SECURITIES AND EXCHANGE COMMISSION
Washington,  D. C.   20549

FORM 8-K

CURRENT REPORT 


PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


DATE OF REPORT -  OCTOBER 12, 1995

NIAGARA MOHAWK POWER CORPORATION
- --------------------------------
(Exact name of registrant as specified in its charter)

State of New York                             15-0265555
- -----------------                             ----------
(State or other jurisdiction of               (I.R.S. Employer
incorporation or organization)                Identification No.)

Commission file Number 1-2987

300 Erie Boulevard West                       Syracuse, New York  13202
(Address of principal executive offices)                  (zip code)

(315)  474-1511
Registrant's telephone number, including area code


ITEM 5. OTHER EVENTS.

      Earlier this year, the Public Service Commission of New York
State (PSC) in making a decision regarding the Company's 1995
rates, directed the parties to the proceeding to address several
key issues in considering any long-range rate plan proposals. 
These were to include improving the Company's competitive position,
without anti-competitive effects, by addressing uneconomic utility
generation and the high price of many unregulated generators (UGs)
contracts; considering elimination of the fuel adjustment clause
and certain other billing mechanisms; addressing property tax
issues with local authorities; improving operational efficiency;
and identifying governmental mandates that are no longer warranted
in a competitive environment without a deterioration in providing
safe and adequate service to customers.  The PSC advised that any
multi-year plan should help insure that the Company maintains an
investment-grade bond rating, guarantee service quality is
maintained in light of cost containment efforts, and include
protection for low-income customers.  Finally, the plan should
propose changes in the regulatory approach for the Company which
support fair competition in the electric generation market
consistent with the PSC's determination in its generic "Competitive
Opportunities" case.

      Following the PSC's directives, the parties engaged in a
collaborative process in which the Company has made a series of
presentations to the parties describing its views of the transition
to competition and the options it presents the Company.

      On October 6, 1995, the Company filed a proposal with the PSC
which is the culmination of these activities.  The proposal
provides for a corporate restructuring designed to create an open,
competitive electricity market, deregulate electricity generation
in the Company's service area, allow all customers, by the year
2000, to choose their electricity supplier and freeze or reduce
electricity prices over the next five years.  The restructuring
would retain the Company's power plants and UG contracts in the
generating company, with the remaining business being separated
into a holding company with regulated subsidiaries that would
transmit and distribute electricity and natural gas and supply
energy services to core customers.  This holding company would also
have unregulated subsidiaries that will engage in marketing,
brokering and service activities.

      Key provisions of the proposal, which is offered as an
integrated package and not piecemeal, include:

      *     CREATION OF A COMPETITIVE WHOLESALE ELECTRICITY MARKET
            AND DIRECT ACCESS BY RETAIL CUSTOMERS.  To give customers
            their choice of power suppliers and pricing terms, the
            Company will open its system to competitive power
            generators beginning in 1997, with full implementation
            targeted for 2000.  The timing of full implementation is
            dependent upon resolution of technical and administrative
            issues.  The restructuring envisions formation of a
            competitive wholesale power pool operating at least in
            the Company's service area under the supervision of the
            Federal Energy Regulatory Commission (FERC) and is
            consistent with proposals announced October 5, 1995 by
            the Energy Association of New York.  The Company would
            give its customers, phased in over the 1997-2000 and
            beginning with its largest customers, full direct access
            to alternative suppliers of electricity with the Company
            delivering that power over its transmission and
            distribution system.

      *     SEPARATION OF THE COMPANY'S POWER GENERATION BUSINESS. 
            The Company proposes that one company would own and
            operate its power plants, including its nuclear
            facilities and unregulated generator contracts.  A
            separate entity would own and operate the regulated,
            customer-focused business of transmitting and
            distributing electricity and gas within its service area. 
            Both companies would be designed to treat bondholders and
            other security holders in a fair and equitable fashion. 
            Any release of collateral under the Company's mortgage
            indenture would involve the substitution of other
            collateral of equivalent value, including bonds of the
            Company.  The Company believes the New York Power
            Authority (NYPA) can be helpful in this process, possibly
            through the purchase or refinancing of the Company's
            nuclear plants.

            As an interim step, the Company is reorganizing its
            business units to create a Generation Group, which will
            include all of its power plants as well as unregulated
            generator contracts; an Energy Distribution Group, which
            will include both electricity and natural gas customer
            service functions; and a separate group for existing and
            new business ventures. 

      *     RELIEF FROM OVERPRICED UNREGULATED GENERATOR CONTRACTS
            THAT WERE MANDATED BY PUBLIC POLICY, ALONG WITH
            EQUITABLE, SHARED WRITE-DOWNS OF ABOVE-MARKET ASSETS. 
            State and federal policy required the Company to enter
            into contracts to buy power from more than 150
            unregulated generators at above-market prices, even when
            the power isn't needed.  The Company's payments to UGs
            have increased from less than $200 million in 1990 to
            more than $1 billion in 1995, and will continue to grow
            in the future as contract prices increase.  To create an
            open and competitive market and achieve a price freeze,
            the Company has offered to negotiate new contracts with
            UGs.

            If negotiations fail, the Company proposes to take
            possession of these projects and compensate their owners
            through the Company's power of eminent domain.  The
            Company would then resell the projects, allowing the
            projects to sell electricity into the competitive pool at
            market prices.  Some of the costs related to the Company
            and unregulated generators that would be "stranded" or
            unrecoverable in a competitive market would be written
            off (further discussed below).  Remaining stranded costs
            would be recovered through a contract with the
            distribution company which, in turn, would recover these
            costs through a non-bypassable fee tied to distribution
            services.

      *     A PRICE FREEZE OR CUT FOR ALL THE COMPANY'S ELECTRIC
            CUSTOMERS.  If the proposal is agreed to by all necessary
            parties, the prices paid by residential and commercial
            customers could be frozen for five years.  Prices for
            industrial customers, who now subsidize other customers,
            would be reduced.  If the proposal is not approved, the
            continued growth in payments to unregulated generators
            and taxes will exceed the Company's internal cost-cutting
            efforts, resulting in substantial price increases.  If
            substantial progress on the proposal is not made by the
            end of the year, the Company will be required to seek
            emergency rate relief no later than early 1996.  With the
            long lead time associated with a traditional rate filing,
            the Company will file for a conventional price increase
            in early February 1996, to be effective on January 1,
            1997.  This filing will preserve the Company's right to
            traditional cost-based rates in the event that an
            acceptable restructuring proposal cannot be achieved
            through negotiation.

      The Company believes these proposals are the best courses for
dealing with the problems it is encountering as the energy industry
is deregulated.  Traditional, cost-based rate making would
otherwise require the Company to seek in excess of a 5% increase in
electric revenues for 1996, driven largely by increases in UG
payments, taxes and lower sales.  The Company currently forecasts
about a 3.9% decline in public sales from levels assumed in setting 1995 rates.
Price increases of this magnitude would further erode the Company's
ability to be competitive in open energy markets and continue to apply
certain fundamental accounting standards applicable to regulated
businesses, as discussed below.  If the proposal appears
unachievable and other measures fail as well, the Company cannot rule
out cessation of common and preferred stock dividends and the ultimate
possibility of restructuring under Chapter 11 of the U.S. Bankruptcy Code.

      The price freeze and restructuring of the Company's markets
and business envisioned in the proposal are contingent on critical
cost reductions, which depend in turn on the willingness of the
UGs and the Company to absorb the losses required to make
substantial reductions in the Company's embedded cost structure
(i.e., sunk costs of the Company's generation and future
obligations for UG contracts).  The Company's proposal would reduce its
embedded cost structure through substantial write-offs if, and only
if, the UGs agree to cost reductions that are proportional to
their relative responsibility for strandable costs (i.e., those
embedded costs that would not be recovered at competitive market
prices).  The Company proposes reduction in its fixed costs of
service be made by mutual contribution of the Company's
shareholders and UGs that are in the same proportion as the
contribution of each to the problem of strandable costs, which the
Company calculates to be $4 of UG strandable cost for every $1 of
Company strandable cost.  All remaining strandable costs would be
recoverable by the Company and the UGs through surcharges on rates
for remaining monopoly  (i.e., distribution) services.  Recovery of
remaining strandable costs by the new owner of the Company's
generation facilities would be structured so as not to impede each
unit from being an efficient participant in the competitive
generation market.

      The Company is pursuing other courses of action to support the
objectives of restructuring.  Certain UG projects have received
very large front-end-loaded payments in order to obtain financing. 
Those projects are obligated to repay those advance payments after
their financing is paid off.  The Company seeks to ensure as part of
its proposal that its ratepayers are repaid by these projects by
requiring them to provide the Company commercially acceptable, firm
security for these obligations (estimated to be worth $1.3 billion in
today's dollars).

      The Company believes there are other opportunities to reduce
the embedded costs of the Company to the benefit of customers.  The
Company pays twice the national average in taxes.  Reduction of the
state gross receipts tax, which is a tax on revenues rather than
income, would help facilitate a freeze in prices.  Other state
involvement, such as through NYPA's participation in the
refinancing or ownership of the Company's nuclear plants, would
also support the objectives of the restructuring proposal.

      The successor to all the Company's assets and businesses other
than generation would be an unregulated holding company which would
provide fully regulated transmission, distribution and gas services
through one subsidiary and through a second subsidiary would
provide competitive unregulated services, such as energy marketing
and other services.  The Company believes the regulated subsidiary
would continue to account for its assets and costs, based on
ratemaking conventions as approved by the PSC and FERC, in
accordance with Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation" (SFAS
No. 71.)

      Effective for the year commencing January 1, 1996, this
accounting standard, under which the Company reports its financial
condition and results of operations, will be amended by Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and Long-Lived Assets to be Disposed Of" (SFAS
No. 121).  While the Company has not completed analyzing all the
changes which may be occasioned by SFAS No. 121, these changes more
likely than not, may have a significant adverse effect on the Company's
financial statements, in particular with regard to the continued
recording of regulatory assets on the Company's balance sheet in
respect to the Company's electric business.  The Company anticipates
having electric regulatory assets of $1,302 million and $438 million of
electric regulatory liabilities as of January 1, 1996, for a net amount
of $864 million that would be at risk if accounting under SFAS No. 71 were
to be discontinued for the Company's entire electric business.  Of this
amount, approximately $300 million relates to the generation business.
No impact on the Company's gas business is anticipated.  The essence of
the change in accounting standards is that the Company will need to
conclude that the regulatory assets in question continue to be probable
of recovery. The current accounting standard requires a conclusion only that
such assets are not probable of loss.  Current conditions in the
generation portion of the Company's business, relating to market
costs of power, erosion of margins because of inadequate rate
relief and the incursion of unregulated generators on the Company's
customer base, when taken together with the Company's proposal
described above, may call into question the continued recording of
such assets and may require material downward adjustments in those
accounts.  Lack of progress in adopting and implementing the
proposal may also raise questions about the continued applicability
of SFAS No. 71.  Any such adjustments would result in a reduction
of retained earnings, whose balance is currently approximately $600
million.  Various tests under applicable law and corporate
instruments, including with respect to issuance of debt and equity
securities, payment of preferred and common dividends and certain
types of transfers of assets could be adversely implicated by any
such writedowns.  The Company cannot currently predict whether or
to what extent the new accounting standard will require such
adjustments, or the impact on its financial flexibility and
operations.

      Standard & Poors (S&P) reacted swiftly to the Company's
proposal, lowering its ratings on the Company's senior secured debt
to BB from BBB-, senior unsecured debt to B+ from BB+, preferred
stock to B from BB+, and commercial paper to B from A-3.  All such
ratings are "below investment grade."  In addition, S&P's ratings
of the Company's securities are on "CreditWatch" with negative
implications.  The downgrade of the Company's security ratings
reflects S&P's concern regarding the uncertainty and potential
negative impact of the proposal on the Company's "already weak
financial profile."  S&P believes the Company may need to reduce or
eliminate common dividends since discretionary cash flow is
currently negative and declining.  Further, S&P believes the
ultimate possibility of restructuring under Chapter 11 of the U.S.
Bankruptcy Code cannot be ruled out, based on the Company's statements
in that regard.

      Moody's Investors Service (Moody's) also lowered its ratings
of the Company's senior secured debt to Ba1 from Baa3; senior
unsecured debt to Ba2 from Ba1; its preferred stock to ba3 from
ba1; and its short-term rating for commercial paper to Not Prime
from Prime -3.  Moody's is also maintaining these ratings under
review for possible further downgrade.  Moody's believes that the
necessity for agreement by third parties significantly diminishes
the likelihood that the Company's proposal will survive intact and
increases uncertainty about the Company's future over the interim
period, as related negotiations proceed.  Moody's fears the
Company's apparent willingness to consider restructuring under
Chapter 11 of the U.S. Bankruptcy Code raises serious doubts as to
the Company's financial stability. Moody's continued review will
consider responses to the proposal, the likelihood of the proposal
being adopted and the effect any interim or final agreement may
have on bondholders.

      Fitch Investors Services, Inc. (Fitch) also downgraded the
Company's first mortgage bonds and secured pollution control bonds
rating from BBB to BB and its preferred stock rating from BBB- to
B+ and noted a declining credit trend.  Fitch's concerns are
similar to those expressed by S&P and Moody's.

      While these rating agencies have cited the increased risk and 
uncertainty and the potential for bankruptcy as reasons for downgrade,
the Company believes these reasons likewise increase the risk to third
party unregulated generators and their security ratings.  The Company
believes its proposal is in the best interests of its customers, bondholders
and stockholders.  The alternative is to allow the Company's
financial and competitive position to continue to erode.

      Other reactions to the Company's proposal have generally been
"very favorable" and included praise and skepticism.  While
industrial customers viewed the plan as progressive, consumer
groups feared residential customers would experience higher
electric costs.  Most constituencies agreed that the proposal is
creative and places the Company among the first in the nation to
advocate full competition for electric supply.


                                GAS BUSINESS

      AN INNOVATIVE GAS RATE PROPOSAL.  The Company also filed a
proposal to adopt a "performance-based regulation" mechanism,
including a gas cost incentive mechanism for its gas operations. 
The proposal provides for a complete unbundling of the Company's
sales service, allowing customers to choose alternative gas
suppliers.  Increases for gas distribution services would be
subject to a price index through the year 2000.  The price index,
which is based on inflation associated with gas service-related
costs, would be applied to existing 1995 prices after consideration
of the service restructuring.  A gas cost incentive mechanism is
also being proposed, along with discontinuation of the weather
normalization clause.  Flexibility in pursuing unregulated
opportunities related to the gas business is also being sought. 
The Company expects to file a formal rate request in early November
1995 for new rates to be effective in the fourth quarter of 1996 as
an alternative in the event negotiations on the proposal are not
fruitful.  The filing would comprise a one-year traditionally-
determined rate adjustment, followed by the implementation of the
index proposal.


          NIAGARA MOHAWK POWER CORPORATION AND SUBSIDIARY COMPANIES

                                  SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.



                                   NIAGARA MOHAWK POWER CORPORATION
                                        (Registrant)



Date:   October 12, 1995        By : /s/ Steven W. Tasker
                                     --------------------
                                     Steven W. Tasker
                                     Vice President-Controller and
                                     Principal Accounting Officer,
                                     in his respective capacities
                                     as such