Last year money was to be set aside in reserves to cover the net amount needed
to resolve these issues with Transco, BUG , LILCO and Enron.  The total dollars
required was approximately $4.25 million.  An amount of $3.55 million needed for 
the Transco historical imbalance resolution.  The remaining balance was needed
for the BUG and LILCO accounting issues that Keyspan brought to our attention 
last year.

Bob Hall has $3.5 million reserved in his area for the Transco historical imbalance.
The remaining $50,000 for Transco and approximately $700,000 of additional funds
for the accounting issues were to be reserved last year under "The Office of the
Chairman".  Sally Beck and Janet Dietrich arranged for this additional money to
be reserved at the "Chairman" level since the additional funds were needed to 
correct an old accounting problem that should not hit the East Desk P&L.  Also, the 
arrangement was that the reserve would be maintained until the settlement payments
were made by Enron.

As with most stories, there is some good news and some bad news.  First, the bad news.
After a great deal of investigation, it appears that there currently is no reserve at the
"Office of the Chairman"  for these additional funds.  Now, the good news.  Georgeanne 
will take the necessary steps to make sure there is money available so that we can
quickly resolve these issues with Keyspan and Transco.

If you have questions, please give me a call.

Ruth
x31667