EXHIBIT NO. 10-1

AMENDMENT 2
TO THE
NIAGARA MOHAWK HOLDINGS, INC.
DEFERRED COMPENSATION PLAN

This sets forth Amendment 2 to the Niagara Mohawk Holdings, Inc. Deferred
Compensation Plan (“Plan”) effective January 1, 1994. This Amendment shall be
effective as of December 13, 2000.

         1.       The definition of “Change in Control” in Section 2 of the Plan
shall be deleted in its entirety.
         2.       The Plan shall be further amended by deleting Appendix A in
its entirety.
         3.       The Plan shall be further amended by inserting a definition of
“Change in Control Payment” in Section 2, stated as follows:

“Change in Control Payment” means a payment which would be made to an Eligible
Employee, regardless of whether such Eligible Employee is an Employee on the
date such payment would be made (i) with respect to Stock Units following a
change in control pursuant to the provisions of Article 13 of the Company’s Long
Term Incentive Plan, (ii) with respect to PSUs following a change in control
pursuant to Section 8 of the Niagara Mohawk Energy, Inc. Long Term Incentive
Plan (the “NME Plan”) or (iii) as a severance payment following a change in
control under the Eligible Employee’s employment agreement or change in control
severance agreement with the Company or a subsidiary. For the purposes hereof,
“change in control” shall have the meaning assigned to such term in the
Company’s Long Term Incentive Plan, the NME Plan, or an Eligible Employee’s
employment agreement or severance agreement.

         4.       The Plan shall be amended by deleting in its entirety, the
definition of “Constructive Termination” in Section 2.
         5.       The Plan shall be further amended by inserting a definition of
“Nuclear Generation Payment” in Section 2, stated as follows:

“Nuclear Generation Payment” means a payment which would be made to an Eligible
Employee of the Company’s nuclear generation division, regardless of whether
such Eligible Employee is an Employee on the date such payment would be made (i)
as a severance payment in connection with the termination of the Eligible
Employee’s employment on the sale of the assets of the Company’s nuclear
generation division pursuant to a letter agreement between the Eligible Employee
and the Company entered into on July 16, 1999 or (ii) with respect to Contingent
Stock Units granted to the Eligible Employee March 31, 1999 which become payable
upon completion of such sale.

         6.       The Plan shall be further amended by inserting a second
paragraph to Section 4.1 stated as follows:

Notwithstanding anything contained herein to the contrary, an Eligible Employee,
regardless of whether such Eligible Employee is then an Employee, may elect to
defer a percentage of any Change in Control Payment or Nuclear Generation
Payment, and may change or revoke such election, by written notice to the
Administrator on an election form which is delivered prior to January 1 of the
year in which the change in control or sale of the assets of the Company’s
nuclear generation division occurs, as applicable, and at least six months in
advance of such Change in Control or sale. The deferral percentage applicable to
a Change in Control Payment or Nuclear Generation Payment shall be in 10%
increments, not to exceed 100% of a Change in Control Payment or Nuclear
Generation Payment.

         7.       The Plan shall be further amended by deleting in its entirety,
Section 6.1, paragraph (c).

Executed this 17th day of August, 2001.

NIAGARA MOHAWK HOLDINGS, INC.

                                                                  
                                                                       
                                                                       
                                            /s/ David J.
Arrington                                                
                                                                       
                                                                       
                                                                       
                   David J. Arrington
                                                                       
                                                                       
                                                                       
                                      Senior Vice President and
                                                                       
                                                                       
                                                                       
                                      Chief Administrative Officer