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                                                                 EXHIBIT 10.1.2


                              FIRST MODIFICATION TO

                          RIGHT OF OCCUPANCY AGREEMENT

         THIS AMENDMENT, dated as of the 25th day of September, 1997 between
Niagara Mohawk Power Corporation and its subsidiaries now existing and any
successor(s) thereto which are created as a result of the PowerChoice Case No.
94-E-0098, et al. pending before the New York State Public Service Commission
(NIAGARA), a New York corporation having its principal place of business at 300
Erie Boulevard West, Syracuse, New York 13202 and Telergy Joint Venture
(Telergy), a New York joint venture having its principal place of business at
5784 Widewaters parkway, Syracuse, New York 13204.

                               W I T N E S S E T H

         WHEREAS, NIAGARA and Telergy are parties to a certain Right of
Occupancy Agreement dated as of February 2, 1996 (the RO Agreement), whereby,
among other things, Telergy is granted a non-exclusive Right of Occupancy to
install a Backbone Network and Spur Routes consisting primarily of a fiber optic
telecommunications network and facilities in NIAGARA Rights-of-Way, Facilities
and electric distribution conduit along the Backbone Route as those terms are
defined in the RO Agreement; and

         WHEREAS, the parties agreed that it would be mutually beneficial to
amend the RO Agreement in certain respects.

         NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereby agree that,
effective as of the date first written above, the RO Agreement is hereby amended
in the following respects:

         1.       Notwithstanding anything to the contrary contained in the RO
                  Agreement, or any other provisions contained in the RO
                  Agreement:



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                  A.   Section 1, DEFINITIONS, shall be amended by adding
                       thereto the following definitions:

                           1.32     "CAPS" is defined to mean Competitive Access
                                    Providers to any other telecommunications
                                    network.

                           1.33     "LOCAL LOOP" is defined to mean the physical
                                    wires/fibers that run from the subscriber"s
                                    telephone set or PBX or key telephone
                                    system, to the telephone Company central
                                    office.

                           1.34     "NIAGARA STRANDS" is defined to mean a total
                                    of four fiber optic telecommunications
                                    strands anywhere in Telergy's Facilities
                                    that are installed in NIAGARA's Right of Way
                                    or Facilities as included in Exhibit A as it
                                    may be amended from time to time of the same
                                    type and quality as the Backbone Network and
                                    any spurs or LOCAL LOOPS and such four
                                    strands shall not be damaged in any fashion
                                    and shall consist of 2 pairs of such strands
                                    to be located in separate buffer tubes
                                    anywhere that Telergy or its subsidiaries
                                    have installed fiber optic
                                    telecommunications strands installed in such
                                    separate buffer tubes as included in Exhibit
                                    A as it may be amended from time to time.

                           1.35     "CLEC" ("Competitive Local Exchange
                                    Carrier") is defined to mean a provider of
                                    local exchange services that is not the
                                    incumbent local exchange carrier

                  B        In Sections 2 take out "internal" and in Sections 2
                           and 3.1, insert "NIAGARA Facilities in" in the third
                           line of each section before the words "NIAGARA"s
                           Rights of Way".



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                  C.       In Section 4.1 on the 5th line, after "occupancy" add
                           "to construct a fiber Backbone network, LOCAL LOOPS
                           and Spurs" and continue with the sentence after
                           "Backbone Route".

                           Section 4.1 in the RIGHT-OF-OCCUPANCY, "TERM" is
                           changed to read as follows:

                                            For an Initial Term of twenty-five
                                    (25) years commencing on the date of
                                    approval by the New York State Public
                                    Service Commission (Commencement Date) and
                                    ending on the expiration of the
                                    three-hundredth (300th) month thereafter,
                                    unless earlier terminated or unless extended
                                    pursuant to this Agreement, subject to the
                                    terms and conditions set forth in this
                                    Agreement, NIAGARA hereby grants to TELERGY
                                    a Right-of-Occupancy in, on, upon, under,
                                    over, across, along and through (hereinafter
                                    collectively referred "within") the Backbone
                                    Route and LOCAL LOOPS and spurs within
                                    NIAGARA's Electric Transmissions
                                    Right-of-Way and electric distribution
                                    conduit system, subject to all terms and
                                    conditions of any governing agreements in
                                    addition to this Agreement when conduit,
                                    poles and/or towers are used, except that
                                    compensation for the use of the electronic
                                    distribution and/or transmission conduit
                                    network agreement only has been addressed in
                                    this agreement.

                  D.       Section 5.1 is hereby amended to add the following
                           paragraph:

                                             The specific Right-of-Way that will
                                    be subject to the Right of Occupancy
                                    Agreement shall be defined in the manner set
                                    forth in Section 6 of the RO Agreement. Maps
                                    showing the revisions to the Backbone Route
                                    as modified by the first Modification to the
                                    RO Agreement shall be prepared and attached
                                    to this Modification to RO Agreement as
                                    Exhibit A, which shall replace the original
                                    Attachment A to the RO Agreement. The
                                    Right-of-Way for the extension to [***]


CONFIDENTIAL
[***] Confidential treatment has been requested with respect to material omitted
      on this page. The omitted portions have been filed separately with the
      Securities and Exchange Commission.


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                                    and the Rights-of-Way to replace the
                                    extensions to [***] with [***] Operations
                                    Center located in [***] shall be defined by
                                    the parties in the manner set forth in
                                    Section 6 of the RO Agreement within
                                    forty-five (45) working days following the
                                    date of execution of this Modification.

                  E.      Delete Section 7 governing "Additional
                          Rights-of-Occupancy for Spur Routes.

                  F.      Section 9.5 is hereby modified to replace all
                          references therein to [***] with [***] to delete the
                          reference to [***], and to substitute therefor [***]

                  G.      Section 9.5 is hereby modified to add a sentence at
                          the end of the first paragraph as follows:

                                    Failure to complete Telergy's obligations in
                                    accordance with these dates shall obligate
                                    Telergy to reimburse NIAGARA for any
                                    telecommunications arrangements NIAGARA must
                                    make for its internal telecommunications
                                    needs due to the lack of availability of the
                                    original NIAGARA CAPACITY of [***] to make
                                    up for the telecommunications capacity
                                    currently being provided by NYNEX and AT&T
                                    at Sprint expense through an agreement for
                                    the purchase of the 2 GHz microwave license
                                    from NIAGARA until the NIAGARA CAPACITY is
                                    fully operational; provided, however, that
                                    any delays resulting directly and solely
                                    from NIAGARA's engineering, permitting, and
                                    easement activities shall not constitute a
                                    failure to complete by Telergy, from the
                                    date of last execution of this modification
                                    forward. Telergy agrees to pay directly all
                                    invoices from third parties for any and all
                                    such service within the required days in
                                    such invoices.


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CONFIDENTIAL
[***] Confidential treatment has been requested with respect to material omitted
      on this page. The omitted portions have been filed separately with the
      Securities and Exchange Commission.

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\                  H.       Section 9.5 is hereby amended to add the following
                           paragraph:

                                             Segment III shall connect Albany,
                                    NY to Pleasant Valley, NY, which shall be
                                    constructed at dates and times to be
                                    determined by Telergy, provided, however,
                                    that the extension to Pleasant Valley shall
                                    not interfere with or hinder Telergy's
                                    ability to complete the original Backbone
                                    Route from Buffalo, NY to Albany, NY or to
                                    provide NIAGARA CAPACITY as required in the
                                    RO Agreement.

                  I.       Section 13.1.1 is hereby amended to delete the word
                           "initially" in the second line and to replace [***]
                           with [***].

                  J.       Section 13.1.2 is hereby changed to delete the
                           reference to [***] and substitute [***] in its
                           place.

                  K.       Section 13.1.3 is hereby amended to delete the word
                           "initially" in the third line and to replace "[***]"
                           with "[***]" and to add the following sentence at the
                           end:

                                            In Syracuse, NY, at the point where
                                    the NIAGARA CAPACITY meets the NIAGARA
                                    dedicated interconnect from Telergy's
                                    Syracuse installation to NIAGARA's Syracuse
                                    facility, the NIAGARA Capacity shall be
                                    engineered and installed to provide NIAGARA
                                    with a cross-section of capacity of [***].

                  L.       Section 13.3 is hereby amended to add ", the NIAGARA
                           STRANDS" in the first line after the first three
                           words "The NIAGARA Capacity".

                  M.       Revise Section 14.2 to read as follows: "Should
                           TELERGY, for its own business requirements, require
                           or desire additional Rights-of-Occupancy or NIAGARA
                           Facilities, TELERGY shall notify NIAGARA in writing
                           and submit a request for Additional
                           Right-of-Occupancy use,


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      on this page. The omitted portions have been filed separately with the
      Securities and Exchange Commission.


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                           if appropriate."

                  N.       Section 14.2.1 in the MODIFYING NIAGARA OR TELERGY
                           FACILITIES Section is changed as follows:

                                    NIAGARA shall process any request in the
                           same manner and subject to the same conditions and
                           provisions set forth in this Agreement as modified,
                           advising TELERGY of NIAGARA's acceptance, rejection
                           or modification of said request.

                           The remainder of Section 14.2 shall remain unchanged.

                  O.       Section 23.1 and 23.2 governing NOTICES is hereby
                           amended to read as follows:

                                    23.1 Any notice to be given to NIAGARA under
                                    this Agreement shall be sent by certified
                                    mail or overnight express delivery:

                                    (one copy each to):

                                         (1)   Director, Telecommunications
                                               Niagara Mohawk Power Corporation
                                               300 Erie Boulevard West - C2
                                               Syracuse, New York 13202

                                         (2)   Assistant General Counsel
                                               Niagara Mohawk Power Corporation
                                               300 Erie Boulevard West - A3
                                               Syracuse, New York 13202

                                    23.2     Any notice given to Telergy under
                                             this Agreement shall be sent by
                                             certified mail or overnight express
                                             delivery:

                                             (one copy each to):

                                             (1)   Chief Executive Officer
                                                   Telergy, Inc.
                                                   5784 Widewaters Parkway


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                                                   Syracuse, New York 13214

                                             (2)   General Counsel
                                                   Telergy, Inc.
                                                   20 Corporate Woods Suite 100
                                                   Albany, New York 12211

                  2.       Paragraph 31.2 shall be changed to read as follows:

                                    The parties recognize that the compensation
                           NIAGARA may owe for the RO Agreement is open with the
                           New York Public Service Commission (PSC) in Case
                           96-M-0138. The parties also recognize that reasonable
                           additional compensation is appropriate for NIAGARA's
                           agreement to the following: [***] All optical fibers
                           are [***] and will be provided on an "as-where-is"
                           basis with no warranties express or implied. Unless
                           otherwise agreed to, all maintenance and/or
                           construction on strands located on NIAGARA electric
                           transmission towers that have been allowed to be
                           installed will be performed by NIAGARA, subject to
                           the terms and conditions in the applicable electric
                           transmission structure occupancy agreement.


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      Securities and Exchange Commission.


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                                    As and for compensation for the
                                    modifications herein and to resolve the open
                                    compensation issue in Case 96-M-0138, the
                                    parties agree that Telergy shall provide:
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[***]     Confidential treatment has been requested with respect to material
          omitted on this page. The omitted portions have been filed separately
          with the Securities and Exchange Commission.

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                                    This compensation is contingent upon PSC
                                    approval of this Agreement as modified
                                    herein without further modification and
                                    closure of the compensation issue in Case
                                    96-M-0138 without requiring additional
                                    compensation beyond the additional
                                    compensation provided herein. In the event
                                    the PSC conditions its approval of this
                                    Agreement or declines to accept the
                                    additional compensation in its entirety as
                                    and for final compensation for this
                                    Agreement and Case 96-M-0138, the parties
                                    agree to negotiate within thirty (30)
                                    business days of receipt of the written
                                    decision from the Commission such additional
                                    compensation to obtain compliance with any
                                    Commission requirements.

                  3.       The parties further recognize and acknowledge that
                           Telergy intends to construct and install LOCAL LOOPS
                           in major cities along the Backbone Route to act as a
                           CLEC and/or a CAP , including but not


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                           limited to Buffalo, Syracuse, and Albany, New York,
                           which LOCAL LOOPS may require Spurs off the Backbone
                           Route. To the extent Telergy constructs portions of
                           the LOCAL LOOPS using NIAGARA conduit, poles or
                           towers, the parties shall execute the applicable
                           agreement(s) governing each such use and Telergy
                           shall pay the standard rate(s) for any such uses, and
                           all such uses and related construction shall be
                           subject to all necessary governmental approval prior
                           to start of construction.

                  4.       All terms appearing in this Modification to Right of
                           Occupancy Agreement and not otherwise defined herein
                           shall have the same meaning as set forth in the RO
                           Agreement.

                  5.       Except as modified and amended by this Modification,
                           all of the terms, covenants and conditions of the RO
                           Agreement are hereby ratified and confirmed in all
                           respects and shall continue to be and remain in full
                           force and effect.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first written above.

TELERGY JOINT VENTURE                       NIAGARA MOHAWK POWER CORPORATION

By:/s/Brian Kelly                           By:/s/William J. Synwolst
   -----------------                           -------------------------
Name: Brian Kelly                           Name: William J. Synwolst
Title: President                            Title: VP I/T & CIO


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