EXHIBIT 10-31












                              AMENDMENT NO. 3

                                    to

             THE ANNUAL EXECUTIVE INCENTIVE COMPENSATION PLAN

                                    of

                 NEW YORK STATE ELECTRIC & GAS CORPORATION


The Annual Executive Incentive Compensation Plan of New York 

State Electric & Gas Corporation (the "Plan") is hereby amended, 

effective as of January 1, 1995, as follows:

1.     The last sentence of Article I is hereby amended to read
       as follows:

           Exceptional performance will create benefits for
           ratepayers, shareholders and employees alike.

2.     Article III is hereby amended by listing the following as
       participants in Group II: 
           "Executive Vice Presidents/Senior Vice Presidents"

3.     Article IV is hereby amended to read in its entirety as
       follows:
           Each of the four groups described in Article III will
           have their performance measured based solely on
           corporate achievement, using goals established
           pursuant to Article VI.

4.     Article V,  Section B,  is hereby amended to read in its
       entirety as follows:
           The specific performance goals for the Company will be
           established based on the Company's business plans for
           the performance period.

5.     Article V, Section C,  is hereby amended to read in its
       entirety as follows:
           The threshold measures will be designed to help the
           Company meet its goal of becoming one of the leading
           utilities.

6.     Article V, Section D is hereby amended to read in its
       entirety as follows:
           The variable measures will be established to encourage
           increased shareholder value.

7.     Article V, Section E is hereby deleted.

8.     Article VI is hereby amended by deleting "specified in
       Article V" from Paragraph A.

9.     The Table of Incentive Award Ranges under Article VII is
       hereby amended to read as follows:

           Incentive Award as a percent of salary grade midpoint

               Below            At              At
               Threshold        Threshold       Target
               Performance      Performance     Performance
     Group l    0               7.5%            15%
     Group II   0               6.25%           12.5%
     Group III  0               5%              10%
     Group IV   0               3.75%            7.5%

10.    The last sentence of Article VII is hereby amended to read
       as follows:
           If the threshold measures have been met and the
           performance results in achievement of the variable
           measures established for any year the participants
           will receive the target incentive awards set forth in
           the above table.