<PAGE>   1
                                                                  EXHIBIT 10.3.2

                               AMENDMENT NO. 1 TO
                          CONVERSION RIGHTS AGREEMENT

     This AMENDMENT NO. 1 to CONVERSION RIGHTS AGREEMENT (hereinafter called
this "Amendment"), dated as of November 10, 1998, between TELERGY, INC., a New
York corporation ("Telergy") and NIAGARA MOHAWK ENERGY, INC., a Delaware
corporation formerly known as Plum Street Enterprises, Inc. ("NME" or "PSE").

                                R E C I T A L S

     WHEREAS, Telergy and NME have entered into a Conversion Rights Agreement,
dated as of April 24, 1998 (the "Conversion Rights Agreement"), providing for
the conversion, under certain circumstances, into common stock of Telergy of
NME's 25% membership interest (the "Membership Interest") in Telergy Central,
LLC ("Telergy Central") and its 25% interest in the indefeasible right of use of
the total capacity of Telergy Central's backbone network;

     WHEREAS, concurrently with the execution of this Amendment, Telergy and
NME are entering into a Stock Purchase Agreement, dated as of the date hereof
(the "Stock Purchase Agreement"), pursuant to which NME shall purchase from
Telergy 83,334 shares of Class A common stock of Telergy, and

     WHEREAS, in connection with the execution of the Stock Purchase Agreement,
Telergy and NME desire to make certain amendments to the Conversion Rights
Agreement.

     NOW THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein and in
the Conversion Rights Agreement, the parties hereto agree as follows:

     1.   Definitions. Capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed to them in the Conversion Rights
Agreement.

     2.   Minimum Interest. (a) In the event that NME sells the Membership
Interest and the PSE IRU and NME does not exercise its right to purchase shares
of Common Stock using the proceeds from the sale pursuant to Section 2 of the
Conversion Rights Agreement, then in no event shall the sale price of the
Membership Interest and the PSE IRU determined in accordance with Section 7(a)
of the Conversion Rights Agreement represent a percentage of the value of
Telergy that is less than nine percent (9%).
<PAGE>   2
     (b) In the event that NME sells the Membership Interest and the PSE IRU
and NME exercises its right to purchase shares of Common Stock using the
proceeds from the sale pursuant to Section 2 of the Conversion Rights
Agreement, then in no event shall the determination of (i) the sale price for
the Membership Interest and the PSE IRU pursuant to Section 7 of the Conversion
Rights Agreement and (ii) the per share purchase price for Common Stock to be
purchased by NME pursuant to Section 8 of the Conversion Rights Agreement be
such that, upon exercise in full by NME of the Purchase Option, NME would
receive a number of shares of Common Stock which would represent less than nine
percent (9%) of all of the shares of common stock of Telergy (including the
Class C common stock) outstanding after issuance thereof, calculated on a
fully-diluted basis.

     3.  Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the state of New York, without giving effect to the
principles of conflicts of laws thereof.

     4.  Counterparts.  This Amendment may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.

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

                                        TELERGY, INC.

                                        By:  /s/ Brian Kelly
                                             -----------------------
                                        Name: Brian Kelly
                                        Title: CEO

                                        NIAGARA MOHAWK ENERGY, INC.

                                        By:  /s/ J. Phillip Frazier
                                             -----------------------
                                        Name: J. Phillip Frazier
                                        Title: CEO & President