Exhibit 10.18

                              [GRAPHIC OMITTED]







                                KEYSPAN ENERGY
                      1999 ANNUAL INCENTIVE COMPENSATION
                             AND GAINSHARING PLAN














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                                 INTRODUCTION

MarketSpan  Corporation d/b/a KeySpan Energy ("Company" or "KeySpan") recognizes
that the success and achievement of corporate  goals is directly  related to the
ability  and  performance  of its  employees.  In this  regard,  the Company has
established an Annual Incentive Compensation and Gainsharing Plan ("Plan") which
provides  incentives for achieving specific  performance  objectives and related
financial and operating goals.

In  the  deregulated  utility  environment,   the  need  and  use  of  incentive
compensation   is  a  logical   progression  to  providing   competitive   total
compensation  in the external  marketplace.  The use of a combined  base pay and
incentive  compensation  philosophy has become the norm in salary administration
programs.

In managing the compensation  programs at KeySpan Energy,  it is recognized that
both base pay and  incentives  are integral  components  in an effective  salary
program. One of our compensation  objectives is to identify methods which can be
used to enhance our  existing  programs to create  better "pay for  performance"
plans.  In this  regard,  the Plan  provides  a  method  to  establish  specific
performance  goals.  The Plan also provides a direct link between team and group
performance  results and corporate  initiatives.  The key operational  goals are
based  upon the  corporate  initiatives  and  specifically  focus  upon  growth,
competitive pricing, customer satisfaction and employee excellence.





Compensation Department
Human Resources Division
KeySpan Energy
1999

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                              EXECUTIVE SUMMARY

ELIGIBILITY

 o   Includes all KeySpan Energy and Brooklyn Union Officers.

 o   The Plan also includes:

                    o    All KeySpan Energy and Brooklyn Union regular full-time
                         and regular part-time management employees.

      o     All KeySpan Energy and Brooklyn  Union regular full time  bargaining
            employees and temporary full time and temporary part time bargaining
            employees who are members of Local 101 TWU and Local 3 IBEW.

      o     All  KeySpan  Energy  and  Brooklyn  Union  full  time and part time
            employees who are members of Local 1049 and Local 1381, IBEW.

 o     Personnel who participate in the KeySpan Energy Sales Commission Plan are
       not eligible to  participate  in the Annual  Incentive  Compensation  and
       Gainsharing Plan.

 o    Personnel on loan to other KeySpan  subsidiaries  may  participate  at the
      discretion of the Chairman of KeySpan.


PERFORMANCE GOALS

o   Strategic considerations have been incorporated into the Plan design.

     o    Performance   goals  are   established   to  reflect   KeySpan  Energy
          performance at the Holding
            Company and Utility level.

      o     Awards for participants in the plan may be based solely upon Holding
            Company goals,  Utility goals,  Subsidiary  goals (as  appropriate),
            Business Unit goals or some combination of these goals.

     o    Each goal will have a threshold, target and maximum performance level.

     o    The amount of the award will be  determined by the  performance  level
          achieved.


Compensation Department
Human Resources Division
KeySpan Energy
1999

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      o     The  award  to each  participant  shall  be  determined  by the goal
            results for the Holding  Company,  Utility,  Subsidiary or group, or
            some combination thereof, defined by the individual's position.


      REVIEW AND APPROVAL

      o     All  determinations   relative  to  the  Plan,  regarding  Officers'
            participating in the plan,  including  approval of awards,  shall be
            subject to the  discretion of the KeySpan  Energy and Brooklyn Union
            Boards of Directors.

            The  Boards   shall  make   determinations   after   receiving   the
            recommendations  of the KeySpan Energy  Compensation  and Nominating
            Committee  and  BU  Organization  and  Nominating  Committee.   Such
            determinations  shall be final,  conclusive  and binding.  All other
            awards will be based on approval of the Chairman of KeySpan.

     o    Awards when  granted,  will be paid to each  participant  on an annual
          basis, after the end of the plan year.




Compensation Department
Human Resources Division
KeySpan Energy
1999

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DEFINITIONS

The terms  included in this Plan are defined  below  unless the context  clearly
requires a different meaning.

                    "Actual Salary" the participant's  annual base salary at the
                         end of the Plan year.  Awards will be calculated  based
                         upon annual base salary as of this date.

                    "AWARD DATE" the date  incentive  awards are  approved.  The
                         date  shall  be  defined  as  the  date  the  Board  of
                         Directors reviews and approves incentive awards.

                    "BOARD" the Company's Board of Directors.

                    "CASH" award money paid in a lump-sum.

                    "COMMITTEES" the  Compensation  and Nominating  Committee of
                         the  KeySpan   Energy  Board  of  Directors,   and  the
                         Organization  and Nominating  Committee of the Brooklyn
                         Union Board of Directors.

                    "INCENTIVE   AWARD"   the   award   provided   to   eligible
                         participants  expressed as a percentage of their annual
                         base salary.

                    "MAXIMUM AWARD" the upper  limit as a percent of base salary
                         payable  if the  maximum  level  predetermined  for the
                         goals are achieved.

                    "PLAN" the Annual Incentive Compensation & Gainsharing Plan.

                   "PLAN YEAR" the  calendar  year period  beginning  January 1,
                         1999 and ending December 31, 1999.

                    "TARGET  AWARD"  a  predetermined   payout   percentage  for
                         achieving the established Goals.

                    "THRESHOLD"  minimum  level of  achievement  for a payout to
                         occur.






Compensation Department
Human Resources Division
KeySpan Energy
1999


                                      5

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      KEYSPAN ENERGY ANNUAL INCENTIVE COMPENSATION AND GAINSHARING PLAN

1.  PURPOSE

KeySpan Energy's Annual Incentive  Compensation and Gainsharing Plan is designed
to:

            a)    Provide  incentives  to achieve  goals which are  important to
                  shareholders and customers of the Company.

            b)    Emphasize pay for  performance  with variable awards linked to
                  corporate performance and profitability.

            c) Promote the demonstration of our corporate values which are:

                              Performance   Based  (leadership  at  all  levels,
                              community     commitment)     Customer     Focused
                              (unparalleled    customer    service,    teamwork)
                              Objective     (integrity    and    trust,     open
                              communication) One Workforce Oriented (respect for
                              diversity).

            d)    Maintain an overall  compensation  and  benefit  plan which is
                  competitive with the marketplace to attract the best talent.

            e)    Provide a compensation environment which fosters the retention
                  of  talented  personnel  and  encourages  them  to  contribute
                  towards the success of the Company.


2.  ADMINISTRATION

All  determinations  in  connection  with the Plan shall be made by the Board of
Directors after receiving the recommendations of its respective Compensation and
Nominating Committee, or Organization and Nominating Committee herein called the
"Committees". Such determinations shall be final, conclusive and binding.

The Plan will be administered by the Chief Executive Officer and the Senior Vice
President over Human  Resources,  under the general  direction of the Committee.
The Compensation  Department and Corporate  Planning and Performance  Department
will be responsible for the Plan design recommendations and administration.

The Committees will approve  performance  goals for the plan year as well as the
potential  threshold,  target and maximum award  percentages that will provide a
reasonable and  competitive  level of awards if the primary  threshold goals are
achieved.

Compensation Department
Human Resources Division
KeySpan Energy
1999


                                      6

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The  Committees  shall have full and final  authority to designate the incentive
award for each participant, and to determine the performance objectives,  amount
and  form  of  all  incentive   awards.   The   Committees   may  delegate  such
responsibilities,  other than final approval of awards,  to the Chief  Executive
Officer who may then  delegate such  responsibility  to any other officer of the
Company.

The Committees,  as soon as practicable following the end of the plan year, will
review for approval the recommended  incentive awards to be provided to the Plan
participants  for the previous year. The Board of Directors shall make the final
determination  regarding  approval  of all  awards.  Incentive  awards  for  all
participants,  except the Chief  Executive  Officer will be  recommended  by the
Chief  Executive  Officer subject to the approval of the Committee and the Board
of  Directors.  The  incentive  award for the Chief  Executive  Officer  will be
recommended  by the  Chairman of the  Committee  subject to the  approval of the
Board of Directors.

The  Committees   shall,  in  their  sole  discretion,   recommend  whether  any
participant  shall be  eligible  to earn an  incentive  award.  In the  event of
extraordinary  windfall profits or losses beyond the control of the Company,  or
in circumstances  where prudent  management  decisions will diminish or preclude
the payment of incentive  awards,  the  Committees  will have the  discretion to
recommend  to the  Board to  provide  or  eliminate  incentive  awards as deemed
necessary.  The Committee can also award such amounts that they deem appropriate
to recognize superior results which have been achieved.  Finally, the Committees
may  recommend to the Board of  Directors to amend or terminate  the Plan at any
time, with or without notice to the participants.

3.  ELIGIBILITY

    a)The Plan includes all KeySpan Energy and Brooklyn Union regular  full-time
      and  regular  part-time  management  employees,  all  KeySpan  Energy  and
      Brooklyn Union regular full time  bargaining  employees and temporary full
      time and temporary part time bargaining employees who are members of Local
      101 TWU and Local 3 IBEW,  and all KeySpan  Energy and Brooklyn Union full
      time and part time employees who are members of Local 1049 and Local 1381,
      IBEW.  Personnel who  participate in the KeySpan  Energy Sales  Commission
      Plan are not eligible to participate in the Annual Incentive  Compensation
      and Gainsharing Plan.  Personnel on loan to other KeySpan subsidiaries may
      participate at the discretion of the Chairman of KeySpan.

    b)   To receive an award,  an employee  must be actively  employed  with the
         Company as of the date the awards are paid.  Management employees hired
         after the beginning of the Plan year (i.e. January 1), are eligible for
         a prorata  award  based  upon the number of full  months of  employment
         during the plan year if they remain employed until the awards are paid.
         Bargaining  employees  hired after the  beginning  of the plan year are
         eligible for an

Compensation Department
Human Resources Division
KeySpan Energy
1999


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         award, as long as they remain employed until the awards are paid, based
         on the following schedule:

         Employed before Janu ry 31Eligible for a full potential award.

         Employed  between February 1
            and June 31:            Eligible for 50% of potential award.

         Employed on or after July 1:   Not eligible for an award

    c)   Receipt  of an award in one year shall have no bearing on receipt of an
         award in future years.

    d)   An eligible  employee  must have a  performance  level that the Company
         deems acceptable to participate in the Plan. For management  employees,
         this means an employee must maintain a performance  appraisal rating of
         "Effective"  or better.  Employees who receive a performance  rating in
         the  "Marginal"  category  may be  eligible  to receive an award at the
         discretion of their Officer. Employees who receive a performance rating
         in the "Not Effective" category are not eligible to receive an award.


4.   WEIGHTING OF GOALS

o   The award to each  participant  shall be determined by a combination  of the
    Holding Company/  Utility/Business  Unit/Division/Department,  or individual
    performance, and (depending on position) on Subsidiary performance.

o   Weighting of awards shall be  determined  by an  individual's  band/position
    within the  organization.  In  general,  weighting  of Officer  awards  will
    reflect a mix of Holding  Company/  Utility/Business  Unit/Subsidiary  goals
    (refer to Schedule A, attached). Weighting of all other awards are generally
    as follows, with an allowance for individual measures as appropriate:

         Management Band  4         60% Corporate / 40% Business Unit
         Management Band 1 - 3      50% Corporate / 50% Business Unit
         Bargaining Employees       50% Corporate / 50% Business Unit


5.  ANNUAL INCENTIVE PLAN TARGETS

Incentive  awards for eligible  employees  will be  calculated  based upon their
status as of the end of the plan year,  (i.e.  December 31) as a  percentage  of
their annual base salary as of that date, according

Compensation Department
Human Resources Division
KeySpan Energy
1999


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to the target awards indicated below.  Based upon goal  performance,  awards can
range  from 0% to the  maximum,  with no  payout if the  Threshold  level is not
achieved for the specified goals:

      Band                       1999 Threshold 1999 Target   1999 Maximum
      ----                      --------------- -----------   ------------

      Chairman/CEO                 30.0%            60%          120%
      President /COO               25.0%            50%          100%

      Senior VP, KEMG              20.0%            40%           80%
      Senior Vice President        17.5%            35%           70%

      Vice President               12.5%            25%           50%

      Band                       1999 Threshold 1999 Target   1999 Maximum
      ----                      --------------- -----------   ------------
      Band 4                   10.0%             20%            40%
      Band 3                    7.5%             15%            30%
      Band 2                    5.0%             10%            20%
      Band 1                    2.5%                            10%


      Union Affiliation          1999 Threshold 1999 Target   1999 Maximum
      -----------------         --------------- -----------   ------------

      Local 101 and Local 3         1.25%            2.5%           5%
      Local 1381 and Local 1049     $425            $850        $1,700

      Part time employees are eligible for 1/2 of the award target/awards stated
above.


6.  PAYMENT OF AWARDS

Awards will be paid in cash as soon as practicable following the end of the plan
year after  review and approval by the  Committee  and Board of  Directors.  The
amounts  required by law to be withheld for income and Social Security taxes, as
well as a 401(k) deduction for participants of the 401(k) plan, will be deducted
from the award  payments.  An employee must be actively  employed as of the date
the awards are paid to receive an award.






Compensation Department
Human Resources Division
KeySpan Energy
1999


                                      9

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7.    CHANGE OF EMPLOYMENT STATUS DURING THE PLAN YEAR

      a)  Promotions/Demotions

      Awards to each plan participant will be based on the employee's target and
      status in effect at the end of the plan year.  Employees  who are  demoted
      due to performance during the plan year, shall be eligible for an award at
      the target of their new position.

      b)  Termination

      An employee whose services are terminated during the plan year for reasons
      of misconduct,  failure to perform,  or other performance  related reasons
      shall not be considered for an award.  Unless the Board of Directors shall
      otherwise  determine,  such an  individual  shall not be  entitled  to any
      portion of an incentive  award. If the termination is due to other reasons
      such as reorganization,  transfer to subsidiary, etc., and the termination
      is not due to a fault of the employee,  the employee may be considered for
      a pro-rata award.

      c)  Resignation

      An  employee  who  resigns  to  accept  employment   elsewhere  (including
      self-employment)  during the plan year or prior to the date the awards are
      paid will not be considered for an award.

      d)  Death, Disability, Retirement, Leave of Absence
          (for Sickness, FMLA or Personal Reasons)

      An employee whose status as an active  employee is changed during the plan
      year for any of the reasons cited may be considered  for a pro-rata  award
      at the end of the plan  year  depending  upon the  actual  length  of paid
      service during the plan year. In the event of death,  any prorated payment
      shall be made to the  beneficiary as indicated on the  individual's  group
      term life insurance beneficiary card.

8. CHANGE IN CONTROL

In the event of a change in  control,  all  participants  shall be paid an award
based upon the effective  date of the change in control.  The award would either
be  prorated  or  annualized  based upon the  timing of the  change of  control.
Prorated awards will be made as determined by the Committee.


Compensation Department
Human Resources Division
KeySpan Energy
1999


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A Change in Control is defined as:

   a) The  acquisition  by any Person of beneficial  ownership of 20% or more of
      either (x) the then outstanding shares of common stock of the Company (the
      "Outstanding  Company Common  Stock") or (y) the combined  voting power of
      the then  outstanding  voting  securities of the Company  entitled to vote
      generally in the election of directors  (the  "Outstanding  Company Voting
      Securities"); provided, however, that for purposes of this subsection (a),
      the following  acquisitions shall not constitute a Change of Control;  (A)
      Any  acquisition  directly from the Company,  (B) Any  acquisition  by the
      Company,  (C) Any  acquisition  by any  employee  benefit plan (or related
      trust) sponsored or maintained by the Company or any Person  controlled by
      the Company or (D) Any acquisition by any person pursuant to a transaction
      which complies with clauses (A), (B), and (C) of paragraph c) below; or

   b) Individuals  who,  as of the  Effective  Date,  constitute  the Board (the
      "Incumbent  Board") cease for any reason to constitute at least a majority
      of the Board;  provided,  however, that any individual becoming a Director
      subsequent  to the date of this Plan whose  election,  or  nomination  for
      election by the Company's shareholders, was approved by a vote of at least
      a majority of the Directors then  comprising the Incumbent  Board shall be
      considered as though such individual were a member of the Incumbent Board,
      but  excluding,  for this  purpose,  any  such  individual  whose  initial
      assumption  of  office  occurs  as a result  of an  actual  or  threatened
      election  contest  with respect to the election or removal of Directors or
      other actual or  threatened  solicitation  of proxies or consents by or on
      behalf of a Person other than the Board; or

   c) Consummation of a reorganization, merger or consolidation or sale or other
      disposition  of all or  substantially  all of the assets of the Company or
      the   acquisition   of  assets  of  another   corporation   (a   "Business
      Combination"),  in each case, unless, following such Business Combination,
      (A) All or substantially  all of the individuals and entities who were the
      beneficial owners,  respectively,  of the Outstanding Company Common Stock
      and  Outstanding  Company  Voting  Securities  immediately  prior  to such
      Business Combination  beneficially own, directly or indirectly,  more than
      65% of, respectively,  the then outstanding shares of common stock and the
      combined voting power of the then outstanding  voting securities  entitled
      to vote generally in the election of Directors, as the case may be, of the
      corporation resulting from such Business Combination  (including,  without
      limitation,  a corporation  which as a result of such transaction owns the
      Company  or  all or  substantially  all of  the  Company's  assets  either
      directly or through one or more  subsidiaries) in  substantially  the same
      proportions  as  their  ownership,  immediately  prior  to  such  Business
      Combination  of the  Outstanding  Company  Common  Stock  and  Outstanding
      Company Voting  Securities,  as the case may be, (B) No Person  (excluding
      any corporation  resulting from such Business  Combination or any employee
      benefit  plan  (or  related  trust)  of the  Company  or such  corporation
      resulting from such Business

Compensation Department
Human Resources Division
KeySpan Energy
1999


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      Combination)  beneficially owns,  directly or indirectly,  20% or more of,
      respectively,   the  then  outstanding  shares  of  common  stock  of  the
      corporation  resulting  from such  Business  Combination  or the  combined
      voting power of the then outstanding voting securities of such corporation
      except to the extent that such  ownership  existed  prior to the  Business
      Combination; and

   d) At least a  majority  of the  members  of the  board of  directors  of the
      corporation  resulting from such Business  Combination were members of the
      Incumbent Board at the time of the execution of the initial agreement,  or
      of the action of the Board, providing for such Business Combination; or

   e) Approval by the  shareholders of the Company of a complete  liquidation or
      dissolution of the Company.


9. GENERAL PROVISIONS

   a) The Plan shall not  constitute a contract for the continued  employment of
      any participant by the Company.  The Company  reserves the right to modify
      management and officer compensation and benefits at any time and from time
      to time, as it considers  appropriate and to terminate  employment for any
      reason at any time notwithstanding this Plan.

   b) Cash  payments  made  under  this  Plan   generally  will  be  treated  as
      compensation for the purposes of the Company's  Retirement Plan benefit if
      the employee is:

      1)  Enrolled in the Employee's Retirement Plan of KeySpan Energy,

      2)  Enrolled in the Retirement Income Plan of KeySpan Energy,  with a base
          salary of $75,000 or above.

   Awards will be considered pensionable earnings provided that such payments do
   not result in  disqualification  of the  Retirement  Plan under 401(a) of the
   Internal Revenue Code or adversely affect the exempt status of the Retirement
   Plan  trust  under  Section  501(a)  of  said  code.  Cash  payments  of  any
   non-deferred portion of an incentive award received after retirement or death
   shall be treated for Retirement  Plan benefit  purposes as  compensation  for
   services rendered in the last Retirement Plan year in which the recipient was
   employed,  if the employee was a participant  in an existing  incentive  plan
   prior to 10/1/95.  Cash payments of the portions that were actually  deferred
   or would have normally been deferred which are received  after  retirement or
   death  will  not be  considered  compensation  for  Retirement  Plan  benefit
   purposes.


Compensation Department
Human Resources Division
KeySpan Energy
1999


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   c) No  benefit  under the plan  shall in any  manner  or extent be  assigned,
      alienated, or transferred by any participant under the Plan, or be subject
      to attachment, garnishment or other legal process.

   d) Except as  addressed  herein,  incentive  compensation  payments  will not
      affect the level of  benefits  under any other  employee  benefit  plan or
      program of the Company.
   e) Cash  payments  will be  eligible  for any  Employee  Savings  Plan 401(k)
      deferral or after tax  contribution  election made by the employee subject
      to the limitations established in the current 401(k) plan.

   f) The Board of Directors of the Company may change,  modify or terminate the
      Plan in whole or in part, either in general or in particular cases, at any
      time with or without notice.



Compensation Department
Human Resources Division
KeySpan Energy
1999


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