SECOND AMENDING AGREEMENT TO CREDIT AGREEMENT
                                    BETWEEN
                         KEYSPAN ENERGY DEVELOPMENT CO.
                                 (as Borrower)
                                      AND
                                BANK OF MONTREAL
                                  (as Lender)
                                      AND
                                BANK OF MONTREAL
                           (as Agent for the Lenders)



THIS SECOND AMENDING AGREEMENT TO CREDIT AGREEMENT is dated as of
the 12 th day of October, 2001 to be effective as of the dates set forth herein.


BETWEEN:

                KEYSPAN ENERGY DEVELOPMENT CO. (the "Borrower")

AND:

                BANK OF MONTREAL (the "Lender")

AND:            BANK OF MONTREAL in its capacity as agent for the Lenders
                (the "Agent")

     WHEREAS:

1.   The  Borrower and Bank of Montreal (in its capacity as Agent and as Lender)
     are parties to a Credit  Agreement dated as of October 13, 2000, as amended
     by a Consent,  Waiver and Amending  Agreement dated as of December 22, 2000
     (as amended, the "Credit Agreement"); and

2.   The parties wish to effect  certain  amendments to the Credit  Agreement to
     give effect to a letter  agreement  entered between them dated December 14,
     2000 with  respect to the  issuance  of letters of credit  pursuant  to the
     Credit  Agreement  (the "Interim  Agreement")  and to effect  certain other
     amendments.

     NOW  THEREFORE,  in  consideration  of the premises,  the covenants  herein
contained  and for  other  good and  valuable  consideration,  the  receipt  and
sufficiency of which is hereby  acknowledged by each of the parties hereto,  the
parties agree as follows:

1.      Definitions

     Capitalized  terms used herein,  including the recitals hereto,  shall have
the meanings ascribed thereto in the Credit Agreement,  unless otherwise defined
herein.

2.      Amendments to Definitions

        Section 1.1 of the Credit Agreement is amended by:

(a)  adding the following definitions:

     (i)  ""Letter  of Credit"  means a letter of credit or letter of  guarantee
          denominated  in  Canadian  Dollars or US Dollars and issued by BMO for
          the account of the Borrower at the request of the Borrower pursuant to
          Section 3.14;

     (ii) "Letter  of Credit  Fee"  means,  with  respect  to a Letter of Credit
          issued by BMO, a per annum rate equal to the Margin  applicable to the
          issuance of the Letter of Credit and payable in the  currency in which
          the Letter of Credit is denominated;"

(b)  amending the following definitions:

     (i)  by deleting the definition of  "Accommodations"  and  substituting the
          following:   ""Accommodations"   means  the  advance  of  Loans,   the
          acceptance  of  Bankers'  Acceptances  and the  issuance of Letters of
          Credit;"

     (ii) by  deleting  the  definition  of  "Drawdown"  and   substituting  the
          following:

          "Drawdown"  means the advance of an  Accommodation  by way of a Prime
          Loan,  US Base Rate  Loan,  Libor  Loan,  Bankers'  Acceptance  or the
          issuance of a Letter of Credit, other than as a result of a Conversion
          or Rollover or a drawing under a Letter of Credit;"

     (iii)by  amending  the  definition  of  "Lender's  Proportion"  to add  the
          following words at the end of such definition:

          "provided,  however, that when such term is used in reference to or in
          relation to the Lender's  Proportion of BMO, the same shall be 100% at
          all times when BMO is the only Lender  hereunder.  At all other times,
          the Lender's  Proportion  of BMO in respect of the issuance of Letters
          of Credit  shall be 100% on any date and for the purposes of effecting
          Accommodations  (other than Letters of Credit) or adjusting  any other
          such  Accommodations pro rata, the Lender's Proportion of BMO shall be
          calculated  by reducing its  Commitment  by the  Equivalent  Amount in
          Canadian Dollars of the aggregate  uncancelled and undrawn portions of
          the face amounts of all Letters of Credit then issued by BMO and which
          remain  outstanding,  up to an Equivalent  Amount of Cdn.  $5,000,000,
          being the maximum  amount  which BMO is  obligated  to issue by way of
          Letters of Credit;

     (iv) by deleting the definition of "Margin" and substituting the following:

          "Margin" means, at any time, a margin, expressed as a rate per 365 day
          period for Prime Loans, US Base Rate Loans,  Bankers'  Acceptances and
          Letters of Credit or in the case of Libor  Loans,  per 360 day period,
          payable to the Lenders with respect to:

Type of Accommodation                   Applicable Margin
---------------------                   -----------------
Prime Loans and US Base Rate Loans              0.0
----------------------------------              ---
Bankers' Acceptances (acceptance fees)          125 bps
--------------------------------------          -------
Libor Loans                                     125 bps
-----------                                     -------
Letters of Credit                               125 bps
-----------------                               -------

     (v)  by deleting the  definition of "Maturity  Date" and  substituting  the
          following:

          "Maturity  Date"  means  April 12,  2002,  or if such date is extended
          pursuant to Section 3.13, the date to which it has been extended;

     (vi) by amending  the  definition  of  "Outstandings"  by deleting the word
          "and"  at the end of  paragraph  (b),  inserting  "and"  at the end of
          paragraph (c) and adding the following as paragraph (d):

          "(d) the  Equivalent  Amount  in  Canadian  Dollars  of the  aggregate
               maximum  uncancelled and undrawn  portions of the face amounts of
               outstanding Letters of Credit;"

3.      Amendments to Accommodate Letters of Credit

     (a)  Section 3.4 of the Credit  Agreement  is amended by deleting  the word
          "and"  at the end of  subsection  (c),  inserting  "and" at the end of
          subsection (d) and inserting the following as subsection (e):

          "(e) Letters of Credit:  by way of the  issuance of Letters of Credit,
               upon at least 3 Banking Days' prior written notice"; and

     (b)  Section  3.13(c) of the Credit  Agreement shall be amended by deleting
          "; and" at the end item (i),  by  deleting  the  period at end of item
          (ii) and  inserting "; and" and by adding  "(iii) if the  Non-Agreeing
          Lender is BMO,  such  purchase  shall  subject to the  replacement  or
          collateralization  (satisfactory  to  BMO  acting  reasonably)  of all
          outstanding Letters of Credit issued by BMO (in an amount equal to the
          aggregate maximum uncancelled and undrawn portions of the face amounts
          thereof)  not less  than 3  Business  Days  prior to the then  current
          Maturity Date."

     (c)  Article  3 of the  Credit  Agreement  shall  be  amended  to add a new
          Section 3.14 to the Credit Agreement as follows:

"3.14 Letters of Credit

     (a)  Aggregate Amount:  The Equivalent Amount of the aggregate  uncancelled
          and  undrawn  portions  of the face  amounts of all  Letters of Credit
          issued  and   outstanding  at  any  one  time  shall  not  exceed  Cdn
          $5,000,000.

     (b)  Issuance: The Borrower may give BMO a Borrowing Notice requesting that
          a Letter of Credit be issued by BMO.

     (c)  Documentation:  BMO  shall  have no  obligation  to issue a Letter  of
          Credit until the  Borrower  has  executed and  delivered to BMO a duly
          completed Letter of Credit  application in BMO's standard form and has
          executed and  delivered  to BMO such  ancillary  documents,  including
          applications  and  indemnities,  as BMO  generally  requires  for like
          transactions and which are consistent with the provisions hereof.

     (d)  Expiry:  Each Letter of Credit shall expire not later than 1 year from
          the date of its issue.

     (e)  Payment: All payments made by BMO to any Person pursuant to any Letter
          of Credit shall,  unless the Borrower  reimburses BMO at the Branch of
          Account for such  payment on or before the date it is made,  be deemed
          as and from the date of such  payment to be an advance to the Borrower
          of a Prime Loan (for any such payments  made in Cdn.  Dollars) or a US
          Base Rate Loan (for any such  payments  made in US Dollars),  with the
          proceeds  of  such  advance  being  applied   against  the  Borrower's
          obligations  to  reimburse  BMO for  payment  made under the Letter of
          Credit,  and the provisions  hereof relating to Prime Loans or US Base
          Rate  Loans,  as  applicable  (including  interest  to  be  calculated
          thereon) shall apply thereto.  BMO shall forthwith advise the Borrower
          of any demand by the  beneficiary of a Letter of Credit for payment by
          BMO under such Letter of Credit and of any payment  made by it on such
          Letter of Credit to the beneficiary thereof. In determining whether to
          pay  under a  Letter  of  Credit,  BMO  shall be  responsible  only to
          determine that the documents and certificates required to be delivered
          under such Letter of Credit have been  delivered  and that they comply
          on their face with the requirements of such Letter of Credit.  Save as
          aforesaid,  BMO assumes no liability or  responsibility  for the form,
          sufficiency, correctness, genuineness or legal effect of any documents
          provided  for under a Letter of Credit  and may hold the  delivery  of
          documents  conforming to the Letter of Credit as prima facie  evidence
          of the good faith of the beneficiaries or any other Person in relation
          thereto.

     (f)  Renewal:  Provided the Borrower has requested in the Borrowing  Notice
          applicable  to the  issuance of a Letter of Credit that such Letter of
          Credit be automatically  renewable,  BMO, in its sole discretion,  may
          agree to issue such Letter of Credit on a renewable  basis.  If BMO so
          agrees  and  issues a Letter of Credit  that  provides  for  automatic
          renewal,  then at or before  10:00  a.m.  on a  Business  Day at least
          thirty  (30)  Business  Days  prior to the date of  expiry of any such
          Letter of  Credit,  if there is then no  Default  or Event of  Default
          outstanding  hereunder  and if the Maturity Date would occur more than
          30 days  thereafter,  the  Borrower  may elect to renew such Letter of
          Credit by providing notice in writing confirming such request to renew
          and, if the Letter of Credit does not specify the term of the renewal,
          selecting a new expiry date (not  exceeding the Maturity  Date) of the
          Letter of Credit  being  renewed.  Fees in respect  of any  renewed or
          extended  Letter of Credit  shall be payable  pursuant to Section 5.11
          and shall be computed for the period of renewal or extension.

          Notwithstanding  the foregoing,  BMO  acknowledges  that its Letter of
          Credit  IMDC/TOR/S/335461  dated  December 15, 2000 and in the current
          face amount of Cdn.  $9,440 has been issued in favour of ATCO Electric
          Ltd. which provides for automatic renewal unless BMO provides at least
          30 days' notice prior to expiry, that the Letter of Credit will not be
          renewed.

     (g)  Amendment:  Any amendments to a Letter of Credit by way of addition or
          deletion of any  beneficiary,  any  increase in the face amount of the
          Letter of Credit or any other change in the terms shall be  considered
          to be a new  Accommodation  and may only be effected  by the  Borrower
          delivering a Borrowing Notice to BMO.

(d)  Section 4.1 of the Credit  Agreement  shall be amended by deleting the text
     thereof and substituting the following: "On the Maturity Date, the Borrower
     shall repay all Accommodations  (other than outstanding  Letters of Credit)
     then  outstanding,  shall provide cash collateral in respect of any Letters
     of Credit issued thereunder (with a maturity date falling subsequent to the
     Maturity  Date) in an amount equal to the maximum  undrawn and  uncancelled
     portion of the face amount of each such  Letter of Credit (in the  currency
     of such Letter of Credit) to be held by the Agent in the manner provided in
     Section 10.3,  and the  Commitment of each Lender shall be reduced to zero.
     The Borrower  shall  ensure that all Libor Loans and  Bankers'  Acceptances
     mature  on or  prior  to the  Maturity  Date  and  shall  ensure  that  the
     maturities  of all Bankers'  Acceptances  and Libor Loans are such that the
     foregoing mandatory repayments can be effected."

(e)  Section 4.3 of the Credit Agreement shall be amended in subsections (b) and
     (c)  thereof  by  substituting  the  word  "Outstandings"  where  the  word
     "Accommodations" appears therein.

(f)  Section 4.4 of the Credit  Agreement shall be amended by deleting the title
     thereto and substituting the following:

     "Early   Repayment  of  Libor   Loans,   Letters  of  Credit  and  Bankers'
     Acceptances",

     and by amending the text of Section 4.4 to add the words "Letters of Credit
     with an expiry date following subsequent to the date of such cancellation,"
     after the words "as a result  thereof  include" in the third  line,  and by
     adding the words "in respect of Letters of Credit, provided cash collateral
     equal to the aggregate uncancelled and undrawn portions of the face amounts
     thereof  to be  held  in a Cash  Collateral  Account  pursuant  to  Section
     10.3(b), and has" after the words "the Borrower has".

(g)  Article 5 of the Credit  Agreement  shall be  amended to add a new  Section
     5.11 as follows:

     "5.11 Letter of Credit Fees

     The Borrower shall pay to BMO at BMO's Branch of Account the following fees
     in respect of each Letter of Credit issued by BMO hereunder:

     (a)  on the date of issue and of each  renewal  of each  Letter of Credit a
          set-up  fee  of  $40  payable  in  Cdn.  Dollars  or  US  Dollars,  as
          applicable, and an issue fee equal to the Letter of Credit Fee payable
          in Cdn.  Dollars  or US  Dollars,  as  applicable,  calculated  on the
          uncancelled and undrawn face amount of the Letter of Credit and on the
          basis of the number of days for which such  Letter of Credit is issued
          divided by 365,  subject to a minimum  quarterly fee of $50 payable in
          Cdn. Dollars or US Dollars, as applicable, and

     (b)  on the date of each amendment of each Letter of Credit an amending fee
          of $60 payable in Cdn. Dollars or US Dollars, as applicable.

     If a Letter of Credit is drawn upon prior to its  expiry,  or is  otherwise
     returned to BMO prior to its expiry date,  or if the face amount is reduced
     with the  consent of BMO prior to the expiry  date  (other  than  through a
     drawing),  BMO  shall  provide a credit to the  Borrower  in the  aggregate
     amount of the fees that were paid for (i) in the case of a Letter of Credit
     drawn upon prior to its expiry,  the period  after such drawing but only to
     the extent of such drawing; (ii) in the case of a Letter of Credit returned
     prior to its expiry  date,  the time  period from the date of return to the
     expiry date;  and (iii) in the case of a reduction of the face amount,  the
     period after such  reduction to the expiry date,  but only to the extent of
     such reduction.

(h)  Section 7.2(b) of the Credit  Agreement shall be amended in the second line
     thereof to add "and 5.11" after "5.7" in the third line thereof.

(i)  Section  10.2(a)(ii)  shall be amended to add the words "and the  aggregate
     uncancelled  and  undrawn  portions  of the face  amounts of all Letters of
     Credit"  after  the  words  "including  the  face  amount  of all  Bankers'
     Acceptances".

(j)  Section  10.3(b)  shall be amended  to change the title to such  section by
     deleting the same and substituting the following:

     "Bankers' Acceptances, Libor Loans and Letters of Credit"

and by  inserting  the words "and Letters of Credit"  after the words  "Bankers'
Acceptances" where they appear in such Section 10.3(b).

(k)  Section  10.5  shall be  amended to add the words "or under any of the Loan
     Documents  (including the face amount of all Bankers'  Acceptances  and the
     uncancelled  and undrawn  face amount of all Letters of Credit)"  after the
     words "this Agreement" in the ninth line thereof;

(l)  Section  10.6(c) shall be amended to add after the words  "acceptance  fees
     pursuant to Section 5.4," the following:

     "Letter of Credit Fees pursuant to Section 5.11,"

4.      Other Amendments to Credit Agreement

(a)  Section  2.1(ad)  shall be amended by adding the words ", Solex  Production
     Ltd." after the word "GMSFL" in the first line thereof; and

(b)  Section  3.13 (a) of the  Credit  Agreement  shall be amended by adding the
     words "for a period of 364 days or less after the words  "Maturity Date" in
     the second line thereof.

5.      Amendment of Schedules

     Clause 3 of Schedule  "A" to the Credit  Agreement is amended by adding the
words "Letter of Credit," after the words "US Base Rate Loan,".

6.      Confirmations with respect to Existing Letters of Credit

     The parties  acknowledge  the issuance of two Letters of Credit in December
2000 and a further  Letter of Credit in August  2001,  pursuant  to the  Interim
Agreement, in the following amounts and to the following beneficiaries:

<TABLE>
<CAPTION>
<S>                       <C>                       <C>                        <C>
Beneficiary                Date of Issuance         Amount                      Expiry Date
-----------                ----------------         ------                      -----------
Power Pool of Alberta      December 20, 2000        Cdn. $ 2,232,000            December 20, 2001
                                                                                 (Non-renewable)
-------------------------------------------------------------------------------------------------
ATCO Electric Ltd.         December 15, 2000        Cdn. $ 9,440                December 15, 2001
                                                                                (Renewable)
-------------------------------------------------------------------------------------------------
County of Lac Saint Anne   August 2,2001            Cdn $ 10,000                February 1, 2002
-------------------------------------------------------------------------------------------------
</TABLE>

and the parties  confirm and  acknowledge  that the foregoing  Letters of Credit
shall constitute "Letters of Credit" for the purposes of the Credit Agreement as
amended  hereby and all of the terms and  conditions of the Credit  Agreement as
amended hereby shall apply thereto.

7.      Miscellaneous

     (a)  Save and except as amended aforesaid,  the Credit Agreement remains in
          full force and effect and unamended.

     (b)  For  the  purposes  of the  Credit  Agreement,  this  Second  Amending
          Agreement  shall be read  together  with the Credit  Agreement  as one
          instrument, and this Second Amending Agreement shall also constitute a
          Loan Document.

     (c)  This Second  Amending  Agreement shall be governed by and construed in
          accordance with the laws of the Province of Alberta.

     (d)  This Second Amending Agreement shall,  notwithstanding its actual date
          of execution,  and as to all matters provided for hereunder other than
          those  set  forth  in  Sections  2(b)(iv)  and  (v) and  Section  6 be
          effective  as of December  14,  2000.  All other  amendments  provided
          hereunder shall be effective as of October 12, 2001.

     (e)  This  Second  Amending  Agreement  may be  executed  in any  number of
          counterparts  and by different  parties and separate  counterparts and
          may be  delivered  by  facsimile,  each of which when so executed  and
          delivered  shall be deemed to be an  original  and all of which  taken
          together shall constitute one and the same instrument.


     IN WITNESS  WHEREOF  the parties  hereto  have caused this Second  Amending
Agreement  to be  duly  executed  as of the 12 th day of  October,  2001,  to be
effective as provided in Section 7(d).

                                        KEYSPAN ENERGY DEVELOPMENT CO.

                                        Per:/s/_______________________
                                        Name:
                                        Title:


                                        BANK OF MONTREAL, as Lender

                                        Per:/s/_______________________
                                        Name:
                                        Title:


                                        BANK OF MONTREAL, as Agent

                                        Per:/s/_______________________
                                        Name:
                                        Title:

Each of the  Guaranteeing  Subsidiaries  hereby  acknowledges  and  confirms its
agreement  to the  amendments  effected by this Second  Amending  Agreement  and
confirms that its Subsidiary  Guarantee (or in the case of the  Partnership  its
Guarantee  and  Indemnity)  continues  in full  force  and  effect  and that the
"Obligations"  (as  defined  in  the  Subsidiary  Guarantee)  will  include  all
obligations,  liabilities and indebtedness of the Borrower in respect of Letters
of Credit.

                                KEYSPAN ENERGY FACILITIES LIMITED


                                Per:/s/______________________
                                    Name:
                                    Title:


                                KEYSPAN ENERGY CANADA INC.


                                Per:/s/_______________________
                                    Name:
                                    Title:


                                SOLEX PRODUCTION LTD.


                                Per:/s/_______________________
                                       Name:
                                       Title:


                                KEYSPAN ENERGY CANADA PARTNERSHIP, by its
                                managing partner, KEYSPAN ENERGY CANADA INC.


                                Per:/s/________________________
                                       Name:
                                       Title: