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 March 31, 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 May 17, 1999, was 1.


<PAGE>

                     Long Island Lighting Company d/b/a LIPA

                                                                        Page No.
                                                                        --------
Part I - FINANCIAL INFORMATION

         Item 1 - Financial Statements                                    

                    Statement of Operations                                   2

                    Balance Sheet                                           3-4

                    Statement of Cash Flows                                   5

                    Notes to Financial Statements                          6-11

         Item 2 - Management's Discussion and Analysis of
                    Financial Condition and Results of Operations         12-19

         Item 3-  Quantitative and Qualitative Disclosures 
                    About Market Risk                                        19

Part II - OTHER INFORMATION

         Item 1 - Legal Proceedings                                       20-21

         Item 2 - Changes in Securities and Use of Proceeds                  22

         Item 3 - Defaults upon Senior Securities                            22

         Item 4 - Submission of Matters to a Vote of Security Holders        22

         Item 5 - Other Information                                          22

         Item 6 - Exhibits and Reports on Form 8-K                           22

         Signature                                                           23


<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 Per Share Information)

                                                            LIPA         LILCO
                                                            ----         -----
                                                             Three Months Ended
                                                                 March 31,
                                                            ------------------
                                                            1999         1998
                                                            ----         ----
Revenue - Electric                                       $ 475,608    $ 555,682
Expenses
Operations - fuel and purchased power                      154,113      166,024
Operations and maintenance                                 167,832      100,083
Depreciation and amortization                               52,221       33,504
Base financial component amortization                         --         25,243
Rate moderation component amortization                        --        (42,694)
Regulatory liability component amortization                   --        (22,143)
Other regulatory amortization                                 --           (276)
Operating taxes                                             61,123       92,403
Customer rebates                                               168         --
Federal income tax - current                                  --          4,077
Federal income tax - deferred and other                       --         43,335
                                                         ---------    ---------
Total Expenses                                             435,457      399,556
                                                         ---------    ---------
Operating Income                                            40,151      156,126
                                                         ---------    ---------
Other Income and (Deductions)
Other income and deductions, net                               971        5,284
Allowance for other funds used during construction            --            574
Federal income tax - current                                  --           (284)
Federal income tax - deferred and other                       --           (348)
                                                         ---------    ---------
Total Other Income                                             971        5,226
                                                         ---------    ---------
Income from Continuing Operations
  Before Interest Charges                                   41,122      161,352
                                                         ---------    ---------
Interest Charges and (Credits)
Interest on long-term debt                                   1,147       87,731
Interest on advances from and note payable to
  the Authority                                             71,380         --
Other interest                                               7,089       13,381
Allowance for borrowed funds used during construction         (539)      (1,085)
                                                         ---------    ---------
Total Interest Charges                                      79,077      100,027
                                                         ---------    ---------
(Loss) Income from Continuing Operations                   (37,955)      61,325

Income from discontinued operations net of
  taxes of zero and $22,861, respectively                     --         54,614
                                                         ---------    ---------
Net (Loss) Income                                          (37,955)     115,939
Preferred stock dividend requirements                         --         12,947
                                                         ---------    ---------
Earnings for Common Stock                                $ (37,955)   $ 102,992
                                                         =========    =========

Average Common Shares Outstanding (000) (a)                    N/A      121,667
Basic and Diluted Earnings per Common Share from
   Continuing Operations (a)                                   N/A    $     .41

Basic and Diluted Earnings per Common Share from
   Discontinued Operations (a)                                 N/A    $     .44

Basic and Diluted Earnings per Common Share (a)                N/A    $     .85

Dividends Declared per Common Share (a)                        N/A    $     .45

(a) Share and per share data are not meaningful on or after May 29, 1998 because
of the significant change in the capital structure in connection with the Merger
and because no public equity of LIPA is outstanding as of March 31, 1999.

   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)
                                  Balance Sheet
                             (Thousands of Dollars)

                                                        March 31,   December 31,
                                                          1999         1998
                                                       (unaudited)
                                                        ----------  -----------
Assets

Utility Plant
Generation - nuclear                                    $  662,867   $  662,893
Transmission and distribution                            1,412,912    1,385,099
Common                                                       3,093        3,827
Construction work in progress                               44,904       52,897
Nuclear fuel in process and in reactor                      14,875       17,053
                                                        ----------   ----------
                                                         2,138,651    2,121,769
Less- Accumulated depreciation and amortization             67,170       50,287
                                                        ----------   ----------
Total Net Utility Plant                                  2,071,481    2,071,482
                                                        ----------   ----------
Current Assets
Customer accounts receivable (less allowance 
  for doubtful accounts of $18,357 and 
  $20,211, respectively)                                   113,191      119,161
Accrued unbilled revenues                                   67,779       78,414
Other accounts receivable                                    4,646       10,096
Promissory note receivable                                 398,000      398,000
Prepayments and other current assets                        30,305       28,583
                                                        ----------   ----------
Total Current Assets                                       613,921      634,254
                                                        ----------   ----------
Promissory Note Receivable                                 646,902      646,902
                                                        ----------   ----------
Designated Funds                                            74,145      194,972
                                                        ----------   ----------
Nonutility Property and Other Investments                   19,606       19,410
                                                        ----------   ----------
Deferred Charges                                            84,815       78,507
                                                        ----------   ----------
Acquisition Adjustment (net of accumulated amortization
  of $98,112 and $68,766, respectively)                  3,997,543    4,026,956
                                                        ----------   ----------
Total Assets                                            $7,508,413   $7,672,483
                                                        ==========   ==========


<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)

                                                   March 31,       December 31,
                                                     1999              1998
                                                  (unaudited)
                                                  ------------      -----------
Capitalization and Liabilities
Capitalization
Long-term debt                                     $   645,000      $   778,075
Note Payable - the Authority                         4,863,181        5,355,085
Due to the Authority                                 1,441,019          855,684
Accumulated deficit                                   (117,936)         (79,981)
                                                   -----------      -----------
Total Capitalization                                 6,831,264        6,908,863
                                                   -----------      -----------
Current Liabilities
Current maturities of long-term debt                   398,278          398,000
Due to the Authority                                    70,880           70,880
Due to KeySpan                                          31,192           75,085
Accounts payable and accrued expenses                   26,995           35,921
Accrued taxes                                           44,705           79,021
Accrued interest                                        16,975           29,851
Customer deposits                                       22,984           23,205
                                                   -----------      -----------
Total Current Liabilities                              612,009          711,963
                                                   -----------      -----------
Deferred Credits                                        49,833           34,059
                                                   -----------      -----------
Claims and Damages                                      15,307           17,598
                                                   -----------      -----------
Commitments and Contingencies
                                                   -----------      -----------
Total Capitalization and Liabilities               $ 7,508,413      $ 7,672,483
                                                   ===========      ===========

<PAGE>

                                                                               5

                     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)

                                                           LIPA        LILCO
                                                           ----        -----
                                                          Three Months Ended
                                                                March 31,
                                                         ---------------------
                                                            1999        1998
                                                            ----        ----
Operating Activities
Net (Loss) Income                                        $ (37,955)  $ 115,939
Adjustments to reconcile net (loss) income to net
  cash (used in) provided by operating activities
Depreciation and amortization                               52,221      40,583
Base financial component amortization                         --        25,243
Rate moderation component amortization                        --       (42,694)
Regulatory liability component amortization                   --       (12,929)
Provision for fuel and purchased power cost adjustment      15,018        --
Other regulatory amortization                                 --         3,350
Rate moderation component carrying charges                    --        (5,789)
Class Settlement                                              --         3,208
Amortization of cost of issuing and redeeming securities     1,951       7,939
Federal income tax - deferred and other                       --        48,333
Allowance for other funds used during construction            --         2,808
Pensions and Other Post Retirement Benefits                   --        10,193
1989 Settlement credits amortization                          --        (9,213)
Gas Cost Adjustment                                           --        (1,250)
Other                                                        3,956      24,334
Changes in operating assets and liabilities
  Accounts receivable, net                                  11,420     (41,077)
  Accrued unbilled revenues                                 10,635      20,768
  Materials and supplies, fuel oil and gas in storage         --        70,624
  Accounts payable and accrued expenses                     (8,926)    (60,075)
  Due to KeySpan                                           (43,893)       --
  Accrued taxes                                            (34,316)     (3,309)
  Accrued interest                                         (12,876)    (13,804)
  Class Settlement                                            --       (12,238)
  Special deposits                                            --       (28,994)
  Other                                                    (13,010)    (13,244)
                                                          --------   ---------
Net Cash (Used in) Provided by Operating Activities        (55,775)    128,706
                                                          --------   ---------
Investing Activities
Construction and nuclear fuel expenditures                 (22,874)    (55,736)
Shoreham post settlement costs                                --        (9,621)
Other                                                         --           332
                                                          --------   ---------
Net Cash Used in Capital and Related 
  Financing Activities                                     (22,874)    (65,025)
                                                          --------   ---------
Capital and related financing activities
Proceeds from sale of common stock                            --         4,554
Repayment of note payable - Authority                     (491,904)       --
Net Proceeds from Authority loan                           585,335        --
Redemption of long-term debt                              (135,609)       --
Preferred stock dividends paid                                --       (12,948)
Common stock dividends paid                                   --       (54,032)
Other                                                         --          (331)
                                                          --------   ---------
Net Cash Used in Financing Activities                      (42,178)    (62,757)
                                                          --------   ---------
Net (Decrease) Increase in Cash and Cash Equivalents      (120,827)        924
Cash and cash equivalents at beginning of period           194,972*    179,995
                                                          --------   ---------
Cash and cash equivalents at end of period                $ 74,145*  $ 180,919
                                                          ========   =========

*Cash and cash equivalents include designated funds

<PAGE>

                                                                               6

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

Notes to Financial Statements
For the Three Months Ended March 31, 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 March 31, 1999 and
      1998 represent the three month periods ended March 31, 1999 and March 31,
      1998, respectively. The financial information as of March 31, 1999, and
      for the three months ended March 31, 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 months ended March 31, 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.

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) 

<PAGE>

                                                                               7

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

Notes to Financial Statements
For the Three Months Ended March 31, 1999
(Unaudited)
--------------------------------------------------------------------------------

      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 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
      Statement 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

<PAGE>

                                                                               8

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

Notes to Financial Statements
For the Three Months Ended March 31, 1999
(Unaudited)
--------------------------------------------------------------------------------

      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 months ended March 31, 1999 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 through a management
      services agreemen("MSA"). Therefore, LIPA pays KeySpan directly for their
      services and KeySpan, in turn, pays the salaries of their 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 is 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 the Rockaways. The service area
      covers an area of 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 three months ended March 31,
      1998 has 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.

      The income from discontinued operations includes revenue from the gas
      business of approximately $271.9 million for the three months ended March
      31, 1998.

<PAGE>

                                                                               9

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

Notes to Financial Statements
For the Three Months Ended March 31, 1999
(Unaudited)
--------------------------------------------------------------------------------

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 PCRBs and 5.3% on the EFRBs.


                                                               Balances
                                              Interest       Subsequent to
                             Maturity           Rate          Conversion
                             --------           ----          ----------
PCRBs
  1985 Series A           March 1, 2016       Variable       $   58,020
  1985 Series B           March 1, 2016       Variable           50,000

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

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

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 ("PILOT's");

<PAGE>

                                                                              10

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

Notes to Financial Statements
For the Three Months Ended March 31, 1999
(Unaudited)
--------------------------------------------------------------------------------

      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 costs 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 cost 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 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, as filed on March 31, 1999.

      In April 1999, the Attorney General of the State of New York announced a
      settlement with KeySpan relating to certain compensation payments made to
      former officers and directors of LILCO. The Attorney General also
      announced that his office would not be commencing any additional actions
      with regard to the payments.

<PAGE>

                                                                              11

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

Notes to Financial Statements
For the Three Months Ended March 31, 1999
(Unaudited)
--------------------------------------------------------------------------------

Note 6. Reclassifications

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

<PAGE>

                                                                              12


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 filed March 31, 1999, for the nine
      months ended December 31, 1998, or in other reports filed by the
      Registrant with the Securities and Exchange Commission.

      General

      Effective May 29, 1998, KeySpan Energy ("KeySpan"), through certain of its
      subsidiaries provides operations and management services for LIPA's
      transmission and distribution system 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 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 rates and charges. See, however, Note 4 of Notes to the
      Financial Statements. Rates and charges for LIPA are determined by the
      Authority's Board of Trustees.

      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 $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 months
      ended March 31, 1999, do not include a provision for income taxes.

      Results of Operations

      Three Months Ended March 31, 1999 and 1998

      Earnings

      Net loss for the three month period ended March 31, 1999 was approximately
      $38 million. The loss was principally due to the seasonal nature of the
      business, whereby revenues during the first quarter are significantly less
      than those expected to be generated during the summer cooling 

<PAGE>

                                                                              13

      season. This, combined with the fact that the majority of LIPA's costs
      (other than fuel, for which there is a separate rate mechanism, the FPPCA,
      as discussed below) are either fixed, or charged in accordance with terms
      specified by the MSA and the PSA, resulted in a net loss during this
      period.

      For the three months ended March 31, 1998, earnings were enhanced as a
      result of the change in the method of amortizing the Rate Moderation
      Component ("RMC") to eliminate the effects of seasonality on monthly
      operating income, as more fully discussed in the section entitled
      "Regulatory Amortization".

      Electric Revenues

      The decrease in electric revenues of approximately $80.1 million for the
      three months ended March 31, 1999, when compared to the same period in
      1998, was principally the result of the rate reduction (approximately
      20%), for all customers, effective May 29, 1998. Partially offsetting the
      reduction in revenues was an increase in usage by existing customers which
      is attributable to a strong and growing economy and price elasticity
      reflecting the effect of LIPA's 20% rate reduction. In addition, there has
      been an increase in customers relative to the same period last year.

      Fuel and Purchased Power

      Fuel and purchased power expense for the three months ended March 31, 1999
      and 1998, were as follows:


                                                     1999             1998
                                                  -------------- ---------------
                                                  in millions)    (in millions)

Oil                                                       $ 42              $ 43
Gas                                                         20                32
Nuclear                                                      2                 2
Purchased power                                             75                89
                                                          ----              ----
                                                           139               166
FPPCA                                                       15               --
                                                          ----              ----
     Total                                                $154              $166
                                                          ====              ====

      Electric Energy Available

      The percentage of total electric energy available, by type of fuel, for
      electric operations for the three months ended March 31, 1999 and 1998
      were as follows:

<PAGE>

                                                                              14
  
                                          1999                      1998
                                   ------------------      -------------------
(Mwh = Megawatt hours)
                                     Mwh          %           Mwh         %
                                   --------     -----      --------     ------
Oil                                 1,782        40          1,205        29
Gas                                   785        18            845        20
Nuclear                               444        10            394         9
Purchased                           1,414        32          1,761        42
                                    -----       ---          -----       ---
      Total                         4,425       100          4,205       100
                                    =====       ===          =====       ===

      Variations in fuel and purchased power expenses have a minimal impact on
      operating results as LIPA's current rate structure includes a mechanism
      (the FPPCA mechanism) which 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.

      Fuel expense for the three months ended March 31, 1999 decreased when
      compared to the same period of the prior year, despite a 5% increase in
      sales. This decrease is primarily the result of sharply lower oil prices,
      partially offset by incentives recognized and fees paid to KeySpan to
      manage the fuel and purchased power supplies in accordance with the EMA,
      and the recognition of a $15 million expense associated with the FPPCA
      mechanism. Generation with oil increased substantially (from 29% of
      requirements for the three months ended March 31, 1998 to 40% for the
      three months ended March 31, 1999) as it became more economical than
      generation with gas and purchased power.

      Operations and Maintenance

      Operations and Maintenance ("O&M") expenses, excluding fuel and purchased
      power, increased approximately $67.7 million during the three month period
      ended March 31, 1999, when compared to the same period in 1998. The
      increase is primarily due to the fact that LILCO classified expenses such
      as depreciation and amortization, property taxes and other operating taxes
      separately. These costs are incurred by LIPA as part of the costs of
      contracts with KeySpan for the management of LIPA's assets and are
      classified as O&M expense by LIPA. In addition, there were charges
      incurred by LIPA related to the overhead expenses of the Authority.

      Depreciation and Amortization

      Depreciation and amortization expense increased for the three month period
      ended March 31, 1999, when compared to the same period of the prior year,
      primarily due to the amortization of the acquisition adjustment which
      totals approximately $10 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

      Operating taxes decreased during the three months ended March 31, 1999,
      when compared to the same period in 1998, 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 income tax rate, and the absence of

<PAGE>

                                                                              15

      property and payroll taxes related to the operation of the non-nuclear
      generating facilities of LILCO, partially offset by PILOTs on the Shoreham
      Nuclear Power Station (LILCO was able to capitalize these PILOTs under its
      electric rate structure).

      Regulatory Amortization
  
      For the three month period ended March 31, 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.

      In April 1998, the PSC authorized a revision to LILCO's method for
      recording its monthly RMC amortization. Prior to this revision, the
      amortization of the annual level of RMC was recorded monthly on a
      straight-line, levelized basis over LILCO's rate year which ran from
      December 1 to November 30. However, revenue requirements fluctuated from
      month to month based upon consumption, which is greatly impacted by the
      effects of weather. Under the revised method, effective December 1, 1997,
      the monthly amortization of the annual RMC level varied based upon each
      month's forecasted revenue requirements, which more closely aligned such
      amortization with LILCO's cost of service. As a result of this change, for
      the three months ended March 31, 1998, LILCO recorded approximately $51.1
      million more of non-cash RMC credits to income than it would have under
      the previous method.

      Federal Income Tax

      The decrease in Federal income tax expense for the three months ended
      March 31, 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

      The decrease in other income and deductions of approximately $4.3 million
      for the three months ended March 31, 1999, when compared to the same
      period in 1998 was primarily due to the absence of carrying charges on
      regulatory assets of LILCO, combined with the effects of the reversal in
      March of 1998 of previously recognized benefits for certain officers and
      directors of LILCO.

      Interest Expense

      Interest expense for the three months ended March 31, 1999, is
      approximately $21 million less than that of the same period in 1998. This
      decrease is principally attributable to the lower borrowing rates of LIPA
      relative to the borrowing rates of LILCO. This decrease in interest
      expense was partially offset by the higher levels of debt that LIPA had
      outstanding during this period, when compared to LILCO during the same
      period in 1998. This increase in the level of debt is due to the fact that
      LIPA's entire capital structure is debt, where 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, where LILCO's cost of capital was reflected in interest expense,
      common and preferred stock dividends. 

<PAGE>

                                                                              16

      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 the Financial Statements included in LIPA's Annual Report on Form
      10-K for the nine months ended December 31, 1998, in exchange for a
      promissory note. All cash from customer payments and other sources is
      collected by the Authority. The Authority makes all disbursements 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 $329 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.

      At March 31, 1999, the Authority's and LIPA's cash and cash equivalents
      amounted to approximately $485.5 million. In addition, LIPA has designated
      funds aggregating $74 million on hand, $43.4 million of which are
      available to fund capital expenditures.

      During the three months ended March 31, 1999, LIPA retired prior to
      maturity, with cash on hand, $132.7 million of outstanding NYSERDA bonds
      which were assumed from LILCO as part of the Merger. LIPA believes that
      cash from operations for 1999 will be sufficient to meet its operating,
      capital and debt service requirements. However, LIPA intends to access the
      capital markets in 1999 in order to finance capital expenditures and to
      refinance higher cost debt, if conditions prove favorable.

      LIPA estimates that for the remainder of 1999, capital spending will total
      approximately $102 million and debt maturities will total approximately
      $469 million. Of the $469 million, $398 million is due from KeySpan in
      accordance with the promissory note between them and LIPA. With respect to
      the remaining $71 million, the Authority will use cash generated from
      operations to satisfy such maturities.

      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 credits to the bills of customers
      arising from the proposed settlement of the Shoreham Property Tax
      Litigation. Credits will be issued over the five years after May 29, 1998,
      in the total amount of $106.3 million for Suffolk County customers and
      $208 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 Part II, Item-1-Legal
      Proceedings-Shoreham Tax Matters.

<PAGE>

                                                                              17

      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 has been
      advised by KeySpan that the amount of capital expenditures budgeted to be
      made 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 their
      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 evaluated the extent to which modifications to its
      computer software, hardware and database will be necessary to accommodate
      the new millenium. KeySpan's computer applications are generally based on
      two digits and do require 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 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. The inventory phase for both the IT systems and
      non-IT systems is complete. The total assessment phase is 100% complete
      for the IT systems, and as of March 31, 1999, over 83% complete for non-IT
      systems.

      Hardware, software and embedded systems are being tested and certified to
      be Year 2000 ready. As of March 31, 1999, repair was 84% complete and
      testing was 39% complete. Non-IT systems were 62% repaired and 25% tested.
      Components needed to support the critical business process and associated
      business contingency plans are expected to be ready for the Year 2000 by
      July 1, 1999.

      Vendors and business partners needed to support the critical business
      processes of KeySpan are also being reviewed for their Year 2000
      readiness. At this time none of these vendors have indicated to KeySpan
      that they will be materially affected by the Year 2000 issue.

<PAGE>

                                                                              18

      Risk Scenarios and Contingency Plans

      KeySpan is presently in the process of analyzing each of the critical
      business processes to identify possible Year 2000 risks. Each critical
      business process will be certified by the responsible corporate officer as
      being Year 2000 ready. However, the most reasonable likely worst case
      scenarios are also being identified. Business operating procedures are
      being reviewed to ensure that risks are minimized when entering the Year
      2000 and other high risk dates. Contingency plans are being developed to
      address possible failure points in each critical business process, and are
      scheduled to be completed by July 1999. Testing of systems and 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 process as Year 2000 ready. Contingency
      plans are being developed, where appropriate, for loss of critical system
      elements. KeySpan presently estimates that contingency plans regarding its
      electric facilities should be completed by July 1999.

      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 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 will address methods for manually monitoring these
      functions and/or utilizing alternative communication methods. These
      contingency plans, KeySpan presently estimates, should be finalized by
      July 1999.

      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,

<PAGE>

                                                                              19

      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 are not made, or are not completed
      on time, 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 March 31, 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>

                                                                              20

Part II. OTHER INFORMATION

Item 1. Legal proceedings

      Shoreham Tax Matters

      Through November 1992, Suffolk County and the following Suffolk County
      political subdivisions (collectively, the "Suffolk Taxing Jurisdictions"),
      the Town of Brookhaven, Shoreham-Wading River Central School District,
      Wading River Fire District and the Shoreham-Wading River Library District
      (which was succeeded by the North Shore Library District), levied and
      received real estate taxes from LILCO on the Shoreham plant. When the
      Authority acquired the Shoreham plant in February 1992, it was obligated
      pursuant to the Act to make PILOTs on the Shoreham plant beginning in
      December 1992. As part of the agreement between LILCO and the Authority
      providing for the transfer of Shoreham to the Authority, LILCO agreed to
      fund these payments. Prior to the Merger, LILCO charged rates sufficient
      to make these payments to the Authority. Both LILCO and the Authority
      contested the assessments, claiming the Shoreham plant was overassessed.
      To date, the Authority has made such payments, in whole or in part,
      pursuant to interim PILOT agreements and collected the costs thereof
      pursuant to the PILOTs rider which is part of LIPA's rates.

      On March 26, 1997, a judgment was entered in the Supreme Court, State of
      New York, Suffolk County, on behalf of LILCO against the Suffolk Taxing
      Jurisdictions ordering them to refund to LILCO property tax overpayments
      (resulting from over-assessments of Shoreham) in an amount exceeding $868
      million, including interest as of the date of the judgment. In addition,
      the judgment provides for the payment of post-judgment interest (the
      "Shoreham Property Tax Litigation"). The Court also determined that the
      Shoreham plant had a value of nearly zero during the period the Authority
      has owned Shoreham. This judgment was unanimously affirmed by the
      Appellate Division of the State of New York on July 13, 1998. Certain
      Suffolk Taxing Jurisdictions sought to appeal this judgment to the New
      York State Court of Appeals. Their applications were unanimously denied by
      the Appellate Division. New applications for leave to appeal were made to
      the Court of Appeals. On January 19, 1999, the Court of Appeals denied the
      motions. There is no further review in the New York State court system.

      The Authority had proposed a settlement agreement with the Suffolk Taxing
      Jurisdictions and Nassau County. The proposed settlement agreement would,
      among other things, cause the Authority: (i) not to enforce the judgment
      in favor of LILCO; and (ii) not to make any claim for a refund of what the
      Authority believes is an overpayment of PILOTs, in exchange for the
      payment by the Suffolk Taxing Jurisdictions to the Authority of $625
      million.

      On February 1, 1999, a lawsuit was filed in the Supreme Court of the State
      of New York, Nassau County, by the Association for a Better Long Island
      against the Authority and LIPA. This lawsuit seeks: (i) to require the
      Authority to collect the full amount of the judgment obtained by the
      Authority in the Shoreham Property Tax Litigation as well as certain
      overpaid PILOTs; and (ii) to declare that the offer of the Authority to
      settle the Shoreham Property Tax Litigation is void and legally
      unenforceable. No assurance can be given as to the method, amount (if any)
      or timing of any recovery by the Authority related to the Shoreham
      Property Tax Litigation.

      The proposed settlement agreement with the Suffolk Taxing Jurisdictions
      was not accepted and on March 1, 1999, the Authority withdrew its offer to
      settle the Shoreham Property Tax Litigation including claims related to
      the Authority's overpayment of PILOTs on the Shoreham plant for 

<PAGE>

                                                                              21

      $625 million and indicated that any settlement would have to be at a
      higher amount. On that date, the Authority also demanded that the Suffolk
      Taxing Jurisdictions pay refunds of real estate taxes in the amount of
      approximately $784 million consisting of: (i) refunds and interest due as
      of the entry of the judgment on March 26, 1997, for the period from and
      after January 15, 1987, (the effective date of the Act), of approximately
      $675 million; and (ii) accrued post-judgment interest in the amount of
      approximately $109 million. Post-judgment interest will continue to accrue
      until the judgment is satisfied.

      On September 15, 1998, Suffolk County filed an action against the
      Authority in the Supreme Court of the State of New York, Suffolk County
      seeking to enjoin the Authority from recovering tax refunds based upon the
      over-assessment of the Shoreham nuclear plant. The action claims that the
      Authority does not have the right to recover property taxes previously
      assessed against LILCO for tax years 1984-1985 through 1991-1992. On April
      14, 1999, a judgment was entered ordering that the Authority shall
      discontinue and abandon all proceedings which seek the repayment of all or
      part of the taxes assessed against the Shoreham plant, and enjoining the
      Authority from enforcing any judgment for refund of taxes paid on the
      Shoreham plant. The Authority has appealed this decision to the Appellate
      Division, Second Department. Oral arguments have been scheduled for June
      21, 1999. The Authority does not believe that an adverse decision in this
      litigation will have a material adverse effect on the Authority's or
      LIPA's financial condition. Further, the court stated that under a ruling
      of the State Court of Appeals, the Authority is not prohibited from
      seeking refunds of PILOTs paid on over-assessments of the Shoreham plant.

      On May 10, 1999, Suffolk County filed an action against the Authority in
      the Supreme Court of the State of New York, Suffolk County seeking, among
      other things, to enjoin the Authority from implementing or collecting a
      bifurcated rate for electric service and directing the Authority to refund
      monies already collected from Suffolk County ratepayers as a result of the
      implementation of the proposed Shoreham Settlement Agreement. The
      Authority does not believe that an adverse decision in this litigation
      will have a material adverse effect on the Authority's or LIPA's financial
      condition.

      The New York State Court of Appeals in a separate case has ruled that the
      Act does not prohibit the Authority from recovering overpayments of PILOTs
      plus interest based upon inflated assessed valuations of Shoreham. The
      Authority has made PILOTs of approximately $345 million which it believes
      were based on such inflated assessed valuations. On February 24, 1999, the
      Authority filed an action against the Suffolk Taxing Jurisdictions in the
      Supreme Court of the State of New York, Nassau County seeking a judgment
      in an amount equal to the total amount of PILOTs overpaid by the
      Authority, plus interest.

      On March 23, 1999, the Shoreham Wading River Central School District filed
      an action against the Authority in the Supreme Court of the State of New
      York, County of Nassau seeking an order directing the Authority to pay
      approximately $6.4 million of PILOTs which the plaintiff alleges are due
      and owing and approximately $24.6 million of PILOTs which the plaintiff
      alleges is the cumulative deficiency as of June 1, 1998. The Authority
      does not believe that an adverse decision in this litigation will have a
      material adverse effect on the Authority's or LIPA's financial condition.

<PAGE>

                                                                              22

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

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 quarter ended
              March 31, 1999.

<PAGE>

                                                                              23

                                    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:  May 17, 1999               LONG ISLAND LIGHTING COMPANY d/b/a LIPA
                                  (Registrant)

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