CONSOLIDATED EDISON, INC.


                       1996 STOCK OPTION PLAN, AS AMENDED


                         AND RESTATED FEBRUARY 24, 1998

                                    ARTICLE 1
                                     Purpose


            Section  1.1.  Purpose.  The purpose of this plan (the "Plan") is to
promote the  interests of  Consolidated  Edison,  Inc. (the  "Company")  and its
shareholders by providing long-term incentives to those persons with significant
responsibility  for the success and growth of the Company,  by strengthening the
Company's  ability to attract and retain  officers  and other  employees  of the
Company  and  its  subsidiaries  on a  competitive  basis  and by  aligning  the
interests of the officers and other  employees with the Company's  shareholders,
through facilitating their acquisition of equity interests in the Company.


                                    ARTICLE 2
                                   Definitions

            For  purposes  of the  Plan,  the  following  terms  shall  have the
meanings provided herein:


            Section 2.1.      "Board" means the Board of Directors of
the Company.


            Section 2.2.      "Code" means the Internal Revenue Code of
1986, as amended from time to time.

            Section 2.3.  "Committee" means the Executive  Personnel and Pension
Committee of the Board or such other  committee as may be appointed by the Board
to administer the Plan; provided,  however,  that the Committee shall consist of
three or more non-employee  members of the Board who shall qualify to administer
the Plan as  contemplated  by both Rule 16b-3 under the Exchange Act and Section
162(m) of the Code.

            Section 2.4.  "Disability"  means permanent and total  disability as
defined  under  the  Long-Term  Disability  Plan  for  Management  Employees  of
Consolidated Edison Company of New York, Inc.
("CECONY"), as in effect from time to time.

            Section 2.5.      "Exchange Act" means the Securities
Exchange Act of 1934, as amended from time to time.

            Section 2.6.  "Fair Market Value" means the closing price of a Share
in the  Consolidated  Reporting System as reported in the Wall Street Journal or
in a similarly  readily  available public source for the trading day immediately
prior to the applicable transaction date under the Plan. If no trading of Shares
occurred on such date,  the closing  price of a Share in such System as reported
for the preceding day on which sales of Shares occurred shall be used.

            Section 2.7.  "Incentive  Option" means an option  granted under the
Plan to purchase  Shares and which is intended to qualify as an incentive  stock
option under Section 422 of the Code.

            Section 2.8.      "Non-qualified Option" means an option
granted under the Plan to purchase Shares and which is not intended to
qualify as an Incentive Option.

            Section 2.9.      "Option" means, collectively, Incentive
Options and Non-qualified Options.


            Section 2.10.     "Shares" means shares of the Company's
common shares, $ .10 par value.

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                                    ARTICLE 3
                                 Administration

            Section 3.1.  Administration.  (a) The Plan shall be administered by
the  Committee.  The  Committee  shall have  authority  in its sole  discretion,
subject to and not  inconsistent  with the express  provisions  of the Plan,  to
administer  the Plan and to  exercise  all the  powers  and  authorities  either
specifically  granted  to it under the Plan or  necessary  or  advisable  in the
administration of the Plan, including without limitation authority to select the
employees to be granted Options,  to determine the size and terms of the Options
to be granted to each  employee  selected,  to determine  the time or times when
Options  will be granted,  the period or periods  during  which  Options will be
exercisable,  and to  prescribe  the form of the  agreements  embodying  Options
granted under the Plan. The Committee  shall be authorized to interpret the Plan
and the Options  granted  under the Plan,  to  establish,  amend and rescind any
rules and regulations relating to the Plan, and to make any other determinations
which it believes necessary or advisable for the administration of the Plan. The
Committee  may  correct  any  defect,  supply  any  omission  or  reconcile  any
inconsistency  in the Plan or in any  Option in the manner and to the extent the
Committee  deems  necessary or  desirable to carry it into effect.  In no event,
however,  shall the Committee  have the right to grant  dividend  equivalents in
respect of Options or to cancel outstanding Options for the purpose of replacing
or regranting  such Options with a purchase price that is less than the purchase
price of the original Option.


            (b)  The  Committee   shall   maintain  a  written   record  of  its
proceedings. Any decision of the Committee in the administration of the Plan, as
described  herein,  shall be final and  conclusive  and  binding on all  persons
affected by the decision, including the Company, any employee or optionee or any
person  claiming  any rights  under the Plan from or  through  any  employee  or
optionee.  The  Committee  may  delegate to one or more of its members or to any
officer or officers of the Company or CECONY such  administrative  duties  under
the Plan as the Committee may deem advisable.


                                    ARTICLE 4
                          Eligibility and Participation

            Options  may be  granted  to  officers  and other  employees  of the
Company as the Committee  may from time to time select.  Any officer or employee
of the Company shall be eligible to receive one or more Options,  subject to the
limitation set forth in Section 5.1. In determining  the persons to whom Options
are to be granted and the number of Shares subject to each Option, the Committee
shall take into consideration the person's present and potential contribution to
the  success of the  Company and such other  factors as the  Committee  may deem
proper  and  relevant.  For  purposes  of  participation  in the Plan,  the term
"Company" shall include any entity that is directly or indirectly  controlled by
the Company or any entity,  including an acquired  entity,  in which the Company
has a significant equity interest, as determined by the Committee.

                                    ARTICLE 5
                             Shares Subject to Plan

            Section 5.1. Amount of Stock.  There may be delivered under the Plan
an  aggregate  of not more than  10,000,000  Shares,  subject to  adjustment  as
provided in Section 5.2. The  aggregate  number of Shares that may be covered by
Options granted to a single individual under the Plan shall not exceed 1,500,000
Shares. Shares delivered pursuant to the Plan may consist in whole or in part of
authorized and unissued Shares or reacquired  Shares,  and no fractional  Shares
shall be delivered  under the Plan.  Cash may be paid in lieu of any  fractional
Shares in the  exercise  of Options  under the Plan.  In the event that  Options
shall be  forfeited or cancelled  or shall  terminate  or expire  without  being
exercised  in whole or in part,  new Options may be granted  covering the Shares
not purchased under such forfeited,  cancelled,  terminated or expired  Options.
For purposes of this Section,  the number of Shares deemed to be delivered under
the Plan upon the  exercise of an Option  shall equal the number of Shares as to
which the  Option is  exercised  less the  number  of Shares  tendered,  if any,
pursuant to Section 6.5.  However,  the number of Shares deemed exercised by the
optionee  under  the  applicable  option(s)  shall be the full  number of Shares
specified in the exercise notice required under Section 6.5.

            Section  5.2.  Dilution and Other  Adjustments.  In the event of any
change in the number of outstanding Shares or Share price by reason of any stock
split, stock dividend, recapitalization, merger, consolidation,  reorganization,
combination or exchange of equity securities or other  distribution  (other than
normal cash dividends) of Company assets to  stockholders,  or any other similar
change,  if the Committee shall  determine,  in its sole  discretion,  that such
change  equitably  requires an adjustment in the  limitations  on the numbers of
Shares that may be  delivered as set forth in 

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Section  5.1, in the number or kind of shares that may be  delivered  under
the Plan,  or in the number or kind of shares  which are subject to  outstanding
Options and in the exercise price per Share relating  thereto,  such  adjustment
shall be made by the  Committee  and shall be  conclusive  and  binding  for all
purposes of the Plan.
                                    ARTICLE 6
                         Terms and Conditions of Options

            Section 6.1.  Terms and Options.  An Option  granted  under the Plan
shall be in such  form as the  Committee  may from  time to time  approve.  Each
Option shall be subject to the terms and  conditions  provided in this Article 6
and shall contain such other or additional terms and conditions as the Committee
may  deem  desirable,  but in no  event  shall  such  terms  and  conditions  be
inconsistent  with the Plan  and,  in the case of  Incentive  Options,  with the
provisions of the Code  applicable to "incentive  stock options" as described in
Section 422 of the Code.

            Section 6.2.      Option Price.  The purchase price per
Share under an Option shall be determined by the Committee, but may not
be less than 100 percent of the Fair Market Value of a Share on the
date the Option is granted.

            Section 6.3. Option Period. The period during which an Option may be
exercised  shall be fixed by the  Committee;  provided,  that no Option shall be
exercisable  after  the  expiration  of ten years  from the date such  Option is
granted,  except that,  in the event of the death of an optionee  holding one or
more options,  the option(s) may remain exercisable for up to one year following
the optionee's death.

            Section 6.4 Exercisability of Options.  The Committee may provide in
the Option  agreement that such Option may be immediately  exercisable,  or that
such Option  shall become  exercisable  at such times or upon such events as the
Committee may specify.

            Section 6.5.  Exercise of Option.  (a) An Option may be exercised in
whole or in part from time to time during the Option  period (or, if  determined
by the Committee,  in specified installments during the Option period) by giving
written notice of exercise to the Secretary of the Company specifying the number
of Shares to be purchased.  Notice of exercise of an Option must be  accompanied
by payment in full of the purchase  price either by cash or such other method as
may be permitted by the Committee,  including but not limited to (i) check, (ii)
tendering  (either  actually or by  attestation)  Shares  owned by the  optionee
having a Fair Market Value at the date of exercise equal to such purchase price,
(iii)  a  third-party  exercise  procedure,  or  (iv)  in a  combination  of the
foregoing.  The Committee,  in its sole  discretion,  may, in lieu of delivering
Shares covered by an Option upon its exercise, settle the exercise of the Option
by means of a cash  payment to the  optionee  equal to the  positive  difference
between the Fair Market Value on the exercise date and the option  price,  or by
delivering Shares having an aggregate Fair Market Value equal to such a payment,
or by a combination of both.

            (b) No Shares shall be delivered in connection  with the exercise of
an Option until full payment  therefor has been made. An optionee shall have the
rights of a shareholder only with respect to Shares for which  certificates have
been issued to such person.

            Section 6.6.  Nontransferability of Options. No Option granted under
the Plan shall be transferable by the optionee  otherwise than by will or by the
laws of descent and distribution,  except that the Committee may provide for the
transferability of an Option:
      (a) by gift or other transfer to (i) a spouse or other immediate relative,
or (ii) a trust or an estate in which the  original  optionee or the  optionee's
spouse or other immediate relative has a substantial interest;
      (b) pursuant to a qualified  domestic  relations  order; and (c) as may be
      otherwise permitted by Rule 16b-3 under the
Exchange Act; provided,  however,  that any Option so transferred shall continue
to be subject to all the terms and conditions contained in the Option agreement.
If so permitted by the  Committee,  an optionee may designate a  beneficiary  or
beneficiaries  to exercise  the rights of the  optionee  under the Plan upon the
death of the optionee.

            Section 6.7. Termination of Employment.  The Committee shall provide
in the Option agreement the terms and conditions applicable to the Option in the
event of the  optionee's  termination  of  employment  by reason of  retirement,
death, Disability or any other reason.

            Section 6.8. Annual  Limitation.  The maximum  aggregate Fair Market
Value of

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Shares  (determined  as of the date of grant of the  Incentive  Option) for
which Incentive Options are exercisable for the first time by an employee during
any  calendar  year  (under  the Plan and any other  plan of the  Company or its
subsidiaries) shall not exceed $100,000 as and to the extent required by Section
422(d) of the Code.

            Section  6.9.  Withholding  Obligations.  (a) As a condition  to the
delivery of any Shares pursuant to the exercise of an Option,  the Committee may
require that the optionee,  at the time of such exercise,  pay to the Company an
amount sufficient to satisfy any applicable tax withholding  obligations or such
greater  amount of  withholding  as the Committee  shall  determine from time to
time, or the  Committee  may take such other action as it may deem  necessary to
satisfy any such withholding obligations.

            (b) The Committee, in its sole discretion,  may permit or require an
optionee to satisfy all or a part of the tax withholding obligations incident to
the exercise of an Option by having the Company withhold a portion of the Shares
that would  otherwise be issuable to the  optionee.  Such Shares shall be valued
based on their Fair Market Value on the date the tax  withholding is required to
be made.  Any such Share  withholding  with  respect to an  optionee  subject to
Section  16(a) of the Exchange Act shall be subject to such  limitations  as the
Committee  may  impose to comply  with the  requirements  of  Section  16 of the
Exchange Act.

                                    ARTICLE 7
                            Miscellaneous Provisions

            Section  7.1. No Implied  Rights.  No employee or other person shall
have any claim or right to be granted an Option under the Plan. Neither the Plan
nor any action  taken  hereunder  shall be  construed as giving any employee any
right to be retained in the employ of the  Company or any  subsidiary  or affect
any  right  of the  Company  or  any  subsidiary  to  terminate  any  employee's
employment.

            Section 7.2. Securities Law Compliance. No Shares shall be delivered
hereunder  unless  counsel for the Company shall be satisfied that such delivery
will be in compliance with applicable Federal and state securities laws.

            Section 7.3.  Ratification  of Actions.  By accepting  any Option or
other benefit under the Plan,  each employee and each person  claiming  under or
through such person shall be conclusively deemed to have indicated such person's
acceptance and  ratification of, and consent to, any action taken under the Plan
by the Company, the Board or the Committee.

            Section 7.4.  Unfunded  Plan.  Unless  otherwise  determined  by the
Committee,  the Plan shall be unfunded  and shall not create (or be construed to
create) a trust or a separate  fund or funds.  The Plan shall not  establish any
fiduciary  relationship between the Company and any employee,  optionee or other
person. To the extent any person holds any rights by virtue of an Option granted
under the Plan, such rights shall constitute general,  unsecured  liabilities of
the Company  and shall not confer upon such person any right,  title or interest
in any assets of the Company.

                                    ARTICLE 8
                          Amendments or Discontinuance

            The Plan  may be  amended  at any time and from  time to time by the
Board and without the approval of  shareholders  of the Company,  except that no
amendment which increases the aggregate  number of Shares which may be delivered
pursuant to the Plan or which,  in the absence of  shareholder  approval,  would
cause the Plan not to comply with Rule 16b-3 under the  Exchange  Act or Section
162(m) of the Code shall be  effective  unless and until the same is approved by
the  shareholders  of the Company.  No  amendment  of the Plan shall  materially
adversely  affect any of the rights or obligations  of any person,  without such
person's written consent, under any Option theretofore granted under the Plan.

                                    ARTICLE 9
                                   Termination

            The Plan shall  terminate upon the earlier of the following dates or
events to occur:(a)  upon the adoption of a resolution of the Board  terminating
the Plan; or (b) May 20, 2006. After  termination of the Plan, no Options may be
granted. No termination of the Plan shall materially adversely affect any of the
rights or  obligations  of any person,  without such person's  written  consent,


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<PAGE>

under any Option theretofore granted under the Plan.

                                   ARTICLE 10
                Change in Control; Dissolution or Merger

            Either in contemplation of the Company's undergoing, or in the event
the Company  undergoes,  a change in control (as determined by the Committee) or
in the event of a merger, consolidation, other business combination, liquidation
or  reorganization  of the Company,  the Committee  may provide for  appropriate
adjustments, including (i) rescinding or taking any other action with respect to
any Option to the extent  necessary to permit the Company to engage in a merger,
consolidation or business  combination intended to be accounted for as a pooling
of interests  transaction or (ii) accelerating any  exercisability or expiration
dates, and settlements of Options either at the time the Option is granted or at
a subsequent date.

                                   ARTICLE 11
                        Governing Law and Interpretation

            The  provisions  of  the  Plan  shall  take   precedence   over  any
conflicting  provision contained in an Option. The Plan shall be governed by and
construed in  accordance  with the laws of the State of New York. If any term or
provision  of the  Plan  is  held by a court  of  competent  jurisdiction  to be
invalid,  void or unenforceable,  the remainder of the terms and provisions will
remain in full  force and  effect and will in no way be  affected,  impaired  or
invalidated.