STATE OF NEW YORK
                    PUBLIC SERVICE COMMISSION





Case 96-E-0900 - In the Matter of Orange and
Rockland Utilities, Inc.'s Plans for Electric
Rate/Restructuring Pursuant to Opinion No. 96-12.














                        Electric Rate and
                       Restructuring Plan



















Dated:  November 6, 1997
        Albany, New York


                        Table of Contents


Overview of O&R Plan                                          i

Introduction                                                  1

Terms of Plan                                                 4
     I. Rate Plan                                             4
             A.  Electric Price Reductions                    4
                 *   Large Industrial Customers
                 *   All Other Customers
                 *   Cumulative Price Reduction Summary
                 *   Sources of Price Reductions ($000)
             B.  Return on Equity Sharing                     8
             C.  Performance Standards                       10
             D.  Rate Design                                 10
             E.  Accounting Provisions                       11
    II. Transition to Retail Access                          12
             A.  Sequence of Events                          12
             B.  Reciprocity                                 13
             C.  Expansion of PowerPick(TM)Program           13
             D.  Full Retail Access                          14
             E.  Unbundled Tariffs                           14
             F.  System Benefits Charge                      16
             G.  Low Income Program                          17
   III. Strandable Costs                                     18
             A.  Regulatory Assets                           18
             B.  NUG Contract Purchased Power Costs          18
             C.  Divestiture                                 19
             D.  Allocation of Net Book Gains and Losses
                 from the Disposition of Generating Assets   25
             E.  Other Strandable Costs                      26
             F.  Proceeds of Divestiture                     26
    IV. Corporate Structure                                  26
             A.  Holding Company                             26
             B.  Section 107 Preauthorization                27
             C.  Delivery Company and Affiliated ESCOs       27
             D.  Metering Services                           29
             E.  Billing Services                            30
             F.  Load Pockets                                30
             G.  System Upgrades                             30
     V.  Other Provisions                                    31
             A.  Force Majeure                               32
             B.  Changes in Laws or Regulations              32
             C.  Confidentiality and Privileged Information  32
             D.  Changes in Rates                            32
             E.  Rate Design Flexibility                     32
             F.  Regulatory Reform and Customer
                 Operations Procedures                       33
             G.  Customer Outreach and Education             35
             H.  Interdepartmental Transfers                 35
             I.  Other Accounting Provisions                 36
             J.  Flex Rates and Economic Development Rate    36
             K.  Securitization                              37
             L.  Gross Receipts and Franchise Taxes          37
             M.  Merger                                      37
             N.  Arrangements with Third Parties             37
             O.  Comprehensive Nature of Plan                38
             P.  Provisions Not Separable                    38
             Q.  Provisions Not Precedent                    38
             R.  Plan Modification                           38
             S.  Term and Time Line                          38
             T.  Effect of Plan                              39
             U.  Dispute Resolution                          40
             V.  Additional Public Statement Hearings        40


                           Appendices

Appendix A     Time Line for Certain Actions

Appendix B     Standard Industrial Codes

Appendix C     Eligibility Guidelines for Large Industrial
               Customer Classification

Appendix D     Sources of Price Reductions

Appendix E     Privileged Information

Appendix F     Customer Service and Reliability Performance
               Mechanism

Appendix G     Low Income Customer Assistance Program

Appendix H     Standards of Competitive Conduct

Appendix I     Affiliate Relations

Appendix J     Accounting for Affiliate Transactions

Appendix K     Interdepartmental Transfers


                        STATE OF NEW YORK
                    PUBLIC SERVICE COMMISSION


Case 96-E-0900 - In the Matter of Orange and
Rockland Utilities, Inc.'s Plans for Electric
Rate/Restructuring Pursuant to Opinion No. 96-12.


                        Electric Rate and
                       Restructuring Plan
                                
                      Overview of O&R Plan


     This Electric Rate and Restructuring Plan (the "Plan") has
been developed with three major goals in mind:

          Improve customer service and customer choice while
          ameliorating current price levels and introducing
          competition;

          Promote jobs and economic development in the
          region by significantly reducing industrial rates
          immediately;

          Continue steps taken in prior years to reduce
          rates for all other customers by further reducing their
          rates in 1997 and 1998 (with first claim going to non-
          Large Industrial Customers for benefits produced by the
          customers' share of net gains on the disposition of
          generating assets[1]), in order to reduce the impact of
          the cost of electricity on the budgets of all customers
          other than Large Industrial customers.

     The signatories to this Plan view the accomplishment of
these goals as essential to the future welfare of the region.
Integral to this Plan is the principle that these economic goals
can be pursued successfully while maintaining reliability,
quality customer service and protection; maintaining essential
environmental programs; and seeking ways to reduce the effects of
energy prices on low-income customers.



____________________
[1]  Hereinafter referred to as "Generating Assets" which include
     all units at Lovett and Bowline Generating stations, the
     Company's hydro-electric facilities and gas turbines.

     Upon Commission approval, this Plan will further reduce
rates for all O&R ratepayers.  In the past two years, residential
ratepayers have already experienced rate decreases, on average,
of 4%.  Commercial and industrial classes have experienced
decreases between 4% and 14%.

Rate Plan

          The Plan covers a four-year period.

          Large Industrial Customers have the opportunity to
          realize an average electric price of six cents per kWh
          beginning with the effective date of new rates.  The
          Peak Activated Rate will be made optional.

          The rates of all other customers will be reduced
          in the first year by 1.09% and by another 1.0%
          effective one year later. Gross Receipts Tax Reform
          will result in additional savings.[2]  Additional
          benefits to all other customers, up to the equivalent
          of an overall 5% rate reduction, are possible should
          sufficient net gains on the sale of Generating Assets
          be realized.

          The cumulative rate reductions over the four-year
          period are approximately $32.4 million. Additional
          opportunities for savings for all customers will become
          available with the expansion of the PowerPick(TM) program
          and the Gross Receipts Tax Reform.[3]


___________________
[2]  Additional savings of about 1% for all customers including
     Large Industrial Customers are expected from the recent
     passage of Gross Receipts Tax Reform.

[3]  The $32.4 million does not include: 1) an opportunity for
     Large Industrial Customers to realize additional savings of
     about 3 1/2% in annual bill reductions from the expansion of
     the PowerPick(TM) program,  2) an opportunity for all customers
     other than Large Industrial Customers to realize benefits
     over the term of the Plan of about 2% in annual bill
     reductions beginning with the expansion of PowerPick(TM) in May
     1998, and 3) the Gross Receipts Tax Reform. The PowerPick(TM)
     Program is intended to refer to the "Retail Access Pilot
     Program" as described in Appendix D to the Settlement
     approved by the Commission by Order Concerning Settlement
     Agreements issued May 3, 1996, in Cases 95-E-0491, 93-M-0849
     and 93-G-0779.

          For each of the four rate years that this Plan is in effect,
          earnings on regulated electric operations in excess of 11.4%
          in New York will be shared with 75% being used to offset
          Commission-approved deferrals or otherwise inure to the benefit
          of O&R Customers; and 25% being retained by O&R's shareholders.

          A flexible rate tariff will be designed and filed
          with the Commission.  It will provide for the
          possibility of rate discounts for commercial and
          industrial customers who are currently taking service
          and who are at serious risk of relocating or closing
          their facilities.


Transition to Retail Access

          Full retail access to a competitive energy and
          capacity market will be available on May 1, 1999 for
          all customers.

          The existing PowerPick(TM) program (choice of
          purchasing energy from alternate suppliers) will be
          expanded to all customers on May 1, 1998.  For Large
          Industrial Customers, the PowerPick(TM) program will be
          expanded at the time of Commission approval of the
          Plan.

          O&R will file proposed unbundled rates for
          electric service one month after Commission approval of
          the Plan.

Divestiture and Corporate Structure

          Upon Commission approval of the Plan, the Company
          will immediately commence a process to auction all of
          its electric Generating Assets. The Company will seek
          to restructure itself as a Registered Holding company
          to create structurally separate subsidiaries such as
          one or more unregulated Energy Services companies
          ("ESCOs"), and a regulated Transmission and
          Distribution company or Delivery company.

          Upon commencement of retail access, the Delivery
          company will provide basic energy services, including
          energy, capacity, ancillary services, metering and
          billing within the service territory.

          Unless and until relieved of the obligation, the
          Delivery company will be the Provider of Last Resort
          for all customers choosing to continue to purchase
          "packaged" energy services from it, for those customers
          who do not choose an energy provider, and for those
          customers who purchase from other providers but who
          later return as customers purchasing power from the
          Delivery company. The parties have agreed to study
          transferring this obligation to the competitive market
          and will present recommendations to the Commission by
          May 1, 1999.

          After issuance of the Staff report on metering
          issues ordered by the Commission in Opinion No. 97-13
          (August 1, 1997), and before March 31, 1999, O&R will
          submit a plan regarding the provision of competitive
          metering services by December 31, 1999.

          Other companies will be able to enter into the
          market for providing billing services to Orange and
          Rockland's Delivery company customers consistent with
          the manner and in accordance with the schedule
          prescribed by the Commission.

Allocation of Net Book Gains and Losses from
the Disposition of Generating Assets

          The New York share of combined net book
          gains/losses from the divestiture of the Generating
          Assets shall be allocated on the following basis:[4]

          -    If the Company selects a winning bidder
               prior to May 1, 1999, any gains shall be allocated
               between shareholders and customers on a 25/75
               basis and any losses shall be allocated between
               shareholders and customers on a 5/95 basis.

          -    If the Company selects a winning bidder
               on or after May 1, 1999, any gains or losses shall
               be allocated between shareholders and customers on
               a 20/80 basis.

          -    There shall be a cap of $20 million on
               the New York share of net book gains allocated to
               shareholders as a result of the divestiture of the
               Generating Assets.

          The Company will recover in full its Commission-
          approved regulatory assets and the remaining
          commitments to purchases from non-utility generators.

___________________
[4]  100% of the net book gains/losses shall be allocated among
     New York, New Jersey and Pennsylvania in accordance with the
     then-effective FERC-approved Power Supply Agreements. The
     sharing percentages (customers/shareholders) shall be
     applied to New York's share of the net book gains/losses.
     The parties intend that the allocation of the net book
     gains/losses among the three states be determined by FERC
     based upon appropriate consideration of the positions of the
     regulatory authorities in each state.

Performance Standards

          The Performance Standards, which were agreed to in
          the Company's most recent case, will be continued.
          There are five areas:  three focus on customer service
          standards and two on reliability standards.

          If the Company fails to meet the target levels for
          these performance standards, there will be a downward
          adjustment of up to 25 basis points to the 11.4% return
          on equity sharing threshold.

Low Income Program

          A Low Income Customer Assistance Program will be
          conducted for a four-year period for approximately 400
          customers in the City of Port Jervis.  The Program will
          address energy efficiency, payment patterns, and/or
          arrears forgiveness.  Energy efficiency measures,
          including refrigerator replacement, will be the first
          priority for expenditures.

          The Company will allocate up to $200,000 of DSM
          overcollections to support the development of a pilot
          program that would aggregate low income customers.

Customer Outreach and Education

          In conjunction with the parties, the Company will
          continue to develop and implement programs and
          materials that will aid its customers in understanding
          the changes in the electric industry that are coming
          and the nature of the services that customers can
          expect to receive from O&R in the future.  The overall
          goals are to enable customers, particularly small
          customers, to make informed choices about utility
          service while understanding their rights and
          responsibilities as utility customers.  These efforts
          will be complemented by those of participating energy
          providers.

          Up to $1 million of the present value of the
          fourth year equivalent of SBC funding levels will be
          spent on educating the Company's Residential and
          Commercial customers about electric competition. The
          Staff will develop a proposal to implement this
          education program and circulate it to the active
          parties by December 31, 1997.

Public Interest Program

          Public interest programs will be continued through
          a competitively neutral Systems Benefit Charge.

                                
                                                        
This summary is intended to be a general description of the terms
 of the Plan. The complete text of the Plan will control in the
                     event of any conflict.
                                
                          Introduction


     On May 20, 1996, the New York State Public Service
Commission (the "Commission") issued its Opinion and Order
Regarding Competitive Opportunities for Electric Service, Opinion
No. 96-12 in Case 94-E-0952 (the "Competitive Opportunities
Proceeding").

     In Opinion No. 96-12 (at 24-25), the Commission articulated
a vision for the electric utility industry that includes the
following market characteristics:

     1.   effective competition in the generation and energy
          services sectors;

     2.   reduced prices resulting in improved economic
          development for the State as a whole;

     3.   increased opportunities for consumers to choose
          suppliers and service companies;

     4.   a system operator that treats all participants
          fairly and ensures reliable service;

     5.   a provider of last resort for all consumers and
          the continuation of a means to fund necessary public
          policy programs;

     6.   ample and accurate information for consumers to
          use in making informed decisions; and

     7.   the availability of information that permits
          adequate oversight of the market to ensure its fair
          operation.

     The Commission directed Orange and Rockland Utilities, Inc.
("Orange and Rockland" "O&R" or "the Company") and four other
electric utilities to file a rate/restructuring plan consistent
with the Commission's policy and vision for increased
competition. Id., at 74-75. The plans to be filed were to address
such matters as the structure of the utility both in the short
and long term, a schedule for transition to retail access for all
of the utility's customers and a rate plan to be effective for a
significant portion of the transition.

     The Commission directed the utilities to collaborate with
the Staff and other interested parties in developing a number of
technical studies, undertaking public informational and
educational forums and determining what Federal Energy Regulatory
Commission ("FERC") filings were necessary to implement the
Independent System Operator ("ISO"), Power Exchange ("PE") and
Reliability Council.

     On October 1, 1996, Orange and Rockland filed a
rate/restructuring plan in response to Opinion No. 96-12. The
Company's filing included a rate plan that would go beyond the
third year of the rate settlement approved in Case 95-E-0491, a
schedule for expanding its PowerPick(TM) Program and introducing
retail access to all customers, a plan to separate the generation
function from the regulated delivery function and a means of
addressing the strandable cost issue.

     By its Order Establishing Procedures and Schedule dated
October 9, 1996, the Commission initiated Case 96-E-0900 to
examine Orange and Rockland's October 1, 1996 filing. The
Commission established a procedural schedule, including a 90-day
negotiation period during which the parties were strongly
encouraged to reach a negotiated settlement instead of pursuing a
litigated outcome. To facilitate these negotiations, the
Commission's Order of October 9, 1996, waived certain settlement
guidelines established in Case 90-M-0255, Settlement and
Stipulation Agreements, Opinion No. 92-2 (March 24, 1992).

     Between October 29 and November 7, 1996, Orange and Rockland
and Staff hosted four technical meetings with the intervenors in
this case. The Company provided detailed presentations on its
October 1, 1996 filing, furnished supporting data and responded
to numerous questions of the parties.

     Preliminary settlement negotiations were conducted between
the Company and Staff during January and February 1997. After
agreement in principle was attained, the negotiations included
the Consumer Protection Board, the Industrial Energy Users
Association and other parties. By notices issued December 19,
1996, January 9, 1997, February 13, 1997,  February 26, 1997, and
March 6, 1997, the Secretary of the Commission extended the 90-
day negotiation period established in the Order of October 9,
1996 to March 25, 1997.

     On February 28, 1997, the Company and Staff informed the
active parties that they had made significant progress in
resolving the issues in this proceeding and a summary of
settlement terms was circulated to the active parties. The
parties were invited to attend settlement negotiations on
March 4, 1997, in order to discuss the summary of settlement
terms and indicate their willingness to participate in the
preparation of a detailed settlement proposal for submission to
the Commission. Subsequent meetings of the active parties took
place on March 11, 18 and 24, 1997, to review drafts of a
detailed settlement proposal.

     A Settlement Agreement was signed on March 25, 1997.
Evidence relating to the terms of the proposed Settlement was
submitted by the Company, the Staff and several other parties and
hearings were held in Albany on May 19, 20 and 22, 1997, before
Administrative Law Judge Stewart C. Boschwitz. Judge Boschwitz
Recommended Decision was issued on July 2, 1997, and after
briefing by the parties was considered by the Commission at its
session on September 10, 1997. At that session, the Commission
expressed concerns about the terms of the Settlement Agreement
and directed the parties to resume negotiations to address those
concerns. The parties met on September 15, 16 and 22 and
October 15 and 30, 1997, participated in several conference calls
and renegotiated a number of Settlement terms consistent with the
concerns expressed by the Commission. This Plan was signed on
November 6, 1997, by the Company, the Staff, the New York State
Department of Economic Development, the Industrial Energy Users
Association, the National Association of Energy Service
Companies, The Joint Supporters, the Independent Power Producers
of New York, Inc., and Pace Energy Project. This Plan has been
reviewed and approved by Orange and Rockland's Board of Directors
as submitted at the Board meeting on November 6, 1997.

     The term of this Plan is four years from the date of the
effectiveness of new rates. The times for various actions to be
accomplished by the various parties are set forth on Appendix A.



                          Terms of Plan
                                
                          I. Rate Plan


     Orange and Rockland shall implement a rate plan for the four
years beginning with the effectiveness of new rates, which shall
include the following provisions.

A.   Electric Price Reductions

     In the event that the Commission approves the terms of this
     Plan on November 25, 1997, new rates shall become effective
     on November 26, 1997.

     Large Industrial Customers

     Large Industrial Customers[5] will be provided the
     opportunity to realize an average electric price of six
     cents per kWh beginning with the effectiveness of new rates.
     This electric price reduction opportunity is to be achieved
     through a combination of energy choice (i.e., PowerPick(TM)) and
     rate reductions (i.e., one-time credits and base rate
     reductions).
                                          Cents/    Revenue
                                           kWh     Equivalent
                                                     ($000)

     Average Price                        6.82       $31,661
     Electric Price Reductions:
     PowerPick(TM) Savings Opportunity[6] -.24      -$ 1,108
     Scheduled Rate Reductions            -.58      -  2,707
     Total                                -.82      -$ 3,815

     Average Price Opportunity            6.00       $27,846


___________________
[5]  Large Industrial Customers are all customers in the existing
     S.C.9 class whose facilities are classified by the Standard
     Industrial Manual (1987 ed. or supplement thereto) as Mining
     [Division B] or Manufacturing [Division D] and where 60% or
     more of the account's electric usage is used directly for
     manufacturing and/or mining per the Standard Industrial
     Codes ("SIC") codes set forth in Appendix B.

[6]  The PowerPick(TM) savings opportunity is based on an estimate
     and represents energy-only choice for all energy
     requirements of the Large Industrial Customers. The Company
     will permit all Large Industrial Customers to participate in
     the PowerPick(TM) program (energy-only) for all of their energy
     requirements at the time of the effectiveness of new rates.
     Guidelines for eligibility are set forth in Appendix C.

     All Other Customers

     Reduce  electric  rates, through one-time credits  and  base
     rate  reductions, by 1.09% at the time of the  effectiveness
     of new rates, and an additional 1% effective one year later.

                Revenue Levels @     Rate Reductions      Cumulative
Classification  May 3, 1996 Rates Year 1(1.09%) Year 2(1%)  Total
                   $000                   $000              $000

Large Commercial$  25,600       -$   280       -$  256     -$   536
Small C&I         120,298       -  1,317       - 1,203     -  2,520
Residential       146,023       -  1,599       - 1,460     -  3,059
Total           $ 291,921       -$ 3,196       -$2,919     -$ 6,115

       Cumulative Price Reduction Summary ($000)

                Year 1    Year 2    Year 3    Year 4     Total

Lg. Industrial -$2,707   -$2,707   -$2,707   -$2,707
All Other       -3,196    -6,115   - 6,115    -6,115
Sub.Total      -$5,903   -$8,822   -$8,822   -$8,822   -$ 32,369
Lg. Industrial
 PowerPick(TM) -$1,108   -$1,108   -$1,108   -$1,108   -$  4,432
Total          -$7,011   -$9,930   -$9,930   -$9,930   -$ 36,801

       Sources of Price Reductions ($000)[7]

                  Year 1   Year 2    Year 3   Year 4    Total

PowerPick(TM)[8] -$1,108  -$1,108   -$1,108  -$1,108
Deferred Credits - 4,271  - 3,256   - 3,256        0
Expired Surcharg -   498  -   498   - 1,849  - 7,150
Cost Reductions  - 1,342  - 2,076   - 1,672  - 1,672

Total            -$7,219  -$6,938   -$7,885  -$9,930   -$31,972


____________________
[7]  A detailed schedule of each source of price reductions is
     set forth in Appendix D.

[8]  Estimated savings for Large Industrial Customers are based
     on their participation in the PowerPick(TM) program for all of
     their energy requirements.  For all other customers they are
     based on such customers being provided the opportunity to
     choose alternative providers under the PowerPick(TM) program
     effective May 1, 1998. In order to provide the opportunity
     to achieve the 6 cents/kWh rate for the first rate year, the
     Company will permit all Large Industrial Customers to
     participate in the PowerPick(TM) program (energy-only) at the
     time of the effectiveness of new rates.  "Dump" energy
     losses incurred as a result of the expansion of the
     PowerPick(TM) program prior to the implementation of wholesale
     competition due to system load falling below minimum load
     requirements of the Company's generating plants will not be
     recoverable through the FCA.

     The sources of the above price reductions underlie the
agreed-upon changes in rate levels.[9] The main objectives of
this component of the Plan are 1) to achieve price reductions to
Large Industrial Customers so that they have a reasonable
opportunity starting in the first rate year to reduce their
average price to 6 cents per kWh; and 2) to reduce all other
customers' average rates by 1.09% in the first rate year, and by
another 1% effective one year later. For Large Industrial
Customers these price reduction opportunities are intended to
remain in effect through the four-year term of this Plan; the
1.09% reduction for all other customers is intended to remain in
place for the first rate year and the 2.09% reduction for all
other customers is intended to remain in place through the end of
the four-year term. It is the intention of the parties that
cumulative rate reductions over the four-year period will equal
approximately $32.4[10] million. The parties acknowledge that the
form of any price reduction provided for herein will vary among
permanent base rate reductions and temporary credits which will
expire when the related funding source is depleted.

     After rates are unbundled in accordance with the provisions
of Section II.E herein, the cost of Power Supply will not be
included in rates for Delivery services. Delivery service
customers will be charged for authorized services at the
regulated rates approved by the Commission as a result of the
Company's unbundling filing. Delivery service customers will be
billed for power supply at market prices as charged by the
customers' energy supplier plus any amounts necessary to cover
stranded costs recoverable in accordance with Section III herein.
It is expressly understood that the tariff reductions provided
for in this Plan will be reflected in the unbundled Delivery
rates and that the sources supporting these reductions will
likewise be reflected in unbundled Delivery rates.



____________________
[9]  The parties acknowledge that the difference between the
     cumulative price reductions and the sources of price
     reductions is $4,829,000 and that this Plan does not
     identify the sources of such price reductions.

[10] This amount does not reflect the potential net book
     gain/loss associated with the divestiture of the Generating
     Assets. The $32.4 million does not include: 1) an
     opportunity for Large Industrial Customers to realize
     additional savings of about 32% in annual bill reductions
     from the expansion of the PowerPick(TM) program, 2) an
     opportunity for all customers other than Large Industrial
     Customers to realize benefits over the term of the Plan of
     about 2% in annual bill reductions beginning with the
     expansion of PowerPick(TM) in May 1998, and 3) the Gross
     Receipts Tax Reform.

     All parties acknowledge that there is no guarantee that the
Company will realize a net book gain from the sale of the
Generating Assets. In the event that the Company does realize a
net book gain from the sale of the Generating Assets, the Company
will file a plan with the Commission that will return the
customers' share of such net gain over an appropriate period of
time consistent with the principle of maintaining rate stability.
These benefits will first be provided to customers other than
Large Industrial Customers so that "All Other" customers could
receive the annual equivalent of an additional 2.91% rate
reduction that, when combined with the rate reduction of 2.09%,
yields the annual equivalent of a 5% rate reduction. The parties
acknowledge that such net gain, if any, may not be sufficient to
provide an amount of customer benefits necessary to produce the
full 2.91% equivalent rate reduction.  Should the net gain be
sufficient to provide customer benefits greater than the 2.91%
equivalent rate reduction, the Company will propose for
Commission approval the manner in which such additional benefits
will be allocated among customer classes.

     In the event the Company realizes a net book loss from the
sale of the Generating Assets, the customers' share shall be
recovered through a non-bypassable wires charge component of
regulated delivery company rates over an appropriate period of
time. The Company shall submit a proposal to recover the
customers' share. Staff and other parties shall submit comments
on the Company's proposal within 60 days after receiving such
proposal. The Commission shall consider the Company's proposal
expeditiously. The parties agree that the customers' share of any
net book losses shall be recovered in rates as soon as
practicable consistent with rate stability considerations.

     Total Rate Reductions Since 1995 ($000)

     The rate plan provides for the further rate reductions for
     all O&R customers. Since May 1995, customers have already
     been provided significant rate reductions. Total electric
     rate reductions from May 1995 through 1998 and the annual
     benefit of the Gross Receipts Tax Reform once fully phased
     in by January 1, 2000, are as follows:
     
                                                           GRT
                     1995-96     1997    1998   Total     Reform

Large Industrial   $ (4,702) $(2,707)  $     -$(7,409)$

All Other Customers$(17,241) $(3,196) $(2,919)$(23,356)

Total              $(21,943) $(5,903) $(2,919)$(30,765)$(3,315)
                       -6.4%    -1.8%    -0.9%    -9.0%   -1.0%

B.   Return on Equity Sharing

     For each of the four rate years, earnings in excess of 11.4%
on regulated New York electric operations will be shared as
follows:

     75% to be used to offset Commission-approved deferrals or
     otherwise inure to the benefit of customers;
     
     25% to be credited to Orange and Rockland's shareholders.
     
     To the extent that the Rate Settlement approved in Case 95-E-
0491 provides for an adjustment to the calculation of the annual
earnings for the earnings sharing mechanism incorporated in such
Rate Settlement to take into account the levelized rate
reduction, a similar adjustment will be permitted from the
effective date of this Plan until April 30, 1999. Additional
adjustments to the calculation of the actual return on equity set
forth in the Rate Settlement will include:

          Any earned incentive or penalty from the partial pass-
          through Fuel Cost Adjustment (while still in effect),
          off-system sales imputations, property tax refunds, or
          other incentive or penalty mechanism made effective
          during the three-year rate period pursuant to an Order
          of the Commission.
          
          Revenues associated with the equalization of the return
          on equity provided by the Power Supply Agreements as
          approved by the Federal Energy Regulatory Commission
          and the 10.4% return on equity provided for in the
          Commission's Order Approving Settlement Agreements in
          Cases 95-E-0491, 89-E-0175 and 93-M-0849 (May 3, 1996).

     Upon the implementation of full retail access, the return on
equity will be calculated based on Delivery company operations
excluding the assets, revenues and operating costs associated
with generation.

     The Company and Staff acknowledge that this Plan is intended
to finally resolve a number of accounting and rate matters
currently pending before the Commission, including calculations
of earnings for any prior period (in accordance with the
settlement approved by Commission Order Approving Settlement
Agreements in Cases 95-E-0491, 89-E-0175 and 93-M-0849 (May 3,
1996)), deferral accounting petitions and compliance filings or
studies submitted in accordance with the settlement approved by
the Commission in Case 95-E-0491. These resolved matters include:

     1.   Earnings calculations (95-E-0491, 89-E-175 and 93-M-0849);

     2.   Accounting procedures and journal entries (95-E-0491);

     3.   Low income program;

     4.   Labor panel recommendations;[11]

     5.   Property tax benefits associated with March 1996
          Special Franchise Tax Settlement;

     6.   The filing of studies associated with bus bar
          costs, transfer gas mark-up and cost allocation; and

     7.   DSM performance mechanism.

Pending the completion of Staff's analysis, the Company will be
authorized to defer a maximum of $2,985,000 of expenditures it
incurred to terminate the Company's contract for coal supply with
Pittston Coal Sales Corporation (Case 96-M-1145) provided those
expenditures can be matched to verifiable savings flowed through
to customers. This deferral and any regulatory assets approved by
the Commission during the term of this Plan may be deferred and
written off against reductions in NUG contract purchased power
costs below those reflected in rates, or any source of price
reductions set forth in Appendix D when the total of such sources
exceeds the totals shown on page 6 under "Sources of Price
Reductions" for any of the four 12-month periods shown.

     The Company will be given 60 days after the end of the
relevant time period to submit to the Director of Accounting and
Finance of the Department of Public Service any earnings
calculations required herein. These calculations will be
submitted in summary form to other requesting parties at the same
time that the detailed calculations are provided to Staff. Other
parties may request the detailed calculations subject to
appropriate confidentiality protections.  Staff will be given 60
days to review any such calculations and if the Company receives
no written objections or comments from Staff or other parties,
the Company's calculations will be deemed approved. Written
objections or comments, if not resolved within 30 days from the
date of receipt, shall be submitted to the Commission for a
determination. Staff and the Company agree that any commercially
sensitive data underlying any calculations submitted in
accordance with this Plan will be given protection against
disclosure as described in Appendix E.


____________________
[11] Subject to Staff field verification.

C.   Performance Standards

          The Company agrees to continue to operate under the
          performance standards incorporated in the Commission-
          approved settlement in Case 95-E-0491. These
          performance standards are set forth in detail in
          Appendix F and include customer service standards and
          reliability standards.
          
          The Company agrees to a maximum downward adjustment to
          the return on equity sharing threshold of 25 basis
          points for failure to meet the performance standards
          each year (five basis points per performance standard).

D.   Rate Design

          Consistent with the Commission's order in Case 97-E-
          1795, the Company will submit a plan to phase out
          mandatory Time-of-Use Residential Rates for customers
          presently taking such service. No new residential
          customers will be added as mandatory Time-of-Use
          Customers. The Company will, however, continue to offer
          Time-of-Use rates to Residential customers on an
          optional basis. The Company shall be permitted to defer
          any revenue shortfalls that may result from changing
          the mandatory nature of this rate.
          
          The Company will offer the Peak Activated Rate ("PAR")
          for the SC-9 and Large Industrial Customers on an
          optional basis.
          
          The Company will eliminate the mandatory nature of the
          PAR by applying the rate decrease proposed for this
          customer class in this Plan. Should that decrease not
          cover the full elimination of the PAR, the Company
          shall make such related rate design changes as are
          required to ensure revenue neutrality.
          
          In response to requests from Staff and other signatory
          parties, the Company did not implement the PAR
          provisions of the existing SC-9 tariffs in 1997.
          Because the rate reductions and associated new rate
          design provisions of this Plan were not made effective
          until after the end of the PAR period, September 30,
          1997, the Company deferred the resulting revenue
          requirement shortfall for the period June 1, 1997,
          through September 30, 1997. The parties agree that this
          treatment is appropriate.

E.   Accounting Provisions

     Orange and Rockland will defer all prudent and verifiable
incremental costs associated with divesting its Generating
Assets, such as developing an auction plan, obtaining approval of
the plan, conducting the auction, transferring title to the
Generating Assets,  and any related environmental, transaction,
financial and litigation costs. In addition, the parties
recognize that all reasonable employee-related transition costs,
including retraining, outplacement, severance, early retirement
and employee retention programs should be recovered from
customers. The Company will defer up to $7.5 million (New York
electric share) of prudent and verifiable non-officer employee
costs, such as retraining, outplacement, severance, early
retirement and employee retention programs associated with the
divestiture plan. Orange and Rockland shall be able to petition
the Commission for recovery of employee costs in excess of $7.5
million.[12]

     Orange and Rockland will defer the $2,649,900 revenue
shortfall associated with eliminating the mandatory PAR.  The
regulatory asset associated with the deferred PAR revenue
requirement will be written off by the application of Orange and
Rockland's share of PowerPick(TM) savings in accordance with the
Retail Access Pilot Program approved by the Commission in Case 95-
E-0491 and other customer credits that become available during
the term of the Plan.  Any remaining regulatory asset not
otherwise offset will be addressed in Orange and Rockland's next
base rate case or other suitable proceeding.

     Orange and Rockland will be permitted to establish a major
storm damage reserve[13] of up to $3.0 million by transferring to
a storm damage account overcollections from other cost elements
which are subject to reconciliation.  The Company will be
permitted to charge storm damage costs incurred after the date of
the Commission's approval of the Plan in excess of any costs
included in rates (i.e., $200,000) to the storm damage reserve
and will notify Staff accordingly.  Storm costs charged to the
reserve shall be subject to Staff verification and review.




____________________
[12] The costs of such programs for employees transferred to
     unregulated affiliates shall not be paid for by customers.

[13] A "A major storm" is defined as a period of adverse weather
     during which service interruptions affect at least 10% of
     the Company's customers within an operating area and/or
     results in customers being without electric service for
     durations of at least 24 hours.

     Orange and Rockland will defer its New York share of
incremental costs associated with establishing an ISO, PE and
Reliability Council and, if not otherwise offset, these incremental
costs will be addressed in the Company's next base rate case or
other suitable proceeding.

     Orange and Rockland will be permitted to defer environmental
costs caused by the operation of the Generating Assets up to the
date of transfer of title[14].  This provision is designed to
protect the Company by providing for the recovery of reasonable
and prudent expenditures incurred in connection with the
investigation and/or remediation of environmental conditions
associated with the ownership and operation of the Generating
Assets.

     Consistent with the terms of the approved settlement in Case
95-E-0491, the Company will retain 10% of any property tax
refunds.  The customers' 90% share of any property tax refunds
shall be deferred and used to offset other regulatory assets or
otherwise be returned to customers.  This provision will remain
in effect through the term of this Plan.

     Consistent with the objectives set forth elsewhere in this
Plan, the Company will have the discretion to offset deferred
regulatory assets against deferred regulatory liabilities
established in accordance with this Plan or pursuant to prior
Commission approval. The Company will submit to Staff and other
interested parties for its review an annual report showing the
offsets recorded within 60 days after the end of each rate year
covered by this Plan.


                 II. Transition to Retail Access


A.   Sequence of Events

     The parties anticipate the following sequence of events:

          Expansion of PowerPick(TM) Program (energy only) to all
          Large Industrial Customers at the time of the
          effectiveness of new rates and to all other customers
          on May 1, 1998.[15]



____________________
[14] These costs shall not include the cost of any NOx allowances
     purchased under applicable environmental laws and
     regulations.

[15] Customers in the PowerPick(TM) Program as of December 31, 1997,
     will remain eligible to participate through April 30, 1998.

          The ISO becomes fully operational.

          Full retail access (energy and capacity) to all
          customers on May 1, 1999.

     Unbundled tariffs, as described in detail below, should
become effective at least several months prior to the
effectiveness of full retail access in order to allow customers a
reasonable time to understand and react properly to the pricing
signals that will be in effect when full retail access is
implemented.

B.   Reciprocity

     Staff and O&R agree that implementation of full retail
access in O&R's service territory before O&R is able to gain
comparable access to other New York electric utilities' service
territories could result in a substantial financial disadvantage
for O&R. Prior to the implementation of full retail access in
O&R's service territory, the Commission is expected to determine
the appropriate standards for reciprocity with respect to other
New York utilities or their affiliates operating in O&R's service
territory. Until the time of such Commission determination, the
Company will not be required unconditionally to accommodate a
full retail transaction between an O&R customer and a New York
utility or affiliated company that does not offer comparable
access to O&R. This provision is not applicable to the New York
Power Authority ("NYPA").

C.   Expansion of PowerPick(TM) Program

     The existing PowerPick(TM) program (energy only) will be
expanded to all customers on May 1, 1998. O&R affiliates (other
than the Delivery company) will not be precluded from
participating in the expanded PowerPick(TM) program. If it should
appear that the energy-only ISO would not be in place by April
1998, and, in the Company's view, the failure to implement the
energy-only ISO would present technical or financial obstacles to
the expansion of the PowerPick(TM) program, the Company may petition
the Commission and show cause why relief from this commitment, in
whole or in part, is required. Staff will join the Company in
requesting the Commission to address the petition expeditiously.

     In order to enhance the participation of smaller customers
(non-Large Industrial) in the retail access programs provided in
this Plan, a competitive enhancement fund of $250,000 will be
created for the first 12 months after the May 1, 1998 expansion
of the PowerPick(TM) program. Funding shall be the equal
responsibility of both customers and shareholders (50/50
sharing). The $250,000 fund is designed to produce a temporary
stimulus to encourage the participation of small customers in the
retail access program. Staff will initiate a process to determine
the necessary details by December 31, 1997.

D.   Full Retail Access

     Effective May 1, 1999, full retail access (capacity and
energy) will be available to all customers. In the event the ISO
is not fully operational on an energy and capacity basis by
December 1998, and, in the Company's view, the failure to
implement the ISO would present technical obstacles to the
implementation of full retail access, the Company may petition
the Commission and show cause why relief from this commitment, in
whole or in part, is required. Staff will join the Company in
requesting that the Commission address the petition
expeditiously.

E.   Unbundled Tariffs

     O&R agrees to file with the Commission within one month of
Commission approval of this Plan proposed unbundled draft
electric tariffs based on an updated embedded cost of service
study, or other appropriate studies, using calendar 1996 data,
subject to necessary confidentiality protections. The proposed
tariffs will disaggregate the Commission-approved bundled rate
for each rate class into its functionalized components in a
revenue neutral manner among classes. It is the parties intention
that the unbundled tariffs will be designed to produce the same
total revenue requirement underlying the rate levels reflected in
Section I.A. of this Plan. It is anticipated that the Company's
filing will separate the cost of:

     - Power Supply (energy and capacity)
     - Power Delivery
     - Metering
     - Billing
     - Governmental Tax Surcharges
     - Systems Benefits (mandated public policy programs)
     - Competitive Transition Charge
     - Non-Bypassable Wires Charge

     Should the cost of service study show that one of the above
cost components should be subdivided into more than one component
or that other cost components should be separately identified,
O&R will be permitted to propose them in its unbundling
submittal.  The transitional rate design proposed by IPPNY,
including rate and bill impact concerns, particularly for low-use
or low-income customers, will be addressed by the parties in the
proceeding following the Company's filing. The parties agree that
the entire record already developed on the transitional rate
design proposed by IPPNY will be incorporated into the record
developed in the phase of this proceeding involving unbundled
rates.


     The Power Supply component will be used to bill customers
for energy and capacity costs, regardless of the provider, unless
other approved billing procedures are chosen by the customer.
Until the wholesale energy market becomes effective and/or full
retail access is implemented, energy costs will continue to be
charged through the existing FAC and the fixed costs of O&R's
generation and purchased power will continue to be recovered
through the base rates approved as part of this Plan. When
wholesale competition is implemented, the FAC will reflect energy
purchases at market prices made by the regulated delivery
function on behalf of its customers. The embedded capacity cost
of O&R's generation plant not yet transferred in accordance with
the auction procedure provided for herein will continue to be
charged at tariff rates until the implementation of full retail
access. Any margin (wholesale revenues from sales of energy in
excess of fuel costs) realized by the O&R generation function
will be used as a mitigation measure to offset NUG purchased
power costs during the interval between the implementation of
wholesale competition and full retail access. In the event NUG
purchased power costs incurred during that interval are fully
offset, additional margins will be shared between the customers
and the Company on an 80/20 basis. The parties acknowledge that
the current FAC will need to be re-examined and may require
modification in accordance with changes occurring in electricity
markets and rates.

     The Power Delivery charge(s) will recover the costs
associated with transmission and distribution, and customer
services (e.g., metering and billing). All regulatory assets will
also be recovered in the Power Delivery charge(s).

     The Governmental Tax Surcharge component will identify
separately all gross receipts and franchise taxes and
governmental surcharges to the extent consistent with the Tax
Law.

     The CTC, as described in Section III.C. herein, will also be
separately identified as necessary and appropriate in the
Company's unbundling filing.

     The customers' share of any net gain or loss from the sale
of Generating Assets as determined in accordance with Sections
I.A. and III.D. of this Plan shall be recovered or refunded
through a non-bypassable wires charge included in the regulated
rates of the Delivery company. In addition, any stranded costs
approved by the Commission resulting from the introduction of
competitive metering and/or billing services in accordance with
Sections IV.D. and E. of this Plan shall also be recovered
through the non-bypassable wires charge.

     It is contemplated that O&R's Generation Assets will
continue to operate until title is transferred in accordance with
the divestiture process set forth herein. The CTC, which will
commence on May 1, 1999, if title has not been transferred by
that time, will allow O&R to recover in customers' rates a
portion of above-market generation costs as more fully described
in Section III.C. herein. The CTC component of rates will be
filed with Staff 90 days before its proposed effective date. Such
filing shall be subject to review by Staff and approval by the
Commission before implementation. In addition, the Company will
provide to other requesting parties. Orange and Rockland can
remove information it designates as confidential from copies of
the filing provided to parties other than Staff and seek trade
secret status for such designated confidential information in
accordance with the Commission's rules of procedure. Any written
objections to or comments on the CTC recalculation, if not
resolved within 30 days from the date of receipt, shall be
submitted to the Commission for a determination on an expedited
basis.

     With respect to transmission required to provide wheeling
service to retail customers under the Plan, the Company will use
its Open Access Transmission Tariff ("OATT") currently on file
with the FERC, until such time as there is a pool-wide tariff
available from the Independent System Operator. The Company will
file, for the Commission's review and approval, a revised OATT
which will contain those changes to the OATT that are necessary
to implement retail wheeling. In the filing the Company will
propose and justify requested changes to non-rate terms and
conditions, and also indicate how rates should be designed for
retail customers using the OATT. Following Commission approval,
the Company will file the amended OATT and Commission order
approving the tariff with the FERC with a request that the FERC
defer to the state-approved tariff.

F.   System Benefits Charge

     Opinion No. 96-12 provides that "[c]osts required to be
spent on necessary environmental and other public policy programs
that would not otherwise be recovered in a competitive market
will generally be recovered by a non-bypassable system benefits
charge."  The System Benefits Charge ("SBC") will be used to
collect the costs of mandated public policy programs. This non-
bypassable charge will be imposed on all Delivery company
customers. The expenditures reflected in the SBC are for research
and development ("R&D"), energy efficiency, environmental
protection, and low income programs that are required or approved
by the Commission to be funded by the SBC. One way of disbursing
such expenditures would be by means of a standard performance
contract with stipulated pricing approved by the Commission. In
this Plan, expenditure levels of one mill per kWh on average for
the first three years of this Plan for SBC programs will
initially be covered in base rates and subsequently broken out in
accordance with the unbundled rates approved by the Commission,
but they will be non-bypassable in any event. The price levels
established in this Plan include specific annual rate allowances
for the costs of mandated public policy programs. Increases in
these annual rate allowances are not provided for in the targeted
price levels for the Large Industrial Customers, nor in the rate
reductions proposed for all other customers. The parties agree
that any increases in these spending levels resulting from
changes required by law (including by order of the Commission)
will be fully recoverable.

     The parties agree that the Commission may appoint a third-
party administrator to administer the SBC funded programs.  All
SBC funds will be allocated by the statewide administrator,
although the establishment of such a statewide administrator
shall not preempt program funding for commitments made prior to
the date of this Plan. The statewide administrator may continue
implementation of certain Company programs.

     Over or under collections of SBC funds will be accumulated
for future SBC program use. Commission-approved low income energy
efficiency assistance program services for persons not included
in the Port Jervis low income assistance program will be provided
as a portion of the energy efficiency SBC budget. Appropriate
funding levels for the SBC in Year 4 will be revisited by the
Commission via a formal proceeding or other public process at the
discretion of the Commission.

G.   Low Income Program

     The Company agrees to implement the Low Income Customer
Assistance Program developed pursuant to the Commission-approved
Settlement in May 1996. The specific provisions of this Program
are set forth in detail in Appendix G hereto. The cost of this
Program will not be included in the SBC.

     The Program will commence as soon as practicable after the
effectiveness of new rates and terminate four years after the
effectiveness of new rates. The Program will be conducted solely
for the residents of the City of Port Jervis, New York and
residents of the zip code area 12771.  The goal of the Program is
to serve approximately 400 customers in total, and approximately
100 customers in each rate year. Expenditures per customer will
be capped at $1,000.  This expenditure includes the cost of an
energy audit, disaggregated billing analysis, energy efficiency
measures, and arrears forgiveness. Funding for this program
including $35,000 of administrative costs per year shall come
from unexpended DSM funds accumulated prior to the commencement
of the SBC funding mechanism. Should unexpended DSM funds not be
sufficient to cover this Program the remaining costs shall be
deferred. Any additional unexpended DSM funds shall be deferred
for future disposition in accordance with the Accounting Plan
submitted in accordance with Section E above.

     The Company will allocate up to $200,000 of DSM
overcollections accumulated prior to the commencement of the SBC
funding mechanism for the purpose of developing a pilot program
that would aggregate low income customers. Such a pilot program
could help advance the state of knowledge and experience with
such programs if it included 1) several towns within the service
territory (and one or more towns in the Eastern Division which
can experience load pocket conditions) and 2) a representative
mix of multi- and single-family homes. Staff will develop a
proposal to implement the program and will circulate it to the
active parties by March 31, 1998. The parties agree to meet
thereafter to begin the development of this pilot. As directed by
the Commission in its Order Concerning Retail Access Proposals,
issued February 25, 1997, in Case 94-E-0385, the parties shall
consider the petition of the New York State Division of Housing
and Community Renewal, et al., in Case 97-E-0073.
                                
                                
                     III.  Strandable Costs

A.   Regulatory Assets

     Generation-related regulatory assets[16] established in
accordance with Commission orders, policies or practices will be
fully recoverable in regulated Delivery company rates. At the
time rates are unbundled, an appropriate allowance for these
regulatory assets will be identified in the rates for the
Delivery company.

B.   NUG Contract Purchased Power Costs

     Until rates are unbundled, these costs will continue to be
recovered through the FAC. When rates are unbundled, the recovery
of these costs will be identified in the regulated rates for the
Delivery company. The costs of these contracts escalate during
their initial years and decline in later years. Therefore, these
costs are to be recovered by means of a fixed annual rate until
full recovery. An estimate of recoverable NUG purchased power
costs will be made at the time of unbundling and converted to a




____________________
[16] Excluding FAS 109 effects related to divestiture.

fixed charge to be included in Delivery rates. Recoverable NUG
purchased power costs will consist of actual NUG contract
payments less an estimate of the revenues received from the
resale of the NUG purchased power. A full reconciliation of
recoverable NUG purchased power costs shall be permitted.

C.   Divestiture

     Upon the Commission's approval of the Plan, the Company will
immediately commence a process to auction all of its electric
generating assets (i.e., Lovett, Bowline, hydro-electric
facilities and gas turbines) (collectively referred to as the
"Generating Assets").  Neither the Company nor any of its
affiliates will bid in such auction.[17]

     The divestiture of the Generating Assets to third parties
will be carried out through a process that will result in a fair
and reasonable treatment of all parties, including the Company,
its employees, investors and customers.  The Company will submit
its divestiture plan to Staff and the other parties in this
proceeding within three months of the Commission approving the
Plan.  Staff and the other parties shall submit their comments to
the Company within 30 days of their receipt of the divestiture
plan. This divestiture plan will identify how the Generating
Assets will be packaged for sale; what restrictions, if any, will
be placed on the capacity that any one bidder may purchase; the
procedures to be followed in the sale of the Generating Assets,
including minimum bids; and key dates and milestones to achieve
the scheduled divestiture.  The divestiture plan will also
address the resolution of market power issues in any load pocket
areas. At the time the Company submits its divestiture plan, it
will submit supporting documentation subject to appropriate
protection being provided for confidential information in
accordance with Appendix E. The Company further agrees to provide
a copy of the collective bargaining agreement to any party that
indicates an interest in bidding in any auction of the Generating
Assets.

____________________
[17] The Company and Con Edison are tenants in common in the
     Bowline Generating Station. The Company will attempt to
     coordinate the divestiture of its interest in Bowline with
     Con Edison. The agreement between the Company and Con Edison
     for the operation and maintenance of Bowline provides that
     if either tenant wishes to convey its ownership interest in
     Bowline to a third party, the other tenant shall have a six-
     month right of first refusal to purchase such interest in
     Bowline under the terms and conditions offered by the third
     party. For purposes of this Plan, the Company shall be
     deemed to have selected the winning bidder for its interest
     in Bowline on the date the Company selects the winning
     bidder's offer for the its interest in Bowline, regardless
     of whether Con Edison exercises its right of first refusal.

     The parties recognize that the Company and Local No. 503 of
the International Brotherhood of Electrical Workers are subject
to a collective bargaining agreement effective through midnight
May 31, 2000, which includes the following provisions:

          This Agreement is made by and between Orange and
     Rockland Utilities, Inc., (hereinafter called the
     "Company") and Local Union No. 503 of the International
     Brotherhood of Electrical Workers (hereinafter called
     the "Union").

          This Agreement is made for the purpose of
     establishing stabilized conditions of employment,
     including rates of pay, and working conditions,
     facilitating the peaceful adjustment of differences
     that may arise between the parties hereto from time to
     time, and of promoting harmony and efficiency, to the
     end that the Company and the Union may be better able
     to fulfill their obligation to furnish uninterrupted
     and adequate electric and gas service to the public.

          Identity of contracting parties:  The parties to this
     Contract agree that it shall have force and effect as
     between them as herein named and described, and that this
     Contract, for any part of its term, shall be binding on the
     parties, their lawful successors and assigns. An absolute
     precondition to the sale, lease, transfer or takeover by
     sale, transfer, lease, assignment, corporate reorganization,
     receivership, bankruptcy proceeding of the entire operation
     or any part thereof is that any purchaser, transferee,
     lessee, assignee, etc., shall agree and become party to and
     bound by all the terms, conditions and obligations of this
     agreement.

          If the above-named Local Union is merged into or
     consolidated with any other Local Unions of the
     Brotherhood, this Contract shall continue in force as
     between the Company and the successor Local Unions
     resulting from such merger or consolidation, when such
     merger or consolidation is sanctioned in accordance
     with the constitution of the International Brotherhood
     of Electrical Workers, AFL-CIO.

          Agreement made by and between the Orange and
     Rockland Utilities, Inc., a corporation organized and
     existing under and pursuant to the Transportation
     Corporations Law of the State of New York, its
     successors or assigns, hereinafter referred to as the
     "Company" and Local 503 of the International
     Brotherhood of Electrical Workers hereinafter referred
     to as the "Union" the "Company" shall provide notice of     
     the existence of the terms of this Collective
     Bargaining Agreement to any purchaser, transferee,
     assignee or lessee. Such notice shall be in writing
     with a copy to the Union.

Nothing in this Plan in intended to add to, subtract from or
otherwise modify any rights, duties or obligations set forth in
said collective bargaining agreement.

     Within six months of the Commission approving the Plan, the
Company will submit a revised expanded divestiture plan.  Staff
and interested parties will be given an opportunity to file
comments on the revised divestiture plan within thirty days of
its submission.  The Commission will review and act expeditiously
on this plan and any comments submitted. Once the divestiture
plan is approved, Orange and Rockland will use its best efforts
to expeditiously complete the auction process and select the
winning bidder(s) of the Generating Assets.

     Following implementation of the ISO, Orange and Rockland
agrees that its bids for energy from its fossil fuel resources
shall not fall below the incremental cost of fuel plus variable O
& M costs.[18]

     It is the objective of the parties that the Company should
implement full divestiture, by an auction, of Orange and
Rockland's Generating Assets.  If title to the Generating Assets
is transferred prior to the implementation of retail access on
May 1, 1999, no CTC will be required (other than to recover any
net book losses associated with divestiture of the Generating
Assets).  In the event there is  a delay in the transfer of title
beyond May 1, 1999, Orange and Rockland will recover above-market
generation costs by means of an incentive based CTC commencing
May 1, 1999.  The CTC will be established by identifying the non-
variable electric production costs using an embedded cost of
service study using 1996 as a guide.  The unbundling process will
establish the precise amount of non-variable production costs to
be used in the calculation of the CTC.

     Should a CTC be required, Orange and Rockland will be
authorized to recover the difference between Orange and
Rockland's non-variable cost of generation as identified in the
unbundling proceeding and the revenues, net of fuel and variable
O&M expenses, derived from the operation of Orange and Rockland's
generation plants in a deregulated competitive market with the
exception of 25% of fixed production labor expenses and property
taxes on generation properties that cannot be recovered from


____________________
[18] Variable O&M costs are estimated at one mill per kWh of
     generation.

customers, but should instead be recovered through the
competitive market.  The CTC will remain in effect until the
earlier of the date title to the Generating Assets is transferred
or April 30, 2000.

     The Company will consider alternative, economically
comparable means of allowing an individual customer to pay for
its allocable share of above-market embedded fixed costs of
generation that customers would otherwise pay through the CTC
and/or a non-bypassable wires charge.

     If title to the Generating Assets has not transferred as of
May 1, 2000, the CTC will be modified to increase to 35% the
level of fixed production labor expense and property taxes that
cannot be recovered from customers, but should instead be
recovered through the competitive market.  The modified CTC will
remain effective until the earlier of the date title to the
Generating Assets is transferred or October 31, 2000.  In the
event title to the generation assets will not transfer by October
31, 2000, the Company may petition the Commission for permission
to continue a CTC until the date title to the Generating Assets
is transferred.

     The parties acknowledge that the CTC does not allow for the
recovery of inflationary increases in non-fuel O&M production
costs, property tax increases, wage rate increases, and increased
costs associated with capital additions or changes in the cost of
capital applicable to production costs.

     An illustration of the CTC mechanism is shown on the
following page.


                  Illustration of CTC Mechanism

                                      Market   Revenues  Realized
                                      Below     Above     Above
                                      @ Risk    @ Risk    @ Risk
Competitive Market Revenues           Amount    Amount    Amount

Annual Competitive GENCO Revenues     $ 25       $100     $500
  Less: Variable O&M & Fuel            (12)       (50)    (250)

  Revenue Available for Fixed Costs    $13        $50     $250

Regulatory Revenue Requirement
for Fixed Generation Costs:

  "Going Forward Costs":
      Fixed Production Labor           $50        $50      $50
      Property Taxes                    50         50       50
      Other Production Costs            10         10       10

      Total "Going Forward Costs"      110        110      110

  Capital Costs:
      Depreciation                      25         25       25
      Interest                          25         25       25
      Return & FIT                      30         30       30

      Total Capital Costs               80         80       80

  Total Regulated Revenue Requirement $190       $190     $190

CTC Mechanism

  Competitive GENCO Revenues - Net    $ 13       $ 50     $250
  Less: 25% of Fixed Production
      Labor and Property Taxes         (25)       (25)     (25)

  Available for CTC Eligible Costs       0         25      225
  Less: Eligible "Going Forward
      Costs"                           (85)       (85)     (85)
  Less: Capital Costs                  (80)       (80)     (80)

  CTC Charge to Customers(A)          $165       $140     ($60)

O&R Cost Recovery

  Competitive GENCO Revenues - NET    $ 13       $ 50     $250
  CTC Charge to Customers              165        140      (60)

  Total Recovered                     $178       $190     $190

  Revenue Impact on Company           $(12)      $  0     $  0

(A)  CTC established to recover generation costs except 25% of
     Fixed Production Labor and Property Taxes, as defined above,
     which must be recovered through competitive market. If
     market revenues exceed total generation costs, the excess
     will be credited to customers.
     
                          Illustration
                                
            Gain (Loss) on Sale of Generation Assets
                             ($000s)

                                         Gain            Loss
                                       On Sale         On Sale
                                          (New York Share)

Sale Price (Winning Bid)              $185,000        $140,000

Cost of Sale:
  Net Book Value of Assets Sold(A)     150,000         150,000
  Divestiture Plan Costs
    (Legal, Financial, etc.)(B)          7,500           7,500
  Employee Costs(B)                      7,500           7,500
  NYS Revenue Taxes                        995               -
      Total Cost of Sale               165,995         165,000

Gain (Loss) Before Taxes                19,006         (25,000)

Reversal of FAS 109 Regulatory Asset     3,500           3,500

Federal Income Tax Expenses:
  Current FIT expense                   24,152           8,750
  Reversal of FAS 109 Deferred FIT      (3,500)         (3,500)
  Reversal of Funded Deferred FIT      (14,000)        (14,000)
      Total Federal Tax Expense          6,652          (8,750)

Net Gain (Loss) Eligible for Sharing  $  8,854       $ (19,750)

CTC Mechanism

  Refund 75% of Net Gain(C)           $ (6,640)

  Recover 95% of Net Loss(C)                          $ 18,763


(A)  Includes generation plant in service, net of accumulated
     provision for depreciation and related CWIP, fuel
     inventories, spare parts inventory, prepaid property taxes
     and insurance, etc.

(B)  In accordance with the terms of the Plan, Section III, Para.
     D.

(C)  Net gain or loss to be refunded or surcharged to customers
     with interest calculated on unamortized balance at the
     Commission-approved after-tax overall rate of return over
     appropriate period of time as determined by the Commission.

D.   Allocation of Net Book Gains and Losses
     from the Disposition of Generating Assets

     The parties agree that the combined net book gains/losses
from the divestiture of the Generating Assets shall be determined
as follows:

    Net Book Gain or Loss = Bid - Cost of Sale - Tax Effects[19]
    Where:
                     Bid  =    The Winning Bid
           Cost of Sale   =    Net Book Value of the Generating Assets
                          +    Costs of Developing and Implementing
                               the Divestiture Plan(including all incremental
                               financial,[20] environmental, transaction
                               and litigation costs)
                          +    Employee Costs[21]
           Tax Effects    =    Revenue Taxes
                          +    State, Federal and Local Taxes

     These costs shall be prudent and verifiable.  The net book
gains/losses shall be allocated as follows:

     (a)  If the Company selects a winning bidder prior to May 1,
     1999, the New York share of any net book gains shall be
     allocated between shareholders and customers on a 25/75
     basis and any net book losses shall be allocated
     between shareholders and customers on a 5/95 basis.

     (b)  If Orange and Rockland selects a winning bidder on or
     after May 1, 1999, the New York share of any net book
     gains or losses shall be allocated between shareholders
     and customers on a 20/80 basis.

     There shall be a $20 million cap on the New York share of
net book gains to shareholders from the divestiture of the
Generating Assets.
____________________
[19] All tax effects related to the divesture of the Generating
     Assets consistent with avoiding any violation of the IRS
     rules and regulations governing tax normalization and
     Investment Tax Credits.

[20] Including any prepayment penalties incurred as a result of
     the redemption of the Company's financial obligations.

[21] As defined under "Accounting Provisions."

E.   Other Strandable Costs

     Orange and Rockland's Delivery service rates will be set so
that the Company is provided a reasonable opportunity to recover
from all customers other prudent and verifiable stranded costs
associated with depreciable assets used in connection with the
metering and billing functions.

F.   Proceeds of Divestiture

     The parties agree that the provisions of Public Service Law
Section 70 and 107 shall not apply to any proceeds from the
divestiture of the Generating Assets.

     For ten years from the date of the Commission order
approving the Plan, Orange and Rockland agrees that neither it
nor any of its affiliates shall purchase or otherwise acquire an
ownership interest in the Generating Assets or in generating
assets owned by Con Edison, New York State Electric and Gas
Corporation or Central Hudson Gas & Electric Corporation or any
other utility in a service territory contiguous to the Orange and
Rockland system. At the determination of the Commission, when
considering an application for a merger or acquisition, this
provision may or may not apply to any third party which merges
with or acquires Orange and Rockland or a Company affiliate after
the approval date of the Commission order approving the Plan. In
the event that Orange and Rockland or any affiliated company
acquires another company, the newly created company is prohibited
from purchasing or acquiring an ownership interest in the
Generating Assets until after the expiration of ten years from
the date of the Commission order approving the Plan.

     It is the intention of the parties that any winning bidder
shall be free to own and/or operate the Generating Assets as an
exempt wholesale generator pursuant to Section 32 of the Public
Utility Holding Company Act of 1935 without first securing any
additional approval from the Commission.


                    IV.  Corporate Structure
                                
                                
A.   Holding Company

     Orange and Rockland agrees to apply to the appropriate
regulatory authorities for permission to form a registered
holding company. The formation of a registered holding company is
intended to further the public interest by avoiding barriers to
full and fair competition. Implementation of this holding company
structure is conditioned upon shareholder and regulatory (i.e.,
Federal Energy Regulatory Commission ("FERC"), Securities and
Exchange Commission ("SEC"), the Commission, the New Jersey Board
of Public Utilities ("NJBPU") and the Pennsylvania Public Utility
Commission ("PAPUC") approvals. Orange and Rockland agrees to
move expeditiously to secure such approvals and will use its best
efforts to form a registered holding company prior to the
introduction of full retail competition. The parties acknowledge,
however, that shareholder approval can be obtained no earlier
than the Company's April 1998 annual meeting. Staff will join the
Company in requesting that the Commission act expeditiously on
the petition required to implement this structural separation.

     At the time that a registered holding company is formed, it
will become the successor to Orange and Rockland as signatory
hereto. Standards of Competitive Conduct and rules governing
affiliate relations are set forth in Appendices H and I,
respectively.

B.   Section 107 Preauthorization

     Orange and Rockland will be allowed to invest up to $15
million of retained earnings derived from revenues received from
the rendition of public service within New York State without the
need to make separate application under Section 107 of the Public
Service Law for each investment. Orange and Rockland will limit
its investments to energy services and marketing,
telecommunication services, environmental services and related
developmental projects. Staff will be given access to the books
and records of each unregulated subsidiary which receives such
investments in order to review any and all transactions between
Orange and Rockland and such unregulated subsidiaries. This
investment authority would be subject to immediate and automatic
suspension by the Commission should the Standard and Poor's bond
rating of Orange and Rockland (or the successor entity subject to
a bond rating) fall to BBB- or below. In addition, Orange and
Rockland would commit to entering into written contracts for all
exchanges of goods and services between the Company and any
unregulated subsidiary established pursuant to this pre-
authorization which receives such investments and to file all
such contracts with the Commission at least 30 days prior to
their effective dates. The Company agrees that any purchase of
electric supply (i.e., the commodity) from an unregulated
affiliate shall be pursuant to competitive bidding.

C.   Delivery Company and Affiliated ESCOs

     At the time the Transmission and Distribution ("T&D")
segment of O&R's electric system in New York is separated from
Orange and Rockland's generation operations, the Delivery company
will be authorized to continue to provide basic energy services,
including energy, capacity, ancillary services, metering and
billing within the service territory. In accordance with
Paragraphs A and B herein, subject to certain conditions, O&R    
will be authorized to create an affiliated unregulated Energy
Services Company ("ESCO"). O&R's affiliated ESCO will be
authorized to provide energy services and products at market
prices. O&R's affiliated ESCO shall operate in accordance with
Standards of Competitive Conduct designed to prevent it from
gaining an unfair competitive advantage as a result of its
affiliation with the Delivery company. O&R's affiliated ESCO will
be subject to the same regulatory requirements applicable to any
other comparably situated ESCO. The Standards of Competitive
Conduct that will govern the relationship between the Delivery
company and its affiliated ESCO are set forth in Appendix H.

     Affiliated ESCOs may be subjected to an annual examination
by the Staff, if necessary, to determine whether the manner in
which they conduct business impedes competition in the energy-
related service or product markets within O&R's service territory
in which they operate. The Company agrees that the Commission has
authority to initiate an investigation and set a schedule to
consider allegations of the Company's failure to meet the
Standards of Competitive Conduct. The purpose of these conditions
is to ensure the Commission can act promptly to eliminate
unwarranted barriers to competition or require correction of anti-
competitive behavior, consistent with its obligations and
responsibilities under the Public Service Law. Remedial action
for violations of the Standards of Competitive Conduct is covered
in Appendix H, subp. (viii).

     Upon separation of the Delivery company from generation
pending divestiture, there will be no bilateral agreements
between Delivery company and the generation department (except if
necessary to address load pockets or other reliability issues,
including ancillary transmission services). As part of its
responsibility to continue to minimize energy costs, the Delivery
company may petition the Commission for a waiver of the above
restriction on bilateral agreements. Any such bilateral agreement
shall be in writing and filed with the Commission for a review of
its consistency with the transition to competition.

     The Parties acknowledge that the Commission has determined
that Provider of Last Resort ("POLR") responsibility should
continue to exist to meet the needs of end-use customers
including those who require service but have not chosen an ESCO
or who require temporary service, and end-use customers who are
unable to obtain service from an ESCO. The Commission has also
concluded that, for the time being, this responsibility should be
performed by the regulated utility company, although the
Commission did not rule out alternatives to the regulated utility
performing this function and specifically invited such
alternative proposals. The parties agree that the transfer of the
regulated utility's responsibility to serve as POLR to ESCOs
through a competitive bid process is a desirable goal to explore.
Accordingly, the parties agree that by May 1, 1999, they will
submit their recommendations on this issue to the Commission for
its consideration. Staff will initiate the process of this
examination by May 1, 1998.

     Unless and until relieved of its obligation, the Delivery
company shall be the POLR for all customers choosing to continue
to purchase "packaged" energy services from the Delivery company
or failing to choose an energy provider and those customers
deciding to purchase from providers other than the Delivery
company, but who later return as customers purchasing power from
the Delivery company.

     To the extent that a disproportionate amount of higher risk,
lower usage customers will continue to be supplied with power by
the Delivery company, rates shall reflect an appropriate
allowance for the billing and collection costs associated with
such customers.

D.   Metering Services

     Following issuance of the Staff report required by
Commission Opinion No. 97-13 (August 1, 1997), on or before
March 31, 1999, O&R will submit a plan designed to make metering
competitive by December 31, 1999. In the event that there remain
significant implementation obstacles (such as open architecture,
customer protections or necessary changes to Parts 92 and 93 of
the Commission's regulations) which cannot be timely resolved,
the Company may petition the Commission to delay the
implementation schedule. Should the Commission order that
metering services become competitive earlier than the schedule
contemplated herein, the Company shall meet the schedule
prescribed by the Commission and offer such services in the
manner and to the extent prescribed by the Commission. Any
resulting stranded costs[22] approved by the Commission shall be
fully recoverable (via a non-bypassable wires charge with
recovery to commence during the term of this Plan) over an
appropriate period of time as determined by the Commission. After
the time that metering services become competitive, the Company
may continue to provide such services to remaining customers at
such rates as are determined by the Commission to be appropriate.




____________________
[22] Including the costs of implementing this program (e.g.,
     meter removal costs incurred by the Company, if any).

E.   Billing Services

     Other companies will be able to enter into the market for
providing billing services to Orange and Rockland's Delivery
company customers consistent with the manner and in accordance
with the schedule prescribed by the Commission. Any resulting
stranded costs shall be fully recoverable (via a non-bypassable
wires charge with recovery to commence during the term of this
Plan) over an appropriate period of time as determined by the
Commission.

F.   Load Pockets

     Orange and Rockland has identified two separate load pocket
areas in its service territory. A process will be established in
which Staff, the Company, and other interested parties will
address different measures,[23] analyses of which are to be
submitted in January 1998, for mitigating load pocket conditions
in O&R's service territory. Incremental costs associated with a
load pocket mitigation measure will be fully recovered in rates.
The January 1998 filing will include a proposal to provide for
such interim relief as may be necessary pending a final
Commission determination. The parties anticipate that the
divestiture plan will address the load pocket issue on an interim
basis pending a final Commission determination on the load pocket
issue.

G.   System Upgrades

     The Company will continue its annual forecasts of T&D
capital budget requirements. For each major T&D upgrade (projects
of $2 million or more), the Company shall identify the location,
reason, scope and projected capital costs, and shall monitor
circuit peaks for any affected substation and the load on any
affected transmission lines. When deciding whether to implement
major T&D upgrades, the Company shall consider a full range of
alternative measures, their cost-effectiveness and their
environmental impacts, including demand-side technologies and
practices, fuel cells, photovoltaic systems or other alternatives
that may both defer the need for implementing the upgrades and



____________________
[23] Examples of such measures are existing and new local
     distributed generation or energy efficiency/management
     measures.

minimize the environmental impacts of electricity usage. The
Company will also continue to seek to minimize costs and
environmental impacts for T&D projects that are not major
projects.

     In the Company's first major electric rate filing following
Commission approval of the Plan, unless otherwise directed by the
Commission, Staff will address the merits of performance-based
ratemaking, including the relationship among sales and
distribution revenues and energy efficiency and concerning the
appropriate measure of cost-effectiveness for alternatives to T&D
projects, and make ratemaking proposals as warranted.


                      V.  Other Provisions


A.   Force Majeure

     If the Company because of an event of Force Majeure is
rendered wholly or partly unable to perform its obligation under
the Plan to select a winning bidder for its Generating Assets by
May 1, 1999, or to transfer title to the Generating Assets by
October 31, 2000, Orange and Rockland shall be excused from the
performance affected by the Force Majeure and to the extent so
affected, the time of performance shall be extended for a period
equal to the time lost by reason of such Force Majeure. Orange
and Rockland shall not be liable for the damage caused by such
non-performance. The Company shall provide the Commission prompt
notice of the occurrence of the Force Majeure, including an
estimate of its expected duration and probable impact on the
performance of the Company's obligations hereunder, and shall
submit satisfactory evidence for Commission review of the
existence of the Force Majeure.

     For purposes of the Plan, the term "Force Majeure" shall
include, but not be limited to acts of God, fires, floods,
earthquakes, landslides, storms, lightning, strikes, labor
disputes, riots, nuclear emergencies, insurrections, acts of war
(whether declared or otherwise), changes in laws, regulation or
ordinances and unforeseeable acts or failures to act by
governmental, regulatory or judicial bodies, failure of any party
to submit a bid for the Generating Assets or any other
unforeseeable causes beyond the reasonable control of and without
the fault and negligence of Orange and Rockland. Orange and
Rockland shall use its best efforts to remedy expeditiously its
inability to perform.  Orange and Rockland shall not be required
to settle any strike, walkout, lockout or other labor dispute on
terms which in its sole judgment, are contrary to its interest.
When Orange and Rockland is able to resume performance of its
obligations under the Plan, it shall provide written notice to
that effect to Staff and the Commission.

B.   Changes in Laws or Regulations

     If any law, rule, regulation, order or other requirement (or
any repeal or amendment of an existing rule, regulation, order or
other requirement) of a state, local or federal government
body,[24] results in a change of 5% or more in the Company's net
income from regulated electric operations, O&R will defer on its
books of account the total effect of all such annual cost changes
in excess of 5% of net income, with any such deferrals to be
reflected in rates in a manner found reasonable and appropriate
by the Commission.

C.   Confidentiality and Privileged Information

     Pursuant to the provisions of this Plan, the Company is
required to and may be requested to provide information to the
Commission and other parties. In responding to these requirements
and/or requests, the Company reserves the right to assert the
legal privileges and/or the right to designate as confidential
certain information as described in Appendix E.

D.   Changes in Rates

     The Commission reserves the authority to act on the level of
Orange and Rockland's base electric rates in the event of
unforeseen circumstances that, in the Commission's opinion, have
such a substantial impact upon the return on equity contemplated
in this Plan as to render the Company's return unreasonable and
unnecessary for the provision of safe and adequate service. If a
circumstance occurs that, in the judgment of the Commission, so
threatens the Company's economic viability or ability to maintain
safe and adequate service, the Company shall be permitted to file
for a change in base electric rates at any time. In the event of
cost inflation (as measured by a generally accepted economic
index, such as the GDP Price Deflator) in excess of 4% per year,
the Company may petition the Commission for appropriate relief.

E.   Rate Design Flexibility

     During the term of this Plan, the Company will have the
right to seek to change regulated rates in a revenue-neutral
manner or to propose de minimis rate changes. All rate changes
will be filed with the Commission and subject to its approval.

     Where the Company proposes more than one rate change to take
effect at approximately the same time, it will, to the extent
practicable, combine such proposals in a single filing with the
Commission.

____________________
[24] Excluding Gross Receipts and Franchise Taxes.

     Any changes in rate design will fairly reflect underlying
costs of service in order to avoid or minimize the likelihood of
customers using electricity uneconomically or wastefully.

F.   Regulatory Reform and Customer Operations
     Procedures

     In consideration of the Company's implementation of retail
competition as described in this Plan and in light of the
increased uncertainty of accurately forecasting avoided costs as
competition is introduced, the parties agree that, upon the
Commission's approval of this Plan, Orange and Rockland's
obligation to purchase from qualifying facilities under the
Public Utility Regulatory Policies Act of 1978 shall be limited
to "as available" purchases or contracts for a period of no
longer than two years setting forth the price schedules based on
projections of Orange and Rockland's system avoided costs.

     To facilitate the Company's operations under the rate plan,
the parties agree that the provisions of Part 11, Part 13,
Part 140, and Part 273 of 16 N.Y.C.R.R. and the requirements for
a plain language bill format adopted in Case 28080, Order
Requiring Gas and Electric Utilities To File Revised Billing
Formats (Oct. 31, 1985), should be waived to the extent that any
such provisions are inconsistent with the Company's ability to:

        - institute non-discriminatory procedures which require
          an applicant to provide reasonable proof of the
          applicant's identity as a condition of service;

        - modify its bill content and format in response to
          industry restructuring; provided, however, the
          Company's bills will contain the following:

          -    an explanation of how bills may be paid
          -    total charges due
          -    due date
          -    dates of present and previous meter readings
          -    whether the consumption levels were
               based on estimated or actual readings
          -    the amount of any penalty charges
          -    any credits from past bills
          -    any amounts owed and unpaid from previous bills
          -    the customer service classification
          -    any budget plan information, if applicable
          -    unit price of energy consumed or other
               appropriate itemization of charges (including
               sales taxes and other informative tax itemization)
          -    complete name and address of customer
          -    unique account number or customer number
               assigned to the customer
          -    meter readings
          -    period of time associated with each
               product or service
          -    name of entity rendering bill
          -    local or toll-free telephone number
               customers may call with inquiries

        - include non-tariffed items in a bill; provided,
          however, that customers' current payments are credited
          first to tariffed items and that service cannot be
          terminated for failure to pay non-tariffed items.

     Upon appropriate customer authorization, the Delivery
company shall disclose to qualifying ESCOs and other service
providers agreeing to such protective conditions as the
Commission finds appropriate, residential and non-residential
customers' current payment status information to other service
providers to the extent such information is limited to: whether
or not a deposit could be requested from the customers by the
Delivery company due to delinquency, as defined in 16 NYCRR
section 11.12(d)(2) or in 16 NYCRR section 13.1(b)(13), or for
any reason provided in 16 NYCRR section 13.7(a)(1); whether or
not a customer could be denied service by the Delivery company
due to unpaid bills on an existing or prior account; or, whether
a customer's service could be terminated by the Delivery company,
provided that:

        - such information is to be used by other service
          providers only for the purposes of determining whether
          unregulated energy services will be provided to the
          customer, whether a deposit will be requested from such
          customer, or for other purposes approved by the
          Commission; and

        - such information request is made by a service provider
          in response to a bona fide request from the customer to
          the service provider for electric service or with other
          customer consent.

     The Company supports the concept of informed customer choice
and agrees that consumers are entitled to meaningful
environmental information concerning the power provided to them.
To effectuate such disclosure, the Company agrees to work with
interested parties to develop and implement on a statewide basis
a feasible, meaningful and cost-effective approach to providing
customers with fuel-mix and emissions characteristics of the
generating resources relied upon by the load serving entity.

G.   Customer Outreach and Education

     In conjunction with the parties, Orange and Rockland will
continue to develop and implement programs and materials that
will aid its customers in understanding the changes in the
electricity market that are coming and the nature of the services
that customers can expect to receive from the Company in the
future. Such programs will include information on environmental
programs as described above. The Company's overall goals in
conducting these programs are to enable customers, particularly
small customers, to make informed choices about utility service
while understanding their rights and responsibilities as a
utility customer. For retail access and energy services choices
in the competitive energy market, the Company's efforts would be
complemented by those of the participating providers of
competitive services, who can be expected to provide prospective
retail access customers with information about the energy choices
becoming available to consumers.

     The Company will provide to Staff by June 30 of each year of
this Plan, a summary of its customer education efforts. This
submission will include, but not be limited to, an assessment of
the progress made by these efforts and the various methods used
to communicate the information, how the information was
distributed, and the most frequently asked questions by
customers. The first report is due June 30, 1998.

     As partial retail access is being offered to all customers
by May 1998 and full retail access by May 1999, it is essential
that the Company's customers are educated so that they can make
informed energy choices. To achieve this goal, an information
campaign would be undertaken by early next year. The Company
agrees to the use of up to the equivalent of $1 million of the
present value[25] of fourth year SBC funds for the purpose of
educating Residential and Commercial customers about electric
competition. Staff will develop a proposal to implement the
program to educate customers about electric competition and will
circulate it to the active parties by December 31, 1997.

H.   Interdepartmental Transfers

     For purposes of this Plan, electric prices will be reduced
by $375,000 annually to reflect an imputation of cost savings
resulting from the separation of the gas and electric purchasing
functions and the anticipated ensuing cost reduction in gas
purchased for electric generation. Cost savings in excess of




____________________
[25] Discounted at the authorized overall rate of return of
     8.79%.

$375,000 will be preserved for the benefit of customers in the
form of future price reductions or mitigation of stranded costs.
The $375,000 annual imputation will initially be in the form of a
credit to the FAC and, in the event of changes in the FAC, in an
appropriate form of equivalent dollar impact.

     As part of the Company's proposal to separate the gas and
electric departments (to allow the electric department to
purchase in an open market), the Company proposed a $.05 per Mcf
rate for all gas volumes transported to the electric department
for electric generation. Consistent with the principles set forth
in Appendix K, the Company will submit to the Commission no later
than January 1, 1998, proposed changes in the FAC and Gas
Adjustment Clause that will accomplish the pricing contemplated
herein. Staff will support such pricing and join with the Company
in seeking expeditious consideration of the Company's proposal.
This proposed charge to the electric department will be a minimum
of $1,275,000. The actual annual dollar amount paid to the gas
department will be dependent on the volume of gas transported (at
$0.05 per MCF) each year for O&R's electric generation, but in no
event will the total annual charge be less than $1.275 million.
The Company's proposal will provide for a review of the minimum
at two-year intervals unless the Company or Staff requests review
within a shorter interval.

I.   Other Accounting Provisions

     Consistent with Commission policy and precedent and subject
to Staff review for reasonableness, reconciliation and/or
deferral accounting of the following costs will continue in
effect through the term of this Plan for regulated operations,
including 1) R&D, 2) Pensions, 3) Other Post Employment Benefits
("OPEBs"), 4) Demand-Side Management ("DSM"), 5) Cable
gasification, 6) the Gas Turbine Maintenance Reserve, and 7) West
Nyack and Manufactured Gas Plant site investigation and
remediation costs.

J.   Flex Rates and Economic Development Rate

     The Flex Rate and Economic Development provisions contained
in the approved Settlement in Case 95-E-0491 will remain in
effect through the term of this Plan. Any existing NYPA EDP
business customers served pursuant to the current statutory
program, including Economic Development Power and high load
factor customers served under Rider G, would be exempted from
strandable cost recovery to the extent that portion of the
customer's usage is provided by NYPA resources and so long as
that customer continues to take service under Rider G or any
successor tariff rider.

     The Company will design and file a flexible rate tariff for
commercial and industrial customers who are currently taking
service and who are at serious risk of relocating or closing
their facility absent a discount rate. Such tariffs will be
available regardless of the supplier of electricity and such
discounts will be fashioned in a competitively neutral manner.
Additionally, a customer must be receiving a comprehensive
package of economic incentives from a State or local authority to
qualify for the discount, which, coupled with the rate discount,
will enable the business to remain in New York. The mechanism for
sharing net lost revenues caused by the discounts resulting from
such a rate will be consistent with the Flexible Rate Tariff
Provisions approved by the Commission in Case 95-E-0941. The
Company will file the tariff within 60 days after the approval of
this Plan.

K.   Securitization

     In the event of enactment of statewide securitization
legislation providing cost savings to Orange and Rockland, the
Company agrees to submit appropriate filings to provide the
benefits to Large Commercial, Small Commercial and Industrial and
Residential customers, unless otherwise prescribed by such
statute or order of the Commission. The Commission will also
consider the use of these savings for energy efficiency programs
and clean energy technologies.

L.   Gross Receipts and Franchise Taxes

     Any changes in Gross Receipts and Franchise Taxes will be
flowed through to Orange and Rockland's customers.

M.   Merger

     Should the regulated utility, within the next five years,
merge, purchase or be purchased by any regulated utility or other
company in this or any other state, such an event will be
considered to be unforeseen for the purpose of this Plan. Such
merger or purchase will not, in any manner, restrict the
Commission's authority to consider appropriate actions regarding
any savings that may result, or from taking any other action that
the Commission deems reasonable.

N.   Arrangements with Third Parties

     Prior to the implementation of full retail competition, the
Company may enter into arrangements with third parties. The
Company acknowledges that the Commission may exercise such
authority as is provided by the Public Service Law to approve or
disapprove such an agreement or consider actions regarding any
savings that may result from any such arrangements and to take
any other action that the Commission deems reasonable, including
the modification of this Plan.

O.   Comprehensive Nature of Plan

     The foregoing reflects the parties' efforts to resolve
complex revenue requirement and rate level issues in this
proceeding. The issues involved difficult questions arising from
stranded cost recovery as well as issues arising from the
corporate restructuring under review in this proceeding. In
developing the rate plan, the parties intended to develop a
comprehensive plan that accounts for both typical revenue-
requirement issues such as expected productivity improvements as
well as for claims regarding stranded cost recoverability. The
rate plan is intended as a permanent and comprehensive resolution
of the Company's revenue requirement for the four-year term of
the Plan. The plan resolves these issues on a basis that is
intended to allow the Company to remain under the Statement of
Financial Accounting Standards No. 71 requiring regulated
companies to follow cost-based ratemaking.

P.   Provisions Not Separable

     The parties have negotiated this Plan with each provision
being in consideration for, support of, and dependent upon all
others. This Plan is, therefore, presented for the Commission's
approval as an integrated whole. If the Commission does not
approve this Plan in its entirety, without modification, any
signatory hereto may withdraw its acceptance of this Plan by
serving written notice on the other parties, and shall be free to
pursue its position in this proceeding without prejudice.

Q.   Provisions Not Precedent

     The terms and provisions of this Plan apply solely to and
are binding only in the context of the purposes and results of
this Plan. None of the terms and provisions of this Plan and none
of the positions taken herein by any party may be referred to,
cited or relied upon by any other party in any fashion as
precedent in any other proceeding before this Commission or any
other regulatory agency or before any court of law except in
furtherance of the purposes of this Plan.

R.   Plan Modification

     Upon mutual agreement, the signatories may modify this Plan
in writing to take into consideration material information that
may become available after the execution of this Plan and submit
such written modification to the Commission for its approval.

S.   Term and Time Line

     The term of this Plan runs for four years from the
effective date of the new rates implemented upon Commission
approval of this Plan. The dates scheduled for expansion of the
PowerPick(TM) Program and the implementation of full retail access
shall remain May 1, 1998 and May 1, 1999, respectively. The times
for various actions to be accomplished by the various parties are
set forth on Appendix A.

T.   Effect of Plan

     The Company will petition the Appellate Division of the
Supreme Court for permission to withdraw its December 24, 1996
appeal in Energy Association of N.Y.S. v. Public Service
Commission, Albany County Index No. 5830-96, with prejudice,
following final Commission approval of this agreement (i.e., when
any appeals from such approval are exhausted or the time to
appeal has expired). Until this petition is granted, the Company
will discontinue its appeal to the extent it is able to do so
without forfeiting the right to appeal.

     The Company has made the following additional concessions:

          -    Providing for substantial price reductions to
               large industrial customers and all other customers.

          -    Divestiture of the Generating Assets pursuant to
               an auction process.

          -    Allocating equity earnings in excess of the
               sharing threshold between shareholders and customers
               and to writing down Commission-approved deferred costs.

          -    Expanding PowerPick(TM) (energy only) to all Large
               Industrial Customers at the time of the effectiveness
               of new rates and to all other customers in 1998.

          -    Providing full retail access (energy and capacity)
               to all customers in 1999.

          -    Agreeing to address alternative ways of providing
               metering and billing services.

     It is the express intention of the signatories hereto that
     Orange and Rockland be provided with:

          -    A reasonable rate of return while maintaining the
               overall level of rates for the term of the Plan.

          -    A reasonable opportunity to recover prudently
               incurred strandable costs as a result of divesting the
               Generating Assets, or otherwise during the
               effectiveness of the CTC.

     The parties agree that the provisions of this Plan will
     result in rates that are just and reasonable to both
     customers and shareholders through the four-year term of
     this Plan.
     
     Future generic determinations by the Commission will be
     addressed in good faith by the parties to this Plan and will
     provide guidance for potential tailoring or application of
     those determinations or this agreement, as appropriate, to
     preserve this agreement and associated considerations and
     obligations of Orange and Rockland and the Commission.

U.   Dispute Resolution

     In the event of any disagreement over the interpretation of
this Plan or the implementation of any of the provisions of this
Plan, which cannot be resolved informally among the parties
hereto, such disagreement shall be resolved in the following
manner: the parties shall promptly attempt to convene a
conference and in good faith shall attempt to resolve such
disagreement. If any such disagreement cannot be resolved by the
parties within 30 days, any party may petition the Commission for
relief on a disputed matter.

V.   Additional Public Statement Hearings

     The parties agree that additional public statement hearings
should be held in the Company's service territory prior to the
Commission acting on this Plan in order to receive and consider
public input on important matters included within this Plan. The
parties strongly encourage the Secretary to schedule such
hearings.


                    Orange and Rockland Utilities, Inc.



                    G.D. CALIENDO, ESQ.
                    G.D. Caliendo, Esq.
                    Senior Vice President, General Counsel and
                    Corporate Secretary



                    New York State Department of Public Service



                    SAUL A. RIGBERG, ESQ.
                    Saul A. Rigberg, Esq.
                    Assistant Counsel

                    New York State Department of
                    Economic Development



                    JEFFREY SCHNUR
                    Jeffrey Schnur
                    Director of Energy Policy

                    National Association of Energy Service Companies



                    RUBEN S. BROWN
                    Ruben S. Brown

                    The Joint Supporters
                    By: The E Cubed Company



                    RUBEN S. BROWN
                    Ruben S. Brown

                    Industrial Energy Users Association



                    THOMAS A. CONDON, ESQ.
                    Thomas A. Condon, Esq.
                    Birbrower, Montalbano, Condon & Frank, P.C.

                    
                    L.M. DIVALENTINO
                    L.M. DiValentino
                    Strategic Power Management, Inc.

                    

          Exceptions to the following provisions of the Plan:

                    __________________________________________

                    __________________________________________



                    Independent Power Producers of New York, Inc.



                    CAROL E. MURPHY
                    Carol E. Murphy
                    Executive Director

                    Pace Energy Project



                    DAVID R. WOOLEY
                    David R. Wooley
                    Counsel for the Energy Project
                    Center for Environmental Legal Studies
                    Pace University School of Law


                                                     Appendix A
                                                      


                  Time Line for Certain Actions


November 6, 1997                        Plan Filed

_____________________                   Commission approves Plan

_____________________                   O&R withdraws from
                                        Article 78 appeal (4
                                        months after Commission
                                        approval)

Effectiveness of new rates              O&R provides Large
                                        Industrial Customers with
                                        opportunity to realize an
                                        electric price of 6
                                        cents/kWh and reduces
                                        electric rates for all
                                        other customers by 1.09%.
                                        PowerPick(TM) is expanded to
                                        include all large
                                        Industrial Customers
                                        (energy only)

December 1997                           O&R files proposed draft
                                        unbundled electric
                                        tariffs

February 1998                           O&R submits initial
                                        divestiture plan

May 1, 1998                             O&R expands PowerPick(TM)
                                        (energy only) to all
                                        customers

May 1998                                O&R submits detailed
                                        divesture plan

One year after effectiveness            O&R reduces rates for all
of new rates                            other customers by an
                                        additional 1%

_____________________                   O&R forms Holding company

_____________________                   Unbundled electric
                                        tariffs become effective

March 31 1999                           O&R submits metering
                                        proposal

April 30, 1999                          O&R selects winning
                                        bidders of auction

May 1, 1999                             O&R introduces full
                                        retail choice (energy and
                                        capacity) to all
                                        customers

May 1, 1999                             Recommendations on POLR
                                        obligation submitted

May 1, 1999                             CTC commences, if
                                        necessary

December 31, 1999                       Metering proposal becomes
                                        effective assuming
                                        significant technical
                                        obstacles are resolved

October 31, 2000, or earlier            CTC terminates

Four years after effectiveness          Plan terminates
of new rates



                                                     Appendix B
                                                         

                    Standard Industrial Codes
                                
                           Division B
                                
                             Mining
                                
                     The Division as a Whole


     This division includes all establishments primarily engaged
in mining. The term mining is used in the broad sense to include
the extraction of minerals occurring naturally; solids, such as
coal and ores; liquids, such as crude petroleum; and gases such
as natural gas. The term mining is also used in the broad sense
to include quarrying, well operations, milling (e.g., crushing,
screening, washing, flotation), and other preparation customarily
done at the mine site, or as a part of mining activity.

     Exploration and development of mineral properties are
included. Services performed on a contract or fee basis in the
development or operation of mineral properties are classified
separately, but within this division. Establishments which have
complete responsibility for operating mines, quarries, or oil and
gas wells for others on a contract or fee basis are classified
according to the product mined rather than as mineral services.

     Mining operations are classified, by industry, on the basis
of the principal mineral produced, or, if there is no production,
on the basis of the principal mineral for which exploration or
development work is in process. The mining of culm banks, ore
dumps, and tailing piles is classified as mining according to the
principal mineral product derived.

     The purification and distribution of water is classified in
Transportation and Public Utilities, Industry 4941, and the
bottling and distribution of natural spring and mineral waters is
classified in Wholesale Trade, Industry 5149.

     Crushing, grinding, or otherwise preparing clay, ceramic,
and refractory minerals; barite; and miscellaneous nonmetallic
minerals, except fuels, not in conjunction with mining or
quarrying operations, are classified in Manufacturing,
Industry 3295. Dressing of stone or slab is classified in
Manufacturing, Industry 3281, whether or not mining is done at
the same establishment.



                           Division D

                          Manufacturing

                     The Division as a Whole


     The manufacturing division includes establishments engaged
in the mechanical or chemical transformation of materials or
substances into new products. These establishments are usually
described as plants, factories, or mills and characteristically
use power driven machines and materials handling equipment.
Establishments engaged in assembling component parts of
manufactured products are also considered manufacturing if the
new product is neither a structure nor other fixed improvement.
Also included is the blending of materials, such as lubricating
oils, plastics, resins or liquors.

     The materials processed by manufacturing establishments
include products of agriculture, forestry, fishing, mining, and
quarrying as well as products of other manufacturing
establishments. The new product of a manufacturing establishment
may be finished in the sense that it is ready for utilization or
consumption, or it may be semifinished to become a raw material
for an establishment engaged in further manufacturing. For
example, the product of the copper smelter is the raw material
used in electrolytic refineries; refined copper is the raw
materials used by copper wire mills; and copper wire is the raw
material used by certain electrical equipment manufacturers.

     The materials used by manufacturing establishments may be
purchased directly from producers, obtained through customary
trade channels, or secured without recourse to the market by
transferring the product from one establishment to another which
is under the same ownership. Manufacturing production is usually
carried on for the wholesale market, for interplant transfer, or
to order for industrial users, rather than for direct sale to the
domestic consumer.

     There are numerous borderline cases between manufacturing
and other divisions of the classification system. Specific
instances will be found in the descriptions of the individual
industries. The following activities, although not always
considered as manufacturing, are:

     Milk bottling and pasteurizing;
     
     Fresh fish packaging (oyster
          shucking, fish filleting);


     Apparel jobbing (assigning of
          materials to contract factories
          or shops for fabrication or other
          contracting operations) as well as
          contracting on materials
          owned by others;
     
     Publishing;
     
     Ready-mixed concrete production;
     
     Leather converting;
     
     Logging;
     
     Wood preserving;

     Various service industries to the
          manufacturing trade, such as typesetting,
          engraving, plate printing, and preparing
          electrotyping and stereotype plates, but
          not blue-printing or photocopying services;
     
     Electroplating, plating, metal heat
          treating, and polishing for the trade;
     
     Lapidary work for the trade;
     
     Fabricating of signs and advertising
          displays.
     
     There are also some manufacturing-type activities performed
by establishment which are primarily engaged in activities
covered by other divisions, and are, thus not classified as
manufacturing. A few of the more important examples are:

     
Agriculture, Forestry, and Fishing

     Processing on farms is not considered manufacturing if the
raw materials are grown on the farm and if the manufacturing
activities are on a small scale without the extensive use of paid
labor. Other exclusions are threshing and cotton ginning.

Mining

     The dressing and beneficiating of ores; the breaking,
washing, and grading of coal; the crushing and breaking of stone;
and the crushing, grinding, or otherwise preparing of sand,
gravel, and nonmetallic chemical and fertilizer minerals other
than barite are classified in Mining.

Construction

     Fabricating operations performed at the site of construction
by contractors are not considered manufacturing, but the
prefabrication of sheet metal, concrete, and terrazzo products
and similar construction materials is included in the
Manufacturing Division.

Wholesale and Retail Trade

     Establishments engaged in the following types of operations
are included in Wholesale or Retail Trade; cutting and selling
purchased carcasses; preparing feed at grain elevators and farm
supply stores; stemming leaf tobacco at wholesale establishments;
and production of wiping rags. The breaking of bulk and
redistribution in smaller lots, including packaging, repackaging,
or bottling products, such as liquors or chemicals, is also
classified as Wholesale or Retail Trade. Also included in Retail
Trade are establishments primarily engaged in selling, to the
general public, products produced on the same premises from which
they are sold, such as bakeries, candy stores, ice cream parlors,
and custom tailors.

Services

     Tire retreading and rebuilding, sign painting and lettering
shops, computer software production, and the production of motion
picture films (including video tapes) are classified in Services.
Most repair activities are classified as Services. However, some
repair activity such as shipbuilding and boatbuilding and repair,
the rebuilding of machinery and equipment on a factory basis, and
machine shop repair are classified as Manufacturing.


                                                     Appendix C


                   Eligibility Guidelines for
            Large Industrial Customer Classification


     The following guidelines shall serve as eligibility
requirements to take service under the Large Industrial Customer
classification:

    (i)   General primary, substation and transmission
          service customers who maintain a minimum demand of
          1,000 kW during any two of the previous twelve months.

    (ii)  The facility is classified by the Standard
          Industrial Classification Manual (1987 edition or
          supplements thereto) as Mining (Division B) or
          Manufacturing Division).

    (iii) Energy use for mining or manufacturing
          purposes must be at least 60% of their total energy
          usage as determined by the Company.

    (iv)  At time of application for Large Industrial
          Classification a Minimum Eligibility Requirement for
          that facility representing 60% of customer's total
          energy usage at time of application will be
          established.

    (v)   If a customer's actual kWh energy usage for
          minings or manufacturing purposes falls below the
          Minimum Eligibility Requirement established in (iv)
          above by more than 25% the customer will be removed
          from this rate and transferred to as appropriate
          service classification.

    (vi)  A customer who fails to maintain criteria set
          forth in (i), (ii) and (iii) above may at the
          customer's option transfer to another appropriate
          service classification.


                                                          Appendix D


                      Sources of Price Reductions


       Description         Year 1    Year 2    Year 3     Year 4   Total

Expiring Surcharges:
  RDM Rate Allowance     $468,000   $468,000  $468,000   $468,000
  Allowance for Rate Case Costs                253,000    253,000
  Amort. of OPEBs                            1,016,000  1,016,000
  NUG Amortization                                      4,978,000(A)

  Subtotal                468,000   468,000  1,737,000  6,715,000

One-Time Refunds (3 year Amortization):
  Ramapo Tax Settlement 1,855,600   902,200    902,200
  R&D Overcollection      541,000   541,000    541,000
  RDM Overcollection       82,000    82,000     82,000
  Investigation Refund
    Shortfall              40,000    40,000     40,000
  Unallocated Depreciation
    Reserve - Net(71%)  1,491,873 1,491,873  1,491,873

  Subtotal              4,010,473 3,057,073  3,057,073          0

Other Cost Reductions
  Special Franchise Property
    Tax Savings           185,000   185,000    185,000    185,000
  DSM Program Reductions  645,000 1,335,000  1,335,000  1,335,000
  R&D Reductions          300,000   300,000    300,000    300,000
  Gas Transfer Pricing
  (71%)                   380,069   380,069          0          0
  Incremental Holding
    Company Costs(B)     -250,000  -250,000   -250,000   -250,000

  Subtotal              1,260,069 1,950,069  1,570,000  1,570,000

Total Cost Reductions
  (Excl. GRT)          $5,738,542$5,475,142 $6,364,073 $8,285,000
GRT Gross-up              371,858   354,789    412,392    536,868

Cost Reductions
  (Incl. GRT)          $6,110,400$5,829,931 $6,776,465 $8,821,868

PowerPick(TM) Savings Opportunity
   (Incl. GRT)         $1,108,000$1,108,000 $1,108,000 $1,108,000

Total Sources of Price
  Reduction (Incl. GRT)$7,218,400$6,937,931 $7,884,465 $9,929,868 $31,970,664


(A)  Total NUG Amortization of $5,292,000 less amount applied to other
     regulatory assets in the amount of $314,000.

(B)  Costs up to maximum of $1.0 million incurred in establishment of
     Holding company will be deferred and amortized over term of
     settlement.

                                                     Appendix E


                     Privileged Information

     Nothing in this Plan requires or will be construed to
require the Delivery company, the Holding company or an
unregulated subsidiary to provide Staff or any other party access
to, or to make disclosure of any information as to which the
entity in possession of such information would be entitled to
assert a legal privilege, such as the attorney-client privilege,
if, either (i) the privilege could be asserted pursuant to CPLR
4503, CPLR 3101 (or any other applicable statute or constitution)
in a judicial proceeding, action, trial or hearing, or (ii)
providing access to or making disclosure of such information
would impair in any manner the right of the entity in possession
of such information to assert such privilege against third
parties.

     If Staff or any other party seeks access to or disclosure of
any information that either the Delivery company, the Holding
company or an unregulated subsidiary believe is privileged and
not subject to access or disclosure under the terms of this Plan,
counsel for the entity asserting such privilege will detail, to
the extent practical without destroying the privilege, the
reasons why the privilege is being claimed in sufficient detail
to permit a determination of whether or not to dispute the claim
of privilege. If Staff or any other party decides to dispute such
claim, it may request that an assigned administrative law judge
conduct an in camera review of such information to determine
whether it is in fact exempt from access or disclosure under the
terms of this section, which disclosure shall not be deemed
waiver of the privilege. Such determination will be subject to
review by the Commission and, if necessary, judicial review.


                   Confidentiality of Records

     The Holding company and the Delivery company shall designate
as confidential any non-public information to or of which Staff
or any other party requests access or disclosure, and which the
Holding company, the Delivery company or an unregulated
subsidiary believe is entitled to be treated as a trade secret.
The Holding company, Delivery company or unregulated subsidiary
shall provide the requesting party with a redacted version of the
information deemed to be confidential together with a non-
confidential description of the information and a full
explanation of why the information should be provided "trade
secret" status. Any party will have the right to contest the
trade secret nature of such designated confidential information
in accordance with the Commission's Rules of Procedure.


     Anyone who is afforded access to, or to whom disclosure is
made of, designated confidential portions of books and records,
financial information, contracts, minutes, memoranda, business
plans, and the like, will agree to maintain such information as
confidential, other than information that previously has been
made public. For the purposes of this Plan, "information that
previously has been made public" will mean information that
either (i) has been disclosed by either the Holding company, the
Delivery company or any unregulated subsidiary in financial or
other literature to the financial community or to the public at
large, (ii) appears in documents contained in the public files of
a local, state or federal agency, body or court and which has not
been accorded trade secret protection, or (iii) information that
otherwise is in the public domain.

     In the event that Staff or any other party receives any
information designated as confidential pursuant to the procedures
described in this Plan and desires to use such information in a
litigated proceeding before the Commission, Staff or the party
will first notify counsel for the Delivery company and the
Holding company and the unregulated subsidiary, if applicable, of
the nature of such information as well as its intention to use
such information in such proceeding and afford the Delivery
company, the unregulated subsidiary and/or the Holding company
the opportunity to apply to the administrative law judge
presiding over such proceeding within ten (10) business days for
a ruling designed to maintain the confidentiality of such
information under Part 6-1 of the Commission's Rules of Procedure
(16 NYCRR). Staff and any other party may object to any such
application on the grounds that such information is not entitled
to be treated as a trade secret under Part 6-1.

     In the event that a member of Staff receives any information
designated as confidential pursuant to the procedures described
in this Plan and desires to use or refer to such information in a
memorandum or other document which may become an "agency record"
as the term is defined in the New York Freedom of Information
Law, Staff first shall notify the Company Liaisons (as defined in
Appendix H, p. 4, paragraph (iv)) of the nature of such
information as well as its intended use, and afford the Delivery
company, the unregulated subsidiary, if applicable, and/or the
Holding company the opportunity to apply to the Commission under
Part 6-1 of the Commission's Rules of Procedure within ten (10)
business days for a protective order designed to maintain the
confidentiality of such information. Staff and any other party
may object to any such application on the grounds that such
information is not entitled to be treated as a trade secret under
Part 6-1.

     Should O&R or any of its affiliates come into possession of
any information protected by the provisions of Part 6-1 of the
Commission's regulations, such information shall be afforded the
same protection by the Company as is afforded the Company's
confidential information under the provisions of this Appendix.
Contract and pricing terms between Delivery company customers and
providers other than O&R or its affiliates shall constitute
confidential information and will be used by the Company solely
as needed to comply with its required customer and supplier
billing function under PowerPick(TM). O&R shall provide such
confidential information to its own personnel on a need-to-know
basis only and will not disclose such information to any
affiliate without the written consent of the party with
proprietary rights in the information. Any confidential
information provided to O&R shall be clearly marked on every page
to the effect that the information is confidential and protected
by the Commission's rules on confidentiality and non-disclosure.


                                                     Appendix F


     Customer Service and Reliability Performance Mechanism


Customer Service

     The Company shall continue the customer service performance
mechanism consisting of:  1) an annual Residential Customer
Assessment Score ("RCAS"), 2) an annual Commercial and Industrial
Customer Assessment Score ("CICAS"), and 3) an annual PSC
complaint rate target.

     The customer satisfaction surveys that will be used as the
basis to establish the targets discussed below are intended to
evaluate Company performance as rated by customers in the
categories of overall favorableness, value and loyalty. The
customer satisfaction survey shall be conducted for each year of
this Plan. At the commencement of retail access, the Company and
Staff will assess the appropriateness of the survey upon which
the CAS is based and determine whether a modified survey is
necessary.

     The RCAS target shall be 2.73 for each rate year of the
Plan. The actual RCAS will be subject to adjustment to account
for any applicable margin of error. If the actual RCAS as
adjusted falls below the 2.73 target or the customer satisfaction
survey is not performed in any rate year, the Sharing Threshold
(as defined in this Plan) will be reduced by five basis points in
that rate year.

     The CICAS target shall be 2.65 for each rate year of the
Plan. The actual CICAS will be subject to adjustment to account
for any applicable margin of error. If the actual CICAS, as
adjusted, falls below the 2.65 target or the customer
satisfaction survey is not performed in any rate year, the
Sharing Threshold will be reduced by five basis points in that
rate year.

     The annual PSC Complaint Rate target shall be 10.6
complaints per 100,000 customers for each rate year. The actual
complaint rate shall be calculated using a 12-month average. If
the actual complaint rate exceeds 10.6 in any rate year, the
Sharing Threshold will be reduced by five basis points in that
rate year.

     The Company will, upon request from Staff, provide such
information as is available to verify survey results. Any
confidential information or trade secrets given to Staff shall be
held and used in accordance with Appendix E.

Average Duration of Interruptions

     The weighted Company-wide average duration of interruption
level target it 1.54 Hrs./Int. ("Interruption Duration Target"),
which is a composite of the following minimum acceptable values
established by the Commission's Order of May 30, 1995, in Case 95-
E-0165:

                                                Minimum
    Operating Area   Interruption Standard     (Hrs./Int.)

       Eastern             Duration               1.46
       Central             Duration               1.70
       Western             Duration               1.53

If, for any of the rate years covered by this Plan, Orange and
Rockland fails to achieve the Interruption Duration Target, the
Sharing Threshold (as defined in this Plan) applicable to that
rate year shall be reduced by five basis points.

Average Frequency of Interruptions

     The weighted Company-wide average frequency of interruption
level target is 1.70 Int./Cust. ("Interruption Frequency Target")
which is a composite of the following minimum acceptable values
established by the Commission in its order dated May 30, 1995, in
Case 95-E-0165:

                                                  Minimum
    Operating Area   Interruption Standard     (Int./Cust.)

       Eastern             Frequency              1.46
       Central             Frequency              1.70
       Western             Frequency              2.25

If, for any of the rate years covered by this Plan, Orange and
Rockland fails to achieve the Interruption Frequency Target, the
Sharing Threshold applicable to that rate year shall be reduced
by five basis points.


                                                     Appendix G

             Low Income Customer Assistance Program

                          Introduction

     On April 2, 1996, Orange and Rockland Utilities, Inc.
("Orange and Rockland" or the "Company"), New York State
Department of Public Service Staff ("Staff"), the New York State
Consumer Protection Board ("CPB") and the Industrial Energy Users
Association ("IEUA") entered into a settlement agreement on
electric rates in Case 95-E-0941 ("Rate Case Settlement
Agreement") in this proceeding. As part of the Rate Case
Settlement Agreement, the parties agreed to meet and discuss the
feasibility of developing a new low income program. The Rate Case
Settlement Agreement was approved by the Commission in Opinion
No. 96-21 issued August 12, 1996.

     Since the issuance of Opinion No. 96-21, representatives of
the Company, Staff, Pace Energy Project ("Pace") and Public
Utility Law Project of New York, Inc. ("PULP") have met on
various occasions to discuss the development of a new low income
program. The parties have agreed that the Company shall implement
a low income program ("program") in accordance with the terms and
conditions set forth below.

1.   Term

     The Program will commence as soon as practicable after the
effectiveness of new rates and terminate four years thereafter.

2.   Eligible Customers

     The Program will be conducted solely for the residents of
the City of Port Jervis, New York and/or residents of the zip
code area 12771. The goal of the Program is to serve
approximately 400 customers in total, or approximately 100
customers for each of the four  years included in this Plan. To
be eligible, a customer must have been the current customer of
record and been receiving service for at least one year at the
present location.

3.   Program Expenditures

     Program expenditures will include all expenses for energy
efficiency, arrears forgiveness, evaluation and administration.
Funding for this Program, including $35,000 of administrative
costs per year, shall come from unexpended DSM funds.

     Expenditures per customer will be capped at $1,000. This
expenditure includes the cost of an energy audit, disaggregated
billing analysis, energy efficiency measures, and arrears
forgiveness. If the Company finds that it is spending
consistently less than $1,000 per customer, it will attempt to
recruit more customers (in excess of the original 400 customers)
into the Program in order to fully expend the available funds.

4.   Financial Eligibility Criteria

     Customers must be at or below 150% of the Federal Poverty
Level to qualify for entry into the Program. HEAP eligibility
guidelines will be used. Participating customers must apply for
HEAP benefits, and, where applicable, customers also must apply
to the Neighbor Fund for a grant.

     The Company's target for recruiting customers who are on a
direct payment program with the Department of Social Services
will be 10% of the total customers served.

5.   Budget Program

     Participating customers will be required to participate in
the Company's budget program.

6.   Landlord Contribution

     If a customer lives in a leased premise, a landlord
contribution of 25% will be required for energy conservation
measures. If the landlord does not contribute, the customer will
not be eligible to participate in the Program.

7.   Energy Audit

     An energy audit will be conducted for each participant to
identify the potential for the installation of an energy
efficient refrigerator and/or weatherization measures.
Weatherization measures will be considered for electric or gas
heating customers only. The final determination of which
measures, if any, to install will be based on the cost of the
measures and the benefits to the customer.

8.   Contract

     A participating customer must execute a contract with the
Company which sets forth the terms of the agreement including:
the budget payments to be made, the amount of arrears forgiveness
agreed on (if any), the energy measures to be installed, and the
conditions upon which continued participation will be allowed.
The contract will also provide that the customer will be removed
from credit action while participating in the Program.

9.   Program Measures

     The Program will address energy efficiency, payment
patterns, and/or arrears forgiveness, depending upon a customer's
circumstances. Energy efficiency measures (including refrigerator
replacement) will be the first priority for Program expenditures.

10.  Arrears Forgiveness

     Arrears forgiveness, capped at $250 per participant, is a
customer option in the Program. Customers who choose this option
will be required to make on-time monthly budget payments. If a
customer fails to make three monthly payments by the due date for
those payments, the customer will be removed automatically from
the Program, will forfeit any further arrears forgiveness, will
be returned to normal credit action.

     All accounts complying with the payment criteria, as well as
all other Program requirements, will then have 25% of the arrears
agreed on between the customer and the Company removed from the
customers account at the end of each successful three-month
segment.

     If a participating customer chooses not to take advantage of
the arrears forgiveness component, the customer will be required
to participate and remain on a mutually agreeable payment plan to
address the customers arrears condition.

     At the conclusion of a customer's participation in the
Program, any arrears still existing will be subject to a mutually
agreeable payment plan, and all normal collection activity will
be reinstated.

11.  Program Evaluation

     At the conclusion of the Program's first year, the Company
will prepare and provide to Staff a brief status report on the
Program. The Company will evaluate the Program and prepare a
detailed report within 75 days of the Program's conclusion.

12.  Legislative, Regulatory or Related Actions

     If any law, rule, regulation, order or other requirement (or
any repeal or amendment of an existing rule, regulation, order or
other requirement) of the state, local or federal government
results in a material change in the terms of this Plan, the
parties agree to reconvene promptly and consider any appropriate
changes to this Plan.
                                                     Appendix H

                Standards of Competitive Conduct

General Principles

     The following standards of competitive conduct shall govern
the Delivery company's relationship with any energy supply and
energy service affiliates:

    (i)   There are no restrictions on affiliates using the
          same name, trade names, trademarks, service names,
          service mark or a derivative of a name, of the Holding
          company or the Delivery company or in identifying
          itself as being affiliated with the Holding company or
          the Delivery company. The Delivery company will not
          provide sales leads involving customers in its service
          territory to any affiliate, including the ESCO, and
          will refrain from giving any appearance in promotional
          advertising or otherwise that the Delivery company
          speaks on behalf of an affiliate or that an affiliate
          speaks on behalf of the Delivery company. If a customer
          requests information about securing any service or
          product offered within the service territory by an
          affiliate, the Delivery company will provide a list of
          companies of which it is aware operating in the service
          territory who provide the service or product, which may
          include an affiliate, but the Delivery company will not
          promote its affiliate.

    (ii)  The Delivery company will not provide services to
          its marketing affiliates or customers of its marketing
          affiliates on preferential terms, nor represent that
          such terms are available, exclusively to customers who
          purchase goods or services from, or sell goods or
          services to, an affiliate of the Delivery company. The
          Delivery company will not purchase goods or services on
          preferential terms offered only to suppliers who
          purchase goods or services from, or sell goods or
          services to an affiliate of the Delivery company. The
          Delivery company will not represent to any customer,
          supplier, or third party that an advantage may accrue
          to such customer, supplier, or third party in the use
          of the Delivery company's services as a result of that
          customer, supplier or third party dealing with any
          affiliate. This standard does not prohibit two or more
          of the unregulated affiliates from lawfully packaging
          their services. The Delivery company must process all
          similar requests for distribution services in the same
          manner and within the same period of time.

    (iii) All similarly situated customers, including
          energy services companies and customers of energy
          service companies, whether affiliated or unaffiliated,
          will pay the same rates for the Delivery company's
          utility services and the Delivery company shall apply
          any tariff provision in the same manner if there is
          discretion in the application of the provision. The
          Delivery company must strictly enforce a tariff
          provision for which there is no discretion in the
          application of the provision.

    (iv)  Transactions subject to FERC's jurisdiction over
          the provision of sales or services in interstate
          commerce will be governed by FERC's orders or standards
          as applicable.

    (v)   Release of proprietary customer information
          relating to customers within the Delivery company's
          service territory shall be subject to prior
          authorization by the customer and subject to the
          customer's direction regarding the person(s) to whom
          the information may be released.

    (vi)  The Delivery company will not disclose to its
          affiliate any customer or market information relative
          to its service territory, including, but not limited to
          utility customer lists, that it possesses or receives
          from a marketer, customer, potential customer, or agent
          of such customer or potential customer other than
          information available from sources other than the
          Delivery company, unless it discloses such information
          to its affiliate's competitors on an equal basis and
          subject to the consent of the marketer, customer, or
          potential customer.

    (vii) The Delivery company shall establish a
          complaint process consistent with the following. If any
          competitor or customer of the Delivery company believes
          that the Delivery company has violated the standards of
          competitive conduct established in this section of the
          agreement, such competitor or customer may file a
          complaint in writing with the Delivery company. The
          Delivery company will respond to the complaint in
          writing within twenty (20) business days after receipt
          of the complaint, including a detailed factual report
          of the complaint and a description of any course of
          action proposed to be taken. After the filing of such
          response, the Delivery company and the Complaining
          party will meet, if necessary, in an attempt to resolve
          the matter informally. If the Delivery company and the
          complaining party are not able to resolve the matter
          informally within 15 business days, the matter will be
          referred promptly to the Commission for disposition.

    (viii)The Commission may impose on the Delivery
          company remedial action for violations of the standards
          of competitive conduct. If the Commission believes that
          the Delivery company has engaged in material violations
          of the standards of competitive conduct during the
          course of this Plan, it shall provide the Delivery
          company notice of and a reasonable opportunity to
          remedy such conduct or explain why such conduct is not
          a violation. If the Delivery company fails to remedy
          such conduct within a reasonable period after receiving
          such notice, the Commission may take remedial action
          with respect to the Holding company to prevent the
          Delivery company from further violating the standard(s)
          at issue. Such remedial action may include directing
          the Holding company to divest the unregulated
          subsidiary, or some portion of the assets of the
          unregulated subsidiary, that is the subject of the
          Delivery company's material violation(s), but exclude
          directing the Holding company to divest the Delivery
          company or imposing a service territory restriction on
          the unregulated subsidiary. If the Holding company is
          directed to divest an unregulated subsidiary, it may
          not thereafter, without prior Commission approval, use
          a new or existing subsidiary of the Holding company to
          conduct within the Delivery company's service territory
          the same business activities as the divested subsidiary
          (e.g., energy services). The Delivery company and the
          Holding company may exercise any and all legal and/or
          equitable relief from such remedial actions, including,
          but not limited to injunctive relief. Neither Orange
          and Rockland nor any affiliate or subsidiary will
          challenge the Commission's legal authority to implement
          the provisions of this subparagraph.

    (ix)  The Standards of Competitive Conduct set forth in
          this Plan will apply in lieu of any existing generic
          standards of conduct (e.g., the interim gas standards
          established in Case 93-G-0932) and may be proposed as
          substitutes for any future generic Standards of
          Competitive Conduct established by the Commission
          through the term of this Plan. Unless otherwise ordered
          by the Commission, the Standards of Competitive
          Conduct set forth in this Plan will continue to apply
          after the expiration of the term of this Plan, given
          the Company's need for stability in rules governing its
          structure. Before the Commission makes any changes to
          these standards, it will consider the Company's
          specific circumstances, including its performance under
          the existing standards.

    (x)   The rate levels provided for in this Plan cover
          all royalties that otherwise would be credited to the
          Delivery company's customers, at any time, including
          after the expiration of this Plan.

Access to Books and Records and Reports

    (i)   Staff will have access, on reasonable notice and
          subject to appropriate resolution of confidentiality
          and privileges, to the books and records of the Holding
          company and the Holding company majority-owned
          subsidiaries.

          Staff will have access, on reasonable notice and
          subject to the provisions of Appendix E regarding
          confidentiality and privileges, to the books and
          records of all other Holding company subsidiaries to
          the extent necessary to audit and monitor any
          transactions which have occurred between the Delivery
          company and such subsidiaries, to the extent the
          Holding company has access to such books and records.

    (ii)  The Delivery company will supplement the
          information that the Commission's regulations require
          it to report annually with the following information:
          Transfers of assets to and from an affiliate, cost
          allocations relative to affiliate transactions,
          identification of Delivery company employees
          transferred to an affiliate, and a listing of affiliate
          employees participating in common benefit plans.

    (iii) The Holding company will provide a list on a
          quarterly basis to the Commission of all filings made
          with the Securities and Exchange Commission by the
          Holding company and any subsidiary of the Holding
          company including the Delivery company.

    (iv)  A senior officer of the Holding company and the
          Delivery company will each designate a company
          employee, as well as an alternate to act in the absence
          of such designee, to act as liaison among the Holding
          company, the Delivery company and Staff ("Company
          Liaisons"). The Company Liaisons will be responsible
          for ensuring adherence to the established procedures
          and production of information for Staff, and will be
          authorized to provide Staff access to any requested
          information to be provided in accordance with this
          Plan.

    (v)   Access to books and records shall be subject to
          claims of privilege and confidentiality as set forth in
          Appendix E hereto.


                                                     Appendix I

                       Affiliate Relations

1.   General

     a)   The Delivery company and the Holding company's
          other subsidiaries will be operated as separate
          entities, with separate books of account and other
          business records, within 180 days of formation of the
          Holding company. Unregulated affiliates will establish
          and maintain separate and distinct offices and work
          space from the Delivery company in a separate building
          or leasehold.

     b)   Draft cost allocation guidelines are attached as
          Appendix J. These guidelines are fully reviewable and
          non-binding proposals that may be amended and/or
          supplemented as necessary. The Company will file with
          the Director of the Office of Accounting and Finance of
          the Department of Public Service all amendments and
          supplements to the guidelines, thirty days prior to
          making such change(s). At the discretion of the
          Commission, these guidelines will be considered in
          either the unbundling phase of this proceeding or as
          part of the Company's application to form a Holding
          company as appropriate.

     c)   Neither the Delivery company nor marketing
          affiliate personnel shall communicate with any
          customer, supplier or third party that any advantage
          may accrue to such customer supplier or third party in
          the use of the Delivery company's service as a result
          of their dealing with the marketing affiliate.

     d)   If the Delivery company offers its affiliate or a
          customer of its affiliate a discount or special
          arrangement for distribution service, billing, metering
          on any other service offered, it must contemporaneously
          offer the same arrangement to all similarly situated
          non-affiliate merchants and must file with the
          Commission procedures that will enable the Commission
          to determine how the Delivery company is complying with
          those standards.

2.   Transfer of Assets

     a)   Transfers of assets from an affiliate to the
          Delivery company will not require prior Commission
          approval. Transfers of assets from the Delivery company
          to an affiliate will not require prior Commission
          approval, except for assets of the Delivery company
          whose transfer requires Commission approval under
          Public Service Law, Section 70.

     b)   For all assets other than generating stations,
          transfers of assets from the Delivery company to an
          affiliate shall be at the higher of net book value or
          fair market value net of deferred Federal income taxes,
          except that the Delivery company may, as part of its
          reorganization, transfer to the Holding company or
          affiliate, at no charge, title to office furniture,
          equipment and other assets having an aggregate net book
          value not to exceed $250,000 (on a system basis).
          Transfers of assets from an affiliate to the Delivery
          company shall be on a basis not to exceed fair market
          value.

     c)   Fair market value shall be determined in
          accordance with the cost allocation guidelines. For
          example, the Delivery company may transfer to an
          affiliate any computer software system that the
          Delivery company is authorized to transfer, without
          data, at a price at which the Delivery company would
          sell such software to an unaffiliated third party.

3.   Personnel

     a)   The Delivery company and the unregulated
          affiliates will have separate operating employees.

     b)   Officers of the Delivery company may not be
          officers of the  ESCO.

     c)   Employees may be transferred from the Delivery
          company to an unregulated affiliate upon mutual
          agreement. Transferred employees may not be reemployed
          by the Delivery company for a minimum of one year after
          the transfer date. Employees returning to the Delivery
          company may not be transferred again to an unregulated
          affiliate until one year after the date of return. The
          Delivery company will file annual reports to the
          Commission, beginning 45 days after the end of the
          first calendar quarter following structural separation
          showing transfers between the Delivery company and
          unregulated affiliates by employee name, former
          company, former position, new company, new position,
          and salary or annualized base compensation.

     d)   For each employee transferred from the Delivery
          company to an unregulated affiliate, the unregulated
          affiliate shall compensate the Delivery company by
          paying an amount equal to 25% of the employee's prior
          year's annual salary on a one-time basis, except that
          there shall be no compensation (i) for employees
          transferred to an unregulated affiliate not later than
          six months from the date of structural separation or
          the unregulated affiliate to which the employee is
          transferred is formed, whichever is later; (ii) for the
          transfer of employees covered by a collective
          bargaining agreement; or (iii) where the employee's
          transfer is attributable to the transfer or reduction
          of a Delivery company function or major asset.

     e)   The foregoing provisions do not restrict any
          affiliate from loaning employees to Delivery company to
          respond to an emergency that threatens the safety or
          reliability of service to consumers.

     f)   The compensation of Delivery company employees may
          not be tied to the performance of any of the
          unregulated subsidiaries, provided, however, that stock
          of the Holding company may be used as an element of
          compensation and the compensation of common officers of
          the Holding company and Delivery company may be based
          upon the operations of the Holding company and Delivery
          company.

     g)   The employees of Holding company, Delivery company
          and the unregulated subsidiaries may participate in
          common pension and benefit plans, provided that funding
          requirements for employees remaining with the regulated
          entity are readily determined. If the plans are
          maintained or amended in such a manner that employees
          of the unregulated entities are treated inconsistently
          with the employees of the regulated entity, then the
          plans of the regulated entity will be segregated and
          made independent.

4.   Provision of Services and Goods

     a)   Corporate services (such as corporate governance,
          administrative, legal, purchasing and accounting) may
          be provided by the Holding company to or on behalf of
          the Delivery company and unregulated affiliates at a
          price equal to fully-loaded cost. This guideline will
          not operate as a prescription of the ratemaking
          treatment of requested allowances for the costs of such
          services.

     b)   The Delivery company may provide services to an
          unregulated affiliate, except that the Delivery company
          may not use any of its marketing or sales employees to
          provide services to any affiliated ESCO relating to
          business within the Delivery company's service
          territory. The unregulated affiliate shall compensate
          the Delivery company for the services of employees at
          the higher of the employees' fully-loaded cost or the
          price that the Delivery company would charge a third
          party for such employees' services. This guideline will
          not operate as a limitation on the projections of
          revenues from such services adopted for ratemaking
          purposes.

     c)   Subject to the provisions of this Appendix, the
          Company's unregulated affiliates may provide services
          to the Delivery company. Any management, construction,
          engineering or similar contract between the Delivery
          company and an affiliate and any contract for the
          purchase by the Delivery company from an affiliate of
          electric energy or gas will be filed with the Public
          Service Commission pursuant to Public Service Law Section
          110, and will be subject to any applicable FERC
          requirements. (As noted in Section IV.B. herein,
          certain electric supply contracts will be subject to
          competitive bidding.)  All other goods and services
          will be provided to the Delivery company at a price
          that shall not be greater than fair market value. This
          guideline will not operate as a prescription of the
          ratemaking treatment of requested allowances for the
          costs of such services.

     d)   The Delivery company, the Holding company, and the
          unregulated affiliates may be covered by common
          property/casualty and other business insurance
          policies. The costs of such policies shall be allocated
          among the Delivery company, the Holding company and the
          unregulated affiliates in an equitable manner.

                                                     Appendix J

              ACCOUNTING FOR AFFILIATE TRANSACTIONS


1.0  PURPOSE  -  To provide accounting guidelines for the
     transfer of assets and employees and the provision of goods
     and services among the Holding Company and its affiliates.

2.0  APPLICATION -  Corporate Accounting
                         Accounting Policies & Procedures ("APP")
                         Accounts Payable ("AP")
                         General Accounting and Financial
                         Reporting ("GA")
                         Plant Accounting ("PA")
                    Treasury
                    Tax Accounting
                    Human Resources
                    Payroll
                    All other Applicable Organizations


3.0  PROCEDURES

     3.1  Background

          On October 1, 1996 in the Competitive Opportunities
          proceeding, Orange and Rockland Utilities, Inc. ("O&R")
          submitted to the New York State Public Service
          Commission ("PSC") a petition which set forth a plan
          for corporate restructuring.  As part of the Settlement
          Agreement dated _______ regarding Competitive
          Opportunities for Electric Service, Case 96-E-0900,
          "O&R's" regulated and unregulated business would be
          conducted through separate corporate entities which
          would be direct or indirect subsidiaries of a holding
          company.  The holding company ("HoldCo") and its
          subsidiaries, including the regulated company ("RegCo")
          are considered affiliates for purposes of this
          procedure.  The procedures outlined herein are designed
          to properly allocate costs among the HoldCo, the RegCo
          and unregulated affiliates.


     3.3  Provision of Goods and Services

     a)   The cost allocations set forth in this procedure have
          been developed utilizing guidelines established by the
          (1) Securities and Exchange Commission's Staff
          Accounting Bulletin No. 55, "Allocation of Expenses and
          Related Disclosure in Financial Statements of
          Subsidiaries, Divisions or Lesser Business Components
          of Another Entity"; and (2) Cost Accounting Standards
          Board's Standard 403, "Allocation of Home Office
          Expenses to Segments, " Standard 410, "Allocation of
          Business Unit General and Administrative Expenses to
          Final Cost Objectives," and Standard 418, "Allocation
          of Direct and Indirect Costs."

     b)   Expenses incurred by the RegCo and the HoldCo in
          support of an affiliate will be allocated directly to
          that affiliate to the maximum extent practicable.
          Expenses that are not directly allocable will be
          accumulated into homogenous cost categories and
          allocated on a cost causative basis.  If cost drivers
          cannot be determined, then allocations will be based
          upon reasonable and related proportional relationships
          (i.e., capitalization, number of employees, revenues,
          etc.).
     
     c)   The unregulated affiliates may provide services to the
          HoldCo and the RegCo.  Any management, construction,
          engineering or similar contract between the RegCo and
          an affiliate and any contract for the purchase by the
          RegCo from an affiliate of electric energy or gas will
          be governed by PSL section 110, subject to any
          applicable FERC requirements.  All other goods and
          services will be provided to the RegCo at a price that
          will not be greater than fair market value, determined
          through reference within a specified market.  In the
          absence of a specified market, fair market value may be
          determined, for example, by using independent qualified
          appraisers.
     
   Note: Based on net book value less deferred taxes compared to
          fair market value reduced by federal tax benefits
          previously taken. Assets valued at fair market value
          will be discounted for tax benefits previously
          utilized.
     

     3.4  Costs Incurred by the RegCo on Behalf of Affiliates

     a)   Direct Cost Allocations

          Salaries and labor related expenses incurred by the
          RegCo in support of affiliate activities will be
          directly assigned and billed to affiliates each month
          based on the extent practical.  These charges are to be
          made on direct time and material basis plus appropriate
          overhead.  Salary and labor related expenses will be
          charged to the affiliate based on the hours reported on
          the weekly or semi-monthly time report.  RegCo
          corporate services (such as legal and accounting) will
          be billed on a fully-loaded cost basis.
          
     b)   Proportional and Other Allocations

          1.   Allocable Charges  - Category I

               Category I costs include all RegCo employees who
               provide services (both corporate and project
               specific) to affiliates.  Costs incurred that are
               impractical to charge direct will be distributed
               based on the relationship of the expenses to the
               cost incurred to provide the service.  Some of
               these costs will be based on a percentage of the
               base costs incurred or an average cost per
               activity to insure a fully loaded cost billing.
               See Exhibit A for a breakdown of Allocable Costs.

          2.   Common Services - Category II

               Category II identifies general corporate functions
               or administrative support services performing
               common activities applicable to all affiliates.
               Included in Common Services would be, but not
               limited to, Internal Auditing, Human Resources,
               Corporate Communications and Accounting.
               Corporate governance costs related to Board of
               Directors, financial communication, investor
               relations, and ethics would also be included in
               this category.

     c)   Cost Causative Allocations

          1.   Administrative support services (Common Services)
               incurred by the RegCo on behalf of the affiliates
               and which cannot be allocated directly will be
               billed to the affiliates each month based on
               appropriate cost causative allocations.  These
               administrative support services may include, but
               are not limited to transactions processed by the
               following RegCo organizations:  Accounting, Office
               of Treasurer, Board of Directors, Tax Accounting,
               Corporate Communication, Ethics, Financial
               Forecasting & Budgets.

          2.   The costs associated with these administrative
               support services will be allocated to the
               affiliates, as appropriate, based on the
               activities and business functions and allocated
               based on one of the following measures:

                  - ratio of affiliates assets to total
                    consolidated assets

                  - activity unique to a department distributed
                    to applicable business segments.

                  - percentage of either payroll dollars or
                    staffing levels of the affiliate in relation
                    to all payroll dollars or employees

                  - percentage of affiliates operating revenue to
                    the total operating revenue of all affiliates

                  - percentage of average net book value of the
                    affiliates assets plus inventories to the
                    total average net book value of assets of all
                    affiliates

                  - the number of affiliate transactions
                    processed in relation to the total number of
                    transactions processed.


          2.   Affiliate employees may have the opportunity to
               participate in the benefit programs of the RegCo.
               These programs may include medical and
               hospitalization coverage as well as pension and
               other post retirement benefits.  The RegCo will be
               reimbursed by the affiliates for costs associated
               with these benefits based on the fringe benefit
               applied to the salary of the affiliates employees.

          3.   The RegCo, the HoldCo, and the unregulated
               affiliates may be covered by common
               property/casualty and other business insurance
               policies.  The costs of such policies will be
               allocated among the RegCo, the HoldCo and the
               unregulated affiliates in accordance with the use,
               occupancy and/or liability risk being insured.


     3.5  Costs Incurred by the HoldCo on Behalf of Affiliates


     a)   Costs incurred by the HoldCo that are specifically
          attributable to the affiliates will be charged to the
          affiliates by direct cost allocations (as described in
          Section 3.4a) or cost causative allocations (as
          described in Section 3.4b and 3.4c).

     b)   Costs incurred by the HoldCo that are of a general
          corporate nature, such as organization costs and
          development stage activities, will be charged to the
          affiliates by proportional cost allocations (as
          described in Section 3.4c).


4.0  EXHIBIT

     Exhibit A-Allocation of Expenses Between the RegCo and
Affiliates


                                                      EXHIBIT A

               ORANGE AND ROCKLAND UTILITES, INC.
   ALLOCATION OF EXPENSES BETWEEN THE HOLDCO AND/OR REGCO AND
                           AFFILIATES


Description of Expense                Basis for Allocation

1) Compensation

        A)   Salaries                 Number of hours devoted to
                                      affiliate operation or
                                      percentage of time.

        B)   Other Compensation       Includes deferred compensation
                                      and imputed income.  Allocated
                                      on same basis as salaries.

        C)   Support Services         Allocated on basis of
                                      utilization of individuals
                                      for whom support work is
                                      performed. (e.g.
                                      information technology,
                                      security, safety.)

        D)   Fringe Benefits          Corporate fringe benefit
                                      rate to be applied to all
                                      straight-time labor.


2) Employee Expenses

        A)   Office Space             Charged at the market rate
                                      per square foot, including
                                      utilities and building
                                      service maintenance (as
                                      provided by the Real
                                      Estate Department);
                                      multiplied by the space
                                      utilized (as provided by
                                      Facilities Management).


        B)   Office Supplies          Overhead percentage
             & Expenses               to be applied to total salary
             (excluding expenses      and other compensation
             directly assignable      (based on RegCo ratio of
             to the affiliate         Office Supplies and
             or included in the       Expenses-PSC Account 921,
             office space             less Building Service costs
             charge)                  and Administrative and General
                                      Salaries).
                                      


3) Corporate Governance Expenses      Weighting of
                                      affiliate assets,
                                      employees, and revenue
                                      contribution to
                                      consolidated assets,
                                      employees and revenues.
                                      (also applies to corporate
                                      fiscal expenses and
                                      outside services performed
                                      for consolidated group.


4) Other Expenses Directly            These costs will be
   Assignable to Affiliates           charged to an affiliate
                                      account and paid directly
                                      by the affiliate.




                                                     Appendix K
                                                         
                                
                   Interdepartmental Transfers

     The Company's submission to the Commission to modify its
Fuel Adjustment Clause and Gas Adjustment Charge will be
consistent with the following principles:

1.   The existing agreement in which the Company's gas department
     provided a bundled gas service (i.e., acquired gas and
     transported from production area to generation site) for
     generation is changed.

2.   The new agreement functionally separates the electric and
     gas departments' business relationship. Electric department
     will now purchase gas separate from the gas department.

3.   The gas department will not be obligated to provide gas
     services (including natural gas, transportation, capacity or
     balancing services upstream of the citygate) to electric
     department, except: under separately negotiated contracts at
     market based prices.

4.   The new Transportation price will incorporate a  charge of
     $0.05 per Mcf for all volumes transported to the electric
     department by the gas department, but in no event will the
     total annual charge be less than $1.275 million (Bowline By-
     Pass).

5.   All gas transactions between gas and electric business units
     will be arms length, with separate purchasing personnel.

6.   Negotiated agreements between gas and electric departments
     will be at posted bulletin board prices (market prices),
     consistent with FERC standards and regulations. Copies of
     agreements will be filed with the Commission by the gas
     business unit. This will include:

        - transportation and capacity services from
          production areas to citygate (i.e., all upstream
          capacity);

        - price of gas (commodity) sold; and

        - balancing services.

7.   Absent a separate balancing agreement approved by the
     Commission, the electric department must balance its gas
     deliveries to the citygate and from the citygate to the
     generator site within the limits established for
     transportation customers, as described in the gas
     transportation tariff, or face penalty charges detailed in
     the gas tariff.

8.   Expenditures associated with the upgrade of the existing
     pipeline to Bowline, in order to allow the pipeline to
     operate it at a higher pressure, and not for instance due to
     general safety considerations, will be allocated to the
     Company's electric department.