay by reason of negligence on the part of the Company
in  performing  its  obligations  pursuant to this  Agreement  or the  Company's
failure to abide by the provisions of this  Agreement.  QF agrees to include the
Company as an additional  insured in any liability  insurance policy or policies
QF obtains to protect QF's  interests  with respect to QF's  indemnity  and hold
harmless assurances to the Company contained in this Section.

            9.3  Renegotiations  Due to  Regulatory  Changes.  Anything  in this
Agreement to the contrary notwithstanding, should the Company at any time during
the term of this Agreement fail to obtain or be denied the FPSC's authorization,
or the authorization of any other regulatory body which now has or in the future
may have jurisdiction over the Company's rates and charges,  to recover from its
customers all of the payments  required to be made to QF under

                                      -5-
<PAGE>


the terms of this Agreement or any subsequent  amendment to this Agreement,  the
parties  agree  that,  at the  Company's  option,  they shall  renegotiate  this
Agreement or any applicable  amendment.  If the Company exercises such option to
renegotiate,  the Company shall not thereafter be required to make such payments
to the extent the Company's  authorization to recover them from its customers is
not obtained or is denied.  The Company's  exercise of its option to renegotiate
shall not  relieve  the QF of its  obligation  to pay the credit  balance in the
Capacity  Account.  It is the intent of the parties that the  Company's  payment
obligations  under this Agreement or any amendment  hereto are conditioned  upon
the Company's  being fully  reimbursed  for such  payments  through the Fuel and
Purchased Power Cost Recovery Clause or other authorized  rates or charges.  Any
such  payments  initially  recovered by the Company from its  customers  but for
which  recovery is  subsequently  disallowed by the FPSC and charged back to the
Company  may be set off or  credited  against  subsequent  payments  made by the
Company for purchases from the QF, or alternatively, shall be repaid by the QF.

            9.4 Agreement to  Renegotiate.  The Parties hereby agree to commence
renegotiation  of this  Agreement  in good  faith  within 45 days after the date
hereof with a view toward achieving agreement upon improved terms and conditions
hereof to the mutual  benefit of both parties;  provided,  however,  that in the
event the Parties fail to reach agreement,  or in the event any amendment hereto
does not receive approval by the Florida Public Service Commission,  the parties
will comply with the provisions of this Agreement as presently set forth.

            9.5 Force  Majeure.  If either  party shall be unable,  by reason of
force majeure, to carry out its obligations under this Agreement,  either wholly
or in part, the party so failing shall give written notice and full  particulars
of such  cause or  causes  to the  other  party as soon as  possible  after  the
occurrence of any such cause; and such obligations shall be suspended during the
continuance  of such  hindrance,  which,  however,  shall be  remedied  with all
possible dispatch;  and the obligations,  terms and conditions of this Agreement
shall be extended for such period as may be necessary  for the purpose of making
good any suspension so caused.  The term "force  majeure" shall be taken to mean
acts  of  God,  strikes,  lockouts  or  other  industrial  disturbances,   wars,
blockades,  insurrections,  riots,  arrests and  restraints of rules and people,
environmental constraints lawfully imposed by federal, state or local government
bodies, explosions, fires, floods, lightning, wind, perils of the sea, accidents
to equipment or machinery or similar  occurrences;  provided,  however,  that no
occurrences  may be claimed to be a force majeure  occurrence if it is caused by
the  negligence or lack of due diligence on the part of the party  attempting to
make such claim. QF agrees to pay the costs necessary to reactivate the Facility
and/or the  interconnection  with the Company's  system if the same are rendered
inoperable due to actions of QF, its agents,  or force majeure events  affecting
the  Facility or the  interconnection  with the Company.  The Company  agrees to
reactivate   at  its  own  cost  the   interconnection   with  the  Facility  in
circumstances where any interruptions to such interconnections are caused by the
Company or its agents.

            9.6  Assignment.  The QF shall have the right to assign its benefits
under  this  Agreement,  but the QF  shall  not have the  right  to  assign  its
obligations and duties without the Company's prior written approval.

                                      -6-
<PAGE>


            9.7 Disclaimer.  In executing this Agreement,  the Company does not,
nor should it be construed  to,  extend its credit or financial  support for the
benefit of any third parties lending money to or having other  transactions with
QF or any assignee of this Agreement.

            9.8  Notification.  For purposes of making any and all non-emergency
oral and written notices,  payments or the like required under the provisions of
this  Agreement,  the Parties  designate the following to be notified or to whom
payment shall be sent until such time as either party  furnishes the other party
written instructions to contact another individual.

            For QF:

                  Gary H. Kappler
                  c/o Timber Energy Resources, Inc.
                  5433 Westheimer, Suite 1106
                  Houston, Texas 77056

                  Phone: (713) 626-5691

            For the Company:

                  W.H. Howell, Vice President
                  Florida Power Corporation
                  1021 S.W. Tenth Street
                  Ocala, Florida 32670

                  Phone: (904) 732-7521

            9.9  Applicable  Law.  This  Agreement  shall  be  governed  by  and
construed in accordance with the laws of the State of Florida.

            9.10  Severability.  If any part of this Agreement,  for any reason,
shall be declared invalid, or unenforceable by a public authority of appropriate
jurisdiction,  then such decision shall not affect the validity of the remainder
of the Agreement,  which  remainder  shall remain in force and effect as if this
Agreement had been executed without the invalid or unenforceable portion.

            9.11 Complete Agreement and Amendments.  All previous communications
or agreements between the Parties,  whether verbal or written, with reference to
the subject  matter of this  Agreement  are hereby  abrogated.  No  amendment or
modification  to this Agreement shall be binding unless it shall be set forth in
writing and duly executed by both parties to this Agreement.

            9.12  Incorporation  of Rate  Schedule.  The parties agree that this
Agreement  shall be subject to all of the provisions  contained in The Company's
published  Rate Schedule  COG-2 as approved and on file with the FPSC.  The Rate
Schedule is incorporated herein by reference.

                                      -7-
<PAGE>


            9.13  Survival of Agreement.  This  Agreement as may be amended from
time to  time,  shall  be  binding  and  inure to the  benefit  of the  Parties'
respective successors-in-interest and legal representatives.

            IN WITNESS WHEREOF,  QF and The Company have executed this Agreement
the day and year first above written.

                                         Timber Energy Resources, Inc.

/s/                                      /s/ Gary H. Kappler
-------------------------------------    -------------------------------------
Witness                                  Gary H. Kappler, President

/s/
-------------------------------------
Witness


                                         Florida Power Corporation

/s/                                      /s/ Joseph F. Cronin
-------------------------------------    -------------------------------------
Witness                                  Joseph F. Cronin, Vice President

/s/
-------------------------------------
Witness

                                      -8-

<PAGE>


                                    EXHIBIT A

                                            Standard 10 Yr. Deferral
                                  -------------------------------------------
                                  Capacity Cost      O&M Cost      Total Cost
              Year                   $/kw-mo         $/kw-mo        $/kw-mo
              ----                   -------         -------        -------

        4/1986 - 3/1987               5.60              --            5.60
        4/1987 - 3/1988               5.90              --            5.90
        4/1988 - 3/1989               6.22              --            6.22
        4/1989 - 3/1990               6.56              --            6.56
        4/1990 - 3/1991               6.91              --            6.91
        4/1991 - 3/1992               7.29              --            7.29
        4/1992 - 3/1993               7.68             4.21          11.89
        4/1993 - 3/1994               8.10             4.44          12.54
        4/1994 - 3/1995               8.53             4.68          13.21
        4/1995 - 3/1996               9.00             4.93          13.93
        4/1996 - 3/1997               9.48             5.20          14.68
        4/1997 - 3/1998               9.99             5.48          15.47
        4/1998 - 3/1999              10.53             5.78          16.31
        4/1999 - 3/2000              11.10             6.09          17.19
        4/2000 - 3/2001              11.70             6.42          18.12
        4/2001 - 3/2002              12.32             6.77          19.09

<PAGE>




                                                                     Page 1 of 8

                               RATE SCHEDULE COG-2
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)

AVAILABILITY:

Florida Power  Corporation will purchase Firm Capacity and Energy offered by any
Qualifying Facility,  irrespective of its location,  which is either directly or
indirectly  interconnected  with  the  Company  under  the  provisions  of  this
schedule.  Florida Power  Corporation  will  negotiate and may contract with any
Qualifying Facility,  irrespective at its location,  which is either directly or
indirectly interconnected with the Company for the purchase at Firm Capacity and
Energy  pursuant to terms and conditions  which deviate from this schedule where
such negotiated contracts are in the best interest of the Company's ratepayers.

APPLICABLE:

To any cogeneration or small power production Qualifying Facility,  irrespective
of its location, producing capacity and energy for sale to the Company on a firm
basis  pursuant to the terms and  conditions  of this schedule and the Company's
"Standard Offer Contract" or a separately negotiated contract. Firm Capacity and
Energy are  described  by the Florida  Public  Service  Commission  (FPSC) Rules
25-17.83,  F.A.C., and are capacity and energy produced and sold by a Qualifying
Facility pursuant to a negotiated or standard Company contract offer and subject
to certain  contractual  provisions as to quantity,  time,  and  reliability  of
delivery.  Criteria for achieving  Qualifying Facility status shall be those set
out in FPSC Rule 25-17.80, F.A.C.

CHARACTER OF SERVICES:

Purchases  within the territory served by the Company shall be, at the option of
the  Company,  single or three  phase,  60  hertz,  alternating  current  at any
available standard Company voltage.  Purchases from outside the territory served
by the  Company  shall be three  phase,  60 hertz,  alternating  current  at the
voltage  level  available at the  interchange  point between the Company and the
entity delivering Firm Capacity and Energy from the Qualifying Facility.

LIMITATION OF SERVICE:

Purchases  under this schedule are subject to the Company's  "General  Standards
for  Safety and  Interconnection  of  Cogeneration  and Small  Power  Production
Facilities to the Electric  Utility  System" and to FPSC Rules 25-17.80  through
25-17.87, F.A.C., and are limited to those Qualifying Facilities which:

      A.    Execute  a Company  "Standard  Offer  Contract"  prior to April 1,
            1990 for the Company's purchase of Finn Capacity and Energy; and

      B.    Commit to commence  deliveries  of Firm Capacity and Energy no later
            than April 1, 1992, and to continue such deliveries through at least
            March 31, 2002.

RATES FOR PURCHASES BY THE COMPANY:

Firm  Capacity and Energy are  purchased at a unit cost, in dollars per kilowatt
per  month  and cents per  kilowatt  hour,  respectively,  based on the value of
deferring  additional  generating  capacity in Florida.  For the purpose of this
schedule,  a  Statewide  Avoided  Unit  has been  designated  by the FPSC and is
considered to be a jointly owned,  peninsular Florida base load generating plant
consisting  of two (2), 700 MW coal fired  generating  units with an  in-service
date of April 1, 1992.  Appendix A of this schedule  describes  the  methodology
used to calculate payment schedules, general terms, and conditions applicable to
the Company's  "Standard Offer Contract" pursuant to FPSC Rules 25-17.80 through
25-17.87, F.A.C.

                                                     (Continued on Page No. 2)
<PAGE>

                                                                     Page 2 of 8

                               RATE SCHEDULE COG-2
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)
                           (Continued from Page No. 1)

A.    Firm Capacity Rates

      Three options,  A through C, as set forth below, are available for payment
      for Firm  Capacity  which  is  produced  by the  Qualifying  Facility  and
      delivered to the Company.  Once selected, an option shall remain in effect
      for  the  term  of  the  contract  with  the  Company.  Exemplary  payment
      schedules,  shown  below,  contain the monthly  rate per  kilowatt of Firm
      Capacity the Qualifying Facility has contractually committed to deliver to
      the Company  and are based on a minimum  contract  term which  extends ten
      (10) years beyond the anticipated in-service date of the Statewide Avoided
      Unit (i.e., through March 31, 2002). Payment schedules for longer contract
      terms will be made available to a Qualifying Facility upon request and may
      be calculated based on the methodologies described in Appendix A.

      Option A - Fixed Value of Deferral

      Payment  schedules  under  this  option  are  based  on  the  value  of  a
      year-by-year  deferral of the  Statewide  Avoided Unit with an  in-service
      date of April 1, 1992;  calculated in accordance  with FPSC Rule 25-17.83,
      F.A.C.,  as  described  in Appendix A. Once this option is  selected,  the
      current  schedule of payments shall remain fixed and in effect  throughout
      the term of the "Standard Offer Contract".

      The  Qualifying  Facility  shall  select  the  month and year in which the
      delivery of Firm  Capacity  and Energy to the  Company is to commence  and
      capacity  payments are to start.  The Company will provide the  Qualifying
      Facility with a schedule of capacity  payment rates based on the month and
      year in which the delivery of Firm Capacity and Energy are to commence and
      the term of the contract.  The  following  exemplary  payment  schedule is
      based on the minimum required contract term which must extend at least ten
      (10) years beyond the anticipated in-service date of the Statewide Avoided
      Unit. The currently  approved  parameters  used to calculate the following
      schedule of payments are found in Appendix B of this schedule.

<TABLE>

                   MONTHLY CAPACITY PAYMENT RATE $/KW/MONTH
<CAPTION>

                Normal
                Payment
                Option
 Contract Year  Starting               Early Payment Option Starting:
 -------------  --------  ------------------------------------------------------------------------
  FROM     TO     4/1/92   4/1/91   4/1/90    4/1/89   4/1/88   4/1/87   4/1/86    4/1/85   4/1/84
  ----     ---    ------  -------  -------    ------  -------  -------  -------    ------  -------
<S>    <C>       <C>      <C>      <C>       <C>      <C>      <C>      <C>       <C>       <C>
*4/1/84  3/31/85    -        -         -        -        -        -         -        -        4.25
4/1/85   3/31/86    -        -         -        -        -        -         -        4.87     4.48
4/1/86   3/31/87    -        -         -        -        -        -        5.60      5.13     4.72
4/1/87   3/31/88    -        -         -        -        -        6.47     5.90      5.41     4.97
4/1/88   3/31/89    -        -         -        -        7.50     6.82     6.22      5.70     5.24
4/1/89   3/31/90    -        -         -        8.74     7.90     7.18     6.56      6.01     5.53
4/1/90   3/31/91    -        -       10.24      9.21     8.33     7.57     6.91      6.34     5.82
4/1/91   3/31/92    -       12.08    10.79      9.70     8.78     7.98     7.29      6.68     6.14
4/1/92   3/31/93   18.58    16.94    15.59     14.44    13.47    12.63    11.89     11.25    10.68
4/1/93   3/31/94   19.58    17.86    16.43     15.22    14.19    13.31    12.54     11.86    11.26
4/1/94   3/31/95   20.64    18.82    17.31     16.04    14.96    14.03    13.21     12.50    11.87
4/1/95   3/31/96   21.75    19.84    18.25     16.91    15.77    14.78    13.93     13.18    12.51
4/1/96   3/31/97   22.93    20.91    19.24     17.82    16.62    15.58    14.68     13.89    13.19
4/1/97   3/31/98   24.17    22.04    20.27     18.79    17.52    16.42    15.47     14.64    13.90
4/1/98   3/31/99   25.47    23.23    21.37     19.80    18.46    17.31    16.31     15.43    14.65
4/1/99   3/31/00   26.85    24.48    22.52     20.87    19.46    18.24    17.19     16.26    15.44
4/1/00   3/31/01   28.30    25.81    23.74     22.00    20.51    19.23    18.12     17.14    16.27
4/1/01   3/31/02   29.83    27.20    25.02     23.18    21.62    20.27    19.09     18.06    17.15

</TABLE>

----------------------
*  Payments  commencing  in 1984  are  available  only for  existing  Qualifying
Facilities not currently under contract.

                                                     (Continued on Page No. 3)
<PAGE>

                                                                     Page 3 of 8

                               RATE SCHEDULE COG-2
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)
                           (Continued from Page No. 2)

      Option B - Variable Value of Deferral

      Payment  schedules  under  this  option  are  based  on  the  value  of  a
      year-by-year  deferral of the  Statewide  Avoided Unit with an  in-service
      date of April 1, 1992. Once this option is selected, the Statewide Avoided
      Unit  designation  and its in-service date shall remain fixed for the term
      of true "Standard Offer Contract".  The value of deferral,  however, shall
      be recalculated annually and the payment schedule shall be adjusted,  upon
      approval by the FPSC,  to reflect the most recent  factors  affecting  the
      cost of constructing the Statewide  Avoided Unit. The Qualifying  Facility
      shall select the month and year in which the delivery of Firm Capacity and
      Energy to the Company is to commence  and  capacity  payments are to start
      pursuant to this option.

      The  methodology  used to determine  the level of payment each year is the
      same as that  used  in  Option  A of this  schedule  and is  described  in
      Appendix A. For  informational  purposes only,  the current  projection of
      payments are those contained in Option A on the previous page.

      Option C - Average  Embedded  Book Cost of Fossil Steam  Production  Plant
      Monthly capacity payments are made under this option shall be based on the
      Company's  current average  embedded book cost of fossil steam  production
      plant  approved by the FPSC and in effect in the year in which  payment is
      made.

      The  following  monthly  payment  schedule is provided  for  informational
      purposes only. It reflects the Company's current projection of payments.

<TABLE>
             Projected Monthly Capacity Payment Rate - $/KW/Month

<CAPTION>
*1984   1985   1986   1987   1988   1989    1990   1991   1992   1993   1994    1995   1996   1997  1998  1999   2000   2001   2002
-----   ----   ----   ----   ----   ----    ----   ----   ----   ----   ----    ----   ----   ----  ----  ----   ----   ----   ----
<S>     <C>    <C>    <C>    <C>    <C>     <C>    <C>    <C>    <C>    <C>     <C>    <C>    <C>   <C>   <C>    <C>    <C>    <C>
3.84    4.61   4.66   4.69   4.72   4.75    4.78   4.81   4.84   4.87   7.65    7.11   7.75   9.69  9.83  9.88   11.8   11.9   12.16
</TABLE>

---------
*  Payments  commencing  in 1984  are  available  only for  existing  Qualifying
Facilities not currently under contract.

B.    Energy Rates

      1.    Payments Prior to April 1, 1992

            The energy  rate in cents per  kilowatt-hour  ((cent)/KWH)  shall be
            based on the Company's  actual hourly avoided energy costs which are
            calculated  by the Company in accordance  with FPSC Rule  25-17.825,
            F.A.C.  Avoided energy costs include incremental fuel,  identifiable
            operation  and  maintenance  expenses,  and an  adjustment  for line
            losses reflecting delivery voltage.  When economy  transactions take
            place,  the incremental  costs are calculated  after the purchase or
            before the sale of the economy energy.

            The  calculation  of payments to the  Qualifying  Facility  shall be
            based on the sum,  over all  hours  of the  billing  period,  of the
            product of each hour's  avoided  energy cost times the  purchases by
            the  Company for that hour.  All  purchases  shall be  adjusted  for
            losses from the point of metering to the point of interconnection.

      2. Payments Starting on April 1, 1992

            The energy rate in cents per  kilowatt-hour  ((cent)/KWH),  shall be
            the lesser of an hour-by-hour  comparison of: (1) the fuel component
            of the Company's  avoided energy costs calculated in accordance with
            rule  25-17.825,  F.A.C.;  and (b) the  Statewide  Avoided Unit Fuel
            Cost.   The   Statewide   Avoided  Unit  Fuel  Cost,  in  cents  per
            kilowatt-hour  ((cent)/KWH)  shall be defined as the product of: (a)
            the  average  monthly  inventory  charge out price of coal burned at
            Tampa  Electric  Company's Big Unit No. 4, in cents per million Btu;
            and (b) an average annual heat rate of 10.5 million Btu per megawatt
            hours.

                                                     (Continued on Page No. 4)
<PAGE>

                                                                     Page 4 of 8

                               RATE SCHEDULE COG-2
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)
                           (Continued from Page No. 3)

            Calculation of payments to the Qualifying Facility shall be based on
            the sum,  over all hours of the  billing  period,  of the product of
            each hour's  avoided  energy cost times the purchases by the Company
            for that hour.  All purchases  shall be adjusted for losses from the
            point of metering to the point of interconnection.

ESTIMATED FIRM ENERGY COST:

For informational  purposes only, the estimated incremental avoided energy costs
for the next four semi-annual periods are as follows.  These estimates include a
credit  for  estimated  variable  operating  and  maintenance  expense  of 0.056
(cent)/KWH.  The variable O&M credit will be  recomputed  monthly in  accordance
with the Company's methodology.

                                   On-Peak          Off-Peak       Average
           Applicable Period       (cent)/KWH      (cent)/KWH     (cent)/KWH
           -----------------       ----------      ----------     ----------

April, 1986-September, 1986           3.106           2.589          2.831
October, 1986-March, 1987             3.072           2.838          2.935
April, 1987-September, 1987           3.961           3.112          3.506
October, 1987-March, 1988             3.298           2.846          3.079

A 100 MW block has been used to calculate the estimated avoided energy cost.

PERFORMANCE CRITERIA:

Payments for firm capacity are conditioned on the Qualifying  Facility's ability
to maintain the following performance criteria:

A.    Commercial In-Service Date

      Capacity  payments shall not commence  until the  Qualifying  Facility has
      attained and demonstrated,  commercial  in-service  status. The commercial
      in-service date of a Qualifying Facility shall be defined as the first day
      of the  month  following  the  successful  completion  of  the  Qualifying
      Facility  maintaining  an hourly  kilowatt (KW) output,  as metered at the
      point of  interconnection  with the Company,  equal to or greater than the
      Qualifying  Facility's  "Standard Offer Contract" committed capacity for a
      24 hour period.  A Qualifying  Facility shall  coordinate the selection of
      and operation of its facility  during this test period with the Company to
      insure that the  performance of its facility during this 24-hour period is
      reflective  of the  anticipated  day to day  operation  of the  Qualifying
      Facility.

B.    Capacity Factor

      Upon achieving  commercial  in-service status,  payments for Firm Capacity
      shall be made monthly in accordance with the capacity  payment rate option
      selected by the Qualifying  Facility and subject to the provision that the
      Qualifying  Facility maintains a 70% capacity factor on a 12 month rolling
      average  basis as defined in Appendix A. Failure to achieve this  capacity
      factor shall result in true Qualifying  Facility's  forfeiture of payments
      for Firm  Capacity  during the month in which such failure  occurs.  Where
      early  capacity  payments have been elected and starting with the month of
      April, 1992,  failure of a Qualifying  Facility to maintain a 70% capacity
      factor an a 12 month  rolling  average basis shall also result in payments
      by the  Qualifying  Facility to the Company.  The amount of such  payments
      shall be equal to the difference between: (1) what the Qualifying Facility
      would have been paid had it elected  the normal  payment  option  starting
      April 1, 1992;  and (2) what it would have been paid pursuant to the early
      payment option had it maintained the capacity factor performance criteria.

                                                     (Continued on Page No. 5)
<PAGE>

                                                                     Page 5 of 8

                               RATE SCHEDULE COG-2
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)
                           (Continued from Page No. 4)

      All  capacity  payments  made by the  Company  prior to April 1,  1992 are
      considered  "early  payments".  The owner or  operator  of the  Qualifying
      Facility,  as  designated by the Company,  shall secure its  obligation to
      repay, with interest,  the cumulative amount of early capacity payments in
      the  event  the  Qualifying  Facility  defaults  under  the  terms  of its
      "Standard  Offer  Contract"  with the  Company.  The Company  will provide
      monthly  summaries  of the  total  outstanding  balance  of such  security
      obligations.  A summary  of the types of  security  instruments  which are
      generally acceptable to the Company is discussed in Appendix A.

C.    Additional Criteria

      1.    The Qualifying  Facility shall provide monthly generation  estimates
            by October 1 for the next calendar year; and

      2.    The Qualifying  Facility shall promptly update its yearly generation
            schedule when any changes are determined necessary; and

      3.    The  Qualifying  Facility  shall agree to reduce  generation or take
            other  appropriate  action as  requested  by the  Company for safety
            reasons or to preserve system integrity; and

      4.    The Qualifying  Facility shall coordinate  schedule outages with the
            Company; and

      5.    The Qualifying Facility shall comply with the reasonable requests of
            the Company regarding daily or hourly communications.

DELIVERY VOLTAGE ADJUSTMENTS:

Energy payments to Qualifying  Facilities  within he Company's service territory
shall  be  adjusted   according  to  the  delivery   voltage  by  the  following
multipliers:

      Qualifying Facility Delivery Voltage                Adjustment Factor
      ------------------------------------                -----------------
      69 KV or Greater                                           1.038
      4 KV, 12 KV, 25 KV @ Substation Bus                        1.047
      4 KV, 12 KV, 25 KV @ Primary Bus                           1.058
      600 Volts or Lower                                         1.076

METERING REQUIREMENTS:

Qualifying  Facilities  within  the  territory  served by the  Company  shall be
required to purchase from the Company hourly  recording  meters to measure their
energy  production.  Energy  purchases from  Qualifying  Facilities  outside the
territory served by the Company shall be measured as the quantities schedule for
interchange to the Company by the entity  delivering firm capacity and energy to
the Company.

For the purpose of this schedule,  the on-peak hours occur Monday through Friday
except holiday, April 1 - October 31 from 12 noon to 9:00 P.M., and November 1 -
March 31 from 6:00 A.M. to 10:00 A.M.  and 6:00 P.M. to 10:00 P.M. All hours not
mentioned  above and all hours of the holidays of New Year's Day,  Memorial Day,
Independence  Day, Labor Day,  Thanksgiving  Day, and Christmas Day are off-peak
hours.

BILLING OPTIONS:

The  Qualifying  Facility may elect to make either  simultaneous  purchases  and
sales or net sales.  The  decision  to change  billing  methods can be made once
every twelve (12) months  coinciding with the next Fuel and Purchased Power Cost
Recovery  Factor  billing  period  provided the Company is given at least thirty
(30) days  written  notice  before the  change is to take  place.  In  addition,
allowance must be made for the  installation or alteration of needed metering or
interconnection  equipment for which the qualifying  facility must pay; and such
purchases  and/or  sales  must not  abrogate  any  provisions  of the  tariff or
contract with the Company.

                                                     (Continued on Page No. 6)
<PAGE>

                                                                     Page 6 of 8

                               RATE SCHEDULE COG-2
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)

                           (Continued from Page No. 5)

A statement  covering the charges and payments  due the  Qualifying  Facility is
rendered  monthly,  and payment  normally is made by the twentieth  business day
following the end of the billing period.

CHARGES TO QUALIFYING FACILITY:

A.    Customers Charges

      Monthly customer  charges for meter reading,  billing and other applicable
      administrative costs by Rate Schedule are:

                        RS-1                    $   6.10
                        RST-1                      11.28
                        GS-1                        6.10
                        GST-1                      11.28
                        GSD-1                      17.75
                        GSDT-1                     22.93
                        GSLD-1                     91.00
                        GSLDT-1                    96.18
                        GSLDT-2                   265.00
                        GSLD-2                    265.00
                        CS-1                      175.00
                        CST-1                     175.00
                        IS-1                      475.00
                        IST-1                     475.00
                        MS-1                        6.10

B.    Interconnection  Charge for  Non-Variable  Utility Expenses

       The Qualifying  Facility shall bear the cost required for interconnection
       including the metering.  The Qualifying Facility shall have the option of
       payment in full for  interconnection or making equal monthly  installment
       payments  over a thirty-six  (36) month period  together with interest at
       the rate then  prevailing  for thirty (30) days prior to the date of each
       payment.

C.    Interconnection  Charge  for  Variable  Utility  Expenses

       The Qualifying  Facility shall be billed monthly for the cost of variable
       utility  expenses  associated  with the operation and  maintenance of the
       interconnection.  These  include  (a) the  Company's  inspections  of the
       interconnection  and (b) maintenance of any equipments  beyond that which
       would be required to provide  normal  electric  service to the Qualifying
       Facility if no sales to the Company were involved.

      In lieu of payments for actual charges,  the Qualifying Facility may pay a
      monthly charge equal to 0.57% of the installed cost of the interconnection
      facilities.

D.    Taxes and Assessments

      The  Qualifying  Facility  shall be billed  monthly an amount equal to the
      taxes, assessments, or other impositions, if any, for which the Company is
      liable as a result of its purchases of Firm  Capacity and Energy  produced
      by the Qualifying Facility.

TERMS OF SERVICE:

1.    It shall be the Qualifying Facility's responsibility to inform the Company
      of any change in its electric generating ability.

                                                      (Continued on Page No. 7
<PAGE>

                                                                     Page 7 of 8

                               RATE SCHEDULE COG-2
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)
                           (Continued from Page No. 6)

2.    Any electric service  delivered by the Company to the Qualifying  Facility
      shall be metered  separately and billed under the  applicable  retail rate
      schedule and the terms and  conditions  of the  applicable  rate  schedule
      shall pertain.

3.    A  security  deposit  will be  required  in  accordance  with  FPSC  Rules
      25-17.82(5) and 25-6.97, F.A.C. and the following:

      a.    In the first year of operation, the security deposit should be based
            upon the singular month in which the QF's  projected  purchases from
            the utility exceed, by the greatest amount, the utility's  estimated
            purchases from the QF. The security deposit should be equal to twice
            the amount of the difference  estimated for that month.  The deposit
            should be required upon interconnection.

      b.    For each year thereafter, a review of the actual sales and purchases
            between the QF and the utility  should be conducted to determine the
            actual month of maximum  difference.  The security deposit should be
            adjusted  to equal  twice the  greatest  amount by which the  actual
            monthly  purchases  by the QF exceed the actual sales to the utility
            in that month.

4.    The Company shall specify the point of interconnection and voltage level.

5.    The Company  will,  under the  provisions of this  Schedule,  require an
      agreement  with  the  Qualifying   Facility  upon  the  Company's  filed
      Standard  Offer Contract and Standard  Agreement for Parallel  Operation
      between  the  Qualifying  Facility  and  the  Company.   The  Qualifying
      Facility  shall  recognize  that its  generation  facility  may  exhibit
      unique interconnection  requirements which will be separately evaluated,
      modifying the Company's General Standard for Safety and  interconnection
      where applicable.

6.    Service under this rate  schedule is subject to the rules and  regulations
      of the Company and the Florida Public Service Commission.

SPECIAL PROVISION:

1.    Special  contracts  deviating  from the above  standard  rate schedule are
      allowable  provided  they are agreed to by the Company and approved by the
      Florida Public Service Commission.

2.    A Qualifying  Facility located within the Company's  service territory may
      sell Firm Capacity and Energy to a utility  other than the Company.  Where
      such agreements exist and existing transmission capacity is available, the
      Company  will  provide  transmission   wheeling  service  to  deliver  the
      Qualifying   Facility's   power  to  the  purchasing   utility  or  to  an
      intermediate utility.

When a  Qualifying  Facility  located  within the  Company's  service  territory
exercises  its option to sell  As-Available  Energy to a utility  other than the
Company prior to the  in-service  date (April 1, 1992) of the Statewide  Avoided
Unit and  existing  transmission  capacity is  available,  the Company will also
provide transmission wheeling service to deliver the Qualifying Facility's power
to the  purchasing  utility or to an  intermediate  utility.  In  addition,  the
Company will provide  transmission  wheeling service through its territory for a
Qualifying  Facility  located  outside  the  Company's  service  territory,  for
delivery of the Qualifying  Facility's power to the purchasing  utility or to an
intermediate  utility.   Transmission  service  that  is  determined  to  be  an
intrastate  transaction  will be provided,  subject to  availability,  under the
rates, terms and conditions set forth in Rate Schedule COG-3 or, as provided for
therein, under a separate,  compensatory contract.  Transmission service that is
determined  to be  an  interstate  transaction  will  be  provided,  subject  to
availability,  under rates,  terms and  conditions  filed with, and accepted for
filing by, the Federal  Energy  Regulatory  Commission  (a copy of the Company's
currently  effective  wholesale tariff rate schedule  applicable to transmission
service is on file with the Public Service  Commission and is available from the
Company upon request).

                                                     (Continued on Page No. 8)
<PAGE>

                                                                     Page 8 of 8

                               RATE SCHEDULE COG-2
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)
                           (Continued from Page No. 7)

Interstate  transactions are defined as those determined to be jurisdictional by
the Federal Energy Regulatory Commission. Intrastate transactions are defined as
all other transactions.

The Qualifying  Facility shall be responsible for all costs associated with such
wheeling including:

      A.    Wheeling charges
      B.    Line losses incurred by the Company
      C.    Inadvertent energy flows resulting from such wheeling.

Energy  delivered to the Company  shall be adjusted  before  delivery to another
utility as follows:

      Qualifying Facility Delivery Voltage                Adjustment Factor
      ------------------------------------                -----------------
      69 KV or Greater                                           0.963
      4 KV, 12 KV, 25 KV @ Substation Bus                        0.955*
      4 KV, 12 KV, 25 KV @ Primary Bus                           0.945*
      600 Volts or Lower                                         0.929*

      *     The 69 KV or greater  adjustment factor shall apply if the following
            conditions are met for Qualifying Facility power and energy input to
            the Company's distribution facilities:

      (1)   The input power and energy fully  displace power and energy that the
            Company would  otherwise be required to supply to other customers on
            the same distribution facility, and

      (2)   The delivery  voltage to the receiving  utility system is 69 KV or
            greater.

The Company may deny,  curtail or  discontinue  providing  transmission  service
under this special  provision if the provision of such service  would  adversely
affect the adequacy,  reliability or cost of providing  electric  service to its
general body of retail and wholesale customers.

For a more complete  description of the rates,  terms and conditions under which
intrastate  transmission  service may be offered,  refer to Rate Schedule  COG-3
commencing  on sheet  9.700 of this  tariff  section.  For  similar  information
related to interstate  transmission  service,  refer to the Company's  currently
effective wholesale tariff rate schedule  applicable to transmission  service, a
copy of  which  is on file  with  the  Florida  Public  Service  commission  and
available from the Company upon request.


<PAGE>




                                                                     Page 1 of 4

                               RATE SCHEDULE COG-2
                                   APPENDIX A
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)

APPLICABILITY:

Appendix  A  provides  a detailed  description  of the  methodology  used by the
Company to calculate the monthly values of deferring the Statewide  Avoided Unit
referred to in Schedule  COG-2.  When used in conjunction  with the current FPSC
approved cost parameters associated with the Statewide Avoided Unit contained in
Appendix B, a Qualifying Facility may determine the applicable value of deferral
capacity payment rate associated with the timing and operation of its particular
facility  should the Qualifying  Facility enter into a "Standard Offer Contract"
with the utility.

Also contained in Appendix A is the methodology used by the Company to calculate
the 12 month  rolling  average  capacity  factor of a Qualifying  Facility and a
discussion  of the types and forms of surety  bond  requirements  or  equivalent
assurance of repayment of early capacity  payments  acceptable to the Company in
the event of contractual default by a Qualifying Facility.

CALCULATION OF VALUE OF DEFERRAL:

FPSC Rules  25-17.83(7)  specifies that avoided  capacity  costs, in dollars per
kilowatt  per  month,  associated  with firm  capacity  sold to a  utility  by a
Qualifying Facility pursuant to the utility's standard offer shall be defined as
the value of a year-by-year  deferral of the Statewide Avoided Unit and shall be
calculated as follows:

                                           (1 + ip)
                                     1 -   ---------
                      C                    (1 - r)                   1 + i
             VACm  = --   (  KIn (  --------------------  ) +  Dn ( -------- ) )
                     12                            L                 1 + r
                                           (1 + ip)
                                     1 -   ---------
                                           (1 + r)


Where, for a one year deferral:

      VACm  =     utility's  value  of  avoided   capacity,   in  dollars  per
                  kilowatt per month, during month m;

      C     =     a constant risk  multiplier  equal to 0.8 for the purpose of
                  the utility's standard offer agreement;

      K     =     present  value  of  carrying   charge  for  one  dollar  of
                  investment  over L years with carrying  charges  assumed to be
                  paid at the end of each year;

      In    =     total  direct and  indirect  cost,  in dollars per  kilowatt
                  including AFUDC but excluding  CWIP, of the statewide  avoided
                  unit with an in-service date of year n;

      Dn    =     total  first  year's  fixed  and  variable   operating  and
                  maintenance expense, less fuel and in dollars per kilowatt per
                  year, of the statewide avoided  unit deflated to the beginning
                  of year n by io;

      ip    =     annual  escalation  rate  associated  with the plant cost of
                  the statewide avoided unit;

                                                     (Continued on Page No. 2)
<PAGE>

                                                                   Page 2 of 4

                               RATE SCHEDULE COG-2
                                   APPENDIX A
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)
                           (Continued from Page No. 1)

      r     =     annual discount rate,  defined as the utility's  incremental
                  after tax cost of capital;

      L     =     expected life of the statewide avoided unit; and

      n     =     year  for  which  the  statewide  avoided  unit is  deferred
                  starting  with its original  anticipated  in-service  date and
                  ending with the  termination  of the contract for the purchase
                  of firm energy and capacity.

Normally, payment for firm capacity shall not commence until the in-service date
of the  statewide  avoided  unit.  At the  options of the  Qualifying  Facility,
however,  the utility may begin making early capacity payments consisting of the
capital cost component of the value of a year-by-year  deferral of the statewide
avoided  unit  starting  as  early  as  seven  years  prior  to the  anticipated
in-service date of the statewide avoided unit. When such early capacity payments
are elected,  the avoided  capital cost component of capacity  payments shall be
paid monthly  commencing no earlier than the Commercial  In-Service  date of the
Qualifying Facility, and shall be calculated as follows:

                                              n
                                     A (1 + ip)   ; for n = o, n
                             Am =    ----------
                                          12

Where:

      Am    =     monthly avoided capital cost component of capacity  payments
                  to be made to the  Qualifying  Facility  starting  as early as
                  seven years prior to the  anticipated  in-service  date of the
                  statewide avoided unit, in dollars per kilowatt per month;

      ip    =     annual  escalation rate associated with the plant cost of me
                  statewide avoided unit;

      n     =     year for  which  early  capacity  payments  to a  Qualifying
                  Facility are made;

                                                   (1 + ip)
                                              1 - (        )
                             A = F                 (1 + r)
                                            ( ---------------  )
                                                           t
                                                   (1 + ip)
                                              1 - (         )
                                                   (1 + r)

Where:

      F     =     the  cumulative  present  value of the avoided  capital cost
                  component of capacity  payments which would have been made had
                  capacity  payments  commenced with the anticipated  in-service
                  date of the statewide avoided unit;

      r     =     annual discount rate,  defined as the utility's  incremental
                  after tax cost of capital; and

                                                     (Continued on Page No. 3)
<PAGE>

                                                                     Page 3 of 4

                               RATE SCHEDULE COG-2
                                   APPENDIX A
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)
                           (Continued from Page No. 2)

      t    =      the term, in years, of the contract for the purchase of firm
                  capacity  commencing  prior  to  the  in-service  date  of the
                  statewide  avoided unit, and commencing with the year in which
                  the  Qualifying  Facility  elects to  receive  early  capacity
                  payments.

      Currently approved  parameters  applicable to the formulas above are found
      in Appendix B.

CALCULATION OF 12 MONTH ROLLING AVERAGE CAPACITY FACTOR:

Pursuant to FPSC Rule  25-17.83(3)(a)(ii),  F.A.C., and Order 13247,  Docket No.
830377-EU, a Qualifying Facility must maintain a 70% capacity factor in order to
receive capacity payments. For the purpose of this schedule, the capacity factor
of the  Qualifying  Facility  shall be defined as: the total  kilowatt-hours  of
energy  delivered to the utility during the preceding 12 months,  divided by the
product  of: (1) the  maximum  kilowatt  capacity  contractually  committed  for
delivery to the  Company by the  Qualifying  Facility  during the  preceding  12
months;  and (2) the sum of the total hours during the  preceding 12 months less
those hours  during  which the Company was unable to accept  energy and capacity
deliveries  from the Qualifying  Facility.  The Company shall be relieved of its
obligation  under FPSC Rule  25-17.82  F.A.C.  to  purchase  electricity  from a
Qualifying  Facility when  purchases  result in higher costs to the Company than
without such  purchases,  and where service to the Company's other customers may
be  impaired  by  such  purchases.  The  Company  shall  notify  the  Qualifying
Facilities  as soon as  possible  or  practical,  and the  FPSC of the  problems
leading to the need for such relief.

During the first 12 months in which the 70% capacity factor performance criteria
is imposed,  the Qualifying  Facility's  capacity  factor shall be calculated by
dividing  the  sum  of the  kilowatt  hours  delivered  to  the  Company  by the
Qualifying  Facility  for the number of months  since the  performance  criteria
became applicable by the product of: (1) the number of hours in the months which
have transpired and in which  deliveries  were accepted by the Company;  and (2)
the  maximum  kilowatt  capacity  contractually   committed  by  the  Qualifying
Facility.  This  calculation  shall be performed  each month until enough months
have transpired to calculate a true 12 month rolling average capacity factor.

SURETY BOND REQUIREMENTS

FPSC Rule 25-17.83(3)(c), F.A.C., requires that when early capacity payments are
elected,  the  Qualifying  Facility  must  provide a surety  bond or  equivalent
assurance of repayment of early  capacity  payments in the event the  Qualifying
Facility is unable to meet the terms and  conditions of its contract.  Depending
on the  nature of the  Qualifying  Facility's  operation,  financial  health and
solvency,  and its  ability to meet the terms and  conditions  of the  Company's
"Standard  Offer  Contract" one of the  following  may  constitute an equivalent
assurance of repayment:

      (1)   Surety bond;
      (2)   Escrow;
      (3)   Irrevocable letter of credit;
      (4)   Unsecured  promise by a municipal,  county,  or state  government to
            repay early company  payments in the event of default in conjunction
            with a legally binding commitment from such government  allowing the
            utility  to levy a  surcharge  on either the  electric  bills of the
            government's  electricity  consuming  facilities or the  constituent
            electric  customers of such government to assure that early capacity
            payments are repaid;

                                                     (Continued on Page No. 4)
<PAGE>

                                                                     Page 4 of 4

                               RATE SCHEDULE COG-2
                                   APPENDIX A
    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES
                             (QUALIFYING FACILITIES)
                           (Continued from Page No. 3)

      (5)   Unsecured promise by a privately owned Qualifying  Facility to repay
            early capacity  payments in the event of default in conjunction with
            a legally  binding  commitment  from the owner(s) of the  Qualifying
            Facility,  parent company,  and/or subsidiary companies allowing the
            utility to levy a surcharge on the electric  bills of the  owner(s),
            parent company,  and/or  subsidiary  companies located in Florida to
            assure that early capacity payments are repaid; or

      (6)   Other guarantee acceptable to the Company.

The Company will  cooperate  with each  Qualifying  Facility  applying for early
capacity  payments to determine  the exact form of an  "equivalent  assurance of
repayment"  to be required  based on the  particular  aspects of the  Qualifying
Facility.  The Company will endeavor to accommodate  an equivalent  assurance of
repayment which is in the best interests of both the Qualifying Facility and the
Company's ratepayers.


<PAGE>


                                                                     Page 1 of 1

                               RATE SCHEDULE COG-2

                                   APPENDIX B

    STANDARD OFFER CONTRACT RATE FOR PURCHASE OF FIRM CAPACITY AND ENERGY
      FROM QUALIFYING COGENERATION AND SMALL POWER PRODUCTION FACILITIES

                             (QUALIFYING FACILITIES)

                        NORMAL PAYMENT OPTION PARAMETERS

Where, for a one year deferral:

                                                                           Value

VACm         =    utility's  value of avoided  capacity,  in  dollars  per 18.58
                  kilowatt per month, during month m;

C            =    a constant  risk  multiplier  for the purpose of the utility's
                  0.8 standard contract offer;

K            =    present  value of  carrying  charge  for one dollar of 1.75616
                  investment  over L years with carrying  charges  assumed to be
                  paid at the end of each year;

In           =    total direct and indirect  cost,  in dollars per kilowatt 2044
                  including AFUDC but excluding  CWIP, of the statewide  avoided
                  unit with an in-service date of year n;

Dn           =    total first  year's  fixed and  variable  operating  and 66.27
                  maintenance expense, less fuel and in dollars per kilowatt per
                  year, of the statewide  avoided unit deflated to the beginning
                  of the year n by io;

lp           =    annual  escalation rate associated with the plant cost of 5.4%
                  the statewide avoided unit;

io           =    annual  escalation rate associated with the operation and 5.4%
                  maintenance expense of the statewide avoided unit;

r            =    annual  discount  rate,  defined as the utility's  incremental
                  10.50% after tax cost capital;

l            =    expected life of the statewide avoided unit; 31

n            =    year for which the  statewide  avoided  unit is deferred  1992
                  starting  with its original  anticipated  in-service  date and
                  ending with the  termination  of the contract for the purchase
                  of firm energy and capacity;

                         EARLY PAYMENT OPTION PARAMETERS

Am           =    monthly  avoided  capital cost component of capacity  payments
                  4.87 to be made to the Qualifying  Facility  starting as early
                  as seven years prior to the anticipated in-service date of the
                  statewide avoided unit, in dollars per kilowatt per month;

ip           =    annual  escalation rate associated with the plant cost of 5.4%
                  the statewide avoided unit;

n            =    year for which early  capacity  payments to a Qualifying  1985
                  Facility are made;

F            =    the  cumulative  present  value of the  avoided  capital  cost
                  699.1%  component of capacity  payments  which would have been
                  made had  capacity  payments  commenced  with the  anticipated
                  in-service  date of the  statewide  avoided unit and continued
                  for a period of 10 years;

r            =    annual  discount  rate,  defined as the utility's  incremental
                  10.5% after tax cost capital;

t            =    the term,  in years,  of the  contract  for the purchase of 17
                  firm capacity  commencing  prior to the in-service date of the
                  statewide avoided unit.
