LIMITED LIABILITY COMPANY AGREEMENT
                                       OF
                              CINERGY PROPANE, LLC


     This LIMITED LIABILITY COMPANY  AGREEMENT (this  "Agreement"),  dated as of
October 18, 2001, of Cinergy Propane,  LLC, a Delaware limited liability company
(the "Company"), is entered into by Cinergy Marketing & Trading, LLC, a Delaware
LLC, as the sole member of the Company (the "Member");

                                    RECITALS

     WHEREAS,  the  Company was formed on October 18,  2001,  by an  "authorized
person"  within the meaning of the Delaware  Limited  Liability  Company Act (as
amended from time to time, the "Act");

     WHEREAS,  in  accordance  with  Section  18-201  (d) of the Act,  it is the
intention  of the  Member  that the  Agreement  be  effective  as of the date of
formation, October 18, 2001;

     WHEREAS,  the Member holds the sole limited  liability  company interest in
the Company as of October 18, 2001; and

     WHEREAS,  the Member desires to set forth its understandings  regarding its
rights, obligations and interests with respect to the affairs of the Company and
the conduct of its business.

     NOW,  THEREFORE,  in  consideration  of the agreements and  obligations set
forth  herein and for other good and  valuable  consideration,  the  receipt and
sufficiency  of which are  hereby  acknowledged,  the  Member  hereby  agrees as
follows:

                                    ARTICLE I

                                   Definitions

     Section 1.1 Definitions.  Capitalized  terms used but not otherwise defined
herein shall have the meanings assigned to them in the Act.

                                   ARTICLE II

                               General Provisions

     Section 2.1 Company Name. The name of the Company is "Cinergy Propane, LLC"
The business of the Company may be conducted upon compliance with all applicable
laws under any other name designated by the member(s).


     Section 2.2 Registered Office; Registered Agent.

     (a)  The  Company  shall  maintain  a  registered  office  in the  State of
          Delaware  at,  and the name and  address of the  Company's  registered
          agent in the State of Delaware is,  Corporation  Trust  Company,  1209
          Orange Street, Wilmington, Delaware, 19801.

     (b)  The  business  address  of the  Company  is 139  East  Fourth  Street,
          Cincinnati,  Ohio,  45201,  or such other  place as the  Member  shall
          designate.

     Section 2.3 Nature of Business Permitted;  Powers. The Company may carry on
any lawful  business,  purpose or activity.  The Company  shall  possess and may
exercise all the powers and privileges granted by the Act or by any other law or
by this Agreement,  together with any powers incidental  thereto, so far as such
powers and privileges  are necessary or convenient to the conduct,  promotion or
attainment of the business purposes or activities of the Company.

     Section  2.4  Business  Transactions  of a  Member  with  the  Company.  In
accordance  with Section 18-107 of the Act, a member may transact  business with
the  Company  and,  subject to  applicable  law,  shall have the same rights and
obligations with respect to any such matter as a person who is not a member.

     Section 2.5 Fiscal Year. The fiscal year of the Company (the "Fiscal Year")
for financial statement purposes shall end on December 31 of each year.

     Section 2.6 Effective  Date. In accordance  with Section  18-201 (d) of the
Act, it is the intention of the Member that the Agreement be effective as of the
date of formation, October 18, 2001.

                                   ARTICLE III

                                    Member(s)

     Section 3.1  Admission of Member(s).  The Member is hereby  admitted to the
Company in respect of an Interest (as defined in Section 3.2), which is the sole
Interest  outstanding as of the effective time of this Agreement.  New member(s)
shall be admitted only with the approval of the Member.

     Section 3.2  Interests.  The Company  shall be authorized to issue a single
class of  limited  liability  company  interest  (as  defined  in the  Act,  the
"Interest"),  which shall  include  any and all  benefits to which the holder of
such Interest may be entitled in this  Agreement,  together with all obligations
of such  person to  comply  with the terms  and  provisions  of this  Agreement.
Interests may, but need not be, evidenced by a certificate of limited  liability
company interest issued by the Company.

     Section 3.3 Liability of Member(s).

     (a)  All debts, obligations and liabilities of the Company, whether arising
          in contract, tort or otherwise, shall be solely the debts, obligations
          and  liabilities  of the  Company,  and no member  shall be  obligated
          personally  for any such debt,  obligation or liability of the Company
          solely by reason of being a member.

     (b)  Except as otherwise expressly required by law, a member shall not have
          any liability in excess of (i) the amount of its capital  contribution
          to the Company, (ii) its share of any assets and undistributed profits
          of the Company,  (iii) its obligation to make other payments,  if any,
          expressly  provided for in this Agreement or any amendment  hereto and
          (iv) the amount of any distributions wrongfully distributed to it.

     Section 3.4 Access to and Confidentiality of Information; Records.

     (a)  Any member  shall have the right to obtain from the Company  from time
          to time upon reasonable demand for any purpose  reasonably  related to
          the member's  interest as a member of the Company,  the  documents and
          other information described in Section 18-305(a) of the Act.

     (b)  Any  demand  by a member  pursuant  to this  Section  3.4  shall be in
          writing and shall state the purpose of such demand.

     Section 3.5 Meetings of Member(s).

     (a)  Meetings of the member(s) may be called at any time by any member.

     (b)  Except as  otherwise  provided by law,  if  additional  member(s)  are
          admitted,  a majority of the  member(s),  determined  in proportion to
          their  respective  interests in the  Company,  entitled to vote at the
          meeting shall constitute a quorum at all meetings of the member(s).

     (c)  Any action required to or which may be taken at a meeting of member(s)
          may be taken  without a meeting,  without  prior  notice and without a
          vote, if a consent or consents in writing, setting forth the action so
          taken, shall be signed by all member(s).

     (d)  Regular  meetings of the  member(s)  shall be held at least  annually.
          Member(s)  may  participate  in  a  meeting  by  means  of  conference
          telephone  or similar  communications  equipment by means of which all
          persons  participating  in  the  meeting  can  hear  each  other,  and
          participation in a meeting by such means shall constitute  presence in
          person at such meeting.

     Section 3.6 Vote. Except as specifically set forth herein, the business and
affairs  of the  Company  shall be  managed  by or under  the  direction  of the
member(s) by majority vote.

     Section 3.7 Notice.  Meetings of the  member(s)  may be held at such places
and at such times as the member(s) may from time to time  determine.  Any member
may at any time call a meeting  of the  member(s).  Written  notice of the time,
place,  and purpose of such meeting  shall be served by  registered or certified
prepaid,  first class mail, via overnight  courier using a nationally  reputable
courier,  or by fax or cable,  upon each  member and shall be given at least two
(2) business days prior to the time of the meeting.  No notice of a meeting need
be given to any member if a written waiver of notice,  executed  before or after
the meeting by such member thereunto duly authorized,  is filed with the records
of the  meeting,  or to any member who attends the  meeting  without  protesting
prior thereto or at its  commencement the lack of notice to him or her. A waiver
of notice need not specify the purposes of the meeting.

     Section 3.8 Delegation of Powers.  Subject to any  limitations set forth in
the Act, the member(s) may delegate any of its powers to officers of the Company
or to committees  consisting  of persons who may or may not be member(s).  Every
officer or committee  shall,  in the exercise of the power so delegated,  comply
with any restrictions that may be imposed on them by the member(s).

     Section 3.9  Withdrawals  and Removals of Member(s).  No member may resign,
withdraw or be removed as a member of the Company without the written consent of
all of the member(s).

                                   ARTICLE IV

                                   Management

     Section 4.1 General.  Except as specifically set forth herein, the business
and affairs of the Company  shall be managed by and under the  direction  of the
Member,  or, if  additional  members are admitted,  the members,  who shall have
full,  exclusive and complete  discretion to manage and control the business and
affairs of the Company as would (if the Company were a  corporation)  be subject
to control by a board of directors, to make all decisions affecting the business
and affairs of the Company and to take all such actions as it deems necessary or
appropriate to accomplish  the purposes of the Company as set forth herein.  The
Member or members shall serve  without  compensation  from the Company,  and the
Member or members shall bear the cost of its participation in meetings and other
activities of the Company.

     Section 4.2 Officers.

     (a)  Election,  Term of Office.  Officers shall be elected  annually by the
          member(s). Except as provided in paragraphs (b) or (c) of this Section
          4.1, each officer  shall hold office until his or her successor  shall
          have been chosen and qualified.  Any two offices,  except those of the
          President and the  Secretary,  may be held by the same person,  but no
          officer shall  execute,  acknowledge  or verify any instrument in more
          than  one  capacity  if such  instrument  is  required  by law or this
          Agreement to be executed,  acknowledged or verified by any two or more
          officers.

     (b)  Resignations and Removals. Any officer may resign his or her office at
          any time by delivering a written resignation to the member(s).  Unless
          otherwise  specified therein,  such resignation shall take effect upon
          delivery. Any officer may be removed from office with or without cause
          by either the member(s) or the President.

     (c)  Vacancies and Newly Created Offices. If any vacancy shall occur in any
          office by reason of death, resignation,  removal,  disqualification or
          other cause, or if any new office shall be created,  such vacancies or
          newly  created  offices  may be filled by the  President,  subject  to
          approval and election by the member(s).

     (d)  Conduct of Business.  Subject to the provisions of this Agreement, the
          day-to-day  operations of the Company shall be managed by its officers
          and such  officers  shall  have full power and  authority  to make all
          business  decisions,  enter into all  commitments  and take such other
          actions in connection  with the business and operations of the Company
          as they deem appropriate.  Such officers shall perform their duties in
          a manner  consistent with this Agreement and with directions which may
          be given from time to time by the member(s).

     (e)  President.  Subject to the further  directives of the  member(s),  the
          President shall have general and active  management of the business of
          the Company  subject to the  supervision of the  member(s),  shall see
          that all orders and  resolutions  of the  member(s)  are carried  into
          effect and shall have such  additional  powers  and  authority  as are
          specified by the provisions of this Agreement.

     (f)  Secretary.  The  Secretary  shall attend all meetings of the member(s)
          and record all the  proceedings  of the meetings and all actions taken
          thereat in a book to be kept for that  purpose and shall  perform like
          duties for the standing committees when required.  The Secretary shall
          give, or cause to be given,  notice of all meetings of the  member(s),
          and  shall  perform  such  other  duties as may be  prescribed  by the
          member(s) or the President.  The Assistant Secretary, if there be one,
          shall,  in  the  absence  of the  Secretary  or in  the  event  of the
          Secretary's  inability  to act,  perform the duties and  exercise  the
          powers of the  Secretary  and shall perform such other duties and have
          such other powers as the member(s) may from time to time prescribe.

     (g)  Other Officers. The member(s) from time to time may appoint such other
          officers or agents as it may deem  advisable,  each of whom shall have
          such  title,  hold office for such  period,  have such  authority  and
          perform  such  duties  as the  member(s)  may  determine  in its  sole
          discretion.  The  member(s)  from time to time may  delegate to one or
          more  officers  or agents the power to appoint  any such  officers  or
          agents  and  prescribe  their  respective  rights,  terms  of  office,
          authorities and duties.

     (h)  Officers as Agents;  Authority.  The officers,  to the extent of their
          powers set forth in this  Agreement  and/or  delegated  to them by the
          member(s),  are agents and  managers of the Company for the purpose of
          the  Company's  business,  and the  actions of the  officers  taken in
          accordance with such powers shall bind the Company.

     Section 4.3 Reliance by Third Parties. Persons dealing with the Company are
entitled to rely  conclusively  upon the power and  authority  of the  member(s)
herein set forth.

     Section 4.4 Expenses.  Except as otherwise provided in this Agreement,  the
Company shall be responsible  for and shall pay all expenses out of funds of the
Company  determined by the member(s) to be available for such purpose,  provided
that such  expenses  are those of the Company or are  otherwise  incurred by the
member(s) in connection with this Agreement, including, without limitation:

     (a)  all  expenses  related to the  business of the Company and all routine
          administrative  expenses of the Company,  including the maintenance of
          books and records of the Company,  the preparation and dispatch to any
          member(s)  of checks,  financial  reports,  tax  returns  and  notices
          required  pursuant to this Agreement or in connection with the holding
          of any meetings of the member(s);

     (b)  all expenses incurred in connection with any litigation or arbitration
          involving the Company  (including  the cost of any  investigation  and
          preparation)  and the amount of any  judgment  or  settlement  paid in
          connection therewith;

     (c)  all expenses for indemnity or  contribution  payable by the Company to
          any person;

     (d)  all expenses incurred in connection with the collection of amounts due
          to the Company from any person;

     (e)  all expenses incurred in connection with the preparation of amendments
          to this Agreement; and

     (f)  expenses incurred in connection with the liquidation,  dissolution and
          winding up of the Company.

                                    ARTICLE V

                                     Finance

     Section  5.1 Form of  Contribution.  The  contribution  of a member  to the
Company  must be in cash or  property,  provided  that if there is more than one
member,  all member(s) must consent in writing to contributions of property.  To
the extent there is more than one member,  additional  contributions in the same
proportion  shall  be made by each  member,  except  as may be  approved  by all
member(s).

                                   ARTICLE VI

                                  Distribution

     Section 6.1 Distribution in Kind. Notwithstanding the provisions of Section
18-605 of the Act, a member may  receive  distributions  from the Company in any
form other than cash, and may be compelled to accept a distribution of any asset
in kind from the Company.

                                   ARTICLE VII

                             Assignment of Interests

     Section 7.1  Assignment of Interests.  A Member may assign and transfer all
or any part of its Interest upon the written  consent of all other  members,  if
any.  Provided  that a transfer is permitted in  accordance  with the  preceding
sentence and the transferee agrees to be bound by the terms of this Agreement by
executing a counterpart  hereto,  such transferee  shall be deemed admitted as a
member  of  the  Company  to  the  extent  of  such  transferred  Interest,  and
immediately  thereafter the transferor  shall be deemed withdrawn as a member of
the Company to the extent of such transferred Interest.

                                  ARTICLE VIII

                                   Dissolution

     Section 8.1 Duration. The duration of the Company shall be perpetual.

     Section 8.2 Winding Up.  Subject to the  provisions  of the Act, the Member
or, if  additional  member(s) are  admitted,  the  member(s)  (acting by written
consent of all member(s)) shall have the right to wind up the Company's  affairs
in  accordance  with  Section  18-803 of the Act (and shall  promptly do so upon
dissolution of the Company) and shall also have the right to act as or appoint a
liquidating trustee in connection therewith.

     Section 8.3 Distribution of Assets. Upon the winding up of the Company, the
assets shall be distributed in the manner provided in Section 18-804 of the Act.

                                   ARTICLE IX

                              Tax Characterization

     Section 9.1 Tax  Treatment.  The Company  shall  timely make all  necessary
elections  and filings for federal,  state,  and local tax purposes such that it
will not be treated as a separate entity, but, instead, will be disregarded, for
federal, state, and local tax purposes.

                                    ARTICLE X

                         Exculpation and Indemnification

     Section 10.1  Exculpation.  Notwithstanding  any other  provisions  of this
Agreement,  whether  express  or  implied,  or  obligation  or duty at law or in
equity,  any  member,  or  any  officers,  directors,  stockholders,   partners,
employees,  representatives or agents of any of the foregoing,  nor any officer,
employee,  representative,  Manager  or  agent  of  the  Company  or  any of its
affiliates  (individually,  a "Covered  Person" and  collectively,  the "Covered
Persons")  shall be liable to the  Company  or any other  person  for any act or
omission (in relation to the Company,  this Agreement,  any related  document or
any transaction or investment  contemplated  hereby or thereby) taken or omitted
in good faith by a Covered Person and in the reasonable  belief that such act or
omission is in or is not  contrary to the best  interests  of the Company and is
within the scope of authority  granted to such Covered  Person by the Agreement,
provided  that  such  act  or  omission  does  not  constitute  fraud,   willful
misconduct, bad faith, or gross negligence.

     Section 10.2  Indemnification.  To the fullest extent permitted by law, the
Company shall  indemnify and hold harmless each Covered  Person from and against
any and all losses, claims, demands,  liabilities,  expenses,  judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, civil, criminal, administrative or investigative, in which
the Covered Person may be involved,  or threatened to be involved, as a party or
otherwise,  by reason of its  management  of the affairs of the Company or which
relates to or arises out of the Company or its property,  business or affairs. A
Covered Person shall not be entitled to indemnification  under this Section 10.2
with  respect  to any claim,  issue or matter in which it has  engaged in fraud,
willful misconduct, bad faith or gross negligence.

                                   ARTICLE XI

                                  Miscellaneous

     Section 11.1 Amendment to this Agreement.  Except as otherwise  provided in
this  Agreement,  this  Agreement  may be  amended  by,  and only by, a  written
instrument  executed by the Member or, if  additional  member(s)  are  admitted,
unanimous consent of the member(s).

     Section  11.2  Successors;  Counterparts.  Subject  to Article  VIII,  this
Agreement  (a) shall be binding as to the  executors,  administrators,  estates,
heirs,  assigns and legal  successors,  or nominees or  representatives,  of the
Member or, if additional  member(s)  are admitted,  the member(s) and (b) may be
executed  in  several  counterparts  with  the  same  effect  as if the  parties
executing the several counterparts had all executed one counterpart.

     Section 11.3 Governing Law; Severability.  This Agreement shall be governed
by and  construed in accordance  with the laws of the State of Delaware  without
giving effect to the principles of conflict of laws thereof. In particular, this
Agreement  shall be construed to the maximum extent  possible to comply with all
the terms and conditions of the Act. If, nevertheless, it shall be determined by
a court  of  competent  jurisdiction  that any  provisions  or  wording  of this
Agreement shall be invalid or  unenforceable  under the Act or other  applicable
law,  such  invalidity  or  unenforceability  shall not  invalidate  the  entire
Agreement  and this  Agreement  shall be  construed  so as to limit  any term or
provision  so as to make it  enforceable  or valid  within the  requirements  of
applicable law, and, in the event such term or provisions  cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable terms or
provisions.  If it shall be determined by a court of competent jurisdiction that
any provisions  relating to the  distributions and allocations of the Company or
to any  expenses  payable by the  Company  are  invalid or  unenforceable,  this
Agreement  shall be construed or interpreted so as (a) to make it enforceable or
valid and (b) to make the distributions and allocations as closely equivalent to
those set forth in this Agreement as is permissible under applicable law.

     Section 11.4 Filings.  Cecilia Temple was an "authorized person" within the
meaning of the Act for purposes of filing the original  Certificate of Formation
of the Company  with the State of Delaware on October 18,  2001.  Following  the
execution  and delivery of this  Agreement,  the Member shall be an  "authorized
person" within the meaning of the Act, and shall prepare any documents  required
to be filed and recorded under the Act, and the Member shall promptly cause each
such document  required to be filed and recorded in accordance with the Act and,
to the extent  required by local law, to be filed and recorded or notice thereof
to be  published  in the  appropriate  place in each  jurisdiction  in which the
Company may  hereafter  establish  a place of  business.  The Member  shall also
promptly cause to be filed, recorded and published such statements of fictitious
business  name  and  any  other  notices,  certificates,   statements  or  other
instruments required by any provision of any applicable law of the United States
or any state or other  jurisdiction  which  governs the conduct of its  business
from time to time.

     Section  11.5  Headings.  Section  and  other  headings  contained  in this
Agreement  are for  reference  purposes  only and are not  intended to describe,
interpret,  define  or  limit  the  scope or  intent  of this  Agreement  or any
provision hereof.

     Section 11.6 Further Assurances.  Each member agrees to perform all further
acts and execute,  acknowledge  and deliver any documents that may be reasonably
necessary to carry out the provisions of this Agreement.

     Section 11.7 Notices. All notices, requests and other communications to any
member shall be in writing  (including  telecopier or similar writing) and shall
be given to such member (and any other person  designated by such member) at its
address or telecopier  number set forth in a schedule  filed with the records of
the  Company  or such  other  address or  telecopier  number as such  member may
hereafter specify for the purpose by notice. Each such notice,  request or other
communication shall be effective (a) if given by telecopier, when transmitted to
the number specified  pursuant to this Section and the appropriate  confirmation
is  received,  (b) if given  by  mail,  72 hours  after  such  communication  is
deposited in the mails with first class postage prepaid, addressed as aforesaid,
or (c) if given by any other  means,  when  delivered  at the address  specified
pursuant to this Section.

     Section 11.8 Books and Records;  Accounting.  The Member or, if  additional
member(s)  are  admitted,  the  member(s)  shall keep or cause to be kept at the
address of the Company (or at such other place as the member(s)  shall determine
in their discretion) true and full books and records regarding the status of the
business and financial condition of the Company.

     IN WITNESS WHEREOF,  the undersigned has duly executed this Agreement as of
the date first above written.



                                         CINERGY MARKETING & TRADING, LLC



                                         By:  __________________________
                                                  Michael J. Cyrus
                                                  President