IRREVOCABLE LETTER OF CREDIT

                               NO. LCA12090300759NY



                                December 9, 2003



JPMorgan Chase Bank

4 New York Plaza, 15th Floor

New York, NY 10004







                     Attention: Capital Markets Fiduciary Services



Dear Sir or Madam:



     We  hereby  establish,  at the  request  and for  the  account  of  KeySpan

Generation LLC (the "Company"), in your favor, as Trustee under the Indenture of

Trust,  dated  as of  December  1,  1997 (as  amended  from  time to  time,  the

"Indenture"),  by and between New York State  Energy  Research  and  Development

Authority (the "Issuer") and you, as Trustee,  pursuant to which  $24,880,000 in

aggregate  principal amount of the Issuer's  Electric  Facilities  Revenue Bonds

(Long Island Lighting Company Project), 1997 Series A (the "Bonds"), are issued,

our  Irrevocable  Letter  of  Credit  No.  LCA12090300759NY,  in the  amount  of

$27,057,000 (subject to reduction and reinstatement as provided below).



     (1) Effective Date. This Letter of Credit shall become  effective only upon

surrender and  cancellation  of the letter of credit,  dated  December 11, 2000,

issued by National  Westminster Bank, Plc on behalf of the Company,  pursuant to

that certain Letter of Credit and  Reimbursement  Agreement dated as of December

1, 2000 between the Company and National Westminster Bank, Plc.



     (2)  Cancellation  Date. This Letter of Credit shall expire on the earliest

to occur of (i) December 8, 2006 (the "Stated  Termination Date"), (ii) the date

upon which we honor a draft  accompanying  a written and  completed  certificate

signed by you in  substantially  the form of  Exhibit  2  attached  hereto,  and

stating therein that such draft is the final draft to be drawn under this Letter

of Credit and that, upon the honoring of such draft,  this Letter of Credit will

expire in  accordance  with its  terms,  (iii) the date upon  which we receive a

written  certificate  signed  by you  and  stating  therein  that no  Bonds  are

"outstanding" under the Indenture,  (iv) the second business day (as hereinafter

defined) following the effective date of the conversion of the Bonds to a "Fixed

Rate"  pursuant to Section  2.04 of the  Indenture,  (v) the 12th  business  day

following  your having  received a notice from us that we are  terminating  this

Letter of Credit  and  directing  the  Trustee to cause a  mandatory  tender and

purchase of or to accelerate the Bonds  pursuant to Section  2.05(j) or 10.01(f)

or (g) of the  Indenture  and (vi) the date  upon  which we  receive  a  written

certificate  signed  by you  and  stating  therein  that  an  "Alternate  Credit

Facility" has been provided  under the Indenture  (such  earliest date being the

"Cancellation Date").





                                       1

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     As used  herein,  "business  day"  shall  mean any day of the year on which

banks  located in The City of New York,  New York,  or in the city in which your

principal  corporate  trust  office is  located  (as  specified  above),  or the

principal corporate trust office designated to us in a certificate substantially

in the form set forth in Exhibit 5 by any  transferee  who has  succeeded you as

Trustee under the Indenture,  or in the city in which the office at which drafts

may be  presented  hereunder,  are not required or  authorized  by law to remain

closed.



     (3) Principal and Interest  Components.  The aggregate  amount which may be

drawn  under  this  Letter of  Credit,  subject  to  reductions  in  amount  and

reinstatement as provided below, is $27,057,000,  of which the aggregate amounts

set forth below may be drawn as indicated.



          (i)  An  aggregate  amount  not  exceeding  $24,880,000   (Twenty-four

     million,  eight hundred  eighty  thousand  Dollars),  as such amount may be

     reduced and restored as provided below,  may be drawn in respect of payment

     of principal  (whether  upon  scheduled or  accelerated  maturity,  or upon

     redemption)  of the Bonds or the  portion  of the  purchase  price of Bonds

     corresponding to principal (the "Principal Component").



          (ii) An aggregate  amount not exceeding  $2,177,000 (Two million,  one

     hundred and seventy-seven  thousand Dollars), as such amount may be reduced

     and  restored  as  provided  below,  may be drawn in  respect of payment of

     interest  on the  Bonds  or the  portion  of the  purchase  price  of Bonds

     corresponding  to  interest,  but not more than an amount  equal to accrued

     interest on the Bonds for the period of 210 days immediately  preceding the

     date of such drawing at a maximum rate of 15% per annum,  calculated on the

     basis of a year of 360 days (the "Interest Component").



     (4)  Drawings.  Funds  under  this  Letter of Credit are  available  to you

against (i) your draft  dated on the date such draft is drawn on us,  stating on

its face: "Drawn under Irrevocable Letter of Credit No.  LCA12090300759NY  dated

December 9, 2003", and (ii) the appropriate  certificate  specified below,  duly

executed by you and  appropriately  completed (it being understood that in order

to draw under this Letter of Credit in respect of both  principal  and interest,

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