KeySpan Announces Special Charge and Revises 2001 Earnings Estimates

Brooklyn, New York, July 17, 2001 -- KeySpan Corporation (NYSE: KSE) announced
today that it is taking a special charge in its Energy Services business. The
Company is also reducing its earnings estimates for the remainder of 2001, as a
result of lower gas commodity prices and lower New York City electricity prices.
The Company will report on the details of its major business segments in its
second quarter earnings report on July 26, 2001.

The Company is taking a $30-million-after-tax, or 22-cents-per-share, special
charge to earnings in the second quarter, as a result of the operations of the
Roy Kay companies (plumbing, mechanical and electrical contracting subsidiaries
acquired by KeySpan in February 2000). The special charge reflects the
unanticipated costs to complete work on certain construction projects, as well
as the impact of inaccuracies on the books of these companies, relating to their
overall financial and operational performance.

As a result of these findings, KeySpan has terminated the employment of the
former owners of the Roy Kay companies and installed new management in their
place. The parties are engaged in litigation relating to the termination of the
former owners, as well as other matters relating to the acquisition of the Roy
Kay companies. KeySpan intends to pursue all available legal remedies to recover
the damages it has incurred as a result of the activity of the former owners.

KeySpan Chairman and CEO Robert B. Catell said: "The performance of the Roy Kay
companies under their former management was not commensurate with the high
standards demanded by KeySpan. We have taken appropriate steps to address these
issues and have every confidence that the actions we are undertaking will mean
better service for KeySpan customers and enhanced value for our shareholders.
While the Roy Kay situation is disappointing, we are confident that our other
acquisitions are performing within expectations. Accordingly, our strategy for
building our Energy Services business remains intact."

The Company expects to report earnings of approximately $0.16 per share for the
second quarter, excluding the special Energy Services charge of $0.22 per share.
For 2001, excluding the special charge, the Company has reduced its earnings
expectations from approximately $2.70 per share to a range of $2.50 to $2.60 per
share, and expects to be towards the middle of this range.







The reduced earnings expectations, excluding the special charge, primarily
result from lower gas prices projected by the Company's gas exploration and
production operations, as well as the lower New York City electricity prices.
The impact of the decreased gas and electric prices on the Company's operations
has been mitigated through a variety of financial instruments. Its exploration
and production subsidiary, The Houston Exploration Company (NYSE:THX), has
hedged 70% of its gas production in 2001, and KeySpan has sold forward up to 50%
of its peak electric summer generating capacity.

"Our core operations and the implementation of our growth strategy continue to
produce strong earnings for our shareholders, but due to lower gas commodity
prices and reduced electricity prices resulting from cooler weather, we feel it
is prudent to lower our earnings estimates at this time. We are confident that
our hedging strategy and the forward sales of electricity will mitigate any
further reduction to earnings and we will continue to deliver strong earnings
growth," added Mr. Catell.

The Company will hold a Conference Call today at 11:30am to discuss these
matters with the financial community.

A member of the S & P 500, KeySpan Corporation (NYSE: KSE) is the largest
distributor of natural gas in the Northeast, with 2.5 million gas customers and
more than 13,000 employees. KeySpan is also the largest investor-owned electric
generator in New York State and operates Long Island's electric system under
contract with the Long Island Power Authority for its 1.1 million customers.
With headquarters in Brooklyn, Boston, and Long Island, KeySpan manages a
portfolio of service companies. They include: KeySpan Energy Delivery, the group
of regulated natural gas utilities; KeySpan Home Energy Services, a full-service
energy company for residential and small commercial customers; and KeySpan
Business Solutions, a full-service energy company for business customers.
KeySpan also has strategic investments in natural-gas exploration and
production, pipeline transportation, distribution, and storage, as well as
fiber-optic cable and Canadian gas processing. For more information about the
company, visit KeySpan's Web site at: http://www.keyspanenergy.com.

Certain statements contained herein are forward-looking statements, which
reflect numerous assumptions and involve a number of risks and uncertainties.
Actual results may differ materially from those discussed in such statements.
Among the factors that could cause actual results to differ materially are:
general economic trends; fluctuations in gas and electric prices; available
sources and costs of fuel; State and Federal regulatory initiatives that
increase competition, threaten cost and investment recovery, and impact rate
structures; the ability of the company to successfully reduce its cost
structure; the ability of the company to successfully integrate acquired
operations; the degree to which the company develops non-regulated business
ventures; the effect of inflationary trends and increases in interest rates; and
risks detailed from time to time in reports and other documents filed by the
company with the Securities and Exchange Commission.

Conference Call: Investors are invited to participate in the KeySpan Corporation
Conference Call on Tuesday, July 17, 2001, at 11:30 a.m. (EST):

                    Dial Number: 888-552-7850
                    Replay Number: 800-642-1687
                    Access Code: 1387122
                    AudioCast: http://www.investor.keyspanenergy.com