from Niagara Mohawk Power Corporation
300 Erie Boulevard West
Syracuse, New York  13202

FOR MORE INFORMATION CONTACT:
Media Inquiries:  Kerry P. Burns (315) 428-5266
Financial Inquiries:  Leon T. Mazur (315) 428-5876

                 NIAGARA MOHAWK, 16 INDEPENDENT POWER PRODUCERS
                       SIGN MASTER RESTRUCTURING AGREEMENT

             Pact Formalizes Agreement in Principle To Terminate Or Restructure 
IPP Contracts; Transaction Is Expected to Reduce Customer Prices and Pave The
Way For PowerChoice Competition Plan

SYRACUSE, July 10 -- Niagara Mohawk Power Corp. (NYSE:NMK) and 16 independent
power producers (IPPs) today said they have signed a master restructuring
agreement to terminate or restructure 29 IPP contracts representing more than 80
percent of Niagara Mohawk's above-market IPP costs.

In exchange for terminating or restructuring these contracts, the IPPs will
receive approximately $3.6 billion in cash and 46 million shares of Niagara
Mohawk stock. Niagara Mohawk and certain IPPs also will enter into restructured
financial and physical contracts on terms more favorable to the company than the
existing contracts. The parties to the agreement said the transaction will
reduce electricity prices for Niagara Mohawk customers and help expedite utility
competition.

The master restructuring agreement formalizes an agreement in principle
announced March 10 between Niagara Mohawk and 19 developers representing 44
contracts. Since then, Niagara Mohawk withdrew its offer with respect to a
subgroup of three developers representing 15 hydro contracts. Because the
agreement in principle called for the subgroup to be compensated solely through
restructured contracts, their departure will not change the amount of cash and
stock in the overall agreement, nor will it materially impact the cost
reductions associated with the agreement. Niagara Mohawk said it hopes to
achieve settlements with the subgroup separately.

"The consummation of this agreement will arrest the growth in Niagara Mohawk's 
IPP payments, helping to stabilize our







financial condition," said William E. Davis, chairman and chief executive
officer of Niagara Mohawk. "We are replacing a large and growing financial
commitment with a defined debt obligation. The improved cash flow we expect to
realize should allow us to begin immediately to reduce that debt. As we do, we
will seek to rebuild shareholder value, reduce prices for our customers and
implement our plans to create a competitive power market for New York
electricity consumers."

"This agreement signals the dawn of an exciting new era of competition in New
York state's electric power industry," said Carol Murphy, executive director,
Independent Power Producers of New York, the trade group that represents
independent power producers in the state. "With Niagara Mohawk's experience
providing reliable electric service and the independent producers' skill in
producing clean, competitive energy, consumers will benefit long into the
future."

"The signing of the master restructuring agreement is a key milestone," said
Kenneth A. Buckfire, the Wasserstein Perella & Co. investment banker advising
the IPPs, "and will help the IPPs successfully negotiate with their third
parties including lenders and suppliers. The support of Niagara Mohawk and the
PSC will be critical in this process."

Davis noted that the consummation of the agreement is subject to a number of
conditions that require the approval of a large number of third parties,
including regulatory approvals, amendment or termination of the IPPs' existing
third-party arrangements, creation of new IPP third-party arrangements,
shareholder approval and Niagara Mohawk's successful completion of financing
required to accomplish the transaction.

"Legislation pending in Albany can reduce costs for customers further by
lowering the cost of financing required to execute this restructuring
agreement," Davis said. "the Electric Ratepayer Relief Act, or an asset
securitization bill like it, can reduce the overall cost of the financing by
more than $200 million. But if the legislature doesn't act soon, those customer
savings will be lost."

The parties agreed to use their best efforts to achieve expedited PSC review of
the transaction and associated rate


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treatment.  The parties hope to close the transaction by early 1998.

The 46 million common shares to be distributed to the IPPs will constitute
approximately 25 percent of Niagara Mohawk's fully diluted shares. IPPs that
receive 2 percent or more of Niagara Mohawk's outstanding shares will be subject
to a five-year standstill agreement. In addition, Niagara Mohawk will fill two
recently vacated seats on its board of directors by selecting two individuals
from a list of 10 candidates mutually agreed to by the IPPs and the company.

Davis said more details on the master restructuring agreement will be available
once the company completes an 8K filing with the SEC, expected in the next
several days.


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