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                        CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.


                              THE CON EDISON SEVERANCE PAY PLAN
                                  FOR MANAGEMENT EMPLOYEES



1.    Purpose; Effective Date

     A.  The Con  Edison  Severance  Pay  Plan for  Management  Employees  ( the
"Severance Pay Plan") is designed to provide specified  post-employment payments
to eligible  management  employees of  Consolidated  Edison Company of New York,
Inc. (the "Company").

      B. This  Severance  Pay Plan is  effective as of June 1, 1997 and replaces
and supersedes any other management  severance or separation pay plan or program
currently in effect in the Company.

2.    Type of Plan

The Severance  Pay Plan is classified as a welfare plan under the  provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). It is
intended to be a  severance  pay plan as defined in Federal  Regulations  29 CFR
2510.3-2(b) for eligible management employees of the Company.

3.    Participation

A "Participant"  means a regular  non-bargaining unit employee working as a full
time employee or a part time employee, whose regularly scheduled hours of annual
service are 1,000 hours or more in a 12-month  period,  of the Company who is on
the active payroll or who is on a leave of absence with a right to reemployment.
Participant shall exclude officers of the Company,  temporary workers (agency or
independent),   independent  contractors,   cooperative  or  student  employees,
employees  with an agreement  providing  for  severance  benefits,  or employees
covered  by  a  collective  bargaining  agreement  that  does  not  provide  for
participation  in the Severance Pay Plan. For purposes of the Severance Pay Plan
the Company in its sole discretion shall determine who is a Participant.

4.    Eligibility

In order to be  eligible  to receive  benefits  under the  Severance  Pay Plan a
Participant  must be  involuntarily  separated  from  service  with the  Company
because of a reduction in staffing levels or any other reasons which the Company
in the exercise of its business judgment may deem appropriate.

5.    Exclusions

      Benefits   under  this   Severance  Pay  Plan  shall  not  be  payable  to
Participants:

        (1) whose employment terminates due to death prior to the Participant's
      Termination Date;

            (2) who are discharged for misconduct or cause or who resign in lieu
      of being  discharged for misconduct or cause, as determined by the Company
      in its sole  discretion,  or who are  discharged  or who resign in lieu of
      being  discharged  for any other reason except those pursuant to Section 4
      above, as determined by the Company in its sole discretion;

            (3) who transfer or are offered the opportunity to transfer from the
      Comapny to a company affiliated (directly or indirectly) with the Company;

            (4) who transfer or are offered the opportunity to transfer from the
      Company to another employer as a result of a sale, merger,  acquisition or
      other  transaction,  provided the  Participant  continues to perform or is
      offered the  opportunity to continue to perform the same or similar duties
      immediately following the transfer; whether the Participant is offered the
      opportunity  to transfer  and \or  continues  to perform or is offered the
      opportunity to continue to perform the same or similar duties  immediately
      following  the  transfer  shall be  determined  by the Company in its sole
      discretion;

            (5) whose employment is terminated in connection with the expiration
       of a sick or other authorized leave of absence; or

            (6) who voluntarily terminate employment with the Company, except if
      the Company in its sole discretion decides otherwise.

6.    Plan Benefits

      A.    For purposes of determining Plan Benefits, the following shallapply:

            (1)  "Salary"  means a  Participant's  base annual  salary as of the
            Participant's  Termination  Date including  shift  differential  and
            salary reduction  contributions under Sections 125 and 401(k) of the
            Internal  Revenue Code of 1986, as amended,  to an employee  benefit
            plan of the Company, but excluding bonuses,  incentive compensation,
            overtime pay and other pay or allowances.

            (2) "Equivalent Week's Salary" means Salary divided by 52.

            (3) "Termination Date" means the date set by the Company as the date
            the  Participant  terminates  employment  with the  Company  for any
            reason  consistent  with the terms of the  Severance  Pay Plan.  The
            Company reserves the right to alter the Termination Date at its sole
            discretion for any reason it deems appropriate.

            (4) "Years of  Service"  means a  Participant's  completed  years of
            service with the Company  ending on the  Termination  Date  computed
            under the  Company's  adjusted  service  credit rules for  computing
            continuous  service.  If a Participant  has  previously  been paid a
            benefit under this  Severance Pay Plan, the  Participant's  Years of
            Service  will  be  computed  from  the  date  of  the  Participant's
            reemployment by the Company, and not from the Participant's original
            continuous service date.



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 . B. (1) A payment will be made in one lump sum as soon as practicable after the
Participant's  Termination  Date based upon the guidelines  indicated below. The
Company may pay amounts over a period of time and may pay amounts other than the
indicated   guidelines  taking  all  pertinent  facts  and  circumstances   into
consideration.  The Company may  determine,  on a case by case basis,  whether a
Participant is eligible for an additional, a reduced, or no severance payment.

                           Guideline A-                  Guideline B-
                           Without a Release             With a Release
                           Number of Equivalent          Number of Equivalent
      Years of Service     Week's Salary                 Week's Salary
      Less than 1                    0                        0

      1 but less than 10             2                 The sum of 4 and one
                                                   times the number of Years of
       10 and over                   4                Service up to a maximum
                                                    sum of 30 Equivalent Week's 
                                                             Salary.
            (2)  Participants who sign a release of all known and unknown claims
            in such form as the Company in its sole  discretion  shall determine
            may  receive a payment  based upon  Guideline B in  subdivision  (1)
            above. Other Participants may receive a payment based upon Guideline
            A in subdivision (1) above.  As additional  benefits to Participants
            who  sign a  release,  the  Company  shall  offer  to  continue  the
            Participant's   group  health  and  employee  group  life  insurance
            coverage with the Participant  contributing the same amount as if he
            or  she  were  an  active   employee  for  a  period  equal  to  the
            Participant's  number of Equivalent  Week's Salary.  The Company may
            deduct the Participant's  contributions for such continued insurance
            coverage from any payment made to the Participant  under subdivision
            (1)  above.  Any such  extended  period  of group  health  insurance
            coverage  shall  be  considered  part  of  the  Participant's  COBRA
            continuation   period  of  coverage.   As  additional   benefits  to
            Participants who sign a release the Company may provide outplacement
            services  to such  extent  and  level  as the  Company  in its  sole
            discretion shall determine.

            (3) If a Participant who receives a payment under this Severance Pay
      Plan  is  re-employed  in a  comparable  position  by  the  Company  or an
      affiliate of the Company,  the Participant  shall repay to the Company any
      amount of the severance  payment  attributable to the number of Equivalent
      Weeks in excess of the number of weeks from the Participant's  Termination
      Date to the re-employment date.

7.    Effect of Plan Benefits on Other Benefits

Payment under this  Severance  Pay Plan will not be considered in  determining a
Participant's  benefits  under  the  Company's  Retirement  Plan for  Management
Employees,  Thrift Savings Plan for Management  Employees,  Group Life Insurance
Plan or any other employee benefit plan of the Company.

8.    Tax Withholding

Payments made pursuant to this Severance Pay Plan are subject to the withholding
of federal,  state and local taxes,  FICA (Social Security taxes),  and FUTA and
SUTA (unemployment taxes) at the time of payment and will be reported to the IRS
on form W-2.

9.    Payment Upon Death, Disability or Leave of Absence

If a Participant dies prior to the specified  Termination Date, no payments will
be made under this Severance Pay Plan to the  Participant  or the  Participant's
heirs or estate.  If a  Participant  dies after  terminating  service but before
payment is made,  payment  will be made to the  Participant's  spouse or, if the
Participant  leaves no surviving spouse,  the  Participant's  estate in a single
lump sum as soon as practicable after the Participant's death.

If a  Participant  is on sick  leave or other  leave of  absence  at the time of
receiving  official  notification  of  his  or  her  Termination  Date,  or if a
Participant  goes on sick  leave  or  other  leave of  absence  after  receiving
official  notification  of  his  or  her  Termination  Date,  the  Participant's
employment and sick pay will be terminated as of the  Participant's  Termination
Date and any payment under the Severance Pay Plan to  Participant  shall be paid
as soon as practicable after the Termination Date.

10.   Financing of Benefits

Plan Benefits shall be payable out of the Company's general assets.

11.   Administration

The Company's Vice President-Employee  Relations is the named fiduciary and Plan
Administrator under the Severance Pay Plan who shall determine  conclusively any
and all questions arising from the  administration of the Severance Pay Plan and
shall have sole and complete  discretionary  authority and control to manage the
operation  and  administration  of the  Severance  Pay Plan,  including  but not
limited to, the  determination  of all  questions  relating to  eligibility  for
participation and benefits, interpretation of all Plan provisions, determination
of the amount of benefits payable to any Participant,  spouse,  heirs or estate,
and construction of disputed or ambiguous terms.

The named fiduciary and Plan Administrator may delegate  responsibilities  under
the Severance Pay Plan.

12.   Claims Procedure

A Participant,  or any person duly authorized by such a Participant,  may file a
written  claim for benefits  under this  Severance  Pay Plan if the  Participant
believes  he/she has been treated  unfairly  under the Severance Pay Plan.  Such
claim  may only  relate to a benefit  under the  Severance  Pay Plan and not any
matter under any other policy, practice or guideline of the Company.

The written  claim shall be sent to the Plan  Administrator-Severance  Pay Plan,
c/o Employee Benefits,  Con Edison, Office E, 4 Irving Place, New York, New York
10003.  Such claim must be received  within 60 days of the event which gave rise
to the claim.

If the claim is denied the claimant will receive written notice of the decision,
including the specific  reason for the decision,  within 90 days of the date the
claim was received.

In some cases, more than 90 days may be needed to make a decision. In such cases
the claimant will be notified in writing,  within the initial 90-day period,  of
the reason more time is needed.  An  additional 90 days may be taken to make the
decision if the claimant is sent such a notice.  The extension  notice will show
the date by which the decision will be sent.

13.   Procedure to Appeal Claim Denial

The "Review  Procedure"  which  follows  gives the rules for  appealing a denied
claim.

(i)   A claimant may use this Procedure if:

          no reply at all is received by the claimant within 90 days after
            filing the claim;

          a notice has extended the time an  additional  90 days and no reply is
            received within 180 days after filing the claim; or

          written  denial of the claim for benefits or other matters is received
           within the  proper  time  limit and the  claimant  wishes to appeal
           the written denial.

If the claim for benefits or review of any other matter under the  Severance Pay
Plan is denied,  the Participant,  or other duly authorized  person,  may appeal
this denial in writing within 60 days after it is received.  Written request for
review   of  any   denied   claim   should   be  sent   directly   to  the  Plan
Administrator-Severance Pay Plan, c/o Employee Benefits, Con Edison, Office E, 4
Irving Place, New York, New York 10003.

The Plan Administrator  serves as the final review committee under the Severance
Pay Plan for all  Participants.  Unless the Plan  Administrator  sends notice in
writing  that  the  claim  is  a  special  case  needing  more  time,  the  Plan
Administrator will conduct a review and decide on the appeal of the denied claim
within 60 days after receipt of the written request for review.  If more time is
required to make a decision,  the Plan Administrator will send notice in writing
that there will be a delay and give the  reasons  for the delay.  In such cases,
the Plan  Administrator may have 60 days more, or a total of 120 days, to make a
decision.

If the claimant sends a written request for review of a denied claim, the person
sending the request has the right to:

(i) review pertinent Severance Pay Plan documents which may be obtained by
    writing to the to the Plan Administrator and

 (ii) send to the Plan  Administrator a written  statement of the issues and any
    other  documents in support of the claim for benefits or other matters under
    review.

The Plan  Administrator's  decision  shall be given to the  claimant  in writing
within 60 days or, if extended, 120 days, and shall include specific reasons for
the  decision.  If the Plan  Administrator  does not give his decision on review
within the  appropriate  time span,  the claimant may consider the claim denied.
The decision of the Plan Administrator is final and binding on all parties.

A Participant in the Severance Pay Plan may have further rights under ERISA,  as
described in Section 20 entitled "Rights of a Plan Participant."

14.   Legal Service

Process can be served on the Severance Pay Plan  Administrator by directing such
service to Vice  President-Employee  Relations,  Con Edison, 4 Irving Place, New
York, New York 10003.

15.   Benefits Not Assigned or Alienated

Assignment or alienation of any benefits provided by the Severance Pay Plan will
not be permitted or recognized except as otherwise authorized by applicable law.
This means that,  except as required by applicable law,  benefits provided under
the Severance Pay Plan may not be sold, assigned, or otherwise transferred by or
on behalf of a Participant.

16.   Plan Records

The  Severance Pay Plan and all of its records are kept on a calendar year basis
beginning January 1 and ending December 31 of each year.

17.   Plan Identification Numbers

This  Severance  Pay Plan is  identified  by the  following  numbers  under  the
Internal Revenue Service (IRS) Rules.

          Number  13-5009340  assigned  by the IRS.  Number 557  assigned by the
          Company.

18.   Plan Continuance

The Company may amend or  terminate  this  Severance  Pay Plan at any time.  Any
amendments or the  termination of the Severance Pay Plan shall not result in the
forfeiture of the benefits previously awarded under the Severance Pay Plan.

19.   Plan Documents

This document is both the Severance Pay Plan and a Summary Plan  Description  as
such terms are defined in ERISA.

20.   Rights of a Plan Participant

As a Participant  in this Severance Pay Plan, you are entitled to certain rights
and  protection  under  the  Employee  Retirement  Income  Security  Act of 1974
(ERISA).  ERISA  provides  that all  Severance  Pay Plan  Participants  shall be
entitled to:

(i) Examine,  without charge, all Severance Pay Plan documents and copies of all
documents filed by the Severance Pay Plan with the U.S.  Department of Labor, if
any;

(ii)  Obtain  copies  of  all  Severance  Pay  Plan  documents  and  other  Plan
   information  upon written  request to the Severance  Pay Plan  Administrator.
   There may be a reasonable charge for such copies.

In  addition to  creating  rights for  Severance  Pay Plan  Participants,  ERISA
imposes  duties upon these who are  responsible  for the  operation  of employee
benefit  plans.  The  people  who  operate  your  Severance  Pay  Plan,   called
"Fiduciaries" of the Plan, have a duty to do so prudently and in the interest of
you and other Severance Pay Plan Participants.  No one, including your employer,
or any other person,  may terminate  your  employment or otherwise  discriminate
against  you in any way to prevent you from  obtaining  a benefit or  exercising
your right under  ERISA.  If your claim for  benefits is denied,  in whole or in
part, you have certain rights of review as described  under Claims and Procedure
to Appeal Claim Denial Sections 12 and 13, respectively, of this Plan.

Under  ERISA,  there are steps you can take to  enforce  the above  rights.  For
instance,  if you  request  materials  from  the Plan  Administrator  and do not
receive them within 30 days, you may file suit in a federal court. In such case,
the court may require the Plan Administrator to provide the materials and pay up
to $100 a day until you receive the  materials,  unless the  materials  were not
sent  because of reasons  beyond the control of the Plan  Administrator.  If you
have a claim for benefits  which is denied or ignored,  in whole or in part, you
may file suit in a state or federal court. If you are discriminated  against for
asserting your rights, you may seek assistance from the U.S. Department of Labor
or you may file suit in a federal  court.  The court  will  decide  who will pay
court  costs  and legal  fees.  If you are  successful,  the court may order the
person  you have sued to pay these  costs and fees.  If you lose,  the court may
order you to pay these  costs and fees if, for  example,  it finds your claim is
frivolous.

If you have any questions  about the Severance Pay Plan,  you should contact the
Severance Pay Plan Fiduciary.  If you have any questions about this statement of
your rights,  or about your rights under ERISA,  you should contact your nearest
Area Office of the U. S. Labor Management Services Administration, Department of
Labor.

21.   Statement of Employer's Rights

A Participant's eligibility for benefits under this Severance Pay Plan shall not
be considered a guarantee of continued or lifetime  employment  with the Company
and shall not change the fact that a Participant shall be considered an employee
at will. A  Participant's  employment  by the Company may be  terminated  by the
Company whenever the Company in its sole discretion  considers that to be in its
best interest, subject to applicable law.