UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    Form 10-Q
(Mark One)
 X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---
EXCHANGE ACT OF 1934

                 For the quarterly period ended March 31, 2000
              -------------------------------------------------
                                       OR
     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---
EXCHANGE ACT OF 1934

For the transition period from                      to
                               -----------------          --------------------

                         Commission file number 1-14161
                                                -------

                               KEYSPAN CORPORATION
                              --------------------
             (Exact name of Registrant as specified in its charter)

                New York                                    11-3431358
-------------------------------------        -----------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                 One MetroTech Center, Brooklyn, New York 11201
              175 East Old Country Road, Hicksville, New York 11801
           ------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)


                            (718) 403-1000 (Brooklyn)
                           (631) 755-6650 (Hicksville)
                          ----------------------------
              (Registrant's telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last
report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

   Class of Common Stock                             Outstanding at May 3, 2000
---------------------------                         ---------------------------
       $.01 par value                                       133,876,426


<PAGE>



                      KEYSPAN CORPORATION AND SUBSIDIARIES

                                      INDEX
                                      -----

                           Part I.   FINANCIAL INFORMATION              Page No.
                                                                        --------

Item 1. Financial Statements

         Consolidated Balance Sheet -
         March 31, 2000 and December 31, 1999                               3

         Consolidated Statement of Income -
         Three Months Ended March 31, 2000 and 1999                         5

         Consolidated Statement of Cash Flows -
         Three Months Ended March 31, 2000 and 1999                         6

         Notes to Consolidated Financial Statements                         7

Item 2. Management's Discussion and Analysis Of Financial
         Condition and Results of Operations                               15

Item 3. Quantitative and Qualitative Disclosures
         About Market Risk                                                 29


                           Part II.   OTHER INFORMATION

Item 1 - Legal Proceedings                                                 29

Item 6 - Exhibits and Reports on Form 8-K                                  30


Signatures                                                                 32



                                        2

<PAGE>



                           CONSOLIDATED BALANCE SHEET
                            (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

                                                                       MARCH 31, 2000           December 31, 1999
                                                                          (Unaudited)                (Audited)
---------------------------------------------------------------      ------------------------   -----------------
<S>                                                                      <C>                  <C>
ASSETS
CURRENT ASSETS
   Cash and temporary cash investments                       $             219,338    $          128,602
   Customer accounts receivable                                            708,183               425,643
   Other accounts receivable                                               263,237               235,156
   Allowance for uncollectible accounts                                    (30,893)              (20,294)
   Special deposits                                                         48,802                60,863
   Gas in storage, at average cost                                          36,397               144,256
   Materials and supplies, at average cost                                  92,367                84,813
   Other                                                                    73,888                98,914
                                                                   ---------------       ---------------
                                                                         1,411,319             1,157,953
                                                                  ----------------      ----------------


EQUITY INVESTMENTS AND OTHER                                               444,542               391,731
                                                                  ----------------      ----------------

PROPERTY
   Electric                                                              1,355,217             1,346,851
   Gas                                                                   3,473,376             3,449,384
   Other                                                                   389,685               375,657
   Accumulated depreciation                                             (1,624,278)           (1,589,287)
   Gas exploration and production, at cost                               1,231,840             1,177,916
   Accumulated depletion                                                  (541,517)             (520,509)
                                                                  ----------------      ----------------
                                                                         4,284,323             4,240,012
                                                                  ----------------      ----------------

DEFERRED CHARGES
   Regulatory assets                                                       322,690               319,167
   Goodwill, net of amortizations                                          332,043               255,778
   Other                                                                   371,268               366,050
                                                                  ----------------      ----------------
                                                                         1,026,001               940,995
                                                                  ----------------      ----------------

                                                                  ----------------      ----------------
TOTAL ASSETS                                                 $           7,166,185    $        6,730,691
                                                                  ================      ================
</TABLE>






See accompanying Notes to the Consolidated Financial Statements.



                                        3

<PAGE>



                           CONSOLIDATED BALANCE SHEET
                            (IN THOUSANDS OF DOLLARS)


<TABLE>
<CAPTION>
                                                                       MARCH 31, 2000              December 31, 1999
                                                                      (Unaudited)                    (Audited)
---------------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                    <C>
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
   Current redemption of preferred stock                     $               363,000 $              363,000
   Accounts payable and accrued expenses                                     614,552                645,347
   Notes payable                                                                   -                208,300
   Dividends payable                                                          61,321                 61,306
   Taxes accrued                                                             154,878                 50,437
   Customer deposits                                                          30,463                 31,769
   Interest accrued                                                           32,703                 28,093
                                                                   -----------------      -----------------
                                                                           1,256,917              1,388,252
                                                                   -----------------      -----------------

DEFERRED CREDITS AND OTHER LIABILITIES
   Regulatory liabilities                                                     37,649                 26,618
   Deferred income tax                                                       187,512                186,230
   Postretirement benefits and other reserves                                500,406                501,603
   Other                                                                      81,702                 66,200
                                                                   -----------------      -----------------
                                                                             807,269                780,651
                                                                   -----------------      -----------------

CAPITALIZATION
   Common stock, $.01 par value, authorized
   450,000,000 shares; outstanding 133,876,426 and
   133,866,077 shares stated at                                            2,973,388              2,973,388
   Retained earnings                                                         558,055                456,882
   Accumulated foreign currency adjustment                                     7,366                  7,714
   Treasury stock purchased                                                 (722,660)              (722,959)
                                                                   -----------------      -----------------
      Total common shareholders' equity                                    2,816,149              2,715,025
   Preferred stock                                                            84,339                 84,339
   Long-term debt                                                          2,109,120              1,682,702
                                                                   -----------------      -----------------
TOTAL CAPITALIZATION                                                       5,009,608              4,482,066
                                                                   -----------------      -----------------

MINORITY INTEREST IN SUBSIDIARY COMPANIES                                     92,391                 79,722
                                                                   -----------------       ----------------
TOTAL LIABILITIES AND CAPITALIZATION                         $             7,166,185 $            6,730,691
                                                                   =================      =================
</TABLE>




See accompanying Notes to the Consolidated Financial Statements.



                                        4

<PAGE>



                                       CONSOLIDATED STATEMENT OF INCOME
                                                  (Unaudited)
                             (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                    THREE MONTHS           Three Months
                                                                       ENDED                   Ended
                                                                   MARCH 31, 2000          March 31, 1999
-------------------------------------------------------------- ----------------------  ---------------------
<S>                                                                  <C>                      <C>

REVENUES
Gas Distribution                                                $        804,703     $          718,298
Electric Services                                                        334,404                174,858
Gas Exploration and Production                                            49,376                 26,520
Energy Related Services and Other                                        128,130                 41,432
                                                                    ------------       ----------------
Total Revenues                                                         1,316,613                961,108
                                                                    ------------       ----------------
OPERATING EXPENSES
Purchased gas                                                            412,005                324,269
Purchased fuel                                                            68,493                      -
Operations and maintenance                                               354,605                232,535
Depreciation, depletion and amortization                                  69,581                 58,185
Operating taxes                                                          115,423                103,893
                                                                    ------------       ----------------
Total Operating Expenses                                               1,020,107                718,882
                                                                    ------------       ----------------

OPERATING INCOME                                                         296,506                242,226
                                                                    ------------       ----------------

OTHER INCOME AND (DEDUCTIONS)
Income from equity investments                                             7,245                  2,972
Interest income                                                            2,591                 11,043
Minority interest                                                         (3,029)                  (304)
Other                                                                      5,128                  3,249
                                                                    ------------       ----------------
Total Other Income                                                        11,935                 16,960
                                                                    ------------       ----------------
INCOME BEFORE INTEREST CHARGES
  AND INCOME TAXES                                                       308,441                259,186
                                                                    ------------       ----------------
INTEREST CHARGES                                                          44,125                 35,886
                                                                    ------------       ----------------
INCOME TAXES
   Current                                                                95,633                 46,646
   Deferred                                                               (3,561)                33,433
                                                                    ------------       ----------------
Total Income Taxes                                                        92,072                 80,079
                                                                    ------------       ----------------
NET INCOME                                                               172,244                143,221
Preferred stock dividend requirements                                      8,691                  8,689
                                                                    ------------       ----------------
EARNINGS FOR COMMON STOCK                                       $        163,553     $          134,532
Foreign currency adjustment                                                 (348)                 3,310
                                                                    ------------       ----------------
COMPREHENSIVE INCOME                                            $        163,205     $          137,842
                                                                    ============       ================
AVERAGE COMMON SHARES OUTSTANDING (000)                                  133,873                142,981
BASIC AND DILUTED EARNINGS PER COMMON SHARE                     $           1.22     $             0.94
                                                                    ============       ================
</TABLE>


See accompanying Notes to the Consolidated Financial Statements.








                                        5

<PAGE>


                                        CONSOLIDATED STATEMENT OF CASH FLOWS
                                                    (Unaudited)
                                             (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
                                                                                    THREE MONTHS        Three Months
                                                                                       ENDED                Ended
                                                                                   MARCH 31, 2000       March 31, 1999
------------------------------------------------------------------------------- -------------------- -------------------
<S>                                                                                <C>                  <C>
OPERATING ACTIVITIES
Net Income                                                                      $     172,244    $        143,221
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
      PROVIDED BY (USED IN) OPERATING ACTIVITIES
   Depreciation, depletion and amortization                                            69,581              58,185
   Deferred income tax                                                                 (3,561)             33,433
   Income from equity investments                                                      (7,245)             (2,972)
   Dividends from equity investments                                                    1,863               4,296
CHANGES IN ASSETS AND LIABILITIES
   Accounts receivable                                                               (215,498)            (67,635)
   Materials and supplies, fuel oil and gas in storage                                101,262             102,612
   Accounts payable and accrued expenses                                               42,769             (85,303)
   Interest accrued                                                                     4,606              (2,230)
   Special deposits                                                                    12,061              24,858
   Prepayments and other                                                               12,182              (5,279)
                                                                                    ---------      --------------
Net Cash Provided by Operating Activities                                             190,264             203,186
                                                                                    ---------      --------------

INVESTING ACTIVITIES
Capital expenditures                                                                 (111,574)            (76,545)
Investments                                                                          (141,719)             (9,786)
Other                                                                                   7,089              12,438
                                                                                    ---------      --------------
Net Cash (Used in) Investing Activities                                              (246,204)            (73,893)
                                                                                    ---------      --------------

FINANCING ACTIVITIES
Treasury stock purchased                                                                    -             (54,061)
Issuance of notes payable                                                             364,479
Repayment of notes payable                                                           (572,779)                  -
Issuance of long-term debt                                                            430,395               7,000
Payment of long-term debt                                                              (4,000)                  -
Preferred stock dividends paid                                                         (8,838)             (8,689)
Common stock dividends paid                                                           (59,575)            (64,360)
Other                                                                                  (3,006)               (621)
                                                                                    ---------      --------------
Net Cash Provided by (Used in) Financing Activities                                   146,676            (120,731)
                                                                                    ---------      --------------
Net Increase in Cash and Temporary Cash Investments                                    90,736               8,562
                                                                                    =========      ==============
Cash and temporary cash investments at beginning of period                      $     128,602    $        942,776
Net Increase in cash and temporary cash investments                                    90,736               8,562
                                                                                    ---------      --------------
Cash and Temporary Cash Investments at End of Period                            $     219,338    $        951,338
                                                                                    =========      ==============
</TABLE>

Temporary cash investments are short-term  marketable  securities purchased with
maturities of three months or less that were carried at cost which  approximates
fair value.

See accompanying Notes to the Consolidated Financial Statements.



                                        6

<PAGE>



                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


   KeySpan  Corporation d/b/a KeySpan Energy (the "Company" or "KeySpan Energy")
   is a holding company  operating two utilities that distribute  natural gas to
   approximately  1.6  million  customers  in New York City and on Long  Island,
   making it the fourth largest  gas-distribution  company in the United States.
   Other  KeySpan  Energy  companies  market a portfolio  of  gas-marketing  and
   energy-    related    services   in   the   Northeast,    own   and   operate
   electric-generation  plants in New York City and on Long Island,  and provide
   operating  and  customer  services  to  approximately  1.1  million  electric
   customers of the Long Island Power  Authority  ("LIPA").  The Company's other
   energy activities include: gas exploration and production,  primarily through
   The Houston  Exploration  Company  ("THEC");  a domestic pipeline and storage
   facilities; and international activities, including gas processing in Canada,
   and a gas pipeline and local  distribution in Northern Ireland.  (See Note 2,
   "Business Segments" for additional information on each operating segment.)

1.    BASIS OF PRESENTATION

   In the  opinion  of the  Company,  the  accompanying  unaudited  Consolidated
   Financial Statements contain all adjustments  necessary to present fairly the
   financial  position of the Company as of March 31,  2000,  and the results of
   its  operations  and cash flows for the three months ended March 31, 2000 and
   1999. The  accompanying  financial  statements  should be read in conjunction
   with  the  consolidated  financial  statements  and  notes  included  in  the
   Company's  1999 Annual Report on Form 10-K.  Income from interim  periods may
   not be indicative of future results.  Certain  reclassifications were made to
   conform prior period  financial  statements with the current period financial
   statement  presentation.  Other than as noted,  adjustments were of a normal,
   recurring nature.


2.    BUSINESS SEGMENTS

   The Company has six reportable segments: Gas Distribution, Electric Services,
   Gas  Exploration  and  Production,  Energy Related  Services,  Energy Related
   Investments and Other.

   The Gas  Distribution  segment consists of the Company's two gas distribution
   subsidiaries.  The Brooklyn Union Gas Company d/b/a KeySpan  Energy  Delivery
   New York  ("KeySpan  Energy  Delivery New York")  provides  gas  distribution
   services to customers in the New York City  boroughs of Brooklyn,  Queens and
   Staten Island, and KeySpan Gas East Corporation d/b/a KeySpan Energy Delivery
   Long Island ("KeySpan Energy Delivery Long Island") provides gas distribution
   services to customers  in the Long Island  counties of Nassau and Suffolk and
   the Rockaway Peninsula of the Borough of Queens.




                                        7

<PAGE>



   The Electric  Services segment consists of Company  subsidiaries that operate
   the electric  transmission and distribution ("T&D") system owned by LIPA, own
   and sell capacity and energy to LIPA from the Company's generating facilities
   located  on Long  Island  and  manage  fuel  supplies  for  LIPA to fuel  the
   Company's  Long  Island  generating   facilities  through  long-term  service
   contracts  having terms that range from eight to fifteen years.  The Electric
   Services  segment also  includes  Company  subsidiaries  that own,  lease and
   operate  the  2,168  megawatt   Ravenswood   electric   generation   facility
   ("Ravenswood Facility"),  located in Long Island City, Queens. Currently, the
   Company's  primary electric  generation  customers are LIPA, and the New York
   Independent System Operator ("NYISO") energy markets.

   The  Gas  Exploration  and  Production  segment  is  engaged  in gas  and oil
   exploration and  production,  and the development and acquisition of domestic
   natural gas and oil  properties.  This segment  consists of the Company's 70%
   equity  interest in THEC,  an  independent  natural  gas and oil  exploration
   company,  as well as KeySpan  Exploration  and Production  LLC, the Company's
   wholly owned  subsidiary  engaged in a joint  venture with THEC. On March 31,
   2000, under a pre- existing credit arrangement,  approximately $80 million in
   debt owed by THEC to the Company was converted into common equity.  Upon such
   conversion,  the Company's common equity ownership interest in THEC increased
   from 64% to approximately 70%.

   The Company's Energy Related Services segment  primarily  includes  companies
   that provide  energy  services to customers  located within the New York City
   tri-state  metropolitan  area and in Rhode Island  through the following five
   lines  of  business:  (i)  equipment   installation  of  plumbing,   heating,
   ventilation  and  air  conditioning  ("HVAC")  equipment;  (ii)  service  and
   maintenance of energy systems and appliances for  commercial,  industrial and
   residential customers;  (iii) energy sales of gas and electricity,  including
   transportation and related services,  largely to retail customers,  including
   those served by the Company's two gas distribution  subsidiaries,  as well as
   the Ravenswood Facility; (iv) professional  engineering-consulting and design
   of  energy  systems  for  commercial  and  industrial   customers;   and  (v)
   telecommunications  which provide  various  services to carriers of voice and
   data transmission on Long Island and in New York City.

   Subsidiaries  in the Energy  Related  Investments  segment  hold a 20% equity
   interest  in the  Iroquois  Gas  Transmission  System  LP,  a  pipeline  that
   transports  Canadian gas supply to markets in the Northeastern United States;
   a 50%  interest  in the  Premier  Transco  Pipeline  and a 24.5%  interest in
   Phoenix  Natural  Gas,  both in  Northern  Ireland;  investments  in  certain
   midstream natural gas assets in Western Canada owned jointly with Gulf Canada
   Resources Limited,  through the Gulf Midstream Services  Partnership  ("GMS")
   and the  ownership of certain oil  producing  properties  in Alberta  Canada.
   These  subsidiaries  are accounted for under the equity method.  Accordingly,
   equity  income  from  these  investments  is  reflected  in other  income and
   (deductions) in the Consolidated Statement of Income.

   The  Other  segment   represents   primarily,   preferred  stock   dividends,
   unallocated  administrative  expenses and interest income earned on temporary
   cash investments.



                                        8

<PAGE>



   The  accounting  policies of the  segments are the same as those used for the
   preparation of the Consolidated Financial Statements.  The Company's segments
   are strategic  business  units that are managed  separately  because of their
   different operating and regulatory environments. At March 31, 2000, the total
   assets of each  reportable  segment  have not changed  materially  from those
   levels reported at December 31, 1999,  except for the Energy Related Services
   segment whose assets increased by approximately $200 million due primarily to
   the  acquisition of three  additional  companies that provide  energy-related
   services and the investment in MyHomeKey.com,  Inc. . The segment information
   presented  below  reflects  amounts  reported in the  Consolidated  Financial
   Statements for the three months ended March 31, 2000 and 1999.
<TABLE>
<CAPTION>

        THREE MONTHS ENDED MARCH 31                                                 (In Thousands of Dollars)
-------------------------------------------------------------------------------------------------------------
                                         Gas Distribution                            Electric Services
                                   ----------------------------                -----------------------------

                                        2000              1999                      2000               1999
                                   --------------  -- ------------           ------------- ---  ------------
<S>                                    <C>            <C>                         <C>             <C>
Revenue                           $      804,703 $      718,298              $      334,404 $       174,858
                                  -------------- --------------              -------------- ---------------
Purchased Gas / Fuel                     374,890        311,254                      68,493               -
Operations and Maintenance               111,963        101,549                     133,662          92,167
Depreciation & Amortization               27,296         24,254                      12,265           9,928
Operating Taxes                           75,496         72,453                      39,490          28,991
Intercompany Billings                      2,597          3,049                      10,882          10,645
                                  --------------  -------------              -------------- ---------------
    Total Expense                        592,242        512,559                     264,792         141,731
                                  -------------- --------------              -------------- ---------------
Operating Income                  $      212,461 $      205,739              $       69,612 $        33,127
                                  -------------- --------------              -------------- ---------------
Earnings for Common Stock         $      126,779 $      120,690              $       42,679 $        16,585
                                  -------------- --------------              -------------- ---------------
Basic and Diluted Earnings Per
Share                             $         0.95 $         0.84              $         0.32 $          0.12
------------------------------------------------ ------------------------------------------ ---------------
</TABLE>

<TABLE>
<CAPTION>
         THREE MONTHS ENDED MARCH 31                                                In Thousands of Dollars)
------------------------------------------------------------------------------------------------------------
                                   Gas Exploration and Production                 Energy Related Services
                                   ----------------------------                -----------------------------

                                        2000              1999                      2000               1999
                                   --------------  -- ------------          ------------- ---  ------------
<S>                                     <C>            <C>                         <C>             <C>
Revenue                           $       49,376 $       26,520               $      126,619   $     40,834
                                  -------------- --------------               -----------------------------
Purchased Gas                                  -              -                       37,115         13,015
Operations and Maintenance                11,479          5,959                       88,725         30,030
Depreciation, Depletion & Amortization    21,003         17,057                        2,186            717
Operating Taxes                              538             33                            -              3
                                  -------------- --------------               -----------------------------
    Total Expense                         33,020         23,049                      128,026         43,765
                                  -------------- --------------               -----------------------------
Operating Income (Loss)           $       16,356 $        3,471               $       (1,407)  $     (2,931)
                                  -------------- --------------               -----------------------------
Earnings (Loss) for Common Stock  $        5,498 $          478               $       (1,570)  $     (1,637)
                                  -------------- --------------               -----------------------------
Basic and Diluted
     Earnings (Loss) Per Share    $        0.04  $         0.00               $        (0.01)  $      (0.01)
------------------------------------------------ ---------------------------- -----------------------------
</TABLE>





                                        9

<PAGE>



<TABLE>
<CAPTION>

         THREE MONTHS ENDED MARCH 31                                                    (In Thousands of Dollars)
-----------------------------------------------------------------------------------------------------------------
                                    Energy Related Investments                             Other
                                   ----------------------------                -----------------------------

                                        2000              1999                      2000               1999
                                   --------------  -- ------------          ------------- ---  ------------
<S>                                      <C>           <C>                           <C>            <C>
Revenue                           $        1,511 $          598               $            -    $         -
                                  -------------- --------------               ----------------  -----------
Operations and Maintenance                 1,657          1,272                        7,119          1,558
Depreciation & Amortization                  384            384                        6,447          5,845
Operating Taxes                                5              7                         (106)         2,406
Intercompany Billings                          -              -                      (13,479)       (13,694)
                                  -------------- --------------               -----------------  ----------
    Total Expense                          2,046          1,663                          (19)        (3,885)
                                  -------------- --------------               -----------------  ----------
Operating (Loss) Income           $         (535)$       (1,065)              $           19     $    3,885
                                  -------------- --------------               -----------------------------
Earnings (Loss) for Common Stock  $        3,647 $          499               $      (13,480)    $   (2,083)
                                  -------------- --------------               -----------------------------
Basic and Diluted
     Earnings (Loss) Per Share    $        0.02   $        0.00               $         (0.10)   $    (0.01)
------------------------------------------------ ---------------------------- -----------------------------
</TABLE>



THREE MONTHS ENDED MARCH 31           (In Thousands of Dollars)
--------------------------------------------------------------------------------
                                             Consolidated
                                    -------------------------------

                                            2000               1999
                                   --------------------------------
Revenue                            $      1,316,613   $     961,108
                                   --------------------------------
Purchased Gas / Fuel                        480,498         324,269
Operations and Maintenance                  354,605         232,535
Depreciation, Depletion & Amortization       69,581          58,185
Operating Taxes                             115,423         103,893
---------------                    --------------------------------
    Total Expense                         1,020,107         718,882
                                   --------------------------------
Operating Income                   $        296,506   $     242,226
                                   --------------------------------
Earnings for Common Stock          $        163,553   $     134,532
                                   --------------------------------
Basic and Diluted Earnings Per Share  $        1.22   $        0.94
-------------------------------------------------------------------




3.       ENVIRONMENTAL MATTERS

         MANUFACTURED  GAS PLANT SITES:  The Company has identified  thirty-four
         manufactured  gas plant ("MGP") sites that were  historically  owned or
         operated  by  KeySpan  Energy  Delivery  New  York and  KeySpan  Energy
         Delivery Long Island (or such  companies'  predecessors).  These former
         sites,  some of which are no  longer  owned by the  Company,  have been
         identified  to  the  New  York  State   Department   of   Environmental
         Conservation   ("DEC")  for   inclusion  on   appropriate   waste  site
         inventories.




                                       10

<PAGE>



         The  Company   presently   estimates   the  cost  of  its   MGP-related
         environmental  cleanup  activities will be approximately  $121 million;
         which  amount has been  accrued  by the  Company  as its  current  best
         estimate of its aggregate environmental liability for known sites.
          The  currently-known  conditions of the former MGP sites, their period
         and magnitude of operation, generally observed cleanup requirements and
         costs in the  industry,  current land use and  ownership,  and possible
         reuse have been considered in establishing  contingency  reserves.  The
         Company  believes  that in the  aggregate,  the accrued  liability  for
         investigation  and  remediation of the MGP sites  identified  above are
         reasonable  estimates  of  likely  cost  within a range of  reasonable,
         foreseeable costs.

         Thirteen  of  the  identified   sites  are  currently  the  subject  of
         Administrative  Consent Orders ("ACO") with the DEC and two are subject
         to the  negotiation  of an ACO or an  agreement  under DEC's  Voluntary
         Clean-up  Program.  The Company's  remaining MGP sites,  eight of which
         have  recently been  identified  to the DEC, may not become  subject to
         ACOs in the future,  and  accordingly no liability has been accrued for
         these sites.

         Under prior rate orders,  the Public Service Commission of the State of
         New York  ("NYPSC")  has allowed  recovery of costs  related to certain
         KeySpan Energy Delivery New York MGP sites.  The Company  believes that
         current  rate  plans in effect for both Gas  Distribution  subsidiaries
         provide for recovery of  environmental  costs  attributable  to the Gas
         Distribution  segment.  At March  31,  2000,  the  Company  had a total
         regulatory asset of approximately $96 million. Expenditures incurred to
         date by the  Company  with  respect  to  MGP-related  activities  total
         approximately $18 million.

         OTHER:  The Company will be responsible for  environmental  obligations
         relating to the Ravenswood  Facility  operations other than liabilities
         arising from  pre-closing  disposal of waste at off-site  locations and
         any monetary fines arising from the prior owner's pre-closing  conduct.
         Based   on   information    currently   available   for   environmental
         contingencies  related  to the  Ravenswood  Facility  acquisition,  the
         Company has accrued an additional  $5 million as the minimum  liability
         expected to be incurred.


4.       ISSUANCE OF LONG-TERM DEBT, REPAYMENT OF NOTES PAYABLE AND
         FINANCING

         In December 1999,  KeySpan Energy  Delivery Long Island and the Company
         jointly filed a shelf  registration  statement  with the Securities and
         Exchange  Commission  ("SEC") in  anticipation  of issuing,  up to $600
         million of Medium Term  Notes.  On  February  1, 2000,  KeySpan  Energy
         Delivery  Long Island issued $400 million 7.875 % Notes due February 1,
         2010. The net proceeds from the issuance were used to repay the Company
         for its costs in  extinguishing  certain  promissory notes to LIPA that
         matured   in  June  1999.   The   Medium   Term  Notes  are  fully  and
         unconditionally guaranteed by the Company.



                                       11

<PAGE>



         During the quarter ended March 31, 2000, THEC borrowed an additional $2
         million  under  its  Credit  Facility  and then  repaid $4  million  of
         outstanding  borrowings;  at March  31,  2000,  $179  million  remained
         outstanding.  In addition,  during the quarter  ended March 31, 2000, a
         subsidiary  in the Energy  Related  Investments  segment  increased its
         borrowings   under  a  revolving   loan   agreement  with  a  financial
         institution in Canada by U.S. $28.4  million.  At March 31, 2000,  U.S.
         $114.8  million  was  outstanding  at  a  weighted  average  annualized
         interest rate of 5.81%.

         At December 31,  1999,  the Company had $208.3  million of  outstanding
         commercial  paper.  Additional  commercial  paper was issued during the
         months of January and  February  2000.  The average  outstanding  daily
         balance  during  this period was $241.4  million at a weighted  average
         annualized interest rate of 6.08%. In February 2000, the Company repaid
         the entire outstanding  balance.  At March 31, 2000, the Company had no
         commercial paper outstanding.

         In  connection  with the  Company's  anticipated  purchase  of  Eastern
         Enterprises (See Note 5, "Acquisition of Eastern  Enterprises") and the
         anticipated  issuance  of  long-term  debt  securities  to finance  the
         acquisition,  the  Company  entered  into  forward  interest  rate lock
         agreements  to hedge a portion  of the risk that the cost of the future
         issuance of  fixed-rate  debt may be  adversely  affected by changes in
         interest  rates.  Through April 30, 2000,  the Company has entered into
         seven forward interest rate lock agreements with an aggregate  notional
         amount of $500  million.  The interest  lock rates range from 7.172% to
         7.780%.  Under an interest rate lock  agreement,  the Company agrees to
         pay or  receive  an  amount  equal to the  difference  between  the net
         present  value of the cash  flows for a  notional  principal  amount of
         indebtedness based on the existing yield of a hedging instrument at the
         date of the agreement  and at the date the agreement is settled.  Gains
         and  losses on  interest  rate lock  agreements  will be  deferred  and
         amortized  over  the  life of the  underlying  debt to be  issued.  The
         notional  amounts of the agreements are not exchanged.  The Company has
         entered into  interest  rate lock  agreements  with more than one major
         financial institution in order to minimize counterparty credit risk.


5.       ACQUISITION OF EASTERN ENTERPRISES

         On November 4, 1999,  the Company and Eastern  Enterprises  ("Eastern")
         announced that the companies had signed a definitive  merger  agreement
         under which the Company will acquire all of the common stock of Eastern
         for  $64.00  per  share in cash.  The  Agreement  and Plan of Merger is
         included as an exhibit to the  Company's  Form 8-K filed on November 5,
         1999.

         The  transaction  has a total value of  approximately  $2.5 billion and
         will be accounted for as a purchase.  The  increased  size and scope of
         the combined organization should enable the



                                       12

<PAGE>



         Company to provide  enhanced,  cost-effective  customer  service and to
         capitalize on the above-average growth opportunities for natural gas in
         the Northeast.

         In connection with the merger, Eastern has amended its merger agreement
         with  EnergyNorth,  Inc.  ("EnergyNorth")  to  provide  for an all cash
         acquisition  by Eastern of  EnergyNorth  shares at a price per share of
         $61.13.  The  restructured  EnergyNorth  merger  is  expected  to close
         contemporaneously   with   the   KeySpan/Eastern   transaction.    This
         transaction has a total value of approximately $250 million.

         It is  anticipated  that the combined  company will have assets of $8.8
         billion, $4.3 billion in revenues, and earnings before interest, taxes,
         depreciation and amortization ("EBITDA") of approximately $950 million.
         The combined companies will serve  approximately 2.4 million customers.
         The Company expects  pre-tax annual cost savings will be  approximately
         $40 million.  These cost savings result  primarily from the elimination
         of   duplicate   corporate   and   administrative   programs,   greater
         efficiencies  in  operations  and  business  processes,  and  increased
         purchasing efficiencies. The Company expects to achieve the majority of
         the reductions through a variety of programs which would include hiring
         freezes,  attrition and  separation  programs.  The Company  expects to
         issue  approximately  $2.0  billion of  long-term  debt to acquire  the
         combined  common  stock  of  Eastern  and   EnergyNorth.   The  Company
         anticipates  issuing several different  maturities of long-term debt to
         balance its current capital structure and maturity structure.

         Following  the closing of these  transactions,  the Company will become
         subject to regulation of the SEC as a registered  holding company under
         the Utility Holding Company Act of 1935, as amended.

         The merger is conditioned upon the approval of the SEC. Shareholders of
         both  Eastern and  EnergyNorth,  as well as the New  Hampshire  Utility
         Commission (with respect to Eastern's  acquisition of EnergyNorth) have
         approved the transactions. The Company anticipates that the transaction
         will be  consummated  in the third or fourth  quarter  of 2000,  but is
         unable to determine when or if the required approval will be obtained.

          Eastern  owns and operates  Boston Gas Company,  Colonial Gas Company,
          Essex Gas Company, Midland Enterprises Inc. ("Midland"), Transgas Inc.
          ("Transgas"), and ServicEdge Partners, Inc. ("ServicEdge").


6.       NEW YORK STATE INDEPENDENT SYSTEM OPERATOR ("NYISO") ISSUES

         The Company  currently  realizes  revenues  from its  investment in the
         Ravenswood Facility through the wholesale sale of energy,  capacity and
         ancillary  services.  Ancillary  services include spinning reserves and
         non spinning reserves available to replace energy that is unable



                                       13

<PAGE>



         to be generated due to the unexpected loss of a major facility.  Due to
         the increase in the market-clearing price of certain ancillary services
         in February  2000,  the NYISO has  imposed a bid cap on these  services
         retroactive to March 1, 2000. Further,  the NYISO has asked the Federal
         Energy Regulatory  Commission ("FERC") to review the pricing of certain
         ancillary services,  implement bid caps for these services and initiate
         an Alternative  Dispute  Resolution  process  designed at arriving at a
         settlement  that  would  involve  the  payment of refunds of so- called
         alleged  "excess  payments"  received  by  sellers  into the  ancillary
         services market,  including the Ravenswood Facility and LIPA during the
         period January 29 through February 29, 2000. Other market participants,
         including buyers of ancillary  services and electric  utilities as load
         serving entities ("LSEs") have also filed petitions with and intervened
         in the various pending FERC  proceedings and have proposed  alternative
         remedies,  including  refunds  back to the  inception  of the  NYISO in
         November 1999 and the  revocation  of the  authority of the  Ravenswood
         Facility  to charge  market-based  prices for  ancillary  services.  In
         addition,  one LSE  has  petitioned  the  FERC  to  suspend  the use of
         market-based  pricing in the energy market until alleged  problems with
         the operations of the NYISO are resolved.

         The Company is opposing the relief  requested by the NYISO and the LSEs
         and believes that the ultimate resolution of this issue will not have a
         material effect on its consolidated financial position.

7.       NEW FINANCIAL ACCOUNTING STANDARDS

         In June 1999, the Financial  Accounting Standards Board ("FASB") issued
         SFAS No.  137,  "Accounting  for  Derivative  Instruments  and  Hedging
         Activities - Deferral of the Effective  Date of SFAS No. 133." SFAS No.
         137 defers the effective date of SFAS No. 133 to fiscal years beginning
         after July 15, 2000. The Company will therefore,  adopt SFAS No. 133 in
         the first  quarter  of  fiscal  year  2001.  SFAS No.  133  establishes
         accounting and reporting  standards for derivative  instruments and for
         hedging   activities.   It  requires  that  an  entity   recognize  all
         derivatives  as  either  assets  or  liabilities  in the  statement  of
         financial  position and measure those instruments at fair value. All of
         the  Company's  derivative  financial  instruments,  except for certain
         interest rate swaps, are cash-flow hedges. As a result,  implementation
         of SFAS No. 133 when adopted, is not expected to have a material effect
         on the  Company's net income,  but could have a  significant  effect on
         comprehensive income because of fluctuations in the market value of the
         derivatives  employed for hedging  certain  risks.  Under SFAS No. 133,
         periodic changes in market value are recorded as comprehensive  income,
         subject to effectiveness,  and then included in net income to match the
         underlying transactions.



                                       14

<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

CONSOLIDATED RESULTS

The  following  is a  summary  of items  affecting  comparative  earnings  and a
discussion of material  changes in revenues and expenses during the three months
ended March 31, 2000 compared to the three months ended March 31, 1999.  All per
share  amounts are stated on a diluted  basis.  For the quarter  ended March 31,
2000 and March 31, 1999 diluted earnings per share is the same as basic earnings
per share,  since there was no effect on earnings  per share from the  Company's
options and those of its subsidiary,  The Houston  Exploration Company ("THEC").
(Capitalized  terms used in the discussions to follow but not otherwise defined,
have  the  same  meaning  as when  used  in the  Footnotes  to the  Consolidated
Financial Statements included under Item 1.)

Earnings Summary
----------------

Consolidated  earnings (loss) by reporting segment is set forth in the following
table for the periods indicated:

                                                (IN THOUSANDS OF DOLLARS)

                                         Three Months          Three Months
                                             Ended                 Ended
                                         March 31, 2000        March 31, 1999
------------------------------------  ------------------- ----------------------

Gas Distribution                      $      126,779     $           120,690
Electric Services                             42,679                  16,585
Gas Exploration and
 Production                                    5,498                     478
Energy Related Services                       (1,570)                 (1,637)
Energy Related Investments                     3,647                     499
Other                                        (13,480)                 (2,083)
--------------------------------------------------------------------------------
                                      $      163,553     $            134,532
------------------------------------  -------------- ---------------------------


Consolidated  earnings  for the first  quarter of 2000 were 22% higher  than the
corresponding  quarter last year. The increase in earnings  reflects,  primarily
the Company's  investment in the 2,168 megawatt  Ravenswood  electric generating
facility ("Ravenswood  Facility") located in Queens New York, which was acquired
in June 1999.  Earnings from the Ravenswood  Facility were $32.8 million for the
first quarter of 2000.  Since the facility was acquired in June 1999,  there are
no comparative  earnings  attributable to that facility for the first quarter of
1999.  The  increase  in earnings  from the Gas  Distribution  segment  reflects
revenue  benefits  from  continued  gas sales growth and favorable gas prices as
compared to oil prices.



                                       15

<PAGE>



Consolidated  earnings also reflect improved  performance from the Company's Gas
Exploration and Production segment,  which benefitted from significantly  higher
realized  gas prices  and  increased  production  volumes,  as well as  improved
performance from the Company's  Energy Related  Investments  segment.  Partially
offsetting the aforementioned  benefits to comparative earnings,  was a decrease
in interest  income on  temporary  cash  investments.  Interest  income has been
decreasing  as the  Company  used cash to finance  acquisitions  and  repurchase
shares of its common stock in 1999.

Consolidated  earnings  per share was $1.22 for the first  quarter  of 2000,  as
compared  to $0.94 for the first  quarter of last year,  an  increase of 30%. In
addition to the  earnings  enhancements  noted above,  comparative  earnings per
share also  reflects a six percent  decrease  in the  Company's  average  common
shares  outstanding  for the  first  quarter  of 2000 as  compared  to the first
quarter last year. During 1999, the Company  repurchased its common stock market
on the open market.

Revenues
--------

Consolidated  revenues  were $1.3  billion  for the first  quarter  of 2000,  as
compared to $961.1  million for the first  quarter of last year,  an increase of
$355.5  million or 37%.  The increase in revenues is due to: (i) the addition of
the Ravenswood  Facility which contributed $148.1 million in revenues during the
first quarter;  (ii) an increase of $86.4 million in Gas Distribution  revenues;
and (iii) an increase of $85.8 million in revenues from subsidiaries  comprising
the Energy Related Services segment.  Revenues from the Gas Distribution segment
benefitted  from continued gas sales growth and favorable gas prices as compared
to oil prices. The increase in revenues from the Energy Related Services segment
resulted from recent acquisitions of companies providing various energy- related
services  throughout  the New York  tri-state  area and Rhode Island,  and sales
growth related to the Company's gas marketing subsidiary.

Operating Expenses
------------------

Consolidated  operating expenses were $1.0 billion for the first quarter of 2000
as  compared  to $718.9  million for the  corresponding  period  last year.  The
increase in operating  expenses of $301.2  million,  or 42%, was  primarily  the
result of  higher  purchased  gas and fuel  costs,  and  higher  operations  and
maintenance  expense. The increase in gas costs in the first quarter of 2000, as
compared to first quarter of last year,  resulted from the increase in gas sales
growth  associated with the Company's two gas distribution  subsidiaries and its
gas marketing  subsidiary,  as well as higher gas prices.  Variations in utility
gas costs  have  little  impact on  operating  results as the  current  gas rate
structure of each of the Company's  gas  distribution  utilities  includes a gas
adjustment clause, pursuant to which variations between actual gas costs and gas
cost  recoveries  are deferred and  subsequently  refunded to or collected  from
customers. Operations and maintenance expense has increased by $122.1 million or
52%  as  a  result  of  recent   acquisitions  of  companies  providing  various
energy-related  services,  as discussed  above.  Further,  the operations of the
Ravenswood  Facility also contributed to the increase in operating  expenses for
the first quarter of 2000.



                                       16

<PAGE>



Other Income and (Deductions)
-----------------------------

Other income includes equity  earnings from  subsidiaries  comprising the Energy
Related Investments segment,  primarily the Company's  investments in Canada. In
addition,  other  income  also  includes  interest  income from  temporary  cash
investments.  During the first quarter of 2000,  the Company  recognized  equity
earnings from its Canadian investments of $6.3 million, compared to $2.6 million
during the first quarter of 1999. As previously  mentioned,  interest income has
been decreasing as the Company used cash to finance  acquisitions and repurchase
shares of its common stock.

Other Expenses
--------------

Interest  expense for the first quarter of 2000 was $44.1 million as compared to
$35.9  million  for the  corresponding  period  last year,  an  increase of $8.2
million or 23%.  Interest  expense  reflects higher levels of debt  outstanding,
primarily  related to the Company's  Canadian  investments  and higher  carrying
charges associated with certain outstanding  regulatory issues.  These increases
to interest  expense were partially offset by a decrease to interest expense due
to the Company  extinguishing  a $397  million  promissory  note to LIPA in June
1999, and not issuing a replacement  series of debt until February 1, 2000. (See
Note 4 to the Consolidated  Financial Statements,  "Issuance of Long- Term Debt,
Repayment  of Notes  Payable,  and  Financing"  for further  information  on the
extinguishment and issuance of the debt instruments.)

Income tax expense  reflects the higher level of pre-tax  income for the quarter
ended March 31, 2000, as compared to the corresponding quarter last year.


SEGMENT RESULTS

Gas Distribution
----------------

With the exception of a portion of Queens County, the Company's gas distribution
subsidiaries are the only providers of gas distribution services in the New York
City  counties of Kings,  Richmond  and Queens and the Long  Island  counties of
Nassau and Suffolk.  KeySpan Energy Delivery New York provides gas  distribution
services to  customers  in the New York City  Boroughs of  Brooklyn,  Queens and
Staten Island, and KeySpan Energy Delivery Long Island provides gas distribution
services to customers in the Long Island  counties of Nassau and Suffolk and the
Rockaway Peninsula of the Borough of Queens.


The table below  highlights  certain  significant  financial  data and operating
statistics for the Gas Distribution segment for the periods indicated.




                                       17

<PAGE>



                                                       (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

                                             Three Months Ended          Three Months Ended
                                               March 31, 2000              March 31, 1999
-------------------------------------- ------------------------------ -------------------------
<S>                                                <C>                       <C>

Revenues                               $            804,703 $                 718,298
Purchased gas                                       374,890                   311,254
Revenue taxes                                        44,541                    44,307
-------------------------------------------------------------------------------------
Net Revenues                                        385,272                   362,737
-------------------------------------------------------------------------------------
Operations and maintenance                          114,560                   104,598
Depreciation and amortization                        27,296                    24,254
Operating taxes                                      30,955                    28,146
-------------------------------------------------------------------------------------
Total Operating Expenses                            172,811                   156,998
-------------------------------------- -------------------- -------------------------
Operating Income                       $            212,461 $                 205,739
-------------------------------------- -------------------- -------------------------
Earnings for Common Stock              $            126,779 $                 120,690
-------------------------------------- -------------------- -------------------------
Firm gas sales (MDTH)                                78,734                    78,313
Firm transportation (MDTH)                           10,483                     8,226
Transportation - Electric
     Generation (MDTH)                               12,786                     8,488
Other sales (MDTH)                                   20,167                    16,840
Warmer than normal                                      8.7%                     8.2%
-------------------------------------- -------------------- -------------------------
</TABLE>
An MDTH is 10,000  therms  (British  Thermal  Units) and  reflects  the  heating
content of  approximately  one million  cubic feet of gas. A therm  reflects the
heating content of  approximately  100 cubic feet of gas. One billion cubic feet
(BCF) of gas equals approximately 1,000 MDTH.

NET REVENUES

Net gas revenues  increased during the first quarter of 2000, as compared to the
first quarter of last year, by $22.5 million or 6.2%, due to continued gas sales
growth  and  favorable  gas prices as  compared  to oil  prices.  Firm gas sales
margins grew  approximately $10 million during the first quarter of 2000 through
the addition of new gas customers and oil to gas  conversions,  primarily in the
Long Island market.  Long Island has a very low natural gas saturation  rate and
significant  gas sales growth  opportunities  are believed to be available.  The
Company  estimates  that  only 28% of one and  two-family  homes on Long  Island
currently  use  natural  gas for space  heating,  while 28% of the  multi-family
market  and 69% of the  commercial  market  use gas for space  heating.  In this
service  area,  the  Company  will seek  growth  through  the  expansion  of its
distribution  system as well as through the conversion of residential  homes and
the pursuit of  opportunities  to grow  multi-family,  industrial and commercial
markets.

In the large  volume  heating  markets and other  interruptible  markets,  which
include large apartment houses, government buildings and schools, gas service is
provided under rates that are set to compete



                                       18

<PAGE>



with prices of  alternative  fuel,  including No. 2 and No. 6 grade heating oil.
Due to the  recent  increase  in the price of  heating  grade  fuel oil,  gas is
currently  selling at a discount to heating oil. The Company  increased sales in
these markets in the first quarter of 2000 by approximately $9 million,  through
aggressive unit pricing and customer additions.

The Gas  Distribution  segment is  influenced  by seasonal  weather  conditions.
Annual  gas  revenues  are  substantially  realized  during the  heating  season
(November 1 to April 30) as a result of the large  proportion of heating  sales,
primarily  residential,  compared  with  total  sales.  Accordingly,  results of
operations for gas  distribution  operations  historically are most favorable in
the three  months  ended March 31, with  results of  operations  being next most
favorable in the three months ended  December 31.  Results for the quarter ended
June 30 are  marginally  profitable  or  unprofitable,  and losses are generally
incurred in the quarter ended September 30.

The Company's gas distribution  subsidiaries  operate under utility tariffs that
contain a weather  normalization  adjustment that largely offsets  shortfalls or
excesses of firm net revenues (i.e.,  revenues less gas costs and revenue taxes)
during a heating season due to variations from normal weather.

SALES, TRANSPORTATION AND OTHER QUANTITIES

Comparative firm gas sales and  transportation  quantities for the first quarter
of 2000 reflect the increase in normalized firm sales, as discussed above.  Firm
gas  transportation  volumes  increased  in the first  quarter  of 2000,  as the
Company  continues its natural gas deregulation  initiatives.  The Company's net
margins are not affected by customers  opting to purchase  their gas supply from
sources   other  than  the  Company,   since   distribution   rates  charged  to
transportation  customers  are the same as those  charged to full sales  service
customers.

Transportation   quantities   related  to   electric   generation   reflect  the
transportation of gas to the Company's electric generating facilities located on
Long Island. Net revenues from these quantities are minimal.

Other sales quantities include on-system  interruptible  quantities,  off-system
sales  quantities  (sales made to  customers  outside of the  Company's  service
territories)  and  related  transportation.  For the first  quarter of 2000,  as
compared to the  corresponding  period last year,  the Company  realized  higher
on-system  interruptible  sales due to customer  additions.  Effective  April 1,
2000, the Company entered into an agreement with Coral Energy Resources, L.P., a
subsidiary of Shell Oil Company  ("Coral").  Coral  assists in the  origination,
structuring,  valuation and execution of energy-related  transactions. A sharing
agreement  exists between gas ratepayers and the Company's two gas  distribution
subsidiaries  (collectively  referred to as the "Gas  Companies") for off-system
gas  transactions.  The Gas Companies' share of the profits on such transactions
is then shared with Coral. The Gas Companies also share in revenues arising from
certain transactions initiated by Coral.




                                       19

<PAGE>



OPERATING EXPENSES

Comparative  operating expenses increased by $15.8 million, or 10%, in the first
quarter of 2000 as compared to the  corresponding  period last year.  Operations
and maintenance expense in the first quarter of 2000 reflects, generally, higher
labor costs and associated  employee  benefit  expenses and higher  accruals for
uncollectible  accounts.  The increase in depreciation and amortization  expense
generally reflects continued property additions.  Further, operating taxes which
include  state and local  taxes on property  have  increased  as the  applicable
property base and tax rates generally have increased.


Electric Services

The Electric  Services segment  primarily  consists of subsidiaries that own and
operate  oil and gas fired  generating  plants in Queens  and Long  Island,  and
through  long-term  contracts,  manage the  electric  T&D  system,  the fuel and
electric purchases, and the off-system electric sales for LIPA.

Selected  financial data for the Electric  Services  segment is set forth in the
table below for the periods indicated.

                                                       (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

                                          Three Months Ended               Three Months Ended
                                             March 31, 2000                  March 31, 1999
------------------------------------ ----------------------------- ----------------------------------
<S>                                             <C>                               <C>
Revenues
  LIPA service agreements            $           185,409 $                          174,858
  Ravenswood Facility                            148,139                                  -
  Other                                              856                                  -
------------------------------------ ------------------- ----------------------------------
Total Revenues                                   334,404                            174,858
------------------------------------ ------------------- ----------------------------------
Operating expenses
  Fuel purchased                                  68,493                                  -
  Operations and maintenance                     144,544                            102,812
  Depreciation                                    12,265                              9,928
  Operating taxes                                 39,490                             28,991
------------------------------------ ------------------- ----------------------------------
Total Operating Expenses                         264,792                            141,731
------------------------------------ ------------------- ----------------------------------
Operating Income                     $            69,612 $                           33,127
------------------------------------ ------------------- ----------------------------------
Earnings for Common Stock            $            42,679 $                           16,585
------------------------------------ ------------------- ----------------------------------
</TABLE>





                                       20
<PAGE>


REVENUES

Electric revenues  increased by $159.5 million,  or 91%, in the first quarter of
2000 as compared to the  comparable  period last year.  The increase in electric
revenues is due primarily to the Ravenswood Facility.  As previously  mentioned,
the Company acquired its interest in the Ravenswood Facility in June 1999 and as
a result there are no comparable revenues  attributable to that facility for the
first quarter of 1999.

In addition, revenues from the Company's service agreements with LIPA were $10.6
million  higher in the first quarter of 2000 as compared to the first quarter of
1999.  The increase in  comparative  revenues is primarily the result of a major
construction  project  being  performed  by the  Company  on behalf of LIPA.  In
February 2000, the Company began the installation of an underground transmission
line to reinforce the electric  system capacity on the southfork of Long Island.
The project is being  performed  under a fixed fee contract with LIPA as part of
the  Management  Services  Agreement.  The  Company  can earn a profit from this
project if its actual  cost to install  the  transmission  line is less than the
budgeted  cost  under  the  contract.  (For a  description  of the LIPA  service
agreements,  refer to the Company's Annual Report on Form 10K for the year ended
December 31, 1999.)

Electric  revenues  also  include  the  sale  of  ancillary  services  from  the
Ravenswood  Facility  and through  the Energy  Management  Agreement  with LIPA.
Ancillary   services  include  primarily   spinning  reserves  and  non-spinning
reserves.  Due to the  significant  increase  in the  market-clearing  price  of
certain  ancillary  services in February 2000, the New York  Independent  System
Operator ("NYISO") has imposed a bid cap on these services  retroactive to March
1, 2000.  Further,  the NYISO has asked  FERC to review  the  pricing of certain
ancillary services and initiate an Alternative Dispute Resolution.  The Company,
LIPA,  and certain other New York state  utilities and generators are contesting
the NYISO's position and/or are seeking  alternative  relief. (See Note 6 to the
Consolidated  Financial  Statements,   "New  York  Independent  System  Operator
("NYISO") Issues" for further details on this topic.)

OPERATING EXPENSES

Operating  expenses  for the first  quarter of 2000,  as  compared  to the first
quarter of 1999,  increased by $123.1  million or 87%. The  Ravenswood  Facility
added $98.8 million to first quarter 2000  operating  expenses,  including  fuel
charges of $68.5 million.  Operating  expenses incurred by the Company under the
LIPA Service  Agreements were  approximately  20% higher in the first quarter of
2000 as  compared  to the first  quarter of 1999,  reflecting,  primarily  costs
incurred to install the new electric transmission line discussed above.









                                       21

<PAGE>



OTHER ISSUES

In the first quarter of 2000,  LIPA's board of trustees approved a resolution to
negotiate a contract with the Company to build a 79-megawatt  natural  gas-fired
peaking unit located on Long Island.  The unit will be used to accommodate  peak
loads  during high  electricity  demand and is expected to be available in 2002.
The Company expects to begin  constructing  the project within the next year and
will own and operate the peaking  unit upon its  completion.  In  addition,  the
Company is proceeding with its application  for a new  cogeneration  facility at
the Ravenswood  Facility for submission to the NYPSC.  The proposed new facility
is a 250 MW state-of-the-art gas turbine to generate both electricity and steam.


Gas Exploration and Production
------------------------------

The Gas Exploration and Production segment is engaged in gas and oil exploration
and production,  and the development and acquisition of domestic natural gas and
oil  properties.  This segment  consists of the Company's 70% equity interest in
THEC, as well as KeySpan  Exploration and Production  LLC, the Company's  wholly
owned subsidiary  engaged in a joint venture with THEC. On March 31, 2000, under
a pre-existing  credit  arrangement,  approximately  $80 million in debt owed by
THEC to the Company was converted into common equity. Upon such conversion,  the
Company's  common  equity  ownership  interest  in THEC  increased  from  64% to
approximately 70%.




                                       22

<PAGE>



Selected  financial data and operating  statistics for the Gas  Exploration  and
Production  segment  are set  forth  in the  following  table  for  the  periods
indicated.

                                                       (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

                                                   Three Months Ended              Three Months Ended
                                                      March 31, 2000                 March 31, 1999
--------------------------------------------  -----------------------------  ------------------------
<S>                                                        <C>                            <C>
Revenues                                      $             49,376  $                       26,520
Operating Expenses                                          33,020                          23,049
--------------------------------------------  --------------------  ------------------------------
Operating Income                              $             16,356  $                        3,471
--------------------------------------------  --------------------  ------------------------------
Earnings for Common Stock                     $              5,498  $                          478
--------------------------------------------  --------------------  ------------------------------

Natural gas production (Mmcfe)                              19,917                          16,465
Natural gas (per Mcf) realized                $               2.43  $                          1.61
Proved reserves (BCFe)                                         558                             480
--------------------------------------------  --------------------  ------------------------------
</TABLE>
Operating  income above  represents  100% of the Company's gas  exploration  and
production subsidiaries' results for the periods indicated.  Earnings,  however,
are  adjusted to reflect  the  Company's  minority  interest  and,  accordingly,
include 64% of THEC's  results.  Gas reserves and  production are stated in BCFe
and Mmcfe, which includes equivalent oil reserves.


OPERATING INCOME

Operating  income  increased  by $12.9  million in the first  quarter of 2000 as
compared to the first quarter of 1999,  reflecting  the benefits  derived from a
21%  increase in  production  volumes,  combined  with a 51% increase in average
realized gas prices  (average  wellhead price received for production  including
hedging gains and losses).  All of the new production  was internally  generated
through  successful  drilling  and  workover  activity.  At March  31,  2000 the
Company's gas exploration and production subsidiaries had 558 BCFe of net proved
reserves of natural  gas, of which  approximately  75% is  classified  as proved
developed.


Energy Related Services
-----------------------

The Company's Energy Related Services segment primarily  includes companies that
provide  services  through five lines of business to clients  located within the
New York City  tri-state  metropolitan  area and in Rhode  Island.  The lines of
business include:  equipment installation  services;  service and maintenance of
energy equipment for commercial, industrial and residential customers; marketing
of gas and electricity;  professional engineering,  consulting and the design of
energy systems; and telecommunications.

In February 2000, the Company acquired three  additional  companies that provide
energy-related  services within these five lines of business.  In addition,  the
Company is also involved, through a



                                       23

<PAGE>



joint venture,  in providing  energy-related  services to consumers  through the
MyHomeKey.com  website,  a personalized  Internet-based  home management system.
MyHomeKey.com  is currently under  development and is anticipated to be launched
in the summer of 2000.

Selected  financial data for the Energy Related Services segment is set forth in
the following table for the periods indicated.

                                                       (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

                                                   Three Months Ended              Three Months Ended
                                                      March 31, 2000                 March 31, 1999
--------------------------------------------  -----------------------------  ------------------------------
<S>                                                       <C>                             <C>

 Revenues                                     $            126,619  $                       40,834
 Cost of goods sold                                        106,353                          34,558
--------------------------------------------  --------------------  ------------------------------
 Gross profit margin                                        20,266                           6,276
 Operating expenses                                         21,673                           9,207
--------------------------------------------  --------------------  ------------------------------
 Operating Income (Loss)                      $             (1,407) $                       (2,931)
--------------------------------------------  --------------------  ------------------------------
 Earnings (Loss) for Common Stock             $             (1,570) $                       (1,637)
--------------------------------------------  --------------------  ------------------------------
</TABLE>
Results of operations of the Energy Related Services  segment remained  constant
for the  first  quarter  of 2000 as  compared  to the  first  quarter  of  1999.
Significantly  greater  gross  profit  margins  were  realized  for each line of
business  primarily  from recent  acquisitions  of companies  providing  energy-
related services and through customer  additions related to energy sales.  These
benefits to gross profit margins,  however,  were offset by increases in general
and  administrative  expenses.  Earnings  for this  segment are  projected to be
profitable in 2000.


Energy Related Investments
--------------------------

Earnings  for this  segment are  derived,  primarily,  from the  Company's:  20%
interest in the Iroquois Gas Transmission System LP ("Iroquois");  50% ownership
interest in Gulf Midstream Services Partnership  ("GMS");  ownership interest in
certain oil  producing  properties in Alberta,  Canada;  and 50% interest in the
Premier  Transco  Pipeline and a 24.5% interest in Phoenix  Natural Gas, both in
Northern Ireland.

Earnings for this segment increased by $3.1 million in the first quarter of 2000
as compared to the  corresponding  period last year,  reflecting higher earnings
from the Company's Canadian investments. Results of operations from Canadian gas
and oil  operations  were enhanced  through the  acquisition,  in the later part
1999,  of the Paddle  River Gas Plant and certain oil  producing  properties  in
Alberta,  Canada,  and more efficient  operations of GMS. In addition,  Iroquois
realized  higher   transportation   sales   quantities  and  revenues  from  its
interruptible  customers  during the first  quarter of 2000 as compared with the
same period last year.  Since natural gas is currently  selling at a discount to
fuel oil throughout the Northeast,  interruptible  customers are electing to use
natural gas



                                       24

<PAGE>



rather than fuel oil in their operations. Earnings for the first quarter of 2000
from the Company's  investments in Northern Ireland were essentially the same as
earnings for the first quarter of last year.  The  subsidiaries  in this segment
are,  primarily  accounted  for  under the  equity  method  since the  Company's
ownership interests are 50% or less. Accordingly,  income from these investments
is reflected in other income and (deductions) in the  Consolidated  Statement of
Income.


Other
-----

The Other segment incurred a loss of $13.5 million for the first quarter of 2000
compared to a loss of $2.1 million for the first quarter of 1999 and, generally,
reflects  preferred  stock  dividends and charges  incurred by the corporate and
administrative  areas of the Company that have not been allocated to the various
business segments,  offset, in part, by interest income earned on temporary cash
investments.  Interest  income has  decreased  as the Company  utilized  cash to
finance certain acquisitions and repurchase shares of its common stock. Further,
during  the  first  quarter  of 2000,  the  Company  recorded  carrying  charges
associated with certain outstanding regulatory issues.


LIQUIDITY, CAPITAL EXPENDITURES AND FINANCING

LIQUIDITY

Cash flow provided by operating  activities for the three months ended March 31,
2000 reflects stable growth from the Company's gas distribution  operations,  as
well as positive  contributions  from the Ravenswood  Facility.  The decrease in
cash flow  provided by  operating  activities  for the first  quarter of 2000 as
compared  to the first  quarter of last year,  however,  reflects a decrease  in
interest  income and  negative  operating  cash flow from the  Company's  Energy
Related Services segment.

At March 31, 2000, the Company had cash and temporary cash investments of $219.3
million. In addition, the Company has a $700 million revolving credit agreement,
with a one-year term and one- year renewal option,  with a commercial bank. This
credit facility is used to support the Company's $700 million  commercial  paper
program.   At  December  31,  1999,  $208.3  million  of  commercial  paper  was
outstanding.  In  addition,  commercial  paper was  issued  during the months of
January and February  2000.  The average  outstanding  daily balance during this
time was $241.4 million at a weighted average annualized interest rate of 6.08%.
In February 2000, the Company repaid the outstanding balance.

THEC has an  unsecured  available  line of credit  with a  commercial  bank that
provides  for  a  maximum  commitment  of  $250  million,   subject  to  certain
conditions.  During the first  quarter of 2000,  THEC  borrowed an additional $2
million  under  its  Credit  Facility  and  repaid  $4  million  of  outstanding
borrowings;  at March 31,  2000,  $179  million  remained  outstanding.  Also, a
subsidiary  included in the Energy Related  Investments  segment has a revolving
loan agreement with a financial



                                       25

<PAGE>



institution in Canada.  Borrowings under this agreement during the first quarter
of 2000 were U.S. $28.4 million and, at March 31, 2000,  U.S. $114.8 million was
outstanding. (See Note 4 to the Consolidated Financial Statements,  "Issuance of
Long-Term  Debt,   Repayment  of  Notes  Payable,  and  Financing"  for  further
information.)

CAPITAL EXPENDITURES

Construction Expenditures
The table below sets forth the Company's  construction  expenditures  by segment
for the periods indicated:

                                                       (IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
                                           Three Months Ended              Three Months Ended
                                             March 31, 2000                  March 31, 1999
------------------------------------ -------------------------------  -----------------------------
<S>                                              <C>                            <C>
Gas Distribution                     $             39,162  $                      34,590
Electric Services                                  10,235                          3,658
Gas Exploration and Production                     53,954                         35,399
Energy Related Services                             3,133                            161
Other                                               5,090                          2,737
-----------------------------------  -------------------------------  ------------------
                                     $            111,574  $                      76,545
------------------------------------ -------------------------------  ------------------
</TABLE>
Construction  expenditures  related to Gas  Distribution  were primarily for the
renewal and  replacement  of mains and services and for the expansion of the gas
distribution system on Long Island. Electric Service's construction expenditures
reflect  primarily,   costs  to  maintain  the  Company's  electric   generating
facilities.  Construction expenditures related to Gas Exploration and Production
reflect,  in part,  costs related to the  development of properties  acquired in
Southern  Louisiana  and in the Gulf of Mexico in 1999 and costs  related to the
continued development of other properties previously acquired. Expenditures also
include the  Company's  joint  venture  with THEC to explore for natural gas and
oil.

Equity Investments
------------------

In February 2000, the Energy Related  Services segment acquired three additional
companies  located in the New York City  metropolitan  area.  The newly acquired
companies  include,  an engineering-  consulting firm, a plumbing and mechanical
contracting firm, and a firm specializing in mechanical contracting and heating,
ventilation and air conditioning ("HVAC").  Combined,  these companies have over
900  employees and revenues of  approximately  $170  million.  Further,  capital
expenditures  for equity  investments  during the first  quarter of 2000 reflect
incremental investments in Canadian affiliates.

In addition,  in March 2000, the Company and TXU Energy  Services formed a joint
venture with  MyHomeKey.com,  Inc. The Company and TXU Energy Services have each
invested $12.5 million into the project;  Bechtel  Enterprises has also invested
$5 million. MyHomeKey, formerly



                                       26

<PAGE>



MyHomeLink,  is a personalized,  Internet-based home management system that puts
service  providers  at  customers'  fingertips,  delivers  advice  and  one-stop
shopping for most home products and services.  The MyHomeKey portal is currently
under  development  and is expected  to be  launched in the summer of 2000.  TXU
Energy Services is a unit of TXU - an investor-owned energy service company with
over $40 billion in assets.  Bechtel Enterprises is an affiliate of Bechtel with
an asset value exceeding $18 billion.

FINANCING

In December 1999,  KeySpan Energy  Delivery Long Island and the Company  jointly
filed a shelf registration statement with the Securities and Exchange Commission
in  anticipation of issuing up to $600 million of Medium Term Notes. On February
1, 2000,  KeySpan  Energy  Delivery Long Island issued $400 million 7.875% Notes
due February 1, 2010. The net proceeds from this issuance were used to repay the
Company for its costs in  extinguishing  certain  promissory  notes to LIPA that
matured in June 1999. The notes issued are fully and unconditionally  guaranteed
by the Company.

In June 2000,  the Company  will redeem $363  million of  preferred  stock 7.95%
Series AA with corporate cash and is currently  evaluating its  alternatives for
the permanent financing of this issue.

On November 4, 1999,  the  Company  entered  into a  definitive  agreement  with
Eastern Enterprises ("Eastern"),  pursuant to which the Company will acquire all
of the  outstanding  common  stock of Eastern for $64.00 per share in cash.  The
transaction has a total value of  approximately  $2.5 billion.  Eastern owns and
operates, among other entities,  Boston Gas Company, Colonial Gas Company, Essex
Gas Company and Midland Enterprises Inc. In connection with this merger, Eastern
has amended its merger  agreement  with  EnergyNorth,  Inc.  ("EnergyNorth")  to
provide for an all cash acquisition by Eastern of EnergyNorth  common stock. The
restructured  EnergyNorth merger is expected to close contemporaneously with the
KeySpan/Eastern transaction. This transaction has a total value of approximately
$250 million.

The  Company  intends  to  access  the  financial  markets  in 2000  to  finance
approximately  $2 billion  for the  Eastern and  EnergyNorth  transactions.  The
Company  anticipates  issuing several different  maturities of long-term debt to
balance its current capital structure and maturity structure. (See Note 5 to the
Consolidated Financial Statements  "Acquisition of Eastern Enterprises" for more
information.)

In  connection   with  the  Company's   anticipated   Eastern  and   EnergyNorth
transactions,  and the anticipated  issuance of long-term debt  securities,  the
Company entered into forward interest rate lock agreements to hedge a portion of
the  risk  that  the  cost of the  future  issuance  of  fixed-rate  debt may be
adversely  affected by changes in interest  rates.  The agreements  have a total
notional  principal  amount of $500  million.  (See  Note 4 to the  Consolidated
Financial Statements,  "Issuance of Long- Term Debt, Repayment of Notes Payable,
and Financing" for additional details.)




                                       27

<PAGE>



GAS DISTRIBUTION - RATE MATTERS

By  orders  dated  February  5, 1998 and April  14,  1998 the NYPSC  approved  a
Stipulation  and Agreement  ("Stipulation")  among KeySpan  Energy  Delivery New
York,  LILCO,  the  Staff of the  NYPSC  and six  other  parties  that in effect
approved the KeySpan Acquisition and established gas rates for the Company's two
gas  distribution   subsidiaries  that  are  currently  in  effect.   (For  more
information  on these  agreements  refer to the Company's  Annual Report on Form
10-K for the year ended December 31, 1999.)

ENVIRONMENTAL MATTERS

The Company is subject to various  federal,  state and local laws and regulatory
programs  related  to  the   environment.   Ongoing   environmental   compliance
activities,  which  have  not  been  material,  are  charged  to  operation  and
maintenance activities. The Company estimates that the remaining minimum cost of
its  MGP-related  environmental  cleanup  activities,  including  costs  of $5.0
million  associated with the Ravenswood  Facility,  will be  approximately  $126
million and has recorded a related  liability  for such amount.  Further,  as of
March 31, 2000, the Company has expended a total of  approximately  $18 million.
(See Note 3 to the Consolidated Financial Statements "Environmental Matters".)

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q concerning expectations, beliefs,
plans,  objectives,   goals,  strategies,   future  events  or  performance  and
underlying  assumptions and other  statements which are other than statements of
historical facts, are "forward-looking statements" within the meaning of Section
21E of the  Securities  Exchange Act of 1934, as amended.  Without  limiting the
foregoing, all statements relating to the Company's future outlook,  anticipated
capital  expenditures,  future cash flows and  borrowings,  pursuit of potential
future  acquisition  opportunities  and sources of funding  are  forward-looking
statements.  Such  forward-looking  statements reflect numerous  assumptions and
involve  a number of risks and  uncertainties  and  actual  results  may  differ
materially from those discussed in such statements. Among the factors that could
cause actual results to differ  materially  are:  available  sources and cost of
fuel;  federal  and state  regulatory  initiatives  that  increase  competition,
threaten cost and investment recovery,  and impact rate structures;  the ability
of the  Company  to  successfully  reduce  its cost  structure;  the  successful
integration  of the Company's  subsidiaries,  including the Eastern  Transaction
companies;  the  degree  to which  the  Company  develops  unregulated  business
ventures;  the  ability  of the  Company  to  identify  and  make  complementary
acquisitions,  as  well as the  successful  integration  of  such  acquisitions;
inflationary  trends and interest  rates;  and other risks detailed from time to
time in other reports and other documents filed by the Company with the SEC. For
any of these  statements,  the Company  claims the protection of the safe harbor
for forward-looking  information  contained in the Private Securities Litigation
Reform Act of 1995, as amended.




                                       28

<PAGE>



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
        ABOUT MARKET RISK

The  Company and its  subsidiaries  are subject to various  risk  exposures  and
uncertainties associated with their operations. The most significant contingency
involves  the  evolution  of  the  gas  distribution   industry  toward  a  more
competitive and deregulated  environment.  Most important to the Company, is the
evolution of  regulatory  policy as it pertains to the  Company's  fixed charges
associated  with its firm gas purchase  contracts  related to its historical gas
merchant  role.  In addition,  the Company is exposed to  commodity  price risk,
interest  rate risk and, to a much less  degree,  foreign  currency  translation
risk.  The Company's  exposure to the  aforementioned  market risks has remained
substantially  unchanged  from December 31, 1999. As  previously  mentioned,  in
anticipation of the Company's  purchase of Eastern and the anticipated  issuance
of  long-term  debt  securities,  the Company  entered into  additional  forward
interest rate lock  agreements  in April 2000, to hedge a larger  portion of the
risk that the cost of the future  issuance of  fixed-rate  debt may be adversely
affected by changes in interest rates. The Company may, from time to time, enter
into additional  interest rate lock  agreements to hedge this risk exposure,  if
market conditions so warrant. The Company can not predict the timing or notional
amount of potential future interest rate lock agreements.


PART II.  OTHER INFORMATION
---------------------------

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company is subject to various legal  proceedings  arising
out of the ordinary course of its business.  Except as described below or in its
Annual Report on Form 10K for the year ended December 31, 1999, the Company does
not consider any of such proceedings to be material to its business or likely to
result in a material  adverse  effect on its results of  operations or financial
condition.

A class settlement,  which became effective in June 1989 (COUNTY OF SUFFOLK,  ET
AL., V. LONG ISLAND LIGHTING COMPANY,  ET AL.), resolved a civil lawsuit against
LILCO brought under the federal Racketeer  Influenced and Corrupt  Organizations
Act, alleging that LILCO made inadequate disclosures before the NYPSC concerning
the  construction  and completion of nuclear  generating  facilities.  The class
settlement provided electric customers with rate reductions of $390 million that
were being  reflected as  adjustments  to their  monthly  electric  bills over a
ten-year period which began on June 1, 1990. The class settlement  obligation of
approximately  $7.9 million at March 31, 2000  reflects the present value of the
remaining  reductions  to be  refunded  to  customers.  As a result  of the LIPA
Transaction,  LIPA is providing the remaining balance to its electric  customers
as an  adjustment  to their monthly  electric  bills.  The Company will then, in
turn,  reimburse  LIPA on a monthly basis for such  reductions on the customer's
monthly bill. The Company remains ultimately obligated for amounts due under the
class settlement. In November 1999, class counsel for the



                                       29

<PAGE>



LILCO  ratepayers  served a motion,  in the United States District Court for the
Eastern District of New York,  seeking an order directing the Company to pay $42
million,  in  addition  to the  amounts  remaining  to be paid  under  the class
settlement based upon their contention that the required rate reductions  should
have been exclusive of gross receipts taxes. The Company filed its opposition in
January 2000 and class  counsel  filed their reply papers in February  2000.  In
their  February  papers,  class  counsel  revised  their demand to seek an order
directing  the Company to pay  approximately  $22  million,  plus  interest,  in
addition to the amounts  remaining  to be paid under the class  settlement.  The
Company  filed its rebuttal  papers March 1, 2000 and an oral  argument was held
March 6, 2000. On March 9, 2000, an order was issued by the court granting class
counsel's  motion.  On April 3, 2000, the Corrected Final Order and Judgment was
filed with the District Court.  Under this order, the total amount due the class
settlement,  including  pre-judgment  interest,  but  excluding  post-  judgment
interest,  was set forth at approximately  $29.7 million.  On April 7, 2000, the
Company  filed its Notice of Appeal,  appealing  the matter to the United States
Court of Appeals for the Second Circuit.  The Company is unable to determine the
outcome of this  proceeding,  or what effect,  if any, such outcome will have on
its financial condition or results of operations.



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)        Exhibits

(27)*      Financial  Data  Schedule on Schedule  U-T for the quarter  ended
           March 31, 2000.

(b)        Reports on Form 8-K

In its Report on Form 8-K dated March 27, 2000, the Company reported

(1) its anticipated earnings for the first quarter of 2000.

(2)  that  it  has  made  an  investment  in   MyHomeKey.com,   a  personalized,
Internet-based home management system.

In its Report on Form 8-K dated February 1, 2000,  the Company  reported that on
February 1, 2000,  KeySpan Gas East  Corporation  d/b/a KeySpan Energy  Delivery
Long Island,  a wholly owned  subsidiary  of the  Company,  issued  $400,000,000
aggregate principal amount of Medium-Term Notes, titled 77/8% Notes Due February
1, 2010.

In its Report on Form 8-K dated  January 27,  2000,  the Company  issued a press
release reporting its operating results for the year ended December 31, 1999.

In its Report on Form 8-K dated January 19, 2000,  the Company  reported that it
is currently seeking to resolve remaining issues concerning  compliance with the
Ravenswood generation facility



                                       30

<PAGE>



December 15  post-closing  conditions and, in connection  therewith,  is seeking
extensions of the deadlines for certain of the conditions.

-------------------------

*Filed Herewith





                                       31

<PAGE>


                      KEYSPAN CORPORATION AND SUBSIDIARIES

                                    SIGNATURE



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant has duly caused this report to be signed on behalf of the undersigned
there unto duly authorized.



                                                   KEYSPAN CORPORATION
                                                       (Registrant)



Date: May 12, 2000                                  /s/ Gerald Luterman
                                                    ----------------------
                                                    Gerald Luterman
                                                    Senior Vice President and
                                                    Chief Financial Officer



Date: May 12, 2000                                  /s/ Ronald S. Jendras
                                                    ------------------------
                                                    Ronald S. Jendras
                                                    Vice President, Controller
                                                    and Chief Accounting Officer





                                       32