Gas Supply Contract

This Gas Supply Agreement entered into effective this 6 ^th day of December , 2005 ("Agreement") by and between Corning Natural Gas Corporation, a gas corporation organized under the New York State Transportation Corporations Law ("Corning" ) and KeySpan Gas East Corporation d/b/a KeySpan Energy Delivery Long Island, both of which are gas corporations organized under the New York State Transportation Corporations Law (collectively, "KeySpan") Corning and KeySpan may be referred to collectively herein as the "Parties" or individually as a "Party".

            WHEREAS, Corning desires to purchase quantities of natural gas to meet the requirements of its firm customers during the 2005-06 winter season;

            WHEREAS, KeySpan desires to obtain a supply of flowing gas to sell to Corning to meet the requirements of Corning&s firm customers during the 2005-06 winter season; and

            WHEREAS, KeySpan agrees to sell to Corning and Corning agrees to buy from KeySpan natural gas for resale under the terms and conditions set forth herein.

            WHEREFORE, Corning and KeySpan hereby agree as follows:

SECTION 1. SCOPE OF AGREEMENT

KeySpan will purchase a supply of gas on Corning&s behalf, which gas supply will flow daily from the start of the gas day on December 1, 2005 and through the end of the gas day on March 31, 2006 (the "Gas Supply Period").

            1.1. Estimated Delivered Volumes and Delivery Points

The Delivery Points where title to the gas will pass to Corning will be at any point of receipt specified under Corning&s firm transportation contracts with the following interstate pipelines: Dominion Transmission, Texas Gas Transmission, and Tennessee Gas Pipeline. On every day during the Gas Supply Period, KeySpan will deliver to the Delivery Points the quantity of gas nominated by Corning pursuant to Section 1.2, below.

Corning has developed estimates of the daily quantities it will need to purchase each month from KeySpan, on a net, city gate delivered basis, assuming 10% colder than normal weather, as follows:

December        5,439 Dth/day

January             4,389 Dth/day

February           5,764 Dth/day

March               4,751 Dth/day

Corning will be responsible for transportation of gas from the Delivery Points to Corning&s city gate.

            1.2.       Nominations

On a monthly basis and except as otherwise provided below for the month of December 2005, Corning will nominate by the 15 ^th day of each month, or the first business day thereafter if such day falls on a weekend or holiday, the net city gate delivered quantity it wishes to purchase from KeySpan. Such nomination will be made first to KeySpan and then to any upstream interstate pipeline transporting the gas.

The Parties will coordinate their nomination activities, giving sufficient time to meet the deadlines of the affected transporter pipeline(s). Should either Party become aware that actual deliveries at the Delivery Point(s) are greater or less than the confirmed quantities of gas, such Party will promptly notify the other Party.

Corning may revise the estimated daily volumes set forth in Section 1.1 above for the months of January, February, and March upward or downward, depending on its requirements, but Corning&s nominations for those months may not be lower than 4,000 Dth/day. Corning is deemed to have a confirmed nomination of 5,439 Dth/day net delivered to the city gate for the month of December 2005.

Corning acknowledges that once it has nominated a volume of gas, KeySpan will commit to purchasing the nominated quantity on each day in the following month, and Corning will be required to pay for such gas regardless of its actual requirements. Corning further acknowledges that KeySpan is committing in advance to purchase 4,000 Dth per day on Corning&s behalf for the Gas Supply Period.

Following each nomination, KeySpan will confirm Corning&s nomination for the following month, and inform Corning of the price(s) and Delivery Point(s) of the nominated volumes. KeySpan agrees to sell and deliver, and Corning agrees to receive and purchase, the confirmed volumes at the prices set forth in KeySpan&s confirmation notice. The form of such confirmation notice will be as follows:

            1.3.       Price

KeySpan will charge Corning the price KeySpan pays for the nominated quantities plus interest as set forth in Section 1.4, below. Thus, the total price of gas sold hereunder will vary monthly depending on Corning&s nominations and market prices, and will be calculated on a monthly basis.

            1.4.       Terms of Payment

Payment will be due 60 days from the invoice date. In addition to the invoiced amount, Corning will pay interest from the date of delivery of the gas through and including the date of payment at the rate of 4.5% per annum, provided payment is made within 60 from the invoice date. Amounts not paid within 60 days will bear interest from the date of delivery of the gas through and including the date of payment at the rate of 9% per annum. Payments will be by wire transfer, as follows:

KeySpan Gas East Corporation

d/b/a KEYSPAN ENERGY DELIVERY LONG ISLAND                    

100 EAST OLD COUNTRY RD, HICKSVILLE, NY 11801              

Phone: (516) 545-6075            

Attn: KEN SUTTON, MANAGER, GAS BILLING    

Wire Transfer/ACH:                

CITIBANK N.A., NY: ABA #021000089 ACCT #00036871

            1.5.       Dispute of Invoices

If Corning disputes the amount of any invoice or part thereof, it will provide supporting documentation to support the amount paid or disputed and will pay such amount as it concedes to be correct. In the event the Parties are unable to resolve such dispute, either Party may pursue any remedy available at law or in equity to enforce its rights pursuant to this Section.

            1.6.       Audit Rights

Corning shall have the right, at its own expense and upon reasonable notice and at reasonable times. To examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of KeySpan only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under the Agreement. This right to examine, audit, and to obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Agreement. All invoices and billings shall be conclusively presumed final and accurate and all associated claims for under or overpayments shall be deemed waived unless such invoices or billings are objected to in writing, with adequate explanation and/or documentation, within two years after the month of gas delivery. All retroactive adjustments under Section 1 shall be paid in full by the Party owing payment within 30 days of notice and substantiation of such inaccuracy.

SECTION 2     PERFORMANCE OBLIGATION

2.1.       In addition to any liability for Imbalance Charges ( i.e. , any fees, penalties, costs or charges (in cash or in kind) assessed by a Transporter for failure to satisfy the Transporter&s balance and/or nomination requirements), which are not to be recovered twice by the following remedy, the exclusive and sole remedy of the Parties in the event of a breach of a firm obligation will be recovery of the following: (i) in the event of a breach by KeySpan on any day(s), payment by KeySpan to Corning in an amount equal to the positive difference, if any, between the purchase price paid by Corning utilizing the Cover Standard for replacement gas or alternative fuels and the price set forth in KeySpan&s confirmation notice, adjusted for commercially reasonable differences in tra