UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                     Washington, D. C. 20549
                            Form 10-Q
(Mark One)
 X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended       December 31, 1997            

                               OR

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                

Commission file number          1-14508                           

                     KEYSPAN ENERGY CORPORATION                   
     (Exact name of Registrant as specified in its charter)

             New York                              11-3344628     
(State or other jurisdiction of                 (I.R.S. Employer  
 incorporation or organization)                  Identification
                                                 No.)

One MetroTech Center, Brooklyn, New York           11201-3851     
(Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including
 area code                                        (718) 403-1000  


                              NONE                                
(Former name, former address and former fiscal year, if changed   
 since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
                                          Yes  X   No    

              APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

   Class of Common Stock          Outstanding at February 13, 1998 
     $.33 1/3 par value                     51,157,142



<PAGE>

            KEYSPAN ENERGY CORPORATION AND SUBSIDIARIES

                              INDEX

Part I.   Financial Information                        Page No.

          Condensed Consolidated Balance Sheet -
          December 31, 1997 and 1996, and September 30,
          1997                                              3

          Condensed Consolidated Statement of Income -
          Three and Twelve Months Ended December 31,
          1997 and 1996                                     4

          Condensed Consolidated Statement of Cash Flows -
          Three and Twelve Months Ended December 31,
          1997 and 1996                                     5

          Notes to Condensed Consolidated Financial
          Statements                                        6

          Management's Discussion and Analysis of Results
          of Operations and Financial Condition            12

          Review of Independent Public Accountants         21

          Report of Independent Public Accountants         22

Part II.  Other Information

          Item 1 - Legal Proceedings                       23

          Item 5 - Other Information                       23

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


Signature                                                  25

                            2

<PAGE>
<TABLE>
KEYSPAN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET

<CAPTION>
===================================================================================================================================
                                                           December  31,              December  31,              September 30,
                                                                1997                       1996                       1997
                                                            (UNAUDITED)                (UNAUDITED)                 (AUDITED)
===================================================================================================================================
                                                                                  (Thousands of Dollars)
<S>                                                      <C>                        <C>                        <C>
Assets

Property
  Utility, at cost                                       $     1,855,724            $     1,786,688            $     1,848,817
  Accumulated depreciation                                      (461,564)                  (428,445)                  (458,089)
  Gas exploration and production, at cost                        683,975                    538,551                    636,312
  Accumulated depletion                                         (237,147)                  (176,814)                  (216,423)
-----------------------------------------------------------------------------------------------------------------------------------
                                                               1,840,988                  1,719,980                  1,810,617
-----------------------------------------------------------------------------------------------------------------------------------
Equity Investments in Energy Services                             98,626                    113,183                    166,833
-----------------------------------------------------------------------------------------------------------------------------------
Current Assets
  Cash and temporary cash investments                             39,803                     44,485                     36,912
  Accounts receivable                                            335,457                    334,106                    174,321
  Allowance for uncollectible accounts                           (16,804)                   (16,781)                   (14,444)
  Gas in storage, at average cost                                 87,350                     81,658                     94,695
  Materials and supplies, at average cost                         11,761                     12,691                     11,436
  Prepaid gas costs                                                8,474                     10,881                     11,309
  Other                                                           57,645                     39,754                     33,886
-----------------------------------------------------------------------------------------------------------------------------------
                                                                 523,686                    506,794                    348,115
-----------------------------------------------------------------------------------------------------------------------------------
Deferred Charges                                                 154,261                    120,230                    171,625
-----------------------------------------------------------------------------------------------------------------------------------
                                                         $     2,617,561            $     2,460,187            $     2,497,190
===================================================================================================================================
Capitalization and Liabilities

Capitalization
  Common stock, $.33 1/3 par value , authorized
  210,000,000; outstanding 51,014,498, 
  50,033,347 and 50,767,041 shares, 
  respectively stated at                                 $       580,558            $       554,907            $       572,457
  Retained earnings                                              433,545                    382,430                    396,586
-----------------------------------------------------------------------------------------------------------------------------------
     Total common equity                                       1,014,103                    937,337                    969,043
  Preferred stock, redeemed                                          -                        6,600                        -
  Long-term debt                                                 760,111                    712,031                    745,091
-----------------------------------------------------------------------------------------------------------------------------------
                                                               1,774,214                  1,655,968                  1,714,134
-----------------------------------------------------------------------------------------------------------------------------------
Current Liabilities                                         
  Accounts payable                                               177,604                    179,857                    142,725
  Dividends payable                                               19,224                     18,924                     18,490
  Commercial paper and Notes payable                              40,300                     28,000                     64,211
  Taxes accrued                                                   37,930                     42,456                      4,602
  Customer deposits                                               23,208                     22,699                     22,829
  Customer budget plan credits                                    30,674                     26,993                     15,956
  Interest accrued and other                                      39,242                     32,547                     50,629
-----------------------------------------------------------------------------------------------------------------------------------
                                                                 368,182                    351,476                    319,442
-----------------------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
  Federal income tax                                             291,889                    286,818                    290,458
  Unamortized investment tax credits                              18,754                     19,738                     19,004
  Other                                                           76,070                     65,755                     69,003
-----------------------------------------------------------------------------------------------------------------------------------
                                                                 386,713                    372,311                    378,465
-----------------------------------------------------------------------------------------------------------------------------------
Minority Interest in Subsidiary Company                           88,452                     80,432                     85,149
-----------------------------------------------------------------------------------------------------------------------------------
                                                         $     2,617,561            $     2,460,187            $     2,497,190
===================================================================================================================================
See accompanying notes to condensed consolidated financial statements.
</TABLE>
 

                           3

<PAGE>
<TABLE>
KEYSPAN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
          (Unaudited)

<CAPTION>
================================================================================================================
                                                        Three Months                      Twelve Months
                                                      Ended December 31,                Ended December 31,

                                                       1997          1996               1997          1996
================================================================================================================
                                                         (Thousands of Dollars, Except Per Share Data)

<S>                                              <C>             <C>               <C>            <C>
Operating Revenues
  Gas sales and transportation                   $     393,347   $   405,482       $  1,301,793   $ 1,362,397
  Other retail services                                 17,936        13,011             55,046        29,717
  Gas production and other                              40,664        28,233            126,636        84,597
----------------------------------------------------------------------------------------------------------------
                                                       451,947       446,726          1,483,475     1,476,711
Operating Expenses
   Cost of gas                                         183,221       197,536            579,870       647,287
   Operation and maintenance                           104,295       101,877            421,350       421,399
   Depreciation and depletion                           33,787        24,982            119,768        92,601
   General taxes                                        42,409        41,439            154,448       145,912
   Federal income tax                                   27,348        23,434             58,600        41,104
----------------------------------------------------------------------------------------------------------------
Operating Income                                        60,887        57,458            149,439       128,408

Other Income (Expense)
   Income from equity investments                        2,808         2,290             16,695        12,196
   Gain on sale of investments and subsidiary stock     11,417           -               25,172        51,597
   Other, net                                              138          (777)            (1,407)        1,440
   Federal income tax                                   (4,093)         (883)           (10,881)      (20,155)
   Minority interest in earnings of subsidiary          (2,964)       (1,583)            (8,010)       (1,583)
----------------------------------------------------------------------------------------------------------------
Income Before Interest Charges                          68,193        56,505            171,008       171,903
Interest Charges
       Long-term debt                                    9,484        10,545             37,455        43,928
       Other                                             2,162         1,159              7,074         4,972
----------------------------------------------------------------------------------------------------------------
Net Income                                              56,547        44,801            126,479       123,003
Dividends on Preferred Stock                               -              79                213           320
----------------------------------------------------------------------------------------------------------------
Income Applicable to
   Common Stock                                 $       56,547   $    44,722       $    126,266   $   122,683
================================================================================================================
Basic and Diluted Per Share of Common Stock     $         1.11   $      0.90       $       2.50   $      2.47
----------------------------------------------------------------------------------------------------------------
Dividends Declared per Share
   of Common Stock                              $        0.375   $     0.365       $      1.470   $     1.430
----------------------------------------------------------------------------------------------------------------
Average Common Shares
   Outstanding                                      50,892,078    49,941,590         50,461,414    49,614,109
================================================================================================================
See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                                                4


<PAGE>
<TABLE>
KEYSPAN ENERGY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
           (Unaudited)
<CAPTION>
====================================================================================================================================
                                                                            Three Months                        Twelve Months
                                                                          Ended December 31,                  Ended December 31,
                                                                         1997             1996               1997           1996
====================================================================================================================================

                                                                                          (Thousands of Dollars)

<S>                                                               <C>               <C>               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                                                       $      56,547     $      44,801     $     126,479   $     123,003
 Adjustments to reconcile net income                                                                                          
      to net cash provided by operating activities:
   Depreciation and depletion                                            34,857            25,911           123,211          90,117
   Deferred Federal income tax                                            5,361             4,558             9,543          29,019
   Gain on sale of investments                                          (11,417)              -             (27,469)        (16,160)
   Gain on sale of subsidiary stock                                         -                 -                 -           (35,437)
   Income from energy services investments                               (2,808)           (2,290)          (16,695)        (13,196)
   Dividends from energy services investments                             4,891               910            16,867           9,633
   Change in balance sheet accounts:
       Accounts receivable, net                                        (163,780)         (152,988)          (10,399)          4,268
       Accounts payable                                                  30,716            28,188            (7,025)         43,738
       Gas inventory and prepayments                                     10,180            11,219            (3,285)        (19,912)
       Other                                                             36,733            73,513            22,419          25,821
------------------------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities                                     1,280            33,822           233,646         240,894
------------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Sale of common stock                                                  7,751             5,061            25,308          25,328
    Proceeds from initial public offering of subsidiary stock               -                 -                 -           101,041
    Commercial paper and revolving lines of credit, net                 (23,911)           28,000            12,300           5,000
    Increase in long-term debt                                           16,000               -             188,000         153,500
    Repayment of long-term tax-exempt debt and preferred stock           (1,000)              -            (146,600)       (163,523)
    Dividends paid                                                      (19,130)          (18,343)          (74,557)        (71,819)
------------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) financing activities                         (20,290)           14,718             4,451          49,527
------------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FOR INVESTING ACTIVITIES
    Capital expenditures (excluding allowance                                                                                 
      for equity funds used during construction)                        (72,272)          (49,074)         (309,626)       (311,266)
    Proceeds from sale of investments                                   101,882               -             125,156          26,938
    Partnership (investment) distribution                                   -                 -             (30,000)            -
    Other                                                                (7,709)            3,098           (28,309)         30,810
------------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities                          21,901           (45,976)         (242,779)       (253,518)
------------------------------------------------------------------------------------------------------------------------------------
Change in Cash and Temporary Cash Investments                             2,891             2,564            (4,682)         36,903
Cash and Temporary Cash Investments at Beginning of Period               36,912            41,921            44,485           7,582
Cash and Temporary Cash Investments at End of Period              $      39,803     $      44,485     $      39,803   $      44,485
------------------------------------------------------------------------------------------------------------------------------------

Temporary cash investments are short-term marketable securities purchased with maturities of three months or less that are carried 
  at cost which approximates their fair value.


Supplemental disclosures of cash flows 
   Income taxes                                                   $       3,000     $         -       $      51,000   $      37,053
   Interest                                                       $      10,345     $      12,007     $      44,003   $      50,196
====================================================================================================================================

See accompanying notes to condensed consolidated financial statements.
</TABLE>

                                                                5


<PAGE>
            KEYSPAN ENERGY CORPORATION AND SUBSIDIARIES
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   GENERAL

     The financial statements presented herein reflect the
     reorganization of Brooklyn Union and its subsidiaries into a
     holding company structure under the name KeySpan Energy
     Corporation on September 29, 1997.

     In the opinion of the Company, the accompanying unaudited
     Condensed Consolidated Financial Statements contain all
     adjustments necessary to present fairly the financial position
     of the Company as of December 31, 1997 and 1996, and the
     results of operations for the three and 12 month periods ended
     December 31, 1997 and 1996, and cash flows for the three and
     12 month periods ended December 31, 1997 and 1996. Certain
     reclassifications were made to conform prior period financial
     statements with the current period financial statement
     presentation.  All other adjustments were of a normal,
     recurring nature.

     As permitted by the rules and regulations of the Securities
     and Exchange Commission, the Condensed Consolidated Financial
     Statements do not include all of the accounting information
     normally included with financial statements prepared in
     accordance with generally accepted accounting principles.
     Accordingly, the Condensed Consolidated Financial Statements
     should be read in conjunction with the financial statements
     and notes thereto included in the Company's Annual Report on
     Form 10-K for the fiscal year ended September 30, 1997.
     
     This document contains forward-looking statements within the
     meaning of Section 21E of the Securities Exchange Act of 1934. 
     For any of these statements, the Company claims the protection
     of the safe harbor for forward-looking information contained
     in the Private Securities Litigation Reform Act of 1995, as
     amended.  
     
     The gas distribution business is influenced by seasonal
     weather conditions. Annual revenues are substantially realized
     during the heating season (November 1 to April 30) as a result
     of the large proportion of heating sales, primarily
     residential, compared with total sales.  Accordingly, results
     of operations historically are most favorable in the second
     quarter (three months ended March 31) of the Company's fiscal
     year, with results of operations being next most favorable in
     the first quarter.  Results for the third quarter are
     marginally unprofitable, and losses are usually incurred in
     the fourth quarter.  Therefore, the interim Condensed
     Consolidated Statement of Income should not be taken as a
     prediction for any future period. 

                                 6

<PAGE>
     The utility tariff contains a weather normalization adjustment
     that largely offsets shortfalls or excesses of firm net
     revenues during a heating season due to variations from normal
     weather. 


2.   ENVIRONMENTAL MATTERS

     Historically, Brooklyn Union or predecessor entities owned or
     operated several former manufactured gas plant (MGP) sites.
     These sites have been identified for the New York State
     Department of Environmental Conservation (DEC) for inclusion
     on appropriate waste site inventories.  In certain circum-
     stances, former MGP sites can give rise to environmental
     cleanup responsibilities for Brooklyn Union.

     With respect to one former MGP site located on Brooklyn Union
     property, the Brooklyn Borough Works site in Coney Island,
     Brooklyn Union executed an administrative consent order (ACO)
     with the DEC in 1995 addressing the overall remediation of the
     site.  In accordance with the ACO, a schedule of investigative
     and cleanup activities has been developed, and cleanup over
     the next several years is expected.

     With respect to another former MGP site also located on
     Brooklyn Union property, the Clifton site in Staten Island,
     Brooklyn Union has recently completed certain investigations. 
     Based upon this data and discussions with the DEC, Brooklyn
     Union expects to conduct a comprehensive investigation
     pursuant to an ACO to be executed with DEC.

     Based upon the current estimated range of the costs of 
     compliance with the Coney Island ACO, and the estimated costs
     of investigation of three other sites, the minimum cost of
     MGP-related environmental cleanup will be approximately $34
     million, the majority of which will be expended for the Coney
     Island plant site.  This amount includes approximately $7.7
     million of costs expended as of December 31, 1997.  The actual
     MGP-related costs for the Coney Island site may be
     substantially higher depending upon remediation experience,
     end use of the site and environmental conditions not addressed
     in the ACO.  Further, additional accruals may be required for
     remediation upon completion of current investigative plans. 
     As of December 31, 1997, the Company had an unpaid liability
     of $26.3 million representing costs associated with
     investigation and remediation at former manufactured gas plant
     sites.

     The utility rate plan that became effective on October 1,
     1996, provides, among other things, that if the total cost of
     investigation and remediation varies from the amount
     originally accrued, Brooklyn Union will retain or absorb 10%

                                7

<PAGE>
     of the variation.  In addition, Brooklyn Union may seek
     recovery of any new liability that exceeds three percent of
     pretax utility income. 

     Periodic discussions with insurance carriers and third parties
     for reimbursement of some portion of remediation and
     investigation cost continues.

3.   REGULATORY ASSETS
     
     Brooklyn Union is subject to the provisions of Statement of
     Financial Accounting Standards (SFAS) No. 71, "Accounting for
     the Effects of Certain Types of Regulation".  Regulatory
     assets arise from the allocation of costs and revenues to
     accounting periods for utility ratemaking purposes differently
     from bases generally applied by nonregulated companies. 
     Regulatory assets are recognized in accordance with SFAS-71. 
     With the exception of net tax regulatory assets, all other
     assets and liabilities created by the ratemaking process are
     immaterial. Accordingly, at December 31, 1997, there was a net
     tax regulatory asset of $68.7 million compared to a net tax
     regulatory asset of $75.3 million at December 31, 1996.

     In the event that the provisions of SFAS-71 were no longer
     applicable, the Company estimates that the write-off of this
     net tax regulatory asset could result in a charge to net
     income of approximately $44.7 million which would be
     classified as an extraordinary item.


4.   COMBINATION WITH LONG ISLAND LIGHTING COMPANY (LILCO         
     TRANSACTION)  

                 AMENDED AGREEMENT WITH LILCO

     On December 29, 1996, Brooklyn Union and LILCO entered into an
     Agreement and Plan of Exchange (LILCO Agreement), pursuant to
     which the companies would become wholly owned subsidiaries of
     a new holding company (LILCO Transaction).  The LILCO
     Agreement was amended and restated to reflect certain
     technical changes as of February 7, 1997 and June 26, 1997.
     Further, as the result of Brooklyn Union's reorganization into
     holding company form on September 29, 1997, the Company was
     assigned all of Brooklyn Union's rights in and to, and assumed
     all of the obligations of Brooklyn Union under the Amended
     LILCO Agreement.      

     The LILCO Transaction was approved by both companies' boards
     of directors and shareholders of both companies approved the
     transaction on August 7, 1997.  Under the terms of the LILCO
     Transaction, as the result of a merger of the Company with a 
     newly-formed subsidiary of the new holding company, the

                              8 

<PAGE>
     Company's common shareholders will receive one share of common
     stock of the new holding company for each common share of the
     Company that they currently own.  Through a share exchange,
     LILCO common shareholders will receive 0.803  shares (the
     Ratio) of the new holding company's common stock for each
     share of LILCO common stock that they currently own.  In the
     event that the transaction with the Long Island Power
     Authority (LIPA Transaction) is consummated, the Ratio will be
     0.880.  See LILCO Agreement with Long Island Power Authority
     (LIPA Transaction).  Based on current facts and circumstances,
     it is probable that the purchase method of accounting will
     apply to the LILCO Transaction with LILCO being the acquiring
     company for accounting purposes.

     The Amended LILCO Agreement contains certain covenants of the
     parties pending the consummation of the LILCO  Transaction. 
     Generally, the parties must carry on their businesses in the
     ordinary course consistent with past practice. 
     
     The Company and LILCO expect to continue their respective 
     current dividend policies until completion of the LILCO
     Transaction.  It is anticipated that the new holding company
     will set an initial annual dividend rate of $1.78 per share on
     its common stock.

     Following the announcement of the LILCO Agreement, Standard &
     Poor's Ratings Services placed Brooklyn Union's corporate
     credit and senior unsecured debt ratings of A, as well as
     Brooklyn Union's A-1 commercial paper rating, on CreditWatch
     with negative implications.  Similarly, Moody's Investors
     Service placed Brooklyn Union's A1 senior unsecured and Prime-
     1 short-term ratings on review for possible downgrade.

     The LILCO Transaction is conditioned upon the receipt of all
     required regulatory approvals and other conditions.  On July
     17, 1997, the Federal Energy Regulatory Commission (FERC)
     approved the LILCO Transaction. By order dated February 5,
     1998, the PSC approved the transactions necessary to effect
     the combination as well as the transfer of certain utility
     assets to the newly-formed holding company and to shared
     services organizations being established to provide general
     corporate administrative services for the business units and
     affiliates of the holding company. (See Management's
     Discussion and Analysis of Results of Operations and Financial
     Condition, "Utility Rate and Regulatory Matters", for further
     information.)  

     Unaudited pro forma combined condensed financial information
     for KeySpan Energy Corporation and Long Island Lighting
     Company at December 31, 1997 and for the 12 months ended
     December 31, 1997 is contained in the Company's Report on Form
     8-K, dated February 13, 1998. 

                                9

<PAGE>
        LILCO AGREEMENT WITH LONG ISLAND POWER AUTHORITY
                       (LIPA Transaction)

     On June 26, 1997, LILCO and LIPA entered into definitive 
     agreements pursuant to which, after the transfer of LILCO's
     gas distribution assets, non-nuclear electric generation
     assets and certain other assets and liabilities (Transferred
     Assets and Liabilities) to one or more newly-formed
     subsidiaries of the new holding company (Transferee
     Subsidiaries), LILCO's common and preferred stock will be sold
     to LIPA for $2.4975 billion in cash.  The LIPA Transaction was
     approved by LILCO's shareholders on August 7, 1997.  Upon
     consummation of the LIPA Transaction, LIPA will own LILCO's
     electric transmission and distribution system, its 18%
     interest in the Nine Mile Point 2 Nuclear Power Station, and
     its electric regulatory assets and liabilities, and will
     assume or refinance approximately $339 million in preferred
     stock and approximately $3.6 billion in long term debt.  The
     common and preferred stock transferred to consummate the LIPA
     Transaction will be cancelled and will not represent an
     interest in the new holding company or any of its
     subsidiaries.

     As part of the LIPA Transaction, the definitive agreements 
     contemplate that one or more subsidiaries of the newly-formed
     holding company will enter into agreements with LIPA, pursuant
     to which such subsidiaries will provide management and
     operations services to LIPA with respect to the electric
     transmission and distribution system, sell power generated by
     the non-nuclear power plants to LIPA, and manage LIPA's fuel
     and electric purchases and any off-system electric sales.  In
     addition, three years after the LIPA Transaction is
     consummated, LIPA will have the right for a one year period to
     acquire the non-nuclear generating assets.  The purchase price
     for such assets would be the fair market value at the time of
     the exercise of the right, which value will be determined by
     independent appraisers.

     On July 16, 1997, the New York State Public Authorities 
     Control Board (PACB) unanimously approved the definitive
     agreements related to the LIPA Transaction subject to the
     following conditions: (1) within one year, LIPA must establish
     a plan for open access to the electric distribution system;
     (2) LIPA may not purchase the generating facilities, as
     contemplated in the generation purchase right agreement, at a
     price greater than book value; (3) the holding company formed
     in connection with the LIPA Transaction (or the LILCO
     Transaction) must agree to invest, over a ten year period, at
     least $1.3 billion in energy-related and economic development
     projects, and natural gas infrastructure projects on Long
     Island; (4) LIPA will guarantee that, over a ten year period,
     average electric rates will be reduced by no less than 14%

                              10

<PAGE>
     when measured against LILCO's rates today.  As part of this
     guarantee, no less than 2% cost savings to LIPA customers must
     result from the savings attributable to the LILCO Transaction;
     and (5) LIPA will not increase average customer rates by more
     than 2 1/2% over a 12 month period without approval of the
     Public Service Commission.

     The LIPA Transaction is subject to the approval of the FERC
     and other regulatory agencies.  In July 1997, the Company,
     LILCO and LIPA filed requests for private letter rulings with
     the Internal Revenue Service regarding certain federal income
     tax issues that require favorable rulings in order for the
     LIPA Transaction to close.  On January 20, 1998, LILCO filed
     an application with the PSC for approval of the transfer of
     the Transferred Assets and Liabilities from LILCO to the 
     Transferee Subsidiaries.  At its session held on
     February 11, 1998, the FERC approved the LIPA Transaction. 
     The Company is unable to determine when or if all other
     consents and approvals required to consummate the LIPA
     Transaction will be obtained.


                              11


<PAGE>
           KEYSPAN ENERGY CORPORATION AND SUBSIDIARIES

             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          RESULTS OF OPERATIONS AND FINANCIAL CONDITION


Operating Results

The following is a summary of items affecting comparative earnings
and a discussion of the material changes in revenues and expenses
during the following periods:

(1)  Three Months ended December 31, 1997 vs. Three Months ended
     December 31, 1996.

(2)  Twelve Months ended December 31, 1997 vs. Twelve Months     
     ended December 31, 1996.


Earnings

Consolidated earnings for the first quarter ended December 31, 1997
were $56.5 million, or $1.11 per share, compared to $44.7 million,
or 90 cents per share, for the first quarter of last year. 
Earnings in this year's first quarter continued to reflect solid
performance from operating subsidiaries and included a gain of $7.4
million, or 14 cents per share, from the sale of our domestic
cogeneration investments and related fuel management operations. 
The sale enabled us to realize value from the investment and to
eliminate any potential conflict related to the ownership of these
electric-generation facilities following the LILCO Transaction. 
Utility operations contributed $44.2 million, or 87 cents per
share, to consolidated earnings for the first quarter of fiscal
1998, compared to $41.5 million, or 83 cents per share, in last
year's first quarter.  The increase reflects continued attainment
of cost efficiency and revenue growth objectives.  The results of
the energy-related investment group primarily reflect income from
gas production operations of The Houston Exploration Company
(THEC), investment in the Iroquois Pipeline and the gain from the
cogeneration sale.  This group contributed a total of $14.0
million, or 27 cents per share, to consolidated earnings for the
first quarter of fiscal 1998.  Excluding the gain from the sale of
our cogeneration investment, earnings from the group were $6.6
million, or 13 cents per share, for the first quarter of fiscal
1998 compared to $4.1 million, or eight cents per share, for last
year's first quarter.  The group's results primarily reflected
operating earnings of $5.7 million, or 11 cents per share, from
THEC in this year's first quarter compared to $3.0 million, or six
cents per share, a year ago.  THEC's results reflected increased
production and higher prices.  The energy-marketing group showed
slight losses in the first quarter of both years, reflecting the
effect of various costs related to market development.  We are

                              12

<PAGE>
applying our project development know-how internationally in
pipeline and distribution infrastructure, technology, cogeneration
and marketing in select areas overseas.  Major projects under
various stages of development include gas pipeline and distribution
projects in the United Kingdom, and gas cogeneration and
distribution projects in Mexico.  

Consolidated earnings for the 12 months ended December 31, 1997
were $126.3 million, or $2.50 per share, compared to $122.7
million, or $2.47 per share, for the 12 months ended December 31,
1996.  Earnings in the 12 months ended December 31, 1997 included
gains of $15.2 million, or 30 cents per share, from sales of
various cogeneration investments as well as the sale of residual
interests in Canadian assets.  Further, earnings in the 12 months
ended December 31, 1996 included similar but larger net gains of
$25.7 million, or 52 cents per share, from the initial public
offering of THEC's common stock and sale of our investment in a
Canadian processing plant, net of a reorganization charge, all
recorded in September 1996. Otherwise, results for the 12 months
ended December 31, 1997 reflected favorable trends in earnings
growth from major operating groups.

The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS
No. 128) during fiscal 1997.  The Company adopted SFAS No. 128
beginning October 1, 1997 and there was no difference between basic
and diluted earnings per share amounts as computed in accordance
with the requirements of SFAS No. 128.

Firm gas and transportation sales for the first quarter of fiscal
1998, which was 4.8% colder than normal, were 43,535 MDTH, compared
to 41,703 MDTH, in last year's first quarter, which had normal
weather.  Total gas throughput, which includes gas sales to
interruptible customers primarily within Brooklyn Union's service
territory and transportation services primarily to off-system
customers, was 57,374 MDTH for the first quarter of fiscal 1998,
compared to 55,087 MDTH in last year's first quarter.  Total gas
throughput, for the 12 months ended December 31, 1997 was 197,496
MDTH, compared to 187,770 MDTH for the corresponding 12-month
period a year ago.

Net revenues (operating revenues less cost of gas) increased 1% in
the three months ended December 31, 1997 reflecting weather which
was colder than normal, compared to the same period last year which
had normal weather.  

A significant market for off-system gas sales, transportation and
other services has developed as a result of deregulation.  These
sales and services reflect optimal use of available pipeline
capacity and our New York Market Hub in balancing on-system
requirements to core customers with off-system services to increase
total margins.  For the 12 months ended December 31, 1997, gas and

                               13

<PAGE>
transportation sales and services to off-system and interruptible
customers amounted to 59,294 MDTH compared with 47,768 MDTH for the
comparable period in 1996.


Risk Management

The Company's utility and gas exploration and production
subsidiaries employ derivative financial instruments, such as
natural gas and oil futures, options and swaps, for the purpose of
hedging exposure to commodity price risk.  The value at risk of the
related positions as measured by the maximum adverse price movement
in a single day is not material.  

The utility tariff applicable to certain large-volume customers
permits gas to be sold at prices established monthly within a
specified range expressed as a percentage of prevailing alternate
fuel oil prices.  Brooklyn Union uses standard New York Mercantile
Exchange futures contracts to fix profit margins on specified
portions of the sales to this market in line with pricing
objectives.

With respect to natural gas production operations, THEC generally
uses options to establish collars and swaps to hedge the price risk
related to known production plans and capabilities.  These
instruments include a fixed price/volume and are structured as both
straight and participating swaps.  In all swap instruments, THEC
pays the counterparties the amount by which the floating variable
price (settlement price) exceeds the fixed price and receives the
amount by which the settlement price is below the fixed price.

The Company's subsidiaries are exposed to credit risk in the event
of nonperformance by counterparties to derivative contracts, as
well as nonperformance by the counterparties of the transactions
against which they are hedged.  The Company believes that the
credit risk related to the futures, options and swap instruments is
no greater than that associated with the primary commodity
contracts which they hedge, as the instrument contracts are with
major investment grade financial institutions, and that elimination
of the price risk lowers the Company's overall business risk.


Gas Production Revenues

Gas production and other revenues increased in the current periods
as compared with the comparable periods last year, principally due
to the acquisition of gas and oil properties by THEC in July and
September 1996.  Gas production for the quarter ended December 31,
1997 was 15.5 BCFe, or 5.0 BCFe above production in the first
quarter last year.  For the 12 months ended December 31, 1997, gas
production was 51.3 BCFe, compared with 31.9 BCFe in the 12 months
ended December 31, 1996.  The effective price (average wellhead
price received for production including realized gains and losses)
was $2.58 per MCF in the first quarter of fiscal 1998 compared with

                                14

<PAGE>
$2.32 per MCF in the first quarter of 1997.  The average wellhead
price was $2.76 per MCF in the current quarter compared with $2.68
per MCF in the first quarter of 1997. The effective prices in the
12 months ended December 31, 1997 and 1996 were $2.25 and $2.00 per
MCF, respectively. 

THEC uses the full cost method of accounting for its investment in
natural gas and oil properties.  Under the full cost method of
accounting, all costs of acquisition, exploration and development
of natural gas and oil reserves are capitalized into a "full cost
pool" as incurred, and properties in the pool are depleted and
charged to operations using the unit-of-production method based on
the ratio of current production to total proved natural gas and oil
reserves.  To the extent that such capitalized costs (net of
accumulated depreciation, depletion and amortization) less deferred
taxes exceed the present value (using a 10% discount rate) of
estimated future net cash flows from proved natural gas and oil
reserves and the lower of cost or fair value of unproved
properties, such excess costs are charged to operations.  If a
write-down is required, it would result in a charge to earnings but
would not have an impact on cash flows from operating activities. 
Once incurred, a write-down of oil and gas properties is not
reversible at a later date even if oil and gas prices increase.

As of December 31, 1997, THEC estimates, using prices in effect as
of such date, that the ceiling limitation imposed under full cost
accounting rules on total capitalized natural gas and oil property
costs exceeded actual capitalized costs.  Natural gas prices
declined substantially in January 1998 from prices in effect on
December 31, 1997.  If prices continue to decline, THEC may be
required to write down the carrying value of its natural gas and
oil properties depending upon natural gas prices and the results of
drilling programs during the second quarter of Fiscal 1998.


Consolidated Expenses

Operation and maintenance expense increased 2.4% for the quarter
ended December 31, 1997.  The increase principally reflects higher
operating costs related to increased production operations of THEC
and market development costs of energy marketing subsidiaries.  The
comparative expense in the 12 months ended December 31, 1997
decreased slightly.  The 12 months ended December 31, 1996 included
colder weather and the reorganization charge of $12 million ($7.8
million, after taxes) incurred by THEC.

The increase in depreciation and depletion expense in the current
periods reflects higher depletion charges at THEC due to increased
gas production.

General taxes principally include State and City taxes on utility
revenues and property. The applicable property base generally has

                               15

<PAGE>
increased and the related valuations for assessment of utility
franchise taxes was increased. Taxes based on revenues reflect the
variations in utility revenues each year.

Federal income tax expense reflects changes in pre-tax income.  The
effective tax rate for the 12 months ended December 31, 1997 was
36%, reflecting the non-deductibility of certain organization
expenses.

Interest charges for the 12 months ended December 31, 1997
primarily reflect lower utility interest costs due to debt
refunding.  Other interest charges principally include carrying
charges related to regulatory settlement items, and for the
quarters ended December 31, 1997 and 1996, reflect interest charges
related to commercial paper borrowings for general corporate
purposes. 

Other income includes results from investments in energy services
which reflect increased earnings in the current periods, primarily
associated with an increase in the Company's investment in the
Iroquois Gas Transmission System from 11.4% to 19.4% in May 1996. 
Other income for the 12 months ended December 31, 1997 reflect the
gains on the sale of our domestic cogeneration investment and the
sale of residual interests in Canadian assets.  Other income for
the 12 months ended December 31, 1996 reflect the gains on the sale
of subsidiary stock of $35.4 million ($23 million, after taxes) and
the sale of a Canadian gas processing plant of $16.2 million ($10.5
million, after taxes).

In September 1997, all outstanding shares of 4.60% Cumulative
Preferred Stock were redeemed.  Prior to the redemption, dividends
reflect reductions in the number of shares outstanding due to
sinking fund requirements.


Financial Condition and Dividends 

Cash flow from operating activities continues to reflect stable
growth notwithstanding differences caused by weather and the timing
of payments of a general corporate nature, which adversely affected
cash flow in the quarter ended December 31, 1997.  

At December 31, 1997, the Company had available bank lines of
credit of $100 million, which lines secure the issuance of
commercial paper.  The lines of credit are available to the Company
and its principal subsidiary, Brooklyn Union.  THEC has an
available line of credit of $130 million.  THEC is planning on
issuing $150 million of bonds through a private placement depending
on market conditions and interest rates.  The proceeds from such
issuance would be used, in part, to pay down obligations for
borrowings under its revolving loan agreement.  The bonds if
issued, would be subordinate to borrowings under the line of
credit.

                            16

<PAGE>
In November 1997, the Board of Directors approved an increase in
the annual dividend on common stock to $1.50 per share from $1.46
per share.  This increase became effective on February 1, 1998,
when the quarterly dividend was raised to 37 1/2 cents per share
from 36 1/2 cents per share.  Common dividends have been increased
in 22 consecutive years and paid continuously for 50 years.

Pursuant to the PSC order dated February 5, 1998 approving the 
LILCO Transaction, Brooklyn Union's ability to pay dividends 
to the Company is conditioned upon maintenance of a utility 
capital structure with debt not exceeding 55% of total utility
capitalization.  The principal source of funding for the Company
is dividend payments from Brooklyn Union.  The Company and
LILCO expect to continue their respective current dividend policies
until completion of the LILCO Transaction.  It is anticipated that
the new holding company, will set an initial dividend rate of $1.78
per share of its common stock.  (See Notes to the Condensed
Consolidated Financial Statements, Note 4., "Combination with Long
Island Lighting Company", for additional information.)


Utility Rate and Regulatory Matters

                 Proposed LILCO Transaction
 
In 1997, the Company and LILCO filed a joint petition with the New
York State Public Service Commission (PSC or Commission) seeking
PSC approval, under section 70 of the New York Public Service Law,
of the Amended LILCO Agreement by which the Company and LILCO each
would become subsidiaries of a newly-formed holding company. (See
Notes to the Condensed Consolidated Financial Statements, Note 4.,
"Combination with Long Island Lighting Company".)  In addition, the
petition called for $1.0 billion of  efficiency savings,
excluding gas cost, attributable to operating synergies that are
expected to be realized over the 10 year period following the
combination, be allocated to ratepayers net of transaction costs.
In late December, Brooklyn Union, LILCO, the Staff of the
Department of Public Service and three other parties entered into
a Settlement Agreement (Stipulation) resolving all issues among
them in the proceeding. Hearings on the Stipulation were held in
early January 1998 and, by order dated  February 5, 1998, the PSC
approved the Stipulation. Under the Stipulation, effective on the
date of the consummation of the LILCO Transaction, Brooklyn Union's
base rates to core customers will be reduced by $23.866 million
annually.  In addition, effective in the fiscal year in which the
LILCO Transaction is consummated, Brooklyn Union will be subject to
an earnings sharing provision pursuant to which it will be required
to credit core customers with 60% of any utility earnings up to 100
basis points above certain threshold returns on equity levels over
the term of the rate plan (other than any earnings associated with
discrete incentives) and 50% of any utility earnings in excess of
100 basis points above such threshold levels.  The threshold levels

                                17

<PAGE>
are 13.75% in fiscal year 1998, 13.50% in fiscal years 1999 through
2001, and 13.25% in fiscal year 2002.  A safety and reliability
incentive mechanism will be implemented effective on the
consummation date of the LILCO Transaction, with a maximum 12 basis
point pretax return on equity penalty if Brooklyn Union fails to
achieve certain safety and reliability performance standards.  With
the exception of the simplification of the customer service
performance standards, the Brooklyn Union rate plan approved by the
PSC in the holding company proceeding remains unchanged.  Any gas
cost savings allocable to Brooklyn Union resulting from the LILCO
Transaction will be reflected in rates to utility customers as
those savings are realized.  Also under the Stipulation, LILCO's
base gas rates were reduced by $12.175 million annually effective
on February 5, 1998, and further reduced by $6.253 million
effective on the date of consummation of the LILCO Transaction. 
The Stipulation defers action on the pending LILCO electric rate
plan until no earlier than July 1, 1998.  

The Stipulation also eliminates or relaxes many restrictions
contained in the holding company settlement agreement in such areas
as affiliate transactions; use of the name and reputation of
Brooklyn Union by unregulated affiliates; common officers of the
holding company, the utility subsidiaries and unregulated
subsidiaries; dividend payment restrictions; and the composition of
the Board of Directors of Brooklyn Union.  


                     Appliance Service
 
On April 4, 1997, the PSC issued its "Order Concerning Gas
Appliance and Repair Service" by which it determined that
non-safety related appliance repair service, other than minor
adjustments, should not be performed by regulated gas utilities. 

In compliance with the order, Brooklyn Union filed tariff revisions
with the PSC, which became effective on October 1, 1997, and also
filed an application seeking PSC approval to transfer certain
assets related to the conduct of the non-safety related appliance
repair business to a subsidiary that would conduct and carry on
that business after the PSC's approval is secured.  On February 5,
1998, as part of the Settlement Agreement in the proceeding
governing the LILCO Transaction (see above), the Commission
approved the terms of the asset transfers as well as the procedures
by which the Company would assign unexpired service contracts to
the newly-formed appliance repair subsidiary.  The Settlement
Agreement calls for the asset transfer and business "spin-off" to
take place no earlier than April 5, 1998 and no later than June 30,
1998.  

                             18 

<PAGE>
                   Customer Fixed Price Option

On June 5, 1997, the PSC issued an order entitled "Order Requiring
the Filing of Proposals to Ameliorate Gas Price Volatility and
Requesting Comments" (Order).  The Order required each New York
State local distribution company to submit proposals for a fixed
price option to be available for use by customers effective with
the 1997-98 heating season.  

As a result of this Order, Brooklyn Union made available to gas
sales customers, except residential non-heating customers, seasonal
off-peak and large volume customers, a fixed price option, for the
period December 1997 through April 1998.  Any incremental costs
that may be incurred as a result of the program will be recovered
from customers in the following year.

               Industry Restructuring Proceedings 

The PSC has set forth a policy framework to guide the transition of
New York State's gas distribution industry in the deregulated gas
industry environment. Beginning on May 1, 1996, customers in the
small-volume market were given the option to purchase their gas
supplies from sources other than Brooklyn Union, the gas
transporter.  Large-volume customers had this option for a number
of years.  In addition to transporting gas that customers purchase
from marketers, utilities will provide billing, meter reading and
other services for aggregate rates that match the distribution
charge reflected in otherwise applicable sales rates to supply
these customers.  The PSC placed a voluntary limit on the amount of
gas a utility would be obligated to transport in its core market
under aggregation programs to 5% of total core sales in each of the
next three years, with no more than 25% of any one service class
permitted to convert to transportation service. 

In September, as part of the restructuring proceeding of the gas-
distribution industry in New York, the staff of the Public Service
Commission issued a position paper, "The Future of the Natural Gas
Industry."  Its principal recommendations relate to gas supply and
pipeline capacity issues, specifically, the separation of the gas
merchant function from the distribution-transportation function as
the most effective way to establish a more competitive local gas
market.  A five-year transition period was suggested in the
Position Paper, during which time local distribution companies
would continue to provide the bulk of the merchant function.

We conceptually support the recommendations made in the Position
Paper but requested flexibility and customer feedback before the
PSC makes a final decision.  Our response addressed the need to
establish principles regarding:  system reliability, recovery of
prudently incurred costs, the obligation to provide service to all
firm customers, tax disparity among suppliers and the obligation to
be "supplier of last resort".  Brooklyn Union also indicated that

                          19

<PAGE>
legislative revisions were required in order for the Staff
recommendations to be implemented.  It is anticipated that the PSC
will evaluate all comments to the Position Paper before it makes
specific recommendations.


Environmental Matters

The Company is subject to various Federal, State and local laws and
regulatory programs related to the environment.  These
environmental laws govern both the normal, ongoing operations of
the Company as well as the cleanup of historically contaminated
properties.  Ongoing environmental compliance activities, which
historically have not been material, are integrated with the
Company's regular operation and maintenance activities.  As of
December 31, 1997 the Company had an accrued liability of $26.3
million representing costs associated with investigation and
remediation at former manufactured gas plant sites.  (See Notes to
Condensed Consolidated Financial Statements, Note 2.,
"Environmental Matters".)       


Computer Software, Year 2000 Issue

The Company has evaluated the extent to which modifications to its
computer software and database will be necessary to accommodate the
year 2000.  The Company's computer systems are generally based on
two digits and will require some additional programming to
recognize the start of the new millennium.  In 1996, the Emerging
Issues Task Force of the Financial Accounting Standards Board
reached a consensus, EITF Issue No. 96-14, that internal and
external costs specifically associated with modifying internal-use
computer software for the year 2000 should be charged to expense as
incurred.  The Company estimates the cost of future modifications,
which are expected to be made over the next two years, to be
approximately $2.5 million.


New Financial Accounting Standards

The Financial Accounting Standards Board issued the following
accounting standards:  Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" (SFAS No. 130); and
Statement of Financial Accounting Standards No. 131, "Disclosure
about Segments of an Enterprise and Related Information" (SFAS No.
131).  The Company will adopt SFAS No. 130 and SFAS No. 131 in its
next fiscal year.  The Company does not expect any material effect
from adoption of these statements.

                                 20

<PAGE>
            REVIEW OF INDEPENDENT PUBLIC ACCOUNTANTS

Arthur Andersen LLP has performed reviews in accordance with
standards established by the American Institute of Certified Public
Accountants of the Condensed Consolidated Financial Statements for
the periods set forth in their report shown on page 22.
 
                                 21

<PAGE>
            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To KeySpan Energy Corporation:


We have reviewed the accompanying condensed consolidated balance
sheets of KeySpan Energy Corporation (a New York corporation) and
subsidiaries as of December 31, 1997 and 1996, and the related
condensed consolidated statements of income for the three and
twelve month periods ended December 31, 1997 and 1996, and the
condensed consolidated statements of cash flows for the three and
twelve month periods ended December 31, 1997 and 1996. These
financial statements are the responsibility of the Company's
management.

We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical  procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications
that should be made to the financial statements referred to above
for them to be in conformity with generally accepted accounting
principles.

We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet and consolidated
statement of capitalization of KeySpan Energy Corporation and
subsidiaries as of September 30, 1997, and the related consolidated
statements of income, retained earnings, and cash flows for the
year then ended (not presented herein) and, in our report dated
October 22, 1997, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated balance sheet
as of September 30, 1997 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which
it has been derived.



                                   ARTHUR ANDERSEN LLP


New York, New York
January 22, 1998 


                                  22 

<PAGE>
Part II. Other Information

Item 1. Legal Proceedings

The Company and/or its subsidiaries have from time to time been
named as defendants in various legal proceedings.  In the opinion
of management, the ultimate disposition of currently asserted
claims will not have a materially adverse impact on the Company's
consolidated financial position or results of operations.  For
information regarding environmental matters affecting the Company,
see Notes to the Condensed Consolidated Financial Statements, Note
2., "Environmental Matters".

Item 5.  Other Information

     Annual Shareholders Meeting 
     Shareholders voted overwhelmingly for the combination with
     Long Island Lighting Company at the special meeting held in
     August.  We anticipate that the business combination will take
     place this year, and have postponed the shareholder meeting
     originally scheduled for February 5, 1998.  KeySpan directors
     will continue to serve until a meeting of shareholders is
     held.  The directors selected for the new holding company will
     serve until a meeting of shareholders of the new holding
     company is held. 

     Gas Procurement Matters 
     On February 10, 1998, Brooklyn Union entered into a series of
     agreements with Enron Capital and Trade Resources Corp. (ECT)
     and its parent company, Enron Corp. which provide for ECT to
     engage in an overall gas supply management arrangement (ECT
     Arrangement) on behalf of Brooklyn Union over the course of a
     one year term commencing on April 1, 1998 (Contract Period). 
     Under the ECT Arrangement, Brooklyn Union will assign contract
     rights to interstate pipeline transportation and storage field
     capacity to ECT (to the extent that Federal law permits such
     assignment), and will appoint ECT as its exclusive agent under
     gas supply contracts and other interstate pipeline and storage
     field capacity contracts (to the extent not assignable under
     Federal law).  ECT also will satisfy Brooklyn Union's gas
     supply requirements during the Contract Period.  As
     consideration for the various assignments and agency
     designations reflected in the ECT Arrangement, ECT will pay
     Brooklyn Union a fixed amount that, in Brooklyn Union's
     judgment, exceeds the level of margins that it would be able
     to generate through the operation of its New York Hub during
     the Contract Period.  On February 10, 1998, Brooklyn Union
     filed with the PSC the ECT agreements and certain tariff
     revisions that would permit the ECT Arrangement to take effect
     as contemplated in such agreements.

                               23

<PAGE>
Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits

     (11) Statement re computation of per share earnings.

     (15) Letter re unaudited interim financial information.

     (27) Financial data schedule.


(b) Reports on Form 8-K

     With the filing of its Form 10-Q Report for the quarter ended
     December 31, 1997, the Company filed a report on Form 8-K
     providing disclosure applicable to the unaudited pro forma
     combined condensed financial information for the Company and
     Long Island Lighting Company at December 31, 1997 and for the
     12 months ended December 31, 1997.  The unaudited pro forma
     combined condensed financial information reflects the
     condensed consolidated financial information of the Company
     and Long Island Lighting Company contained in their respective
     Quarterly Reports on Form 10-Q.
     
     There was a Form 8-K filed on December 19, 1997 together with
     the Company's Annual Report on Form 10-K for the fiscal year
     ended September 30, 1997 providing disclosure applicable to
     the unaudited pro forma combined condensed financial
     information for the Company and Long Island Lighting Company
     at September 30, 1997 and for the 12 months ended September
     30, 1997.  The unaudited pro forma combined condensed
     financial information reflects the condensed consolidated
     financial information of the Company as reported in its Annual
     Report on Form 10-K for its fiscal year ended September 30,
     1997 and of Long Island Lighting Company as reported in its
     Quarterly Report on Form 10-Q for its period ended September
     30, 1997. 
     
                                 24  

<PAGE>
           KEYSPAN ENERGY CORPORATION AND SUBSIDIARIES

                            SIGNATURE

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



                                       KEYSPAN ENERGY CORPORATION
                                             (Registrant)



Date February 13, 1998             s/ V.D. Enright
                                   ------------------------
                                   V.D. Enright
                                   Senior Vice President, 
                                   Chief Financial Officer
                                   and Chief Accounting
                                   Officer






                                   25