SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

  [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES AND
                              EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1999

                                       OR

    [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 16 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                          Commission file number 1-3571

                     LONG ISLAND LIGHTING COMPANY d/b/a LIPA
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  New York                                   11-1019782
-----------------------------------------------         --------------------
(State or other jurisdiction of incorporation             (I.R.S. Employer
               or organization)                          Identification No.)

333 Earle Ovington Boulevard, Suite 403, Uniondale, New York          11553
--------------------------------------------------------------------------------
          (Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code:        (516) 222-7700
                                                           -----------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days

                               Yes X    No
                                  ---      ---

The total number of shares of the registrant's Common Stock $1 par value,
outstanding on November 15, 1999, was 1.


<PAGE>


<TABLE>
<CAPTION>

                     Long Island Lighting Company d/b/a LIPA

                                                                                                   Page No.

Part I - FINANCIAL INFORMATION

<S>      <C>                                                                                        <C>
         Item 1 - Financial Statements

                  Statements of Operations                                                           2-3

                  Balance Sheet                                                                      4-5

                  Statement of Cash Flows                                                              6

                  Notes to Financial Statements                                                     7-13

         Item 2 - Management's Discussion and Analysis of

                  Financial Condition and Results of Operations                                    14-22

         Item 3 - Quantitative and Qualitative Disclosures About Market Risk                          23

Part II - OTHER INFORMATION

         Item 1 - Legal Proceedings                                                                   23

         Item 2 - Changes in Securities and Use of Proceeds                                           23

         Item 3 - Defaults upon Senior Securities                                                     23

         Item 4 - Submission of Matters to a Vote of Security Holders                                 23

         Item 5 - Other Information                                                                   24

         Item 6 - Exhibits and Reports on Form 8-K                                                    24

         Signature                                                                                    25

</TABLE>

<PAGE>



                                                                               2

PART I.  FINANCIAL INFORMATION
ITEM I.   Financial Statements

                     Long Island Lighting Company d/b/a LIPA
         (a wholly owned subsidiary of the Long Island Power Authority)
                             Statement of Operations
                                   (Unaudited)
           (Thousands of Dollars - Except Average Shares Outstanding)





<TABLE>
<CAPTION>

                                                                                    Three Months      Three Months
                                                                                       Ended             Ended
                                                                                   September 30,     September 30,
                                                                                        1999              1998
                                                                                   -------------     -------------

<S>                                                                                <C>               <C>
Revenue - Electric                                                                    $   737,265       $   693,698

Expenses
Operations - fuel and purchased power                                                     210,019           180,808
Operations and maintenance                                                                185,876           194,060
Depreciation and amortization                                                              52,334            50,479
Operating taxes                                                                            61,935            72,305
Customer rebates                                                                                5                 -
                                                                                     -------------     -------------
Total Expenses                                                                            510,169           497,652
                                                                                     -------------     -------------
Operating Income                                                                          227,096           196,046
                                                                                     -------------     -------------


Other Income and (Deductions)
Other, net                                                                                  1,348             9,915
                                                                                     -------------     -------------
Total Other Income and (Deductions)                                                         1,348             9,915
                                                                                     -------------     -------------

Income Before Interest Charges                                                            228,444           205,961
                                                                                     -------------     -------------

Interest Charges and (Credits)
Interest on long-term debt, net                                                             1,295            41,821
Interest on advances from and note payable
    to the Authority                                                                       72,163            56,770
Other interest                                                                              8,644             3,915
Allowance for borrowed funds used during construction                                        (602)             (527)
                                                                                     -------------     -------------
Total Interest Charges                                                                     81,500           101,979
                                                                                     -------------     -------------

Net Income                                                                            $   146,944       $   103,982
                                                                                     -------------     -------------
Average Common Shares Outstanding                                                               1                 1
Basic and Diluted Earnings Per Common Share                                                   N/A               N/A
</TABLE>




The accompanying notes are an integral part of these financial statements.




<PAGE>



                                                                               3

                     Long Island Lighting Company d/b/a LIPA
         (a wholly owned subsidiary of the Long Island Power Authority)
                             Statement of Operations
                                   (Unaudited)
                (Thousands of Dollars - Except Share Information)


<TABLE>
<CAPTION>

                                                                           LIPA                          LILCO
                                                            --------------------------------    ------------------------
                                                              Nine Months
                                                                 Ended         May 29, 1998 to
                                                             September 30,      September 30,         January 1, 1998 to
                                                                  1999               1998                May 28, 1998
                                                            -----------------------------------------------------------
<S>                                                          <C>                 <C>                   <C>
Revenue - Electric                                            $  1,721,963        $   896,437           $      885,693

Expenses
Operations - fuel and purchased power                              534,911            247,595                  257,786
Operations and maintenance                                         520,622            228,743                  169,076
Depreciation and amortization                                      157,387             68,434                   56,490
Base financial component amortization                                    -                  -                   41,257
Rate moderation component amortization                                   -                  -                  (82,268)
Regulatory liability component amortization                              -                  -                  (36,191)
Other regulatory amortization                                            -                  -                   14,418
Operating taxes                                                    184,389            103,354                  153,288
Customer rebates                                                       178                  -                        -
Federal income tax - current                                             -                  -                  (75,004)
Federal income tax - deferred and other                                  -                  -                   44,554
                                                              -------------       ------------          ---------------
Total Expenses                                                   1,397,487            648,126                  543,406
                                                              -------------       ------------          ---------------
Operating Income                                                   324,476            248,311                  342,287
                                                              -------------       ------------          ---------------
Other Income and (Deductions)
Other, net                                                           4,913             15,311                  (23,297)
Allowance for other funds used during construction                       -                  -                      948
Federal income tax - current                                             -                  -                  (67,543)
Federal income tax - deferred and other                                  -                  -                  (22,442)
                                                              -------------       ------------          ---------------
Total Other Income and (Deductions)                                  4,913             15,311                 (112,334)
                                                              -------------       ------------          ---------------

Income from Continuing Operations
    Before Interest Charges                                        329,389            263,622                  229,953
                                                              -------------       ------------          ---------------

Interest Charges and (Credits)
Interest on long-term debt, net                                      3,496             55,903                  143,989
Interest on advances from and note payable to
    the Authority                                                  215,703             77,333                        -
Other interest                                                      25,273              4,585                   23,181
Allowance for borrowed funds used during construction               (1,773)              (690)                  (1,625)
                                                              -------------       ------------          ---------------
Total Interest Charges                                             242,699            137,131                  165,545
                                                              -------------       ------------          ---------------

Income from continuing operations                                   86,690            126,491                   64,408

Income from discontinued operations net of
    taxes of zero, zero and ($20,915), respectively                      -                  -                   50,134
                                                              -------------       ------------          ---------------

Net Income                                                          86,690            126,491                  114,542
Preferred stock dividend requirements                                    -                  -                   20,984
                                                              -------------       ------------          ---------------
Earnings for Common Stock                                       $   86,690        $   126,491            $      93,558
                                                              -------------       ------------          ---------------
Average Common Shares Outstanding                                        1                  1              121,534,827
Basic and Diluted Earnings per Common Share                            N/A                N/A                   $ 0.77

Dividends Declared per Common Share                                    N/A                N/A                   $ 0.74
</TABLE>



The accompanying notes are an integral part of these financial statements.


<PAGE>



                                                                               4

                     Long Island Lighting Company d/b/a LIPA
         (a wholly owned subsidiary of the Long Island Power Authority)
                                  Balance Sheet
                             (Thousands of Dollars)

<TABLE>
<CAPTION>

                                                                                 September 30,      December 31,
                                                                                      1999              1998
                                                                                  (unaudited)
                                                                                -----------------  ----------------

Assets

Utility Plant
<S>                                                                             <C>                <C>
Generation - nuclear                                                                  $  663,596         $ 662,893
Transmission and distribution                                                          1,433,930         1,385,099
Common                                                                                     2,738             3,827
Construction work in progress                                                             52,283            52,897
Nuclear fuel in process and in reactor                                                    17,052            17,053
                                                                                -----------------  ----------------
                                                                                       2,169,599         2,121,769
Less- Accumulated depreciation and amortization                                           95,741            50,287
                                                                                -----------------  ----------------
Total Net Utility Plant                                                                2,073,858         2,071,482
                                                                                -----------------  ----------------

Current Assets
Customer accounts receivable (less allowance for doubtful
   accounts of $19,480 and $20,211, respectively)                                        199,730           119,161
Accrued unbilled revenues                                                                 69,076            78,414
Other accounts receivable                                                                 10,491            10,096
Promissory note receivable                                                                 1,000           398,000
Prepayments and other current assets                                                      34,393            28,583
                                                                                -----------------  ----------------
Total Current Assets                                                                     314,690           634,254
                                                                                -----------------  ----------------

Promissory Note Receivable                                                               646,902           646,902
                                                                                -----------------  ----------------

Designated Funds                                                                          21,390           194,972
                                                                                -----------------  ----------------

Nonutility Property and Other Investments                                                 19,938            19,410
                                                                                -----------------  ----------------

Deferred Charges                                                                          79,867            78,507
                                                                                -----------------  ----------------

Acquisition Adjustment (net of accumulated amortization
   of $156,733 and $68,766, respectively)                                              3,938,923         4,026,956
                                                                                -----------------  ----------------

Total Assets                                                                         $ 7,095,568        $7,672,483
                                                                                -----------------  ----------------
</TABLE>



The accompanying notes are an integral part of these financial statements.

<PAGE>



                                                                               5

                     Long Island Lighting Company d/b/a LIPA
         (a wholly owned subsidiary of the Long Island Power Authority)
                                  Balance Sheet
                             (Thousands of Dollars)




<TABLE>
<CAPTION>

                                                                                 September 30,       December 31,
                                                                                      1999              1998
                                                                                  (unaudited)
                                                                                -----------------  ----------------

Capitalization and Liabilities

Capitalization
<S>                                                                                   <C>                <C>
Long-term debt                                                                        $  650,527         $ 778,075
Note Payable - the Authority                                                           3,704,017         5,355,085
Due to the Authority                                                                   2,373,951           855,684
Retained earnings (accumulated deficit)                                                    6,709           (79,981)
                                                                                -----------------  ----------------
Total Capitalization                                                                   6,735,204         6,908,863
                                                                                -----------------  ----------------


Current Liabilities
Current maturities of long-term debt                                                       1,278           398,000
Due to the Authority                                                                     150,895            70,880
Due to KeySpan                                                                            50,048            75,085
Accounts payable and accrued expenses                                                     34,299            35,921
Accrued taxes                                                                             40,070            79,021
Accrued interest                                                                          12,218            29,851
Customer deposits                                                                         22,749            23,205
                                                                                -----------------  ----------------
Total Current Liabilities                                                                311,557           711,963
                                                                                -----------------  ----------------

Deferred Credits                                                                          37,584            34,059
                                                                                -----------------  ----------------

Claims and Damages                                                                        11,223            17,598
                                                                                -----------------  ----------------

Commitments and Contingencies
                                                                                -----------------  ----------------

Total Capitalization and Liabilities                                                 $ 7,095,568        $7,672,483
                                                                                -----------------  ----------------
</TABLE>



The accompanying notes are an integral part of these financial statements.

<PAGE>



                                                                               6

                     Long Island Lighting Company d/b/a LIPA
         (a wholly owned subsidiary of the Long Island Power Authority)
                             Statement of Cash Flows
                                   (Unaudited)
                             (Thousands of Dollars)



<TABLE>
<CAPTION>
                                                                       LIPA                         LILCO
                                                         -------------------------------      -----------------
                                                          Nine Months
                                                             Ended       May 29, 1998 to
                                                         September 30,     September 30,      January 1, 1998 to
                                                             1999              1998             May 28, 1998
                                                         -------------   ---------------      -----------------

Operating Activities

<S>                                                      <C>             <C>                  <C>
Net Income                                                 $     86,690     $     126,491        $     114,542
Adjustments to reconcile net income to net
    cash provided by (used in) operating activities
Depreciation and amortization                                   157,387            68,434               68,326
Base financial component amortization                                 -                 -               41,257
Rate moderation component amortization                                -                 -              (82,268)
Regulatory liability component amortization                           -                 -              (26,977)
Provision for fuel and purchased power cost adjustment            1,850                 -                    -
Other regulatory amortization                                         -                 -               18,208
Rate moderation component carrying charges                            -                 -              (12,200)
Class Settlement                                                      -                 -                5,226
Amortization of cost of issuing and redeeming securities          5,961               264               12,903
Federal income tax - deferred and other                               -                 -              (12,487)
Allowance for other funds used during construction                    -                 -                2,390
Pensions and Other Post Retirement Benefits                           -                 -               23,066
1989 settlement credits amortization                                  -                 -               (9,213)
Gas Cost Adjustment                                                   -                 -                4,119
Other                                                            20,725              (437)              60,433
Changes in operating assets and liabilities
    Accounts receivable, net                                    (80,964)          (64,702)              12,688
    Accrued unbilled revenues                                     9,338           (11,791)              68,233
    Materials and supplies, fuel oil and gas in storage               -                 -               39,386
    Accounts payable and accrued expenses                        (1,622)                -              (39,007)
    Due to KeySpan                                              (25,037)          457,386                    -
    Pensions and other post retirement benefits                       -                 -             (250,000)
    Accrued taxes                                               (38,951)           75,734               12,615
    Accrued interest                                            (17,633)           52,331              (52,197)
    Class Settlement                                                  -                 -              (19,156)
    Special deposits                                                  -                 -               37,498
    Other                                                       (31,135)          (12,620)             (67,969)
                                                           -------------    --------------       --------------
Net Cash Provided by (Used in) Operating Activities              86,609           691,090              (50,584)
                                                           -------------    --------------       --------------

Investing Activities
Shoreham post settlement costs                                        -                 -              (16,271)
Merger costs, net of cash transferred                                 -           (61,789)                   -
Other                                                                 -                 -               (1,677)
                                                           -------------    --------------       --------------
Net Cash Used in Investing Activities                                 -           (61,789)             (17,948)
                                                           -------------    --------------       --------------


Capital and Related Financing Activities
Construction and nuclear fuel expenditures                      (71,797)          (31,769)            (122,229)
Proceeds from promissory note receivable                        397,000                 -                    -
Proceeds from sale of common stock                                    -                 -                8,738
Acquisition of common stock                                           -        (2,497,500)                   -
Issuance of notes payable                                             -                 -              350,000
Net proceeds from Authority loan                              1,598,282         4,949,528                    -
Repayment of note payable-Authority                          (1,651,068)         (831,928)                   -
Redemption of long-term debt                                   (532,608)       (1,186,000)            (100,000)
Issuance of preferred stock                                           -                 -               75,000
Redemption  of preferred stock                                        -          (221,600)            (116,390)
Bond issuance costs                                                   -           (48,316)                   -
Preferred stock dividends paid                                        -                 -              (18,659)
Common stock dividends paid                                           -                 -             (108,179)
Other                                                                 -            (3,990)              (3,080)
                                                           -------------    --------------       --------------
Net Cash (Used in) Provided by Capital
    and Related Financing Activities                           (260,191)          128,425              (34,799)
                                                           -------------    --------------       --------------
Net (Decrease) Increase in Cash and Cash Equivalents           (173,582)          757,726             (103,331)
Cash and cash equivalents at beginning of period                194,972 *          75,000              179,995
                                                           -------------    --------------       --------------
Cash and cash equivalents at end of period                 $     21,390 *   $     832,726 *      $      76,664
                                                           =============    ==============       ==============

* Cash and cash equivalents include designated funds
</TABLE>




The accompanying notes are an integral part of these financial statements.

<PAGE>




Long Island Lighting Company d/b/a LIPA                                        7
(a wholly owned subsidiary of the Long Island Power Authority)

Notes to Financial Statements
For the Nine Months Ended September 30, 1999
(Unaudited)
--------------------------------------------------------------------------------

Note 1.  Basis of Presentation

          As used herein, the term "LILCO" refers to the Long Island Lighting
          Company, the publicly owned gas and electric utility company as it
          existed prior to the LIPA/LILCO Merger, as described in Note 2, and
          the term "LIPA" refers to that company as it exists after the
          LIPA/LILCO Merger, as a wholly-owned electric utility subsidiary
          company of the Long Island Power Authority (the "Authority"), doing
          business as LIPA.

          The Authority was established as a corporate municipal instrumentality
          of the State of New York, constituting a political subdivision of the
          State, created by Chapter 517 of the Laws of 1986 (the "LIPA Act"). As
          such, it is a component unit of the State and is included in the
          State's annual financial statements.

          On April 11, 1997, LILCO changed its year-end from December 31 to
          March 31. Subsequent to the LIPA/LILCO Merger, LIPA adopted a calendar
          year-end. Accordingly, unless otherwise indicated, references to
          September 30, 1999 and 1998 represent the three or nine month periods
          ended September 30, 1999 and 1998, respectively. The financial
          information as of September 30, 1999, and for the three and nine
          months ended September 30, 1999 and 1998 is unaudited. However, in the
          opinion of management, the financial statements include all
          adjustments, consisting of normal recurring accruals, necessary for a
          fair presentation of the financial statements for the periods
          presented. Operating results for any of the periods presented are not
          necessarily indicative of results to be expected for the entire year
          due to the seasonal nature of the electric business.

          These Notes to Financial Statements should be read in conjunction with
          Management's Discussion and Analysis of Financial Condition and
          Results of Operations for the three and nine months ended September
          30, 1999 and LIPA's Annual Report on Form 10-K for the nine months
          ended December 31, 1998. In addition, please refer to the discussion
          following in Note 2 regarding the change in control of LILCO on May
          28, 1998.

          Recent Accounting Pronouncements

          In July 1999, the Financial Accounting Standards Board issued
          Financial Accounting Statement No. 137, "Accounting for Derivative
          Instruments and Hedging Activities - Deferral of the Effective Date of
          FASB Statement No. 133," which deferred the effective date of
          Financial Accounting Statement No. 133, "Accounting for Derivative
          Instruments and Hedging Activities," from fiscal years beginning after
          June 15, 1999 to fiscal years beginning after June 15, 2000. LIPA will
          defer its adoption until the new effective date. LIPA does not expect
          a material effect on the financial position, earnings or cash flows
          resulting from the adoption of this pronouncement.

          Reclassifications

          Certain prior period amounts have been reclassified in the financial
          statements to conform with the current period presentation.

<PAGE>

Long Island Lighting Company d/b/a LIPA                                        8
(a wholly owned subsidiary of the Long Island Power Authority)

Notes to Financial Statements
For the Nine Months Ended September 30, 1999
(Unaudited)
--------------------------------------------------------------------------------

Note 2.  Merger/Change in Control

          On May 28, 1998, LIPA Acquisition Corp., a wholly-owned subsidiary of
          the Authority, was merged with and into LILCO (the "Merger") pursuant
          to an Agreement and Plan of Merger dated as of June 26, 1997, by and
          among LILCO, MarketSpan Corporation (formerly known as BL Holding
          Corp., and currently known as KeySpan Energy, "KeySpan"), the
          Authority and LIPA Acquisition Corp., (the "Merger Agreement").

          Pursuant to the Merger Agreement, immediately prior to the Merger, all
          of the assets and liabilities of LILCO related to the conduct of its
          gas distribution business and its non-nuclear electric generation
          business, and all common assets used by LILCO in the operation and
          management of its electric transmission and distribution business and
          its gas distribution business and/or its non-nuclear electric
          generation business (the "Transferred Assets") were sold to KeySpan.
          The consideration received by LILCO for the Transferred Assets
          consisted of: (i) 3,440,625 shares of the common stock of KeySpan;
          (ii) 553,000 shares of the Series B Preferred Stock of KeySpan; and
          (iii) 197,000 shares of the Series C Preferred Stock of KeySpan.

          The value of the consideration was determined by KeySpan and LILCO to
          be equal to the net fair market value of the Transferred Assets. The
          transfer of assets and liabilities was effected by a Bill of Sale,
          dated as of May 28, 1998, made and executed by LILCO and acknowledged
          by KeySpan.

          As a result of the Merger, the Authority became the holder of 1 share
          of LILCO's common stock, representing 100% of the outstanding voting
          securities of LILCO. In addition, KeySpan issued promissory notes to
          LIPA of approximately $1.048 billion. The interest rate and timing of
          principal and interest payments on the promissory notes from KeySpan
          are identical to the terms of certain LILCO indebtedness assumed by
          LIPA in the Merger. KeySpan is required to make principal and interest
          payments to LIPA thirty days prior to the corresponding payment due
          dates, and LIPA then transfers those amounts to debtholders in
          accordance with the original debt repayment schedule.

          The former holders of LILCO's common stock, primarily individual
          public shareowners, became entitled to receive a pro-rata share of:
          (i) cash consideration of $2.497 billion; and (ii) 3,440,625 shares of
          the common stock of KeySpan, which were received by LILCO in exchange
          for the Transferred Assets. Pursuant to the Merger Agreement, the
          former holders of LILCO's common stock (other than holders of
          dissenting shares) were deemed to have subscribed for additional
          shares of the common stock of KeySpan, with an aggregate purchase
          price equal to the cash consideration. In order to effect the Merger,
          it was necessary to: (i) retire all shares of LILCO's preferred stock,
          whether by conversion, redemption or cancellation; and (ii) redeem
          certain of LILCO's bonds, at a cost to LIPA of approximately $1.557
          billion. The cash consideration required for the Merger was obtained
          by the Authority from the proceeds of the issuance and sale of its
          Electric System General Revenue Bonds, Series 1998A and Electric
          System Subordinated Revenue Bonds, Series 1 through Series 6. The
          proceeds from the sale of the bonds were then



<PAGE>

Long Island Lighting Company d/b/a LIPA                                        9
(a wholly owned subsidiary of the Long Island Power Authority)

Notes to Financial Statements
For the Nine Months Ended September 30, 1999
(Unaudited)
--------------------------------------------------------------------------------

          transferred by the Authority to LIPA in exchange for a promissory note
          of approximately  $4.949 billion. As a result of the Merger, there was
          a  change  in  control  of LILCO  which  effectively  resulted  in the
          creation  of  a  new  reporting   entity,   LIPA.   Accordingly,   the
          accompanying  financial  statements  for the periods  prior to May 28,
          1998  are  not  comparable  to  the  financial   statements  presented
          subsequent to May 28, 1998. Therefore,  a black line has been drawn on
          the  Statements  of  Operations  and the  Statement  of Cash  Flows to
          distinguish between LIPA and LILCO balances and activity.

          The remaining assets and liabilities of LILCO acquired by LIPA consist
          of: (i) LILCO's electric transmission and distribution system; (ii)
          its net investment in Nine Mile Point Nuclear Power Station, Unit 2;
          (iii) certain regulatory assets and liabilities associated with its
          electric business, (iv) allocated accounts receivable and other assets
          and liabilities; and (v) substantially all of its long-term debt.

          The financial statements of LIPA include the push down of the
          Authority's basis, including costs related to the acquisition of the
          assets acquired and liabilities assumed. Because of the manner in
          which LIPA's rates and charges will be established by the Authority's
          Board of Trustees, the original net book value of the transmission and
          distribution and nuclear generation assets acquired in the Merger is
          considered to be their fair value. The excess of the acquisition costs
          over the fair value of the net assets acquired has been recorded as an
          intangible asset titled "acquisition adjustment" and is being
          amortized over a 35 year period. The acquisition adjustment
          principally arose through the elimination of LILCO's regulatory assets
          and liabilities, totaling $6.3 billion, and net deferred federal
          income tax liability of approximately $2.4 billion. Therefore, the
          amortization of the regulatory assets and liabilities has effectively
          been replaced by the amortization of the acquisition adjustment. In
          addition, as a wholly-owned subsidiary of the Authority, LIPA is
          exempt from Federal, state and local income taxes. Accordingly,
          adjustments were made by LIPA on May 28, 1998 to eliminate deferred
          tax assets and liabilities. The results of operations for the three
          and nine months ended September 30, 1999 and for the period May 29,
          1998 through September 30, 1998 do not include a provision for income
          taxes.

          Effective May 29, 1998, the Authority contracted with KeySpan, through
          certain of its subsidiaries, to provide operations and management
          services for LIPA's transmission and distribution system and its
          interest in Nine Mile Point Nuclear Power Station, Unit 2 through a
          management services agreement ("MSA"). LIPA pays KeySpan directly for
          their services and KeySpan, in turn, pays the salaries of its
          employees. LIPA has no employees, however LIPA is charged a management
          fee by the Authority to oversee LIPA's operations of which the
          salaries of the Authority's employees are a significant component.
          Through a power supply agreement ("PSA"), LIPA contracts for capacity
          and, to the extent necessary, energy from the fossil fired generating
          plants of KeySpan, formerly owned by LILCO. Energy and fuel are
          purchased by KeySpan on LIPA's behalf through an energy management
          agreement ("EMA") (collectively, the "Operating Agreements").

          The electric transmission and distribution system is located in the
          New York Counties of Nassau and Suffolk (with certain limited
          exceptions) and a small portion of Queens County known as



<PAGE>

Long Island Lighting Company d/b/a LIPA                                       10
(a wholly owned subsidiary of the Long Island Power Authority)

Notes to Financial Statements
For the Nine Months Ended September 30, 1999
(Unaudited)
--------------------------------------------------------------------------------

          the Rockaways.  The service area is  approximately  1,230 square miles
          and the population of the service area is  approximately  2.75 million
          persons,  including  approximately 98,500 persons who reside in Queens
          County within the City of New York. LIPA receives approximately 49% of
          its revenues from residential  sales, 48% from sales to commercial and
          industrial  customers,  and the balance from sales to other  utilities
          and public authorities.

          Discontinued Operations

          The statement of operations of LILCO for the period January 1, 1998
          through May 28, 1998 have been prepared to present the gas business
          (as transferred to KeySpan subsidiaries pursuant to the Merger
          Agreement) as a discontinued operation, in accordance with the
          provisions of Accounting Principles Board Opinion No. 30.

          Income from discontinued operations includes revenue from the gas
          business of approximately $351.8 million for the period January 1,
          1998 through May 28, 1998.

Note 3.  Capitalization

          On January 4, 1999, LIPA redeemed $102.6 million of the NYSERDA
          Electric Facilities Revenue Bonds Series 1993B, 1994A, and 1995A,
          which were called for redemption prior to December 31, 1998.

          On March 1, 1999, the variable rate bonds listed below were converted
          to fixed interest rates of 5.15% on the Pollution Control Revenue
          Bonds ("PCRBs"), and 5.3% on the Electric Facilities Revenue Bonds
          ("EFRBs").

<TABLE>
<CAPTION>

                                                                           Balances
                                                                         Subsequent to
                                      Maturity                           Conversion
PCRBs
<S>                               <C>                                    <C>
   1985 Series A                  March 1, 2016                           $  58,020
   1985 Series B                  March 1, 2016                              50,000

EFRBs
   1993 Series B                  November 1, 2023                           29,600
   1994 Series A                  October 1, 2024                             2,600
   1995 Series A                  August 1, 2025                             15,200
</TABLE>

          Also, on March 1, 1999, LIPA redeemed $30.1 million of the NYSERDA
Pollution Control Revenue Bonds, 1985 Series A.


<PAGE>

Long Island Lighting Company d/b/a LIPA                                       11
(a wholly owned subsidiary of the Long Island Power Authority)

Notes to Financial Statements
For the Nine Months Ended September 30, 1999
(Unaudited)
--------------------------------------------------------------------------------

Note 4.  Rate Matters

          Under current New York law, the Authority is empowered to set rates
          for electric service in its service area without being required by law
          to obtain the approval of the New York State Public Service Commission
          (the "PSC") or any other state regulatory body. However, the Authority
          has agreed, in connection with the approval of the Merger by the New
          York State Public Authorities Control Board (the "PACB"), that it will
          not impose any permanent increase, nor extend or reestablish any
          portion of a temporary rate increase, in average customer rates over a
          12 month period in excess of 2.5% without approval of the PSC,
          following a full evidentiary hearing. Another of the PACB conditions
          requires that the Authority reduce average rates within LIPA's service
          area by no less than 14% over a ten year period commencing on the date
          when LIPA began providing electric service, when measured against
          LILCO's base rates in effect on July 16, 1997 (excluding the impact of
          the proposed Shoreham tax settlement, but adjusted to reflect
          emergency conditions and extraordinary unforeseeable events.)

          The LIPA Act requires that any bond resolution of the Authority
          contain a covenant that it will at all times maintain rates, fees or
          charges sufficient to pay the costs of operation and maintenance of
          facilities owned or operated by the Authority; payments in lieu of
          taxes ("PILOTs"); renewals, replacements and capital additions; the
          principal of and interest on any obligations issued pursuant to such
          resolution as the same become due and payable, and to establish or
          maintain any reserves or other funds or accounts required or
          established by or pursuant to the terms of such resolution.

          LIPA's rates include the fuel and purchased power cost adjustment
          ("FPPCA") which adjusts rates to reflect significant changes in the
          cost of fuel, purchased power and related costs. The FPPCA is designed
          to ensure that LIPA will recover from or return to customers any fuel
          costs that fall outside an established base fuel and purchased power
          tolerance band. The tolerance band is equal to one percent above and
          one percent below LIPA's cost of fuel and purchased power for 1999.
          The tolerance band increases to two percent in 2000 and continues to
          increase in one percent increments annually thereafter. Expenses for
          fuel and purchased power costs in excess of or below this level will
          be recovered from or returned to customers beginning the following
          year. Should fuel and purchased power costs increase in excess of five
          percent cumulatively over the original base cost, the FPPCA will
          recover, from that year forward, all costs in excess of the original
          base cost.

          LIPA's rates are largely based on LILCO's pre-Merger rate design to
          avoid customer confusion and facilitate an efficient transition from
          LILCO billing to LIPA billing. In addition, LIPA's rates include the
          FPPCA, a PILOT recovery rider, a rider providing for the Shoreham
          settlement and a rider providing for the RICO Credits (credits to the
          bills of customers as a result of the settlement by LILCO of a RICO
          action in connection with the construction and completion of nuclear
          generating facilities).

          The LIPA Act requires LIPA to make PILOTs for certain New York State
          and local revenue



<PAGE>


Long Island Lighting Company d/b/a LIPA                                       12
(a wholly owned subsidiary of the Long Island Power Authority)

Notes to Financial Statements
For the Nine Months Ended September 30, 1999
(Unaudited)
--------------------------------------------------------------------------------

          taxes  which would  otherwise  have been  imposed on LILCO.  The PILOT
          recovery rider allows for rate adjustments to accommodate the PILOTs.

Note 5.  Contingencies

          Legal and Environmental Proceedings

          Except as discussed below, no significant changes have occurred with
          respect to legal and environmental contingencies as discussed in Note
          13 of Notes to Financial Statements in LIPA's Annual Report on Form
          10-K for the nine months ended December 31, 1998.

          With respect to Shoreham Tax Matters, on July 26, 1999, the Appellate
          Division, Second Department, overruled the lower court's decision and
          held that the Authority was not prohibited from enforcing any part of
          the judgment relating to real property tax refunds attributable to
          over assessments on the Shoreham Plant after the January 15, 1987
          effective date of the LIPA Act. On August 24, 1999, Suffolk County
          filed a motion with the Appellate Division to reargue and/or for
          permission to appeal this decision to the State Court of Appeals. On
          October 14, 1999, the Appellate Division denied the motion. LIPA
          expects that Suffolk County will file a motion with the Court of
          Appeals for permission to appeal the Appellate Division's July 26,
          1999 decision to the Court of Appeals.

          In July 1992, LILCO and the Authority separately commenced proceedings
          in the Supreme Court of the State of New York, County of Suffolk,
          against the Assessor and the Board of Assessment Review for the Town
          of Brookhaven, New York (the "Assessor") challenging the real property
          tax assessment on Shoreham for the 1992-93 tax year. On or about May
          1, 1992, the Assessor had tentatively assessed Shoreham an amount in
          excess of $156 million for the 1992-93 tax year. On April 22, 1996,
          the two proceedings were consolidated. On May 13, 1999, the Assessor
          moved to dismiss the proceedings on procedural grounds. Oral arguments
          were held on August 5, 1999. On October 20, 1999, the court declined
          to dismiss the proceedings.

          With respect to the action brought by the County of Suffolk entitled
          County of Suffolk v. KeySpan et al., this action was voluntarily
          discontinued by plaintiffs without prejudice. The plaintiffs refiled
          their claims related to executive compensation in the federal action
          entitled County of Suffolk et al. v. Long Island Power Authority,
          which was filed on September 28, 1998.

          With  respect to the  Sylvester v.  Catacosinos  et al.  action,  U.S.
          District Court  approved a stipulation  of the parties  dismissing the
          action with prejudice.


<PAGE>


Long Island Lighting Company d/b/a LIPA                                       13
(a wholly owned subsidiary of the Long Island Power Authority)

Notes to Financial Statements
For the Nine Months Ended September 30, 1999
(Unaudited)
--------------------------------------------------------------------------------


Note 6.   Nine Mile Point Nuclear Power Station, Unit 2 ("NMP2")

          In June 1999, two co-tenants of NMP2 representing 57% of the ownership
          interest reached an agreement in principle to sell their interests to
          a single third party. The remaining co-tenants have 180 days to
          exercise their right of first refusal. Such sale is subject to the
          approval of, among others, the PSC. At this time, LIPA is unable to
          determine what effect, if any, this proposed change in ownership will
          have on its operating and financial results. Any such sale, however,
          will not affect LIPA's right to receive 18% of the plant's output.

Note 7.  Subsequent Events

         On October 27, 1999, LIPA entered into an agreement with KeySpan,
         whereby KeySpan advanced approximately $47.2 million of its promissory
         note payable to LIPA, including interest, to be used to fund the
         optional redemption of New York State Research and Development
         Authority Pollution Control Revenue Funding Bonds 1976 Series A and
         1979 Series B totaling $26.4 million and $19.1 million, respectively.
         These funds are to be held in escrow by LIPA until December 1, 1999, at
         which time, LIPA will call such debt at par.


<PAGE>


                                                                              14

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

         Cautionary Statement Regarding Forward-Looking Statements

         This report contains statements which, to the extent they are not
         recitations of historical fact, constitute "forward-looking statements"
         within the meaning of the Securities Litigation Reform Act of 1996. In
         this respect, the words "estimate," "project," "anticipate," "expect,"
         "intend," "believe" and similar expressions are intended to identify
         forward-looking statements. All such forward-looking statements are
         intended to be subject to the safe harbor protection provided by the
         Reform Act. A number of important factors affecting the Registrant's
         business and financial results could cause actual results to differ
         materially from those stated in the forward-looking statements. Those
         factors include regulatory rate proceedings, competition, and certain
         legal and environmental matters each as discussed herein, in the
         Registrant's Annual Report on Form 10-K, for the nine months ended
         December 31, 1998, or in other reports filed by the Registrant with the
         Securities and Exchange Commission.

         General

         KeySpan Energy ("KeySpan"), through certain of its subsidiaries
         provides operations and management services for LIPA's transmission and
         distribution system and LIPA's interest in Nine Mile Point Nuclear
         Power Station, Unit 2 ("NMP2") through a management services agreement
         ("MSA"). LIPA contracts for capacity and to the extent necessary,
         energy from the fossil fuel fired generating plants formerly owned by
         Long Island Lighting Company ("LILCO") through a power supply agreement
         ("PSA") with KeySpan. Energy and fuel is purchased by KeySpan on LIPA's
         behalf through an energy management agreement ("EMA"), (collectively;
         the "Operating Agreements").

         As LIPA is a wholly owned subsidiary of the Authority and not an
         investor owned utility, the PSC does not have jurisdiction with respect
         to the determination of LIPA's rates and charges. Rates and charges for
         LIPA are approved by the Authority's Board of Trustees. See Note 4 -
         Rate Matters of Notes to the Financial Statements.

         The excess of the acquisition cost over the fair value of the net
         assets acquired has been recorded as an intangible asset titled
         "acquisition adjustment" and is being amortized over a 35-year period.
         The acquisition adjustment principally arose through the elimination of
         LILCO's regulatory assets and liabilities, totaling approximately $6.3
         billion, and net deferred Federal income tax liability of approximately
         $2.4 billion. Therefore, the amortization of the regulatory assets and
         liabilities has effectively been replaced by the amortization of the
         acquisition adjustment. Because of the tax-exempt status of LIPA, the
         results of operations for the three and nine months ended September 30,
         1999, and the period May 29, 1998 through September 30, 1998, do not
         include a provision for income taxes.

         Results of Operations

         Three and Nine Months Ended September 30, 1999 and September 30, 1998

         Earnings

         For the three and nine month periods ended September 30, 1999, LIPA
         generated net income of



<PAGE>

                                                                              15


         approximately $147 million and $87 million, respectively. During the
         similar periods in 1998, net income was approximately $104 million and
         $241 million, respectively.

         The increase in earnings for the three month period ended September 30,
         1999 relative to the similar period in 1998 was the result of: i) the
         impact of weather, where in 1999, LIPA set a new peak demand record of
         4,590 MWH in July 1999, surpassing the previous record of 4,208 MWH set
         in July 1998; ii) reduced interest expense resulting from lower debt
         levels as LIPA called for redemption, approximately $132 million of
         debt, and refinanced approximately $1.3 billion of debt at lower
         interest rates; and iii) the absence of the Fuel and Purchase Power
         Cost Adjustment ("FPPCA") in 1998, as the tariff had not been in effect
         during this period last year. (The FPPCA is discussed in more detail in
         Note 4 of Notes to Financial Statements, and in the section below
         titled Fuel and Purchased Power.

         The nine month period ended September 30, 1999, and 1998, are not
         comparable as the prior year figures include the operations of the
         former LILCO gas and generation businesses for the period January 1,
         1998 through May 28, 1998, the date of the Merger.

         Revenues

         The increase in revenues of approximately $44 million for the three
         month period ended September 30, 1999, when compared to the same period
         in 1998, was principally the result of a 2% increase in sales due to
         weather, a 3% increase in usage by existing customers (on a weather
         normalized basis) and a slight increase in the number of customers.

         The decrease in revenues of approximately $60 million for the nine
         month period ended September 30, 1999, when compared to the same period
         in 1998 was the result of the rate reduction (approximately 20%), for
         virtually all customers, effective May 29, 1998. Partially offsetting
         the reduction in revenues was a 5% increase in sales attributable to
         weather, a strong and growing economy, increased usage by existing
         customers resulting from LIPA's rate reduction and a slight increase in
         the number of customers.

         Fuel and Purchased Power

         Fuel and purchased power expense for the three and nine month periods
         ended September 30, 1999 and 1998, were as follows:


<TABLE>
<CAPTION>

                                                    Three Months Ended                   Nine Months Ended
                                                       September 30,                       September 30,
                                                  1999              1998              1999              1998
                                             ------------      ------------      ------------       ------------
                                             (in millions)     (in millions)     (in millions)      (in millions)

<S>                                           <C>               <C>               <C>                 <C>
Oil                                           $        47       $        43       $       114         $      113
Gas                                                    97                53               173                127
Nuclear                                                 1                 2                 5                  5
Purchased power                                        90                83               241                260
                                              -----------       -----------       -----------         ----------
                                                      235               181               533                506

FPPCA                                                 (25)                -                 2                  -
                                              -----------       -----------       -----------         ----------

       Total                                      $   210           $   181           $   535            $   505
                                              -----------       -----------       -----------         ----------
</TABLE>



<PAGE>

                                                                              16

         Electric Energy Available

         The percentage of total electric energy available, by type of fuel,
         for electric operations for the three and nine month periods ended
         September 30, 1999 and 1998 were as follows:


<TABLE>
<CAPTION>

                                            Three Months Ended                        Nine Months Ended
                                               September 30,                            September 30,
                                         1999                 1998                 1999                1998
                                    --------------       -------------       --------------        -------------
(Mwh = Megawatt hours)
                                     Mwh        %         Mwh       %          Mwh       %          Mwh       %
                                   -------    -----     -------   -----      -------   -----      ------    -----
<S>                                <C>        <C>       <C>       <C>        <C>       <C>        <C>       <C>
Oil                                 1,153      20        1,424     16         3,805     26         3,440     25
Gas                                 2,956      50        2,056     47         5,686     38         4,412     32
Nuclear                               331       6          385      8         1,102      7           915      7
Purchased                           1,467      24        1,699     29         4,295     29         5,200     36
                                   -------    ----      -------   ----       -------   ----       -------   ----

       Total                        5,907     100        5,564     100       14,888     100       13,967    100
                                   -------    ----      -------   ----       -------   ----       -------   ----
</TABLE>


         Variations in the fuel mix used to satisfy energy requirements on
         LIPA's system are primarily the result of changes in the cost of each
         particular commodity relative to the other commodities and the
         availability of import capacity on LIPA's transmission
         interconnections. In May 1999, LIPA's import capacity was reduced by
         approximately 33% as a result of a transformer failure on one of its
         interconnections. The interconnection is expected to return to full
         capacity prior to the summer 2000. In addition, during the three month
         period ended September 30, 1999, NMP2 had an unplanned outage which
         lasted 24 days. As a result, LIPA was required to satisfy its
         requirements with more expensive on-island generation from fossil fired
         power plants on Long Island. For the three month ended September 30,
         1999, the decreasing price of gas relative to other fuels and the
         reduced import capability resulted in a larger percentage of LIPA's
         requirements being satisfied with gas generated energy when compared to
         the same period last year. For the nine month period ended September
         30, 1999, generation with gas increased over the same period last year,
         as gas was more economical than other fuels, and as a result of the
         reduced import capacity.

         As a result of the implementation of the FPPCA mechanism, variations in
         fuel and purchased power expenses have a minimal impact on operating
         results. The FPPCA mechanism requires LIPA to return to customers or
         allows LIPA to recover from customers, actual fuel costs which fall
         outside of the fuel cost tolerance band, which is defined as 1% higher
         and 1% lower than the base cost of fuel collected through rates. These
         percentages increase to two percent in 2000 and continue to increase in
         one percent increments annually thereafter. To insure that LIPA's
         customers will receive the lowest cost energy available, the operating
         agreements with KeySpan provide incentives designed to support that
         goal, and penalties when such goals are not satisfied.

         Fuel expense for the three month period ended September 30, 1999
         increased when compared to the same period of the prior year,
         principally as a result of a 5% increase in sales, partially offset by
         the recognition of a $25 million credit associated with the FPPCA
         mechanism, and the absence of an FPPCA charge in 1998 as the mechanism
         did not become effective until January 1, 1999. Had the FPPCA been
         operable in 1998, LIPA would have recorded a $9 million charge.

         Fuel expense for the nine month period ended September 30, 1999
         increased as a result of a 5% increase in sales and the absence of a
         FPPCA charge in 1998 as the mechanism did not become



<PAGE>


                                                                              17


         effective until January 1,  1999. Had the FPPCA been operable in 1998,
         LIPA would have recorded a $9 million charge.

         Operations and Maintenance

         Operations and Maintenance ("O&M") expenses, excluding fuel and
         purchased power, decreased approximately $8 million during the three
         month period ended September 30, 1999, when compared to the same period
         in 1998, primarily as a result of: i) the classification of; and ii)
         the timing of the recognition of certain expenses in 1998 related to
         the Operating Agreements with KeySpan which totaled approximately $27
         million. Excluding the effects of the item above, O&M would have
         increased approximately $16 million during the quarter principally as a
         result of: i) a $3.8 million assessment from the New York Power Pool
         ("NYPP") (As a member of the NYPP, LIPA is required to maintain
         generating capacity equal to 118% of its peak load. On July 6, 1999,
         LIPA set a new peak load of 4,590 MW, for which LIPA was unable to
         fully meet the NYPP requirement of 5,416MW which resulted in the
         assessment.); ii) increased storm costs of approximately $8 million;
         and iii) increased research and development and conservation costs
         totaling approximately $4 million.

         For the nine month period ended September 30, 1999, O&M increased when
         compared to the same period in 1998, primarily due to the fact that
         LILCO classified expenses such as depreciation and amortization,
         property taxes and other operating taxes separately. LIPA, however,
         incurs similar costs through the operating agreements with KeySpan and
         classifies such costs as O&M.

         Depreciation and Amortization

         Depreciation and amortization expense increased approximately $1.8
         million for the three month period ended September 30, 1999 when
         compared to the same period in 1998, as a result of additional plant in
         service and a slight increase in the amortization of the acquisition
         adjustment due to refinements in the balance. Depreciation and
         amortization expense for the nine month period ended September 30, 1999
         increased approximately $32.4 million when compared to the same period
         of 1998 due to the amortization of the acquisition adjustment which
         totals approximately $9.6 million per month. This increase was
         partially offset by the absence of depreciation expense on LILCO's
         non-nuclear generating assets, which is included in O&M as a component
         of the PSA billings.

         Operating Taxes

         For the three month period ended September 30, 1999, operating taxes
         decreased approximately $10.4 million primarily as a result of the
         implementation of the New York State Power for Jobs Program whereby
         qualifying companies receive discounted energy and the utility in turn,
         is permitted to offset its New York State gross receipts tax by an
         amount equal to the lost revenue attributable to the discounted energy
         sales.

         Operating taxes decreased approximately $72 million during the nine
         month period ended September 30, 1999 when compared to the same period
         in 1998, principally as a result of the decrease in revenue taxes
         resulting from lower revenues primarily due to the 20% rate reduction,
         a decrease in the gross receipts tax rate, the absence of property and
         payroll taxes related to the operation of the non-nuclear generating
         facilities of LILCO and the implementation of the New York State Power
         for Jobs Program as discussed previously. These decreases were
         partially offset by PILOTs on the Shoreham Nuclear Power Station (LILCO
         was able to capitalize these PILOTs under its electric rate structure)
         and increased sales volumes.

<PAGE>

                                                                              18

         Regulatory Amortization

         For the three and nine month period ended September 30, 1999, the
         amortization of various regulatory assets and liabilities were not
         recorded as a result of the adjustments made on May 29, 1998, to
         eliminate the related regulatory assets and liabilities.

         Rate Moderation Component ("RMC")

         The RMC represented the difference between LILCO's revenue requirements
         under conventional ratemaking and the revenues provided under LILCO's
         electric rate structure. In addition, the RMC was adjusted for the
         operation of LILCO's Fuel Moderation Component ("FMC") mechanism and
         the difference between LILCO's share of actual operating costs at Nine
         Mile Point Nuclear Power Station, Unit 2 ("NMP2") and amounts provided
         for in electric rates.

         LIPA's rate structure does not provide a RMC mechanism and as a result,
         no such amortization is being recorded.

         Federal Income Tax

         The decrease in Federal income tax expense for the three and nine month
         period ended September 30, 1999, when compared to the same period in
         1998, is due to the fact that LIPA is exempt from Federal income taxes.

         Other Income and Deductions

         Other income and deductions primarily represents interest earned on
         designated funds. As a result of the significantly lower designated
         fund balances, other income and deductions decreased approximately $8.5
         million for the three month ended September 30, 1999 when compared to
         the same period in 1998.

         Other income and deductions contributed to income approximately $12.9
         million more for the nine month period ended September 30, 1999 than
         compared to the same period in 1998, primarily due to merger related
         expenses recognized by LILCO in May 1998, partially offset by the
         absence, in 1999, of carrying charges on regulatory assets.

         Interest Expense

         Interest expense decreased $20.5 million for the three month period
         ended September 30, 1999 when compared to the same period in 1998. This
         decrease is attributable to the lower debt levels in 1999 relative to
         1998.

         Interest expense decreased for the nine month period ended September
         30, 1999, by approximately $60.0 million, when compared to the same
         period in 1998. This decrease is principally attributable to the lower
         borrowing rates of the Authority relative to the borrowing rates of
         LILCO. This decrease was partially offset by the higher levels of debt
         that LIPA had outstanding during these periods when compared to LILCO
         during the same periods in 1998. The increase in the level of debt is
         due to the fact that LIPA's entire capitalization structure is debt,
         whereas LILCO's capitalization structure was composed of debt, common
         stock and preferred stock. As a result, the entire cost of LIPA's
         capital is reflected in interest expense, whereas LILCO's cost of
         capital was reflected in interest expense and common and preferred
         stock dividends.


<PAGE>
                                                                              19

         Liquidity and Capital Resources

         Liquidity

         Since May 29, 1998, LIPA has received approximately $6.7 billion from
         the Authority to finance the Merger, as more fully discussed in Note 7
         of Notes to Financial Statements included in LIPA's Annual Report on
         Form 10-K for the nine month period ended December 31, 1998, in
         exchange for a promissory note. All cash from customer payments and
         other sources is collected by the Authority. All of LIPA's obligations
         are paid by the Authority on LIPA's behalf. Accordingly, all operating
         cash amounts are held at the Authority. Cash collections and
         disbursements by the Authority on LIPA's behalf increase or decrease
         amounts due the Authority by LIPA. LIPA has repaid approximately $471
         million of its debt to the Authority because cash collected by the
         Authority from customers and other sources since May 29, 1998 has
         exceeded cash paid on LIPA's behalf by the Authority.

         Pursuant to the Authority's Electric System General Revenue Bond
         Resolution dated May 13, 1998, all amounts to be paid by the Authority
         to LIPA in respect of the debt obligations of LIPA are subordinated in
         right of payment to the payment of amounts due on the debt obligations
         of the Authority. As a result, all debt assumed from LILCO is
         structurally subordinated in right of payment to the Authority's debt
         obligations.

         During the nine month period ended September 30, 1999, LIPA redeemed
         prior to maturity, cash on hand, $132.7 million of NYSERDA bonds. In
         addition, LIPA satisfied the maturity of a $397 million debenture with
         cash provided by KeySpan in accordance with the terms of the promissory
         note between KeySpan and LIPA, as discussed in more detail in Note 2 of
         Notes to Financial Statements.

         On October 27, 1999, LIPA entered into an agreement with KeySpan,
         whereby KeySpan advanced approximately $47.2 million of its promissory
         note payable to LIPA, including interest, to be used to fund the
         optional redemption of New York State Research and Development
         Authority Pollution Control Revenue Funding Bonds 1976 Series A and
         1979 Series B totaling $26.4 million and $19.1 million, respectively.
         These funds are to be held in escrow by LIPA until December 1, 1999, at
         which time, LIPA will call such debt at par.

         At September 30, 1999, the Authority's and LIPA's cash and cash
         equivalents amounted to approximately $634 million. In addition, LIPA
         holds designated funds aggregating $21.3 million. LIPA estimates that
         capital expenditures will total approximately $30 million for the
         remainder of 1999. Funding for such expenditures will be provided by
         the Authority which intends to issue new debt in 1999 that will be
         designated by the Board of Trustees to replenish the capital
         expenditures fund.

         LIPA believes that cash on hand and cash from operations for 1999 will
         be sufficient to meet its operating, capital and debt service
         requirements. Depending on market conditions the Authority expects to
         issue $150 to $250 million of bonds in 2000 in order to finance its
         capital expenditures. The Authority estimates that for the remainder of
         1999 debt maturities will total approximately $72 million. The
         Authority will use cash generated from operations to satisfy $71
         million of the remaining maturities. An additional $1 million is due
         from KeySpan in order to satisfy LIPA's sinking fund requirement later
         in 1999.


<PAGE>
                                                                              20

         The Authority is planning to repurchase up to $150 million of its
         outstanding debt, with cash on hand, through the issuance of a tender
         offer prior to the end of 1999. The Authority also expects to use cash
         from operations to make optional redemptions of debt in 1999. Such
         actions are consistent with the Authority's plan to retire in 16 years,
         the approximately $4 billion it borrowed to purchase the Shoreham
         regulatory assets from LILCO.

         On May 29, 1998, LIPA began issuing rebates and credits to customers'
         bills arising from the proposed settlement of the Shoreham Property Tax
         Litigation. Rebates and credits will be issued over the five years
         after May 29, 1998, in the total amount of $150 million for Suffolk
         County customers and $312.5 million for Nassau County and Rockaway
         customers. The Authority has issued $145.7 million of bonds and has
         proposed to issue additional bonds over the next four years to finance
         the cost of the proposed settlement. Beginning in May 2004, a surcharge
         will be levied upon the Suffolk County customers in order to repay the
         bonds. See Note 13 of Notes to Financial Statements - Shoreham Tax
         Matters, included in LIPA's Annual Report on Form 10-K for the nine
         months ended December 31, 1998.

         Capital Requirements

         Capital expenditures are expected to be made by LIPA in the ordinary
         course of business for purposes of the normal upgrading and expansion
         of the T&D System. LIPA considers the T&D System to be adequate and in
         good condition. The actual amount and timing of future financing will
         depend upon actual capital expenditures, the timeliness and adequacy of
         rate increases, the availability and cost of capital and the ability to
         meet interest and fixed charge coverage requirements. The Authority
         believes that the amount of capital expenditures budgeted in 1999 is
         adequate to maintain system reliability and insures customer and
         employee safety.

         Impact of Year 2000

         The Authority recently purchased new computer software to support
         certain activities of LIPA and believes that these systems are Year
         2000 compliant. Management also believes that, based on available
         information, it will be able to manage its Year 2000 transition for
         systems and infrastructure, without any material adverse effect on its
         business operations or financial position. However, there can be no
         assurance that failure to resolve any issue relating to such transition
         would not have a material adverse effect on LIPA. LIPA has had
         discussions with its largest vendor, KeySpan, which is responsible for
         the management and operation of LIPA's transmission and distribution
         system, and KeySpan has indicated that it has completed the testing and
         remediation of critical systems to ensure no disruptions in service or
         the supply of electricity to LIPA's customers. KeySpan's computer
         applications are generally based on two digits and have required some
         additional programming to recognize the start of the new millennium. A
         corporate-wide program has been established by KeySpan to review all
         software, hardware, embedded systems and associated compliance plans of
         KeySpan and its subsidiaries. The program includes both information
         technology (IT) and non-IT systems. The critical non-IT systems are
         generally in the areas of electric production, distribution,
         transmission, gas distribution and communications. The readiness of
         suppliers and vendor systems is also under review. The project is under
         the direction of the Year 2000 Program Office, chaired by the Vice
         President, Technology Operations and Corporate Y2K Officer. The
         critical areas of operations are being addressed through a business
         process review methodology. Each of KeySpan's critical business and
         service processes is being reviewed to: identify and inventory
         sub-components; assess for Year 2000 compliance; establish repair plans
         as necessary; and test in a Year 2000 environment. As of July 1, 1999,
         inventory, assessment, repair, testing and the development of
         contingency plans for these service critical processes had been
         completed. Remediation of other



<PAGE>


                                                                              21

         business critical systems, which includes metering, and certain
         financial and accounting systems is 98% complete, and testing is 93%
         complete. Testing of the last of these systems will be complete by
         November 30, 1999.

         Vendors and business partners needed to support the critical processes
         of KeySpan are also being reviewed for their Year 2000 readiness. At
         this time, none of these vendors have indicated to KeySpan that it will
         be materially affected by the Year 2000 issue. However, many vendors
         and business partners have not responded to repeated requests for its
         year 2000 readiness status. KeySpan has developed contingency plans
         that address vendor and business partners year 2000 risk.

         Risk Scenarios and Contingency Plans

         KeySpan has analyzed each of the critical processes to identify
         possible Year 2000 risks. Each critical process will be certified by
         the responsible corporate officer as being Year 2000 ready. However,
         the most reasonable likely worst case scenarios have been identified.
         Operating procedures are being reviewed to ensure that risks are
         minimized when entering the Year 2000 and other high risk dates.
         Contingency plans have been developed to address possible failure
         points in each critical process. Testing of these contingency plans
         will be performed internally, as well as with neighboring utilities and
         business partners.

         While KeySpan must plan for the following possible worst case
         scenarios, management believes that these events are improbable:

         Loss of generating flexibility:

         KeySpan's generation subsidiary receives gas delivery from multiple
         national and international pipelines and, therefore the effects of a
         loss in any one pipeline can be mitigated through the use of other
         pipelines. Complete loss of all the supply lines is not considered a
         reasonable scenario. Nevertheless, the impact of the loss of any one
         pipeline is dependent on temperature and vaporization rate. The partial
         loss of gas supply will not affect KeySpan's ability to supply
         electricity since many of the plants have the ability to operate on
         oil.

         Loss of electric grid interconnections/KeySpan operated electric
         distribution facilities:

         Electric utilities are physically connected on a regional basis to
         manage electric load. This is often referred to as the regional grid.
         Presently, KeySpan is working, on behalf of LIPA, with other regional
         utilities to develop a coordinated operating plan. Should there be an
         instability in the grid, KeySpan has the ability to remove LIPA and
         operate independently.

         Certain electric system components, such as individual generating
         units, transmission and distribution system facilities, and the
         electric energy management system have the potential to be affected by
         the Year 2000 issue. KeySpan has inventoried electric system components
         and developed a plan to certify mission critical processes as Year 2000
         ready. Contingency plans have been developed, where appropriate, for
         loss of critical system elements.

         Loss of telecommunications:

         KeySpan has a substantial dependency on many telecommunication systems
         and services for both internal and external communication providers.
         External communications with the public and the ability of customers to
         contact KeySpan in cases of emergency response, are essential. KeySpan
         intends to coordinate its emergency response efforts with the offices
         of emergency management



<PAGE>
                                                                              22


         of the various local governments within its service territory.
         Internally, there are a number of critical processes in both the gas
         and electric operating areas that rely on external communication
         providers. Contingency plans address methods for manually monitoring
         these functions and/or utilizing alternative communication methods.

         In addition to the above, KeySpan is also planning for the following
         scenarios: short term reduction in system power generating capability;
         limitation of fuel oil operations; reduction in quality of power
         output; loss of automated meter reading; loss of ability to read
         customer meters, prepare bills and collect and process customer
         payments; and loss of the purchasing/materials management system.

         KeySpan believes that, with modifications to existing software and
         conversions to new hardware and software, the Year 2000 issue will not
         pose significant operational problems for its computer systems.
         However, if such modifications and conversions do not perform as
         expected, and contingency plans fail, the Year 2000 issue could have a
         material adverse impact on the operations of LIPA.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         No material changes have occurred in this section as of September 30,
         1999 from the information provided in LIPA's Annual Report on Form 10-K
         for the nine months ended December 31, 1998, as filed on March 31,
         1999.


<PAGE>


                                                                              23

Part II. OTHER INFORMATION

Item 1.   Legal proceedings

          Except as discussed below, no significant changes have occurred with
          respect to legal proceedings as discussed in Item 1. Business -
          Shoreham Tax Matters and Item 3. Legal Proceedings in LIPA's Annual
          Report on Form 10-K for the nine months ended December 31, 1998.

          With respect to Shoreham Tax Matters, on July 26, 1999, the Appellate
          Division, Second Department overruled the lower court's decision and
          held that the Authority was not prohibited from enforcing any part of
          the judgment relating to real property tax refunds attributable to
          over assessments on the Shoreham plant after the January 15, 1987,
          effective date of the LIPA Act. On August 24, 1999 Suffolk County
          filed a motion with the Appellate Division to reargue and/or for
          permission to appeal this decision to the State Court of Appeals. On
          October 14, 1999 the Appellate Division denied the motion. LIPA
          expects that Suffolk County will seek leave directly from the Court of
          Appeals to seek leave to appeal the Appellate Division's July 26, 1999
          decision to the Court of Appeals. No decision has been rendered by the
          court as of the date of this filing.

          In July 1992, LILCO and the Authority separately commenced proceedings
          in the Supreme Court of the State of New York, County of Suffolk,
          against the Assessor and the Board of Assessment Review for the Town
          of Brookhaven, New York (the "Assessor") challenging the real property
          tax assessment on Shoreham for the 1992-93 tax year. On or about May
          1, 1992, the Assessor had tentatively assessed Shoreham an amount in
          excess of $156 million for the 1992-93 tax year. On April 22, 1996,
          the two proceedings were consolidated. On May 13, 1999, the Assessor
          moved to dismiss the proceedings on procedural grounds. Oral arguments
          were held on August 5, 1999. On October 20, 1999 the court declined to
          dismiss the two proceedings.

          With respect to the action brought by the County of Suffolk entitled
          County of Suffolk v. KeySpan et al., this action was voluntarily
          discontinued by plaintiffs without prejudice. The plaintiffs refiled
          their claims related to executive compensation in the federal action
          entitled County of Suffolk et al. v. Long Island Power Authority,
          which was filed on September 28, 1998.

          With respect to the Sylvester v. Catacosinos et al. action, U.S.
          District Court approved the Stipulation of the parties dismissing the
          action with prejudice.

Item 2.   Changes in securities and use of proceeds

          None

Item 3.   Defaults upon senior securities

          None

Item 4.   Submission of matters to a vote of security holders

          None


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                                                                              24

Item 5.  Other information

         None

Item 6.  Exhibits and reports on form 8-K

(A)      Exhibits

27       Financial Data Schedule.

(B)      Reports on Form 8-K

                  No reports on Form 8-K were filed during the three months
ended September 30, 1999.


<PAGE>



                                                                              25

                                    SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date:  November 15, 1999                LONG ISLAND LIGHTING COMPANY d/b/a LIPA
                                        (Registrant)

                                        /s/ David P. Warren
                                        -------------------------
                                        David P. Warren
                                        Chief Financial Officer