SIERRA PACIFIC POWER CO
NEVADA POWER AMENDMENT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>7
<FILENAME>dex103.txt
<DESCRIPTION>NEVADA POWER AMENDMENT AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.3

                              AMENDMENT AGREEMENT
                              -------------------

     This AMENDMENT AGREEMENT (this "Agreement"), is made and entered into as of
                                     ---------
August 1, 2001, among NEVADA POWER COMPANY (the "Company"), MELLON BANK, N.A.
                                                 -------
("Mellon"), FIRST UNION NATIONAL BANK ("First Union"), WELLS FARGO BANK, N.A.
  ------                                -----------
("Wells Fargo"), and the other parties set forth on the signatures pages hereto.
  -----------

                                   RECITALS
                                   --------

     A.   The Company, Mellon, in its capacity as administrative agent (the
"Administrative Agent"), First Union and Wells Fargo, each in their capacity as
 --------------------
syndication agent, and the Lenders have entered into a Credit Agreement, dated
as of June 24, 1999 (as amended, modified and supplemented through the date
hereof, the "Credit Agreement").
             ----------------

     B.   The Company desires, and the Administrative Agent and the Required
Lenders are willing, to amend the Credit Agreement upon the terms set forth in
this Agreement.

     NOW, THEREFORE, in consideration of the foregoing, the premises and
mutual covenants contained herein and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

     1.   Defined Terms.  Unless otherwise defined herein, capitalized terms
          -------------
used herein shall have the meanings given thereto in the Credit Agreement.

     2.   Effectiveness of this Agreement.  This Agreement shall become
          -------------------------------
effective and the amendments described in Section 3 below shall become effective
at the time (the "Effective Time") on the first date (the "Effective Date") on
                  --------------                           --------------
which each of the following conditions shall be satisfied or waived by the
Administrative Agent and the Required Lenders:

          (a)  Execution of Agreement.  The Company and the Required Lenders
               ----------------------
     shall have executed a copy of this Agreement (whether the same or different
     copies) and shall have delivered the same to the Administrative Agent.

          (b)  No Litigation.  The Administrative Agent and the Required Lenders
               -------------
     shall be satisfied that, immediately prior to the Effective Time, no
     judgment, order, injunction or other restraint shall have been issued or
     filed which restrains, and no hearing seeking injunctive relief or other
     restraint is pending or has been noticed which seeks to restrain, the
     Company from consummating the transactions described in the Loan Documents
     or this Agreement.

          (c)  No Default; Representations and Warranties.  The Administrative
               ------------------------------------------
     Agent and the Required Lenders shall be satisfied that, immediately prior
     to the Effective Time and after giving effect to this Agreement, (i) there
     shall exist no Default or Event of Default and (ii) the representations and
     warranties of the Company contained in the Loan Documents to which the
     Company is a party are true and correct in all material respects as of the
     Effective Time with the same effect as though such representations and
     warranties had been made on and as of the Effective Time (except for such
<PAGE>

     representations and warranties made as of a specified date, which shall be
     true and correct in all material respects as of such specified date).

          (d)  Corporate Proceedings.  All corporate and legal proceedings and
               ---------------------
     all instruments and agreements in connection with the transactions
     contemplated in this Agreement and the other Loan Documents shall be
     satisfactory in form and substance to the Administrative Agent and the
     Required Lenders, and the Administrative Agent shall have received all
     information and copies of all documents and papers, including records of
     corporate proceedings and governmental approvals, if any, which any Lender
     reasonably may have requested in connection therewith, such documents and
     papers where appropriate to be certified by proper corporate or
     governmental authorities.

          (e)  Fee.  For consenting to the amendments contained in this
               ---
     Agreement, each Lender that executes and delivers this Agreement prior to
     5:00 p.m., Pacific Time, on July 31, 2001 shall have received on or before
     the Effective Date a fee in immediately available funds equal to the
     product of (i) 0.25% and (ii) the aggregate amount of such Lender's
     Commitments.

          (f)  Payments.  The Administrative Agent and each Lender shall have
               --------
     received all amounts, if any, owing from the Company to such Person through
     and including the Effective Date.

All the certificates and other documents and papers referred to in this Section
2, unless otherwise specified, shall be delivered to the Administrative Agent's
counsel, White & Case LLP, at 633 West Fifth Street, 19/th/ Floor, Los Angeles,
CA 90071, facsimile (213) 687-0758, for the account of each of the Lenders and
in sufficient counterparts for each of the Lenders and shall be satisfactory in
form and substance to the Administrative Agent and the Required Lenders.

     3.   Amendments.  At and from the Effective Time, the Credit Agreement
          ----------
shall be amended as follows:

          (a)  The cover page to the Credit Agreement shall be amended by
     deleting the text "$150,000,000" and inserting the text "$120,000,000" in
     its place.

          (b)  Section 1.01 of the Credit Agreement shall be amended as follows:

               (i)  The defined term "Commitment" shall be amended by deleting
                                      ----------
          the text "$150,000,000" in the last sentence thereof and inserting the
          text "$120,000,000" in its place.

               (ii) The defined term "Final Repayment Date" shall be deleted in
                                      --------------------
          its entirety and the following shall be substituted therefor:

                    "Final Repayment Date" means the earliest to occur of (a)
                     --------------------
               the date that is one year after the Term Loan Conversion Date,
               (b) August 27, 2002 and (c) the date on which the Obligations
               under this Agreement terminate, whether by prepayment,
               cancellation, acceleration or otherwise."

                                      -2-
<PAGE>

               (iii)  The following defined term shall be inserted immediately
          after the definition of "GAAP":

                     "General and Refunding Mortgage Indenture" means the
                      ----------------------------------------
               General and Refunding Mortgage Indenture, dated as of May 1,
               2001, between the Borrower and The Bank of New York, as trustee,
               as the same may be amended, modified or supplemented from time to
               time."

               (iv)  The defined term "Revolving Termination Date" shall be
                                      --------------------------
          deleted in its entirety and the following shall be substituted
          therefor:

                     "Revolving Termination Date" means the earlier of (i)
                      --------------------------
               November 30, 2001, or such date after November 30, 2001 to which
               the Commitments are extended in accordance with Section 2.06(e),
               and (ii) the date the Obligations and Commitments under this
               Agreement terminate, whether by prepayment, cancellation,
               acceleration or otherwise."

               (v)   The following defined term shall be inserted immediately
          after the definition of "Total Indebtedness":

                     "Triggering Event" has the meaning assigned to such term in
                      ----------------
               Section 6.09(b)."

          (c)  Section 6.01(a) of the Credit Agreement shall be amended by
     deleting the text "0.58 to 1" and inserting the text "0.60 to 1" in its
     place.

          (d)  Section 6.02(b) of the Credit Agreement shall be deleted in its
     entirety and the following shall be substituted therefor:

               "(b)  Liens securing obligations issued under and pursuant to the
          terms and conditions of either (i) the First Mortgage Indenture or
          (ii) the General and Refunding Mortgage Indenture; provided that the
                                                             --------
          aggregate amount of Indebtedness issued by the Company under and
          pursuant to the terms and conditions of the First Mortgage Indenture
          and the General and Refunding Mortgage Indenture shall not exceed
          $772.50 million, except that such Indebtedness may exceed $772.50
          million to the extent, and only to the extent, required (x) to secure
          Loans pursuant to Section 6.09(b) of this Agreement, and any similar
          provision of any future short-term credit facility in a principal
          amount not to exceed $175,000,000 among the Borrower, the
          Administrative Agent, as agent, and the other financial institutions
          party thereto, (y) to satisfy a negative pledge to AMBAC Assurance
          Corporation in the amount of $115,000,000 of First Mortgage Bonds and
          (z) to satisfy a negative pledge to holders of the Borrower's 6.20%
          Senior Unsecured Notes, Series B, due April 15, 2004 in the amount of
          $130,000,000 of General and Refunding Mortgage Bonds."

                                      -3-
<PAGE>

          (e)  Section 6.04 of the Credit Agreement shall be amended by deleting
     it in its entirety and replacing it with the following:

               "SECTION 6.04  Dispositions of Properties.
                              --------------------------

               The Borrower shall not, and shall not permit any of its
          Subsidiaries to, sell, convey, assign, lease, sale-leaseback,
          transfer, abandon or otherwise dispose of, voluntarily or
          involuntarily (collectively, "Dispose"), any of its Properties, or
                                        -------
          agree, become or remain liable contingently or otherwise to do any of
          the foregoing, except that, so long as no Default or Event of Default
          shall have occurred and be continuing or shall exist at such time or
          after giving effect to such transaction, the Borrower and its
          Subsidiaries may Dispose of Property (a) in transactions in the
          ordinary course of business consistent with past practice, (b) that is
          obsolete, (c) comprising accounts receivable transferred to a
          commercial paper conduit, special purpose subsidiary or similar
          entity; provided that (i) the aggregate face amount of such accounts
                  --------
          receivable, when added to the aggregate face amount of all other
          accounts receivable Disposed of in reliance on this clause (c), does
          not exceed $125,000,000 and (ii) the net cash proceeds from the
          Disposition of such accounts receivable, (A) when added to the net
          cash proceeds of all other Dispositions of accounts receivable made in
          reliance on this clause (c), are not less than 80% of the aggregate
          face amount of all accounts receivable Disposed of in reliance on this
          clause (c) and (B) at the time of such Disposition, do not exceed the
          sum of (I) the balance of the Borrower's deferred energy accrual
          account at such time and (II) the Borrower's deferred energy costs
          actually incurred but not yet reflected in the Borrower's deferred
          energy accrual account, in each case as set forth in the Borrower's
          books and records; provided, further, that each Disposition made by
                             --------  -------
          the Borrower in reliance on this clause (c) shall constitute a
          representation and warranty of the Borrower, made at the time of such
          Disposition, that the conditions set forth in clauses (i) and (ii)
          above are satisfied at such time and (d) in transactions other than as
          provided in Section 6.04 (a), (b) and (c); provided that the aggregate
                                                     --------
          book value of all Property Disposed of pursuant to this Section
          6.04(d) from and after the date hereof shall not exceed $50,000,000."

          (f)  Section 6.09 of the Credit Agreement shall be amended by deleting
     it in its entirety and replacing it with the following:

               "SECTION 6.09  Equal and Ratable Lien; Grant of Security Interest
                              --------------------------------------------------
          in Certain Events.
          -----------------

               (a)   If, notwithstanding the prohibition contained in Section
          6.02, the Borrower or any of its Subsidiaries is subjected to any Lien
          upon any of its Property, other than those permitted by the provisions
          of Section 6.02, the Borrower will, and will cause its Subsidiaries
          to, make or cause to be made effective provisions whereby the
          Borrowings will be secured equally and ratably with any and all other
          obligations thereby secured, such security to be pursuant to
          agreements reasonably satisfactory to the Administrative Agent and, in
          any such case, the

                                      -4-
<PAGE>

          Borrowings shall have the benefit, to the fullest extent that, and
          with such priority as, the Lenders may be entitled under applicable
          law, of an equitable Lien on such Property. Such violation of Section
          6.02 will constitute an Event of Default, whether or not provision is
          made for an equal and ratable Lien pursuant to this Section 6.09, and
          no such Lien or agreements with respect thereto shall be deemed to be
          a waiver of or consent to such Event of Default by the Administrative
          Agent or any Lender.

               (b)  If any of the following (each, a "Triggering Event") shall
          occur:

                    (x)  Sierra Pacific Resources shall not complete an
               underwritten public offering of its common stock with minimum net
               proceeds to Sierra Pacific Resources of $200,000,000 by September
               30, 2001;

                    (y)  Moody's shall rate (1) the Index Debt or the senior,
               unsecured, long-term indebtedness for borrowed money of SPPC as
               Baa3 or lower, or (2) the commercial paper of the Borrower or
               SPPC below Prime-2; or

                    (z)  S&P shall rate (1) the Index Debt or the senior,
               unsecured, long-term indebtedness for borrowed money of SPPC as
               BB+ or lower, or (2) the commercial paper of the Borrower or SPPC
               below A-2;

               then,

          the Borrower shall issue or cause to be issued, not later than 5
          Business Days after the date on which the Triggering Event first
          occurs, for the ratable benefit of the Lenders, General and Refunding
          Mortgage Bonds (as defined in the General and Refunding Mortgage
          Indenture), to the full extent permitted under applicable orders of
          the Public Utilities Commission of Nevada and the General and
          Refunding Mortgage Indenture, in an aggregate principal amount not to
          exceed the amount of principal of the Loans then outstanding, with
          interest and other terms and conditions substantially similar to the
          Loans, and the Borrower shall perform or cause to be performed all
          acts, and execute or cause to be executed all resolutions, orders,
          instruments, certificates, agreements and other documents, required
          under the General and Refunding Mortgage Indenture (including the
          documents referred to in Section 6.09(c)) to give effect to the
          foregoing within such 5-Business Day period.

               (c)  On or before September 30, 2001, the Borrower shall deliver
          or cause to be delivered to the Administrative Agent substantially
          final versions of the following documents (all as defined in the
          General and Refunding Mortgage Indenture) which, upon execution,
          delivery and filing, shall be sufficient for the issuance of the
          General and Refunding Mortgage Bonds required by Section 6.09(b): a
          Supplemental Indenture, an Officer's Certificate setting forth the
          terms of the General and Refunding Mortgage Bonds, a Company Order
          requesting

                                      -5-
<PAGE>

          authentication of the General and Refunding Mortgage Bonds by the
          trustee under the General and Refunding Mortgage Indenture, a form of
          the General and Refunding Mortgage Bonds to be issued and forms of all
          legal opinions required to issue the General and Refunding Mortgage
          Bonds under the General and Refunding Mortgage Indenture. The forms of
          such documents, prior to their delivery to the Administrative Agent,
          shall have been approved by the trustee under the General and
          Refunding Mortgage Indenture and its counsel, but shall not be
          executed and delivered unless and until execution and delivery is
          required by Section 6.09(b)."

          (g)  Schedule I to the Credit Agreement shall be amended by deleting
     it in its entirety and replacing it with the following:

                                  "Commitments
                                   -----------

               [See definitions of "Commitment" in Section 1.01]


     LENDER                                    COMMITMENT AMOUNT
     ------                                    -----------------

     Mellon Bank, N.A.                            $  15,937,500
     Wells Fargo Bank, N.A.                       $  16,875,000
     First Union National Bank                    $  12,187,500
     Bank One                                     $  11,250,000
     BNP Paribas                                  $  11,250,000
     Credit Suisse First Boston                   $  11,250,000
     The Bank of New York                         $  11,250,000
     Union Bank of California, N.A.               $  11,250,000
     Bayerische Landesbank Girozentrale           $   9,375,000
     The Industrial Bank of Japan                 $   9,375,000
                    Total                         $ 120,000,000

     4.   Representations and Warranties. The Company makes, as of the Effective
          ------------------------------
Date, each of the representations and warranties set forth in Article V of the
Credit Agreement and such representations and warranties are, by this reference,
incorporated herein as if set forth herein in their entirety; provided that
                                                              --------
references to "Loan Documents" shall, for purposes of this paragraph, be deemed
to include this Agreement.

     5.   Miscellaneous.
          -------------

     (a)  Except as expressly modified by this Agreement, the Credit Agreement
shall continue to be and remain in full force and effect in accordance with its
terms.  Any future

                                      -6-
<PAGE>

reference to the Credit Agreement shall, from and after the Effective Time, be
deemed to be a reference to the Credit Agreement as amended by Section 3 of this
Agreement.

     (b)  This Agreement may be executed in any number of counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute but one instrument.

     (c)  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REFERENCE TO CONFLICTS OF LAW RULES.

     (d)  This Agreement may be executed by facsimile signature and each such
signature shall be treated in all respects as having the same effect as an
original signature.

     (e)  The rules of construction set forth in Section 1.03 of the Credit
Agreement are, by this reference, incorporated herein as if set forth in their
entirety, provided that references to "this Agreement" in such section shall
mean references to this Agreement.

                                  *    *    *

                                      -7-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.


                                       NEVADA POWER COMPANY


                                       By: _______________________
                                           Name:
                                           Title:

                               -Signature Page-
                              Amendment Agreement
<PAGE>

                                  MELLON BANK, N.A., as Administrative
                                     Agent and as a Lender



                                  By: _________________________
                                      Name:
                                      Title:

                               -Signature Page-
                              Amendment Agreement
<PAGE>

                                   WELLS FARGO BANK, N.A., as Syndication
                                      Agent and as a Lender

                                   By: __________________________________
                                       Name:
                                       Title:


                               -Signature Page-
                              Amendment Agreement
<PAGE>

                                   FIRST UNION NATIONAL BANK, as
                                     Syndication Agent and as a Lender


                                   By:_______________________________
                                      Name:
                                      Title:

                               -Signature Page-
                              Amendment Agreement
<PAGE>

                                   BANK ONE, N.A. (Main Office-Chicago)


                                   By:_________________________________
                                      Name:
                                      Title:

                               -Signature Page-
                              Amendment Agreement
<PAGE>

                                   BNP PARIBAS


                                   By:_____________________________
                                      Name:
                                      Title:


                                   By:_____________________________
                                      Name:
                                      Title:

                               -Signature Page-
                              Amendment Agreement
<PAGE>

                                  CREDIT SUISSE FIRST BOSTON



                                  By:____________________________
                                     Name:
                                     Title:

                               -Signature Page-
                              Amendment Agreement
<PAGE>

                                  THE BANK OF NEW YORK


                                  By:______________________________
                                     Name:
                                     Title:

                               -Signature Page-
                              Amendment Agreement
<PAGE>

                                  UNION BANK OF CALIFORNIA, N.A.



                                  By:______________________________
                                     Name:
                                     Title:

                               -Signature Page-
                              Amendment Agreement
<PAGE>

                                   BAYERISCHE LANDESBANK
                                     GIROZENTRALE


                                   By:_____________________________
                                      Name:
                                      Title:


                                   By:_____________________________
                                      Name:
                                      Title:

                               -Signature Page-
                              Amendment Agreement
<PAGE>

                                  THE INDUSTRIAL BANK OF JAPAN, LTD.


                                  By:_____________________________
                                     Name:
                                     Title:

                               -Signature Page-
                              Amendment Agreement

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