EXHIBIT NO. 10-1

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

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

1.      
The definition of Change in Control in Section 2 of the Plan shall be deleted in its entirety.

        
2.      
The Plan shall be further amended by deleting Appendix A in its entirety.

        
3.      
The Plan shall be further amended by inserting a definition of Change in Control Payment in Section 2,
stated as follows:

| | Change in Control Payment means a payment which would be made to an Eligible Employee,
regardless of whether such Eligible Employee is an Employee on the date such
payment would be made (i) with respect to Stock Units following a change in
control pursuant to the provisions of Article 13 of the Companys Long Term
Incentive Plan, (ii) with respect to PSUs following a change in control pursuant
to Section 8 of the Niagara Mohawk Energy, Inc. Long Term Incentive Plan (the
NME Plan) or (iii) as a severance payment following a change in
control under the Eligible Employees employment agreement or change in
control severance agreement with the Company or a subsidiary. For the purposes
hereof, change in control shall have the meaning assigned to such
term in the Companys Long Term Incentive Plan, the NME Plan, or an
Eligible Employees employment agreement or severance agreement.
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4.      
The Plan shall be amended by deleting in its entirety, the definition of Constructive Termination in
Section 2.

        
5.      
The Plan shall be further amended by inserting a definition of Nuclear Generation Payment in Section
2, stated as follows:

| | Nuclear Generation Payment means a payment which would be made to an Eligible Employee of
the Companys nuclear generation division, regardless of whether such
Eligible Employee is an Employee on the date such payment would be made (i) as a
severance payment in connection with the termination of the Eligible
Employees employment on the sale of the assets of the Companys
nuclear generation division pursuant to a letter agreement between the Eligible
Employee and the Company entered into on July 16, 1999 or (ii) with respect to
Contingent Stock Units granted to the Eligible Employee March 31, 1999 which
become payable upon completion of such sale.
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6.      
The Plan shall be further amended by inserting a second paragraph to Section 4.1 stated as follows:

| | Notwithstanding anything contained herein to the contrary, an Eligible Employee, regardless of
whether such Eligible Employee is then an Employee, may elect to defer a
percentage of any Change in Control Payment or Nuclear Generation Payment, and
may change or revoke such election, by written notice to the Administrator on an
election form which is delivered prior to January 1 of the year in which the
change in control or sale of the assets of the Companys nuclear generation
division occurs, as applicable, and at least six months in advance of such
Change in Control or sale. The deferral percentage applicable to a Change in
Control Payment or Nuclear Generation Payment shall be in 10% increments, not to
exceed 100% of a Change in Control Payment or Nuclear Generation Payment.
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7.      
The Plan shall be further amended by deleting in its entirety, Section 6.1, paragraph (c).

Executed this 17th day of August, 2001.

NIAGARA MOHAWK HOLDINGS, INC.

/s/ David J. Arrington
                  
                       
                       
                       
                       
                       
                       
                       
                       
                       
                  
David J. Arrington

                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
             
Senior Vice President and

                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
             
Chief Administrative Officer