10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

OR

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

For the transition period from _________________ to ____________________

Commission File Number	Registrant, State of Incorporation Address and Telephone Number	IRS Employer Identification No.
0-30512	CH Energy Group, Inc. (Incorporated in New York) 284 South Avenue Poughkeepsie, New York 12601-4879 (845) 452-2000	14-1804460
1-3268	Central Hudson Gas & Electric Corporation (Incorporated in New York) 284 South Avenue Poughkeepsie, New York 12601-4879 (845) 452-2000	14-0555980

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
CH Energy Group, Inc. Common Stock, $0.10 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

                     Title of each class

Central Hudson Gas & Electric Corporation Cumulative Preferred Stock

                    4.50% Series
                    4.75% Series

          Indicate by check mark if CH Energy Group, Inc. (“CH Energy Group”) is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

                              Yes x     No o

          Indicate by check mark if Central Hudson Gas & Electric Corporation (“Central Hudson”) is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

                              Yes o     No x

          Indicate by check mark if CH Energy Group is not required to file reports pursuant to Section 13 or Section 15(d) of the Act

                              Yes o     No x

          Indicate by check mark if Central Hudson is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

                              Yes o     No x

          Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

                              Yes x     No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.o

        Indicate by check mark whether CH Energy Group is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer x Accelerated Filer o Non-Accelerated Filer o

        Indicate by check mark whether Central Hudson is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer x

          Indicate by check mark whether CH Energy Group is a shell company (as defined in Rule 12b-2 of the Act).

                              Yes o     No x

          Indicate by check mark whether Central Hudson is a shell company (as defined in Rule 12b-2 of the Act).

                              Yes o     No x

          The aggregate market value of the voting and non-voting common equity of CH Energy Group held by non-affiliates as of February 1, 2008, was $620,395,353 based upon the price at which CH Energy Group’s Common Stock was last traded on that date, as reported on the New York Stock Exchange listing of composite transactions.

          The aggregate market value of the voting and non-voting common equity of CH Energy Group held by non-affiliates as of June 30, 2007, the last business day of CH Energy Group’s most recently completed second fiscal quarter, was $708,817,140 computed by reference to the price at which CH Energy Group’s Common Stock was last traded on that date, as reported on the New York Stock Exchange listing of composite transactions.

          The aggregate market value of the voting and non-voting common equity of Central Hudson held by non-affiliates as of June 30, 2007, was zero.

          The number of shares outstanding of CH Energy Group’s Common Stock, as of February 1, 2008, was 15,774,100.

          The number of shares outstanding of Central Hudson’s Common Stock, as of February 1, 2008, was 16,862,087. All such shares are owned by CH Energy Group.

          CENTRAL HUDSON MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (I)(1)(a) AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION (I)(2).

DOCUMENTS INCORPORATED BY REFERENCE

          CH Energy Group’s definitive Proxy Statement to be used in connection with its Annual Meeting of Shareholders to be held on April 22, 2008, is incorporated by reference in Part III hereof. Information required by Part III hereof with respect to Central Hudson has been omitted pursuant to General Instruction (I)(2)(c) of Form 10-K of the Securities Exchange Act of 1934, as amended.

GLOSSARY OF TERMS

The following is a glossary of frequently used abbreviations or acronyms used herein.

CH Energy Group Companies, Segments, and Investments
CH-Auburn	CH-Auburn Energy, LLC (a wholly owned subsidiary of CHEC)
Central Hudson	Central Hudson Gas & Electric Corporation (the wholly owned regulated electric and natural gas subsidiary of CH Energy Group and parent company of Phoenix)
CH-Community Wind	CH-Community Wind Energy, LLC (a CHEC investee company)
CHEC	Central Hudson Enterprises Corporation (the unregulated parent company of Griffith and wholly owned subsidiary of CH Energy Group)
CH Energy Group	CH Energy Group, Inc. (the holding company parent corporation of Central Hudson and CHEC)
CH Resources	CH Resources, Inc. (a former CH Energy Group subsidiary, sold on May 31, 2002)
Cornhusker Holdings	Cornhusker Energy Lexington Holdings, LLC (a CHEC investee company)
Griffith	Griffith Energy Services, Inc. (a wholly owned subsidiary of CHEC)
JB Wind	JB Wind Holdings, LLC (a CH-Community Wind investee company)
Lyonsdale	Lyonsdale Biomass, LLC (a CHEC 75% owned subsidiary company)
Phoenix	Phoenix Development Company, Inc. (a wholly owned subsidiary of Central Hudson)
Regulators
FERC	Federal Energy Regulatory Commission
PSC	New York State Public Service Commission
PSC Staff	Staff of the New York State Department of Public Service
SEC	United States Securities and Exchange Commission
Terms Related to Business Operations Used by CH Energy Group
1993 PSC Policy	PSC’s 1993 Statement of Policy regarding Central Hudson’s pension and OPEB
2006 Rate Order	Order Establishing Rate Plan issued by the PSC to Central Hudson on July 24, 2006
2000 Plan	CH Energy Group’s Long-Term Performance-Based Incentive Plan

(i)

2006 Plan	CH Energy Group’s Long-Term Equity Incentive Plan (which replaced the 2000 Plan)
ABO	Accumulated (OPEB) Benefit Obligation
AFUDC	Allowance for Funds Used During Construction
ARS	Auction Rate Securities
Borrowing Agreement	CH Energy Group’s Unsecured Credit Agreement with Several Commercial Banks (through April 2010)
Customer Benefit Fund	A Regulatory Liability Established Pursuant to the Settlement Agreement for the Benefit of Central Hudson’s Customers
Danskammer Plant	Danskammer Point Steam Electric Generating Station
Distributed Generation	An electrical generating facility located at a customer’s point of delivery which may be connected in parallel operation to the utility system
kWh	Kilowatt-hour(s)
Major Generating Assets	The Roseton Plant, the Danskammer Plant, and the Nine Mile 2 Plant
Mcf	Thousand Cubic Feet
Medicare Act	The Medicare Prescription Drug, Improvement and Modernization Act of 2003
MGP	Manufactured Gas Plant
MTBE	Methyl Tertiary Butyl Ether
MW	Megawatt(s)
MWh	Megawatt-hour(s)
Nine Mile 2 Plant	Unit No. 2 of the Nine Mile Point Nuclear Generating Station
OCI	Other Comprehensive Income
OPEB	Other Post-Employment Benefits
PBO	Projected (Pension) Benefit Obligation
PCBs	Polychlorinated Biphenyls
R&D	Research and Development
Rate Plan	As Approved by the PSC, Formal Framework to Implement Changes in Customer Rates and Special Regulatory Accounting
Rate Year	July 1 to June 30
Repurchase Program	CH Energy Group Common Stock Repurchase Program, effective August 1, 2002 and amended as of July 31, 2007
Retirement Plan	Central Hudson’s Non-Contributory Defined Benefit Retirement Income Plan
ROE	Return on Equity
Roseton Plant	Roseton Electric Generating Plant
ROW	Right-of-Way
Settlement Agreement	Amended and Restated Settlement Agreement dated January 2, 1998, and thereafter amended, among Central Hudson, PSC Staff, and Certain Other Parties

(ii)

Trust Fund	The Retirement Plan’s Trust Fund
VRDN	Variable Rate Demand Note
Other
10-K Annual Report	Annual Report on Form 10-K for the Fiscal Year ended December 31, 2007
Attorney General	New York State Attorney General
Clean Air Act Amendments	Clean Air Act Amendments of 1990
Constellation	Constellation, Inc.
CO	Carbon Monoxide
COSO	Committee of Sponsoring Organizations of the Treadway Commission
DEC	New York State Department of Environmental Conservation
Dynegy	Affiliates of Dynegy Power Corp., collectively
EITF	FASB Emerging Issues Task Force
Energy Act	Energy Policy Act of 2005
EPA	United States Environmental Protection Agency
Exchange Act	Securities Exchange Act of 1934
FASB	Financial Accounting Standards Board
FIN	FASB Interpretation Number
GAAP	Accounting Principles Generally Accepted in the United States of America
NOx	Nitrogen Oxide
NYISO	New York Independent System Operator
NYSERDA	New York State Energy Research and Development Authority
OTC	Over-the-Counter
Pension Protection Act	Pension Protection Act of 2006
PUHCA 2005	Public Utility Holding Company Act of 2005
Registrants	CH Energy Group and Central Hudson
SAB	SEC Staff Accounting Bulletin
Sarbanes-Oxley Act	Sarbanes-Oxley Act of 2002
SFAS	Statement of Financial Accounting Standards
SPDES	State Pollution Discharge Elimination System
VIE	Variable Interest Entity

(iii)

TABLE OF CONTENTS

		Page
	PART I
ITEM 1	BUSINESS	2
ITEM 1A	RISK FACTORS	14
ITEM 1B	UNRESOLVED STAFF COMMENTS	17
ITEM 2	PROPERTIES	17
ITEM 3	LEGAL PROCEEDINGS	19
ITEM 4	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	20
	PART II
ITEM 5	MARKET FOR CH ENERGY GROUP’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	20
ITEM 6	SELECTED FINANCIAL DATA OF CH ENERGY GROUP AND ITS SUBSIDIARIES	22
ITEM 7	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	68
ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	70
ITEM 9	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	161
ITEM 9A	CONTROLS AND PROCEDURES	161
ITEM 9B	OTHER INFORMATION	161

(iv)

	PART III
ITEM 10	DIRECTORS AND EXECUTIVE OFFICERS OF CH ENERGY GROUP	162
ITEM 11	EXECUTIVE COMPENSATION	164
ITEM 12	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	164
ITEM 13	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	165
ITEM 14	PRINCIPAL ACCOUNTANT FEES AND SERVICES	165
	PART IV
ITEM 15	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	166

(v)

PART I

FILING FORMAT

          This 10-K Annual Report for the fiscal year ended December 31, 2007, is a combined report being filed by two different registrants: CH Energy Group and Central Hudson. Any references in this 10-K Annual Report to CH Energy Group include all subsidiaries of CH Energy Group, including Central Hudson, except where the context clearly indicates otherwise. CH Energy Group’s subsidiaries are each directly or indirectly wholly owned by CH Energy Group. Central Hudson makes no representation as to the information contained in this 10-K Annual Report in relation to CH Energy Group and its subsidiaries other than Central Hudson. When this 10-K Annual Report is incorporated by reference into any filing with the SEC made by Central Hudson, the portions of this 10-K Annual Report that relate to CH Energy Group and its subsidiaries, other than Central Hudson, are not incorporated by reference therein.

FORWARD-LOOKING STATEMENTS

          Statements included in this Annual Report on Form 10-K and any documents incorporated by reference which are not historical in nature are intended to be, and are hereby identified as, “forward-looking statements” for purposes of the safe harbor provided by Section 21E of the Exchange Act. Forward-looking statements may be identified by words including “anticipates,” “intends,” “estimates,” “believes,” “projects,” “expects,” “plans,” “assumes,” “seeks,” and similar expressions. Forward-looking statements including, without limitation, those relating to Registrants’ future business prospects, revenues, proceeds, working capital, liquidity, income, and margins, are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, due to several important factors, including those identified from time-to-time in the forward-looking statements. Those factors include, but are not limited to: weather; fuel prices; corn and ethanol prices; plant capacity factors; energy supply and demand; interest rates; potential future acquisitions; legislative, regulatory, and competitive developments; market risks; electric and natural gas industry restructuring and cost recovery; the ability to obtain adequate and timely rate relief; changes in fuel supply or costs including future market prices for energy, capacity, and ancillary services; the success of strategies to satisfy electricity, natural gas, fuel oil, and propane requirements; the outcome of pending litigation and certain environmental matters, particularly the status of inactive hazardous waste disposal sites and waste site remediation requirements; and certain presently unknown or unforeseen factors, including, but not limited to, acts of terrorism. Registrants undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

          Given these uncertainties, undue reliance should not be placed on the forward-looking statements.

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ITEM 1 - BUSINESS

CORPORATE STRUCTURE

          CH Energy Group is the holding company parent corporation of two principal, wholly owned subsidiaries, Central Hudson and CHEC. Central Hudson, the regulated electric and natural gas subsidiary, has one wholly owned subsidiary, Phoenix. CHEC, the parent company of CH Energy Group’s unregulated businesses and investments, has two wholly owned subsidiaries, Griffith and CH-Auburn.

          For a discussion of CH Energy Group’s and its subsidiaries’ capital structure and financing program, see Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this 10-K Annual Report under the subcaptions “Capital Structure” and “Financing Program” under the caption “Capital Resources and Liquidity.” For a discussion of short-term borrowing, capitalization, and long-term debt, see Note 7 – “Short-Term Borrowing Arrangements,” Note 8 – “Capitalization – Common and Preferred Stock,” and Note 9 – “Capitalization – Long-Term Debt,” respectively, to the financial statements contained in Item 8 – “Financial Statements and Supplementary Data” of this 10-K Annual Report (each Note being hereinafter called a “Note”). For information concerning revenues, certain expenses, earnings per share, and information regarding assets for Central Hudson’s regulated electric and regulated natural gas segments and for Griffith, see Note 13 – “Segments and Related Information.”

HOLDING COMPANY REGULATION

           CH Energy Group is generally exempt from regulation under PUHCA 2005 under its intrastate exemption provisions, except for the requirement to obtain prior SEC approvals for certain direct or indirect acquisitions of the securities of any electric or gas utility company. CH Energy Group is a “holding company” under PUHCA 2005 because of its ownership interests in Central Hudson and CHEC and CH Energy Group’s indirect ownership interests in Lyonsdale and JB Wind. CH Energy Group, however, is exempt from regulation as a holding company under PUHCA 2005 because it derives substantially all of its public utility company revenues from business conducted within a single state, the State of New York. CH Energy Group will retain this exemption until such time as it derives more than 13% of its public utility revenues from businesses conducted outside of the State of New York. Under FERC’s regulations implementing PUHCA 2005, revenues received from Lyonsdale, JB Wind and CH-Auburn are excluded from this determination because these entities are either a “qualifying facility” under the Public Utility Regulatory Policies Act of 1978, as amended, or an “exempt wholesale generator” under PUHCA 2005. In addition, qualified propane revenues derived from Griffith will continue to be excluded from this determination until such time as its qualified gross sales of propane exceed an average annual amount of $5 million calculated on a rolling basis over the preceding three calendar years. Griffith’s qualified gross sales of propane are expected to exceed this threshold in 2008. Although Griffith’s propane revenues may be considered public utility revenues in 2008, they would not cause CH Energy Group to derive more than 13% of its public utility revenues

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from outside of New York State. In 2007, CH Energy Group had no public utility revenues from outside of New York State. At the present time, CH Energy Group cannot predict whether and when its circumstances may change such that it no longer qualifies for exemption from PUHCA 2005 or whether regulation under PUHCA 2005 would have a material impact on its financial condition.

SUBSIDIARIES OF CH ENERGY GROUP

CENTRAL HUDSON

          Central Hudson is a New York State natural gas and electric corporation formed in 1926. Central Hudson purchases, sells at wholesale, and distributes electricity and natural gas at retail in portions of New York State. Central Hudson also generates a small portion of its electricity requirements. Central Hudson sold its interests in its major generating assets in 2001, pursuant to a PSC order.

          Central Hudson serves a territory extending about 85 miles along the Hudson River and about 25 to 40 miles east and west of the Hudson River. The southern end of the territory is about 25 miles north of New York City and the northern end is about 10 miles south of the City of Albany. The territory, comprising approximately 2,600 square miles, has a population estimated at 690,000. Electric service is available throughout the territory and natural gas service is provided in and about the cities of Poughkeepsie, Beacon, Newburgh, and Kingston, New York, and in certain outlying and intervening territories. The number of Central Hudson employees at December 31, 2007, was 831.

          Central Hudson’s territory reflects a diversified economy, including manufacturing industries, research firms, farms, governmental agencies, public and private institutions, resorts, and wholesale and retail trade operations.

          Seasonality

          Central Hudson’s delivery revenues vary seasonally in response to weather. Sales of electricity are usually highest during the summer months, primarily due to the use of air-conditioning and other cooling equipment. Sales of natural gas are highest during the winter months, primarily due to space heating usage.

          Competition

          Central Hudson is a regulated utility with a legal obligation to deliver electricity and natural gas within its PSC-approved franchise territory. Central Hudson has no direct competitors in its electricity distribution business; indirect competitors may include distributed generation systems, including net metered systems, which could bypass the electric delivery system. To date, the primary source of penetration is solar power, which is capped at 10 MW, but could increase. Central Hudson is made whole for lost net revenues attributable to net metering under the 2006 Rate Order. Central Hudson’s natural gas business competes with other fuels, especially fuel oil and propane.

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          The competitive marketplace continues to develop for electric and natural gas supply markets, and Central Hudson’s electric and natural gas customers may purchase energy and related services from other providers.

          Regulation

          Central Hudson is subject to regulation by the PSC regarding, among other things, services rendered (including the rates charged), major transmission facility siting, accounting procedures, and issuance of securities. For certain restrictions imposed by the Settlement Agreement, see Note 2 – “Regulatory Matters”.

          Certain activities of Central Hudson, including accounting and the acquisition and disposition of property, are subject to regulation by the FERC under the Federal Power Act.

          Central Hudson is not subject to the provisions of the Natural Gas Act. Central Hudson’s hydroelectric facilities are not required to be licensed under the Federal Power Act.

          Rates

           Generally: The electric and natural gas rates collected by Central Hudson applicable to service supplied to retail customers within New York State are regulated by the PSC. Transmission rates and rates for electricity sold for resale in interstate commerce by Central Hudson are regulated by the FERC.

          Central Hudson’s retail electricity rate structure consists of various service classifications covering delivery service and full service (which includes electricity supply) for residential, commercial, and industrial customers. Retail rates for delivery and supply were separated to allow customers to see the costs associated with their fuel supply in order to facilitate retail competition. During 2007, the average price of electricity for full service customers was 11.86 cents per kWh as compared to an average of 11.15 cents per kWh for 2006. The average delivery price for 2007 was 3.26 cents per kWh and 2.93 cents per kWh for 2006. The majority of the increase in delivery price was due to the implementation of new rates as part of the 2006 Rate Order.

          Central Hudson’s retail natural gas rate structure consists of various service classifications covering transport, retail access service, and full service (which includes natural gas supply) for residential, commercial, and industrial customers. During 2007, the average price of natural gas for full service customers was $15.00 per Mcf as compared to an average of $15.05 per Mcf for 2006. The average delivery price for natural gas in 2007 was $4.19 per Mcf and $3.68 per Mcf for 2006. The increase in delivery price was due to the implementation of new rates as part of the 2006 Rate Order.

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           Rate Proceedings - Electric and Natural Gas: For information regarding Central Hudson’s most recent electric and natural gas rate proceeding approved by the PSC in July 2006, see Note 2 – “Regulatory Matters” under the caption “2006 Rate Order”.

           Cost Adjustment Clauses: For information regarding Central Hudson’s electric and natural gas cost adjustment clauses, see Note 1 – “Summary of Significant Accounting Policies” under the caption “Rates, Revenues and Cost Adjustment Clauses.”

          Capital Expenditures and Financing

          For estimates of future capital expenditures for Central Hudson, see the subcaption “Anticipated Sources and Uses of Cash” in Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this 10-K Annual Report under the caption “Capital Resources and Liquidity.”

          Central Hudson’s Certificate of Incorporation and its various debt instruments do not contain any limitations upon the issuance of authorized, but unissued, preferred stock or unsecured short-term debt.

          Central Hudson has in place certain credit facilities with financial covenants that limit the amount of indebtedness Central Hudson may incur. Additionally, Central Hudson’s ability to issue debt securities is limited by authority granted by the PSC. Central Hudson believes these limitations will not impair its ability to issue any or all of the debt described under the subcaption “Financing Program” in Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this 10-K Annual Report under the caption “Capital Resources and Liquidity.”

          Purchased Power and Generation Costs

For the twelve-month period ended December 31, 2007, the sources and related costs of purchased electricity and electric generation for Central Hudson were as follows:

Sources of Energy	Aggregate Percentage of Energy Requirements			Costs in 2007 ($000)
Purchased Electricity		98.6	%		$	387,513
Hydroelectric and Other		1.4	%			79
		100.0	%
Deferred Electricity Cost						(3,786	)
Total					$	383,806

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          Research and Development

          Central Hudson is engaged in the conduct and support of R&D activities, which are focused on the improvement of existing energy technologies and the development of new technologies, including renewable energy sources, for the delivery and use of energy. Central Hudson’s R&D expenditures were $3.5 million in 2007, $3.2 million in 2006, and $3.3 million in 2005. These expenditures were for internal research programs and for contributions to research administered by NYSERDA, the Electric Power Research Institute, and other industry organizations. Recovery of expenditures for R&D is provided for in Central Hudson’s rates charged to customers for electric and natural gas delivery service. In addition, any differences between R&D expense and the rate allowances covering these costs are deferred, pursuant to PSC authorization, for future recovery from or return to customers.

          Other Central Hudson Matters

           Labor Relations: Central Hudson has an agreement with Local 320 of the International Brotherhood of Electrical Workers for its 530 unionized employees, representing construction and maintenance employees, customer service representatives, service workers, and clerical employees (excluding persons in managerial, professional, or supervisory positions). This agreement became effective on May 1, 2003, and remains effective through April 30, 2008. It provides for an average annual general wage increase of 3.5% and certain additional fringe benefits.

           Subsidiary of Central Hudson - Phoenix: Phoenix, a New York corporation, is a wholly owned subsidiary of Central Hudson. Phoenix was incorporated in 1950 to hold or lease real property for future use by Central Hudson and to participate in energy-related ventures. Currently, Phoenix’s assets are not significant.

CHEC AND ITS SUBSIDIARIES AND INVESTMENTS

          CHEC, a New York corporation, is a wholly owned subsidiary of CH Energy Group. CHEC and its subsidiaries have been engaged in the business of marketing petroleum products and related services to retail and wholesale customers and providing service and maintenance of energy conservation measures and generation systems for private businesses, institutions, and government entities. CHEC has also participated in cogeneration, wind generation, biomass energy projects, and alternate fuel and energy production projects in Connecticut, New Jersey, New Hampshire, New York, and Pennsylvania, and a fuel ethanol production plant in Nebraska. For further discussion of certain of these energy-related projects, see Note 5 – “Acquisitions and Investments.”

          CHEC’s subsidiaries and investments are shown below. Ownership interests are 100% unless otherwise noted.

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          Griffith, a New York Corporation, is an energy services company engaged in fuel distribution, including heating oil, gasoline, diesel fuel, kerosene, and propane, and the installation and maintenance of heating, ventilating, and air conditioning equipment in Virginia, West Virginia, Maryland, Delaware, Pennsylvania, Rhode Island, Washington, D.C., Connecticut, Massachusetts, New Jersey and New York.

          Since being acquired by CHEC in November 2000, Griffith has acquired the assets of 40 regional fuel oil, propane, and related services companies.

          The number of Griffith employees at December 31, 2007, was 728.

          CH-Auburn, a New York limited liability company, plans to construct and operate a 3-megawatt electric generating plant that will burn gas derived from wastewater sludge and a landfill to supply a portion of the energy needs of the City of Auburn, NY with renewable energy.

          Seasonality

          A substantial portion of CHEC’s revenues vary seasonally, as fuel deliveries are directly related to use for space heating and are highest during the winter months.

          Competition

          CHEC and Griffith participate in competitive industries that are subject to different risks than those found in the businesses of the regulated utility, Central Hudson. As an unregulated competitor in the fuel distribution business, Griffith faces competition from other fuel distribution companies and from companies supplying other fuels for heating, such as natural gas and propane. For a discussion of Griffith’s operating revenues and operating income, see the caption “Results of Operations” in Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this 10-K Annual Report.

ENVIRONMENTAL QUALITY REGULATION

          Central Hudson, Griffith, and Lyonsdale are subject to regulation by federal, state, and local authorities with respect to the environmental effects of their operations. Environmental matters may expose Central Hudson, Lyonsdale and/or Griffith to

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potential liability, which, in certain instances, may be imposed without regard to fault or may be premised on historical activities that were lawful at the time they occurred.

          Each of Central Hudson, Griffith and Lyonsdale monitor their activities in order to determine the impact of their activities on the environment and to comply with applicable environmental laws and regulations.

          The principal environmental areas relevant to these companies are described in the table below. Each company was in compliance during 2007. Unless otherwise noted, all required permits and certifications have been obtained by the applicable company.

Air Quality – The Clean Air Act Amendments address attainment and maintenance of national air quality standards, including control of particulate emissions from fossil-fueled electric generating plants and emissions that affect “acid rain” and ozone. The impacted facilities are listed below.
Central Hudson	Griffith	Lyonsdale
Combustion turbines in South Cairo and Coxsackie, NY have Air State Facility permits regulating their NOx emissions		Title V Permit regulating certain gas emissions including CO and NOx
(A) See footnote below.

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Water Quality – The Clean Water Act addresses the discharge of pollutants into waterways and ground water.
Central Hudson	Griffith	Lyonsdale
SPDES Permits – The following locations have permits regulating pollutant discharges.
Eltings Corners, NY maintenance and warehouse facility	Bulk storage plants in Frederick, Westminster, and Edgewater, MD	Lyonsdale electric generating plant
Rifton, NY Training and Recreation Center	Cheverly, MD office
Other Permits and Certifications – Griffith and Lyonsdale have additional permits and certifications regulating their water usage and pollutant discharges.
	Storm Water Discharge Permits Bulk storage plants in Charlestown and Martinsburg, WV	Great Lakes Water Withdrawal Certificate Allows water withdrawal from the Moose River
	General Permit Allows discharge of groundwater remediation wastewater to the sanitary sewer.
	Winsted, CT bulk storage facility
Other Requirements – Central Hudson is subject to water monitoring and reporting requirements at several facilities.
Eltings Corners, NY maintenance and warehouse facility	Bulk storage plants in Frederick, Westminster, and Edgewater, MD	Lyonsdale electric generating plant
Rifton, NY Training and Recreation Center	Cheverly, MD office
Kingston, NY District Office

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Toxic Substances and Industrial and Hazardous Wastes – Central Hudson, Lyonsdale, and Griffith are subject to federal, state and local laws and regulations relating to the use, handling, storage, treatment, transportation, and disposal of industrial, hazardous, and toxic wastes. Currently there are no permit or certification requirements for Lyonsdale and Griffith. The Central Hudson permitted facility is shown below.
Central Hudson	Griffith	Lyonsdale
Hazardous Waste Storage Facility at Eltings Corners (NYS Part 373 Permit)
Waste Transportation Permits for certain vehicles
Petroleum Bulk Storage Certificates
South Cairo and Coxsackie combustion turbines
Offices in Catskill, Poughkeepsie, Fishkill, Newburgh and Stanfordville, NY
(B) See footnote below.

Other Permits – Lyonsdale also has permits for the use of wood as fuel, and the use of ash as fertilizer.

Environmental Expenditures – 2007 actual, and 2008 estimated, expenditures attributable, in whole or in substantial part, to environmental considerations.
Central Hudson	Griffith	Lyonsdale
2007 – $6.4 million	2007 – $0.3 million	2007 – immaterial
2008 – $3.5 million	2008 – $0.3 million	2008 – immaterial

(A)	See Note 12 – “Commitments and Contingencies” under the caption “Environmental Matters” regarding the investigation by the EPA into the compliance of a former major generating asset.
(B)	See Note 12 – “Commitments and Contingencies” under the caption “Environmental Matters” regarding, among other things, former MGP facilities, Little Britain Road, and Newburgh Consolidated Iron Works.

          In addition to the above areas, Central Hudson, Griffith and Lyonsdale, are also subject to regulation with respect to other environmental areas such as noise levels, protection of vegetation and wildlife, and limitations on land use, and are in compliance with regulations in these areas.

          Regarding environmental matters, except as described in Note 12 – “Commitments and Contingencies” under the caption “Environmental Matters,” neither

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CH Energy Group, Central Hudson, Griffith, nor Lyonsdale are involved as defendants in any material litigation, administrative proceeding, or investigation and, to the best of their knowledge, no such matters are threatened against any of them.

AVAILABLE INFORMATION

          CH Energy Group files annual, quarterly, and current reports, proxy statements, and other information with the SEC. Central Hudson files annual, quarterly, and current reports and other information with the SEC. The public may read and copy any of the documents each company files at the SEC’s Public Reference Room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. SEC filings are also available to the public from the SEC’s Internet website at www.sec.gov.

          CH Energy Group makes available free of charge on or through its Internet website at www.CHEnergyGroup.com its proxy statements, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after it electronically files such material with, or furnishes it to, the SEC. Central Hudson’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are also available on this site. CH Energy Group’s governance guidelines, Code of Business Conduct and Ethics, and the charters of its Audit, Compensation, Governance and Nominating, and Strategy and Finance Committees are available on CH Energy Group’s Internet website at www.CHEnergyGroup.com. The governance guidelines, the Code of Business Conduct and Ethics, and the charters may also be obtained by writing to the Corporate Secretary, CH Energy Group, Inc., 284 South Avenue, Poughkeepsie, New York 12601-4879.

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Executive Officers

          All executive officers of CH Energy Group are elected or appointed annually by its Board of Directors. There are no family relationships among any of the executive officers of CH Energy Group or its subsidiaries. The names of the current executive officers of CH Energy Group, their positions held and business experience during the past five years, and ages (at December 31, 2007) are as follows:

			Date Commenced
Executive Officers of CH Energy Group		Current and Prior Positions
	Age		CH Energy Group	Central Hudson	CHEC
Steven V. Lant	50	Chairman of the Board	April 2004	May 2004	May 2004
		Chief Executive Officer	July 2003	July 2003	July 2003
		President	July 2003		July 2003
		Director	February 2002	December 1999	December 1999
		Chief Operating Officer	February 2002		February 2002
		Chief Financial Officer	May 2001	February 2002	February 2002
Carl E. Meyer	60	President Director Chief Operating Officer		December 1999
		Executive Vice President	November 1999
Joseph J. DeVirgilio, Jr.	56	Director		March 2005	April 2003
		Executive Vice President – Corporate Services and Administration	January 2005	January 2005
		Executive Vice President			January 2003
		Senior Vice President	October 2002		October 2002
		Senior Vice President – Corporate Services and Administration		November 1998
Christopher M. Capone	45	Executive Vice President	December 2006
		Director		March 2005
		Chief Financial Officer	September 2003	September 2003	September 2003
		Treasurer	April 2003 June 2001	June 2001	April 2003 June 2001
		Managing Director, Furman Selz/ING(i)

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			Date Commenced
Executive Officers of CH Energy Group		Current and Prior Positions
	Age		CH Energy Group	Central Hudson	CHEC
Donna S. Doyle	59	Vice President – Accounting		October 2006
		Director			June 2002
		Vice President – Accounting and Controller	November 1999	November 1999
Denise D. VanBuren	46	Vice President – Public Affairs and Energy Efficiency	August 2007	August 2007
		Vice President – Corporate Communications and Community Relations	November 2000	November 2000
Charles A. Freni, Jr.	48	Senior Vice President – Customer Services		January 2005
		Vice President – Customer Services		February 2004
		Vice President – Engineering and Environmental Affairs		November 2000
W. Randolph Groft	46	Executive Vice President			January 2003
		Director			January 2003

(i) Mr. Capone was in this position March 2002 – March 2003 and managed fixed income portfolios for institutions and high net worth individuals.

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ITEM 1A - RISK FACTORS

Storms and Other Events Beyond Central Hudson’s and Griffith’s Control May Interfere With Their Operations

	Description and Sources of Risk: In order to conduct their businesses, (1) Central Hudson must have access to natural gas and electric supplies and be able to utilize its electric and natural gas infrastructure, and (2) Griffith needs access to petroleum supplies from storage facilities in its service territories. Central Hudson has designed its electric and natural gas and pipeline systems to serve customers under various contingencies in accordance with good utility practice.
	However, any one or more of the following could impact either or both of the companies’ ability to access supplies and/or utilize critical facilities:
		o	Storms, natural disasters, wars, terrorist acts, failure of major equipment and other catastrophic events occurring both within and outside Central Hudson’s and Griffith’s service territories.
		o	Unfavorable developments in the world oil markets that could impact Griffith
		o	Third-party facility owner financial distress.
		o	Unfavorable governmental actions or judicial orders.
		o	Bulk power system and gas transmission pipeline system capacity constraints (in the case of Central Hudson).
	Potential Impacts: The companies could experience service disruptions leading to lower earnings and/or reduced cash flows if the situation is not resolved in a timely manner or the financial distress is not alleviated through insurance policies, regulated rate recovery for Central Hudson or higher sales prices for Griffith.
Unusual Temperatures in Central Hudson and Griffith’s Service Territories Could Adversely Impact Earnings
	Description and Sources of Risk: Central Hudson’s service territory is the Mid-Hudson Valley region of New York State. Griffith serves the Mid-Atlantic region and northeastern United States. These areas experience seasonal fluctuations in temperature. A considerable portion of Central Hudson’s and Griffith’s earnings is derived directly or indirectly from the weather-sensitive end uses of space heating and air conditioning. As a result, sales volumes fluctuate and vary from normal expected levels based on variations in weather from historically normal seasonal levels. Such variations could significantly reduce sales volumes.
	Potential Impacts: The companies could experience lower delivery volumes in periods of mild weather, leading to lower earnings and reduced cash flows.

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Central Hudson’s Rate Plans Limit its Ability to Recover Increased Costs from its Customers; If Central Hudson’s Sales Are Below Rate Plan Levels or Its Rate Plans Are Modified by State Regulatory Authorities, Central Hudson’s Earnings and Cash Flows May Be Lower Than Expected

	Description and Sources of Risk: Central Hudson’s retail rates are regulated by the PSC. Rate plans generally may not be changed during their respective terms. Therefore, rates cannot be modified for lower sales volumes and/or higher expenses than those assumed in the Rate plan, absent circumstances such as an increase in expenses that meet the PSC’s threshold requirements for filing for approval of deferral accounting.
	The following could unfavorably impact Central Hudson’s financial results:
		o	Lower sales than forecasted in the current rate agreement. Lower sales can occur, for example, as a result of changes in usage patterns driven by customer responses to product prices, customer use of distributed generation, economic conditions, energy efficiency programs, or due to loss of major customers or addition of fewer new customers than projected.
		o	Higher expenses, including carrying costs on capital invested, than reflected in current rates. Higher expenses could result from, among other things, storm restoration expense or other expense components such as labor or health care benefits.
		o	Higher electric and natural gas capital project costs resulting from escalation of material and equipment prices, as well as potential delays in the siting and legislative and/or regulatory approval requirements associated with these projects.
	Potential Impacts: Central Hudson could have lower earnings and/or reduced cash flows if cost management and/or other factors are not sufficient to alleviate the impact of such lower sales and/or higher costs.
	Additional Information: See Note 2 – “Regulatory Matters” of this 10-K Annual Report.
Central Hudson Is Subject to Risks Relating to Asbestos Litigation and Manufactured Gas Plant Facilities
	Description and Sources of Risk: Litigations have been commenced by third parties against Central Hudson arising from the use of asbestos at its previously owned major generating assets, and Central Hudson is involved in a number of matters arising from contamination at former MGP sites.

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	Potential Impacts: To the extent not covered by insurance or recovered through rates, court decisions and settlements resulting from these litigations could reduce earnings and cash flows.
	Additional Information: See Note 12 – “Commitments and Contingencies” and in particular the subcaptions in Note 12 regarding “Asbestos Litigation” and “Former Manufactured Gas Plant Facilities” under the caption “Environmental Matters.”
Significant Increases In Wholesale Fuel Oil Prices May Adversely Affect Griffith’s Ability to Attract New Customers, Retain Existing Customers, Maintain Sales Volumes, and Maintain Margins
	Description and Sources of Risk: Griffith’s management believes that high wholesale fuel oil prices, such as those prices experienced in recent years, could result in customer attrition and/or reduced usage. Unfavorable activity in the domestic and/or foreign markets resulting in significant increases in these prices could cause current and/or prospective full service customers to decide to purchase fuel from discount distributors.
	Potential Impacts: Any one or more of the following could result from these events:
		o	An adverse impact on Griffith’s ability to attract new full service residential customers and, to a lesser extent, retain existing full service residential customers resulting in lower earnings and reduced cash flows.
		o	Further sales volume reductions, and/or compressed margins resulting in lower earnings and reduced cash flows.
	These events could materially reduce profitability which could, in turn, lead to an impairment of Griffith’s goodwill.
	Additionally, if customer attrition were to accelerate significantly, the remaining value of Griffith’s customer list could be impaired or subject to faster amortization.
Commodity Price Changes May Adversely Impact the Profitability of CHEC’s Investment in Cornhusker Holdings
	Description and Sources of Risk: CHEC’s management believes that increases in wholesale corn prices and/or decreases in ethanol prices are caused by a variety of factors, including, but not limited to the following:
		o	Actions by the federal government that reduce the demand for, or increase the supply of, ethanol. Such actions could include, but are not limited to, a reduction in the required level of ethanol blending, decreases in tax credits to refiners and/or reductions in tariffs on imported ethanol.
		o	Imbalances in the supply of and demand for corn. This could be caused by, among other things (1) drought or other acts of nature, (2) increased

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	construction of new ethanol production facilities, (3) governmental actions that discourage raising corn for use in ethanol production (such as providing tax credits for corn grown for human consumption) or (4) changes in agricultural markets, technology or regulations.
o	Volatility in domestic and/or foreign markets may result in increased corn prices and/or lower ethanol prices.

Potential Impacts: Prolonged increases in corn prices and/or decreases in ethanol prices could have a material adverse impact on the earnings of Cornhusker Holdings that could, in turn, lead to an impairment of CHEC’s investment in the company.

ITEM 1B - UNRESOLVED STAFF COMMENTS

   None.

ITEM 2 - PROPERTIES

          CH Energy Group has no significant properties other than those of Central Hudson and CHEC.

CENTRAL HUDSON

Electric: Central Hudson owns hydroelectric and gas turbine generating facilities as described below.

Type of Electric	Year Placed in	MW* Net
Generating Plant	Service/Rehabilitated	Capability
Hydroelectric (3 stations)	1920-1986	23.0
Gas turbine (2 stations)	1969-1970	46.0
Total		69.0

* Reflects maximum one-hour net capability (winter rating as of December 31, 2007) of Central Hudson’s electric generating plants and therefore does not include firm purchases or sales.

          Central Hudson owns substations having an aggregate transformer capacity of 4.8 million kilovolt amps. Central Hudson’s electric transmission system consists of 629 pole miles of line, and the electric distribution system consists of 8,009 pole miles of overhead lines and 1,317 trench miles of underground lines.

           Electric Load and Capacity: Central Hudson’s maximum one-hour demand for electricity within its own territory for the year ended December 31, 2007, occurred on August 8, 2007, and amounted to 1,185 MW. Central Hudson’s maximum one-hour demand for electricity within its own territory for that part of the 2007-2008 winter capability period through January 15, 2008, occurred on December 13, 2007, and amounted to 925 MW.

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          Central Hudson owns minimal generating capacity and relies on purchased capacity and energy from third-party providers to meet the demands of its full service customers. For more information, see Note 12 – “Commitments and Contingencies.” Central Hudson entered into an agreement with Constellation to purchase capacity and energy from the Nine Mile 2 Plant for a ten-year period ending November 30, 2011. The agreement is “unit-contingent” in that Constellation is only required to supply electricity if the Nine Mile 2 Plant is operating. Capacity and energy are purchased at defined prices that escalate over the life of the contract. The capacity and energy supplied under the agreement with Constellation in 2007 was sufficient to supply approximately 12% of Central Hudson’s total system requirements, or 737,835 MWh. On November 12, 2002, Central Hudson entered into agreements with Entergy Nuclear Indian Point 2 LLC and Entergy Nuclear Indian Point 3 LLC to purchase energy (but not capacity) on a unit-contingent basis at defined prices for a period from January 1, 2005, to and including December 31, 2007. On March 6, 2007, Central Hudson entered into new agreements with Entergy Nuclear Power Marketing, LLC to purchase electricity (but not capacity) on a unit-contingent basis at defined prices from January 1, 2008 through December 31, 2010. On an annual basis, the electricity purchased through the Entergy contracts represents approximately 16% of Central Hudson’s full-service customer requirements, or 807,026 MWh. On January 30, 2008, Central Hudson entered into an 11-month agreement with Dynegy Power Marketing, Inc. to purchase 589,200 MWh of electricity on a unit-contingent basis at defined prices from February 11, 2008 through December 31, 2008.

          Purchases under these contracts are supplemented by shorter-term contracts including contracts for differences, and by purchases from the NYISO, which oversees the bulk electricity transmission system and the capacity market in New York State, and other parties. Central Hudson must also acquire sufficient peak load capacity to meet the peak load requirements of its full service customers. This capacity is made up of its own generating capacity, contracts with capacity providers, and purchases from the NYISO capacity market.

           Natural Gas: Central Hudson’s natural gas system consists of 164 miles of transmission pipelines and 1,156 miles of distribution pipelines. For the year ended December 31, 2007, the total amount of natural gas purchased by Central Hudson from all sources was 12,012,599 Mcf. Central Hudson owns two propane-air mixing facilities for emergency and peak-shaving purposes, one located in Poughkeepsie, New York, and the other in Newburgh, New York. These facilities, in aggregate, are capable of supplying 8,000 Mcf per day with propane storage capability adequate to provide maximum facility output for up to six consecutive days.

          The peak daily demand for natural gas of Central Hudson’s customers for the year ended December 31, 2007, and for that part of the 2007-2008 heating season through January 18, 2008, occurred on January 3, 2008, and amounted to 110,981 Mcf. Central Hudson’s firm peak day natural gas capability in the 2007-2008 heating season was 138,183 Mcf, which excludes approximately 7,000 Mcf of transport customer deliveries.

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           Other Central Hudson Matters: Central Hudson’s corporate headquarters is located in Poughkeepsie, New York. Central Hudson’s electric generating plants and important property units are generally held by it in fee simple, except for certain ROW and a portion of the property used in connection with hydroelectric plants consisting of flowage or other riparian rights. Certain of the Central Hudson properties are subject to ROW and easements that do not interfere with Central Hudson’s operations. In the case of certain distribution lines, Central Hudson owns only a partial interest in the poles upon which its wires are installed and the remaining interest is owned by various telecommunications companies. In addition, certain electric and natural gas transmission facilities owned by others are used by Central Hudson under long-term contracts.

          During the three-year period ended December 31, 2007, Central Hudson made gross property additions of $221.7 million and property retirements and adjustments of $36.8 million, resulting in a net increase (including Construction Work in Progress) in gross utility plant of $184.9 million, or 17%.

CHEC

          As of December 31, 2007, Griffith owned or leased several office, warehouse, and bulk petroleum storage facilities. These facilities are located throughout Connecticut, Delaware, Maryland, Pennsylvania, Rhode Island, Virginia, and West Virginia. The bulk petroleum storage facilities have capacities from 60,000 gallons up to in excess of 1.2 million gallons. Griffith’s corporate headquarters is located in Columbia, Maryland.

          As of December 31, 2007, CHEC owned a 100% interest in CH-Auburn, a 75% interest in Lyonsdale, a minority interest in Cornhusker Holdings and a 50% ownership interest in CH-Community Wind.

ITEM 3 - LEGAL PROCEEDINGS

          For information about developments regarding certain legal proceedings, see Note 12 – “Commitments and Contingencies” of this 10-K Annual Report.

Central Hudson:
	Former Manufactured Gas Plant Facilities
	Little Britain Road
	Asbestos Litigation
CHEC:
	Griffith’s remediation efforts at its Kable Oil bulk plant.

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ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2007.

PART II

ITEM 5 - MARKET FOR CH ENERGY GROUP’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

          For information regarding the market for CH Energy Group’s common stock and related stockholder matters, see Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this 10-K Annual Report under the captions “Capital Resources and Liquidity – Financing Program” and “Common Stock Dividends and Price Ranges” and Note 8 – “Capitalization – Common and Preferred Stock.”

          Under applicable statutes and their respective Certificates of Incorporation, CH Energy Group may pay dividends on shares of its common stock and Central Hudson may pay dividends on its common stock and its preferred stock, in each case only out of surplus.

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          The line graph set forth below provides a comparison of CH Energy Group’s cumulative total shareholder return on its Common Stock with the Standard and Poor’s 500 Index (“S&P 500”) and as a Corporation-determined peer comparison with the EEI Index. Shareholder return is the sum of the dividends paid and the change in the market price of stock.

	Base Period Dec 02	INDEXED RETURNS Years Ending
Company / Index		Dec 03	Dec 04	Dec 05	Dec 06	Dec 07
CH Energy Group, Inc.	100	105.72	113.57	113.64	136.60	120.57
S&P 500	100	128.68	142.69	149.70	173.34	182.86
EEI Index	100	123.48	151.68	176.03	212.56	247.76

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ITEM 6 - SELECTED FINANCIAL DATA OF CH ENERGY GROUP AND ITS SUBSIDIARIES

FIVE-YEAR SUMMARY OF CONSOLIDATED OPERATIONS AND SELECTED FINANCIAL DATA* (CH ENERGY GROUP)
(In Thousands, except per share data)

	2007			2006			2005			2004			2003
Operating Revenues
Electric		$	616,839		$	503,908		$	520,994		$	430,575		$	457,395
Natural gas			165,449			155,272			155,602			125,230			123,306
Competitive business subsidiaries			414,469			334,253			295,910			235,707			225,983
Total			1,196,757			993,433			972,506			791,512			806,684
Operating Income			79,268			77,480			79,025			75,133			76,301
Cumulative preferred stock dividends of Subsidiary			970			970			970			970			1,387
Income from continuing operations			42,636			43,084			44,291			42,423			43,985
Net Income			42,636			43,084			44,291			42,423			43,985
Dividends Declared on Common Stock			34,052			34,046			34,046			34,046			34,093
Balance Retained in the Business			8,584			9,038			10,245			8,377			9,892
Retained Earnings - beginning of year			207,055			198,017			187,772			179,395			169,503
Retained Earnings - end of year		$	215,639		$	207,055		$	198,017		$	187,772		$	179,395
Common Stock
Average shares outstanding – basic			15,762			15,762			15,762			15,762			15,831
Average shares outstanding – diluted			15,779			15,779			15,767			15,771			15,835
Earnings per share on average shares outstanding – basic		$	2.70		$	2.73		$	2.81		$	2.69		$	2.78
Earnings per share on average shares outstanding – diluted		$	2.70		$	2.73		$	2.81		$	2.69		$	2.77
Dividends declared per share		$	2.16		$	2.16		$	2.16		$	2.16		$	2.16
Book value per share (at year-end)		$	33.19		$	32.54		$	31.97		$	31.31		$	30.80
Total Assets (at year-end)		$	1,494,748		$	1,460,532		$	1,384,280		$	1,287,807		$	1,310,076
Long-term Debt (at year-end)**			403,892			337,889			343,886			319,883			278,880
Cumulative Preferred Stock (at year-end)			21,027			21,027			21,027			21,030			21,030
Common Shareholders’ Equity (at year-end)			523,148			512,862			503,833			493,465			485,424

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*	This summary should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 – “Financial Statements and Supplementary Data” of this 10-K Annual Report.
**	Net of current maturities of long-term debt.
	For additional information related to the impact of acquisitions and dispositions on the above, this summary should be read in conjunction with Item 7 – “Management Discussion and Analysis of Financial Condition and Results of Operations” of this 10-K Annual Report and Note 5 – “Acquisitions and Investments “ of Item 8 – “Financial Statements and Supplementary Data” of this 10-K Annual Report.

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FIVE-YEAR SUMMARY OF CONSOLIDATED OPERATIONS AND SELECTED FINANCIAL DATA* (CENTRAL HUDSON)
(In Thousands)

	2007			2006			2005			2004			2003
Operating Revenues
Electric		$	616,839		$	503,908		$	520,994		$	430,575		$	457,395
Natural gas			165,449			155,272			155,602			125,230			123,306
Total			782,288			659,180			676,596			555,805			580,701
Operating Income			71,406			70,956			70,791			68,293			69,387
Net Income			33,436			34,871			35,635			38,648			38,875
Dividends Declared on Cumulative Preferred Stock			970			970			970			970			1,387
Income Available for Common Stock			32,466			33,901			34,665			37,678			37,488
Dividends Declared to Parent – CH Energy Group			8,500			8,500			17,000			25,500			34,162
Balance Retained in the Business			23,966			25,401			17,665			12,178			3,326
Retained Earnings - beginning of year			68,710			43,309			25,644			13,466			10,140
Retained Earnings - end of year		$	92,676		$	68,710		$	43,309		$	25,644		$	13,466
Total Assets (at year-end)		$	1,252,694		$	1,215,823		$	1,126,106		$	1,029,442		$	1,052,295
Long-term Debt (at year-end)**			403,892			337,889			343,886			319,883			278,880
Cumulative Preferred Stock (at year-end)			21,027			21,027			21,027			21,030			21,030
Common Shareholder’s Equity (at year-end)			347,006			323,040			297,639			279,974			267,796

*	This summary should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 – “Financial Statements and Supplementary Data” of this 10-K Annual Report.
**	Net of current maturities of long-term debt.

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ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

          The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand CH Energy Group and Central Hudson.

          Please note that the Executive Summary (below) is provided as a supplement to, and should be read together with, the remainder of this Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the Consolidated Financial Statements, including the Notes thereto, and the other information included in this 10-K Annual Report.

EXECUTIVE SUMMARY

Business Overview

          CH Energy Group is a holding company with three business segments, and renewable energy and other investments:

(1)	Central Hudson’s regulated electric utility business;
(2)	Central Hudson’s regulated natural gas utility business;
(3)	Griffith’s fuel distribution business; and
(4)	CHEC’s investments in renewable energy supply, ethanol production, energy efficiency, an energy sector venture capital fund, and other investments of CH Energy Group, consisting primarily of investments in liquid short-term securities and inter-company interest income.

          A breakdown of CH Energy Group’s 2007 revenue and net income by segment is below.

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          CH Energy Group’s long-term objective is to deliver shareholder value through a combination of quarterly dividend payments, and consistent earnings growth, which over time is expected to result in share price appreciation.

          CH Energy Group consists of three segments and renewable energy and other investments. Each has growth opportunities and is expected to contribute to the overall earnings and dividend paying capability of CH Energy Group. The strategy and opportunities of each business unit are discussed in more detail below.

          CH Energy Group believes managing risk is an important component of delivering shareholder value, and emphasizes creditworthiness and liquidity as strong fundamentals of long-term success. We also invest in a way that attempts to constrain earnings volatility to a level we believe is acceptable to our shareholders and is consistent with a relatively high dividend payout.

          CH Energy Group has used the cash proceeds from its 2001 divestitures of major generating assets, and is now seeking to judiciously raise debt capital to lever its unregulated investments, which were 100% equity financed as of December 31, 2007.

Central Hudson

          Central Hudson delivers electricity and natural gas to approximately 372,000 customers in a defined service territory in the Mid-Hudson Valley region of New York State. With costs consistently ranking below the average of electric utilities in New York State, Central Hudson’s earnings are derived primarily from customer delivery charges. Central Hudson’s rates are set by the PSC and designed to recover the cost of providing safe and reliable service to its customers and to provide a fair and reasonable return on the capital invested by shareholders. In addition to delivering electricity and natural gas, Central Hudson also procures supplies of electricity and natural gas for a majority of its customers. With authorization from the PSC, Central Hudson recovers these supply costs from customers without deriving profits from these activities.

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          In 2007, Central Hudson made progress on an important operational and customer initiative, improving electric reliability. The frequency of service interruptions was 20% lower in 2007 compared to the prior three-year average. Although favorable weather played a role, management believes that this reduction is also a result of expanded tree trimming and capital investments to improve reliability. In addition to providing safe and reliable service, management’s attention remains focused on managing costs, and thus maintaining above average levels of customer satisfaction. These strategies promote high customer satisfaction and positive regulatory relations, which should translate into full cost recovery and reasonable returns for shareholders.

          On July 24, 2006, the PSC issued the 2006 Rate Order authorizing increases in Central Hudson’s electric and natural gas delivery rates over a three-year period ending June 30, 2009. During 2007, Central Hudson experienced lower sales volumes than reflected in the 2006 Rate Order, particularly for natural gas. Lower sales were caused by a reduction in natural gas and electric use per customer, which management believes was driven by energy conservation due to the price of energy and customers’ environmental concerns. As a result, Central Hudson is earning less than its allowed ROE, despite growth in its customer base and in its rate base. Management believes that the warmer weather experienced over the last decade is due, at least in part, to changes in the overall climate in its service territory. Management expects this warming trend to continue. Rate base growth and a higher earned ROE are both critical to Central Hudson’s ability to contribute to earnings growth. If not offset, lower sales than forecasted in the 2006 Rate Order, such as those experienced in 2006 and 2007, will continue to limit Central Hudson’s ability to increase its earnings.

          On September 25, 2007, Central Hudson filed a proposed energy efficiency program with the PSC. This proposed program addresses customers’ desire to use energy more efficiently, and also features a Revenue Decoupling Mechanism (RDM), which eliminates the linkage of electric and natural gas profits from sales. If approved, the RDM feature of Central Hudson’s proposed program will neutralize the earnings impact caused by fluctuations in usage per customer and the effect of unusual variations in weather patterns. The proposed program also includes a shareholder incentive provision to reward the company for successfully reducing energy consumption.

          In addition to the energy efficiency and RDM proposals, management has implemented and is considering other potential strategies to manage costs and respond to lower sales growth than forecasted in rates. These strategies include the December 2007 filing with the PSC to defer certain Rate Year 1 gas costs not included in rates in the 2006 Rate Order and the possible filing of a rate case in 2008 to recalibrate revenues and expenses.

          Changes in energy policy at the state level continue to provide new challenges for Central Hudson. Several generic proceedings have been established by the PSC on important policy questions that could impact Central Hudson. These are discussed further in the “Regulatory Matters” section following this discussion. Management

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cannot estimate at this time what, if any, impact these factors may have on Central Hudson.

Griffith

          Griffith provides petroleum products and services to a base of more than 110,000 customers in a market area comprised of parts of Connecticut, Delaware, Washington, D.C., Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, and West Virginia. Griffith’s revenues, cash flows, and earnings are derived from the sale and delivery of heating oil, gasoline, diesel fuel, kerosene, and propane and from the installation and maintenance of heating, ventilating, and air conditioning equipment. Griffith’s 2007 gross profit by petroleum product and service and installations is illustrated below.

          Griffith had stronger performance results for 2007 due primarily to the continued success of its acquisition and integration strategy, its strong marketing efforts, improved operational efficiency, and growth in its margins. Griffith’s acquisition strategy continued to contribute favorably to earnings. In addition to the sixteen companies acquired in 2006 and 2005, Griffith acquired thirteen companies during the twelve months ended December 31, 2007, which provided a 26% increase in the total customer base and accounted for 4% of the company’s net income for 2007. Due to the timing of the acquisitions and the seasonality of the business, it is expected that the favorable impact of these acquisitions will be more fully realized in 2008, when Griffith will own the acquired companies through an entire heating season.

          Griffith’s marketing initiatives have also proven to be an integral part of the continued expansion of its customer base. Internal efforts to promote Griffith’s brand name and strong customer service capabilities have contributed to a 1% net account growth for 2007. Griffith will undertake efforts to continue this trend in 2008.

          Griffith’s earnings were also favorably impacted in 2007 by higher margins achieved in the first half of the year. The increase in oil prices in the second half of 2007 resulted in compression of these margins and could present continued challenges in 2008.

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          Griffith’s strategy of acquiring quality companies, internal marketing efforts, and improving operational efficiency will continue to be Griffith’s future focus.

          During 2008, Griffith will also focus on efforts to expand its margins. The continued growth of the base company’s earnings will be contingent upon Griffith’s ability to minimize costs and optimize margins. Griffith is closely monitoring the impact of the economy on residential use per customer and analyzing potential impacts of legislation in response to recent environmental and political emphasis on energy efficiency initiatives. Conservation efforts by customers and federal policy that encourages this behavior could pose challenges to the company during 2008 and beyond. Management cannot estimate at this time what, if any, impact these factors may have on the company.

Other Businesses and Investments

          In addition to Griffith, CHEC derives earnings through investments in the competitive energy markets. CHEC’s investment objectives are to increase earnings and cash flow while limiting earnings volatility to a level that management believes is acceptable. Increasing government support for investments in renewable energy sources has made such investments more attractive, providing opportunities to promote environmentally friendly energy sources while providing potential earnings for shareholders. CHEC faces strong competition for investment opportunities in the energy industry, which may make it difficult to make investments that offer appropriate risk-adjusted returns or may slow the rate at which such investments can be made. CHEC’s management believes these challenges can be met effectively as it pursues its current strategy.

          In 2007, CHEC continued to expand its investments in renewable energy sources by entering into agreements committing a total of $14 million. The primary investment involves a plan to build, own and operate a 3-megawatt electric generating plant in Auburn, New York, which will use renewable energy for electric generation. The second project is a plan to invest in a biodiesel facility in Brooklyn, New York, which is expected to produce biodiesel fuel utilizing waste cooking oil as raw material. Also, an ethanol investment of $3 million was made through additional subordinated debt of Cornhusker Holdings.

           Despite the challenges in 2007 caused by the volatile commodity prices impacting ethanol investments, CHEC’s existing investments in ethanol production, biomass electric generation, and wind energy contributed favorably to earnings in 2007 and are expected to continue to do so in the future, reinforced by the new investments discussed above. Additionally, Cornhusker Holdings is currently working on an expansion of its plant capacity, which would increase capacity at a competitive cost per gallon of increased ethanol production. Lyonsdale’s earnings are expected to increase starting in 2008 as a result of a contract entered into with NYSERDA for the sale of Renewable Energy Attributes, which are tied directly to plant output.

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          CHEC’s other investments – in energy efficiency projects, a venture capital fund, and other small partnerships – are not expected to play a significant role in CH Energy Group’s strategy going forward.

          CHEC’s ability to continue to make additional investments that provide attractive returns within acceptable earnings volatility parameters will be one of the key factors in CH Energy Group’s ability to achieve its goal of increasing earnings per share over time. As planned, CH Energy Group utilized a portion of its cash reserves to make additional investments in the competitive energy markets, and expects to continue its strategy utilizing its remaining cash reserves and relying on its potential to raise capital with a long-term debt offering related to the currently unlevered CHEC businesses.

          In December 2007, The Energy Independence and Security Act of 2007 (the “Energy Act”) became law. The Energy Act increased the annual minimum of renewable fuels for 2008 and 2012 by 3.6 and 7.7 billion gallons, respectively, which could raise the demand for ethanol. Although these increases could favorably impact Cornhusker Holdings’ earnings, any such impact is not expected to be material to CHEC or CH Energy Group.

2007 In Review

          Earnings for CH Energy Group, Inc. totaled $2.70 per share in 2007, versus $2.73 per share during 2006. Though there was a slight year-over-year reduction in earnings, the core businesses performed solidly during 2007 and were able to almost completely offset more than $0.50 per share of favorable unusual items that were experienced during 2006.

          The 2007 earnings per share reflect sound business fundamentals. Central Hudson’s sales rebounded somewhat from depressed levels in 2006, and higher rates also boosted revenues. When combined with improved margins within Griffith and earnings from a peak level of acquisitions, these developments largely replaced those unusual items that had benefited earnings in 2006. The actual results by business were as follows:

Central Hudson’s Electric and Natural Gas Businesses

          Central Hudson’s contribution to annual earnings was $2.06, which was $0.09 lower than 2006. Though higher utility rates, more favorable weather, and growth in both sales and usage per customer all contributed to strong performance, earnings results were down from the prior year because Central Hudson benefited from certain positive regulatory mechanisms and unusual items during 2006 that did not recur in 2007.

          In particular, three factors that helped to bolster Central Hudson’s earnings per share in 2007 as compared to the prior year were: reduced expenses associated with restoring service due to fewer storms and increased tree trimming ($0.12), higher rates ($0.18) and weather-normalized sales growth ($0.18), the last of which indicates that

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the conservation evidenced by lower usage per customer in 2006 in response to higher energy prices appears to have subsided.

          Despite those positive developments, Central Hudson’s management believes that the sales forecast adopted in the 2006 Rate Order did not accurately reflect the level of customer response to price increases and was therefore overstated, which has resulted in Central Hudson failing to earn the authorized return to shareholders.

          In September 2007, Central Hudson filed a request to implement an energy efficiency program and adopt a revenue decoupling mechanism that would eliminate the linkage of electric and natural gas profits from sales. The outcome of that filing is not yet known and preparations have begun to file a request for a rate increase with the New York State Public Service Commission in 2008.

Griffith

          Griffith contributed $0.20 to earnings per share in 2007, up from $0.10 during 2006, due largely to higher margins and profitable acquisitions. Griffith’s management foresees opportunities to achieve still more given the successful execution in 2007 of Griffith’s strategy to grow through both acquisitions and internal marketing, as well as to improve operational effectiveness.

Other Businesses

          CH Energy Group (the holding company) and CHEC’s partnerships and other investments contributed $0.44 to CH Energy Group’s earnings in 2007, down $0.04 from 2006 results. The earnings from CHEC’s investment in Cornhusker Holdings were lower due to lower margins, but that investment along with the investment in Lyonsdale and CH-Community Wind continued to add positively to earnings as part of a diversified portfolio of investments within the energy industry.

REGULATORY MATTERS

Rate Proceedings - Electric and Natural Gas

          For further information regarding Central Hudson’s current rate agreement, see Note 2 – “Regulatory Matters” under the caption “New Rate Proceedings – Electric and Natural Gas.”

Other PSC Proceedings and Administration Initiatives

PSC Proceedings

           CH Energy Group and Central Hudson continue to monitor a number of generic and specific regulatory proceedings. Neither CH Energy Group nor Central Hudson can predict the final outcome of Governor Spitzer’s energy policies, or the following PSC proceedings.

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          On January 21, 2008, Central Hudson filed a petition for reconsideration and rehearing on the PSC’s Order Concerning Annual Reconciliation of Gas Costs, issued on December 21, 2007. The petition seeks reconsideration and recovery of certain adjustments, totaling $666,000, proposed by the company in its November 1, 2007 gas cost reconciliation filing.

          On December 24, 2007, the PSC issued an Order Initiating Electricity Reliability and Infrastructure Planning in Case 07-E-1507 as an outflow of the longer-term energy planning issues initially considered in Phase II of Case 06-M-1017. The Order institutes a collaborative process to develop the process, criteria, and standards for the PSC to review and choose among competing regulatory backstop projects, if necessary, in order to ensure system reliability in the near term. In addition, the Order seeks to establish a long term electric resource plan and planning process that incorporates various considerations and policy goals which are not adequately addressed by the existing market structure or planning process. In the Order, the PSC reiterated its support for competitive markets and market mechanisms, but noted regulatory approaches, including the use of long-term contracts, may be required to address the energy needs and policy goals of New York State. On January 23, 2008, Central Hudson filed a petition for clarification and reconsideration in this proceeding. The petition seeks Commission redress or consideration of several issues, including utility ownership of generation facilities, long-term contracts, and other planning issues that were addressed in the PSC’s December 24, 2007 Order instituting the proceeding.

          On November 27, 2007, Central Hudson filed a petition with the PSC seeking approval to defer certain incremental and material non-labor gas expenses that were incurred during Rate Year 1 but were not included in rates under the 2006 Rate Plan. The petition seeks PSC authorization to defer $990,000 of incremental expenses and associated carrying charges on the net of tax balances.

          On September 25, 2007, Central Hudson filed a petition with the PSC seeking expedited consideration and approval of interim electric, gas and low-income energy efficiency programs, electric and gas revenue decoupling mechanisms, and deferral accounting authorizations. The petition was accompanied by a filing providing detailed descriptions of Central Hudson’s proposed energy efficiency programs, including analyses demonstrating cost effectiveness. The programs are targeted at residential, small commercial and industrial, and low-income customer segments, and consist of a range of incentives for high efficiency measures including lighting, appliances, heating and cooling equipment, energy audits, and weatherization. In addition, the programs include a comprehensive customer outreach and education effort. On January 18, 2008, Central Hudson filed a comprehensive plan in the Energy Efficiency Portfolio Standard proceeding (Case 07-M-0548) outlining its vision of a statewide plan to achieve the 15% reduction targets. At this time, there has been no Commission action taken in this proceeding.

          On April 24, 2007, the PSC issued an Order in Case 07-M-0458 - Proceeding on Motion of the Commission to Review Policies and Practices Intended to Foster the

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Development of Competitive Retail Energy Markets. This Order encouraged interested parties to examine and submit comments on existing programs and practices of New York State (“NYS”) utilities that promote retail market development focusing on whether programs are still necessary; if market participants are improperly subsidized; if risks and expenses are properly allocated among ratepayers, utilities and market participants; and the need to continue programs or practices to prevent the re-building of barriers to entry in the competitive markets. The Order also calls for the review and evaluation of utility specific programs, practices and policies in ongoing and future electric and gas rate proceedings.

          On April 20, 2007, the PSC issued an Order in Cases 03-E-0640 and 06-G-0746 - Proceeding on Motion of the Commission to Investigate Potential Electric and Gas Delivery Rate Disincentives Against the Promotion of Energy Efficiency, Renewable Technologies and Distributed Generation. The Order directed Central Hudson and other NYS utilities to develop proposals for delivery service revenue decoupling mechanisms for consideration in a next rate case filing. Consistent with the Order’s intent, Central Hudson proposed mechanisms to true up forecast and actual delivery service revenues in its September 25, 2007 filing discussed above.

          On April 19, 2007, the PSC issued an Order in Case 06-M-1017 - Proceeding on Motion of the Commission as to Policies, Practices and Procedures for Utility Commodity Supply Service to Residential and Small Commercial Customers. The Order provided guidance on commodity supply and hedging practices and directed Central Hudson and other NYS utilities, through a collaborative or administrative process, to develop standards and goals for measuring and constraining the supply price volatility on certain classes of customers. In addition, utilities will be required to report to the PSC Staff on their strategies, aggregate supply portfolio, and the extent to which goals for measuring and constraining energy price volatility have been met. This case continues with collaborative meetings among the utilities, PSC Staff, and interested Parties, and a Phase II to address long-term contracting, supply resource planning, and other public policy issues. The Phase II matters in the case are being addressed in Case 07-E-1507 in the Order Initiating Electric Reliability and Infrastructure Planning referenced above.

          On April 19, 2007, Governor Eliot Spitzer delivered a speech announcing a comprehensive energy strategy for NYS, consisting of demand side and supply side components to reduce energy costs and achieve economic and environmental benefits. The strategy includes goals of reducing electricity demand 15% by 2015 through new energy efficiency programs, new appliance efficiency standards, and energy building codes. The plan also proposes a new power plant siting law, and continued support for renewable energy resources, as well as other proposed energy policies. On May 16, 2007, the PSC issued an Order Instituting Proceeding in Case 07-M-0548 - Proceeding on Motion of the Commission on an Energy Efficiency Portfolio Standard. In response to those initiatives, Central Hudson developed the energy efficiency programs included in its September 25, 2007 filing discussed above.

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Non-Utility Land Sales

          For further information regarding non-utility land sales, see Note 2 – “Regulatory Matters.”

Electric Reliability Performance

          For further information regarding Central Hudson’s electric reliability performance, see Note 2 – “Regulatory Matters.”

RESULTS OF OPERATIONS

          The following discussion and analyses include explanations of significant changes in revenues and expenses between the twelve months ended December 31, 2007, and 2006, and the twelve months ended December 31, 2006, and 2005, for Central Hudson’s regulated electric and natural gas businesses, Griffith, and the other businesses.

Earnings

          Earnings per share (basic and diluted) of CH Energy Group’s common stock are computed on the basis of the average number of common shares outstanding (basic and diluted) during the subject year. The number of average shares outstanding of CH Energy Group common stock, the earnings per share, and the rate of return earned on average common equity, which is net income as a percentage of a monthly average of common equity, are as follows:

	2007			2006			2005
Average shares outstanding (In thousands):
Basic		15,762			15,762			15,762
Diluted		15,779			15,779			15,767
Earnings per share:
Basic	$	2.70		$	2.73		$	2.81
Diluted	$	2.70		$	2.73		$	2.81
Return earned on common equity		8.1	%		8.4	%		8.8	%

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2007 as Compared to 2006

CH Energy Group Consolidated Earnings

Earnings per Share (Basic)	2007		2006		Change
Central Hudson – Electric	$	1.66	$	1.67	$	(0.01	)
Central Hudson – Natural Gas		0.40		0.48		(0.08	)
Griffith		0.20		0.10		0.10
Other Businesses and Investments		0.44		0.48		(0.04	)
	$	2.70	$	2.73	$	(0.03	)

          CH Energy Group’s decrease in earnings in 2007 was primarily the result of the effect of unusual items that contributed to earnings favorably in 2006 but did not recur in 2007, partially offset by the impact of Central Hudson’s rate increases in 2006 and 2007, weather-normalized sales growth, and Griffith’s favorable operating results.

Central Hudson
Earnings per share (Basic)	2007		2006		Change
Electric	$	1.66	$	1.67	$	(0.01	)
Natural Gas		0.40		0.48		(0.08	)
Total	$	2.06	$	2.15	$	(0.09	)

          Earnings from Central Hudson’s electric and natural gas operations decreased $0.09 per share in 2007 as compared to 2006, due to the following:

Regulatory Mechanisms and Unusual Events:
Release of Reserves in 2006	$	(0.21	)
Gain on Non-Utility Property Sales in 2006		(0.08	)
Reversal of Shared Earnings in 2006		(0.08	)
Revenues recorded in 2006 per prior Rate Agreement		(0.14	)
Shared earnings recorded in 2007		(0.04	)
Gain on Non-Utility Property Sales in 2007		0.02
		(0.53	)
Rate Increases		0.18
Weather Impact on Sales		0.07	(a)
Weather-Normalized Sales Growth		0.18
Higher Tree Trimming Expense in 2007		(0.03	)
Lower Storm Restoration Expense in 2007		0.15
Interest Expense and Carrying Charges		(0.11	)
	$	(0.09	)

(a) Includes $0.04 and $0.03 per share due to higher sales volumes for electric and natural gas, respectively, and is net of derivatives.

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          Central Hudson’s decrease in earnings was primarily the result of changes in regulatory provisions and a number of significant, favorable, unusual items that contributed $0.51 per share to 2006 earnings, but did not recur in 2007. However, the lack of such items of that magnitude in 2007 was largely offset by an increase in rates pursuant to the 2006 Rate Order, higher energy delivery volumes and modest customer growth, and lower storm restoration costs due to fewer and less severe storms and increased tree trimming in 2007.

Griffith
Earnings per Share (Basic)	2007		2006		Change
	$	0.20	$	0.10	$	0.10

          Griffith’s earnings increased $0.10 per share in 2007 compared to 2006, due to the following:

Acquisitions(1)	$	0.04
Margin on Petroleum Sales and Services		0.18
Operating Expenses		(0.13	)
Weather Impact on Sales		0.02
Reduction in Environmental Remediation Reserve in 2006		(0.04	)
Other		0.03
	$	0.10

(1) For the purposes of this chart, “Acquisitions” represents the incremental affect of acquisitions made by Griffith in 2007 and 2006.

          The increase in earnings at Griffith in 2007 was largely the result of higher gross margins on petroleum products and service contracts which were partially offset by the impact of higher operating costs resulting in a net favorable earnings per share impact of $0.05. In addition, the incremental effect of acquisitions in 2006 and 2007 contributed to the higher earnings.

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Other Businesses and Investments
Earnings per Share (Basic)	2007		2006		Change
	$	0.44	$	0.48	$	(0.04	)

Earnings from CH Energy Group (the holding company) and CHEC’s partnership and other investment interests decreased $0.04 per share in 2007 as compared to 2006, due to the following:

Unusual Events:
Gain on Sale of Non-Strategic Property in 2006	$	(0.03	)
Release of Reserves of a Former Subsidiary in 2006		(0.07	)
Release of Reserves of a Former Subsidiary in 2007		0.01
Tax Adjustments		0.07
		(0.02	)
Cornhusker Holdings		(0.04	)
CH-Community Wind		0.02
Lyonsdale		0.02
Other		(0.02	)
	$	(0.04	)

          CH Energy Group’s other unregulated businesses decreased their earnings contribution by $0.04 per share from 2006 primarily due to the release of reserves related to a former subsidiary and property sales in 2006, partially offset by favorable tax adjustments. Other investments continue to contribute to earnings, but Cornhusker Holdings’ earnings decreased in 2007 due to unfavorable markets for corn and ethanol.

2006 as Compared to 2005

CH Energy Group Consolidated Earnings

Earnings per Share (Basic)	2006		2005		Change
Central Hudson – Electric	$	1.67	$	1.63	$	0.04
Central Hudson – Natural Gas		0.48		0.57		(0.09	)
Griffith		0.10		0.23		(0.13	)
Other Businesses and Investments		0.48		0.38		0.10
	$	2.73	$	2.81	$	(0.08	)

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Details by segment are as follows:

Central Hudson

Earnings per share (Basic)	2006		2005		Change
Electric	$	1.67	$	1.63	$	0.04
Natural Gas		0.48		0.57		(0.09	)
Total	$	2.15	$	2.20	$	(0.05	)

          Earnings from Central Hudson’s electric and natural gas operations decreased $0.05 per share in 2006 as compared to 2005, due to the following:

Regulatory Mechanisms	$	0.38	(a)
Rate Increases		0.32
Weather Impact on Sales		(0.25	) (b)
Line Clearance Expense		(0.15	)
Storm Restoration Expense		(0.10	)
Other Operating Expenses		(0.11	)
Interest Expense		(0.09	)
Lower Sales per Customer Due to Conservation		(0.12	)
Non-Utility Property Sales		0.08
2005 Favorable NYISO Billing Adjustment		(0.04	)
Other		0.03
	$	(0.05	)

(a)	Includes $0.16 per share from lower shared earnings, $0.06 per share from lower PSC reliability assessments, and $0.11 per share from revenue restoration.
(b)	Includes $(0.14) and $(0.11) per share due to lower sales volumes for electric and natural gas, respectively, and is net of derivatives.

          Central Hudson’s reduction in earnings was primarily the result of customer conservation and unfavorable weather. Revenues set aside for customers in 2005 were reinstated in 2006 to offset some of the unfavorable results of higher operating expenses and weather. Additionally, in 2006 Central Hudson recorded revenues to restore earnings towards the allowed rate of return in accordance with the provisions of the then-current Settlement Agreement. This regulatory mechanism is no longer available under the terms of the 2006 Rate Order. Central Hudson’s rate increase was designed to provide revenue support for the recovery of the escalating cost of providing service to its customers and of previously deferred costs.

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Griffith

Earnings per Share (Basic)	2006		2005		Change
	$	0.10	$	0.23	$	(0.13	)

          Griffith’s earnings decreased $0.13 per share in 2006 compared to 2005, due to the following:

Acquisitions(¹ )	$	0.03
Reduction in Environmental Remediation Reserve		0.04
Margin on Petroleum Sales and Services		0.10
Lower Sales per Customer Due to Conservation		(0.10	)
Weather Impact on Sales		(0.13	)
Operating Expenses		(0.04	)
Other		(0.03	)
	$	(0.13	)

(1) For the purposes of this chart, “Acquisitions” represents the incremental affect of acquisitions made by Griffith in 2006 and 2005.

          The reduction in earnings at Griffith was largely the result of customer conservation and warmer weather in 2006. Margins on petroleum products and service contracts increased over 2005 levels. Earnings from acquisitions of several small oil companies in 2006 were also higher than the acquisition-related earnings in 2005.

Other Businesses and Investments

Earnings per Share (Basic)	2006		2005		Change
	$	0.48	$	0.38	$	0.10

          Earnings from CH Energy Group (the holding company) and CHEC’s partnership and other investment interests increased $0.10 per share in 2006 as compared to 2005, due to the following:

Tax Adjustment in 2005	$	(0.14	)
Sales of Non-Strategic Property		0.03
Release of Reserves of a Former Subsidiary		0.07
Cornhusker Holdings		0.10
Lyonsdale		0.03
Other		0.01
	$	0.10

          CH Energy Group’s other unregulated businesses increased their earnings contribution by $0.10 per share over 2005 primarily due to the earnings of new investments including the Cornhusker Holdings and Lyonsdale. The release of reserves related to CH Resources, property sales, and other favorable variations largely offset the favorable tax adjustment recorded in 2005. The 2005 tax adjustment was largely due to the completion of the New York State income tax audit for 2001.

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Central Hudson

          The following discussions and analyses include explanations of significant changes in revenues and expenses between the twelve months ended December 31, 2007, and December 31, 2006, and between the twelve months ended December 31, 2006 and December 31, 2005, for Central Hudson’s regulated electric and natural gas businesses.

Central Hudson Income Statement Variances	Twelve months ended December 31, 2007 over/(under) 2006
	Amount (In Thousands)				Percent
Operating Revenues		$	123,108			18.7	%
Operating Expenses:
Purchased electric, fuel and natural gas			92,662			23.1	%
Depreciation and Amortization			(603	)		(2.1	)%
Other operating expenses			30,599			19.4	%
Total operating expenses			122,658			20.9	%
Operating Income			450			1.0	%
Other income, net			(592	)		(10.0	)%
Interest charges			2,495			12.0	%
Income before income taxes			(2,637	)		(5.0	)%
Income taxes			(1,202	)		(6.0	)%
Net (loss)/income		$	(1,435	)		(4.0	)%

Central Hudson Income Statement Variances	Twelve months ended December 31, 2006 over/(under) 2005
	Amount (In Thousands)				Percent
Operating Revenues		$	(17,416	)		(2.6	)%
Operating Expenses:
Purchased electric, fuel and natural gas			(42,064	)		(9.5	)%
Depreciation and Amortization			(872	)		(2.9	)%
Other operating expenses			25,355			19	%
Total operating expenses			(17,581	)		(2.9	)%
Operating Income			165			0	%
Other income, net			30			1	%
Interest charges			3,367			20	%
Income before income taxes			(3,172	)		(5	)%
Income taxes			(2,408	)		(10	)%
Net (loss)/income		$	(764	)		(2	)%

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Central Hudson

Delivery Volumes

          Delivery volumes for Central Hudson vary in response to weather conditions and customer behavior. Electric deliveries typically peak in the summer, and deliveries of natural gas used for heating purposes typically peak in the winter. Sales also vary as customers respond to the price of the particular energy product and changes in local economic conditions.

          The following charts reflect the change in the level of electric and natural gas deliveries for Central Hudson in 2007, compared to 2006, and in 2006, compared to 2005. The charts reflect the change for actual deliveries, and the change normalized to exclude the effect of weather. Deliveries of electricity and natural gas to residential and commercial customers contribute the most to Central Hudson’s earnings. Industrial sales and interruptible sales have a negligible impact on earnings.

	Actual Deliveries
	2007 Increase (Decrease) from 2006				2006 Increase (Decrease) from 2005
	Electric		Natural Gas		Electric		Natural Gas
Residential	4	%	12	%	(6	)%	(13	)%
Commercial	4	%	10	%	(3	)%	(10	)%
Industrial and Other (a)	(2	)%	5	%	(3	)%	6	%
Total Deliveries	2	%	9	%	(4	)%	(7	)%
(a)           Includes interruptible natural gas deliveries.

	Weather Normalized Deliveries
	2007 Increase (Decrease from 2006)				2006 Increase (Decrease from 2005)
	Electric		Natural Gas		Electric		Natural Gas
Residential	3	%	6	%	0	%	(6	)%
Commercial	4	%	4	%	(1	)%	(4	)%
Industrial and Other (a)	(2	)%	5	%	(2	)%	(19	)%
Total Deliveries	2	%	5	%	(1	)%	(5	)%
(a)           Excludes interruptible natural gas deliveries.

          Electric deliveries to residential and commercial customers were higher in 2007 due to colder weather (electric residential heating degree-days increased 3% for the year), an increase in non-weather related usage per customer, and modest customer growth. This increase was partially offset by the impact of cooler summer weather.

          Deliveries of natural gas in 2007 also increased due to higher usage per customer, resulting from an increase in residential natural gas heating-degree days of

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2% overall for 2007, an increase in non-weather related usage per customer, and some customer growth.

          Electric deliveries to residential and commercial customers in 2006 decreased as a result of less usage due to cooler summer and warmer winter weather conditions, as well as some conservation by customers, which was partially offset by modest customer growth. As compared to 2005, cooling degree-days decreased 31% and electric residential heating degree-days decreased 6%.

          Natural gas deliveries to residential and commercial customers also decreased due to weather conditions and conservation measures on the part of customers, which was partially offset by modest customer growth. Residential natural gas heating degree-days decreased 5% in 2006 as compared to 2005. Industrial deliveries decreased 23% due to lower usage and the loss of a large customer due to bankruptcy.

Revenues

          Central Hudson’s revenues consist of two major categories: those which offset specific expenses in the current period (matching revenues), and those that impact earnings. Matching revenues recover Central Hudson’s actual costs for particular expenses. Any difference between these revenues and the actual expenses incurred is deferred for future recovery from or refund to customers and therefore does not impact earnings.

2007 Increase (Decrease) from 2006 — $123.1 million increase (In Thousands)
	Central Hudson
	Electric			Natural Gas			Total
Revenues with Matching Offsets: (a)
Energy cost adjustment	$	87,833		$	1,955		$	89,788
Sales to other utilities		349			1,086			1,435
Pension, OPEB and other revenues		19,491			5,850			25,341
Subtotal		107,673			8,891			116,564
Revenues Impacting Earnings:
Customer sales (b)		9,911			2,389			12,300
Other regulatory mechanisms		(5,090	)		(224	)		(5,314	)
Sales to other utilities		—			270			270
Weather-hedging contracts		440			(150	)		290
Other revenues		(3	)		(999	)		(1,002	)
Subtotal		5,258			1,286			6,544
Total	$	112,931		$	10,177		$	123,108

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          Electric and natural gas revenues in 2007 increased due largely to an increase in revenues with matching expense offsets. The increases in energy cost adjustment revenues reflect the impact of higher delivery volumes and also higher wholesale costs for electric revenues. Revenues for pension, OPEB and other matched costs resulted from rate changes implemented in accordance with the 2006 Rate Order.

          Electric and natural gas revenues from customer sales increased due to higher delivery volumes and the impact of the 2006 Rate Order. Electric revenues from customer sales were partially offset by a decrease in other regulatory mechanisms primarily related to shared earnings and revenues recorded in 2006 in accordance with prior PSC authorization.

2006 Increase (Decrease) from 2005 — $17.4 million decrease
(In Thousands)

	Central Hudson
	Electric			Natural Gas			Total
Revenues with Matching Offsets: (a)
Energy cost adjustment	$	(40,143	)	$	(9,062	)	$	(49,205	)
Sales to other utilities		(1,060	)		8,940			7,880
Customer Sales		14,517			1,585			16,102
Pension, OPEB and other revenues		202			40			242
Subtotal		(26,484	)		1,503			(24,981	)
Revenues Impacting Earnings:
Customer sales (b)		(439	)		(2,859	)		(3,298	)
Other regulatory mechanisms		8,444			(260	)		8,184
Sales to other utilities		—			1,578			1,578
Weather-hedging contracts		1,342			116			1,458
Other revenues		51			(408	)		(357	)
Subtotal		9,398			(1,833	)		7,565
Total	$	(17,086	)	$	(330	)	$	(17,416	)

(a)

Revenues with matching offsets do not affect earnings since they offset related costs, the most significant being energy cost adjustment revenues, which provide for the recovery of purchased electricity and natural gas costs. Other related costs are pensions, OPEB, and the cost of special programs authorized by the PSC, which are funded with certain available credits. Changes in revenues from electric sales to other utilities also do not affect earnings since any related profits or losses are returned or charged, respectively, to customers. For natural gas sales to other utilities, 85% of such profits are returned to customers.

(b)

Includes an offsetting recovery of amounts related to back-out credits for retail access customers.

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          Electric revenues decreased $17.1 million in 2006 primarily due to a decrease of $26.5 million in revenues with matching offsets. A decrease in energy cost adjustment revenues due to lower deliveries and lower wholesale costs was partially offset by an increase in revenues for pension and OPEB costs resulting from the 2006 Order. Revenues affecting earnings increased $9.4 million primarily due to favorable changes in other regulatory mechanisms related to shared earnings, the restoration of revenues recorded in accordance with PSC authorization, service interruptions, and amounts collected for uncollectible expense and working capital.

          Natural gas revenues decreased $0.3 million in 2006. This decrease was caused by a decrease of $1.8 million in revenues impacting earnings, primarily due to lower deliveries resulting from milder weather and some customer conservation. This decrease was largely offset by an increase of $1.5 million in revenues with matching offsets due to increases in sales to other utilities and revenues for pension and OPEB costs due to the 2006 Order, partially offset by a decrease in energy cost adjustment revenues due to lower deliveries resulting from a milder winter.

Incentive Arrangements

          Under certain earnings incentive provisions approved by the PSC, Central Hudson shares with its customers certain revenues and/or cost savings exceeding predetermined levels or is penalized in some cases for shortfalls from certain performance standards.

          Earnings sharing arrangements are currently effective for interruptible natural gas deliveries and natural gas capacity release transactions. Performance standards apply to electric service reliability, certain aspects of customer service, natural gas safety, and customer satisfaction, and certain aspects of retail market participant satisfaction.

          The net results of these and previous earnings sharing arrangements had the effect of increasing pre-tax earnings by $0.5 million in 2007, and $0.4 million in 2006, and decreasing pre-tax earnings by $0.6 million in 2005.

          In addition to the above-noted items, effective July 1, 2006, Central Hudson shared with customers earnings over a base ROE of 10.6% on the equity portion of Central Hudson’s rate base, which was determined in accordance with the criteria set forth in the 2006 Rate Order. In 2007, Central Hudson recorded $1.1 million as a regulatory liability for the customer portion of these pre-tax shared earnings. Through June 30, 2006, Central Hudson shared earnings over a base ROE of 10.5% with customers, which was determined in accordance with the criteria set forth in the 2001 Rate Plan. In 2005, Central Hudson recorded $2.4 million as a regulatory liability for the customer portion of these pre-tax shared earnings of which $1.7 million was reversed in 2006 due to lower than anticipated ratemaking operating income in the six months ended June 30, 2006.

          See Note 2 – “Regulatory Matters” of this 10-K Annual Report under the caption “2006 Rate Order” for a description of earnings sharing formulas approved by the PSC for Central Hudson.

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Operating Expenses

          The most significant elements of Central Hudson’s operating expenses are purchased electricity and purchased natural gas; however, changes in these costs do not affect earnings since they are offset by changes in related revenues recovered through Central Hudson’s energy cost adjustment mechanisms. Additionally, there are other significant costs that are matched by revenues, notably the cost of pensions and OPEBs.

          Total utility operating expenses increased 20.9% in 2007 and decreased 2.9% in 2006.

          The following summarizes the change in operating expenses:

	2007 Increase (Decrease) from 2006			2006 Increase (Decrease) from 2005
	(Change In Thousands)
Expenses Currently Matched to Revenues (1):
Purchased electricity	$	88,182		$	(41,422	)
Purchased natural gas		3,041			(36	)
Pension		15,102			11,575
OPEB		4,880			3,273
New York State energy programs		2,003			1,275
Stray voltage testing program		1,125			1,100
Residual gas deferred balances		1,509			—
Other matched expenses		1,511			201
Subtotal	$	117,353		$	(24,034	)
Other Expense Variations:
Tree trimming		797			3,877
Disposition of property		1,749			(2,218	)
Injuries & damages reserve		1,390			(836	)
Purchased natural gas		1,439			(606	)
Storm restoration expenses		(3,874	)		2,442
Other expenses		3,804			3,794
Subtotal	$	5,305		$	6,453
Total Increase in Operating Expenses	$	122,658		$	(17,581	)

(1) Includes expenses that, in accordance with the 2006 Rate Order, are adjusted in the current period to equal the revenues earned for the applicable expenses.

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          Purchased electricity costs increased in 2007 due to higher wholesale costs and volumes purchased, the latter resulting from an increase in usage and customer growth. Natural gas costs increased in 2007 due primarily to an increase in volumes purchased due to increased deliveries and customer growth. The lower storm restoration costs in 2007 resulted from fewer and less severe storms as compared to 2006. Other expenses of operation were also impacted by fewer real property sales in 2007 compared to 2006.

          Purchased electricity costs decreased in 2006 due to decreases in wholesale costs and volumes purchased, the latter due primarily to a decrease in usage resulting from cooler weather during the months of July through September 2006. The increase in other expenses of operation was partially offset by $2.2 million in gains realized on the sale of real property.

          The increase in pensions and OPEBs in both periods is due to an increase in the level of expense recorded due to a corresponding increase in revenues resulting from the 2006 Rate Order. The increase in tree trimming expenses in both periods reflects Central Hudson’s continuing efforts to improve system reliability. These costs are covered by the higher revenues resulting from the 2006 Rate Order. Management also believes that the increased tree trimming contributed to the improved system reliability during storms.

Other Income

          Other income and deductions for Central Hudson decreased $0.6 million in 2007 primarily due to lower regulatory carrying charges due from customers related to pension costs. This reduction was partially offset by higher interest income on trust assets and higher other regulatory carrying charges due from customers.

Other income and deductions for Central Hudson remained essentially unchanged in 2006 as compared to 2005. A decrease in regulatory carrying charges due from customers related to pension costs was largely offset by the recording of favorable regulatory adjustments for the change in interest costs on Central Hudson’s variable rate debt. The variation related to the variable rate debt is offset by changes in the related interest charges.

Interest Charges

           Interest charges increased in 2007 primarily due to the issuance of medium-term notes in November 2006 and September 2007, and an increase in regulatory carrying charges due to customers related to other postretirement benefits. The latter results from an increase in the reserve balances upon which these carrying charges are calculated. Additional long-term debt was issued to supplement operating cash sources for Central Hudson’s capital expenditures, and additional short-term debt was required in 2007 for working capital needs.

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          Central Hudson’s interest charges increased in 2006 primarily due to the issuance of medium-term notes in December 2005 and November 2006 and increased interest charges on Central Hudson’s variable rate debt. The increase also reflects higher average balances of outstanding short-term debt and higher interest rates. Regulatory carrying charges on deferred balances due customers also increased.

          The following table sets forth pertinent data on Central Hudson’s outstanding debt.

	2007			2006			2005
	(Dollars In Thousands)
Long-Term Debt:
Debt retired	$	33,000		$	—		$	—
Debt issued	$	66,000		$	27,000		$	24,000
Outstanding at year-end:
Amount (including current portion)	$	403,892		$	370,889		$	343,886
Weighted average interest rate		5.49	%		4.88	%		4.47	%
Short-Term Debt:
Average daily amount outstanding	$	32,501		$	27,657		$	16,559
Weighted average interest rate		5.37	%		5.24	%		3.65	%

See Note 7 – “Short-Term Borrowing Arrangements” and Note 9 – “Capitalization – Long-Term Debt” for additional information on short-term and long-term debt of CH Energy Group and/or Central Hudson.

Income Taxes

          Central Hudson’s income taxes for 2007 decreased by $1.2 million compared to 2006 primarily due to a decrease in pre-tax book earnings, favorable impacts of items related to utility plant and from the tax benefits of the Medicare Act. These favorable items were partially offset by an unfavorable impact of flow-through items related to reserves.

          Central Hudson’s income taxes for 2006 decreased by $2.4 million compared to 2005 primarily due to a decrease in pre-tax book earnings and the reversal in 2005 of income tax reserves resulting from a favorable resolution of income tax audits.

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CH Energy Group

          In addition to the impacts of Central Hudson discussed above, CH Energy Group’s sales volumes, revenues and operating expenses, income taxes and other income were impacted by Griffith and the other businesses described below.

CH Energy Group Income Statement Variances	Twelve months ended December 31, 2007 over/(under) 2006
	Amount (In Thousands)				Percent
Operating Revenues		$	203,324		20.5	%
Operating Expenses:
Purchased electric, fuel, natural gas and petroleum			155,473		23.5	%
Depreciation and Amortization			222		0.6	%
Other operating expenses			45,841		20.9	%
Total operating expenses			201,536		22.0	%
Operating Income			1,788		2.0	%
Other income, net			(1,592	)	(15.0	)%
Interest charges			2,495		12.0	%
Income before income taxes, preferred dividends of subsidiary, and    minority interest			(2,299	)	(3.0	)%
Income taxes			(1,871	)	(8.0	)%
Preferred dividends of subsidiary			—		—
Net (loss)/income		$	(448	)	(1.0	)%

CH Energy Group Income Statement Variances	Twelve months ended December 31, 2006 over/(under 2005)
	Amount (In Thousands)				Percent
Operating Revenues		$	20,927		2.2	%
Operating Expenses:
Purchased electric, fuel, natural gas and petroleum			(8,096	)	(1.2	)%
Depreciation and Amortization			(518	)	(1.4	)%
Other operating expenses			31,086		16.5	%
Total operating expenses			22,472		2.5	%
Operating Income			(1,545	)	(2.0	)%
Other income, net			1,514		16.6	%
Interest charges			3,367		20.0	%
Income before income taxes, preferred dividends of subsidiaries, and    minority interest			(3,398	)	(5.0	)%
Income taxes			(2050	)	(8.0	)%
Net (loss)/income		$	(1,207	)	(3.0	)%

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Griffith

Sales Volumes

          Sales volumes for Griffith vary in response to weather conditions and customer behavior. Deliveries of petroleum products used for heating purposes peak in the winter. Sales also vary as customers respond to the price of the particular energy product and changes in local economic conditions.

          Changes in sales volumes of petroleum products, including the impact of acquisitions, are set forth below. The charts reflect the change for actual deliveries, and the change normalized to exclude the effect of weather.

	Actual Deliveries
	2007						2006
	% Change from 2006			Volumes as % of Total Volume			% Change from 2005			Volumes as % of Total Volume
Heating Oil
Base Company Volume1		7	%		41	%		(16	) %		43	%
Acquisitions Volume2		20	%		9	%		4	%		1	%
Total Heating Oil		27	%		50	%		(12	) %		44	%
Motor Fuels
Base Company Volume		(8	) %		44	%		1	%		54	%
Acquisitions Volume		8	%		4	%		5	%		1	%
Total Motor Fuels		0	%		48	%		6	%		55	%
Propane and Other
Base Company Volume		35	%		2	%		(14	) %		1	%
Acquisitions Volume		0	%		0	%		0	%		0	%
Total Propane and Other		35	%		2	%		(14	) %		1	%
Total
Base Company Volume		(1	) %		87	%		(8	) %		98	%
Acquisitions Volume		13	%		13	%		5	%		2	%
Total		12	%		100	%		(3	) %		100	%

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	Weather Normalized Deliveries
	2007						2006
	% Change from 2006			Volumes as % of Total Volume			% Change from 2005			Volumes as % of Total Volume
Heating Oil
Base Company Volume1		(1	) %		41	%		(6	) %		43	%
Acquisitions Volume2		19	%		9	%		5	%		4	%
Total Heating Oil		18	%		50	%		(1	) %		47	%
Motor Fuels
Base Company Volume		(8	) %		44	%		1	%		50	%
Acquisitions Volume		8	%		4	%		5	%		1	%
Total Motor Fuels		0	%		48	%		6	%		51	%
Propane and Other
Base Company Volume		26	%		2	%		(1	) %		2	%
Acquisitions Volume		0	%		0	%		0	%		0	%
Total Propane and Other		26	%		2	%		(1	) %		2	%
Total
Base Company Volume		(4	) %		87	%		(2	) %		95	%
Acquisitions Volume		13	%		13	%		5	%		5	%
Total		9	%		100	%		3	%		100	%

1	For the purposes of these charts, “Base Company” means Griffith as constituted at January 1, 2006 (i.e., without any impact from acquisitions made by Griffith in 2007 and 2006).
2	For the purposes of these charts, “Acquisition” represents the incremental effect of acquisitions made by Griffith in 2007 and 2006.

          Sales of petroleum products increased 12% in 2007. This was primarily a result of an increase in sales of heating oil, largely attributable to the acquisitions made in 2007 and colder weather in 2007. Sales of propane increased primarily due to colder weather in 2007 and the addition of a large commercial account in 2007. There was a 9% increase in heating degree-days in 2007 as compared to 2006. Degree-day variation is adjusted for the delay between the time the actual weather occurs, and the time of product delivery.

          Sales of petroleum products decreased in 2006. This was primarily a result of a decrease in sales of heating oil, largely attributable to warmer weather in 2006. Additionally, sales declined due to customer conservation because of the increased cost of heating oil. Motor fuel sales increased primarily from the impact of acquisitions made during 2005 and 2006. Sales of propane decreased, primarily due to warmer weather in 2006 and customer conservation. There was a 15% decrease in heating degree-days in 2006 as compared to 2005.

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Revenues

Griffith Revenues
Increase (Decrease) from Prior Year
(In Thousands)

	2007			2006
Heating Oil
Base Company1	$	24,322		$	(8,619	)
Acquisitions2		32,896			6,939
Total Heating Oil	$	57,218		$	(1,680	)
Motor Fuels
Base Company	$	1,126		$	21,946
Acquisitions		14,086			8,075
Total Motor Fuels	$	15,212		$	30,021
Service Revenues
Base Company	$	1,886		$	1,803
Acquisitions		3,511			1,728
Total Service Revenues	$	5,397		$	3,531
Other
Propane	$	1,450		$	(285	)
Weather-Hedging Contracts		(1,626	)		823
Other		276			323
Total Other	$	100		$	861
Total Revenues	$	77,927		$	32,733

1	For the purposes of this chart, “Base Company” means Griffith as constituted at January 1, 2006 (i.e., without any impact from acquisitions made by Griffith in 2007 and 2006).
2	For the purposes of this chart, “Acquisitions” represents the incremental effect of acquisitions made by Griffith in 2007 and 2006.

          Revenues, net of the effect of weather hedging contracts, increased in 2007 due largely to an increase in selling price and revenues from petroleum products resulting from an increase in heating oil volumes, and revenues from acquisitions made in 2006 and 2007.

          Revenues, net of the effect of weather hedging contracts, increased $32.7 million in 2006 due largely to an increase in revenues from petroleum products. Revenues from heating oil decreased due to a decrease in volumes, which was partially offset by an increase in selling price. Revenues from the sale of motor fuels increased due to an increase in selling price and an increase in sales volumes related primarily to acquisitions made in 2006 and 2005.

Operating Expenses

          Operating expenses increased $73.6 million, or 22.8% in 2007 primarily due to higher petroleum product expenses. These costs increased $61.0 million, or 23.8%, due to higher wholesale market prices and an increase in sales volume primarily due to the impact of acquisitions and colder weather in 2007. Other operating expenses increased $12.6 million in 2007 primarily due to an increase in expenses associated

- 51 -

with the increased sales volumes and additional operating and overhead expenses associated with acquisitions made during 2006 and 2007.

          Griffith’s operating expenses for 2006 increased $35.6 million, or 12.4% primarily due to higher wholesale prices of petroleum products. These costs increased $31.0 million, or 13.7%, due to higher wholesale market prices. Other operating expenses increased $4.6 million in 2006 primarily due to operating expenses of acquisitions made in 2005 and 2006.

Other Businesses and Investments

Revenues and Operating Expenses

          On April 12, 2006, CHEC purchased a 75% majority interest in Lyonsdale from Catalyst Renewables Corporation. Lyonsdale owns and operates a 19-megawatt, wood-fired electric generating plant. The operating results of Lyonsdale have been consolidated in the financial statements of CH Energy Group since the date of purchase. Results of operations for 2007 reflect operating revenue of $8.6 million, operating expenses of $9.2 million, and favorable tax benefits of $1.8 million, including production tax credits of $1.2 million.

          Lyonsdale’s operating results in 2006, from the date of acquisition, reflect operating revenues of $5.6 million, operating expenses of $6.1 million, and favorable tax benefits of $1.1 million, including production tax credits of $0.8 million.

Other Income

          Other income for the balance of CH Energy Group, primarily the holding company and CHEC’s investments in partnerships and other investments (other than Griffith) decreased $1.0 million in 2007. The decrease is largely attributable to the sale of non-strategic property in 2006, and decreased investment income resulting from the redeployment of capital from short-term investments to CH Energy Group’s subsidiaries, the use of proceeds from the sale of short-term investments to pay common stock dividends, and a decrease in Cornhusker Holdings’ earnings. The results of CH Energy Group’s investment in Cornhusker Holdings declined due to increasing corn prices and declining ethanol prices, representing the primary input and product output, respectively. This decrease was partially offset by an increase in income from CHEC’s investments in other renewable energy and energy efficiency projects.

          Other Income and Deductions for CH Energy Group (the holding company) and CHEC’s investments in partnerships and other investments (other than Griffith) increased $1.5 million in 2006. This was due primarily to a $1.6 million increase in income from CHEC’s interest in Cornhusker Holdings and a $0.7 million pre-tax gain on the sale of real property held by CH Energy Group. These increases were partially offset by losses on other investments held by CHEC.

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Income Taxes

          CH Energy Group’s income taxes for 2007 decreased by $1.9 million compared to 2006 primarily due to lower taxes at Central Hudson, the favorable impact of production tax credits at CHEC from its renewable energy portfolio and lower state income taxes. These favorable items were partially offset by an unfavorable impact of flow-through items related to reserves.

          CH Energy Group’s income taxes for 2006 decreased by $2.1 million compared to 2005 primarily due to lower taxes at Central Hudson and the favorable impact of production tax credits at CHEC from its renewable energy portfolio. These favorable items were partially offset by increased New York State income taxes due to the capital based tax for 2006 and the absence of a favorable income tax adjustment recorded in 2005 related to the completion of a tax audit.

OTHER MATTERS

NYISO Re-Pricing Adjustment

          On July 20, 2005, Central Hudson received a payment from the NYISO for adjustments to energy sales transactions that had occurred in May 2000, when Central Hudson owned the Danskammer Plant and a share of the Roseton Plant. The adjustments resulted from a decision of the United States Court of Appeals for the District of Columbia and a subsequent Order of the FERC that directed the NYISO to increase the real-time pricing on those transactions. Since the payment related to unresolved billing issues existing at June 30, 2005, its impact was recorded in the financial results for that quarter. The payment resulted in an increase to net income of $572,000, or $0.04 per share. Additionally, as a result of PSC regulatory mechanisms in place in 2000, Central Hudson’s customers received $2.7 million of the NYISO payments which were returned to them through Central Hudson’s electric cost adjustment mechanism.

Pension Protection Act

          On August 17, 2006, President Bush signed the Pension Protection Act into law. The Pension Protection Act introduces new funding requirements for single and multi-employer defined benefit pension plans, addresses plan design for cash balance and other hybrid plans, and addresses contributions to defined contribution plans, deduction limits for contributions to retirement plans, and investment advice provided to plan participants. The new defined benefit funding rules are effective for plan years beginning after December 31, 2007. Certain transition rules will apply for 2008 through 2010. For additional discussion regarding the Pension Protection Act, please see the “Retirement Plan” discussion that follows.

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Higher Energy Prices

          Lower sales than reflected in Central Hudson’s 2006 Rate Order may occur as a result of changes in usage patterns due to factors external to Central Hudson, such as weather, the price of energy, customer use of distributed generation, economic conditions, the loss of major customers or additions of fewer new customers than projected. With increasing energy prices and heightened consumer awareness of the need to conserve energy, Central Hudson is currently experiencing and continues to be at risk of having sales volumes that are lower than those upon which the 2006 Rate Order was based. Such lower volumes will, absent other factors such as expense reductions, reduce the Company’s earnings and cash flow. Implementation of a revenue decoupling mechanism (RDM), which breaks the link between sales and profits, would eliminate this risk. On September 25, 2007, Central Hudson filed a proposed energy efficiency program with the PSC, which includes an RDM.

          Griffith’s customers are also experiencing higher per unit prices. If fuel oil prices remain high in 2008, energy efficiency efforts and a continued decease in use per customer could reduce residential fuel delivery volumes.

          Both Central Hudson and Griffith may also face several other challenges that could result from continued higher prices: higher working capital needs driven by lags between disbursements to energy suppliers and receipts from customers, higher bad debt expenses resulting from customers who are unable to pay higher energy bills, and political and regulatory responses to higher energy prices. Management believes that CH Energy Group has adequate liquidity to meet the working capital demands of the current and near-term energy price environment and is actively monitoring bad debt expense and the political/regulatory environment.

Changes in Accounting Standards

          See Note 3 – “New Accounting Standards and Other FASB Projects” for a discussion of the status of new accounting standards.

Retirement Plan

          As described more fully in Note 10 – “Post-Employment Benefits,” Central Hudson has a non-contributory Retirement Income Plan (“Retirement Plan”) covering all of its unionized employees, and managerial, professional and supervisory employees hired before January 1, 2008. The Retirement Plan is a defined benefit plan which provides pension benefits based on an employee’s compensation and years of service. In 2007 Central Hudson amended the Retirement Plan to eliminate these benefits for managerial, professional, and supervisory employees hired after January 1, 2008.

          The significant assumptions and estimates used to account for the Retirement Plan are the discount rate, the expected long-term rate of return on Retirement Plan assets, the rate of compensation increase, and the method of amortizing gains and losses.

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          The discount rate is determined each year as of September 30 based on the rate at which obligations could be effectively settled. The rate is based on the Citigroup Pension Discount Curve. Central Hudson selects the rate after consultation with its actuarial consultant. Central Hudson’s discount rate was 6.2% as of the most recent valuation date, September 30, 2007.

          In determining the expected long-term rate of return on Retirement Plan assets, Central Hudson considered the current level of expected returns on risk-free investments (primarily United States government bonds), the historical level of risk premiums associated with other asset classes, and the expectations of future returns over a 20-year time horizon on each asset class, based on the views of leading financial advisors and economists. The expected return for each asset class was then weighted based on the Retirement Plan’s target asset allocation. Central Hudson also considered expectations of value-added by active management, net of investment expenses.

          The rate of compensation increase was based on historical and current compensation practices of Central Hudson giving consideration to any anticipated changes in this practice.

          Actuarial gains and losses, which include investment returns and demographic experience which are different than anticipated based on the actuarial assumptions, are amortized in accordance with procedures set forth by the PSC which require the full gain or loss arising each year to be amortized uniformly over ten years. The net losses are currently $32.4 million, including losses for the years 1998 through 2007. Therefore, the future annual amortization of these losses will increase pension expense, determined under SFAS No. 87, titled Employers’ Accounting for Pensions, as amended by SFAS No. 158, titled Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, from its current level unless there are offsetting future gains or other offsetting components of pension expense.

          Between September 30, 2007, the latest measurement date, and December 31, 2007, there were no material changes in the level of Retirement Plan assets, the discount rate used to determine the Retirement Plan liabilities, or the assumptions regarding expected returns on Retirement Plan assets. This measurement does not take into account 2008 market activity.

          Based on current levels of Retirement Plan assets and obligations, a change of 0.25% in the long-term rate of return assumption would change pension expense by approximately $0.9 million and a change of 0.25% in the discount rate would change pension expense by approximately $1.3 million.

          Under the policy of the PSC regarding pension costs, Central Hudson recovers its net periodic pension and OPEB costs through customer rates with differences from rate allowances deferred for future recovery from or return to customers. As a result, Central Hudson expects to fully recover its net periodic pension and OPEB costs over time. The Retirement Plan’s liquidity is primarily affected by the cash contributions made by Central Hudson to the Retirement Plan. Central Hudson contributed $5.8

- 55 -

million and $7 million to the Retirement Plan in 2007 and 2006, respectively. Based on the requirements of the Pension Protection Act, Central Hudson’s actuarial consultant provided estimated annual contributions under various economic scenarios for the four-year period from 2008-2011. The estimated contributions were calculated to achieve a 100% funded ratio by 2011 and not drop below 80% in any given year. Under economic growth assumptions of above average to average growth, annual contributions could range from $0-$11 million. Under a recession scenario that assumes both economic growth and inflation decline through 2009 before a partial recovery, annual contributions could range from $30-$40 million. The actual contributions could vary significantly based upon economic growth, corporate resources, projected investment returns, actual investment returns, inflation, and interest rate assumptions.

          For additional information regarding the Retirement Plan, see Note 10 – “Post-Employment Benefits.”

CAPITAL RESOURCES AND LIQUIDITY

CH Energy Group – Cash Flow Summary

          Changes in CH Energy Group’s cash and cash equivalents resulting from operating, investing, and financing activities for the years ended December 31, 2007, 2006, and 2005 are summarized in the following chart:

CH Energy Group	2007			2006			2005
Net cash provided by (used in):
Operating Activities	$	33,079		$	87,888		$	44,750
Investing Activities		(73,674	)		(88,673	)		(73,409	)
Financing Activities		27,787			(24,504	)		7,652
Net change for the period		(12,808	)		(25,289	)		(21,007	)
Balance at beginning of period		24,121			49,410			70,417
Balance at end of period	$	11,313		$	24,121		$	49,410

          CH Energy Group’s cash decreased by $12.8 million, $25.3 million, and $21.0 million for the years ended December 31, 2007, 2006, and 2005, respectively. For each year, capital expenditures and dividends were funded by a combination of cash from operations and debt. Short-term debt was used primarily as a financing vehicle for working capital needs. For the years ended December 31, 2007 and 2005, cash from operations and proceeds from the sale of short-term investments were used to fund acquisitions. For the year ended December 31, 2006, acquisitions were funded by cash from operations. For the year ended December 31, 2006, the large amount of cash provided by sales in excess of working capital needs provided funds to supplement the financing of capital expenditures and pay down short-term debt borrowings.

          Net cash provided by operations was $33.1 million, $87.9 million, and $44.8 million for the years ended December 31, 2007, 2006, and 2005, respectively. Cash provided by sales exceeded the period’s working capital needs for each year, particularly in 2006. Cash from operations was also significantly impacted by an

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overpayment of federal income taxes in 2006 of $8.7 million, which was refunded in 2007. Other significant items that impacted cash from operations in each of these years included:

	2007		2006		2005
Central Hudson’s pension plan contribution	$	6.3 million	$	7.5 million	$	0.5 million
Central Hudson’s OPEB contribution	$	6.5 million	$	3.2 million	$	6.0 million
MGP site remediation costs	$	5.1 million	$	1.5 million	$	0.7 million

          Net cash used in investing activities was $73.7 million, $88.7 million, and $73.4 million for the years ended December 31, 2007, 2006, and 2005, respectively. Significant uses of cash within investing activities in each of these years included:

	2007		2006		2005
Capital expenditures	$	84.6 million	$	75.1 million	$	63.9 million
Acquisitions	$	25.6 million	$	14.7 million	$	8.5 million
Notes receivable from unconsolidated affiliates	$	4.2 million	$	2.1 million	$	4.6 million

          These uses of cash for investing were partially offset by net proceeds of $39.1 million in 2007 and $6.6 million in 2005 from the sale of short-term investments. Additionally, proceeds from the sale of property and plant provided an additional source of cash in the past two years due to the sale of a Griffith property for $3.6 million in 2007 and the sale of Central Hudson non-utility real property for $3.0 million in 2006.

          Net cash provided by (used in) financing activities was $27.8 million, $(24.5) million, and $7.7 million for the years ended December 31, 2007, 2006, and 2005, respectively. Financing activities have consistently included dividends paid each year and borrowings of long-term debt to finance Central Hudson’s capital expenditures as follows:

	2007		2006		2005
Dividends paid	$	34.0 million	$	34.0 million	$	34.0 million
Net borrowings of long-term debt	$	33.0 million	$	27.0 million	$	24.0 million

          Short-term debt activity consisted of net borrowings of $29.5 million in 2007 and$18.0 million in 2005 primarily used to fund Central Hudson’s working capital and to pay dividends. Repayments of short-term debt of $17.0 million in 2006 was based on the amount of excess of cash provided from sales over the working capital needs for the year.

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Central Hudson – Cash Flow Summary

          Changes in Central Hudson’s cash and cash equivalents resulting from operating, investing, and financing activities for the years ended December 31, 2007, 2006, and 2005 are summarized in the following chart:

Central Hudson	2007			2006			2005
Net cash provided by (used in):
Operating Activities	$	32,798		$	67,912		$	34,265
Investing Activities		(83,279	)		(70,506	)		(61,988	)
Financing Activities		52,363			72			23,728
Net change for the period		1,882			(2,522	)		(3,995	)
Balance at beginning of period		1,710			4,232			8,227
Balance at end of period	$	3,592		$	1,710		$	4,232

          Central Hudson’s cash increased by $1.9 million for the year ended December 31, 2007 and decreased by $2.5 million and $4.0 million for the years ended December 31, 2006 and 2005, respectively. For each year, capital expenditures and dividends were funded by a combination of cash from operations and debt. Short-term debt was used primarily as a financing vehicle for working capital needs. For the year ended December 31, 2006, the large amount of cash provided by sales in excess of working capital needs provided funds to supplement the financing of capital expenditures and pay down short-term debt borrowings.

          Net cash provided by operations was $32.8 million, $67.9 million, and $34.3 million for the years ended December 31, 2007, 2006, and 2005, respectively. Cash provided by sales exceeded the period’s working capital needs each year, particularly in 2006. Cash from operations was also significantly impacted by an overpayment of federal income taxes in 2006 of $8.7 million, which was refunded in 2007. Other significant items that impacted cash from operations in each of these years included:

	2007		2006		2005
Pension plan contribution	$	6.3 million	$	7.5 million	$	0.5 million
OPEB contribution	$	6.5 million	$	3.2 million	$	6.0 million
MGP site remediation costs	$	5.1 million	$	1.5 million	$	0.7 million

          Net cash used in investing activities of $83.3 million, $70.5 million, and $62.0 million for the years ended December 31, 2007, 2006, and 2005, respectively, was primarily for capital expenditures.

          Net cash provided by financing activities was $52.4 million, $0.1 million, and $23.7 million for the years ended December 31, 2007, 2006, and 2005, respectively. Financing activities have consistently included dividends paid to CH Energy Group each year and borrowings of long-term debt to finance capital expenditures as follows:

	2007		2006		2005
Dividends paid	$	8.5 million	$	8.5 million	$	17.0 million
Net borrowings of long-term debt	$	33.0 million	$	27.0 million	$	24.0 million

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          Short-term debt activity consisted of net borrowings of $29.5 million in 2007 and $18.0 million in 2005 primarily used to fund working capital and to pay dividends. Repayments of short-term debt of $17.0 million in 2006 was based on the amount of excess of cash provided from sales over the working capital needs for the year.

Capital Structure

          CH Energy Group’s consolidated capital structure reflects the external debt and preferred stock of Central Hudson. CHEC’s debt is comprised entirely of intercompany loans from CH Energy Group that are eliminated upon consolidation.

          As provided in the 2006 Rate Order, Central Hudson’s rates are based on a capital structure that reflects 45% common equity, but an equity ratio up to 47% may be used for the purpose of determining earnings sharing. Central Hudson currently intends to maintain an equity ratio of approximately 45%. These ratios are calculated according to a PSC methodology, which excludes short-term debt.

          Central Hudson’s current senior unsecured debt ratings are “A2 (stable)” by Moody’s Investors Service and “A (stable)” by Standard and Poor’s Corporation and by Fitch Ratings.

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          Year-end capital structures for CH Energy Group and its subsidiaries are set forth below as of December 31, 2007, 2006, and 2005:

CH Energy Group	Year-end Capital Structure
	2007			2006			2005
Long-term debt		40.8	%		40.4	%		38.3	%
Short-term debt**		4.3			1.4			3.3
Preferred stock		2.1			2.3			2.3
Common equity		52.8			55.9			56.1
		100.0	%		100.0	%		100.0	%

Central Hudson	Year-end Capital Structure
	2007			2006			2005
Long-term debt		49.6	%		50.9	%		49.7	%
Short-term debt**		5.2			1.8			4.3
Preferred stock		2.6			2.9			3.0
Common equity		42.6			44.4			43.0
		100.0	%		100.0	%		100.0	%

CHEC	Year-end Capital Structure*
	2007			2006			2005
Long-term debt		48.9	%		43.6	%		46.8	%
Short-term debt**		—			—			—
Preferred stock		—			—			—
Common equity		51.1			56.4			53.2
		100.0	%		100.0	%		100.0	%

*	Based on stand-alone financial statements and including intercompany balances which are eliminated upon consolidation.
**	Excluded from the common equity ratio under the PSC’s methodology for Central Hudson delivery rates.

Contractual Obligations

          A review of capital resources and liquidity should also consider other contractual obligations and commitments, which are further disclosed in Note 12 – “Commitments and Contingencies.”

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          The following is a summary of the contractual obligations for CH Energy Group and its affiliates as of December 31, 2007:

	Projected Payments Due By Period (In Thousands)
	Less than 1 year		Years Ending 2009-2010		Years Ending 2011-2012		2013 and After		Total
Long-Term Debt(1)	$	—		$ 44,000	$	36,000	$	323,950	$	403,950
Interest Payments – Long-Term Debt(1)		19,830		37,025		33,360		231,269		321,484
Operating Leases		3,307		6,177		5,350		5,581		20,415
Construction/Maintenance & Other Projects(2)		13,872		7,783		2,313		1,084		25,052
Purchased Electric Contracts(3)		166,887		200,251		40,260		12,650		420,048
Purchased Natural Gas Contracts(3)		69,204		85,774		33,157		18,232		206,367
Purchased Fixed Liquid Petroleum Contracts		4,938		—		—		—		4,938
Purchased Variable Liquid Petroleum Contracts(4)		6,572		—		—		—		6,572
Total Contractual Obligations(5)	$	284,610		$ 381,010	$	150,440	$	592,766	$	1,408,826

(1)	Includes fixed rate obligations and variable interest rate bonds with estimated variable interest payments based on the actual interest paid in 2007.
(2)	Including Specific, Term, and Service Contracts, briefly defined as follows: Specific Contracts consist of work orders for construction; Term Contracts consist of maintenance contracts; Service Contracts include consulting, educational, and professional service contracts. The operations and maintenance contract for Lyonsdale (which includes a base management fee included in these totals for the years 2008-2009) also contains provisions for additional performance-based compensation that are not included in the amounts shown.
(3)	Purchased electric and purchased natural gas costs for Central Hudson are fully recovered via their respective regulatory cost adjustment mechanisms. The less than one year total includes a $50 million Dynegy 2008 contract executed on January 30, 2008.
(4)	Estimated based on pricing at December 31, 2007.
(5)	The estimated present value of CH Energy Group’s total contractual obligations is $1,005 million, assuming a discount rate of 6.0%.

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          The following is a summary of the contractual obligations for Central Hudson as of December 31, 2007:

	Projected Payments Due By Period (In Thousands)
	Less than 1 year		Years Ending 2009-2010		Years Ending 2011-2012		2013 and After		Total
Long-Term Debt(1)	$	—	$	44,000	$	36,000	$	323,950	$	403,950
Interest Payments – Long-Term Debt(1)		19,830		37,025		33,360		231,269		321,484
Operating Leases		2,001		3,895		3,857		3,836		13,589
Construction/Maintenance & Other Projects(2)		13,407		7,320		2,298		1,076		24,101
Purchased Electric Contracts(3)		166,887		200,251		40,260		12,650		420,048
Purchased Natural Gas Contracts(3)		69,204		85,774		33,157		18,232		206,367
Total Contractual Obligations(4)	$	271,329	$	378,265	$	148,932	$	591,013	$	1,389,539

(1)	Includes fixed rate obligations and variable interest rate bonds with estimated variable interest payments based on the actual interest paid in 2007.
(2)	Including Specific, Term, and Service Contracts, as defined in footnote (2) of the preceding chart.
(3)	Purchased electric and purchased natural gas costs for Central Hudson are fully recovered via their respective regulatory cost adjustment mechanisms. The less than one year total includes a $50 million Dynegy 2008 contract executed on January 30, 2008.
(4)	The estimated present value of Central Hudson’s total contractual obligations is $987 million, assuming a discount rate of 6.0%.

          Central Hudson may also have an obligation to fund its Retirement Plan and OPEB. Decisions to fund the Retirement Plan are made annually and are primarily affected by the discount rate used to determine benefit obligations and the projection of Retirement Plan assets. Based on the requirements of the Pension Protection Act, Central Hudson’s actuarial consultant provided estimated annual contributions under various economic scenarios for the four-year period from 2008-2011. The estimated contributions were calculated to achieve a 100% funded ratio by 2011 and not drop below 80% in any given year. Under economic growth assumptions of above average to average growth, annual contributions could range from $0-$11 million. Under a recession scenario that assumes both economic growth and inflation decline through 2009 before a partial recovery, annual contributions could range from $30-$40 million. The actual contributions could vary significantly based upon economic growth, projected investment returns, inflation, and interest rate assumptions. Estimated Retirement Plan contributions in 2008 range from $5 to $10 million.

          Employer contributions in 2007 to fund OPEB were $1.7 million for the 2006 plan year, and $4.8 million for the 2007 plan year, with an additional estimated $1.9 million for the 2007 plan year to be funded in the first quarter of 2008. Obligations for future funding depend on a number of factors, including the discount rate, expected return,

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and medical claims assumptions used. If these factors remain stable, annual funding for the next few years is expected to approximate the 2007 amount.

          Under the policy of the PSC regarding pension and OPEB costs, Central Hudson recovers these costs through customer rates with differences from rate allowances deferred for future recovery from or return to customers. Based on the current policy, Central Hudson expects to fully recover its net periodic pension and OPEB costs over time.

Anticipated Sources and Uses of Cash

          CH Energy Group’s cash flow is primarily generated by the operations of its direct subsidiaries, Central Hudson and CHEC. Generally, the subsidiaries do not accumulate cash but rather provide cash to CH Energy Group in the form of dividends and, in the case of CHEC, repayments on its intercompany loan.

          Central Hudson’s planned capital expenditures for construction and removal during 2008 are expected to total approximately $85 million. For 2009, planned capital expenditures are expected to range from $90 million to $100 million. Capital expenditures are expected to be funded with cash from operations and a combination of short-term and long-term borrowings. Central Hudson may alter its plan for capital expenditures as its business needs require.

          In 2008 Central Hudson intends to pay dividends to CH Energy Group that will total less than its net income. Central Hudson intends to retain a portion of its earnings to fund a portion of its growth in long-lived assets while using long-term debt to fund the remainder and to manage its capital structure. Central Hudson anticipates issuing approximately $20 million of its Series F medium-term notes to meet its long-term debt needs in 2008. Additionally, Central Hudson will remarket $16.7 million of its Series A notes, which are nearing the end of their five-year interest rate mode. Short-term debt is expected to be used to fund seasonal and temporary variations in working capital requirements. If wholesale energy prices increase, Central Hudson would expect a corresponding increase in its current level of working capital.

          CHEC’s capital expenditures are driven primarily by Griffith and are expected to be approximately $3.5 million during 2008, excluding acquisitions. In January 2008, Griffith closed on two acquisitions totaling $8.6 million. For 2009, capital expenditures, excluding acquisitions, are expected to range from $3 million to $4 million. Griffith continues to explore opportunities to expand through both internal growth and acquisitions, depending on financial performance and opportunities available. As announced in November 2007, CHEC plans to build a landfill gas energy facility in Auburn, NY during 2008, and expects to invest approximately $10 million for that purpose. CHEC may alter its plan for capital expenditures and acquisitions as its business needs require.

          Assuming normal weather and a stable wholesale fuel price environment, Griffith is expected to generate sufficient cash flow to fund normal annual capital expenditures

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for facilities, equipment, and vehicles as well as partially fund acquisitions or return capital to CH Energy Group. Wholesale fuel prices, which are volatile and difficult to predict, remain the largest driver of potential variations in Griffith’s cash flow and financing needs. If the wholesale fuel price environment in 2008 is one of falling prices, management expects an additional return of working capital. In an environment of rising prices, increased working capital requirements would reduce cash flow and, depending on the magnitude of price increases, could require additional financing from CH Energy Group or expansion of short-term credit facilities.

          CH Energy Group believes its principal sources of liquidity from cash and short-term investments, cash generated from operations, and funds obtained from its financing program will be sufficient in 2008 and the foreseeable future to meet working capital needs, pay dividends on its common stock, and fund investments and acquisitions to fulfill the Company’s growth objectives. CH Energy Group’s primary source of funds is the cash it generates from the operations of Central Hudson and CHEC, which could be affected by volatility in energy markets that affects their working capital needs and profitability. CH Energy Group’s secondary source of funds is its credit facility and its potential to raise capital with a long-term debt offering related to the unleveraged CHEC businesses. CH Energy Group’s ability to use its credit facility is contingent upon maintaining certain financial covenants. The Company does not anticipate those covenants restricting its access to funds in 2008 or the foreseeable future.

Financing Program

          CH Energy Group maintains a $75 million revolving credit agreement with several commercial banks to provide committed liquidity beyond its cash balance. That agreement, which expires in April 2010, is currently earmarked primarily for acquisitions and investments. At December 31, 2007, CH Energy Group had no outstanding borrowings under its credit agreement and had no long-term debt at the holding company level.

          Central Hudson, as a regulated electric and natural gas utility company, requires authorization from the PSC to issue securities with maturities greater than 12 months. In July 2006, Central Hudson filed a petition seeking approval of its financing program. The PSC issued an Order approving that petition in September 2006, authorizing Central Hudson to issue medium-term notes of up to $140 million over the three-year period ending December 31, 2009, and to enter into committed credit agreements up to $125 million for a period not to exceed five years.

          In 2006, Central Hudson had a $75 million committed credit agreement with several commercial banks. Effective January 2, 2007, that agreement was amended, pursuant to PSC authorization, increasing the committed credit to $125 million and extending the term of the agreement to January 2, 2012. In addition to this credit agreement, Central Hudson maintains several uncommitted lines of credit with various banks. These arrangements give Central Hudson competitive options to minimize the

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cost of its short-term borrowings. At December 31, 2007, Central Hudson had a $42.5 million outstanding balance under its uncommitted credit agreements.

          Central Hudson meets its need for long-term debt financing through a medium-term notes program. A summary of 2007 Series F issuances follows:

Date	Amount of Issuance	Term, Rate	Proceeds Used for:
March 23, 2007	$33,000,000	30-year, 5.80%	Redemption at maturity of $33,000,000 5-year, 5.87% Series D Notes
September 14, 2007	$33,000,000	10-year, 6.028%	Financing ongoing investments in capital improvements

          Central Hudson has $74 million of Series F notes remaining, which it expects to issue over the next two years to finance capital improvements and to refinance $20 million of 10-year 6.00% Series C notes, which mature in January 2009.

          In 2007, CHEC maintained an uncommitted line of credit in the amount of $15 million. At December 31, 2007, CHEC’s borrowing needs were funded by CH Energy Group and there was no outstanding balance on its uncommitted line.

          In January 2008, Griffith established an uncommitted line of credit of up to $25 million with a commercial bank for the purpose of funding seasonal working capital. At December 31, 2007, Griffith’s borrowing needs were funded by CH Energy Group.

          In July 2007, CH Energy Group’s Board of Directors extended and amended the Common Stock Repurchase Program of the Company, which was originally authorized in 2002. As amended, the Program authorizes the repurchase of up to 2,000,000 shares (excluding shares repurchased before July 31, 2007) or approximately 13% of the Company’s outstanding common stock, from time to time, during the next five years, i.e., through July 31, 2012. No shares were purchased under the Repurchase Program in 2005, 2006, or 2007. CH Energy Group intends to set repurchase targets, if any, based on circumstances then prevailing.

          For more information on CH Energy Group’s and Central Hudson’s financing program, see Note 7 - “Short-Term Borrowing Arrangements,” Note 8 - “Capitalization - Common and Preferred Stock,” and Note 9 - “Capitalization - Long-Term Debt.”

Parental Guarantees

          For information on parental guarantees issued by CH Energy Group and CHEC, see Note 1 – “Summary of Significant Accounting Policies” under the caption “Parental Guarantees.”

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Product Warranties

          For information on product warranties issued by Griffith, see Note 1 – “Summary of Significant Accounting Policies” under the caption “Product Warranties.”

Environmental Matters

          For information on environmental matters related to CH Energy Group, Central Hudson, CHEC, and Griffith, see subcaption “Environmental Matters” in Note 12 – “Commitments and Contingencies” under the caption “Contingencies.”

Related Parties

          For information on related parties to CH Energy Group and Central Hudson, see Note 1 – “Summary of Significant Accounting Policies” under the caption “Related Party Transactions.”

COMMON STOCK DIVIDENDS AND PRICE RANGES

          CH Energy Group and its principal predecessors (including Central Hudson) have paid dividends on their respective common stock in each year commencing in 1903, and the common stock has been listed on the New York Stock Exchange since 1945. The closing price as of December 31, 2007, and 2006, was $44.54, and $52.80, respectively. The price ranges and the dividends paid for each quarterly period during the last two fiscal years are as follows:

	2007					2006
	High		Low		Dividend	High		Low		Dividend
1st Quarter	$	53.79	$	45.93	$ 0.54	$	49.41	$	45.54	$ 0.54
2nd Quarter		50.78		43.49	0.54		48.70		44.63	0.54
3rd Quarter		50.22		42.85	0.54		52.41		46.68	0.54
4th Quarter		50.29		41.37	0.54		54.92		50.25	0.54

          In 2007, CH Energy Group maintained its quarterly dividend rate at $0.54 per share. In making future dividend decisions, CH Energy Group will evaluate all circumstances at the time of making such decisions, including business, financial, and regulatory considerations.

          From December 31, 2007 through the end of January 2008, CH Energy Group’s share price has experienced significant volatility, and has declined from approximately $44.00 per share, trading as low as $35.00 per share. Subsequently, CH Energy Group’s share price has traded in the $37.00 to $40.00 range. Average daily volume has also increased since December 31, 2007, to 120,000 shares per day from approximately 80,000 shares per day. CH Energy Group’s share price movement has been generally mirroring that of the S&P 600 index, a small cap index that includes CH Energy Group. As speculation about a recession has increased over the last three

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months, it appears investors have rotated out of small cap stocks generally in favor of larger, more liquid and resilient stocks. Management cannot predict how long this trend will continue.

          The Settlement Agreement contains certain dividend payment restrictions on Central Hudson, including limitations on the amount of dividends payable if Central Hudson’s senior debt ratings are downgraded by more than one major rating agency due to performance or concerns about the financial condition of CH Energy Group or any CH Energy Group subsidiary other than Central Hudson. These limitations would result in the average annual income available for dividends on a two-year rolling average basis being reduced to: (i) 75%, if the downgrade were to a rating below “BBB+,” (ii) 50%, if the senior debt were placed on “Credit Watch” (or the equivalent) because of a rating below “BBB,” or (iii) no dividends payable if the downgrade were to a rating below “BBB-.” These limitations survived the June 30, 2001, expiration of the Settlement Agreement. Central Hudson is currently rated “A” or the equivalent and therefore the limitations noted above do not apply.

          The number of registered holders of common stock of CH Energy Group as of December 31, 2007, was 15,825.

          All of the outstanding common stock of Central Hudson and all of the outstanding common stock of CHEC is held by CH Energy Group.

CRITICAL ACCOUNTING POLICIES

          For a summary of all significant accounting policies, see Note 1 – “Summary of Significant Accounting Policies.” The following accounting policies have been identified that could result in material changes to the financial condition, results of operations, or cash flows of CH Energy Group and its subsidiaries under different conditions or using different assumptions:

          Accounting for Regulated Operations: Central Hudson follows GAAP, including the provisions of SFAS No. 71, titled Accounting for the Effects of Certain Types of Regulation (“SFAS 71”). The application of SFAS 71 may cause the allocation of costs to accounting periods to differ from accounting methods generally applied to non-regulated companies. See Note 2 – “Regulatory Matters” under the caption “Regulatory Accounting Policies” for additional discussion.

          Post–Employment Benefits: Central Hudson’s reported costs of providing non-contributory defined pension benefits as well as certain health care and life insurance benefits for retired employees are dependent upon numerous factors resulting from actual plan experience and assumptions of future plan performance. A change in assumptions regarding discount rates and expected long-term rate of return on plan assets, as well as current market conditions, could cause a significant change in the level of costs to be recorded. See Note 10 – “Post-Employment Benefits” for additional discussion.

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          Use of Estimates: Preparation of the Consolidated Financial Statements in accordance with GAAP includes the use of estimates and assumptions by management that affect financial results, and actual results may differ from those estimated. See Note 1 – “Summary of Significant Accounting Policies” under the caption “Use of Estimates” for additional discussion.

          Accounting for Derivatives: CH Energy Group and its subsidiaries use derivatives to manage their commodity and financial market risks. All derivatives, other than those specifically excepted, are reported on the Consolidated Balance Sheet at fair value. For discussions relating to market risk and derivative instruments, see Item 7A – “Quantitative and Qualitative Disclosure About Market Risk” of this 10-K Annual Report and Note 14 – “Accounting for Derivative Instruments and Hedging Activities”.

          Goodwill and Other Intangible Assets: As required by SFAS No. 142, titled Goodwill and Other Intangible Assets, both goodwill and unamortized intangible assets are tested at least annually for impairment. Intangible assets with finite lives are amortized and are reviewed as required for impairment. Impairment testing compares the fair value of the reporting units to the carrying amount of assets. Fair value of goodwill is estimated using a discounted cash flow measurement. For information on CH Energy Group’s determination of an impairment, see Note 6 – “Goodwill and Other Intangible Assets.”

          Accounting for Deferred Taxes: CH Energy Group provides for income taxes based on the asset and liability method required by SFAS No. 109, titled Accounting for Income Taxes (“SFAS 109”). Under SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating loss and credit carry-forwards. See Note 4 – “Income Tax” for additional discussion.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

          The primary market risks for CH Energy Group and its subsidiaries and investments are commodity price risk and interest rate risk. Commodity price risk, related primarily to purchases of natural gas, electricity, petroleum products for resale to retail customers, is mitigated in several different ways. Central Hudson, as authorized by the PSC in the 2006 Rate Order, collects its actual purchased electricity and purchased natural gas costs from its customers through cost adjustment clauses in its rates. These adjustment clauses provide for the collection of costs, including risk management and working capital costs, from customers to reflect the actual costs incurred in obtaining supply. Risk management costs are defined by the PSC as “costs associated with transactions that are intended to reduce price volatility or reduce overall costs to customers. These costs include transaction costs and gains and losses associated with risk management instruments.” Griffith may increase the prices charged for the commodities it sells in response to changes in costs; however, its ability to raise prices is limited by what the competitive market in which it participates will bear.

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Depending on market conditions, Central Hudson may enter into long-term fixed supply and long-term forward supply contracts for the purchase of these commodities. Central Hudson also uses natural gas storage facilities, which enable it to purchase and hold quantities of natural gas at pre-heating season prices for use during the heating season. CH Energy Group also bears commodity price risk for the purchase of corn and the sale of ethanol by Cornhusker Energy Lexington Holdings.

          Central Hudson and Griffith have in place an energy risk management program within their operations. This risk management program permits the use of derivative financial instruments for hedging purposes but does not permit their use for trading or speculative purposes. Central Hudson and Griffith have entered into either exchange-traded futures contracts or OTC contracts with third parties to hedge commodity price risk associated with the purchase of natural gas, electricity, and petroleum products and to hedge the effect on earnings due to significant variations in weather conditions from historical patterns. The types of derivative instruments typically used include natural gas futures and swaps to hedge natural gas purchases, contracts for differences to hedge electricity purchases, put and call options to hedge oil purchases, and degree-day based weather derivatives to hedge weather variations. In this latter case, Central Hudson and Griffith use such derivative instruments to dampen the impact of weather variations on delivery revenues. OTC derivative transactions are entered into only with counter-parties that meet certain credit criteria. The creditworthiness of these counter-parties is determined primarily by reference to published credit ratings. Commodity price risk related to both corn and ethanol is managed by Cornhusker Energy Lexington Holdings, LLC at the entity level, not by CHEC or CH Energy Group directly.

          The use of derivative instruments for hedging purposes is discussed in more detail in Note 14 –“Accounting for Derivative Instruments and Hedging Activities”.

          Interest rate risk affects Central Hudson but is managed through the issuance of fixed-rate debt with varying maturities and of variable rate debt for which interest is reset on a periodic basis to reflect current market conditions. In the case of Central Hudson’s variable rate debt, the difference between costs associated with actual variable interest rates and costs embedded in customer rates is deferred for eventual refund to or recovery from customers. The variability in interest rates is also managed with the use of a derivative financial instrument known as an interest rate cap agreement, for which the premium cost and any realized benefits also pass through the aforementioned regulatory recovery mechanism. On April 1, 2006, Central Hudson replaced its expiring interest rate cap agreement with a new two-year agreement through April 1, 2008, with similar terms as the expired agreement. Please refer to Note 9 – “Capitalization – Long-Term Debt” and Note 15 – “Financial Instruments” for additional disclosure related to long-term debt.

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ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

				Page
I - Index to Financial Statements:
		Report of Independent Registered Public Accounting Firm		72
		Report of Management on Internal Control Over Financial Reporting		76
	CH ENERGY GROUP
		CH Energy Group Consolidated Statement of Income for the three years ended December 31, 2007		80
		CH Energy Group Consolidated Statement of Comprehensive Income for the three years ended December 31, 2007		82
		CH Energy Group Consolidated Statement of Cash Flows for the three years ended December 31, 2007		83
		CH Energy Group Consolidated Balance Sheet at December 31, 2007, and 2006		85
		CH Energy Group Consolidated Statement of Common Shareholders’ Equity for the three years ended December 31, 2007		87
	CENTRAL HUDSON
		Central Hudson Consolidated Statement of Income for the three years ended December 31, 2007		89
		Central Hudson Consolidated Statement of Comprehensive Income for the three years ended December 31, 2007		90
		Central Hudson Consolidated Statement of Cash Flows for the three years ended December 31, 2007		91
		Central Hudson Consolidated Balance Sheet at December 31, 2007, and 2006		93
		Central Hudson Consolidated Statement of Common Shareholder’s Equity for the three years ended December 31, 2007		95
		Notes to Consolidated Financial Statements
		NOTE 1	Summary of Significant Accounting Policies	97
		NOTE 2	Regulatory Matters	106
		NOTE 3	New Accounting Standards And Other FASB Projects	112
		NOTE 4	Income Tax	114
		NOTE 5	Acquisitions and Investments	119
		NOTE 6	Goodwill and Other Intangible Assets	121
		NOTE 7	Short-Term Borrowing Arrangements	122
		NOTE 8	Capitalization – Common and Preferred Stock	123
		NOTE 9	Capitalization – Long-Term Debt	125
		NOTE 10	Post-Employment Benefits	127
		NOTE 11	Equity-Based Compensation	136
		NOTE 12	Commitments And Contingencies	141
		NOTE 13	Segments And Related Information	149
		NOTE 14	Accounting For Derivative Instruments and Hedging Activities	152

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	NOTE 15	Financial Instruments	155
	Selected Quarterly Financial Data (Unaudited)		157
FINANCIAL STATEMENT SCHEDULES
	Schedule II – Reserves – CH Energy Group		159
	Schedule II – Reserves – Central Hudson		160

          All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or the Notes thereto.

II - Supplementary Data

          Supplementary data are included in “Selected Quarterly Financial Data (Unaudited)” referred to in “I” above, and reference is made thereto.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of CH Energy Group, Inc.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of CH Energy Group, Inc. and its subsidiaries (collectively, the “Company”) at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying CH Energy Group Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Notes 10 and 11 to the consolidated financial statements, the Company changed the manner in which it accounts for defined benefit pension and other postretirement plans and share based compensation in 2006.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in

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reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PRICEWATERHOUSECOOPERS LLP

Buffalo, New York
February 12, 2008

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Central Hudson Gas & Electric Corporation

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Central Hudson Gas & Electric Corporation and its subsidiary (collectively, the “Company”) at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Central Hudson Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Notes 10 and 11 to the consolidated financial statements, the Company changed the manner in which it accounts for defined benefit pension and other postretirement plans and share based compensation in 2006.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted

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accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PRICEWATERHOUSECOOPERS LLP

Buffalo, New York
February 12, 2008

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CH ENERGY GROUP
REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING

          The management of CH Energy Group, Inc. (“Management”) is responsible for establishing and maintaining adequate internal control over financial reporting for CH Energy Group, Inc. (the “Corporation”) as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Corporation;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Corporation are being made only in accordance with authorization of Management and directors of the Corporation; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.

          Internal control over financial reporting includes the controls themselves, monitoring (including internal auditing practices) and actions taken to correct deficiencies as identified.

          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

          Management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2007. Management based this assessment on criteria for effective internal control over financial reporting described in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, Management determined that, as of December 31, 2007, the Corporation maintained effective internal control over financial reporting.

          The effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2007, has been audited by PricewaterhouseCoopers LLP, an

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independent registered public accounting firm, as stated in their report which appears herein.

STEVEN V. LANT	CHRISTOPHER M. CAPONE
Chairman of the Board,	Executive Vice President
President, and	and Chief Financial Officer
Chief Executive Officer
February 12, 2008

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CENTRAL HUDSON
REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING

          The management of Central Hudson Gas & Electric Corporation (“Management”) is responsible for establishing and maintaining adequate internal control over financial reporting for Central Hudson Gas & Electric Corporation (the “Corporation”) as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Corporation;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Corporation are being made only in accordance with authorization of Management and directors of the Corporation; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.

          Internal control over financial reporting includes the controls themselves, monitoring (including internal auditing practices) and actions taken to correct deficiencies as identified.

          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

          Management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2007. Management based this assessment on criteria for effective internal control over financial reporting described in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, Management determined that, as of December 31, 2007, the Corporation maintained effective internal control over financial reporting.

          The effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2007, has been audited by PricewaterhouseCoopers LLP, an

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independent registered public accounting firm, as stated in their report which appears herein.

STEVEN V. LANT	CHRISTOPHER M. CAPONE
Chairman of the Board	Executive Vice President
and Chief Executive Officer	and Chief Financial Officer
February 12, 2008

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CH ENERGY GROUP CONSOLIDATED STATEMENT OF INCOME
(In Thousands)

	Year ended December 31,
	2007			2006			2005
Operating Revenues
Electric	$	616,839		$	503,908		$	520,994
Natural gas		165,449			155,272			155,602
Competitive business subsidiaries		414,469			334,253			295,910
Total Operating Revenues		1,196,757			993,433			972,506
Operating Expenses
Operation:
Purchased electricity and fuel used in electric generation		388,569			298,621			337,046
Purchased natural gas		110,123			105,643			106,285
Purchased petroleum		318,020			256,975			226,004
Other expenses of operation – regulated activities		153,978			124,820			99,439
Other expenses of operation – competitive business subsidiaries		75,740			60,702			55,003
Depreciation and amortization		35,923			35,701			36,219
Taxes, other than income tax		35,136			33,491			33,485
Total Operating Expenses		1,117,489			915,953			893,481
Operating Income		79,268			77,480			79,025
Other Income and Deductions
Income from unconsolidated affiliates		1,895			1,810			1,456
Interest on regulatory assets and investment income		8,406			9,867			10,360
Other – net		(1,279	)		(1,063	)		(2,716	)
Total Other Income	$	9,022		$	10,614		$	9,100

The Notes to Consolidated Financial Statements are an integral part hereof.

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CH ENERGY GROUP CONSOLIDATED STATEMENT OF INCOME (CONT’D)
(In Thousands, except per share amounts)

	Year ended December 31,
	2007			2006			2005
Interest Charges
Interest on long-term debt	$	18,653		$	16,425		$	13,826
Interest on regulatory liabilities and other interest		4,254			3,987			3,219
Total Interest Charges		22,907			20,412			17,045
Income before income taxes, preferred dividends of subsidiary and minority interest		65,383			67,682			71,080
Income taxes (Note 4)		21,898			23,769			25,819
Minority Interest		(121	)		(141	)		—
Income before preferred dividends of subsidiary		43,606			44,054			45,261
Cumulative preferred stock dividends of subsidiary		970			970			970
Net Income		42,636			43,084			44,291
Dividends Declared on Common Stock		34,052			34,046			34,046
Balance Retained in the Business	$	8,584		$	9,038		$	10,245
Common Stock:
Average shares outstanding
Basic		15,762			15,762			15,762
Diluted		15,779			15,779			15,767
Earnings per share:
Basic	$	2.70		$	2.73		$	2.81
Diluted	$	2.70		$	2.73		$	2.81
Dividends Declared Per Share	$	2.16		$	2.16		$	2.16

The Notes to Consolidated Financial Statements are an integral part hereof.

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CH ENERGY GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
(In Thousands)

	Year ended December 31,
	2007		2006			2005
Net Income	$	42,636	$	43,084		$	44,291
Other Comprehensive Income:
Fair value of cash flow hedges – FAS 133:
Unrealized gains (losses) - net of tax of $(687), $353, and $(55)		1,031		(529	)		83
Reclassification for losses (gains) realized in net income - net of tax of $(44), $(116), and $64		67		174			(96	)
Net unrealized gains on investments held by Equity method investees - net of tax of $(402), $(231), and $(90)		604		346			136
Other comprehensive income		1,702		(9	)		123
Comprehensive Income	$	44,338	$	43,075		$	44,414

The Notes to Consolidated Financial Statements are an integral part hereof.

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CH ENERGY GROUP CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)

	Year ended December 31,
	2007			2006			2005
Operating Activities:
Net Income	$	42,636		$	43,084		$	44,291
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		35,923			35,701			36,219
Deferred income taxes – net		5,349			23,224			14,555
Provision for uncollectibles		5,853			5,675			4,375
Undistributed equity in earnings of unconsolidated affiliates		(18	)		(726	)		(586	)
Pension expense		12,697			(2,405	)		(13,980	)
OPEB expense		10,097			5,217			1,944
Regulatory liability-rate moderation		(18,425	)		(13,977	)		—
Regulatory asset amortization		1,509			—			—
Minority interest		(121	)		(141	)		—
Gain on sale of property and plant		(627	)		(3,421	)		—
Changes in operating assets and liabilities – net of business acquisitions:
Accounts receivable, unbilled revenues and other receivables		(65,210	)		15,385			(34,425	)
Fuel and materials and supplies		(3,764	)		515			(6,763	)
Special deposits and prepayments		(4,390	)		(4,303	)		(1,403	)
Prepaid income taxes		11,244			(10,074	)		2,069
Accounts payable		1,576			(13,265	)		11,508
Accrued taxes and interest		1,316			489			527
Customer advances		(2,687	)		15,955			(4,135	)
Pension plan contribution		(6,347	)		(7,513	)		(524	)
OPEB contribution		(6,547	)		(3,193	)		(5,984	)
Regulatory liability-MGP site remediations		(5,050	)		(1,485	)		(711	)
Deferred natural gas and electric costs		(3,310	)		3,561			(14,513	)
Customer benefit fund		(893	)		(3,205	)		(4,146	)
Other – net		22,268			2,790			16,432
Net cash provided by operating activities		33,079			87,888			44,750

The Notes to Consolidated Financial Statements are an integral part hereof.

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CH ENERGY GROUP CONSOLIDATED STATEMENT OF CASH FLOWS (CONT’D)
(In Thousands)

	Year ended December 31,
	2007			2006			2005
Investing Activities:
Purchase of short-term investments	$	(69,293	)	$	(36,206	)	$	(43,625	)
Proceeds from sale of short-term investments		108,359			35,695			50,225
Proceeds from sale of property and plant		4,574			3,776			—
Additions to utility and other property and plant		(84,601	)		(75,070	)		(63,879	)
Issuance of notes receivable		(4,200	)		(2,144	)		(4,595	)
Proceeds from repayment of notes receivable		—			1,750			—
Acquisitions made by competitive business subsidiaries		(25,614	)		(14,732	)		(8,499	)
Other – net		(2,899	)		(1,742	)		(3,036	)
Net cash used in investing activities		(73,674	)		(88,673	)		(73,409	)
Financing Activities:
Redemption of long-term debt		(33,000	)		—			—
Proceeds from issuance of long-term debt		66,000			27,000			24,000
Redemption of preferred stock		—			—			(3	)
Borrowings (repayments) of short-term debt – net		29,500			(17,000	)		18,000
Dividends paid on common stock		(34,046	)		(34,046	)		(34,046	)
Debt issuance costs		(667	)		(458	)		(299	)
Net cash provided by (used in) financing activities		27,787			(24,504	)		7,652
Net Change in Cash and Cash Equivalents		(12,808	)		(25,289	)		(21,007	)
Cash and Cash Equivalents at Beginning of Year		24,121			49,410			70,417
Cash and Cash Equivalents at End of Year	$	11,313		$	24,121		$	49,410
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	20,001		$	21,251		$	16,797
Federal and state income tax paid	$	13,096		$	10,807		$	13,028
Additions to plant included in liabilities	$	12,304		$	4,169		$	3,171

The Notes to Consolidated Financial Statements are an integral part hereof.

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CH ENERGY GROUP CONSOLIDATED BALANCE SHEET
(In Thousands)

	December 31,
ASSETS	2007		2006
Utility Plant
Electric	$	807,412	$	768,808
Natural gas		248,894		239,317
Common		113,494		112,426
		1,169,800		1,120,551
Less: Accumulated depreciation		354,353		344,540
		815,447		776,011
Construction work in progress		75,866		51,041
Net Utility Plant		891,313		827,052
Other Property and Plant – net		31,236		33,822
Current Assets
Cash and cash equivalents		11,313		24,121
Short-term investments – available-for-sale securities		3,545		42,611
Accounts receivable from customers - net of allowance for doubtful accounts; $4.8 million in 2007 and $5.8 million in 2006		139,107		80,862
Accrued unbilled utility revenues		12,022		9,772
Other receivables		6,568		7,706
Fuel and materials and supplies		33,321		27,930
Regulatory assets (Note 2)		35,012		31,332
Prepaid income taxes		—		11,244
Fair value of derivative instruments		1,218		—
Special deposits and prepayments		28,108		23,655
Accumulated deferred income tax (Note 4)		7,378		5,875
Total Current Assets		277,592		265,108
Deferred Charges and Other Assets
Regulatory assets – pension plan (Notes 2 and 10)		51,393		99,281
Regulatory assets – OPEB (Notes 2 and 10)		15,967		36,392
Regulatory assets (Note 2)		86,821		83,102
Goodwill		63,433		52,828
Other intangible assets – net		35,720		27,550
Unamortized debt expense		4,345		4,041
Investments in unconsolidated affiliates		12,226		12,651
Other Investments		8,613		7,553
Other		16,089		11,152
Total Deferred Charges and Other Assets		294,607		334,550
Total Assets	$	1,494,748	$	1,460,532

The Notes to Consolidated Financial Statements are an integral part hereof.

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CH ENERGY GROUP CONSOLIDATED BALANCE SHEET (CONT’D)
(In Thousands)

	December 31,
CAPITALIZATION AND LIABILITIES	2007			2006
Capitalization
Common Stock, 30,000,000 shares authorized:
15,762,000 shares outstanding, 16,862,087 shares issued, $0.10 par value	$	1,686		$	1,686
Paid-in capital		351,230			351,230
Retained earnings		215,639			207,055
Treasury stock (1,100,087 shares)		(46,252	)		(46,252	)
Accumulated other comprehensive income (loss)		1,173			(529	)
Capital stock expense		(328	)		(328	)
Total Common Shareholders’ Equity		523,148			512,862
Cumulative Preferred Stock
Not subject to mandatory redemption (Note 8)		21,027			21,027
Long-term debt (Note 9)		403,892			337,889
Total Capitalization		948,067			871,778
Current Liabilities
Current maturities of long-term debt		—			33,000
Notes payable		42,500			13,000
Accounts payable		44,880			41,840
Accrued interest		6,127			5,645
Dividends payable		8,760			8,754
Accrued vacation and payroll		7,640			5,963
Customer advances		23,045			25,732
Customer deposits		8,126			7,954
Regulatory liabilities (Note 2)		9,392			21,651
Fair value of derivative instruments		1,235			3,582
Accrued environmental remediation costs		2,703			3,400
Accrued income taxes		834			—
Deferred revenues		7,437			5,455
Other		16,820			14,112
Total Current Liabilities		179,499			190,088
Deferred Credits and Other Liabilities
Regulatory liabilities (Note 2)		111,663			107,796
Operating reserves		5,212			4,906
Accrued environmental remediation costs		15,027			17,354
Accrued OPEB costs		55,560			68,818
Accrued pension costs		11,202			47,299
Other		19,805			12,566
Total Deferred Credits and Other Liabilities		218,469			258,739
Minority interest		1,345			1,481
Accumulated Deferred Income Tax (Note 4)		147,368			138,446
Commitments and Contingencies (Note 12)
Total Capitalization and Liabilities	$	1,494,748		$	1,460,532

The Notes to Consolidated Financial Statements are an integral part hereof.

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CH ENERGY GROUP CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS’ EQUITY

	Common Stock, $0.10 par value; 30,000,000 shares authorized
	Common Stock				Treasury Stock
	Shares Issued		Amount ($000)		Shares Repurchased			Amount ($000)			Paid-In Capital ($000)
Balance at January 1, 2005		16,862,087	$	1,686		(1,100,087	)	$	(46,252	)	$	351,230
Net income
Dividends declared ($2.16 per share)
Change in fair value:
Derivative instruments
Investments
Reclassification adjustments for gains recognized in net income
Balance at December 31, 2005		16,862,087	$	1,686		(1,100,087	)	$	(46,252	)	$	351,230
Net income
Dividends declared ($2.16 per share)
Change in fair value:
Derivative instruments
Investments
Reclassification adjustments for losses recognized in net income
Balance at December 31, 2006		16,862,087	$	1,686		(1,100,087	)	$	(46,252	)	$	351,230
Net income
Dividends declared ($2.16 per share)
Change in fair value:
Derivative instruments
Investments
Reclassification adjustments for losses recognized in net income
Balance at December 31, 2007		16,862,087	$	1,686		(1,100,087	)	$	(46,252	)	$	351,230

The Notes to Consolidated Financial Statements are an integral part hereof.

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CH ENERGY GROUP CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS’
EQUITY

	Capital Stock Expense				Retained Earnings			Accumulated Other Comprehensive Income / (Loss)				Total Common Shareholders’ Equity
(In Thousands)
Balance at January 1, 2005		$	(328	)	$	187,772			$	(643	)		$	493,465
Net income						44,291								44,291
Dividends declared ($2.16 per share)						(34,046	)							(34,046	)
Change in fair value:
Derivative instruments										83				83
Investments										136				136
Reclassification adjustments for gains recognized in net income										(96	)			(96	)
Balance at December 31, 2005		$	(328	)	$	198,017			$	(520	)		$	503,833
Net income						43,084								43,084
Dividends declared ($2.16 per share)						(34,046	)							(34,046	)
Change in fair value:
Derivative instruments										(529	)			(529	)
Investments										346				346
Reclassification adjustments for losses recognized in net income										174				174
Balance at December 31, 2006		$	(328	)	$	207,055			$	(529	)		$	512,862
Net income						42,636								42,636
Dividends declared ($2.16 per share)						(34,052	)							(34,052	)
Change in fair value:
Derivative instruments										1,031				1,031
Investments										604				604
Reclassification adjustments for losses recognized in net income										67				67
Balance at December 31, 2007		$	(328	)	$	215,639			$	1,173			$	523,148

The Notes to Consolidated Financial Statements are an integral part hereof.

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CENTRAL HUDSON CONSOLIDATED STATEMENT OF INCOME
(In Thousands)

	Year ended December 31,
	2007			2006			2005
Operating Revenues
Electric	$	616,839		$	503,908		$	520,994
Natural gas		165,449			155,272			155,602
Total Operating Revenues		782,288			659,180			676,596
Operating Expenses
Operation:
Purchased electricity and fuel used in electric generation		383,806			295,624			337,046
Purchased natural gas		110,123			105,643			106,285
Other expenses of operation		153,978			124,820			99,439
Depreciation and amortization		28,399			29,002			29,874
Taxes, other than income tax		34,576			33,135			33,161
Total Operating Expenses		710,882			588,224			605,805
Operating Income		71,406			70,956			70,791
Other Income and Deductions
Interest on regulatory assets and other interest income		5,743			6,516			7,316
Other – net		(480	)		(661	)		(1,491	)
Total Other Income		5,263			5,855			5,825
Interest Charges
Interest on other long-term debt		18,653			16,425			13,826
Interest on regulatory liabilities and other interest		4,254			3,987			3,219
Total Interest Charges		22,907			20,412			17,045
Income before income taxes		53,762			56,399			59,571
Income taxes (Note 4)		20,326			21,528			23,936
Net Income	$	33,436		$	34,871		$	35,635
Dividends Declared on Cumulative Preferred Stock		970			970			970
Income Available for Common Stock	$	32,466		$	33,901		$	34,665

The Notes to Consolidated Financial Statements are an integral part hereof.

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CENTRAL HUDSON CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(In Thousands)

	Year ended December 31,
	2007		2006		2005
Net Income	$	33,436	$	34,871	$	35,635
Other Comprehensive Income		—		—		—
Comprehensive Income	$	33,436	$	34,871	$	35,635

The Notes to Consolidated Financial Statements are an integral part hereof.

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CENTRAL HUDSON CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)

	Year ended December 31,
	2007			2006			2005
Operating Activities:
Net Income	$	33,436		$	34,871		$	35,635
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		28,399			29,002			29,874
Deferred income taxes – net		3,105			21,256			12,811
Provision for uncollectibles		4,850			4,435			3,592
Pension expense		12,697			(2,405	)		(13,980	)
OPEB expense		10,097			5,217			1,944
Regulatory liability – rate moderation		(18,425	)		(13,977	)		—
Regulatory asset amortization		1,509			—			—
Gain on sale of property and plant		(468	)		(2,724	)		—
Changes in operating assets and liabilities – net:
Accounts receivable, unbilled revenues and other receivables		(39,577	)		12,179			(23,829	)
Fuel and materials and supplies		(1,466	)		607			(6,204	)
Special deposits and prepayments		(3,409	)		(4,841	)		(187	)
Prepaid income taxes		10,477			(10,477	)		4,373
Accounts payable		(4,111	)		(8,466	)		7,933
Accrued taxes and interest		3,771			165			851
Customer advances		(5,065	)		11,133			(4,138	)
Pension plan contribution		(6,347	)		(7,513	)		(524	)
OPEB contribution		(6,547	)		(3,193	)		(5,984	)
Regulatory liability – MGP site remediations		(5,050	)		(1,485	)		(711	)
Deferred natural gas and electric costs		(3,310	)		3,561			(14,513	)
Customer benefit fund		(893	)		(3,205	)		(4,146	)
Other – net		19,125			3,772			11,468
Net cash provided by operating activities		32,798			67,912			34,265

The Notes to Consolidated Financial Statements are an integral part hereof.

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CENTRAL HUDSON CONSOLIDATED STATEMENT OF CASH FLOWS (CONT’D)
(In Thousands)

	Year ended December 31,
	2007			2006			2005
Investing Activities:
Proceeds from sale of property and plant		862			3,011			—
Additions to utility plant		(81,288	)		(71,411	)		(60,142	)
Other – net		(2,853	)		(2,106	)		(1,846	)
Net cash used in investing activities		(83,279	)		(70,506	)		(61,988	)
Financing Activities:
Redemption of long-term debt		(33,000	)		—			—
Proceeds from issuance of long-term debt		66,000			27,000			24,000
Redemption of preferred stock		—			—			(3	)
Borrowings (repayments) of short-term debt – net		29,500			(17,000	)		18,000
Dividends paid to parent – CH Energy Group		(8,500	)		(8,500	)		(17,000	)
Dividends paid on cumulative preferred stock		(970	)		(970	)		(970	)
Debt issuance costs		(667	)		(458	)		(299	)
Net cash provided by financing activities		52,363			72			23,728
Net Change in Cash and Cash Equivalents		1,882			(2,522	)		(3,995	)
Cash and Cash Equivalents at Beginning of Year		1,710			4,232			8,227
Cash and Cash Equivalents at End of Year	$	3,592		$	1,710		$	4,232
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	20,001		$	17,649		$	13,814
Federal and state income tax paid	$	13,619		$	10,766		$	11,875
Additions to plant included in liabilities	$	12,304		$	4,169		$	3,171

The Notes to Consolidated Financial Statements are an integral part hereof.

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CENTRAL HUDSON CONSOLIDATED BALANCE SHEET
(In Thousands)

	December 31,
ASSETS	2007		2006
Utility Plant
Electric	$	807,412	$	768,808
Natural Gas		248,894		239,317
Common		113,494		112,426
		1,169,800		1,120,551
Less: Accumulated depreciation		354,353		344,540
		815,447		776,011
Construction work in progress		75,866		51,041
Net Utility Plant		891,313		827,052
Other Property and Plant – net		415		434
Current Assets
Cash and cash equivalents		3,592		1,710
Accounts receivable from customers – net of allowance for doubtful accounts; $2.8 million in 2007 and $3.8 million in 2006		81,264		48,611
Accrued unbilled utility revenues		12,022		9,772
Other receivables		2,858		3,034
Fuel and materials and supplies – at average cost		24,270		22,804
Regulatory assets (Note 2)		35,012		31,332
Prepaid income taxes		—		10,477
Special deposits and prepayments		24,481		21,009
Accumulated deferred income tax (Note 4)		6,676		4,600
Total Current Assets		190,175		153,349
Deferred Charges and Other Assets
Regulatory assets – pension plan (Notes 2 and 10)		51,393		99,281
Regulatory assets – OPEB (Notes 2 and 10)		15,967		36,392
Regulatory assets (Note 2)		86,821		83,102
Unamortized debt expense		4,345		4,041
Other Investments		8,570		7,553
Other		3,695		4,619
Total Deferred Charges and Other Assets		170,791		234,988
Total Assets	$	1,252,694	$	1,215,823

The Notes to Consolidated Financial Statements are an integral part hereof.

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CENTRAL HUDSON CONSOLIDATED BALANCE SHEET (CONT’D)
(In Thousands)

	December 31,
CAPITALIZATION AND LIABILITIES	2007			2006
Capitalization
Common Stock, 30,000,000 shares authorized; 16,862,087 shares issued and outstanding, $5 par value	$	84,311		$	84,311
Paid-in capital		174,980			174,980
Retained earnings		92,676			68,710
Capital stock expense		(4,961	)		(4,961	)
Total Common Shareholder’s Equity		347,006			323,040
Cumulative Preferred Stock
Not subject to mandatory redemption (Note 8)		21,027			21,027
Long-term debt (Note 9)		403,892			337,889
Total Capitalization		771,925			681,956
Current Liabilities
Current maturities of long-term debt		—			33,000
Notes payable		42,500			13,000
Accounts payable		29,771			32,418
Accrued interest		6,127			5,645
Dividends payable – preferred stock		242			242
Accrued vacation and payroll		5,235			4,682
Customer advances		10,842			15,907
Customer deposits		7,990			7,811
Regulatory liabilities (Note 2)		9,392			21,651
Fair value of derivative instruments		1,235			2,971
Accrued income taxes		3,289			—
Accrued environmental remediation costs		2,450			3,400
Other		10,695			8,884
Total Current Liabilities		129,768			149,611
Deferred Credits and Other Liabilities
Regulatory liabilities (Note 2)		111,663			107,796
Operating reserves		4,243			3,936
Accrued environmental remediation costs		13,679			15,457
Accrued OPEB costs		55,560			68,818
Accrued pension costs		11,202			47,299
Other		19,390			11,802
Total Deferred Credits and Other Liabilities.		215,737			255,108
Accumulated Deferred Income Tax (Note 4)		135,264			129,148
Commitments and Contingencies (Note 12)
Total Capitalization and Liabilities	$	1,252,694		$	1,215,823

The Notes to Consolidated Financial Statements are an integral part hereof.

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CENTRAL HUDSON CONSOLIDATED STATEMENT OF COMMON SHAREHOLDER’S EQUITY

	Common Stock, $5.00 par value; 30,000,000 shares authorized
	Common Stock				Treasury Stock
								Paid-In Capital ($000)
	Shares Issued		Amount ($000)		Shares Repurchased		Amount ($000)
Balance at January 1, 2005		16,862,087	$	84,311		—	$  —	$	174,980
Net income
Dividends declared
On cumulative preferred stock
On common stock to parent – CH Energy Group
Balance at December 31, 2005		16,862,087	$	84,311		—	$  —	$	174,980
Net income
Dividends declared
On cumulative preferred stock
On common stock to parent – CH Energy Group
Balance at December 31, 2006		16,862,087	$	84,311		—	$  —	$	174,980
Net income
Dividends declared
On cumulative preferred stock
On common stock to parent – CH Energy Group
Balance at December 31, 2007		16,862,087	$	84,311		—	$  —	$	174,980

The Notes to Consolidated Financial Statements are an integral part hereof.

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CENTRAL HUDSON CONSOLIDATED STATEMENT OF COMMON SHAREHOLDER’S EQUITY (CONT’D)

(In Thousands)	Capital Stock Expense			Retained Earnings			Accumulated Other Comprehensive Income / (Loss)	Total Common Shareholder’s Equity
Balance at January 1, 2005	($	4,961	)	$	25,644		$  —	$	279,974
Net income					35,635				35,635
Dividends declared
On cumulative preferred stock					(970	)			(970	)
On common stock to parent – CH Energy Group					(17,000	)			(17,000	)
Balance at December 31, 2005	($	4,961	)	$	43,309		$  —	$	297,639
Net income					34,871				34,871
Dividends declared
On cumulative preferred stock					(970	)			(970	)
On common stock to parent – CH Energy Group					(8,500	)			(8,500	)
Balance at December 31, 2006	($	4,961	)	$	68,710		$  —	$	323,040
Net income					33,436				33,436
Dividends declared
On cumulative preferred stock					(970	)			(970	)
On common stock to parent – CH Energy Group					(8,500	)			(8,500	)
Balance at December 31, 2007	($	4,961	)	$	92,676		$  —	$	347,006

The Notes to Consolidated Financial Statements are an integral part hereof.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

          CH Energy Group, Inc. (“CH Energy Group”) is the holding company parent corporation of Central Hudson Gas & Electric Corporation (“Central Hudson”) and Central Hudson Enterprises Corporation (“CHEC”). Central Hudson and CHEC are each wholly owned by CH Energy Group. Their businesses are comprised of a regulated electric utility and regulated natural gas utility, fuel distribution, cogeneration, energy management, and investments in energy-related assets.

          Central Hudson has one wholly owned subsidiary: Phoenix Development Company, Inc. (“Phoenix”). CHEC has two wholly owned subsidiaries: Griffith Energy Services, Inc. (“Griffith”) and CH-Auburn Energy, LLC (“CH-Auburn”).

          On April 12, 2006, CHEC purchased a 75% interest in Lyonsdale Biomass, LLC (“Lyonsdale”). The operating results of Lyonsdale are consolidated in the financial statements of CH Energy Group. The minority interest shown on CH Energy Group’s Consolidated Financial Statements represents the minority owner’s proportionate share of the income and equity of Lyonsdale.

          CHEC’s investments in limited partnerships (“Partnerships”) and limited liability companies are accounted for under the equity method. CH Energy Group’s proportionate share of the change in fair value of available for sale securities held by the Partnerships is recorded in CH Energy Group’s Consolidated Statement of Comprehensive Income. For more information, see Note 5 – “Acquisitions and Investments.”

Basis of Presentation

          This Annual Report on Form 10-K for the period ended December 31, 2007 (“10-K Annual Report”), is a combined report of CH Energy Group and Central Hudson. The Notes to the Consolidated Financial Statements apply to the Consolidated Financial Statements of both CH Energy Group and Central Hudson. CH Energy Group’s Consolidated Financial Statements include the accounts of CH Energy Group and its wholly owned subsidiaries, which include Central Hudson and CHEC. Intercompany balances and transactions have been eliminated in consolidation.

          The Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which for regulated public utilities, includes the Financial Accounting Standards Board’s (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 71, Accounting for the Effects of Certain Types of Regulation (“SFAS 71”). For additional information regarding regulatory accounting see Note 2 – “Regulatory Matters.”

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Reclassification

          Certain amounts in the 2005 and 2006 Consolidated Financial Statements have been reclassified to conform to the 2007 presentation.

Use of Estimates

          Preparation of the financial statements in accordance with GAAP includes the use of estimates and assumptions by management that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amount of revenues and expenses during the reporting period. Actual results may differ from those estimated, but the methods used by CH Energy Group to prepare estimates have historically produced reliable results. Expense items most affected by the use of estimates are depreciation and amortization (including amortization of intangible assets), reserves for uncollectible accounts receivable, other operating reserves, unbilled revenues, and pension and other post-retirement benefits. Depreciation and amortization is based on estimates of the useful lives and estimated net salvage value of properties (as described in this Note under the caption “Depreciation and Amortization”). Amortizable intangible assets include customer relationships related to Griffith, which are amortized based on an assessment of customer turnover as described in Note 6 – “Goodwill and Other Intangible Assets.” Depreciation and amortization amounts charged to CH Energy Group’s operations for years 2007, 2006, and 2005, are $35.9 million, $35.7 million, and $36.2 million, respectively. Depreciation and amortization amounts charged to Central Hudson’s operations for years 2007, 2006, and 2005 are $28.4 million, $29.0 million, and $29.9 million, respectively.

          Estimates for uncollectible accounts are based on customer accounts receivable aging data as well as consideration of various quantitative and qualitative factors, including special collection issues. The estimates for other operating reserves are based on assessments of future obligations related to injuries and damages and workers compensation claims. Unbilled revenues are determined based on the estimated sales for bimonthly accounts that have not been billed by Central Hudson in the current month. The estimation methods used in determining these sales are the same methods used for billing customers when actual meter readings cannot be obtained. Estimated unbilled revenues are reported as current assets, and include amounts recorded both in revenues and as a regulatory liability. Revenues for 2007 include an estimate of $7.8 million for unbilled revenues, revenues for 2006 include an estimate of $6.6 million for unbilled revenues, and revenues for 2005 include an estimate of $6.3 million. Pursuant to regulatory requirements, a portion of unbilled revenue is offset by a regulatory liability and is not included in revenues. The portion of unbilled revenues offset by a regulatory liability at December 31, 2007 and 2006, respectively was $4.2 million and $3.2 million, respectively.

          The significant assumptions and estimates used to account for the pension plan and other post-retirement benefit expenses and liabilities are the discount rate, the expected long-term rate of return on the retirement plan and post-retirement plan

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assets, the rate of compensation increase, and the method of amortizing gains and losses.

          Estimates are also reflected for certain commitments and contingencies where there is sufficient basis to project a future obligation. Disclosures related to these certain commitments and contingencies are included in Note 12 – “Commitments and Contingencies.”

Rates, Revenues, and Cost Adjustment Clauses

          Central Hudson’s electric and natural gas retail rates are regulated by the New York State Public Service Commission (“PSC”). Transmission rates, facilities charges, and rates for electricity sold for resale in interstate commerce are regulated by the Federal Energy Regulatory Commission (“FERC”).

          Central Hudson’s tariffs for retail electric and natural gas service include purchased electricity and purchased natural gas cost adjustment clauses by which electric and natural gas rates are adjusted to collect the actual purchased electricity and purchased natural gas costs incurred in providing service.

Revenue Recognition

          Central Hudson records revenue on the basis of meters read. In addition, Central Hudson records an estimate of unbilled revenue for service rendered to bimonthly customers whose meters are read in the prior month. The estimate covers 30 days subsequent to the meter-read date. As of December 31, 2007, and 2006, the unrecognized estimated electric unbilled revenues were $10.2 million and $8.5 million, respectively. The full amount of estimated natural gas unbilled revenues are recognized on the Consolidated Balance Sheet.

          Griffith records revenue when products are delivered to customers or services have been rendered. Deferred revenues include unamortized payments from fuel oil burner maintenance and tank service agreements. These agreements require a onetime payment from the customer at inception of the agreements.

          For Central Hudson and Griffith, payments received from customers who participate in budget billing, whose balance represents the amount paid in excess of deliveries received at December 31, are included in customer advances. At the conclusion of the heating season, each such customer’s budget billings are reconciled with their actual purchases and the accounts are settled.

Cash and Cash Equivalents

          For the purposes of the Consolidated Statement of Cash Flows, CH Energy Group and Central Hudson consider temporary cash investments with a maturity, when purchased, of three months or less to be cash equivalents.

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Short-Term Investments

          CH Energy Group’s short-term investments consist of auction rate securities (“ARS”) and variable rate demand notes (“VRDN”), which have been classified as current available-for-sale securities pursuant to the provisions of SFAS No. 115, titled Accounting for Certain Investments in Debt and Equity Securities. ARS and VRDN are debt instruments with a long-term nominal maturity and a mechanism that resets the interest rate at regular intervals.

Fuel and Materials and Supplies

          Fuel and materials and supplies for CH Energy Group are valued using the following accounting methods:

Company	Valuation Method
Central Hudson	Average cost
Griffith	FIFO
Lyonsdale	Weighted average cost

The following is a summary of CH Energy Group’s and Central Hudson’s inventories:

	CH Energy Group				Central Hudson
As of December 31,	2007		2006		2007		2006
	(In Thousands)
Natural Gas	$	16,250	$	15,640	$	16,250	$	15,640
Petroleum Products and Propane		6,794		3,680		554		493
Fuel Used In Electric Generation		696		393		371		233
Materials and Supplies		9,581		8,217		7,095		6,438
Total	$	33,321	$	27,930	$	24,270	$	22,804

Utility Plant – Central Hudson

          The costs of additions to utility plant and replacements of retired units of property are capitalized at original cost. Capitalized costs include labor, materials and supplies, indirect charges for such items as transportation, certain taxes, pension and other employee benefits, and allowances for funds used during construction (“AFUDC”), as further discussed below. The replacement of minor items of property is included in operating expenses.

          The original cost of property, together with removal cost less salvage, is charged to accumulated depreciation at the time the property is retired and removed from service as required by the PSC.

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          The following summarizes the type and amount of assets included in the Electric, Natural Gas, and Common categories of Central Hudson’s utility plant balances at December 31, 2007, and 2006:

	Estimated Depreciable Life in Years	Utility Plant (In Thousands)
		2007		2006
Electric
Production	27-75	$	23,786	$	23,842
Transmission	28-85		179,387		174,665
Distribution	11-80		603,373		569,435
Other	40		866		866
Total		$	807,412	$	768,808
Natural Gas
Production	25-75	$	5,245	$	5,147
Transmission	18-70		42,202		41,931
Distribution	30-85		200,954		191,746
Other	N/A		493		493
Total		$	248,894	$	239,317
Common
Land and Structures	50	$	37,022	$	36,991
Office and Other Equipment, Radios, and Tools	8-35		35,486		36,115
Transportation Equipment	8-12		38,989		38,426
Other	5		1,997		894
Total		$	113,494	$	112,426

Allowance For Funds Used During Construction

          Central Hudson’s regulated utility plant includes AFUDC, which is defined as the net cost of borrowed funds used for construction purposes and a reasonable rate on other funds when so used. The concurrent credit for the amount so capitalized is reported in the Consolidated Statement of Income as follows: the portion applicable to borrowed funds is reported as a reduction of interest charges while the portion applicable to other funds (the equity component, a noncash item) is reported as other income. The AFUDC rate was 5.25% in 2007, 5.25% in 2006, and 3.75% in 2005. The amounts recorded for years 2007, 2006, and 2005 are $1.1 million, $0.6 million, and $0.4 million, respectively.

Depreciation and Amortization

          The regulated assets of Central Hudson include electric, natural gas, and common assets and are listed under the heading “Utility Plant” on Central Hudson’s and

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CH Energy Group’s Consolidated Balance Sheets. The accumulated depreciation associated with these regulated assets is also reported on the Consolidated Balance Sheets.

          For financial statement purposes, Central Hudson’s depreciation provisions are computed on the straight-line method using rates based on studies of the estimated useful lives and estimated net salvage values of properties. The anticipated costs of removing assets upon retirement are provided for over the life of those assets as a component of depreciation expense. This depreciation method is consistent with industry practice and the applicable depreciation rates have been approved by the PSC.

          Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 143, titled Accounting for Asset Retirement Obligations (“SFAS 143”), precludes the recognition of expected future retirement obligations as a component of depreciation expense or accumulated depreciation. Central Hudson, however, is required to use depreciation methods and rates approved by the PSC under regulatory accounting. In accordance with SFAS No. 71, titled Accounting for the Effects of Certain Types of Regulation (“SFAS 71”), Central Hudson continues to accrue for the future cost of removal for its rate-regulated natural gas and electric utility assets. In accordance with SFAS 143, Central Hudson has classified $47.8 million and $44.6 million of net cost of removal as a regulatory liability as of December 31, 2007 and 2006, respectively.

          Central Hudson performs depreciation studies periodically and, upon approval by the PSC, periodically adjusts the depreciation rates of its various classes of depreciable property. Central Hudson’s composite rates for depreciation were 2.78% in 2007, 2.95% in 2006, and 3.15% in 2005 of the original average cost of depreciable property. The ratio of the amount of accumulated depreciation to the original cost of depreciable property at December 31 was 30.4% in 2007, 30.9% in 2006, and 31.1% in 2005.

          The property and plant assets of Griffith and Lyonsdale are reported net of accumulated depreciation on CH Energy Group’s Consolidated Balance Sheet as “Other Property and Plant - net.” Accumulated depreciation for Griffith was $20.5 million and $17.3 million at December 31, 2007 and 2006, respectively. Accumulated depreciation for Lyonsdale was $1.3 million and $0.6 million at December 31, 2007 and 2006, respectively.

          For financial statement purposes, Griffith’s and Lyonsdale’s depreciation provisions are computed on the straight-line method using depreciation rates based on the estimated useful lives of the depreciable property and equipment. Expenditures for major renewals and betterments, which extend the useful lives of property and equipment, are capitalized. Expenditures for maintenance and repairs are charged to expense when incurred. Retirements, sales, and disposals of assets are recorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with any resulting gain or loss reflected in earnings.

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          CH Energy Group’s depreciation expense, which includes Central Hudson, Griffith, and Lyonsdale, was $32.2 million, $32.6 million, and $33.4 million in the years ended December 31, 2007, 2006, and 2005, respectively.

          Amortization of intangibles (other than goodwill) is computed on the straight-line method over the assets’ expected useful lives. See Note 6 – “Goodwill and Other Intangible Assets” for further discussion.

Research and Development

          Central Hudson is engaged in the conduct and support of research and development (“R&D”) activities, which are focused on the improvement of existing energy technologies and the development of new technologies for the delivery and customer use of energy. Central Hudson’s R&D expenditures were $3.5 million in 2007, $3.2 million in 2006, and $3.3 million in 2005. These expenditures were for internal research programs and for contributions to research administered by New York State Energy Research and Development Authority (“NYSERDA”), the Electric Power Research Institute, and other industry organizations. R&D expenditures are provided for in Central Hudson’s rates charged to customers for electric and natural gas delivery service. In addition, the PSC has authorized that differences between R&D expense and the rate allowances covering these costs be deferred for future recovery from or return to customers.

Income Tax

          CH Energy Group and its subsidiaries file consolidated federal and state income tax returns. Income taxes are deferred under the asset and liability method in accordance with SFAS No. 109, titled Accounting for Income Taxes (“SFAS 109”). Under the asset and liability method, deferred income taxes are provided for all differences between the financial statement and the tax basis of assets and liabilities. Additional deferred income taxes and offsetting regulatory assets or liabilities are recorded by Central Hudson to recognize that income taxes will be recovered or refunded through future revenues. For federal and state income tax purposes, CH Energy Group and its subsidiaries use an accelerated method of depreciation and generally use the shortest life permitted for each class of assets. Deferred investment tax credits are amortized over the estimated life of the properties giving rise to the credits. For state income tax purposes, Central Hudson uses book depreciation for property placed in service in 1999 or earlier in accordance with transition property rules under Article 9-A of the New York State Tax Law. Griffith and Lyonsdale file state income tax returns in those states in which they conduct business. For more information, see Note 4 – “Income Tax.”

Equity–Based Compensation

          CH Energy Group has an equity-based employee compensation plan that is described more fully in Note 11 – “Equity-Based Compensation.”

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Earnings Per Share

The following table presents CH Energy Group’s basic and diluted earnings per share included on the Consolidated Statement of Income:

	Year ended December 31,
	2007							2006							2005
	(In Thousands, except for Earnings Per Share)
	Avg. Shares	Net Income			$/Share			Avg. Shares	Net Income			$/Share			Avg. Shares	Net Income			$/Share
Earnings applicable to common stock – continuing operations		$	42,636						$	43,084						$	44,291
Average number of common shares outstanding – basic	15,762					$	2.70	15,762					$	2.73	15,762					$	2.81
Average dilutive effect of:
Stock options (1) (2)	1		(31	)			—	3		(18	)			—	2		(43	)			—
Performance shares (2)	16		—				—	14		—				—	3		—				—
Average number of common shares outstanding – diluted	15,779	$	42,605			$	2.70	15,779	$	43,066			$	2.73	15,767	$	44,248			$	2.81

(1)

For 2007 and 2005, certain stock options have been excluded from the computation of diluted earnings per share because the exercise prices were greater than the average market price of the common stock shares for each of the years presented. The number of common stock shares represented by the options excluded from the above calculation were 18,420 for 2007 and 36,900 shares for 2005. For 2006, there are no stock options excluded from the above calculation.

(2)

See Note 11 – “Equity-Based Compensation” for additional information regarding stock options and performance shares.

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Related Party Transactions

          Thompson Hine LLP serves as general counsel to CH Energy Group and Central Hudson. Two partners in that firm serve as Secretary and Assistant Secretary of each corporation. The Secretary and Assistant Secretary appointments serve to assist in the closure of specified transactions in the ordinary course of business. While neither partner receives additional compensation for these appointments, time spent performing these duties is charged to CH Energy Group and Central Hudson on an hourly basis. The combined total fees paid and accrued by CH Energy Group and Central Hudson to Thompson Hine LLP were $3.4 million in 2007, $2.6 million in 2006, and $2.9 million in 2005.

Parental Guarantees

          CH Energy Group and CHEC have issued guarantees in conjunction with certain commodity and derivative contracts and borrowing agreements that provide financial or performance assurance to third parties on behalf of a subsidiary. The guarantees are entered into primarily to support or enhance the creditworthiness otherwise attributed to a subsidiary on a stand-alone basis, thereby facilitating the extension of sufficient credit to accomplish the relevant subsidiary’s intended commercial purposes.

          The guarantees described above have been issued to counter-parties to assure the payment, when due, of certain obligations incurred by the CH Energy Group subsidiaries in physical and financial transactions related to heating oil, propane, other petroleum products, and weather and commodity hedges. At December 31, 2007, the aggregate amount of subsidiary obligations covered by these guarantees was $11.1 million. Where liabilities exist under the commodity-related contracts subject to these guarantees, these liabilities are included in CH Energy Group’s Consolidated Balance Sheet.

Product Warranties

          Griffith offers a multi-year warranty on heating system installations and has recorded liabilities for the estimated costs of fulfilling its obligations under these warranty and service contracts. CH Energy Group’s approximate aggregate potential liability for product warranties at December 31, 2007 and 2006 was not material. CH Energy Group’s liabilities for these product warranties were determined by accruing the present value of future warranty expense based on the number and type of contracts outstanding and historical costs for these contracts.

FIN 46R – Consolidation of Variable Interest Entities

          FASB Interpretation No. 46, titled Consolidation of Variable Interest Entities (“FIN 46R”), clarifies the application of Accounting Research Bulletin No. 51, titled Consolidated Financial Statements, as it relates to the consolidation of a variable interest entity (“VIE”). FIN 46R provides guidance on the identification of a variable interest and a VIE to determine when the assets, liabilities, and results of operations

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should be consolidated in a company’s financial statements. A VIE is an entity that is not controllable through voting interests where the equity investment at risk is not sufficient to permit the VIE to finance its activities without additional subordinated financial support provided by any party, including the equity holders. A company that holds a variable interest in an entity is required to consolidate the entity if the company’s interest in the VIE is such that the company will absorb a majority of the VIE’s expected losses and/or receive a majority of the VIE’s expected residual returns.

          CH Energy Group and its subsidiaries do not have any interests in special purpose entities and do not have material affiliations with any VIEs that require consolidation under the provisions of FIN 46R.

NOTE 2 - REGULATORY MATTERS

          In response to the May 1996 Order, the PSC issued in its generic Competitive Opportunities Proceeding, Central Hudson, PSC Staff, and certain other parties entered into the Settlement Agreement. The PSC approved the Settlement Agreement by its final Order effective June 30, 1998, for which a final amendment was approved as of March 7, 2000.

          The Settlement Agreement, which expired on June 30, 2001, included the following major provisions which survive its expiration date: (i) certain limitations on ownership of electric generation facilities by Central Hudson and its affiliates in Central Hudson’s franchise territory; (ii) standards of conduct in transactions between Central Hudson, CH Energy Group, and any other subsidiaries of CH Energy Group (such as CHEC and Griffith); (iii) prohibitions against Central Hudson making loans to CH Energy Group or any other subsidiary of CH Energy Group and against Central Hudson guaranteeing debt of CH Energy Group or any other subsidiary of CH Energy Group; (iv) limitations on the transfer of Central Hudson employees to CH Energy Group or other CH Energy Group subsidiaries; (v) certain dividend payment restrictions on Central Hudson; and (vi) treatment of savings up to the amount of an acquisition’s or merger’s premium or costs flowing from a merger with another utility company.

Regulatory Accounting Policies

          Central Hudson follows GAAP, which for regulated public utilities includes SFAS 71. Under SFAS 71, regulated companies such as Central Hudson apply AFUDC to the cost of construction projects and defer costs and credits on the balance sheet as regulatory assets and liabilities (see the caption “Summary of Regulatory Assets and Liabilities” of this Note) when it is probable that those costs and credits will be recoverable through the rate-making process in a period different from when they otherwise would have been reflected in income. For Central Hudson, these deferred regulatory assets and liabilities, and the related deferred taxes, are then either eliminated by offset as directed by the PSC or reflected in the consolidated statement of income in the period in which the same amounts are reflected in rates. In addition, current accounting practices reflect the regulatory accounting authorized in the most recent settlement agreement or rate order, as the case may be.

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Summary of Regulatory Assets and Liabilities

The following table sets forth Central Hudson’s regulatory assets and liabilities:

At December 31,	2007		2006
	(In Thousands)
Regulatory Assets (Debits):
Current:
Deferred purchased electric and natural gas costs (Note 1)	$	29,477	$	26,167
FAS 133 – deferred unrealized losses (Note 14)		1,235		2,971
Residual natural gas deferred balances		4,300		2,194
		35,012		31,332
Long-term:
Deferred pension costs	$	51,393	$	99,281
Carrying charges – pension reserve		6,477		2,134
Deferred costs – manufactured gas sites (Note 12)		17,386		15,106
Deferred OPEB costs (Note 10)		15,967		36,392
Deferred debt expense on re-acquired debt (Note 8)		6,032		6,626
Residual natural gas deferred balances		25,298		28,525
Income taxes recoverable through future rates		22,399		22,847
Other		9,229		7,864
		154,181		218,775
Total Regulatory Assets	$	189,193	$	250,107
Regulatory Liabilities (Credits):
Current:
Rate moderation – excess electric depreciation reserve	$	5,930	$	17,396
Income taxes refundable through future rates		3,462		4,255
		9,392		21,651
Long-term:
Customer benefit fund	$	4,865	$	5,758
Deferred cost of removal (Note 1)		47,819		44,602
Excess electric depreciation reserve		32,371		39,956
Income taxes refundable through future rates		9,488		9,349
Other		17,120		8,131
		111,663		107,796
Total Regulatory Liabilities	$	121,055	$	129,447
Net Regulatory Assets	$	68,138	$	120,660

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          The significant regulatory assets and liabilities include:

           Deferred Pension Costs: As discussed further in Note 10 – “Post-Employment Benefits,” the amount of deferred pension cost undercollected as of December 31, 2007, and December 31, 2006, includes $48.4 million and $97.2 million, respectively, related to the accounting required under SFAS 158 for recording the funded status. The remaining $3.0 million and $2.1 million are the cumulative undercollected pension costs to be recovered from Central Hudson’s customers.

           Carrying Charges – Pension Reserve: Under the policy of the PSC regarding pension costs, carrying charges are accrued on cash differences between rate allowances and cash contributions to Central Hudson’s defined benefit pension plan. For further discussion regarding this plan, see Note 10 – “Post-Employment Benefits.”

           Residual Natural Gas Deferred Balances: The net regulatory asset balance to be amortized over a seven-year period beginning July 1, 2007, as prescribed by the 2006 Rate Order.

           Income Taxes Recoverable: Regulatory asset balance established to offset deferred tax liabilities determined under the provisions of SFAS 109 and for which it is probable that they will be recoverable from customers.

           Excess Electric Depreciation Reserve: The 2006 Rate Order prescribes the use of excess depreciation reserves to offset regulatory assets and to apply the remainder for rate moderation.

           Income Taxes Refundable: Central Hudson adopted SFAS 109 in 1993, with the effect of increasing Central Hudson’s net deferred taxes. As it is probable that the related balances will be refundable to customers, Central Hudson established a net regulatory liability for these balances.

           Customer Benefit Fund: The 2006 Order prescribes the use of the residual balance to fund economic development and competitive metering initiative programs.

          In terms of recoverability, regulatory asset balances at December 31, 2007, reflect the following (in millions):

          Balances with offsetting accrued liability balances recoverable when future costs are actually incurred:

¡	Deferred Pension and OPEB Costs	$	64.0
¡	Income Taxes Recoverable Through Future Rates		22.4
¡	Deferred Costs – Manufactured Gas Sites		16.1
¡	Other		4.6
			107.1

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          Balances earning a return via inclusion in rates and/or the application of carrying charges:

¡	Residual Natural Gas Deferred Balances	24.7
¡	Deferred Pension and OPEB Costs*	3.3
¡	Other*	12.1
		40.1

          Subject to current recovery:

¡	Deferred Purchased Electric and Natural Gas Costs	30.7
¡	Residual Natural Gas Deferred Balances	4.3
		35.0

          Accumulated carrying charges*:

¡	Pension Reserve		6.5
¡	Other		.5
			7.0
	Total Regulatory Assets	$	189.2

          * Subject to recovery in Central Hudson’s next rate proceeding.

2001 Rate Order

          Central Hudson continued to operate, through June 30, 2006, under the terms of a Rate Plan approved by the PSC on October 25, 2001, and further modified by the PSC on June 14, 2004 (“2001 Rate Order”).

          Two initiatives survived the expiration of the 2001 Rate Order: 1) Economic Development and 2) Competitive Metering Initiative. These programs are funded by the Customer Benefit Fund, established to benefit customers as a result of proceeds retained from Central Hudson’s sale of generating assets in 2001.

2006 Rate Order

          From July 1, 2006 through June 30, 2009, Central Hudson operates under the terms of the 2006 Rate Order, which provides for the following:

• Electric delivery revenues increase of $53.7 million over the three-year term with annual rate increases of approximately $17.9 million on July 1, 2006, July 1, 2007, and July 1, 2008.

• Natural gas delivery revenues increase by $14.1 million with rate increases of $8 million on July 1, 2006, and $6.1 million on July 1, 2007.

• Delivery rates based on a ROE of 9.6% with an earnings sharing threshold of 10.6%, above which Central Hudson is to share 50% with its customers.

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• Earnings above 11.6% are shared 65% with customers and earnings above 14.0% are allocated entirely to customers.

• Limits on Central Hudson’s ability to defer certain costs if earnings exceed an 11.0% ROE, however, these deferral limitations will not cause earnings to be reduced below 11.0%.

• Rates based on a capital structure that includes 45% common equity, however the actual proportion of common equity, up to a limit of 47%, is used to determine the ROE for the purpose of earnings sharing.

• Continued full recovery of all purchased natural gas and electricity costs through existing monthly supply cost recovery mechanisms.

• Established targets for electric, natural gas, and common plant expenditures, and increased allowances for the recovery of operating costs, including transmission and distribution Right-of-Way (“ROW”) maintenance expenses. The capital expenditure targets are subject to true-up provisions, requiring deferral of 150% of the revenue requirement of any shortfalls in spending over the 2006 Rate Order’s three-year term, if such shortfall is expected to exist at June 30, 2009. Commencing on July 1, 2009, should such shortfall exist, it will be subject to carrying charges.

• Transmission and distribution ROW maintenance expenses are also subject to true-up provisions over the 2006 Rate Order’s three-year term, requiring the deferral of shortfalls in actual expenditures, if such shortfall is expected to exist at June 30, 2009. Commencing on July 1, 2009, should such shortfall exist, it will be subject to carrying charges.

• Increased rate allowances and continued deferral accounting authorization for the recovery of expenses for pensions, OPEB, stray voltage testing, manufactured gas plant (“MGP”) site remediation, and certain other expense items.

• Additional funding to assist low-income customers in paying their energy bills as well as continued funding of programs to encourage customers to explore new opportunities available through the competitive retail supply markets.

• Penalty-only performance mechanisms with established targets for specified levels of performance related to customer service quality, natural gas safety, and electric reliability measures.

          As a result of failing to meet electric reliability targets, Central Hudson recorded penalties of $0.7 million, and $0.8 million for the years 2006 and 2005, respectively. As prescribed by the 2006 Rate Order, the 2005 penalty was reversed. The 2006 penalty has been deferred for future pass back to customers. No penalties were recorded in 2007.

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Other PSC Proceedings

          On October 19, 2007, the PSC issued an Order in Case 07-E-0437 – New York Solar Energy Industries Association and Sustainable Hudson Valley – Joint Petition to Expand the Ceiling on the Photovoltaic Net Metering Load for Central Hudson Gas and Electric Corporation from 1.2 MW to 3.0 MW. Under Public Service Law (PSL) § 66-j, electric utilities are required to provide net metering to residential Photovoltaic (PV) generation systems sized at 10 kW or less. PSL § 66-j also allows the PSC to set a ceiling on the amount of PV capacity a utility must net meter. This Order raised the PV net metering ceiling for Central Hudson from 1.8 MW, the level set in a June 21, 2007 Order issued by the PSC in this proceeding, to 10 MW. This Order also authorizes Central Hudson to defer delivery revenue losses attributable to PV penetration in excess of the 0.8 MW level assumed in the 2006 Rate Order for the period July 1, 2007 through June 30, 2009. The amount deferred in 2007 was not material.

Other Regulatory Matters

Non-Utility Land Sales

Central Hudson

          On June 23, 2006, the PSC issued an Order approving the proposed transfers of ownership interests in 48 parcels of non-utility property and the recognition of any gains realized upon the transfers for the benefit of shareholders.

          Central Hudson sold a total of four and thirty seven parcels of non-utility real property for $0.5 million and $2.2 million, respectively, in excess of book value and transaction costs, during the years ended December 31, 2007 and 2006. This excess is recorded as a reduction to Other Expenses of Operation.

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NOTE 3 - NEW ACCOUNTING STANDARDS AND OTHER FASB PROJECTS

          New accounting standards are summarized below, and explanations of the underlying information for all standards (except those not currently applicable to CH Energy Group and its subsidiaries) follow the chart.

Reference	Title	Issued Date	Effective Date	Status	Impact*
SFAS 159	Establishing the Fair Value Option for Financial Assets and Liabilities	Feb-07	Jan-08	Under Assessment	1
SFAS 157	Fair Value Measurement	Sep-06	Jan-08	Under Assessment	1
FIN 39-1	Amendment of FASB Interpretation No. 39, Offsetting of Amounts Related to Certain Contracts	Apr-07	Jan-08	Under Assessment	1
SFAS 141R	Business Combinations – Revised	Dec-07	Jan-09	Under Assessment	1
SFAS 160	Noncontrolling Interest in Consolidated Financial Statements	Dec-07	Jan-09	Under Assessment	1
SFAS 158	Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans	Sep-06	Dec-06	Implemented	2
FIN 48	Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109	Jul-06	Jan-07	Implemented	2
FIN 48-1	Definition of Settlement in FASB Interpretation No. 48	May-07	Jan-07	Implemented	2
Statement 133 Issue B40	Embedded Derivatives: Application of Paragraph 13 (b) to Securitized Interests in Prepayable Financial Assets	Dec-06	Jan-07	Not Currently Applicable	3
SFAS 156	Accounting for Servicing of Financial Assets	Mar-06	Jan-07	Not Currently Applicable	3
SFAS 155	Accounting for Certain Hybrid Financial Instruments, an Amendment of FASB Statements No. 133 and 140	Feb-06	Jan-07	Not Currently Applicable	3
Statement 133 Issue G26	Cash Flow Hedges: Hedging Interest Cash Flows on Variable-Rate Assets and Liabilities that are not Based on a Benchmark Rate	Dec-06	Apr-07	Not Currently Applicable	3

*Impact Key:

1 - No significant impact on the financial condition, results of operations and cash flows of CH Energy Group and its subsidiaries expected.

2 - Following the chart, the impacts are separately disclosed as of standard effective dates.

3 - No current impact on the financial condition, results of operations and cash flows of CH Energy Group and its subsidiaries.

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STANDARDS UNDER ASSESSMENT

          SFAS 159 permits entities to choose to elect, at specified election dates, to measure eligible financial instruments at fair value. The election is made on an instrument-by-instrument basis, and once made is irrevocable. Eligible instruments include written loan commitments, rights and obligations under insurance contracts and warranties that are not financial instruments, and firm commitments that would otherwise not be recognized at inception and that involve only financial instruments. The statement requires that entities report in earnings unrealized gains and losses on items for which the fair value option has been elected, and recognize upfront costs and fees related to those items in earnings as incurred.

          SFAS 157 will change the definition of fair value, establish a framework for measuring it in accordance with General Accepted Accounting Principles, and expand disclosures about fair value measurements.

          FSP No. FIN 39-1 permits a reporting entity to offset fair value amounts recognized for the rights to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative agreements if the receivable or payable arises from the same master netting arrangement as the derivative instrument. This FSP also replaces the terms “conditional contracts” and “exchange contracts” with the term “derivative contracts” (as defined by Statement 133). For more information regarding CH Energy Group’s derivative contracts, see Note 14 – “Accounting for Derivative Instruments and Hedging Activities.”

          SFAS 141R applies to all business combinations, defined as a transaction or event in which an acquirer obtains control of one or more businesses. The objective of SFAS 141R is to improve the relevance, representational faithfulness, and comparability of the information that an entity provides in its financial reports about a business combination and its effects.

          SFAS 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. The objective of SFAS 160 is to improve the relevance, comparability and transparency of the financial information that an entity provides in its consolidated financial statements.

STANDARDS IMPLEMENTED

          SFAS 158 requires an employer that sponsors a defined benefit pension or other post-retirement plans to report the current economic status (i.e., the overfunded or underfunded status) of each such plan in its statement of financial position by measuring plan assets and benefit obligations on the same date as the employer’s assets and liabilities. SFAS 158 became effective for fiscal years ending after

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December 15, 2006, with an exception for the provision to change the measurement date, which is effective and will be implemented for fiscal years ending after December 15, 2008. The impact of the measurement date change on CH Energy Group’s financial condition, results of operations, and cash flows cannot be determined at this time. For additional information regarding CH Energy Group’s post-employment benefits, see Note 10 – “Post-Employment Benefits.”

          FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS 109, Accounting for Income Taxes. FIN 48 also prescribes a recognition threshold and measurement methodology for tax positions taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, and disclosure and transition issues. Only tax positions that are more likely than not to be successful may be recognized. CH Energy Group has reviewed material tax positions taken on federal and state income tax returns for all years open for audit and has concluded that these positions are more likely than not to be successful. Therefore, no adjustment to the opening balance of retained earnings was recorded upon CH Energy Group’s adoption of FIN 48 in January 2007 and, no interest or penalties have been recorded in the financial statements. If CH Energy Group and its subsidiaries incur any interest or penalties on underpayment of income taxes, the amounts would be included on the line “Other liabilities” on the Consolidated Balance Sheet and on the line “Other – net” on the Consolidated Statement of Income. CH Energy Group and its subsidiaries file a consolidated Federal and New York State income tax return, which represents the major tax jurisdictions of CH Energy Group. The statute of limitations for federal tax years 2004 through 2006 are still open for audit. The New York State income tax return is currently open for audit for tax years 2002 through 2006, and tax years 2002 through 2004 are currently under audit. Although these tax years are still open for audit, CH Energy Group does not believe it has exposure resulting from uncertain tax positions.

          FIN 48-1 clarifies the rules regarding settled tax positions. Under the approach prescribed by FIN 48-1, an enterprise must evaluate all of the following conditions when determining effective settlement: whether a tax authority has examined the tax year; whether or not the enterprise intends to appeal or litigate any aspects of the tax position; and, based on a taxing authority’s widely understood policy, whether the enterprise considers it remote that the taxing authority would subsequently examine or reexamine any of the positions once the examination process is completed. CH Energy Group’s determination of settled positions is consistent with these rules.

NOTE 4 - INCOME TAX

          CH Energy Group and its subsidiaries file a consolidated Federal and New York State income tax return. CHEC, Griffith, and Lyonsdale also file state income tax returns in those states in which they conduct business.

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          In 2000, New York State law was changed such that Central Hudson and other New York State utilities became subject to state income tax. The tax law repealed the three-quarter percent, or 0.75%, tax on gross earnings and the excess dividends tax under Section 186 of the New York State Tax Law and replaced them with an income-based tax under Article 9-A of the New York State Tax Law. Therefore, CH Energy Group filed a combined Article 9-A tax return which included all of its subsidiaries. The completion of the audit, concluded in the second quarter of 2005, of the 2000 and 2001 combined filings of the Article 9-A tax resulted in a favorable adjustment of $2.3 million of New York State income tax, including the Metropolitan Transit Authority tax, and was the primary factor for the lower effective state tax rate in 2005 for CH Energy Group. Management does not expect adjustments relating to similar audits of subsequent years to be of this magnitude.

          The Article 9-A state income tax obligation was recovered from Central Hudson customers as a revenue tax through June 30, 2006, the expiration date of the 2001 Rate Plan. Effective July 1, 2006, and in accordance with the 2006 Rate Order, the state income tax obligation in accordance with Article 9-A is included in base rates of Central Hudson, in the same manner as Central Hudson’s federal income tax obligation is already included.

          As a result of CHEC’s ownership in Cornhusker Energy Lexington Holdings, LLC (“Cornhusker Holdings”) and Lyonsdale Biomass, LLC (“Lyonsdale”), a $1.4 and $1.0 million benefit for federal production tax credits, for 2007 and 2006, respectively, is included in CH Energy Group’s federal income tax expense. CHEC investments in Cornhusker Holdings and Lyonsdale are discussed further in Note 5 – “Acquisitions and Investments.”

          See Note 2 – “Regulatory Matters” under the caption “Summary of Regulatory Assets and Liabilities” for additional information regarding CH Energy Group’s and its subsidiaries’ income taxes.

Components of Income Tax

          The following is a summary of the components of state and federal income taxes for CH Energy Group as reported in its Consolidated Statement of Income:

	2007		2006		2005
	(In Thousands)
Federal income tax	$	14,630	$	482	$	12,021
State income tax		1,919		63		(757	)
Deferred federal income tax		4,636		20,108		12,245
Deferred state income tax		713		3,116		2,310
Total income tax	$	21,898	$	23,769	$	25,819

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Reconciliation: The following is a reconciliation between the amount of federal income tax computed on income before taxes at the statutory rate and the amount reported in CH Energy Group’s Consolidated Statement of Income:

	2007			2006			2005
	(In Thousands)
Net income	$	42,636		$	43,084		$	44,291
Preferred stock dividends of Central Hudson		970			970			970
Minority interest		(121	)		(141	)		—
Federal income tax		14,630			482			12,021
State income tax		1,919			63			(757	)
Deferred federal income tax		4,636			20,108			12,245
Deferred state income tax		713			3,116			2,310
Income before taxes	$	65,383		$	67,682		$	71,080
Computed federal tax at 35% statutory rate	$	22,884		$	23,689		$	24,878
State income tax net of federal tax benefit		1,812			2,985			1,695
Depreciation flow-through		2,437			2,870			3,464
Cost of Removal		(1,185	)		(1,139	)		(1,136	)
Production tax credits		(1,366	)		(1,011	)		—
Other		(2,684	)		(3,625	)		(3,082	)
Total income tax	$	21,898		$	23,769		$	25,819
Effective tax rate – federal		29.5	%		30.4	%		34.1	%
Effective tax rate – state		4.0	%		4.7	%		2.2	%
Effective tax rate – combined		33.5	%		35.1	%		36.3	%

          In 2007, the effective federal income tax rate decrease was due to favorable impacts of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (“Medicare Act”), increased production tax credits and depreciation flow-through partially offset by tax reserve reversals in 2006 that did not occur in 2007.

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          The following is a summary of the components of deferred taxes at December 31, 2007, and December 31, 2006, as reported in CH Energy Group’s Consolidated Balance Sheet:

	2007		2006
Accumulated Deferred Income Tax Asset:
Excess depreciation reserve	$	15,173	$	22,870
Unbilled revenues		15,163		10,670
Plant-related		24,846		32,010
OPEB expense		19,721		15,998
Other		13,097		4,359
Accumulated Deferred Income Tax Asset		88,000		85,907
Accumulated Deferred Income Tax Liability:
Plant-related		152,245		144,351
Pension expense		15,024		19,830
Residual deferred gas balance		11,835		12,531
Other		48,886		41,766
Accumulated Deferred Income Tax Liability		227,990		218,478
Net Deferred Income Tax Liability		139,990		132,571
Net Current Deferred Income Tax Asset		7,378		5,875
Net Long-term Deferred Income Tax Liabilities	$	147,368	$	138,446

          The following is a summary of the components of state and federal income taxes for Central Hudson as reported in its Consolidated Statement of Income:

	2007		2006			2005
	(In Thousands)
Federal income tax	$	13,944	$	562		$	9,675
State income tax		3,277		(290	)		1,450
Deferred federal income tax		2,814		18,632			10,852
Deferred state income tax		291		2,624			1,959
Total income tax	$	20,326	$	21,528		$	23,936

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Reconciliation: The following is a reconciliation between the amount of federal income tax computed on income before taxes at the statutory rate and the amount reported in Central Hudson’s Consolidated Statement of Income:

	2007			2006			2005
	(In Thousands)
Net income	$	33,436		$	34,871		$	35,635
Federal income tax		13,944			562			9,675
State income tax		3,277			(290	)		1,450
Deferred federal income tax		2,814			18,632			10,852
Deferred state income tax		291			2,624			1,959
Income before taxes	$	53,762		$	56,399		$	59,571
Computed federal tax at 35% statutory rate	$	18,817		$	19,740		$	20,850
State income tax net of federal tax benefit		2,421			2,436			2,902
Depreciation flow-through		2,437			2,870			3,464
Cost of Removal		(1,185	)		(1,139	)		(1,136	)
Other		(2,164	)		(2,379	)		(2,144	)
Total income tax	$	20,326		$	21,528		$	23,936
Effective tax rate – federal		31.2	%		34.0	%		34.5	%
Effective tax rate – state		6.6	%		4.2	%		5.7	%
Effective tax rate – combined		37.8	%		38.2	%		40.2	%

          In 2007, the effective federal income tax rate decrease was due to favorable impacts of the Medicare Act, flow-through benefits from depreciation, and the federal benefits from higher current period state taxes offset partially by tax reserve reversals in 2006 that did not occur in 2007.

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          The following is a summary of the components of deferred taxes at December 31, 2007, and December 31, 2006, as reported in Central Hudson’s Consolidated Balance Sheet:

	2007		2006
Accumulated Deferred Income Tax Asset:
Unbilled revenues	$	15,163	$	10,670
Plant-related		24,846		32,010
OPEB expense		19,721		15,998
Excess depreciation reserve		15,173		22,870
Other		12,394		2,904
Accumulated Deferred Income Tax Asset		87,297		84,452
Accumulated Deferred Income Tax Liability:
Plant-related	$	150,035	$	141,794
Pension expense		15,024		19,830
Residual deferred gas balance		11,835		12,531
Other		38,991		34,845
Accumulated Deferred Income Tax Liability		215,885		209,000
Net Deferred Income Tax Liability		128,588		124,548
Net Current Deferred Income Tax Asset		6,676		4,600
Net Long-term Deferred Income Tax Liabilities	$	135,264	$	129,148

NOTE 5 - ACQUISITIONS AND INVESTMENTS

ACQUISITIONS

          In 2007, 2006 and 2005, Griffith acquired fuel distribution companies as follows (in Millions):

Year Ended	# of Acquired Companies	Purchase Price			Total Intangible Assets(1)			Goodwill			Total Tangible Assets(2)
December 31, 2005	7		$	3.6		$	2.9		$	0.8		$	0.7
December 31, 2006	9		$	3.6		$	3.4		$	1.3		$	0.2
December 31, 2007	13		$	25.6		$	22.1		$	10.6		$	3.5
Total	29		$	32.8		$	28.4		$	12.7		$	4.4

(1)	Including goodwill.
(2)	Total tangible assets include $1.6 million in liquid petroleum and spare parts inventory, and $1.8 million in vehicles.

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          Fifteen of the above noted acquisition transactions have agreements containing clauses (known as “earn out provisions”) for a possible additional payment provided certain conditions are met. These provisions increase the purchase price if certain sales volumes are attained. An additional $129,700 was paid in 2006 as a result of these provisions. The amount of this additional payment was added to goodwill.2007 payments were not material.

          In January 2008, Griffith acquired two fuel distribution and service companies in Pennsylvania and Connecticut for a total of $8.6 million.

          On April 12, 2006, CHEC purchased a 75% interest in Lyonsdale from Catalyst Renewables Corporation (“Catalyst”) for $10.8 million, including a working capital adjustment of $1.0 million. CHEC allocated the total purchase price based on the fair value of assets acquired and liabilities assumed as follows: Current Assets of $1.3 million, Other Property and Plant of $9.6 million, and Current Liabilities of $0.1 million. Catalyst remains the owner of a minority share of Lyonsdale and will provide asset management services to Lyonsdale under a contract expiring April 12, 2009. Lyonsdale owns and operates a 19-megawatt, wood-fired, biomass electric generating plant, which began operation in 1992. The plant is located in Lyonsdale, New York. The energy and capacity of the plant is being sold at a fixed price to an investment grade rated counter-party pursuant to a contract beginning May 1, 2006, and ending December 31, 2014. For the period April 12, 2006 through December 31, 2007, the operating results of Lyonsdale have been consolidated in the financial statements of CH Energy Group.

Investments

          In the fourth quarter of 2004, CHEC acquired a 12% interest in preferred units issued by Cornhusker Holdings for $2.7 million and also agreed to acquire $8.0 million of subordinated notes issued by Cornhusker Holdings. As of December 31, 2007, CHEC had acquired all of these subordinated notes. Cornhusker Holdings is the owner of Cornhusker Energy Lexington, LLC, a fuel ethanol production facility located in Nebraska that began operation as of the end of January 2006. This investment is accounted for under the equity method.

          On March 10, 2006, CHEC closed on a $4.9 million investment in CH-Community Wind Energy, LLC, a joint venture between CHEC and Community Energy, Inc. that owns an 18% interest in two wind farm projects in the Mid-Atlantic region. Located near Wilkes-Barre, Pennsylvania, the 24 MW Bear Creek wind project, and the 7.5 MW Jersey Atlantic project, built at a wastewater treatment plant in Atlantic City, New Jersey, both are commercially operational. CHEC’s ownership represents a minority interest in each project. This investment is accounted for under the equity method.

          In the fourth quarter of 2007, CHEC’s subsidiary, CH-Auburn Energy LLC (“CH-Auburn”), entered into a 15-year contract to supply the City of Auburn, NY (the “City”) with a portion of its electricity needs by constructing and operating a 3-megawatt electric generating plant in Auburn that will burn gas derived from wastewater sludge and a

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landfill to generate renewable power. As of December 31, 2007, $0.5 million of the estimated $9.75 million investment was completed. CH-Auburn is consolidated in the financial statements of CH Energy Group.

          Under its agreement with the City, CH-Auburn will sell electricity and hot water to the City at a rate that is a function of the project’s actual capital costs and operating costs. The rate charged to the City is capped at a budgeted maximum value. If the rate cap will be exceeded and the City does not increase the cap, or if certain schedule-related criteria are not met, CH-Auburn may terminate the agreement and recover its full investment in the project.

NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS

          Goodwill, customer relationships, and covenants not to compete associated with acquisitions are included in intangible assets. Goodwill represents the excess of cost over the fair value of the net tangible and identifiable intangible assets of businesses acquired as of the date of acquisition. The balances reflected on CH Energy Group’s Consolidated Balance Sheet at December 31, 2007, and 2006, for “Goodwill” and “Other intangible assets – net” relate to Griffith. In July 2001, the FASB issued SFAS No. 142, titled Goodwill and Other Intangible Assets (“SFAS 142”). SFAS 142 requires that goodwill and other intangible assets that have indefinite useful lives no longer be amortized to expense, but instead be periodically reviewed for impairment. Annually, Griffith tests the goodwill and intangible assets remaining on the balance sheet for impairment and for all periods presented no impairment existed. Impairment testing compares the fair value of Griffith to its carrying amount. Fair value of the reporting unit is estimated using a discounted cash flow measurement. The carrying amount for goodwill was $63.4 million as of December 31, 2007, and $52.8 million as of December 31, 2006. For tax purposes, goodwill is amortized ratably over a 15-year period, beginning in the month of acquisition.

          In accordance with SFAS 142, intangible assets that have finite useful lives continue to be amortized over their useful lives. The estimated useful life for customer relationships is fifteen years, which is believed to be appropriate in view of average historical customer turnover. However, if customer turnover were to substantially increase, a shorter amortization period would be used, resulting in an increase in amortization expense. For example, if a ten-year amortization period were initially used, annual amortization expense would increase by approximately $1.6 million. The estimated useful lives of trademarks range from five to fifteen years and are based upon management’s assessment of several variables such as brand recognition, management’s plan for the use of the trademark, and other factors which will affect the duration of the trademark’s life. The useful life of a covenant not to compete is based on the expiration date of the covenant, generally between two and five years. The weighted average amortization periods for customer relationships, trademarks and covenants not to compete are 15 years, 11.2 years, and 8.4 years, respectively. The weighted average amortization period for all amortizable intangible assets is 14.7 years.

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          The components of amortizable intangible assets of CH Energy Group are summarized as follows (in Thousands):

	December 31, 2007						December 31, 2006
	Gross Carrying Amount			Accumulated Amortization			Gross Carrying Amount			Accumulated Amortization
Customer Relationships		$	51,451		$	18,593		$	42,479		$	15,508
Trademarks			2,490			101			—			—
Covenants Not to Compete			1,420			947			1,350			771
Total Amortizable Intangibles		$	55,361		$	19,641		$	43,829		$	16,279

          Amortization expense was $3.4 million, $2.9 million, and $2.7 million for the years ended December 31, 2007, 2006, and 2005, respectively. The estimated amortization expense for each of the next five years, assuming no new acquisitions, will be approximately $3.8 million.

NOTE 7 - SHORT-TERM BORROWING ARRANGEMENTS

          CH Energy Group maintains a $75 million revolving credit agreement to provide committed liquidity beyond its cash reserves. In April 2005, CH Energy Group amended its revolving credit agreement with several commercial banks, extending its term to April 2010. At December 31, 2007 and 2006, there was no outstanding loan under the agreement.

          For the year ended December 31, 2006, Central Hudson maintained a $75 million revolving credit facility to provide committed liquidity for its operations. Effective January 2, 2007, Central Hudson amended its revolving credit agreement with several commercial banks, pursuant to PSC authorization, increasing the available committed credit to $125 million for a five-year term ending January 2, 2012. At December 31, 2007, and 2006, there was no outstanding loan under Central Hudson’s revolving credit agreement.

          Central Hudson also maintains certain uncommitted lines of credit that diversify its sources and provide competitive options to minimize its cost of short-term debt. At December 31, 2007, Central Hudson had $42.5 million of short-term debt outstanding under these credit lines.

          For the years ended December 31, 2007, 2006, and 2005, Central Hudson had an average daily amount of short-term debt outstanding of $32.5 million, $27.7 million, and $16.6 million, respectively. The weighted-average interest rate for short-term borrowing was 5.37% for 2007, 5.24% for 2006, and 3.65% for 2005.

          As of December 31, 2007, CHEC had an uncommitted line of credit totaling $15 million. There were no borrowings against this line of credit.

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          At December 31, 2007, CH Energy Group, on a consolidated basis, had no short-term debt outstanding other than the above-referenced $42.5 million in short-term debt of Central Hudson. CH Energy Group had $11.3 million of cash and cash equivalents and $3.5 million of short-term investments as of December 31, 2007.

          On January 18, 2008, Griffith established an uncommitted line of credit of up to $25 million with a commercial bank for the purpose of funding seasonal working capital, and for general corporate purposes. The obligations of Griffith under the line of credit are guaranteed by CH Energy Group and by CHEC.

Debt Covenants

          CH Energy Group’s $75 million credit facility and Central Hudson’s $125 million credit facility both require the satisfaction of certain restrictive covenants, including a ratio of total debt-to-total capitalization of no more than 0.65 to 1.00. Currently, both CH Energy Group and Central Hudson are in compliance with all of these debt covenants.

          The only debt outstanding at CHEC is amounts borrowed from CH Energy Group. As of December 31, 2007, there were no amounts outstanding on CHEC’s line of credit with its commercial bank and there were no applicable debt covenants.

NOTE 8 - CAPITALIZATION - COMMON AND PREFERRED STOCK

          For a schedule of activity related to common stock, paid-in capital, and capital stock, see the Consolidated Statements of Shareholders’ Equity for CH Energy Group and Central Hudson.

           Cumulative Preferred Stock: Central Hudson, $100 par value; 210,300 shares authorized, not subject to mandatory redemption:

		Shares Outstanding
	Redemption
	Price	December 31,
Series	12/31/07	2007		2006
4.50%	107.00		70,285		70,285
4.75%	106.75		19,980		19,980
4.35%	102.00		60,000		60,000
4.96%	101.00		60,000		60,000
			210,265		210,265

          A nominal number of these preferred shares were repurchased during the year ended December 31, 2005. There were no repurchases in 2006 and 2007.

           Capital Stock Expense: Expenses incurred on issuance of capital stock are accumulated and reported as a reduction in common equity.

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           Repurchase Program: On July 25, 2002, the Board of Directors of CH Energy Group authorized a Common Stock Repurchase Program (“Repurchase Program”) to repurchase up to 4 million shares, or approximately 25% of its outstanding common stock, over the five years beginning August 1, 2002. Between August 1, 2002, and December 31, 2003, the number of shares repurchased under the Repurchase Program was 600,087 at a cost of $27.5 million. No shares were repurchased during the years ended December 31, 2007, 2006, and 2005. On July 27, 2007, the Board of Directors of CH Energy Group extended and amended the Common Stock Repurchase Program (the “Program”) of the Company, which was originally authorized on July 25, 2002. As amended, the Program authorizes the repurchase of up to 2,000,000 shares (excluding shares purchased before July 31, 2007) or approximately 13% of the Company’s outstanding common stock, from time to time, during the next five years, i.e., through July 31, 2012. The extended and amended Program is effective as of July 31, 2007. CH Energy Group reserves the right to modify, suspend, renew, or terminate the Program at any time without notice.

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NOTE 9 - CAPITALIZATION - LONG-TERM DEBT

          Details of Central Hudson’s long-term debt are as follows:

Series	Maturity Date	December 31,
		2007			2006
		(In Thousands)
Promissory Notes:
2002 Series D (5.87%)(d)	Mar. 28, 2007	$	—		$	33,000
1999 Series C (6.00%)	Jan. 15, 2009		20,000			20,000
2003 Series D (4.33%)(d)	Sep. 23, 2010		24,000			24,000
2002 Series D (6.64%)(d)	Mar. 28, 2012		36,000			36,000
2004 Series D (4.73%)(d)	Feb. 27, 2014		7,000			7,000
2004 Series E (4.80%)(b)	Nov. 05, 2014		7,000			7,000
2007 Series F (6.028%) (b)	Sep. 01, 2017		33,000			—
2004 Series E (5.05%)(b)	Nov. 04, 2019		27,000			27,000
1999 Series A (5.45%)(a)	Aug. 01, 2027		33,400			33,400
1999 Series C (a)(c)	Aug. 01, 2028		41,150			41,150
1999 Series D (a)(c)	Aug. 01, 2028		41,000			41,000
1998 Series A (3.00%)(a)	Dec. 01, 2028		16,700			16,700
2006 Series E (5.76%)(b)	Nov. 17, 2031		27,000			27,000
1999 Series B (a)(c)	July 01, 2034		33,700			33,700
2005 Series E (5.84%)(b)	Dec. 05, 2035		24,000			24,000
2007 Series F (5.80%) (b)	Mar. 23, 2037		33,000			—
			403,950			370,950
Unamortized Discount on Debt			(58	)		(61	)
Total Long-term debt		$	403,892		$	370,889
Less: Current Portion			—			(33,000	)
Net Long-term debt		$	403,892		$	337,889

(a)	Promissory Notes issued in connection with the sale by NYSERDA of tax-exempt pollution control revenue bonds.
(b)	Issued under Central Hudson’s medium-term note program, described below.
(c)	Variable rate notes.
(d)	Issued pursuant to the 2001 Order approving the issuance by Central Hudson prior to June 30, 2004, of up to $100 million of unsecured medium-term notes.

          On September 21, 2006, the PSC issued an Order authorizing issuance of securities, in response to a financing petition Central Hudson filed on July 3, 2006. The Order authorizes Central Hudson to issue and sell up to $140 million of medium-term notes through December 31, 2009, and to enter into revolving credit agreements in an amount not to exceed $125 million and for periods not to exceed five years. On March 23, 2007, Central Hudson issued $33 million of 30-year, 5.80% Series F notes. The

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proceeds were used to redeem at maturity $33 million of 5-year, 5.87% Series D Notes, on March 28, 2007. On September 14, 2007, Central Hudson issued an additional $33 million of 10-year 6.028% Series F Notes. The proceeds were used to finance ongoing investments in capital improvements.

          Griffith had no third-party long-term debt outstanding as of December 31, 2007, or 2006. The only debt outstanding at CHEC is amounts borrowed from CH Energy Group.

Long-Term Debt Maturities

          All of CH Energy Group’s outstanding long-term debt has been issued by Central Hudson. See Note 15 - “Financial Instruments” for a schedule of long-term debt maturing or to be redeemed during the next five years and thereafter.

NYSERDA

          Central Hudson’s 1998 Series A promissory notes were issued in conjunction with the sale of tax-exempt pollution control revenue bonds by NYSERDA. The current applicable interest rate of 3.0% is scheduled to end on December 1, 2008, at which time the notes will be remarketed at then-current interest rates under the terms of the applicable indenture.

          Central Hudson’s 1999 NYSERDA Bonds Series B, C, and D are unsecured, variable rate bonds and are insured as to payment of principal and interest as they become due by a municipal bond insurance policy issued by AMBAC Assurance Corporation (“AMBAC”). In its Orders, the PSC has authorized deferred accounting for the interest costs of these bonds. This authorization provides for full recovery of the actual interest costs supporting utility operations, which represent approximately 94% of the total costs. The deferred balance under this accounting was $0.7 million and $0.2 million at December 31, 2007 and 2006, respectively, and is included in Regulatory Assets in CH Energy Group’s and Central Hudson’s Consolidated Balance Sheets. The deferred balances at June 30, 2006, were eliminated in accordance with the 2006 Rate Order. Management expects to address the ongoing deferred balances in future rate filings. To further mitigate the risk of rising interest rates, Central Hudson purchased derivative instruments known as interest rate caps to limit its exposure to a defined 4.5% interest rate ceiling for the period from April 1, 2004, to March 31, 2006. On April 1, 2006, Central Hudson replaced its interest rate cap agreement with a new two-year agreement through April 1, 2008, with similar terms as the expired agreement.

          Central Hudson has five debt issues totaling $166 million that are insured by AMBAC. On January 18, 2008, Fitch Ratings took rating actions on 137,504 AMBAC-insured issues, which included the downgrade of Central Hudson’s five issues from AAA to AA. Concurrent with its announced outlook for AMBAC, Fitch classified the issues as “on Rating Watch Negative” to reflect significant uncertainty with AMBAC’s financial situation. Central Hudson is not able to predict the impact that the downgrade of AMBAC and other bond insurers will have on the market for municipal debt, but does

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not currently believe this situation will have a significant impact on the Company’s earnings or its ability to obtain debt financing.

Debt Expense

          Expenses incurred in connection with Central Hudson’s debt issuance and any discount or premium on debt are deferred and amortized over the lives of the related issues. Expenses incurred on debt redemptions prior to maturity have been deferred and are usually amortized over the shorter of the remaining lives of the related extinguished issues or the new issues, as directed by the PSC.

NOTE 10 - POST-EMPLOYMENT BENEFITS

Pension Benefits

          Central Hudson has a non-contributory Retirement Income Plan (“Retirement Plan”) covering all of its unionized employees and all managerial, professional and supervisory employees hired before January 1, 2008. The Retirement Plan is a defined benefit plan, which provides pension benefits based on an employee’s compensation and years of service. In 2007, Central Hudson amended the Retirement Plan to eliminate these benefits for managerial, professional, and supervisory employees hired after January 1, 2008. The Retirement Plan’s assets are held in a trust fund (“Trust Fund”). Central Hudson has provided periodic updates to the benefit formulas stated in the Retirement Plan.

          Decisions to fund the Retirement Plan are based on several factors including the value of plan assets relative to plan liabilities, legislative requirements, and available corporate resources. The liabilities are affected by the interest rate used to determine benefit obligations. Central Hudson is currently reviewing the provisions of the Pension Protection Act of 2006 (“Pension Protection Act”) to determine funding requirements for the near-term and future periods.

          Central Hudson contributed $5.8 million and $7 million to the Retirement Plan in 2007 and 2006, respectively. The estimated contributions in 2008 range from $5-$10 million. The actual contributions could vary significantly based upon economic growth, corporate resources, projected investment returns, actual investment returns, inflation, and interest rate assumptions.

          In accordance with the provisions of SFAS 158, which was effective for the year ended December 31, 2006, Central Hudson’s pension liability balance (i.e., the funded status) at December 31, 2007 was $11.7 million and at December 31, 2006, was $47.8 million, including recognition for the difference between the projected benefit obligation (“PBO”) for pensions and the market value of the pension assets. These balances include consideration for non-qualified executive plans.

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          The following reflects the impact of the recording of SFAS 158 adjustments on the December 31, 2007, and 2006 Consolidated Balance Sheets of CH Energy Group and Central Hudson:

	December 31,
(In Thousands)	2007				2006
		SFAS 158				SFAS 158
Prefunded (accrued) pension costs prior to SFAS 158 adjustment		$	36,697			$	49,325
Additional liability required			(48,426	)			(97,172	)
Accrued pension liability per SFAS 158		$	(11,729	)		$	(47,847	)
Total offset to additional liability – Regulatory assets – Retirement Plan		$	48,426			$	97,172

          The recording of regulatory assets to offset the additional SFAS 158 liability is consistent with the PSC’s 1993 Statement of Policy regarding pensions and OPEB (“1993 PSC Policy”). Under the 1993 PSC Policy, differences between pension expense and rate allowances covering these costs are deferred for future recovery from or return to customers with carrying charges accrued on cash differences.

          It should be noted that the valuation of the PBO was determined as of the measurement date of September 30, 2007, using a 6.2% discount rate (as determined using the Citigroup Pension Discount Curve reflecting projected pension cash flows) and that a 0.25% change in the discount rate would affect the projection of PBO by approximately $1.3 million. The discount rate on the prior measurement date of September 30, 2006, was 5.80%. Declines in the market value of the Trust Fund’s investment portfolio, which occurred from 2000 through 2002, and a reduction in the discount rate used to determine the benefit obligation for pensions have resulted in a significant increase in pension costs since 2001. The 2006 Rate Order includes an increase in the rate allowances for pension expense and OPEB expense which more closely approximate the cost of providing these benefits. However, due to the volatility of these costs, authorization remains in effect for the deferral of any differences between rate allowances and actual costs under the 1993 PSC Policy. The 2006 Rate Order also authorized Central Hudson to offset significant deferred balances for pension expense and OPEB expense for the electric department with available deferred credit balances due to customers. Deferred pension and OPEB balances accumulated through June 30, 2006, for the natural gas department are being recovered via a seven-year amortization beginning July 1, 2007.

          Central Hudson accounts for pension activity in accordance with PSC-prescribed provisions, which among other things, require a ten-year amortization of actuarial gains and losses.

          In addition to the Retirement Plan, CH Energy Group’s and Central Hudson’s executives are covered under a non-qualified Supplemental Executive Retirement Plan.

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Estimates of Long-Term Rates of Return

          The expected long-term rate of return on Retirement Plan assets is 8.0%, net of investment expense. In determining the expected long-term rate of return on these assets, Central Hudson considered the current level of expected returns on risk-free investments (primarily United States government bonds), the historical level of risk premiums associated with other asset classes, and the expectations of future returns over a 20-year time horizon on each asset class, based on the views of leading financial advisors and economists. The expected return for each asset class was then weighted based on the Retirement Plan’s target asset allocation. Central Hudson also considered expectations of value-added by active management, net of investment expenses.

Retirement Plan Policy and Strategy

          The Retirement Plan seeks to match the long-term nature of its funding obligations with investment objectives for long-term growth and income. Retirement Plan assets are invested in accordance with sound investment practices that emphasize long-term investment fundamentals. The Retirement Plan recognizes that assets are exposed to risk and the market value of assets may vary from year to year. Potential short-term volatility, mitigated through a well-diversified portfolio structure, is acceptable in accordance with the objective of capital appreciation over the long-term.

          The asset allocation strategy employed in the Retirement Plan reflects Central Hudson’s return objectives and risk tolerance. Asset allocation targets, expressed as a percentage of the market value of the Retirement Plan, are summarized in the table below:

Asset Class	Minimum		Target Average		Maximum
Domestic Large/Medium Capitalization Stocks	31	%	33	%	35	%
Domestic Small/Medium Capitalization Stocks	9	%	12	%	14	%
International Equity Securities	13	%	15	%	17	%
Alternate Investments	0	%	5	%	10	%
Other Investments	0	%	0	%	10	%
Fixed Income Securities	30	%	35	%	40	%
Cash and Cash Equivalents	0	%	0	%	10	%

          Due to the dynamic nature of market value fluctuations, Retirement Plan assets will require rebalancing from time-to-time to maintain the target asset allocation. The Retirement Plan recognizes the importance of maintaining a long-term strategic allocation and does not intend any tactical asset allocation or market timing asset allocation shifts.

          The Retirement Plan seeks to earn a return commensurate with the risk of its underlying assets. The benchmark index is currently comprised of 33% Russell 1000 Stock Index; 12% Russell 2500 Stock Index; 15% Morgan Stanley Capital International

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Europe, Australasia and Far East (MSCI EAFE) International Stock Index (Net); 5% Russell Open-End Real Estate Mean; and 35% LB Aggregate Bond Index. The Retirement Plan seeks to exceed the average annual return of this benchmark over a three to five year rolling time period and a full market cycle. It is understood that there can be no guarantees about the attainment of the Retirement Plan’s return objectives.

          The Retirement Plan utilizes two asset managers.

Other Post-Retirement Benefits

          Central Hudson provides certain health care and life insurance benefits for retired employees through its post-retirement benefit plans. Substantially all of Central Hudson’s unionized employees and managerial, professional and supervisory employees (“non-union”) hired prior to January 1, 2008, may become eligible for these benefits if they reach retirement age while employed by Central Hudson. In order to reduce the total costs of these benefits, Central Hudson amended its OPEB programs for existing non-union, and certain retired employees effective January 1, 2008. Benefit plans for non-union active employees were similarly amended. Programs were also amended to eliminate post-retirement benefits for non-union employees hired after January 1, 2008. Benefits for retirees and active employees are provided through insurance companies whose premiums are based on the benefits paid during the year.

          The significant assumptions used to account for these benefits are the discount rate, the expected long-term rate of return on plan assets and the health care cost trend rate. Central Hudson selects the discount rate using the Citigroup Pension Discount Curve reflecting projected cash flows. The estimates of long-term rates of return and the investment policy and strategy for these plan assets are the same as used for pension benefits previously discussed in this Note. The estimates of health care cost trend rates are based on a review of actual recent trends and projected future trends.

          Central Hudson fully recovers its net periodic post-retirement benefit costs in accordance with the 1993 PSC Policy. Under these guidelines, the difference between the amounts of post-retirement benefits recoverable in rates and the amounts of post-retirement benefits determined by an actuarial consultant under SFAS No. 106, titled Employers Accounting for Post-retirement Benefits Other Than Pensions, as amended by SFAS No. 158, is deferred as either a regulatory asset or a regulatory liability, as appropriate.

          The effect of the Medicare Act was reflected in 2007 and 2006 assuming Central Hudson will continue to provide a prescription drug benefit to retirees that is at least actuarially equivalent to Medicare Part D and that Central Hudson will receive the federal subsidy.

          In accordance with the provisions of SFAS 158, Central Hudson’s liability (i.e. the funded status) for OPEB at December 31, 2007 was $55.6 million and $68.8 million at December 31, 2006 including recognition for the difference between the Accumulated Benefit Obligation (“ABO”) and the market value of other post-retirement assets. The

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additional liability for the difference between the ABO and the market value of other post-retirement assets at December 31, 2007 and 2006 of $15.6 million and $36.1 million, respectively, was offset by recording a regulatory asset in accordance with the 1993 PSC Policy. Central Hudson and Griffith each participate in a 401(k) retirement plan for their employees. Griffith also provides a discretionary profit-sharing benefit for their employees. The 401(k) plans provide for employee tax-deferred salary deductions for participating employees and their respective employer matches contributions made by participating employees. The matching benefit varies by employer and employee group. For Central Hudson, the cost of its matching contributions was $1.6 million for 2007, $1.5 million for 2006, and $1.4 million for 2005. For Griffith, the cost of its matching contributions was $783,000 in 2007, $605,000 in 2006, and $557,000 in 2005. Profit sharing contributions made by Griffith were $665,000, $591,000, and $452,000, for 2007, 2006, and 2005, respectively.

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          Reconciliations of Central Hudson’s pension and other post-retirement plans’ benefit obligations, plan assets, and funded status, as well as the components of net periodic pension cost and the weighted average assumptions (excluding Griffith employees not covered by these plans) are reported on the following chart.

	Pension Benefits						Other Benefits
	2007			2006			2007			2006
	(In Thousands)						(In Thousands)
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	414,474		$	409,907		$	156,520		$	168,890
Service cost		7,908			7,939			3,788			3,323
Interest cost		23,711			22,307			9,806			8,020
Participant contributions		—			—			391			401
Plan amendments		—			(45	)		(27,392	)		—
Benefits paid		(23,103	)		(22,072	)		(6,482	)		(6,309	)
Actuarial (gain) loss		(14,104	)		(3,562	)		11,584			(17,805	)
Benefit Obligation at End of Plan Year	$	408,886		$	414,474		$	148,215		$	156,520
Change in Plan Assets:
Fair Value of plan assets at beginning of year	$	359,627		$	349,813		$	87,702		$	80,632
Adjustment/other		—			—			221			—
Actual return on plan assets		49,552			33,114			4,201			9,855
Employer contributions		13,347			513			6,547			3,193
Participant contributions		—			—			391			401
Net transfer in/(out)		—			—			186			—
Benefits paid		(23,103	)		(22,072	)		(6,482	)		(6,309	)
Administrative expenses		(2,266	)		(1,741	)		(111	)		(70	)
Fair Value of Plan Assets at End of Plan Year	$	397,157		$	359,627		$	92,655		$	87,702

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	Pension Benefits						Other Benefits
(In Thousands)	2007			2006			2007			2006
Reconciliation of Funded Status:
Funded Status at end of year	$	(11,729	)	$	(54,847	)	$	(55,560	)	$	(68,818	)
Employer Contributions between measurement date and fiscal year-end		—			7,000			—			—
Amounts Recognized on Consolidated Balance Sheet:
Noncurrent assets	$	—		$	—		$	—		$	—
Current liabilities		(527	)		(548	)		—			—
Noncurrent liabilities		(11,202	)		(47,299	)		(55,560	)		(68,818	)
Net amount recognized on Consolidated Balance Sheet (after SFAS 158)		(11,729	)		(47,847	)		(55,560	)		(68,818	)
Regulatory asset:
- Net (loss) gain		32,397			79,167			39,338			32,122
- Prior service costs (credit)		16,029			18,005			(36,569	)		(11,394	)
- Transition obligation		—			—			12,816			15,381
Components of Net Periodic Benefit Cost:
Service cost	$	7,908		$	7,939		$	3,788		$	3,323
Interest cost		23,711			22,307			9,806			8,020
Expected return on plan assets		(27,997	)		(26,836	)		(6,778	)		(5,985	)
Amortization of prior service cost (credit)		1,976			2,167			(2,217	)		(1,256	)
Amortization of transitional obligation		—			—			2,566			2,566
Amortization of net (gain) loss		13,377			12,961			6,521			4,306
Net Periodic Benefit Cost	$	18,975		$	18,538		$	13,686		$	10,974

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Other Changes in Plan Assets and Benefit Obligation Recognized in Regulatory Assets:
Net loss (gain)	$	(33,393	)	$	—		$	13,737		$	—
Amortization of net (loss) gain		(13,377	)		—			(6,521	)		—
Prior service cost (credit)		—			—			(27,392	)		—
Amortization of prior service cost		(1,976	)		—			2,217			—
Transitional obligation		—			—			—			—
Amortization of transitional obligation		—			—			(2,565	)		—
Regulatory asset attributable to change from prior year		—			38,233			—			36,109
Total recognized in regulatory asset		(48,746	)		38,233			(20,524	)		36,109
Total recognized in net periodic benefit cost and regulatory asset	$	(29,771	)	$	56,771		$	(6,838	)	$	47,083
Weighted-average assumptions used to determine benefit obligations at September 30 for Pension Benefits and December 31 for Other Benefits:
Discount rate		6.20	%		5.80	%		6.40	%		5.90	%
Rate of compensation increase		5.00	%		4.50	%		5.00	%		4.50	%
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:
Discount rate		5.80	%		5.50	%		5.90	%		5.50	%
Expected long-term rate of return on plan assets		8.00	%		8.00	%		8.00	%		7.80	%
Rate of compensation increase		4.50	%		4.50	%		4.50	%		4.50	%
	Pension Benefits						Other Benefits
(In Thousands)	2007			2006			2007			2006
Assumed health care cost trend rates at December 31:
Health care cost trend rate assumed for next year		N/A			N/A			9.50	%		9.50	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)		N/A			N/A			5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate		N/A			N/A			2015			2014
Pension plans with accumulated benefit obligations in excess of plan assets:
Projected benefit obligation	$	9,106		$	414,474			N/A			N/A
Accumulated benefit obligation		7,582			380,873			N/A			N/A
Fair Value of plan assets		—			359,627			N/A			N/A

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          The ABO for defined benefit pension plans was $375.4 million and $380.9 million at December 31, 2007, and 2006, respectively.

          The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from regulatory assets into net periodic benefit cost over the next fiscal year are $12.4 million and $2.1 million, respectively. The estimated net loss, prior service cost (credit) and transitional obligation for the other defined benefit post-retirement plans that will be amortized from regulatory assets into net periodic benefit cost over the next fiscal year is $6.6 million, $(3.6) million, and $2.6 million, respectively.

          Central Hudson’s pension and other post-retirement plans’ weighted average asset allocations at December 31, 2007, and 2006, by asset category are as follows:

	Pension Plan				Other Plans
	2007		2006		2007		2006
Equity Securities	57.3	%	58.4	%	64.5	%	65.3	%
Debt Securities	34.6	%	34.4	%	32.4	%	33.3	%
Alternate Investment	7.6	%	6.7	%	—		—
Other	0.5	%	0.5	%	3.1	%	1.4	%
Total	100	%	100	%	100	%	100	%

For the pension plan and other benefit plans (other than the 401(k) retirement plans), equity securities include no CH Energy Group common stock at December 31, 2007, and 2006, respectively. Effective January 20, 2004, a CH Energy Group common stock investment fund was added as an investment option under the 401(k) retirement plans. This investment option was discontinued effective December 31, 2005.

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          Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A 1% change in assumed health care cost trend rates would have the following effects:

	One Percentage Point Increase			One Percentage Point Decrease
	(In Thousands)
Effect on total of service and interest cost components for 2007		$	1,854		$	(1,500	)
Effect on year-end 2007 post-retirement benefit obligation		$	14,991		$	(12,522	)

          Employer contributions in 2007 to fund OPEB were $1.7 million for the 2006 plan year, and $4.8 million for the 2007 plan year, with an additional estimated $1.9 million for the 2007 plan year to be funded in the first quarter of 2008. Determinations of future funding depend on a number of factors, including the discount rate, expected return, and medical claims assumptions used. If these factors remain stable, annual funding for the next few years is expected to approximate the 2007 amount.

          Estimated Future Benefit Payments: The following benefit payments, which reflect expected future service as appropriate, are expected to be paid:

Year	Pension Benefits - Gross			Other Benefits - Gross			Other Benefits – Net(1)
	(In Thousands)			(In Thousands)			(In Thousands)
2008		$	25,965		$	7,669		$	7,130
2009			26,534			8,409			7,836
2010			27,188			9,031			8,417
2011			27,806			9,753			9,104
2012			28,559			10,233			9,538
2013 – 2017			150,551			56,989			53,541

⁽¹⁾ Estimated benefit payments reduced by estimated gross amount of Medicare Act subsidy receipts expected.

NOTE 11 - EQUITY-BASED COMPENSATION

          CH Energy Group’s Long-Term Performance-Based Incentive Plan (“2000 Plan”), adopted in 2000 and amended in 2001 and 2003, reserves 500,000 shares of CH Energy Group’s common stock for awards to be granted under the 2000 Plan. The 2000 Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, performance shares, and performance units. No participant may be granted total awards in excess of 150,000 shares over the life of the 2000 Plan. Stock options granted to officers of CH Energy Group and its subsidiaries are exercisable over a period of ten years, with 40% of the options vesting after two years and 20% of the

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options vesting each year thereafter for the following three years. Stock options granted to non-employee Directors are immediately exercisable.

          The 2000 Plan was amended in the third quarter of 2003. The amendment allows executives to defer receipt of performance shares and performance units in accordance with the terms of CH Energy Group’s Directors and Executives Deferred Compensation Plan. Also, an amendment to the previously effective Stock Plan for Outside Directors provided for shares of stock previously accrued for retired Directors to be paid in the form of cash and provides that active Directors could elect to transfer previously accrued shares payable to them to CH Energy Group’s Directors and Executives Deferred Compensation Plan. In addition, the amendment freezes future participation and future accruals under the 2000 Plan.

          In 2006, CH Energy Group adopted a Long-Term Equity Incentive Plan (the “2006 Plan”) to replace the 2000 Plan. The 2006 Plan was approved by CH Energy Group’s shareholders on April 25, 2006. The 2000 Plan has been terminated, with no new awards to be granted under such plan. Outstanding awards granted under the 2000 Plan will continue in accordance with their terms and the provisions of the 2000 Plan.

          The 2006 Plan reserves up to a maximum of 300,000 shares of CH Energy Group’s common stock for awards to be granted under the 2006 Plan. Awards may consist of stock option rights, stock appreciation rights, performance shares, performance units, restricted shares, restricted stock units, and other awards that CH Energy Group’s Compensation Committee of its Board of Directors (“Compensation Committee”) may authorize. The Compensation Committee may also, from time-to-time and upon such terms and conditions as it may determine, authorize the granting to non-employee Directors of stock option rights, stock appreciation rights, restricted shares, and restricted stock units.

          In addition to the aggregate limit in the awards described above, the 2006 Plan imposes various sub-limits on the number of shares of CH Energy Group’s common stock that may be issued or transferred under the 2006 Plan. The aggregate number of shares of common stock actually issued or transferred by CH Energy Group upon the exercise of incentive stock options shall not exceed 300,000 shares. No participant shall be granted stock option rights and stock appreciation rights, in aggregate, for more than 15,000 shares of common stock during any calendar year. No participant in any calendar year shall receive an award of performance shares or restricted shares that specify management objectives, in the aggregate, for more than 20,000 shares of common stock, or performance units having an aggregate maximum value as of their respective date of grant in excess of $1 million. The number of shares of common stock issued as stock appreciation rights, restricted shares, and restricted stock units (after taking forfeitures into account) shall not exceed, in the aggregate, 100,000 shares of common stock.

          CH Energy Group adopted SFAS 123(R) effective January 1, 2006, using the modified prospective application with no significant impact on its financial condition, results of operations, or cash flows. Under this new application, all new awards as of

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January 1, 2006, and any outstanding awards that may be modified, repurchased, or cancelled will be accounted for under SFAS 123(R).

          The following table summarizes information concerning stock options granted through December 31, 2007:

Date of Grant	Exercise Price	Number of Options Granted	Number of Options Outstanding	Weighted Average Remaining Life in Years	Number of Options Exercisable
January 1, 2000	$ 31.94	30,300	320	2.00	320
January 1, 2001	$ 44.06	59,900	21,560	3.00	21,560
January 1, 2003	$ 48.62	36,900	18,420	5.00	18,420
		127,100	40,300	3.91	40,300

          All options are fully vested as of December 31, 2007. The fair market values per option of CH Energy Group stock options granted in 2003, 2001, and 2000 are $6.51, $4.41, and $4.46, respectively. These fair market values were estimated as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

	2003		2001		2000
Risk-free interest rate	4.40	%	4.78	%	6.36	%
Expected life – in years	10		5		5
Expected stock volatility	17.50	%	20.06	%	15.59	%
Dividend yield	4.4	%	5.4	%	5.4	%

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          A summary of the status of stock options awarded to executives and non-employee Directors of CH Energy Group under the 2000 Plan as of December 31, 2007, and changes are as follows:

		Stock Options			Weighted Average Exercise Price			Weighted Average Remaining Life in Years
Outstanding at 12/31/04			91,400			$	45.15	6.75 years
	Granted 1/1/05		—				—	—
	Exercised		(18,100	)		$	40.98
	Forfeited		—				—
	Expired/Cancelled		—				—
Outstanding at 12/31/05			73,300			$	46.18	5.99 years
	Granted 1/1/06		—				—	—
	Exercised		(28,040	)		$	46.70
	Forfeited		—				—
	Expired/Cancelled		—				—
Outstanding at 12/31/06			45,260			$	45.87	4.82 years
	Granted 1/1/07		—				—	—
	Exercised		(4,780	)		$	44.23
	Forfeited		(180	)		$	48.62
	Expired/Cancelled		—				—
Total Outstanding at 12/31/07			40,300			$	46.05	3.91 years

Total Common Stock Shares Outstanding	15,762,000
Potential Dilution	0.3%

          A total of 4,780 non-qualified stock options with exercise prices of $44.06 and $48.62 were exercised during the year ended December 31, 2007. Total intrinsic value of options exercised was not material.

          Compensation expense related to stock options recorded for the years ended December 31, 2007, 2006, and 2005, was not material. The balance accrued at December 31, 2007 for outstanding stock options was $134,000. The intrinsic value of options outstanding was not material.

          A summary of the status of performance shares granted to executives under the 2000 Plan and 2006 Plan as of December 31, 2007 is as follows:

Plan	Grant Date	Grant Price	Performance Shares Granted	Performance Shares Outstanding at 12/31/07
2000 Plan	March 24, 2005	$ 47.45	23,000	20,900
2006 Plan	April 25, 2006	$ 46.15	20,710	18,990
2006 Plan	January 25, 2007	$ 51.09	20,920	20,480

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          Performance shares from the 2005 grant have completed the required performance period, with an estimated 88% payout earned. The ultimate number of shares earned under the awards is based on metrics established by the Compensation Committee at the beginning of the award cycle. Compensation expense is recorded as performance shares are earned over the relevant three-year life of the performance share grant prior to its award. Due to the retirement of one of CH Energy Group’s executive officers on January 1, 2007, a pro-rated number of shares under the 2005 and 2006 grants were paid out in April 2007. Additionally, outstanding performance shares for all grants were reduced in the second quarter of 2007 for forfeitures. Compensation expense recorded in 2007 and 2006 related to performance shares was $495,000 and $713,000, respectively. Compensation expense recorded in 2005 related to performance shares was not material.

          The determination of compensation expense for performance shares is based on the use of the binomial method, which reflects the following assumptions:

	For year ended December 31,
	2007			2006			2005
Stock price	$	44.54		$	52.80		$	45.90
Dividend yield		4.8	%		4.2	%		4.7	%
Performance period (in years)		3			3			3
Risk-free rates of return:
One year		3.34	%		5.00	%		4.38	%
Two year		3.05	%		4.82	%		4.41	%
Three year		3.07	%		4.74	%		4.37	%

          Other considerations in the determination of compensation expense for performance shares include the grant price for each individual grant, estimated forfeitures, and historical percentile performance rank.

          CH Energy Group has equity compensation for non-employee Directors. The equity component of annual compensation for each non-employee Director is fixed at a number of phantom shares of CH Energy Group common stock. CH Energy Group is recognizing compensation expense and accruing a liability for these phantom shares. Each Director receives the current equivalent of $55,000 in phantom shares per year for each year of service as a Director. These phantom shares are deferred until the Director’s termination of service. The compensation expense recognized by CH Energy Group in relation to these phantom shares was $387,000 in 2007, $433,000 in 2006, and $380,000 in 2005.

          Effective January 1, 2008, CH Energy Group adopted new director stock ownership guidelines, which require each Director to accumulate within 5 years, and to hold during his or her service on the board, at least 6,000 shares of CH Energy Group’s common stock (in phantom shares and/or common stock). This amendment to the plan provides that if a Director satisfies this required level of stock ownership, he or she will receive the cash value of equity compensation in lieu of additional phantom shares.

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This value will either be paid in cash or deferred under CH Energy Group’s Directors and Executives Deferred Compensation Plan at the election of the Director.

          Effective January 2, 2008, restricted shares were granted under the 2006 Plan to certain officers and key employees of Griffith and an officer of CHEC. The shares granted were issued from CH Energy Group’s treasury stock on January 2, 2008. These shares were issued at fair market value on the date of grant, and for Griffith, are subject to a three-year vesting period contingent upon continued employment of each individual. Shares granted to the officer of CHEC vest ratably over the three-year vesting period contingent upon continued employment. Dividends paid on restricted shares owned by Griffith officers and key employees will be automatically deferred and re-invested in additional restricted shares.

          For additional discussion regarding the dilutive effects of equity-based compensation, see Note 1 – “Summary of Significant Accounting Policies” under the caption “Earnings Per Share.”

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Electricity Purchase Commitments

          Notwithstanding the sale of its major generating assets, Central Hudson remains obligated to supply electricity to its retail electric customers. Under the Settlement Agreement, Central Hudson’s retail customers may elect to procure electricity from third-party suppliers or may continue to rely on Central Hudson. As part of its efforts to supply customers who continue to rely on Central Hudson for their energy supply, Central Hudson entered into an agreement with Constellation to purchase capacity and energy, comprising approximately 8% of the output of the Nine Mile 2 Plant at negotiated prices during the ten-year period beginning on the sale of Central Hudson’s interest in the Nine Mile 2Plant on November 7, 2001, and ending November 30, 2011. The agreement is “unit-contingent’’ in that Constellation is only required to supply electricity if the Nine Mile 2 Plant is operating. Following the expiration of this purchase agreement, a revenue sharing agreement with Constellation will begin, which will provide Central Hudson with a hedge against electricity price increases and could provide additional future revenue for Central Hudson through 2021. In the Constellation agreements, electricity is purchased at defined prices that escalate over the life of the contract. The capacity and energy supplied under the agreement with Constellation in 2007 was sufficient to supply approximately 12% of Central Hudson’s total system requirements or 737,835 MWh.

          On November 12, 2002, Central Hudson entered into an agreement with Entergy Nuclear Indian Point 2 LLC and Entergy Nuclear Indian Point 3 LLC to purchase electricity (but not capacity) on unit-contingent basis at defined prices from January 1, 2005, to and including December 31, 2007. On March 6, 2007, Central Hudson entered into new agreements with Entergy Nuclear Power Marketing, LLC to purchase electricity (but not capacity) on a unit-contingent basis at defined prices from January 1, 2008 through December 31, 2010. On an annual basis, the electricity purchased through the

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Entergy contracts represents approximately 16% of Central Hudson’s full-service customer requirements, or 807,026 MWh. Purchases under these contracts are supplemented by shorter-term contracts, such as the Dynegy contract discussed below, contracts for differences, and by purchases from the NYISO, which oversees the bulk electricity transmission system, and the capacity market in New York State, and other parties. On January 30, 2008, Central Hudson entered into an 11-month agreement with Dynegy Power Marketing, Inc. to purchase 589,200 MWh of electricity on a unit-contingent basis at defined prices from February 1, 2008 to December 31, 2008.

Operating Leases

          CH Energy Group and its subsidiaries have entered into agreements with various companies which provide products and services to be used in their normal operations. These agreements include operating leases for the use of data processing and office equipment, vehicles, office space, and bulk petroleum storage locations. The provisions of these leases generally provide for renewal options and some contain escalation clauses.

          Operating lease rental payment amounts charged to expense by CH Energy Group and its subsidiaries were $3.5 million in 2007, $3.1 million in 2006, and $3.1 million in 2005. Included in these amounts are payments for contingent rentals, which amounted to $555,000 in 2007, $541,000 in 2006, and $575,000 in 2005. Contingent rentals are those operating lease agreements that contain provisions for a change in lease payments subsequent to the inception of the lease.

          Operating lease rental payment amounts charged to expense by Central Hudson were $2.4 million in 2007, $2.2 million in 2006, and $2.3 million in 2005. Included in these amounts are payments for contingent rentals, which amounted to $555,000 in 2007, $541,000 in 2006, and $513,000 in 2005.

          Future minimum lease payments excluding executory costs, such as property taxes and insurance, are included in the following table of Other Commitments. All leases are non-cancelable, recognizing payments on a straight-line basis over the minimum lease term. Contingent rental payments are adjusted incrementally based on the Consumer Price Index, as specified in the terms of each lease agreement, and are considered when calculating the future minimum payments.

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Other Commitments

          The following is a summary of commitments for CH Energy Group and its affiliates as of December 31, 2007:

	Projected Payments Due By Period (In Thousands)
	Less than 1 year		Year Ending 2009		Year Ending 2010		Year Ending 2011		Year Ending 2012		Total
Operating Leases	$	3,307	$	3,108	$	3,070	$	2,833	$	2,517	$	14,835
Construction/Maintenance & Other Projects(1)		13,872		5,429		2,354		1,397		917		23,969
Purchased Electric Contracts(2)		166,887		102,026		98,225		36,080		4,180		407,398
Purchased Natural Gas Contracts(2)		69,204		46,003		39,771		22,968		10,189		188,135
Purchased Fixed Liquid Petroleum Contracts		4,938		—		—		—		—		4,938
Purchased Variable Liquid Petroleum Contracts(3)		6,572		—		—		—		—		6,572
Total	$	264,780	$	156,566	$	143,420	$	63,278	$	17,803	$	645,847

(1)	Including Specific, Term, and Service Contracts, briefly defined as follows: Specific Contracts consist of work orders for construction; Term Contracts consist of maintenance contracts; and Service Contracts include consulting, educational, and professional service contracts. The operations and maintenance contract for Lyonsdale (which includes a base management fee included in these totals for years 2008-2009) also contains provisions for additional performance-based compensation that are not included in the amounts shown.
(2)	Purchased electric and purchased natural gas costs for Central Hudson are fully recovered via their respective regulatory cost adjustment mechanisms. The less than one year total includes a $50 million Dynegy 2008 contract executed on January 30, 2008.
(3)	Estimated based on pricing at December 31, 2007.

          The following is a summary of commitments for Central Hudson as of December 31, 2007:

	Projected Payments Due By Period (In Thousands)
	Less than 1 year		Year Ending 2009		Year Ending 2010		Year Ending 2011		Year Ending 2012		Total
Operating Leases	$	2,001	$	1,951	$	1,944	$	1,939	$	1,918	$	9,753
Construction/Maintenance & Other Projects(1)		13,407		5,101		2,219		1,389		909		23,025
Purchased Electric Contracts(2)		166,887		102,026		98,225		36,080		4,180		407,398
Purchased Natural Gas Contracts(2)		69,204		46,003		39,771		22,968		10,189		188,135
Total	$	251,499	$	155,081	$	142,159	$	62,376	$	17,196	$	628,311

(1)	Including Specific, Term, and Service Contracts, as defined in footnote (1) of the preceding chart.
(2)	Purchased electric and purchased natural gas costs for Central Hudson are fully recovered via their respective regulatory cost adjustment mechanisms. The less than one year total includes a $50 million Dynegy 2008 contract executed on January 30, 2008.

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CONTINGENCIES

City of Poughkeepsie

          On January 1, 2001, a fire destroyed a multi-family residence on Taylor Avenue in the City of Poughkeepsie, New York resulting in several deaths and damage to nearby residences. Eight separate lawsuits arising out of this incident have been commenced against Central Hudson and other defendants. The basis for the claimed liability of Central Hudson in these actions is that it was allegedly negligent in the supply of natural gas. The suits seek an aggregate of $528 million in compensatory damages. Central Hudson has notified its insurance carrier, has denied liability, and is defending the lawsuits. Based on information known to Central Hudson at this time, including information from ongoing discovery proceedings in the lawsuits, Central Hudson believes that the likelihood it will have a liability in these lawsuits is remote.

Environmental Matters

Central Hudson:

          Air

          In October 1999, Central Hudson was informed by the New York State Attorney General (“Attorney General”) that the Danskammer Point Steam Electric Generating Station (“Danskammer Plant”) was included in an investigation by the Attorney General’s Office into the compliance of eight older New York State coal-fired power plants with federal and state air emissions rules. Specifically, the Attorney General alleged that Central Hudson “may have constructed, and continues to operate, major modifications to the Danskammer Plant without obtaining certain requisite preconstruction permits.” In March 2000, the Environmental Protection Agency (“EPA”) assumed responsibility for the investigation. Central Hudson has completed its production of documents requested by the Attorney General, the New York State Department of Environmental Conservation (“DEC”), and the EPA, and believes any permits required for these projects were obtained in a timely manner. Notwithstanding Central Hudson’s sale of the Danskammer Plant on January 30, 2001, Central Hudson could retain liability depending on the type of remedy, if any, imposed in connection with this matter. Central Hudson presently has insufficient information with which to predict the outcome of this matter.

Former Manufactured Gas Plant Facilities

          Like most late 19^th and early 20^th century utilities in the northeastern United States, Central Hudson and its predecessors owned and operated manufactured gas plants (“MGPs”) to serve their customers’ heating and lighting needs. MGPs manufactured gas from coal and oil. This process produced certain by-products that may pose risks to human health and the environment.

          The DEC, which regulates the timing and extent of remediation of MGP sites in New York State, has notified Central Hudson that it believes Central Hudson or its predecessors at one time owned and/or operated MGPs at eight sites in Central

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Hudson’s franchise territory. The DEC has further requested that Central Hudson investigate and, if necessary, remediate these sites under a Consent Order, Voluntary Cleanup Agreement, or Brownfield Cleanup Agreement. The DEC has placed five of these sites on the New York State Environmental Site Remediation Database. A number of the eight sites are now owned by third parties and have been redeveloped for other uses. The current status of the eight sites is as follows:

SITE	STATUS
#1 Beacon, NY	Remediation substantially complete.
#2 Newburgh, NY	Remediation complete in one area. Pre-design studies being conducted at two additional areas under a NYSDEC-approved consent agreement.
#3 Laurel Street, Poughkeepsie, NY	Remediation plan developed under Voluntary Cleanup Agreement awaiting NYSDEC approval.
#4 North Water Street, Poughkeepsie, NY	Investigation currently underway under NYSDEC-approved Brownfield Clean-up Agreement.
#5 Kingston, NY	Brownfield Clean-up Agreement application filed with NYSDEC; awaiting NYSDEC approval prior to beginning site investigation.
#6 Catskill, NY	Investigation currently underway under NYSDEC-approved Brownfield Clean-up Agreement.
#7 Saugerties, NY	Central Hudson does not believe it has any liability.
#8 Bayeaux Street, Poughkeepsie, NY	Central Hudson does not believe it has any liability.

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          Central Hudson has developed an estimate of the potential remediation cost for sites # 2, 3, 4 and 5 indicating that the total cost for the four sites could exceed $125 million over the next 30 years. This estimate was based on proposed remediation plans for sites # 2 and 3, and on conceptual plans for sites # 4 and 5. The cost estimate involves assumptions relating to investigation expenses, remediation costs, potential future liabilities, and post-remedial monitoring costs, and is based on a variety of factors including projections regarding the amount and extent of contamination, the location, size and use of the sites, proximity to sensitive resources, status of regulatory investigations, and information regarding remediation activities at other MGP sites in New York State. This cost estimate also assumes that proposed or anticipated remediation techniques are technically feasible and that proposed remediation plans receive DEC approval. Further, this estimate could change materially based on changes to technology relating to remedial alternatives and changes to current laws and regulations.

          Prior to 2007, Central Hudson recorded a $19.5 million estimated liability for sites # 2 and 3 based on estimates of remediation costs for the proposed clean-up plans. Based on the actual expenditures from the remediation completed to date and the latest cost projections, Central Hudson has increased its recorded estimated liability by $1.7 million. As of December 31, 2007, $16.1 million of the recorded estimated liability has not been spent; $2.5 million of the recorded estimated liability is expected to be spent over the next twelve months.

          No amounts have been recorded in connection with sites # 4 and 5, for which Central Hudson has estimated future costs developed from conceptual plans. Absent DEC-approved remediation plans, management cannot estimate what cost, if any, will actually be incurred. The portion of the $125 million referenced above related to these two sites is approximately $88 million.

          Central Hudson has performed limited site investigations at site # 6 and does not have sufficient information to estimate its potential remediation cost.

          With regard to sites # 7 and 8, as previously stated, Central Hudson now believes that it has no liability for these sites and therefore does not have sufficient information to estimate its potential remediation cost if any.

          Central Hudson spent approximately $5.9 million in 2007 related to site investigation and remediation of which $0.8 million represents total expenditures for site #1 remediation. Based on the 2006 Rate Order, on July 1, 2007, Central Hudson started the recovery of a rate allowance for MGP Site Investigation & Remediation Costs which totaled $0.8 million as of December 31, 2007.

          Future remediation activities and costs may vary significantly from the assumptions used in Central Hudson’s current cost estimates, and these costs could have a material adverse effect (the extent of which cannot be reasonably determined) on the financial condition, results of operations and cash flows of CH Energy Group and Central Hudson if Central Hudson were unable to recover all or a substantial portion of these costs via collection in rates from customers and/or through insurance.

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          Central Hudson has put its insurers on notice and intends to seek reimbursement from its insurers for the costs of any liabilities. Certain of these insurers have denied coverage. Furthermore, pursuant to the 2006 Order, Central Hudson is permitted to defer for future recovery the differences between actual costs for MGP site investigation and remediation and the associated rate allowances, with carrying charges to be accrued on the deferred balances at the authorized pre-tax rate of return.

          Little Britain Road

          In December 1977, Central Hudson purchased property at 610 Little Britain Road, New Windsor, New York. In 1992, the DEC informed Central Hudson that the DEC was preparing to conduct a Preliminary Site Assessment (“PSA”) of the site and in 1995, the DEC issued an Order of Consent in which Central Hudson agreed to conduct the PSA. In 2000, following completion of the PSA, Central Hudson and the DEC entered into a Voluntary Cleanup Agreement (“VCA”) whereby Central Hudson removed approximately 3,100 tons of soil and has conducted a routine groundwater sampling program since that time. Groundwater sampling results show the presence of certain contaminants at levels exceeding DEC criteria. Deep groundwater wells were installed in 2005 and 2006, which also show contaminants exceeding DEC criteria. The DEC responded with a request for a plan to address the situation. Negotiations between DEC and Central Hudson regarding additional site work and closure of the VCA are ongoing. Central Hudson has submitted a proposal to DEC for limited additional site work, and closure of the VCA. Although at this time Central Hudson does not have sufficient information to estimate potential remediation costs, Central Hudson has put its insurers on notice regarding this matter and intends to seek reimbursement from its insurers for amounts, if any, for which it may become liable. Neither CH Energy Group nor Central Hudson can predict the outcome of this matter.

          Newburgh Consolidated Iron Works

          By letter from the EPA dated November 28, 2001, Central Hudson, among others, was served with a Request For Information pursuant to the Comprehensive Environmental Response, Compensation and Liability Act regarding any shipments of scrap or waste materials that Central Hudson may have made to Consolidated Iron and Metal Co., Inc. (“Consolidated Iron”), a Superfund site located in Newburgh, New York. Sampling by the EPA indicated that lead and polychlorinated biphenyls (or “PCBs”) are present at the site, and the EPA subsequently commenced a remedial investigation and feasibility study at the site. No records were found which indicate that the material sold by Central Hudson to Consolidated Iron contained or was a hazardous substance. Central Hudson has put its insurers on notice regarding this matter and intends to seek reimbursement from its insurers for amounts, if any, for which it may become liable. Neither CH Energy Group nor Central Hudson can predict the outcome of this investigation at the present time.

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          Asbestos Litigation

          Since 1987, Central Hudson, along with many other parties, has been joined as a defendant or third-party defendant in 3,310 asbestos lawsuits commenced in New York State and federal courts. The plaintiffs in these lawsuits have each sought millions of dollars in compensatory and punitive damages from all defendants. The cases were brought by or on behalf of individuals who have allegedly suffered injury from exposure to asbestos, including exposure which allegedly occurred at the Roseton Plant and the Danskammer Plant.

          As of January 15, 2008, of the 3,310 asbestos cases brought against Central Hudson, 1,183 remain pending. Of the cases no longer pending against Central Hudson, 1,976 have been dismissed or discontinued without payment by Central Hudson, and Central Hudson has settled 151 cases. Central Hudson is presently unable to assess the validity of the remaining asbestos lawsuits; accordingly, it cannot determine the ultimate liability relating to these cases. Based on information known to Central Hudson at this time, including Central Hudson’s experience in settling asbestos cases and in obtaining dismissals of asbestos cases, Central Hudson believes that the costs which may be incurred in connection with the remaining lawsuits will not have a material adverse effect on either of CH Energy Group’s or Central Hudson’s financial position, results of operations, or cash flows.

CHEC:

          Griffith has a voluntary environmental program in connection with the West Virginia Division of Environmental Protection regarding Griffith’s Kable Oil Bulk Plant, located in West Virginia. The State of West Virginia indicated that some additional remediation was required and in 2007, $188,000 was spent on site remediation efforts at this location. In addition, Griffith spent $108,000 on remediation efforts in Maryland, Virginia, and Connecticut in 2007. Griffith is to be reimbursed $273,000 from the State of Connecticut under an environmental agreement and has recorded this amount as a receivable.

          Griffith has a reserve for environmental remediation which is $1.6 million as of December 31, 2007, of which approximately $0.3 million is expected to be spent in the next twelve months.

Other Matters

Central Hudson

          Central Hudson is involved in various other legal and administrative proceedings incidental to its business which are in various stages. While these matters collectively could involve substantial amounts, it is the opinion of management that their ultimate resolution will not have a material adverse effect on either of CH Energy Group’s or Central Hudson’s financial positions, results of operations, or cash flows.

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NOTE 13 - SEGMENTS AND RELATED INFORMATION

          CH Energy Group’s reportable operating segments are the regulated electric utility business and regulated natural gas utility business of Central Hudson and the unregulated fuel distribution business of Griffith.

          Central Hudson purchases, sells at wholesale, and distributes electricity and natural gas at retail in New York State’s Mid-Hudson River Valley. Electric service is available throughout the territory and natural gas service is provided in and about the cities of Poughkeepsie, Beacon, Newburgh, and Kingston, New York and certain outlying and intervening territories. Central Hudson also generates a small portion of its electricity requirements.

          Griffith is engaged in fuel distribution including heating oil, gasoline, diesel fuel, kerosene, and propane, and the installation and maintenance of heating, ventilating, and air conditioning equipment in Virginia, West Virginia, Maryland, Delaware, New Jersey, Pennsylvania, Rhode Island, Washington, D.C., Connecticut, Massachusetts, and New York. Management regularly reviews Griffith’s operating results as a standalone component of CH Energy Group and assesses its performance as a basis for allocating resources.

          The investment and business development activities of CH Energy Group and the renewable energy and investment activities of CHEC, including its ownership interests in ethanol, wind, and biomass energy projects, are reported under the heading “Other Businesses and Investments”.

          Certain additional information regarding these segments is set forth in the following tables. General corporate expenses, Central Hudson property common to both electric and natural gas segments, and the depreciation of Central Hudson’s common property have been allocated in accordance with practices established for regulatory purposes.

          Central Hudson’s and Griffith’s operations are seasonal in nature and weather-sensitive. Demand for electricity typically peaks during the summer, while demand for natural gas and heating oil typically peaks during the winter.

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CH Energy Group, Inc.
Segment Disclosure
Year Ended December 31, 2007

	Central Hudson				Griffith		Other Businesses and Investments				Eliminations				Total
(In Thousands, except Earnings per Share)	Electric		Natural Gas
Revenues from external customers	$	616,839	$	165,449	$	405,753		$	8,716			$	—		$	1,196,757
Intersegment revenues		15		301		—			—				(316	)		—
Total revenues		616,854		165,750		405,753			8,716				(316	)		1,196,757
Depreciation and amortization		22,251		6,148		6,715			809				—			35,923
Interest and investment income		3,770		1,973		115			7,082				(4,534	)		8,406
Interest expense		17,535		5,372		4,091			443				(4,534	)		22,907
Earnings before income taxes		42,159		10,633		5,171			6,571				—			64,534
Income tax expense		16,018		4,308		2,005			(433	)			—			21,898
Net Income		26,141		6,325		3,166			7,004				—			42,636
Earnings per share-diluted		1.66		0.40		0.20			0.44	(1)			—			2.70
Segment assets		926,223		326,471		197,425			44,655				(26	)(2)		1,494,748
Goodwill		—		—		63,433			—				—			63,433
Capital expenditures		65,548		17,215		2,253			1,060				—			86,076

(1)	The amount of Unregulated EPS attributable to CHEC’s other businesses and investments was $0.16 per share, with the balance of $0.28 per share resulting primarily from interest income.
(2)	Includes minority interest of $1,345 related to Lyonsdale.

CH Energy Group, Inc.
Segment Disclosure
Year Ended December 31, 2006

	Central Hudson				Griffith		Other Businesses and Investments				Eliminations				Total
(In Thousands, except Earnings per Share)	Electric		Natural Gas
Revenues from external customers	$	503,908	$	155,272	$	327,825		$	6,428			$	—		$	993,433
Intersegment revenues		14		319		—			—				(333	)		—
Total revenues		503,922		155,591		327,825			6,428				(333	)		993,433
Depreciation and amortization		22,363		6,639		6,139			560				—			35,701
Interest and investment income		4,634		1,882		105			6,726				(3,480	)		9,867
Interest expense		15,478		4,934		3,150			330				(3,480	)		20,412
Earnings before Income taxes		42,425		13,004		2,407			9,017				—			66,853
Income tax expense		16,027		5,501		799			1,442				—			23,769
Net Income		26,398		7,503		1,608			7,575				—			43,084
Earnings per share-diluted		1.67		0.48		0.10			0.48	(1)			—			2.73
Segment assets		899,982		315,841		148,249			95,948				512	(2)		1,460,532
Goodwill		—		—		52,828			—				—			52,828
Capital expenditures		57,340		14,071		3,659			—				—			75,070

(1)	The amount of Unregulated EPS attributable to CHEC’s other businesses and investments was $0.23 per share, with the balance of $0.25 per share resulting primarily from interest income.
(2)	Includes minority interest of $1,481 related to Lyonsdale.

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CH Energy Group, Inc.
Segment Disclosure
Year Ended December 31, 2005

	Central Hudson				Griffith		Other Businesses and Investments				Eliminations				Total
(In Thousands, except Earnings per Share)	Electric		Natural Gas
Revenues from external customers	$	520,994	$	155,602	$	295,092		$	818			$	—		$	972,506
Intersegment revenues		13		355		—			—				(368	)		—
Total revenues		521,007		155,957		295,092			818				(368	)		972,506
Depreciation and amortization		23,209		6,665		6,345			—				—			36,219
Interest and investment income		5,471		1,845		49			5,858				(2,863	)		10,360
Interest expense		12,938		4,107		2,623			240				(2,863	)		17,045
Earnings before Income taxes		43,439		15,162		6,069			5,440				—			70,110
Income tax expense		17,688		6,248		2,406			(523	)			—			25,819
Net Income		25,751		8,914		3,663			5,963				—			44,291
Earnings per share - diluted		1.63		0.57		0.23			0.38	(1)			—			2.81
Segment assets		836,564		289,542		152,485			105,689				—			1,384,280
Goodwill		—		—		51,333			—				—			51,333
Capital expenditures		46,371		13,771		3,737			—				—			63,879

⁽¹⁾ The amount of Unregulated EPS attributable to CHEC’s other businesses and investments was $0.06 per share, with the balance of $0.32 per share resulting primarily from interest income

Central Hudson Gas & Electric Corporation
Segment Disclosure
Year Ended December 31, 2007

(In Thousands)	Electric		Natural Gas		Eliminations				Total
Revenues from external customers	$	616,839	$	165,449		$	—		$	782,288
Intersegment revenues		15		301			(316	)		—
Total revenues		616,854		165,750			(316	)		782,288
Depreciation and amortization		22,251		6,148			—			28,399
Interest income		3,770		1,973			—			5,743
Interest expense		17,535		5,372			—			22,907
Income tax expense		16,018		4,308			—			20,326
Income available for common stock		26,141		6,325			—			32,466
Segment assets		926,223		326,471			—			1,252,694
Capital expenditures		65,548		17,215			—			82,763

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Central Hudson Gas & Electric Corporation
Segment Disclosure
Year Ended December 31, 2006

(In Thousands)	Electric		Natural Gas		Eliminations				Total
Revenues from external customers	$	503,908	$	155,272		$	—		$	659,180
Intersegment revenues		14		319			(333	)		—
Total revenues		503,922		155,591			(333	)		659,180
Depreciation and amortization		22,363		6,639			—			29,002
Interest income		4,634		1,882			—			6,516
Interest expense		15,478		4,934			—			20,412
Income tax expense		16,027		5,501			—			21,528
Income available for common stock		26,398		7,503			—			33,901
Segment assets		899,982		315,841			—			1,215,823
Capital expenditures		57,340		14,071			—			71,411

Central Hudson Gas & Electric Corporation
Segment Disclosure
Year Ended December 31, 2005

(In Thousands)	Electric		Natural Gas		Eliminations				Total
Revenues from external customers	$	520,994	$	155,602		$	—		$	676,596
Intersegment revenues		13		355			(368	)		—
Total revenues		521,007		155,957			(368	)		676,596
Depreciation and amortization		23,209		6,665			—			29,874
Interest income		5,471		1,845			—			7,316
Interest expense		12,938		4,107			—			17,045
Income tax expense		17,688		6,248			—			23,936
Income available for common stock		25,751		8,914			—			34,665
Segment assets		836,564		289,542			—			1,126,106
Capital expenditures		46,371		13,771			—			60,142

NOTE 14 - ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

          SFAS No. 133, titled Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), as amended, established accounting and reporting requirements for derivative instruments and hedging activities. SFAS 133 requires that an entity recognize the fair value of all derivative instruments as either assets or liabilities on the balance sheet with the corresponding unrealized gains or losses recognized in earnings. SFAS 133 permits the deferral of unrealized hedge gains and losses, under stringent hedge accounting provisions.

          CH Energy Group and its subsidiaries do not enter into derivative instruments for speculative purposes.

          Central Hudson uses derivative instruments to hedge exposure to variability in the prices of natural gas and electricity and to hedge exposure to variability in interest rates for its variable rate long-term debt. The types of derivative instruments typically

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used by Central Hudson are natural gas futures and swaps to hedge natural gas purchases, contracts for differences to hedge electricity purchases, and interest rate caps to hedge interest payments on variable rate debt. These derivatives are not designated as hedges under the provisions of SFAS 133, and the related gains and losses are included as part of Central Hudson’s commodity cost and/or price-reconciled in its natural gas and electricity cost adjustment charge clauses. On April 1, 2006, Central Hudson replaced its interest rate cap agreement with a new two-year agreement through April 1, 2008, with similar terms as the expired agreement. This rate cap agreement hedges the variability in interest rates related to Central Hudson’s bonds issued by the NYSERDA. The premium related to interest rate hedges, as well as any related actual gains, is also subject to a true-up mechanism authorized by the PSC for Central Hudson’s variable rate long-term debt. The earnings impacts from these derivatives are therefore deferred for refund to or recovery from customers under their respective regulatory adjustment mechanisms.

          At December 31, 2007, Central Hudson had open derivative contracts to hedge natural gas prices through March 2008, covering approximately 38.9% of Central Hudson’s projected total natural gas supply requirements during this period. In 2007, derivative transactions were used to hedge 15.1% of Central Hudson’s total natural gas supply requirements as compared to 14.1% in 2006. In its electric operations, Central Hudson had an open derivative contract to hedge the price of approximately 4.5% of its NYISO requirement for unforced capacity (“UCAP”) for the Summer 2008 capability period at December 31, 2007. In 2007, Central Hudson hedged approximately 18.0% of its total electricity supply requirements with over-the-counter (“OTC”) derivative contracts as compared to 11.0% in 2006. Central Hudson also hedged approximately 13.6% of its Summer 2007 UCAP capability period requirement and 4.5% of its Winter 2007-2008 UCAP capability period requirement. In addition, Central Hudson has in place a number of agreements of varying terms to purchase electricity produced by certain of its former major generating assets and other generating facilities at fixed prices. The notional amounts currently hedged by the electricity purchase agreements for 2008 and 2009 represent approximately 33.1% and 34.6%, respectively, of its total anticipated electricity supply requirements in each year.

          The total fair value (net unrealized loss) of Central Hudson’s derivatives at December 31, 2007, was ($1.2) million as compared to a fair value (net unrealized loss) of ($3.0) million at December 31, 2006. Fair value is determined based on market quotes for exchange traded derivatives and broker quotes for OTC derivatives. Actual net losses of ($14.6) million were recorded in 2007, which increased amounts recovered through Central Hudson’s electric and natural gas cost adjustment clauses for the overall cost of electricity and natural gas. This compares to a total net loss of ($10.7) million recorded in 2006, which increased the overall cost of electricity and natural gas.

          Griffith uses derivative instruments to hedge variability in the price of heating oil purchased for delivery to its customers. In 2007, Griffith purchased call option contracts to establish ceiling prices to hedge forecasted heating oil supply requirements for capped price programs not hedged by firm purchase commitments. In 2006, Griffith sold put option contracts and purchased call option contracts to establish floor and

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ceiling prices to hedge forecasted heating oil supply requirements for fixed price programs not hedged by firm purchase commitments. The options hedge commodity price changes. These derivatives are designated as cash flow hedges under the provisions of SFAS 133 and are accounted for under the deferral method with actual gains and losses from the hedging activity included in the cost of sales as the hedged transaction occurs. The put and call options entered into have been effective with no gains or losses from ineffectiveness recorded in 2007 or 2006. The assessment of hedge effectiveness for these hedges excludes the change in the fair value of the premium paid or received for these derivative instruments. The total amount of premiums expensed in 2007 and 2006, was $0.5 million. These net premiums are expensed based on the change in their respective fair value. The total fair value of open derivative instruments at December 31, 2007, was a net unrealized gain of $1.2 million. The total fair value at December 31, 2006, was a net unrealized loss of ($0.6) million. Including premium costs, a net actual loss of ($0.7) million was recorded in 2007, and a net loss of ($0.8) million was recorded in 2006. These losses were recorded in each year as part of the cost or price of the related commodity transactions. The fair values of put and call options are determined based on the market value of the underlying commodity.

          At December 31, 2007, Griffith had open OTC call option positions covering approximately 6.2% of its anticipated fuel oil supply requirements for the period January 2008 through June 2008. The percentage hedged at December 31, 2006, for the period January 2007 to June 2007 was 8.2%. In 2007, derivative instruments were used to hedge 7.3% of total fuel oil requirements as compared to 6.0% in 2006.

          In the first quarter of 2007, Griffith entered into derivative contracts to hedge the fair value of certain fixed price purchase commitments assumed from tuck-in acquisitions. These derivative instruments were comprised of calendar average New York Mercantile Exchange (“NYMEX”) swaps. The actual settlement amount recorded in 2007 for these derivative contracts was not material.

          In the first quarter of 2006, Griffith also entered into derivative contracts to hedge a portion (714,000 gallons) of its fuel oil inventory. These derivative instruments, comprised of calendar average NYMEX swaps, were designated as a fair value hedge of inventory. These derivative contracts were settled in December 2006 and an actual net gain of $0.2 million was recorded.

          In addition to the above, Central Hudson and Griffith use weather derivative contracts to hedge the effect on earnings of significant variances in weather conditions from normal patterns if such contracts can be obtained on reasonable terms. Weather derivative contracts are generally entered into for the periods November through December and January through March, which covers the bulk of the heating season. Central Hudson also has entered into similar contracts for the cooling season, which runs from June through August. Weather derivative contracts are not subject to the provisions of SFAS 133 and are accounted for in accordance with Emerging Issues Task Force (“EITF”) Statement 99-2, titled Accounting for Weather Derivatives. In 2007, Central Hudson made a total payment to counter-parties of $0.2 million. In 2006,

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a total payment of $0.5 million, including premiums, was made to counter-parties. The 2007 payment was a premium payment for an option related to the February – March time frame that settled out of the money since weather was colder than the contractual strike point. The 2006 settlement payment related to the cooling season contract and resulted from weather that was warmer than the contractual strike point. In 2007, Griffith made total payments of $0.9 million, including premiums paid. These payments related to heating season contracts and resulted from weather that was colder than the contractual strike point. In 2006, Griffith received payments of $0.7 million, net of premiums paid. In each case the amounts recorded partially offset variations in revenues experienced due to the actual weather patterns that occurred in each period. Central Hudson and Griffith have each entered into weather derivative contracts for January through March 2008.

NOTE 15 - FINANCIAL INSTRUMENTS

          The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

           Cash, Cash Equivalents and Short-term Investments: The carrying amount approximates fair value because of the short maturity of those instruments.

           Long-term Debt: The fair value is estimated based on the quoted market prices for the same or similar issues or to current rates offered to Central Hudson for debt of the same remaining maturities and credit quality.

           Notes Payable: The carrying amount approximates fair value because of the short maturity of those instruments.

           Notes Receivable: The carrying amount approximates fair value because of the short maturity of those instruments.

           Short-term Investments: CH Energy Group’s investments include tax-exempt ARS and VRDN with interest rates that are reset anywhere from 7 to 35 days. These investments are available to fund current operations or to provide funding in accordance with CH Energy Group’s strategy to redeploy equity into its subsidiaries. Due to the nature of these securities with regard to their interest reset periods, the aggregate carrying value approximates their fair value, thereby not impacting shareholders equity with regard to unrealized gains and losses. The aggregate fair value of these short- term investments was $3.5 million at December 31, 2007 and $42.6 million at December 31, 2006. Cash flows from the purchases and liquidation of these investments are reported separately as investing activities in CH Energy Group’s Consolidated Statement of Cash Flows.

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CH ENERGY GROUP / CENTRAL HUDSON

Long-term Debt Maturities and Fair Value

December 31, 2007
			Expected Maturity Date
			(In Thousands)
	2008		2009			2010			2011		2012			Thereafter			Total			Fair Value
Fixed Rate:		—	$	20,000		$	24,000			—	$	36,000		$	208,042		$	288,042		$	287,308
Estimated
Effective Interest Rate				6.07	%		4.38	%		—		6.64	%		5.48	%		6.30	%
Variable Rate:		—		—			—			—		—		$	115,850		$	115,850		$	115,850
Estimated
Effective Interest Rate															3.69	%		3.69	%
						Total Debt Outstanding											$	403,892		$	403,158
						Estimated Effective Interest Rate												5.49	%

December 31, 2006
				Expected Maturity Date
				(In Thousands)
	2007			2008		2009			2010			2011		Thereafter			Total			Fair Value
Fixed Rate:	$	33,000			—	$	20,000		$	24,000			—	$	178,039		$	255,039		$	255,540
Estimated
Effective Interest Rate		5.92	%		—		6.07	%		4.38	%		—		5.54	%		5.52	%
Variable Rate:		—			—		—			—			—	$	115,850		$	115,850		$	115,850
Estimated
Effective Interest Rate															3.44	%		3.44	%
						Total Debt Outstanding											$	370,889		$	371,390
						Estimated Effective Interest Rate												4.87	%

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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) – CH ENERGY GROUP

Selected financial data for each quarterly period within 2007 and 2006 are presented below:

	Operating Revenues		Operating Income			Net Income		Earnings Per Average Share of Common Stock (Diluted) Outstanding
			(In Thousands)					(Dollars)
Quarter Ended:
2007
March 31	$	343,378		$	37,405	$	21,698		$	1.37
June 30		270,983			10,065		5,189			.33
September 30		260,116			10,640		4,329			.27
December 31		322,280			21,158		11,420			.73
2006
March 31	$	317,231		$	34,078	$	18,300		$	1.16
June 30		213,891			6,784		4,068			.26
September 30		239,820			18,664		10,970			.70
December 31		222,491			17,954		9,746			.61

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SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) – CENTRAL HUDSON

Selected financial data for each quarterly period within 2007 and 2006 are presented below:

	Operating Revenues		Operating Income			Income Available for Common Stock
			(In Thousands)
Quarter Ended:
2007
March 31	$	215,866		$	26,035		$	13,129
June 30		190,687			11,799			5,020
September 30		189,571			15,201			5,863
December 31		186,164			18,371			8,454
2006
March 31	$	206,856		$	25,805		$	12,811
June 30		144,388			10,203			3,881
September 30		173,107			20,407			10,531
December 31		134,829			14,541			6,678

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SCHEDULE II - Reserves – CH Energy Group

Description	Balance at Beginning of Period		Charged to Cost and Expenses		Charged to Other Accounts			Payments and Other Reductions to Reserves		Balance at End of Period
YEAR ENDED DECEMBER 31, 2007
Operating Reserves	$	4,906,000	$	1,879,000		$	65,000	$	1,638,000	$	5,212,000
Reserve for Uncollectible Accounts	$	5,761,000	$	5,853,000		$	—	$	6,785,000	$	4,829,000
YEAR ENDED DECEMBER 31, 2006
Operating Reserves	$	6,216,000	$	45,000		$	32,000	$	1,387,000	$	4,906,000
Reserve for Uncollectible Accounts	$	4,588,000	$	5,675,000		$	—	$	4,502,000	$	5,761,000
YEAR ENDED DECEMBER 31, 2005
Operating Reserves	$	6,515,000	$	1,415,000		$	40,000	$	1,754,000	$	6,216,000
Reserve for Uncollectible Accounts	$	4,830,000	$	4,375,000		$	—	$	4,617,000	$	4,588,000

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SCHEDULE II - Reserves – Central Hudson

Description	Balance at Beginning of Period		Charged to Cost and Expenses			Charged to Other Accounts			Payments and Other Reductions to Reserves			Balance at End of Period
YEAR ENDED DECEMBER 31, 2007
Operating Reserves	$	3,936,000	$	991,000			$	65,000		$	749,000	$	4,243,000
Reserve for Uncollectible Accounts	$	3,800,000	$	4,850,000			$	—		$	5,889,000	$	2,761,000
YEAR ENDED DECEMBER 31, 2006
Operating Reserves	$	5,137,000	$	(475,000	)		$	32,000		$	758,000	$	3,936,000
Reserve for Uncollectible Accounts	$	3,400,000	$	4,435,000			$	—		$	4,035,000	$	3,800,000
YEAR ENDED DECEMBER 31, 2005
Operating Reserves	$	5,969,000	$	370,000			$	40,000		$	1,242,000	$	5,137,000
Reserve for Uncollectible Accounts	$	3,800,000	$	3,592,000			$	—		$	3,992,000	$	3,400,000

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ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

          None.

ITEM 9A - CONTROLS AND PROCEDURES

          As of the end of the period covered by this 10-K Annual Report, CH Energy Group and Central Hudson each carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer of CH Energy Group and of Central Hudson, to evaluate the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that each of CH Energy Group’s and Central Hudson’s disclosure controls and procedures as of December 31, 2007, are effective for recording, processing, summarizing, and reporting information that is required to be disclosed in their reports under the Exchange Act, within the time periods specified in the relevant SEC rules and forms.

          There were no significant changes to the Registrants’ internal control over financial reporting during the Registrants’ last fiscal year.

          For additional discussion, see the Report of Independent Registered Public Accounting Firm and the Report of Management on Internal Control Over Financial Reporting included in this 10-K Annual Report.

ITEM 9B - OTHER INFORMATION

          None.

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PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF CH ENERGY GROUP

The Directors of CH Energy Group are as follows:

Name	Age as of 12/31/07	Year Joined the Board	Term of Office
Margarita K. Dilley(1),(2)	50	2004	Class II Director(5),(6)
Steven M. Fetter(1),(4)	55	2002	Class II Director(5),(6)
Stanley J. Grubel(2),(3)	65	1999	Class II Director(5), (6)
Manuel J. Iraola(1),(2)	59	2006	Class III Director(7)
E. Michel Kruse(3),(4)	63	2002	Class III Director(7)
Steven V. Lant(3)	50	2002	Class I Director(8)
Jeffrey D. Tranen(3),(4)	61	2004	Class I Director(8)
Ernest R. Verebelyi(1),(2)	60	2006	Class III Director(7)

(1)	Member, Audit Committee of the Board of Directors.
(2)	Member, Compensation Committee of the Board of Directors.
(3)	Member, Strategy and Finance Committee of the Board of Directors.
(4)	Member, Governance and Nominating Committee of the Board of Directors.
(5)	Ms. Dilley, Mr. Fetter and Mr. Grubel are standing for election at the Annual Meeting of Shareholders as Class II Directors.
(6)	Term expires at Annual Meeting of Shareholders in 2008.
(7)	Term expires at Annual Meeting of Shareholders in 2009.
(8)	Term expires at Annual Meeting of Shareholders in 2010.

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Officers of the Board:

Steven V. Lant
Chairman of the Board

E. Michel Kruse
Lead Independent Director and Chair of the Strategy and Finance Committee

Steven M. Fetter
Chair of the Governance and Nominating Committee

Stanley J. Grubel
Chair of the Compensation Committee

Margarita K. Dilley
Chair of the Audit Committee

          The information on those directors of CH Energy Group standing for election by shareholders at the Annual Meeting of Shareholders to be held on April 22, 2008, is incorporated by reference to the caption “Election of Directors” in CH Energy Group’s definitive proxy statement (“Proxy Statement”) to be used in connection with its Annual Meeting of Shareholders to be held on April 22, 2008, which Proxy Statement will be filed with the SEC.

          The information on the executive officers of CH Energy Group required hereunder is incorporated by reference to Item 1 – “Business” of this 10-K Annual Report under the caption “Executive Officers.”

          Other information required hereunder for Directors and officers of CH Energy Group is incorporated by reference to the Proxy Statement.

          CH Energy Group submitted a CEO Certification to the New York Stock Exchange in 2007. CH Energy Group and Central Hudson each filed with the SEC, as an exhibit to its most recently filed Form 10-K, the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) Section 302 certification regarding the quality of the company’s public disclosure.

          CH Energy Group has adopted a Code of Business Conduct and Ethics (“Code”). Section II of the Code, in accordance with Section 406 of the Sarbanes-Oxley Act and Item 406 of Regulation S-K, constitutes CH Energy Group’s Code of Ethics for Senior Financial Officers. This section, in conjunction with the remainder of the Code, is intended to promote honest and ethical conduct, full and accurate reporting, and compliance with laws as well as other matters. A copy of the Code is available on CH Energy Group’s Internet website at www.CHEnergyGroup.com.

          If CH Energy Group’s Board of Directors materially amends or grants any waivers to Section II of the Code relating to issues concerning the need to resolve ethically any actual or apparent conflicts of interest, and to comply with all generally

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accepted accounting principles, laws and regulations designed to produce full, fair, accurate, timely, and understandable disclosure in CH Energy Group’s periodic reports filed with the SEC, CH Energy Group will post such information on its Internet website at www.CHEnergyGroup.com.

          CH Energy Group’s governance guidelines, Code, and the charters of its Audit, Compensation, Governance and Nominating, and Strategy and Finance Committees are available on CH Energy Group’s Internet website at www.CHEnergyGroup.com.

          The governance guidelines, the Code, and the charters may also be obtained by writing to the Corporate Secretary, CH Energy Group, Inc., 284 South Avenue, Poughkeepsie, New York 12601-4879.

ITEM 11 - EXECUTIVE COMPENSATION

          The information required hereunder for Directors and executive officers of CH Energy Group is incorporated by reference to the section captioned “Executive Compensation” of the Proxy Statement.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity-Based Compensation Plan Information

          The following table sets forth information concerning CH Energy Group’s compensation plans (including individual compensation arrangements) as of December 31, 2007, under which equity securities of CH Energy Group are authorized for issuance:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity-based compensation plans (excluding securities reflected in column (a) (c)
Equity compensation plans approved by security holders	40,300 (1)	$46.05	258,370 (2)
Equity compensation plans not approved by security holders	—	—	—
Total	40,300	$46.05	258,370

(1)	This includes only stock options granted under the 2000 Plan.
(2)	Pertains to the 2006 Plan only, and excludes 41,630 performance shares granted under the 2006 Plan through December 31, 2007. Effective April 25, 2006, securities can no longer be issued under the 2000 Plan.

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          The information required hereunder regarding equity ownership in CH Energy Group by its Directors and executive officers is incorporated by reference to the section captioned “Beneficial Ownership” of the Proxy Statement.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

          See Note 1 - “Summary of Significant Accounting Policies” under the caption “Related Party Transactions.” The information required hereunder regarding Director independence is incorporated by reference to the section captioned “Director Independence” of the Proxy Statement.

ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES

          The information required by this Item regarding CH Energy Group’s Audit Committee’s policies and procedures and annual fees rendered to CH Energy Group’s principal accountants is incorporated by reference to the Report of the Audit Committee and to the caption “Principal Accountant Fees and Services,” both of which are included in the Proxy Statement.

          The following information is provided for Central Hudson:

PRINCIPAL ACCOUNTANT FEES AND SERVICES

PricewaterhouseCoopers LLP	2007		2006
Audit Fees	$	735,138	$	636,907
Tax Fees
Includes review of federal and state income tax returns and tax research		11,800		11,200
All Other Fees
Includes software licensing fee for accounting research tool		1,500		1,500
TOTAL	$	748,438	$	649,607

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PART IV

ITEM 15 - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)	Documents filed as part of this 10-K Annual Report
	1. and 2. All Financial Statements and Financial Statement Schedules filed as part of this 10-K Annual Report are included in Item 8 – “Financial Statements and Supplementary Data” of this 10-K Annual Report and reference is made thereto.
	3. Exhibits
	Incorporated herein by reference to the Exhibit Index for this 10-K Annual Report.

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SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, CH Energy Group, Inc. and Central Hudson Gas & Electric Corporation have duly caused this 10-K Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

CH ENERGY GROUP, INC.
	By	/s/ Steven V. Lant
		Steven V. Lant
		Chairman of the Board,
		President and
		Chief Executive Officer
Dated:  February 13, 2008
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
	By	/s/ Steven V. Lant
		Steven V. Lant
		Chairman of the Board and
		Chief Executive Officer
Dated:  February 13, 2008

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Pursuant to the requirements of the Securities Exchange Act of 1934, this 10-K Annual Report has been signed below by the following persons on behalf of CH Energy Group, Inc. and Central Hudson Gas & Electric Corporation and in the capacities and on the date indicated:

Signature	Title	Date
(a) Principal Executive Officer or Officers:
/s/ Steven V. Lant	Chairman of the Board, President and Chief Executive Officer of CH Energy Group, Inc. and Chairman of the Board and Chief Executive Officers of Central Hudson Gas & Electric Corporation
(Steven V. Lant)
		February 13, 2008
(b) Principal Accounting Officer:
/s/ Donna S. Doyle	Vice President –Accounting and Controller of CH Energy Group, Inc.; Vice President –Accounting of Central Hudson Gas & Electric Corporation
(Donna S. Doyle)		February 13, 2008
(c) Chief Financial Officer:
/s/ Christopher M. Capone	Executive Vice President and Chief Financial Officer of CH Energy Group, Inc. and Central Hudson Gas & Electric Corporation
(Christopher M. Capone)		February 13, 2008

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(d) A majority of Directors of CH Energy Group, Inc.:

Steven V. Lant*, Margarita K. Dilley*, Steven M. Fetter*, Stanley J. Grubel*, Manuel J. Iraola*, E. Michel Kruse*,
Jeffrey D. Tranen*, and Ernest R. Verebelyi*, Directors

By	/s/ Steven V. Lant
	(Steven V. Lant)	February 13, 2008
(e)	A majority of Directors of Central Hudson Gas & Electric Corporation:
Steven V. Lant*, Christopher M. Capone*,
Joseph J. DeVirgilio, Jr.*, and Carl E. Meyer*, Directors
By	/s/ Steven V. Lant
	(Steven V. Lant)	February 13, 2008

* Steven V. Lant, by signing his name hereto, does thereby sign this document for himself and on behalf of the persons named above after whose printed name an asterisk appears, pursuant to powers of attorney duly executed by such persons and filed with the United States Securities and Exchange Commission as Exhibit 24 hereof.

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EXHIBIT INDEX

          Following is the list of Exhibits, as required by Item 601 of Regulation S-K, filed as a part of this Annual Report on Form 10-K, including Exhibits incorporated herein by reference:

Exhibit No. (Regulation S-K Item 601 Designation)	Exhibits
(2)	Plan of Acquisition, reorganization, arrangement, liquidation or succession:
	(i)	Certificate of Exchange of Shares of Central Hudson Gas & Electric Corporation, subject corporation, for shares of CH Energy Group, Inc., acquiring corporation, under Section 913 of the Business Corporation Law of the State of New York. (Incorporated herein by reference to Energy Group’s Annual Report, on Form 10-K, for the fiscal year ended December 31, 2000; Exhibit 2(i))
	(ii)	Agreement and Plan of Exchange by and between Central Hudson Gas & Electric Corporation and CH Energy Group, Inc. (Incorporated herein by reference to Central Hudson’s Current Report on Form 8-K dated December 15, 1999; Exhibit 2.1)
(3)	Articles of Incorporation and Bylaws:
	(i)	Restated Certificate of Incorporation of CH Energy Group, Inc. under Section 807 of the Business Corporation Law, filed November 12, 1998. (Incorporated herein by reference to Central Hudson’s Current Report on Form 8-K filed on September 30, 1998; Exhibit 3(i))
	(ii)	By-laws of CH Energy Group, Inc. in effect on the date of this Report. (Incorporated herein by reference to Energy Group’s Current Report on Form 8-K filed on February 16, 2006; Exhibit (99))
	(iii)	Restated Certificate of Incorporation of Central Hudson Gas & Electric Corporation under Section 807 of the Business Corporation Law. (Incorporated herein by reference to

		Central Hudson’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1993; Exhibit (3)1)
	(iv)	Certificate of Amendment to the Certificate of Incorporation of Central Hudson Gas & Electric Corporation under Section 805 of the Business Corporation Law. (Incorporated herein by reference to Central Hudson’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1993; Exhibit (3)2)
	(v)	Certificate of Amendment to the Certificate of Incorporation of Central Hudson Gas & Electric Corporation under Section 805 of the Business Corporation Law. (Incorporated herein by reference to Central Hudson’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1993; Exhibit (3)3)
	(vi)	By-laws of Central Hudson Gas & Electric Corporation in effect on the date of this Report. (Incorporated herein by reference to CH Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (3)(vi))
(4)	Instruments defining the rights of security holders, including indentures (see also Exhibits (3)(i) and (ii) above):
	(ii)	1—       Indenture, dated as of April 1, 1992, between Central Hudson and Morgan Guaranty Trust Company of New York, as Trustee related to unsecured Medium-Term Notes. (Incorporated herein by reference to Central Hudson’s Current Report on Form 8-K, dated May 27, 1992; Exhibit (4)(ii)29)
	(ii)	2—       Prospectus Supplement Dated May 28, 1992 (To Prospectus Dated April 13, 1992) relating to $125,000,000 principal amount of Medium-Term Notes, Series A, and the Prospectus Dated April 13, 1992, relating to $125,000,000 principal amount of Central Hudson’s debt securities attached thereto, as filed pursuant to Rule 424(b) in connection with Registration Statement No. 33-46624, and, as applicable to a tranche of such Medium-Term Notes, set forth in Pricing Supplement No. 1, Dated June 26, 1992 (To Prospectus Dated April 13, 1992, as supplemented by a Prospectus Supplement Dated May 28, 1992) filed pursuant to Rule 424(b) in connection with Registration Statement No. 33-46624.

(ii)	3— Prospectus Supplement Dated August 24, 1998 (To Prospectus Dated April 4, 1995) relating to $80,000,000 principal amount of Medium-Term Notes, Series B, and the Prospectus Dated April 4, 1995, relating to (i) $80,000,000 of Central Hudson’s Debt Securities and Common Stock, $5.00 par value, but not in excess of $40 million aggregate initial offering price of such Common Stock and (ii) 250,000 shares of Central Hudson’s Cumulative Preferred Stock, par value $100 per share, which may be issued as 1,000,000 shares of Depositary Preferred Shares each representing 1/4 of a share of such Cumulative Preferred Stock attached thereto, as filed pursuant to Rule 424(b) in connection with Registration Statement No. 33-56349.
	(a)	Pricing Supplement No. 1, Dated September 2, 1998 (To Prospectus Dated April 4, 1995, as supplemented by a Prospectus Supplement Dated August 24, 1998), as filed with the Securities and Exchange Commission pursuant to Rule 424(b)(2) under the Securities Act of 1933 in connection with Registration Statement No. 33-56349.
(ii)	4—     Prospectus Supplement Dated January 8, 1999 (To Prospectus Dated January 7, 1999) relating to $110,000,000 principal amount of Medium-Term Notes, Series C, and the Prospectus Dated January 7, 1999, relating to $110,000,000 principal amount of Central Hudson’s debt securities attached thereto, as filed pursuant to Rule 424(b) in connection with Registration Statement Nos. 333-65597 and 33-56349, and, as applicable to a tranche of such Medium-Term Notes, set forth in Pricing Supplement No. 1, Dated January 12, 1999 (To Prospectus Dated January 7, 1999, as supplemented by a Prospectus Supplement Dated January 8, 1999) filed pursuant to Rule 424(b) in connection with Registration Statement Nos. 333-65597 and 33-56349.
(ii)	5—     Prospectus Supplement Dated March 20, 2002 (To Prospectus dated March 14, 2002) relating to $100,000,000 principal amount of Medium-Term Notes, Series D, and the Prospectus Dated March 14, 2002, relating to $100,000,000 principal amount of Central Hudson’s debt securities attached hereto, as filed pursuant to Rule 424 (b) in connection with Registration Statement No. 33-83542, and, as applicable to a tranche of such Medium-Term Notes, each of the following:

	(a)	Pricing Supplement No. 1, Dated March 25, 2002 (to said Prospectus dated March 14, 2002, as supplemented by said Prospectus Supplement Dated March 20, 2002) filed pursuant to Rule 424 (b) in connection with Registration Statement No. 333-83542.
	(b)	Pricing Supplement No. 2, Dated March 25, 2002 (to said Prospectus Dated March 14, 2002, as supplemented by said Prospectus Supplement Dated March 20, 2002) filed pursuant to Rule 424 (b) in connection with Registration Statement No. 333-83542.
	(c)	Pricing Supplement No. 3, Dated September 17, 2003 (to said Prospectus Dated March 14, 2002, as supplemented by said Prospectus Supplement Dated March 20, 2002 and March 25, 2002) filed pursuant to Rule 424 (b) in connection with Registration Statement No. 333-83542.
	(d)	Pricing Supplement No. 4, Dated February 24, 2004 (to said Prospectus dated March 20, 2002 as supplemented by said Prospectus Supplement Dated March 20, 2002 and March 25, 2002) filed pursuant to Rule 424(b) in connection with Registration Statement No. 333-83542.
(ii)	6—     Prospectus Supplement Dated October 28, 2004 (To Prospectus dated October 22, 2004) relating to $85,000,000 principal amount of Medium-Term Notes, Series E, and the Prospectus Dated October 22, 2004, relating to $85,000,000 principal amount of Central Hudson’s debt securities attached hereto, as filed pursuant to Rule 424 (b) in connection with Registration Statement No. 333-116286, and, as applicable to a tranche of such Medium-Term Notes, each of the following:
	(a)	Pricing Supplement No. 1, Dated October 29, 2004 (to said Prospectus dated October 22, 2004, as supplemented by said Prospectus Supplement Dated October 28, 2004) filed pursuant to Rule 424 (b) (3) in connection with Registration Statement No. 333-116286.

	(b)	Pricing Supplement No. 2, Dated November 2, 2004 (to said Prospectus Dated October 22, 2004, as supplemented by said Prospectus Supplement Dated October 28, 2004) filed pursuant to Rule 424 (b) (3) in connection with Registration Statement No. 333-116286.
	(c)	Pricing Supplement No. 3, Dated November 30, 2005 (to said Prospectus Dated October 22, 2004, as supplemented by said Prospectus Supplement Dated October 28, 2004) filed pursuant to Rule 424 (b) (3) in connection with Registration Statement No. 333-116286.
	(d)	Pricing Supplement No. 4, Dated November 17, 2006 (to said Prospectus dated October 22, 2004 as supplemented by said Prospectus Supplement Dated October 28, 2004) filed pursuant to Rule 424(b)(3) in connection with Registration Statement No. 333-116286.
(ii)	7—     Prospectus Supplement Dated March 20, 2007 (To Prospectus dated December 1, 2006) relating to $140,000,000 principal amount of Medium-Term Notes, Series F, as filed on March 20, 2007, pursuant to Rule 424 (b) in connection with Registration Statement No. 333-138510, and, as applicable to a tranche of such Medium-Term Notes, each of the following:
	(a)	Pricing Supplement No. 1, Dated March 20, 2007 filed on March 21, 2007, pursuant to Rule 424 (b).
	(b)	Pricing Supplement No. 2, Dated September 14, 2007 filed on September 14, 2007, pursuant to Rule 424 (b).
(ii)	8—     Central Hudson and another subsidiary of Energy Group have entered into certain other instruments with respect to long-term debt. No such instrument relates to securities authorized thereunder which exceed 10% of the total assets of Energy Group and its other subsidiaries or Central Hudson, as the case may be, each on a consolidated basis. Energy Group and Central Hudson agree to provide the Commission, upon request, copies of any instruments defining the rights of holders of long-term debt of Central Hudson and such other subsidiary.

(10)	Material contracts:
	(i)	1—     Assignment and Assumption dated as of October 24, 1975 between Central Hudson and New York State Electric & Gas Corporation. (Incorporated herein by reference to Central Hudson’s Registration Statement No. 2-54690; Exhibit 5.25)
	(i)	2—     Amendment to Assignment and Assumption dated October 30, 1978 between Central Hudson and New York State Electric & Gas Corporation. (Incorporated herein by reference to Central Hudson’s Registration Statement No. 2-65127; Exhibit 5.34)
	(i)	3—     Agreement dated April 2, 1980 by and between Central Hudson and the Power Authority of the State of New York. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 1992; Exhibit (10)(i)24)
	(i)	4—     Transmission Agreement, dated October 25, 1983, between Central Hudson and Niagara Mohawk Power Corporation. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 1992; Exhibit (10)(i)30)
	(i)	5—     Underground Storage Service Agreement, dated June 30, 1982, between Central Hudson and Penn-York Energy Corporation. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 1992; Exhibit (10)(i)32)
	(i)	6—     Interruptible Transmission Service Agreement, dated December 20, 1983, between Central Hudson and Power Authority of the State of New York. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 1992; Exhibit (10)(i)33)
	(i)	7—     Agreement, dated December 7, 1983, between Central Hudson and the Power Authority of the State of New York. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 1992; Exhibit (10)(i)34)

(i)	8—     General Joint Use Pole Agreement between Central Hudson and the New York Telephone Company effective January 1, 1986 (not including the Administrative and Operating Practices provisions thereof). (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 1992; Exhibit (10)(i)37)
(i)	9—     Agreement, dated June 3, 1985, between Central Hudson, Consolidated Edison Company of New York, Inc. and the Power Authority of the State of New York relating to Marcy South Real Estate – East Fishkill, New York. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 1992; Exhibit (10)(i)38)
(i)	10—   Agreement, dated June 11, 1985, between Central Hudson and the Power Authority of the State of New York relating to Marcy South Substation – East Fishkill, New York. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 1992; Exhibit (10)(i)39)
(i)	11—   Memorandum of Understanding, dated as of March 22, 1988, by and among Central Hudson, Alberta Northeast Gas, Limited, the Brooklyn Union Gas Company, New Jersey Natural Gas Company and Connecticut Natural Gas Corporation. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1987; Exhibit (10)(i)98)
(i)	12—   Agreement, dated October 9, 1990, between Texas Eastern Transmission Corporation and Central Hudson. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)80)
(i)	13—   Agreement, dated December 28, 1989, between Texas Eastern Transmission Corporation and Central Hudson. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)83)
(i)	14—   Agreement, dated November 3, 1989, between Texas Eastern Transmission Corporation and Central Hudson. (Incorporated herein by reference to Central Hudson’s

	Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)84)
(i)	15—   Storage Service Agreement, dated July 1, 1989, between CNG Transmission Corporation and Central Hudson. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)91)
(i)	16—   Agreement dated as of February 7, 1991 between Central Hudson and Alberta Northeast Gas, Limited for the purchase of Canadian natural gas from ATCOR Ltd. to be delivered on the Iroquois Gas Transmission System. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)92)
(i)	17—   Agreement dated as of February 7, 1991 between Central Hudson and Alberta Northeast Gas, Limited for the purchase of Canadian natural gas from AEC Oil and Gas Company, a Division of Alberta Energy Company, Ltd. to be delivered on the Iroquois Gas Transmission System. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)93)
(i)	18—   Agreement dated as of February 7, 1991 between Central Hudson and Alberta Northeast Gas, Limited for the purchase of Canadian natural gas from ProGas Limited to be delivered on the Iroquois Gas Transmission System. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)94)
(i)	19—   Agreement No. 2 dated as of February 7, 1991 between Central Hudson and Alberta Northeast Gas, Limited for the purchase of Canadian natural gas from TransCanada Pipelines Limited under Precedent Agreement No. 2 to be delivered on the Iroquois Gas Transmission System. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)95)
(i)	20—   Agreement No. 1 dated as of February 7, 1991 between Central Hudson and Alberta Northeast Gas, Limited for the purchase of Canadian natural gas from TransCanada

	Pipelines Limited under Precedent Agreement No. 1 to be delivered on the Iroquois Gas Transmission System. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)96)
(i)	21—   Agreement dated as of February 7, 1991 between Central Hudson and Iroquois Gas Transmission System to transport gas imported by Alberta Northeast Gas, Limited to Central Hudson. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)97)
(i)	22—   Agreement, dated December 28, 1990 and effective February 5, 1991, between Central Hudson and National Fuel Gas Supply Corporation for interruptible transportation. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1991; Exhibit (10)(i)100)
(i)	23—   Utility Services Contract, effective October 1, 1991, between Central Hudson and the U.S. Department of the Army, for the provision of natural gas service to the U.S. Military Academy at West Point and Stewart Army Subpost, together with an Amendment thereto, effective October 10, 1991. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1991; Exhibit (10)(i)101)
(i)	24—   Service Agreement, effective December 1, 1990, between Central Hudson and Texas Eastern Transmission Corporation, for firm transportation service under Rate Schedule FT-1. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1991; Exhibit (10)(i)103)
(i)	25—   Service Agreement, dated February 25, 1991, between Central Hudson and Texas Eastern Transmission Corporation, for incremental 5,056 dth. under Rate Schedule CD-1. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1991; Exhibit (10)(i)104)
(i)	26—   Agreement dated as of July 1, 1992 between Central Hudson and Tennessee Gas Pipeline Company for storage of natural gas. (Incorporated herein by reference to Central

	Hudson’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1992; Exhibit (10)(i)114)
(i)	27—   Agreement dated as of July 1, 1992 between Central Hudson and Tennessee Gas Pipeline Company for firm transportation periods. (Incorporated herein by reference to Central Hudson’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1992; Exhibit (10)(i)115)
(i)	28—   Agreement, dated December 1, 1991, between Central Hudson and Iroquois Gas Transmission System for interruptible gas transportation service. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 1992; Exhibit (10)(i)101)
(i)	29—   Letter Agreement, dated August 24, 1992, between Central Hudson and Iroquois Gas Transmission System amending that certain Agreement, dated December 1, 1991 between said parties for interruptible gas transportation service. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1990; Exhibit (10)(i)102)
(i)	30—   Gas Transportation Agreement, dated as of September 1, 1993, by and between Tennessee Gas Pipeline Company and Central Hudson. (Incorporated herein by reference to Central Hudson’s Quarterly report on Form 10-Q for fiscal quarter ended September 30, 1993; Exhibit (10)(i)108)
(i)	31—   Agreement, dated as of May 20, 1993, between Central Hudson and New York State Electric & Gas Corporation. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993; Exhibit (10)(i)93)
(i)	32—   Amended and Restated Settlement Agreement, dated January 2, 1998, among Central Hudson, the Staff of the Public Service Commission of the State of New York and the New York State Department of Economic Development. (Incorporated herein by reference to Central Hudson’s Current Report on Form 8-K, dated January 7, 1998; Exhibit (10))

(i)	33—   Modification to the Amended and Restated Settlement Agreement, dated February 26, 1998, signed by Central Hudson, the Staff of the Public Service Commission of the State of New York, the New York State Consumer Protection Board and Pace Energy Project. (Incorporated herein by reference to Central Hudson’s Current Report on Form 8-K, dated February 10, 1998; Exhibit (10)(2))
(i)	34—   Participation Agreement, dated as of June 1, 1977 by and between New York State Energy Research and Development Authority and Central Hudson. (Incorporated herein by reference to Energy Group’s Annual Report, on Form 10-K, for the fiscal year ended December 31, 2000; Exhibit (10)(i)67)
(i)	35—   Participation Agreement, dated as of December 1, 1998, by and between New York State Energy Research and Development Authority and Central Hudson. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998; Exhibit (10)(i)82)
(i)	36—   Participation Agreement, dated as of July 15, 1999, by and between New York State Energy Research and Development Authority and Central Hudson. (Incorporated herein by reference to Energy Group’s Annual Report, on Form 10-K, for the fiscal year ended December 31, 2000; Exhibit (10)(i)66)
(i)	37—   Participation Agreement, dated as of August 1, 1999, by and between New York State Energy Research and Development Authority and Central Hudson. (Incorporated herein by reference to Energy Group’s Annual Report, on Form 10-K, for the fiscal year ended December 31, 2000; Exhibit (10)(i)67)
(i)	38—   Asset Purchase and Sale Agreement, dated August 7, 2000, by and among Central Hudson, Consolidated Edison Company of New York, Inc., Niagara Mohawk Power Corporation and Dynegy Power Corp. (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000; Exhibit (10)(i)93)
(i)	39—   Asset Purchase and Sale Agreement, dated August 7, 2000, by and between Central Hudson and Dynegy Power

	Corp. (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000; Exhibit (10)(i)94)
(i)	40—   Purchase Price Agreement, dated August 7, 2000, among Central Hudson, Consolidated Edison Company of New York, Inc., Niagara Mohawk Power Corporation and Dynegy Power Corp. (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000; Exhibit (10)(i)95)
(i)	41—   Guarantee Agreement, dated August 7, 2000, among Central Hudson, Consolidated Edison Company of New York, Inc., Niagara Mohawk Power Corporation and Dynegy Holdings, Inc. (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2000; Exhibit (10)(i)96)
(i)	42—   Nine Mile Point Unit 2 Nuclear Generating Facility Asset Purchase Agreement, dated as of December 11, 2000, by and among Central Hudson, Niagara Mohawk Power Corporation, New York State Electric & Gas Corporation, Rochester Gas and Electric Corporation, Constellation Energy Group, Inc. and Constellation Nuclear LLC. (Incorporated herein by reference to Energy Group’s Annual Report, on Form 10-K, for the fiscal year ended December 31, 2000; Exhibit (10)(i)79)
(i)	43—   Power Purchase Agreement, dated as of December 11, 2000, by and between Constellation Nuclear, LLC and Central Hudson. (Incorporated herein by reference to Energy Group’s Annual Report, on Form 10-K, for the fiscal year ended December 31, 2000; Exhibit (10)(i)80)
(i)	44—   Revenue Sharing Agreement, dated as of December 11, 2000, by and between Constellation Nuclear LLC and Central Hudson. (Incorporated herein by reference to Energy Group’s Annual Report, on Form 10-K, for the fiscal year ended December 31, 2000; Exhibit (10)(i)84)
(i)	45—   Transition Power Agreement, dated January 30, 2001, by and between Central Hudson and Dynegy Power Marketing, Inc. (Incorporated herein by reference to Energy Group’s Annual Report, on Form 10-K, for the fiscal year ended December 31, 2000; Exhibit (10)(i)82)

(i)	46—   Amended and Restated Credit Agreement, dated July 10, 2000, among CH Energy Group, Inc., (“Energy Group”) certain lenders described therein and Banc One, N.A., as administrative Agent. (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000; Exhibit (10)(i)92)
(i)	47—   Stock Purchase Agreement, dated December 21, 2001 between Central Hudson Energy Services, Inc. and WPS Power Development, Inc. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (10)(i)69)
(i)	48—   Letter Agreement, dated December 21, 2001, between Central Hudson Enterprises Corporation and WPS Power Development, Inc. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (10)(i)70)
(i)	49—   Letter Agreement, dated July 3, 2001 between Central Hudson and Dynegy. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (10)(i)72)
(i)	50—   Amendment No. 1, dated April 27, 2005, to Credit Agreement, dated November 21, 2003, among CH Energy Group, Inc., certain lenders described therein and KeyBank, N.A., as administrative agent. (Incorporated herein by reference to Energy Group’s Current Report on Form 8-K filed on April 29, 2005; Exhibit 99)
(i)	51—   Amended and Restated Credit Agreement effective as of January 2, 2007 among Central Hudson, certain lenders described therein and JPMorgan Chase Bank, N.A., as arranger and administrative agent. (Incorporated herein by reference to Central Hudson’s Current Report on Form 8-K filed on December 20, 2006; Exhibit 1)
(i)	52—   $25,000,000 Demand Note of Griffith Energy Services, Inc. dated January 18, 2008, payable to the order of Manufacturers and Traders Trust Company. (Incorporated herein by reference to Energy Group’s Current Report on Form 8-K filed on January 18, 2008; Exhibit 10.1)

	(a)	Guaranty Agreement dated as of January 18, 2008, from Central Hudson Enterprises Corporation to Manufacturers and Traders Trust Company. (Incorporated herein by reference to Energy Group’s Current Report on Form 8-K filed on January 18, 2008; Exhibit 10.2)
	(b)	Guaranty Agreement dated as of January 18, 2008, from CH Energy Group to Manufacturers and Traders Trust Company. (Incorporated herein by reference to Energy Group’s Current Report on Form 8-K filed on January 18, 2008; Exhibit 10.3)
(i)	53—   Promissory Note of Central Hudson Gas & Electric Corporation, dated April 16, 2007, payable to the order of JPMorgan Chase Bank, N.A. (Incorporated herein by reference to CH Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(i)53)
(i)	54—   Promissory Note of Central Hudson Gas & Electric Corporation, dated June 22, 2007, payable to the order of Citizens Bank, N.A. (Incorporated herein by reference to CH Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(i)54)
(i)	55—   Distribution Agreement dated March 19, 2007 between the Company, and Banc of America Securities LLC, J.P. Morgan Securities Inc. and McDonald Investments Inc., as agents. (Incorporated herein by reference to Central Hudson’s Current Report on Form 8-K filed on March 19, 2007; Exhibit 1)
(iii)1	1—     Agreement, made March 14, 1994, by and between Central Hudson and Mellon Bank, N.A., amending and restating, effective April 1, 1994, Central Hudson’s Savings Incentive Plan and related Trust Agreement with The Bank of New York. (Incorporated herein by reference to Central Hudson’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1994; Exhibit (10)(iii)18)
(iii)	2—     Amendment 1, dated July 22, 1994 (effective April 1, 1994) to the Amended and Restated Savings Incentive Plan of Central Hudson. (Incorporated herein by reference to

¹ Exhibits in Part (iii) of this Section 10 are management contracts and compensatory plans and arrangements.

	Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1994; Exhibit (10)(iii)19)
(iii)	3—     Amendment 2, dated December 16, 1994 (effective January 1, 1995) to the Amended and Restated Savings Incentive Plan of Central Hudson, as amended. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1994; Exhibit (10)(iii)20)
(iii)	4—     Management Incentive Program of Central Hudson, effective April 1, 1994. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1996; Exhibit (10)(iii)23)
(iii)	5—     Amendment, dated July 25, 1997, to the Management Incentive Program of Central Hudson, effective August 1, 1997. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as amended December 8, 1998; Exhibit (10)(iii)24)
(iii)	6—     CH Energy Group, Inc. Change-of-Control Severance Policy, effective December 1, 1998. (Incorporated herein by reference to Central Hudson’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998; Exhibit (10)(iii)14)
(iii)	7—     Trust and Agency Agreement, dated December 15, 1999 and effective January 1, 2000, between the Corporation and First America Trust Company for the Corporation’s Directors and Executives Deferred Compensation Plan. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the fiscal year ended December 31, 1999; Exhibit (10)(iii)26)
(iii)	8—     CH Energy Group, Inc. Supplementary Retirement Plan, effective December 15, 1999, being an amendment and restatement of the Central Hudson Executive Deferred Compensation Plan as assigned to CH Energy Group, Inc. (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000; Exhibit (10)(iii)29)
(iii)	9—     Amendment Number Three to the Central Hudson Savings Incentive Plan, effective January 1, 2001.

	(Incorporated herein by reference to Energy Group’s Annual Report, on Form 10-K, for the fiscal year ended December 31, 2000; Exhibit (10)(iii)32)
(iii)	10—   Amendment to the CH Energy Group, Inc. Change-of-Control Severance Policy, effective August 1, 2000. (Incorporated herein by reference to Energy Group’s Annual Report, on Form 10-K, for the fiscal year ended December 31, 2000; Exhibit (10)(iii)33)
(iii)	11—   Employment Agreement, dated September 28, 2001, between CH Energy Group, Inc. and Paul J. Ganci. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (10)(iii)16)
(iii)	12—   Amendment, effective January 1, 2001, to Energy Group’s Long-Term Performance-Based Incentive Plan. (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2001; Exhibit (10)(iii)1)
(iii)	13—   Amendment and Restatement, dated October 1, 2001, of the Central Hudson Savings Incentive Plan. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (10)(iii)18)
(iii)	14—   Form of Trust Agreement, effective as of October 1, 2001, between Central Hudson and ING National Trust, as successor Trustee under the Central Hudson Savings Incentive Plan. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (10)(iii)19)
(iii)	15—   Amendment No. 2, effective January 1, 2002, to Energy Group’s Long-Term Performance-Based Incentive Plan. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (10)(iii)20)
(iii)	16—   Form of Supplemental Participation Agreement, dated October 21, 2001, among Central Hudson Enterprises Corporation, Central Hudson and ING National Trust re: Central Hudson Savings Incentive Plan. (Incorporated herein by reference to Energy Group’s Annual Report on

	Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (10)(iii)21)
(iii)	17—   Amendment and restatement of CH Energy Group, Inc. Supplementary Retirement Plan, effective July 1, 2001. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (10)(iii)23)
(iii)	18—   Amendment and restatement of Central Hudson Gas & Electric Corporation Retirement Benefit Restoration Plan effective June 22, 2001. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (10)(iii)24)
(iii)	19—   Agreement, dated May 10, 2002, between CH Energy Group, Inc. and Allan R. Page. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2002; Exhibit (10)(iii)25)
(iii)	20—   Central Hudson Gas & Electric Corporation Savings Incentive Plan, January 1, 2004 Restatement. (Incorporated herein by reference to Energy Group’s Registration Statement on Form S-8, filed on January 16, 2004; Exhibit (99)(a))
(iii)	21—   Amendment to CH Energy Group, Inc. Long-Term Performance-Based Incentive Plan, dated October 24, 2003, effective as of September 26, 2003. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2003; Exhibit (10)(iii)28)
(iii)	22—   CH Energy Group, Inc. Amended and Restated Stock Plan for Outside Directors, dated October 24, 2003, effective as of September 26, 2003. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2003; Exhibit (10)(iii)30)
(iii)	23—   First Amendment to the Central Hudson Gas & Electric Corporation Savings Incentive Plan (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2004; Exhibit (10)(iii)31)

(iii)	24—   CH Energy Group, Inc. 2004 Executive Annual Incentive Plan, dated March 16, 2004. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2004; Exhibit (10)(iii)32)
(iii)	25—   CH Energy Group, Inc. 2005 Executive Annual Incentive Plan, dated February 11, 2005. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2004; Exhibit (10)(iii)33)
(iii)	26—   CH Energy Group, Inc. Form of Performance Shares Agreement. (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005; Exhibit 10(iii)34)
(iii)	27—   CH Energy Group, Inc. Supplemental Executive Retirement Plan, as amended. (corrected March 31, 2006). (Incorporated herein by reference to Energy Group’s Current Report on Form 8-K/A filed on April 6, 2006; Exhibit (10)(iii)40)
(iii)	28—   Amendment to the CH Energy Group, Inc. Supplementary Retirement Plan. (Incorporated herein by reference to Energy Group’s Current Report on Form 8-K/A filed on April 6, 2006; Exhibit (62)(iii)41)
(iii)	29—   Long-Term Equity Incentive Plan of CH Energy Group, Inc. effective as of April 25, 2006. (Incorporated as Appendix A to Energy Group’s proxy statement filed on March 10, 2006; Appendix A)
(iii)	30—   Form of Performance Share Award Agreement under CH Energy Group, Inc. Long-Term Equity Incentive Plan. (Incorporated herein by reference to Energy Group’s Current Report on Form 8-K filed on April 28, 2006; Exhibit (10)(iii)43)
(iii)	31—   Amended and Restated CH Energy Group, Inc. Directors and Executives Deferred Compensation Plan, effective as of January 1, 2008, (dated December 31, 2007). (Incorporated herein by reference to Energy Group’s Current Report on Form 8-K filed on January 3, 2008, and Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)31)

(iii)	32—   Amended and restated Employment Agreement between CH Energy Group, Inc. and the Chief Executive Officer effective as of January 1, 2008. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)32)
(iii)	33—   Amended and restated Employment Agreement between CH Energy Group, Inc. and the three most senior executives (after Chief Executive Officer) effective as of January 1, 2008. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)33)
(iii)	34—   Amended and restated Employment Agreement between CH Energy Group, Inc. and the other executive officers effective as of January 1, 2008. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)34)
(iii)	35—   Amendment to CH Energy Group, Inc. 2000 Long-Term Equity Incentive Plan effective as of December 31, 2007. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)35)
(iii)	36—   Amendment to CH Energy Group, Inc. 2006 Long-Term Equity Incentive Plan effective as of December 31, 2007. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)36)
(iii)	37—   Amended and Restated CH Energy Group, Inc. Supplemental Executive Retirement Plan effective as of January 1, 2008, (dated December 31, 2007). (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)37)
(iii)	38—   Amendment to CH Energy Group, Inc. Supplementary Retirement Plan effective as of December 31, 2007. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)38)

	(iii)	39—   Amended and Restated Central Hudson Gas & Electric Corporation Retirement Benefit Restoration Plan effective as of January 1, 2008, (dated December 31, 2007). (Incorporated herein by reference to Energy Group’s Current Report on Form 8-K filed on January 3, 2008, and Central Hudson’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)39)
	(iii)	40—   Amended and Restated CH Energy Group, Inc. Short-Term Incentive Plan effective as of January 1, 2008, (dated December 31, 2007). (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)40)
	(iii)	41—   Amendments to CH Energy Group, Inc. 2005, 2006 and 2007 Long-Term Equity Incentive Plans effective as of January 1, 2008, (dated December 31, 2007). (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)41)
	(iii)	42—   Amended and restated Employment Agreement between CH Energy Group, Inc. and Griffith Energy Services, Inc. executive effective as of January 1, 2008. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)42)
	(iii)	43—   CH Energy Group, Inc. 2007 Executive Annual Incentive Plan, dated May 320, 2007. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K for the year ended December 31, 2007; Exhibit (10)(iii)43)
(12)	(i)—	CH Energy Group Statement showing the computation of the ratio of earnings to fixed charges.
	(ii)—	Central Hudson Statement showing the computation of the ratio of earnings to fixed charges and ratio of earnings to fixed charges and preferred dividends.
(21)—	Subsidiaries of Energy Group and Central Hudson as of December 31, 2007.
(23)—	Consents of Independent Registered Public Accounting Firm.

		1—     Consents of Independent Registered Public Accounting Firm for incorporation by reference of Energy Group Inc.’s Registration Statements on Form S-3 and S-8.
		2—     Consents of Independent Registered Public Accounting Firm for incorporation by reference of Central Hudson Gas & Electric Corporation’s Registration Statement on Form S-3.
(24)—	Powers of Attorney:
	(i)	1—     Powers of Attorney for each of the directors comprising a majority of the Board of Directors of Energy Group authorizing execution and filing of this Annual Report on Form 10-K by Steven V. Lant.
	(i)	2—     Powers of Attorney for each of the directors comprising a majority of the Board of Directors of Central Hudson authorizing execution and filing of this Annual Report on Form 10-K by Steven V. Lant.
(31)—	Rule 13a-14(a)/15d-14(a) Certifications.
(32)—	Section 1350 Certifications.
(99)—	Additional Exhibits:
	(i)	1—     Order on Consent signed on behalf of the New York State Department of Environmental Conservation and Central Hudson relating to Central Hudson’s former manufactured gas site located in Newburgh, New York. (Incorporated herein by reference to Central Hudson’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1995; Exhibit (99)(i)5)
	(i)	2—     Summary of principal terms of the Amended and Restated Settlement Agreement, dated January 2, 1998, among Central Hudson, the Staff of the Public Service Commission of the State of New York and the New York State Department of Economic Development. (Incorporated herein by reference to Central Hudson’s Current Report on Form 8-K, dated January 7, 1998; Exhibit (99)2)
	(i)	3—     Order of the Public Service Commission of the State of New York, issued and effective February 19, 1998, adopting the terms of Central Hudson’s Amended Settlement

	Agreement, subject to certain modifications and conditions. (Incorporated herein by reference to Central Hudson’s Current Report on Form 8-K, dated February 10, 1998; Exhibit (10)1)
(i)	4—     Order of the Public Service Commission of the State of New York, issued and effective June 30, 1998, explaining in greater detail and reaffirming its Abbreviated Order, issued and effective February 19, 1998, which February 19, 1998 Order modified, and as modified, approved the Amended and Restated Settlement Agreement, dated January 2, 1998, entered into among Central Hudson, the PSC Staff and others as part of the PSC’s “Competitive Opportunities” proceeding (ii) the Order, dated June 24, 1998, of the Federal Energy Regulatory Commission conditionally authorizing the establishment of an Independent System Operator by the member systems of the New York Power Pool and (iii) disclosing, effective August 1, 1998, Paul J. Ganci’s appointment by Central Hudson’s Board of Directors as President and Chief Executive Officer and John E. Mack III’s formerly Chairman of the Board and Chief Executive Officer) continuation as Chairman of the Board. (Incorporated herein by reference to Central Hudson’s Current Report on Form 8-K, dated July 24, 1998; Exhibit (10)1)
(i)	5—     Order of the Public Service Commission of the State of New York, issued and effective October 25, 2001, establishing new rates for Central Hudson. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2001; Exhibit (99)(i)9)
(i)	6—     Order of the Public Service Commission of the State of New York, issued and effective October 3, 2002, authorizing the implementation of the Economic Development Program. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2002; Exhibit (99)(i)10)
(i)	7—     Order of the Public Service Commission of the State of New York, issued and effective October 25, 2002, authorizing the establishment of a deferred accounting plan for site identification and remediation costs relating to Central Hudson’s seven former manufactured gas plants. (Incorporated herein by reference to Energy Group’s Annual

	Report on Form 10-K, for the fiscal year ended December 31, 2002; Exhibit (99)(i)11)
(i)	8—     Order of the Public Service Commission of the State of New York, issued and effective October 29, 2003, directing the continuation of certain non-price features of the rate plan. (Incorporated herein by reference to Energy Group’s Annual Report on Form 10-K, for the fiscal year ended December 31, 2003; Exhibit (99)(i)12)
(i)	9—     Order of the Public Service Commission of the State of New York, issued and effective June 14, 2004, modifying the rate plan. (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004; Exhibit 99(i)14)
(i)	10—   Order of the Public Service Commission of the State of New York, issued and effective July 24, 2006, establishing the rate plan. (Incorporated herein by reference to Energy Group’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006; Exhibit 99)

EX-3.(VI)

Exhibit 3(vi)

As approved and adopted by the Board of Directors on September 26, 2003, to be effective July 16, 2003

B Y - L A W S

OF

CENTRAL HUDSON GAS & ELECTRIC CORPORATION

As approved and adopted by the Board of Directors on September 26, 2003, to be effective July 16, 2003

TABLE OF CONTENTS

BY-LAWS OF

CENTRAL HUDSON GAS & ELECTRIC CORPORATION

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ARTICLE I.	MEETING OF SHAREHOLDERS	1
Section 1.	Place of Meeting	1
Section 2.	Annual Meeting	1
Section 3.	Special Meeting	1
Section 4.	Notice of Meetings	1
Section 5.	Quorum	2
Section 6.	Inspectors	2
Section 7.	Adjournment of Meetings	2
Section 8.	Voting	3
Section 9.	Record Date	3
ARTICLE II.	BOARD OF DIRECTORS	3
Section 1.	Number and Qualifications	3
Section 2.	Election of Directors	4
Section 3.	Term of Office	4
Section 4.	Resignation and Removal	4
Section 5.	Newly Created Directorships and Vacancies	4
Section 6.	Election of Directors by Holders of Preferred Stock	4
Section 7.	Regular Meetings	6
Section 8.	Special Meetings	6
Section 9.	Notice and Place of Meetings	6
Section 10.	Business Transacted at Meetings	6
Section 11.	Quorum and Manner of Acting	6
Section 12.	Compensation	7
Section 13.	Indemnification of Officers and Directors	7
Section 14.	Committees of the Board	9
ARTICLE III.	EXECUTIVE COMMITTEE	9
Section 1.	How Constituted and Powers	9
Section 2.	Removal and Resignation	9

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Section 3.	Filling of Vacancies	10
Section 4.	Quorum	10
Section 5.	Record of Proceedings, etc.	10
Section 6.	Organization, Meetings, etc.	10
Section 7.	Compensation of Members	10
ARTICLE IV.	OFFICERS	11
Section 1.	Election	11
Section 2.	Removal	11
Section 3.	Resignation of Officers	11
Section 4.	Filling of Vacancies	12
Section 5.	Compensation	12
Section 6.	Chairman of the Board	12
Section 7.	Chief Executive Officer	12
Section 8.	President and Chief Operating Officer	12
Section 9.	Vice Presidents	13
Section 10.	Treasurer	13
Section 11.	Controller	13
Section 12.	Secretary	14
Section 13.	Other Officers	14
ARTICLE V.	CONTRACTS, LOANS, BANK ACCOUNTS, ETC.	15
Section 1.	Contracts, etc., How Executed	15
Section 2.	Loans	15
Section 3.	Checks, Drafts, etc.	15
Section 4.	Deposits	16
Section 5.	General and Special Bank Accounts	16
ARTICLE VI.	CAPITAL STOCK	16
Section 1.	Issue of Certificates of Stock	16
Section 2.	Transfer of Stock	16
Section 3.	Lost, Destroyed and Mutilated Certificates	17

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		Page
ARTICLE VII.	DIVIDENDS, SURPLUS, ETC.	17
Section 1.	General Discretion of Directors	17
ARTICLE VIII.	MISCELLANEOUS PROVISIONS	17
Section 1.	Fiscal Year	17
Section 2.	Waiver of Notice	18
Section 3.	Notices	18
Section 4.	Examination of Books	18
Section 5.	Gender	18
ARTICLE IX.	AMENDMENTS	19
Section 1.	Amendment by Directors	19
Section 2.	Amendment by Shareholders	19

As approved and adopted by the Board of Directors on September 26, 2003, to be effective July 16, 2003

B Y - L A W S

OF

CENTRAL HUDSON GAS & ELECTRIC CORPORATION

ARTICLE I.

MEETINGS OF SHAREHOLDERS

SECTION 1. Place of Meeting.

          All meetings of the shareholders shall be held at the principal office of the Corporation in the City of Poughkeepsie, County of Dutchess, State of New York, or at such other place or places in the State of New York as may from time to time be fixed by the Board of Directors.

SECTION 2. Annual Meeting.

          The annual meeting of the shareholders, for the election of directors and the transaction of such other business as may brought before the meeting, shall be held each year at such date and time of day as the directors may determine.

SECTION 3. Special Meetings.

          Special meetings of the shareholders may be called by (i) all of the Board of Directors or (ii) by the Chairman of the Board and one other director of the Corporation or, (iii) in the absence, unavailability, or inability to act of the Chairman of the Board, by the Chief Executive Officer and one other director of the Corporation or by the President and Chief Operating Officer and one other director of the Corporation, or (iv) by shareholders together holding at least one-third of the capital stock of the Corporation entitled to vote or act with respect thereto upon the business to be brought before such meeting.

SECTION 4. Notice of Meetings.

          Notice of any annual or special meeting of the shareholders shall be in writing and shall be signed by the Chairman of the Board or the Chief Executive Officer or the President and Chief Operating Officer or the Secretary or an Assistant Secretary. Such notice shall state the purpose or purposes for which the meeting is called and shall state the place, date and hour of the meeting and, unless it is the annual meeting, indicate that it is being issued by or at the direction of the person or persons calling the meeting. A copy of the notice of any meeting shall be given, personally or by first-class mail, not fewer than

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ten (10) nor more than sixty (60) days before the date of the meeting to each shareholder entitled to vote at such meeting. If mailed, such notice is given when deposited in the United States mail, with postage thereon prepaid, directed to the shareholder at his address as it appears on the record of shareholders or, if he shall have filed with the Secretary a written request that notices to him be mailed to some other address, then directed to him at such other address. An affidavit of the Secretary or other person giving the notice or of a transfer agent of the Corporation that the notice required by this section has been given shall be supplied at the meeting to which it relates.

SECTION 5. Quorum.

          Except as otherwise provided by statute, the holders of a majority of the shares entitled to vote at a meeting shall constitute a quorum at a meeting of shareholders for the transaction of any business, provided that when a specified item of business is required to be voted on by a class or series, voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum for the transaction of such specified item of business.

SECTION 6. Inspectors.

          The person presiding at a meeting of shareholders may, and on the request of any shareholder entitled to vote at such meeting shall, appoint one (1) or more inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath to faithfully execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspector or inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. The inspector or inspectors shall make a report in writing of any matter determined by him or them and execute a certificate of any fact found by him or them.

SECTION 7. Adjournment of Meetings.

          Any meeting of shareholders may be adjourned by a majority vote of the shareholders present or represented by proxy despite the absence of a quorum. When a meeting of shareholders is adjourned to another time or place, it shall not be necessary to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken, and at the adjourned meeting at which a quorum shall be present, any business may be transacted and any corporate action may be taken, which might have been transacted or taken if the meeting had been held as originally called.

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SECTION 8. Voting.

          Every shareholder of record shall be entitled at every meeting of shareholders to one vote for every share of stock standing in his name on the record of shareholders of the Corporation unless otherwise provided in the Certificate of Incorporation and except as provided in Section 9 of this Article I. Every shareholder entitled to vote at a meeting of shareholders may authorize another person or persons to act for him by proxy. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. A list of shareholders as of the record date certified by the officer responsible for its preparation or by a transfer agent shall be available at every meeting of shareholders and shall be produced upon the request of any shareholder, and all persons who appear from such list to be shareholders entitled to vote at the meeting may vote at such meeting.

SECTION 9. Record Date.

          For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to consent to or dissent from any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the Board of Directors may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be more than sixty (60) nor less than ten (10) days before the day of such meeting, nor more than sixty (60) days prior to any other action.

ARTICLE II.

BOARD OF DIRECTORS

SECTION 1. Number and Qualifications.

          The number of directors constituting the entire Board shall be not less than three (3) nor more than ten (10). The number of directors may be increased or decreased by amendment of these by-laws adopted by vote of a majority of the entire Board of Directors.

          Each director shall be at least eighteen (18) years of age. No person who has reached age seventy-two (72) shall stand for election as a director.

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SECTION 2. Election of Directors.

          Except as otherwise required by law or by the Certificate of Incorporation and except as hereinafter otherwise provided by Sections 5 and 6 of this Article II, directors shall be elected by a plurality of the votes cast at the annual meeting of shareholders by the holders of shares entitled to vote at such meeting and shall hold office until the next annual meeting of shareholders.

SECTION 3. Term of Office.

          Each director shall, except as hereinafter provided in Section 4 and in Section 6 of this Article II, hold office until the expiration of the term for which he is elected and until his successor has been elected and qualified.

SECTION 4. Resignation and Removal.

          Any director may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the Chairman of the Board or the Secretary. The acceptance of a resignation shall not be necessary to make it effective unless so specified therein. Any director may at any time, with or without cause, be removed by vote of the shareholders at a special meeting called for that purpose. When, however, pursuant to the provisions of the Certificate of Incorporation, the holders of the shares of any class or series, voting as a class, have the right to elect one (1) or more directors, such director or directors so elected may be removed only by a vote of the holders of the shares of that class or series, voting as a class.

SECTION 5. Newly Created Directorships and Vacancies.

          Newly created directorships resulting from an increase in the number of directors and vacancies occurring on the Board for any reason, except the removal of directors without cause, and except as provided for in Section 6 of this Article II, may be filled by vote of a majority of the directors then in office, although less than a quorum may exist. A vacancy occurring on the Board by reason of the removal of a director without cause may be filled only by vote of the shareholders, subject to the provisions of said Section 6. A director elected to fill a vacancy shall be elected to hold office for the unexpired term of his predecessor, and until his successor is elected and qualified.

SECTION 6. Election of Directors by Holders of Preferred Stock.

          Anything in these by-laws to the contrary notwithstanding, in case dividends on any series of the serial preferred stock of the Corporation at the rate or rates prescribed for such series shall not have been paid in full for periods aggregating one (1) year or more,

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than, and until full cumulative dividends thereon shall have been paid, the holders of each such series shall have the right, together with holders of all other serial preferred stock in respect to which the same right shall be conferred, to elect a majority of the members of the Board of Directors. Whenever the holders of any series of serial preferred stock shall become so entitled, either separately or together with the holders of other serial preferred stock as aforesaid, to elect a majority of the members of the Board of Directors, and upon the written request of the holders of record of at least five percent (5%) of the total number of shares of serial preferred stock then outstanding and entitled to such right of election, addressed to the Secretary, a special meeting of the holders of serial preferred stock entitled to such right of election and the holders of common stock shall be called for the purpose of electing directors. At such meeting the holders of serial preferred stock and the holders of common stock shall vote separately, and the holders of serial preferred stock present in person or by proxy at such meeting shall be entitled to elect, by a plurality of votes cast by them, a majority of the members of the Board of Directors, and the holders of common stock present in person or by proxy shall be entitled to elect, by a plurality of votes cast by them, the remainder of the Board of Directors. The persons so elected as directors shall thereupon constitute the Board of Directors, and the terms of office of the previous directors shall thereupon terminate. The term “a majority of the members of the Board of Directors” as herein used shall mean one (1) more than one half of the total number of directors provided for by these by-laws, regardless of the number then in office, and in case one half of such number shall not be a whole number, such one half shall be the next smaller whole number. In the event of any vacancy on the Board of Directors among the directors elected by the holders of serial preferred stock, such vacancy may be filled by the other directors elected by them, and if not so filled may be filled by the holders of serial preferred stock entitled to the right of election as aforesaid at a special meeting of the holders of said stock called for that purpose, and such a meeting shall be called upon the written request of at least five percent (5%) of the total number of shares of serial preferred stock then outstanding and entitled to such right of election. If and when, however, full cumulative dividends upon any series of the serial preferred stock shall at any subsequent time be paid, then and thereupon such power of the holders of such series of serial preferred stock to vote in the election of a majority of the members of the Board of Directors shall cease; subject, however, to being again revived at any subsequent time if there shall again be default in payment of dividends upon such series of serial preferred stock for periods aggregating one (1) year or more as aforesaid. Whenever such power of the holders of all series of serial preferred stock to vote shall cease, the proper officer of the Corporation may and upon the written request of the holders of record of five percent (5%) of the total number of shares of common stock then outstanding shall call a special meeting of the holders of common stock for the purpose of electing directors. At any meeting so called, the holders of a majority of the common stock then outstanding, present in person or by proxy, shall be entitled to elect, by a plurality of votes, new directors. The persons so elected as directors shall thereupon constitute the Board of Directors, and the terms of office of the previous directors shall thereupon terminate.

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SECTION 7. Annual Meeting and Regular Meetings.

          The directors shall hold an annual meeting of the Board of Directors for the election of officers as soon as practicable after the adjournment of the annual meeting of shareholders, and, in addition, regular meetings of the directors shall be held at such times as the Board of Directors may determine. No notice of the annual meeting of the Board of Directors shall be required if held immediately after the annual meeting of shareholders and if a quorum is present.

SECTION 8. Special Meetings.

          Special meetings of the Board of Directors may be called by (i) the Chairman of the Board or (ii) in the absence, unavailability, or inability to act of the Chairman of the Board, by the Chief Executive Officer and one director of the Corporation or by the President and Chief Operating Officer and one director of the Corporation, or (iii) by any two (2) directors at any time upon the written request of the Secretary on behalf of the two (2) directors.

SECTION 9. Notice and Place of Meetings.

          Regular meetings of the Board of Directors shall be held at such place or places either within or without the State of New York as the Board of Directors may from time to time determine. Special meetings of the Board of Directors shall be held at such place or places either within or without the State of New York as may be specified in the respective notices of such meetings. Except as provided in Section 7 of this Article II, notice of any regular or special meeting of the Board of Directors shall be mailed to each director addressed to him at his residence or usual place of business at least two (2) days before the day on which such meeting is to be held, or shall be sent to him at such place by telegraph, or be delivered personally or by telephone, not later than the day before the day on which such meeting is to be held.

SECTION 10. Business Transacted at Meetings.

          Any business may be transacted and any corporate action taken at any regular or special meeting of the Board of Directors whether stated in the notice of the meeting or not.

SECTION 11. Quorum and Manner of Acting.

          A majority of the directors in office at the time of any meeting of the Board of Directors shall constitute a quorum and, except as by law otherwise provided, an act of a majority of the directors present at any such meeting, at which a quorum is present, shall be an act of the Board of Directors. In the event it is necessary to obtain a quorum, at the discretion of the presiding director, any one (1) or more directors may be present and participate in a meeting of the Board of Directors by means of a conference telephone or

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similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at such meeting. In the absence of a quorum, the directors present may adjourn the meeting from time to time until a quorum be had. Notice of any adjourned meeting need not be given other than by announcement at the meeting. The directors shall act only as a Board of Directors and individual directors shall have no power as such.

SECTION 12. Compensation.

          The compensation of the directors, other than employees of the Corporation, for services as directors and as members of committees of the Board of Directors shall be as fixed by the Board of Directors from time to time. Such directors shall also be reimbursed for expenses incurred in attending meetings of the Board of Directors and/or committees thereof.

SECTION 13. Indemnification of Officers and Directors.

          A. General Applicability

          Except to the extent expressly prohibited by the New York Business Corporation Law, the Corporation shall indemnify each person made, or threatened to be made, a party to or involved in any action, suit or proceeding, whether criminal or civil, administrative or investigative by reason of the fact that such person or such person’s testator or intestate is or was a director or officer of the Corporation, against judgments, fines, penalties, amounts paid in settlement and reasonable expenses, including attorney’s fees and expenses, reasonably incurred in enforcing such person’s right to indemnification, incurred in connection with such action or proceeding, or any appeal therein, provided that no such indemnification shall be made if a judgment or other final adjudication adverse to such person establishes that such person’s acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that such person personally gained in fact a financial profit or other advantage to which such person was not legally entitled, and provided further that no such indemnification shall be required with respect to any settlement or other nonadjudicated disposition of any threatened or pending action or proceeding unless the Corporation has given its prior consent to such settlement or other disposition.

          B. Scope of Indemnification

          The Corporation promptly shall advance or reimburse upon request, after receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances of reimbursements, to any person entitled to indemnification hereunder all reasonable expenses, including attorney’s fees and expenses, reasonably incurred in defending any action or proceeding in advance of the final disposition thereof upon receipt of an undertaking by or on behalf of such person to repay such amount if such person is ultimately found not to be entitled to indemnification or, where indemnification is granted, to

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the extent the expenses so advanced or reimbursed exceed the amount to which such person is entitled; provided, however, that such person shall cooperate in good faith with any request by the Corporation that common counsel be used by the parties to an action or proceeding who are similarly situated unless to do so would be inappropriate due to actual or potential differing interests between or among such parties.

          C. Other Indemnification Provisions

          Nothing herein shall limit or affect any right of any director, officer or other corporate personnel otherwise than hereunder to indemnification or expenses, including attorney’s fees, under any statute, rule, regulation, certificate of incorporation, by-law, insurance policy, contract or otherwise; without affecting or limiting the rights of any director, officer or other corporate personnel pursuant to this Article II, the Corporation is authorized to enter into agreements with any of its directors, officers or other corporate personnel extending rights to indemnification and advancement of expenses to the fullest extent permitted by applicable law.

          Unless limited by resolution of the Board of Directors or otherwise, the Corporation shall advance the payment of expenses to the fullest extent permitted by applicable law to, and shall indemnify, any director, officer or other corporate person who is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, whether for profit or not-for-profit, or a partnership, joint venture, trust or other enterprise, whether or not such other enterprise shall be obligated to indemnify such person.

          D. Survival of Indemnification

          Anything in these by-laws to the contrary notwithstanding, no elimination or amendment of this Article II adversely affecting the right of any person to indemnification or advancement of expenses hereunder shall be effective until the sixtieth (60^th) day following notice to such person of such action, and no elimination of or amendment to this Article II shall deprive any such person’s rights hereunder arising out of alleged or actual occurrences, acts or failures to act prior to such sixtieth (60^th) day.

          E. Inability to Limit Indemnification

          The Corporation shall not, except by elimination or amendment of this Article II in a manner consistent with the preceding Section 13.D and with the provisions of Article IX (“Amendments”), take any corporate action or enter into any agreement which prohibits, or otherwise limits the rights of any person to, indemnification in accordance with the provisions of this Article II. The indemnification of any person provided by this Article II shall continue after such person has ceased to be a director or officer of the Corporation and shall inure to the benefit of such person’s heirs, executors, administrators and legal representatives.

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          F. Severability

          In case any provision in this Article II shall be determined at any time to be unenforceable in any respect, the other provisions of this Article II shall not in any way be affected or impaired thereby, and the affected provision shall be given the fullest possible enforcement in the circumstances, it being the intention of the Corporation to afford indemnification and advancement of expenses to its directors or officers, acting in such capacities or in the other capacities mentioned herein, to the fullest extent permitted by law.

SECTION 14. Committees of the Board.

          The Board of Directors, by resolution adopted by a majority of the entire Board of Directors, may designate from among the directors, in addition to the Executive Committee provided for in Article III of these by-laws, committees of the Board of Directors, each consisting of three (3) or more directors, and each of which shall have the powers and duties prescribed in the resolution designating such committees. Anything in these by-laws or in resolutions designating such committees to the contrary notwithstanding, at the discretion of the presiding committee member, any one or more members of any committee of the Board of Directors may participate in any meeting of such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at such meeting.

ARTICLE III.

EXECUTIVE COMMITTEE

SECTION 1. How Constituted and Powers.

          The Board of Directors, by resolution adopted by a majority of the entire Board of Directors, may designate three (3) or more of the directors, together with the Chairman of the Board, to constitute an Executive Committee, to serve at the pleasure of the Board of Directors, which Committee shall during the intervals between meetings of the Board of Directors, unless limited by the resolution appointing such Committee, have authority to exercise all or any of the powers of the Board of Directors in the management of the affairs of the Corporation, insofar as such powers may lawfully be delegated. The Board may designate one (1) or more directors as alternate members of such Committee, who may replace any absent member or members at any meeting of such Committee.

SECTION 2. Removal and Resignation.

          Any member of the Executive Committee, except a member ex officio, may be removed at any time with or without cause, by resolution adopted by a majority of the entire

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Board of Directors. Any member of the Executive Committee may resign at any time. Such resignation shall be in writing and shall take effect at the time specified therein, or, if no time be specified, at the time of its receipt by the Chairman of the Board or Chief Executive Officer or the President and Chief Operating Officer or Secretary. The acceptance of a resignation shall not be necessary to make it effective unless so specified therein. Any person ceasing to be a director shall ipso facto cease to be a member of the Executive Committee.

SECTION 3. Filling of Vacancies.

          Any vacancy among the members of the Executive Committee occurring from any cause whatsoever may be filled from among the directors by a majority of the entire Board of Directors.

SECTION 4. Quorum.

          A majority of the members of the Executive Committee shall constitute a quorum. The act of a majority of the members of the Executive Committee present at any meeting at which a quorum is present shall be the act of the Executive Committee. The members of the Executive Committee shall act only as a committee and individual members thereof shall have no powers as such.

SECTION 5. Record of Proceedings, etc.

          The Executive Committee shall keep a record of its acts and proceedings and shall report the same to the Board of Directors when and as required.

SECTION 6. Organization, Meetings, etc.

          The Executive Committee shall make such rules as it may deem expedient for the regulation and carrying on of its meetings and proceedings.

SECTION 7. Compensation of Members.

          The members of the Executive Committee shall be entitled to such compensation as may be allowed them by resolution of the Board of Directors.

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ARTICLE IV.

OFFICERS

SECTION 1. Election.

          The Board of Directors, at its regular annual meeting, shall elect or appoint from their number a Chairman of the Board and the Chairmen of Committees of the Board, which officers shall be officers of the Board of Directors; and it shall elect or appoint a Chief Executive Officer, a President and Chief Operating Officer, one or more Vice Presidents, a Secretary, a Treasurer, and a Controller, which officers shall be officers of the Corporation. Each of said officers, subject to the provisions of Sections 2 and 3 of this Article IV, shall hold office, if elected, until the meeting of the Board of Directors following the next annual meeting of shareholders and until his successor has been elected and qualified, or, if appointed, for the term specified in the resolution appointing him and until his successor has been elected or appointed. Any two (2) or more offices may be held by the same person, except the offices of President and Chief Operating Officer and Secretary. Should any of the officers of the Board of Directors or the President and Chief Operating Officer cease to be a director, he shall ipso facto cease to be such officer.

SECTION 2. Removal.

          Any officer of the Corporation may be removed summarily with or without cause at any time by resolution of the Board of Directors or, except in the case of any officer elected by the Board of Directors, by any committee or officer upon whom such power of removal may be conferred by the Board of Directors, without prejudice, however, to any rights which any such person may have by contract.

SECTION 3. Resignation of Officers.

          Any officer of the Corporation may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President and Chief Operating Officer, or Secretary of the Corporation. Such resignation shall take effect at the time specified therein, or, if no time be specified, at the time of its receipt by the Board of Directors or one (1) of the above-named officers of the Corporation. The acceptance of a resignation shall not be necessary to make it effective unless so specified therein.

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SECTION 4. Filling of Vacancies.

          A vacancy in any office, from whatever cause arising, shall be filled for the unexpired portion of the term in the manner provided in these by-laws for the regular election or appointment of such officer.

SECTION 5. Compensation.

          The compensation of the officers of the Corporation shall be fixed by the Board of Directors or by any committee or superior officer upon whom power in that regard may be conferred by the Board of Directors.

SECTION 6. Chairman of the Board.

          The Chairman of the Board shall, when present, preside at all meetings of the shareholders and of the Board of Directors. He shall be Chairman of the Executive Committee. He shall be responsible for direction of the policy of the Board of Directors and shall have the power and perform the duties necessary to implement such responsibility.

SECTION 7. Chief Executive Officer.

          The Chief Executive Officer shall, subject to the authority of the Chairman of the Board, have the power and perform the duties usually appertaining to the Chief Executive Officer of a corporation, and such power and duties as the Chairman of the Board shall assign to him.

SECTION 8. President and Chief Operating Officer.

          The President and Chief Operating Officer shall, subject to the authority of the Chairman of the Board and the Chief Executive Officer, have the power and perform the duties usually appertaining to the President and Chief Operating Officer of a corporation, and such power and duties as the Chairman of the Board or Chief Executive Officer shall assign to him.

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SECTION 9. Vice Presidents.

          The Vice Presidents shall have such duties as may from time to time be assigned to them by the President and Chief Operating Officer, or by either of the Chairman of the Board or the Chief Executive Officer in the President and Chief Operating Officer’s absence. When performing the duties of the President and Chief Operating Officer, they shall have all the powers of, and be subject to all the restrictions upon, the President and Chief Operating Officer.

SECTION 10. Treasurer.

The Treasurer shall:
(a)	Except as otherwise ordered by the Board of Directors, have charge and custody of, and be responsible for, all funds, securities, receipts and disbursements of the Corporation and shall deposit, or cause to be deposited, all money and other valuable effects in its name in such banks, trust companies or other depositaries as shall be selected in accordance with these by-laws;
(b)	Receive and give receipts for payments made to the Corporation and take and preserve proper receipts for all monies disbursed by it;
(c)	In general, perform such duties as are incident to the office of Treasurer, or as may be from time to time assigned to him by the Chairman of the Board, the Chief Executive Officer, or the President and Chief Operating Officer, or as may be prescribed by law or by these by-laws.

          The Treasurer shall give to the Corporation a bond if, and in such sum as, required by the Board of Directors, conditioned for the faithful performance of the duties of his office and the restoration of the Corporation at the expiration of his term of office, or in case of his death, resignation or removal from office, of all books, papers, vouchers, money or other property of whatever kind in his possession belonging to the Corporation.

SECTION 11. Controller.

The Controller shall:
(a)	Keep at the office of the Corporation correct books of account of all its business and transactions, subject to the supervision and control of the President and Chief Operating Officer;
(b)	Exhibit at all reasonable times his books of accounts and records to any of the directors upon application during business hours at the office of the Corporation where such books and records are kept;

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(c)	Render a full statement of the financial condition of the Corporation whenever requested so to do by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, or the President and Chief Operating Officer; and
(d)	In general, perform such duties as may be from time to time assigned to him by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, or the President and Chief Operating Officer.

SECTION 12. Secretary.

The Secretary shall:
(a)	Keep the minutes of the meetings of the shareholders, Board of Directors and Executive Committee in books provided for the purpose;
(b)	See that all notices are duly given in accordance with the provisions of these by-laws or as required by law;
(c)	Be custodian of the seal of the Corporation and see that it or a facsimile thereof is affixed to all stock certificates prior to their issue, and that it is affixed to all documents the execution of which under the seal of the Corporation is duly authorized or which require that the seal be affixed thereto;
(d)	Have charge of the stock certificate books of the Corporation and keep, or cause to be kept, at the office of the Corporation or at the office of its transfer agent or registrar, a record of shareholders of the Corporation, containing the names and addresses of all shareholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof; and
(e)	In general, perform such duties as are incident to the office of Secretary, or as may be from time to time assigned to him by the Chairman of the Board, the Chief Executive Officer, or the President and Chief Operating Officer, or as are prescribed by law or by these by-laws.

SECTION 13. Other Officers.

          Other officers, including one (1) or more Vice Presidents, may from time to time be appointed by the Board of Directors or by any officer or committee upon whom a power of appointment may be conferred by the Board of Directors, which other officers shall have such powers and perform such duties as may be assigned to them by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, or the President and Chief Operating Officer, and shall hold office for such terms as may be designated by the

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Board of Directors or the officer or committee appointing them.

ARTICLE V.

CONTRACTS, LOANS, BANK ACCOUNTS, ETC.

SECTION 1. Contracts, etc., How Executed.

          The Board of Directors, except as in these by-laws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances, and, unless so authorized by the Board of Directors, no officer or agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credits or to render it liable pecuniarily for any purpose or to any amount.

SECTION 2. Loans.

          No loans shall be contracted on behalf of the Corporation and no negotiable paper shall be issued in its name, unless authorized by the vote of the Board of Directors. When so authorized, any officer or agent of the Corporation may effect loans and advances for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual and for such loans and advances may make, execute and deliver promissory notes, bonds or other evidences of indebtedness of the Corporation. When so authorized, any officer or agent of the Corporation, as security for the payment of any and all loans, advances, indebtedness and liabilities of the Corporation, may pledge, hypothecate or transfer any and all stocks, securities and other personal property at any time held by the Corporation, and to that end endorse, assign and deliver the same. Such authority may be general or confined to specific instances. The Board of Directors may authorize any mortgage or pledge of, or the creation of a security interest in, all or any part of the property of the Corporation, or any interest therein, wherever situated.

SECTION 3. Checks, Drafts, etc.

          All checks, drafts or other orders for the payment of money, notes or other evidence of indebtedness issued in the name of the Corporation shall be signed by the Treasurer or such other officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.

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SECTION 4. Deposits.

          All funds of the Corporation shall be deposited from time to time to its credit in such banks, trust companies or other depositaries as the Board of Directors may select, or as may be selected by an officer or officers, agent or agents of the Corporation to whom such power, from time to time, may be delegated by the Board of Directors and, for the purpose of such deposit, checks, drafts and other orders for the payment of money which are payable to the order of the Corporation may be endorsed, assigned and delivered by the Chief Executive Officer, the President and Chief Operating Officer, a Vice President, or the Treasurer or the Secretary, or by any officer, agent or employee of the Corporation to whom any of said officers, or the Board of Directors, by resolution, shall have delegated such power.

SECTION 5. General and Special Bank Accounts.

          The Board of Directors may from time to time authorize the opening and keeping of general and special bank accounts with such banks, trust companies or other depositaries as the Board of Directors may select and may make such special rules and regulations with respect thereto, as it may deem expedient.

ARTICLE VI.

CAPITAL STOCK

SECTION 1. Issue of Certificates of Stock.

          Certificates for shares of the capital stock of the Corporation shall be in such form as shall be approved by the Board of Directors. They shall be numbered, as nearly as may be, in the order of their issue and shall be signed by the Chairman of the Board or by the Chief Executive Officer or by the President and Chief Operating Officer or a Vice President, and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed with the seal of the Corporation or a facsimile thereof. The signatures of the officers upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation itself or its employee.

SECTION 2. Transfer of Stock.

          Shares of the capital stock of the Corporation shall be transferable by the holder thereof in person or by duly authorized attorney upon surrender of the certificate or certificates for such shares properly endorsed. Every certificate of stock exchanged or returned to the Corporation shall be appropriately cancelled. A person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof as regards the Corporation. The Board of Directors may make such other and further rules

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and regulations as they may deem necessary or proper concerning the issue, transfer and registration of stock certificates.

SECTION 3. Lost, Destroyed and Mutilated Certificates.

          The holder of any stock of the Corporation shall immediately notify the corporation of any loss, destruction or mutilation of the certificates therefor. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it alleged to have been lost or destroyed, and the Board of Directors may, in its discretion, require the owner of the lost or destroyed certificate or his legal representatives to give the Corporation a bond in such sum and with such surety or sureties, as they may require to indemnify the Corporation, and any registrar or transfer agent of its stock, against any claim that may be made against it by reason of the issue of such new certificate and against all other liability in the premises.

ARTICLE VII.

DIVIDENDS, SURPLUS, ETC.

SECTION 1. General Discretion of Directors.

          The Board of Directors shall have the power from time to time to fix and determine and to vary the amount of working capital of the Corporation, to determine whether any and, if any, what dividends shall be declared and paid to the shareholders, to fix the date or dates for the payment of dividends, and to fix a time, not exceeding fifty (50) days preceding the date fixed for the payment of any dividend, as a date for the determination of shareholders entitled to receive payment of such dividend. When any dividend is paid or any other distribution is made, in whole or in part, from sources other than earned surplus, it shall be accompanied by a written notice (i) disclosing the amounts by which such dividend or distribution affects stated capital, surplus and earned surplus, or (ii) if such amounts are not determinable at the time of such notice, disclosing the approximate effect of such dividend or distribution as aforesaid and stating that such amounts are not yet determinable.

ARTICLE VIII.

MISCELLANEOUS PROVISIONS

SECTION 1. Fiscal Year.

          The fiscal year of the Corporation shall be the calendar year.

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SECTION 2. Waiver of Notice.

          Notice of meeting need not be given to any shareholder who submits a signed waiver of notice, in person or by proxy, whether before or after the meeting. The attendance of any shareholder at a meeting, in person or by proxy, without protesting prior to the conclusion of the meeting the lack of notice of such meeting, shall constitute a waiver of notice by him. Notice of a meeting need not be given to any director who submits a signed waiver of notice whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to him. Whenever the Corporation or the Board of Directors or any committee thereof is authorized to take any action after notice to any person or persons or after the lapse of a prescribed period of time, such action may be taken without notice and without the lapse of such period of time, if at any time before or after such action is completed the person or persons entitled to such notice or entitled to participate in the action to be taken or, in the case of a shareholder, by his attorney-in-fact, submit a signed waiver of notice of such requirements.

SECTION 3. Notices.

          Whenever by these by-laws any written notice is required to be given to any shareholder, director or officer, the same may be given, unless otherwise required by law and except as hereinbefore otherwise expressly provided, by delivering it personally to him or by mailing or telegraphing it to him at his last known post office address. Where a notice is mailed or telegraphed, it shall be deemed to have been given at the time it is mailed or telegraphed.

SECTION 4. Examination of Books.

          The Board of Directors shall, subject to the laws of the State of New York, have power to determine from time to time, whether, to what extent, and under what conditions and regulations the accounts and books of the Corporation or any of them shall be open to the inspection of the shareholders, and no shareholder shall have any right to inspect any account book or document of the Corporation except as conferred by the laws of the State of New York unless and until authorized so to do by resolution of the Board of Directors or shareholders of the Corporation.

SECTION 5. Gender.

          Words used in these by-laws importing the male gender shall be construed to include the female gender, wherever appropriate.

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ARTICLE IX.

AMENDMENTS

SECTION 1. Amendment by Directors.

          The Board of Directors shall have the power without the assent or vote of the shareholders to adopt by-laws, and except as hereinafter provided in Section 2 of this Article, and subject to such limitations as may be imposed by law, to rescind, alter, amend or repeal by a vote of a majority of the whole Board of Directors any of the by-laws, whether adopted by the Board of Directors or by the shareholders.

SECTION 2. Amendment by Shareholders.

          The shareholders shall have power to rescind, alter, amend or repeal any by-laws and to adopt by-laws which, if so expressed, may not be rescinded, altered, amended or repealed by the Board of Directors.

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          I, Lincoln E. Bleveans, Secretary of Central Hudson Gas & Electric Corporation, do hereby certify that the foregoing is a full, true and correct copy of the by-laws of said Corporation as in effect at the date hereof.

          IN WITNESS WHEREOF, I have hereunto set my hand as Secretary of said Corporation and hereunto affixed its corporate seal this __th day of _____, ____.

	Secretary
Amended: April 27, 1999
Amended: December 15, 1999
Amended: January 18, 2002
Amended: July 16, 2003

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          I, Lincoln E. Bleveans, Secretary of Central Hudson Gas & Electric Corporation, do hereby certify that the foregoing is a full, true and correct copy of the by-laws of said Corporation as in effect at the date hereof.

          IN WITNESS WHEREOF, I have hereunto set my hand as Secretary of said Corporation and hereunto affixed its corporate seal this __th day of _____, ____.

	/s/ Lincoln E. Bleveans
		Secretary
Amended: April 27, 1999
Amended: December 15, 1999
Amended: January 18, 2002
Amended: July 16, 2003

EX-10.(I)53

Exhibit 10(i)53

PROMISSORY NOTE

$15,000,000.00	Albany, New York
	Date: April 16, 2007

          FOR Value Received, CENTRAL HUDSON GAS & ELECTRIC CORPORATION, a New York corporation (the “Debtor”), HEREBY PROMISES TO PAY to the order of JPMORGAN CHASE BANK, N.A. (the “Bank”), at its offices located at 12 Corporate Woods Blvd., Albany, New York 12211, or at such other place as the Bank or any holder hereof may from time to time designate, the principal sum of Fifteen Million and 00/100 Dollars ($15,000,000), or such lesser amount as may constitute the outstanding balance hereof, in lawful money of the United States, on or before the earlier of (i) On demand; (ii) June 30, 2008 (the “Termination Date”); or (iii) the date set forth on the Grid Schedule attached hereto as the maturity date (the “Maturity Date”) with respect to each loan made hereunder (each a “Loan” and collectively, the “Loans”); and to pay interest in like money at said office or place from the date hereof on the unpaid principal balance of each Loan made hereunder at a rate equal to the “Applicable Interest Rate” (as hereinafter defined) for such Loan, which interest shall be payable on the first day of each month commencing with the first month immediately following the date of a Loan and on the Maturity Date for such Loan or until such Loan shall be due and payable by acceleration or otherwise, and thereafter, on demand. Interest after the Maturity Date for a Loan or after a Loan becomes due and payable by acceleration or otherwise shall be payable at a rate of two percent (2%) per annum above the Bank’s Prime Rate, which rate shall be computed for the actual number of days elapsed on the basis of a 360-day year and shall be adjusted as of the date of each such change, but in no event higher than the maximum permitted under applicable law. “Prime Rate” shall mean the rate of interest as is publicly announced at the Bank’s principal office from time to time as its Prime Rate.

          The Bank is authorized to enter on the Grid Schedule attached hereto (i) the amount of each Loan made from time to time hereunder, (ii) the date on which each Loan is made, (iii) the Maturity Date for each Loan, which in no event shall be a date later than the Termination Date; (iv) the Interest Rate agreed upon between the Debtor and the Bank for each Loan (each such rate, the “Applicable Interest Rate” being either the “Fixed Rate”, or the “Prime Rate”, as hereinabove defined); (v) the amount of each payment made hereunder, and (vi) the outstanding principal balance of the Loans hereunder from time to time, all of which entries, in the absence of manifest error, shall be conclusive and binding on the Debtor; provided, however, that the failure of the Bank to make any such entries shall not relieve the Debtor from its obligation to pay any amount due hereunder.

          “Fixed Rate” means a rate of interest per annum quoted to the Debtor by the Bank in its discretion, from time to time at the request of the Debtor, by 11:00 a.m., New York City time, upon one (1) Business Days’ prior request therefor by the Debtor; such quoted rate shall be the fixed rate which would be applicable to a Fixed Rate Loan by the Bank on the requested date for the proposed borrowing, in the specified amount and with the specified Interest Period; the Debtor may request a Fixed Rate Loan on the basis of such quote. Notwithstanding any other provision of this Note, (i) rates quoted by the Bank shall be determined in the sole discretion of the Bank by reference to such factors and considerations as the Bank shall deem relevant, and (ii) the Bank shall not be required to quote any rate at all for any proposed Loan or upon the termination of an Interest Period relating to any existing Loan.

          “Interest Period” means as to any Fixed Rate Loan the period mutually agreed upon by the Debtor and the Bank; provided, however, that (i) if any Interest Period would end on a day which shall not be a Business Day, such Interest Period shall be extended to the succeeding Business Day, and (ii) no Interest Period may be selected which expires later than the Termination Date.

          “Business Day” shall mean any day that is not a Saturday, Sunday or legal holiday in which banks in New York City are open for business.

          The Debtor shall not have the right to prepay any Loan bearing interest at the Fixed Rate prior to the Maturity Date of such Loan. In the event the Debtor does prepay such a Loan prior to its Maturity Date, the Debtor shall reimburse the Bank on demand for any loss incurred or to be incurred by it in the reemployment of the funds released by any prepayment.

          If the Debtor shall default in the punctual payment of any sum payable with respect to, or in the observance or performance of any of the terms and conditions of, this Note, or any other agreement with or in favor of the Bank, or if a default or event of default that is accelerated shall occur for any reason under any such agreement, or if the Debtor shall default with respect to any other obligations for borrowed money, or if the Bank shall, in its sole discretion, consider any of the obligations of the Debtor hereunder insecure, or if any warranty, representation or statement of fact made in writing to the Bank at any time by an officer, agent or employee of the Debtor is false or misleading in any material respect when made, or if the Debtor shall be dissolved or shall fail to maintain its existence in good standing, or if the usual business of the Debtor shall be suspended or terminated, or if any levy, execution, seizure, attachment or garnishment shall be issued, made or filed on or against any material portion of the property of the Debtor, or if the Debtor shall become insolvent (however defined or evidenced), make an assignment for the benefit of creditors or make or send a notice of intended bulk transfer, or if a committee of creditors is appointed for, or any petition or proceeding for any relief under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, receivership, liquidation or dissolution law or statue now or hereafter in affect (whether at law or in equity) is filed or commenced by or against the Debtor or any material portion of its property, or if any trustee or receiver is appointed for the Debtor or any such property - then and in any such event, in addition to all rights and remedies of the Bank under applicable law and otherwise, all such rights and remedies being cumulative, not exclusive and enforceable alternatively, successively and/or concurrently, the Bank may, at its option, declare any and all of the amounts owing under this Note to be due and payable, whereupon the maturity of the then unpaid balance hereof shall be accelerated and the same, together with all interest accrued hereon, shall forthwith become due and payable.

          The Debtor hereby waives diligence, demand, presentment, protest and notice of any kind, and assents to extensions of the time of payment, release, surrender or substitution of security, or forbearance or other indulgence, without notice.

          This Note may not be changed, modified or terminated orally, but only by an agreement in writing signed by the Debtor and the Bank.

          In the event the Bank or any holder hereof shall refer this Note to an attorney for collection, the Debtor agrees to pay, in addition to unpaid principal and interest, all the costs and expenses incurred in attempting or effecting collection hereunder, including reasonable attorney’s fees, whether or not suit is instituted.

          In the event of any litigation with respect to this Note, the Debtor waives the right to a trial by jury and all rights of setoff and rights to interpose counter-claims and cross-claims. The Debtor hereby irrevocably consents to the jurisdiction of the courts of the State of New York and of any Federal court located in such State in connection with any action or proceeding arising out of or relating to this Note. The execution and delivery of this Note has been authorized by the Board of Directors and by any necessary vote or consent of the stockholders of the Debtor. The Debtor hereby authorizes the Bank to complete this Note in any particulars according to the terms of the Loan evidenced hereby.

          This Note shall be governed by an construed in accordance with the laws of the State of New York applicable to contracts made and to be performed in such State, and shall be binding upon the successors and assigns of the Debtor and inure to the benefit of the Bank, its successors, endorsees and assigns.

          If any term or provision of this Note shall be held invalid, illegal or unenforceable, the validity of all other terms and provisions hereof shall in no way be affected thereby.

CENTRAL HUDSON GAS & ELECTRIC CORPORATION

By:
		ATTEST:
		By:
			LINCOLN E. BLEVEANS, Secretary

GRID SCHEDULE

Date Note# Effective
Date Applicable
Interest Rate Amount Maturity
Date

EX-10.(I)54

Exhibit 10(i)54

PROMISSORY NOTE

Date:	6/22/07
Poughkeepsie, New York

FOR VALUE RECEIVED, the undersigned, Central Hudson Gas & Electric Corporation, a New York corporation (the “Company”), promises to pay to the order of Citizens Bank, N.A. (the “Bank”), on demand, at the principal office of the Bank located 833 Broadway Albany, NY, the principal sum equal to the lesser of (a) 40,000,000.00 or (b) the aggregate unpaid principal amount of all advances (the “Loans”) made to the Company by the Bank hereunder, as reflected on the schedule (the “Schedule”) to this promissory note (this “Note”) or otherwise in accordance with the Bank’s usual practices on the Bank’s loan account records, payable to the Bank on the respective maturity date of each such Loan specified on the Schedule, in lawful money of the United State of America and in immediately available funds, and to pay interest (computed on the bases of a year of 360 days for the actual days elapsed) on the unpaid principal amount of such loans until due, in like funds, at the rate per annum for each such Loan specified on the Schedule. The principal amount of any Loan not paid when due hereunder shall thereafter bear interest at a rate per annum equal to two percent in excess of the rate announced by the Bank from time to time as its “prime” rate. Interest not paid when due shall thereafter bear like interest as the principal to the extent permitted by applicable law.

          Any of the persons authorized to borrow on behalf of the Company (an “Authorized Person”), the names of which shall be communicated by the Company to the Bank in writing, may request a Loan hereunder by telephone which shall be confirmed by the Company in writing the same day via facsimile or electronic mail. In the absence of the Bank’s negligence or willful misconduct, the Company agrees that, in implementing this arrangement, the Bank is authorized to honor requests for Loans which it believes, in good faith, to emanate from Authorized Person acting pursuant to this Note. The Bank shall credit all Loan proceeds to such Company bank account as the Company identifies in writing to the Bank, which account shall be maintained with the Bank.

          The Company hereby irrevocably authorizes the Bank to endorse on the Schedule, or otherwise in accordance with Bank’s usual practices, the amount and maturity date of each Loan made by the Bank to the Company hereunder, the interest rate therefore, the

amount of principal payments thereof, and the outstanding principal balance hereunder from time to time, and all such endorsements shall constitute prima facie evidence of the accuracy of the information so recorded (in the absence of an error that is clearly apparent from the a review of the Schedule) in any proceeding to enforce a payment under this Note; provided, however, that no failure or omission to make any such notation shall affect the obligations of the Company to repay each Loan hereunder. The Bank shall have no obligation to make any Loans or to renew any Loan hereunder at any time. The Company may repay voluntarily any Loan hereunder prior to its stated final maturity date.

          In the event that the Company fails to pay any amount of principal or interest on any Loan as the same shall become due and payable, the Bank may declare the entire unpaid principal amount of all Loans due and payable in whole or in part, whereupon the principal amount of all Loans so declared to be due payable, together with accrued interest thereon, shall become forthwith due and payable, without notice, demand, protest or presentment of any kind, all of which are expressly waived by the Company.

          This Note shall be governed by and construed in accordance with the laws of the State of New York, without regard to any provision thereof which would require the application of the laws of any other jurisdiction.

Central Hudson Gas & Electric Corporation
By:
Name: Stacey A. Renner
Title:   Treasurer

SCHEDULE

LOANS AND PAYMENTS OF PRINCIPAL

Date of
Notation Amount of
Loan Maturity
Date Interest
Rate Amount of
Principal
Paid or
Prepaid Unpaid
Principal
Balance

EX-10.(III)31

Exhibit (10)(iii)31

CH ENERGY GROUP, INC.
DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN

          The Company adopted the CH Energy Group, Inc. Directors and Executives Deferred Compensation Plan (the “Plan”), effective September 26, 2003. The Plan is hereby amended and restated, as set forth below, to comply with the restrictions imposed by Section 409A of the Code.

          In order to comply with section 409A of the Code, effective immediately before January 1, 2008, the Plan is divided into two parts, one of which shall be named “Part One” and the other of which shall be named “Part Two”. Part One of the Plan shall be governed by the terms and conditions of the Plan as in effect on October 3, 2004. Part Two of the Plan shall be governed by the terms and conditions set forth herein. Any “amounts deferred” in taxable years beginning before January 1, 2005 (within the meaning of Section 409A of the Code) and any earnings thereon shall be governed by the terms of Part One of the Plan, and it is intended that such amounts and the earnings thereon shall be exempt from the application of Section 409A of the Code. Any “amount deferred” in taxable years beginning on or after January 1, 2005 (within the meaning of Section 409A of the Code) and any earnings thereon shall be governed by the terms and conditions of Part Two of the Plan, and it is intended that such amounts and the earnings thereon shall be subject to and comply with the payment restrictions imposed under Section 409A of the Code.

ARTICLE I
DEFINITIONS

          For purposes of the Plan, the following words and phrases shall have the meanings set forth below, unless their context clearly requires a different meaning:

          “Account” means the bookkeeping account maintained by the Committee on behalf of each Participant pursuant to this Plan. The sum of each Participant’s Sub-Accounts, in the aggregate, shall constitute his Account. The Account and each and every Sub-Account shall be a bookkeeping entry only and shall be used solely as a device to measure and determine the amounts, if any, to be paid to a Participant or his Beneficiary under the Plan.

          “Affiliated Group” means (i) the Company, and (ii) all entities with whom the Company would be considered a single employer under Sections 414(b) and 414(c) of the Code, provided that in applying Section 1563(a)(1), (2), and (3) for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Section 1563(a)(1), (2), and (3), and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c), “at least 50 percent” is used instead of “at least 80 percent” each place it appears in that regulation. Such term shall be interpreted in a manner consistent with the definition of “service recipient” contained in Section 409A of the Code.

          “Annual Valuation Date” has the meaning given to such term in Section 4.2(a).

          “Base Salary” means the annual base rate of cash compensation payable by the Affiliated Group to an Eligible Employee during a calendar year, excluding Incentive Compensation, bonuses, special/overtime pay bonuses, commissions, severance payments, Company Contributions, qualified plan contributions or benefits, expense reimbursements, fringe benefits and all other payments, and prior to reduction for any deferrals under this Plan or any other plan of the Affiliated Groups under Sections 125 or 401(k) of the Code. For purposes of this Plan, Base Salary payable after the last day of a calendar year solely for services performed during the final payroll period described in Section 3401(b) of the Code containing December 31 of such year shall be treated as earned during the subsequent calendar year.

          “Beneficiary” or “Beneficiaries” means the person or persons, including one or more trusts, designated by a Participant in accordance with the Plan to receive payment of the remaining balance of the Participant’s Account in the event of the death of the Participant prior to the Participant’s receipt of the entire vested amount credited to his Account.

          “Beneficiary Designation Form” means the form established from time to time by the Committee (in a paper or electronic format) that a Participant completes, signs and returns to the Committee to designate one or more Beneficiaries.

          “Board” means the Board of Directors of the Company.

          “Change in Control” means the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company as defined under Section 409A of the Code.

          “Change in Control Termination” means a Separation from Service with the Affiliated Group due to Retirement or Disability during the twenty-four month period that begins on the date of a Change in Control and ends on the second anniversary of such Change in Control.

          “Code” means the Internal Revenue Code of 1986, as amended.

          “Commencement Date” has the meaning given to such term in Section 2.3 hereof.

          “Committee” means the committee appointed to administer the Plan. Unless and until otherwise specified, the Committee under the Plan shall be the Compensation Committee, or its designee.

          “Company” means CH Energy Group, Inc. and its successors, including, without limitation, the surviving corporation resulting from any merger or consolidation of CH Energy Group, Inc. with any other corporation, limited liability company, joint venture, partnership or other entity or entities.

          “Company Contribution Commencement Date” has the meaning given to such term in Section 2.3 hereof.

          “Company Contribution” has the meaning given to such term in Section 4.1 hereof.

2

          “Company Contribution Sub-Account” means the bookkeeping Company Contribution Sub-Account maintained by the Committee on behalf of each Participant pursuant to Section 2.4 hereof.

          “Deferral Commencement Date” has the meaning given to such term in Section 2.3.

          “Deferral Election” means the Participant’s election on a form approved by the Committee to defer a portion of his Base Salary, Incentive Compensation or Director Fees in accordance with the provisions of Article III.

          “Director” means any individual who is a member of the Board and who is not an employee of the Company or its Affiliated Group.

          “Director Fees” means the annual cash retainer for Board and committee service, special assignment fees, meeting fees, committee chair or lead director fees, and other cash amounts payable to a Participant for service to the Company as a Director.

          “Director Stock Contribution” has the meaning given to such term in Section 4.2 hereof.

          “Director Stock Sub-Account” means the bookkeeping Director Stock Sub-Account maintained by the Committee on behalf of each Director pursuant to Section 4.2 hereof.

          “Disability” means that the Participant meets one of the following requirements: (a) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (b) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s employer. Such term shall be interpreted in a manner consistent with the definition of “disability” contained in Treasury Regulation Section 1.409A-3(i)(4).

          “Effective Date” has the meaning given to such term in Section 10.1 hereof.

          “Eligible Employee” has the meaning given to such term in Section 2.1 hereof.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

          “Incentive Compensation” means cash or equity compensation payable pursuant to an incentive compensation or retention plan in which an Eligible Employee participates, including but not limited to an annual or long-term incentive compensation plan, whether such plan is now in effect or hereafter established by the Affiliated Group, which the Committee may designate from time to time.

          “Installment Calculation Date” has the meaning given to such term in Section 6.1(d).

3

          “In-Service Sub-Account” means each bookkeeping In-Service Sub-Account maintained by the Committee on behalf of each Eligible Employee pursuant to Section 2.4 hereof.

          “Newly Eligible Participant” means any Eligible Employee or Director who has not previously participated in the Plan or an “aggregated plan” and is not currently a participant of an “aggregated plan”. For purposes of this definition, an “aggregated plan” is any plan that is required to be aggregated with the Plan under Section 409A of the Code. For purposes of clarity, the portion of the Plan consisting of the right to defer Base Salary, Incentive Compensation and Director Fees shall be treated as separate and apart from, and shall not aggregated with, the portion of the Plan consisting of the right to receive credits of Company Contributions.

          “Participant” means any Eligible Employee or Director who (i) at any time elected to defer the receipt of Base Salary, Incentive Compensation or Director Fees in accordance with the Plan (including an amount treated as a Transferred Amount) or received a credit to his Account pursuant to Section 4.1 or Section 4.2 hereof (including an amount treated as a Transferred Amount) and (ii) in conjunction with his Beneficiary, has not received a complete payment of the vested amount credited to his Account.

          “Part One” has the meaning given to such term in Section 10.1 hereof.

          “Part Two” has the meaning given to such term in Section 10.1 hereof.

          “Payment Election” means the Participant’s election on a form approved by the Committee that sets forth the form of payment of the Company Contribution Sub-Account and the Director Stock Sub-Account as provided in Section 4.3.

          “Performance-Based Compensation” means Incentive Compensation that is based on services performed over a period of at least twelve (12) months and that constitutes “performance-based compensation” within the meaning of Section 409A of the Code. Where a portion of an amount of Incentive Compensation would qualify as Performance-Based Compensation if the portion were the sole amount available under a designated incentive plan, that portion of the award will not fail to qualify as Performance-Based Compensation if that portion is designated separately by the Committee on the Deferral Election or is otherwise separately identifiable under the terms of the designated incentive plan, and the amount of each portion is determined independently of the other.

          “Performance Period” means, with respect to any Incentive Compensation, the period of time during which such Incentive Compensation is earned.

          “Phantom Share” means a hypothetical share of CH Energy Group, Inc. common stock. A Participant shall not possess any incidents of ownership (including, without limitation, dividend and voting rights) in any shares of CH Energy Group, Inc. common stock represented by the Phantom Shares.

          “Phantom Share Fund” shall mean a fund consisting solely of Phantom Shares. At the end of each calendar quarter, the number of Phantom Shares deemed to be held by a Participant’s Account shall be increased by any dividends paid on shares of CH Energy Group, Inc. common stock for that calendar quarter. The number of additional Phantom Shares credited to a

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Participant’s Account as a result of such increase shall be determined by (i) multiplying the total number of Phantom Shares (excluding fractional Phantom Shares) credited to the Participant’s Account as of the end of that calendar quarter by the amount of the dividend paid with respect to a share of CH Energy Group, Inc. common stock during that calendar quarter, and (ii) dividing the product so determined by the closing price of a share of CH Energy Group, Inc. common stock on the New York Stock Exchange on the last business day of the calendar quarter. In the event of any merger, reorganization consolidation, recapitalization, liquidation, stock dividend, split-up, spin-off, stock split, reverse stock split, share combination, share exchange, extraordinary dividend, or any change in the corporate structure affecting the CH Energy Group, Inc. common stock, the number of Phantom Shares credited to the Phantom Share Fund and/or the kind or class of shares in that fund shall be adjusted in such manner as may be determined to be appropriate and equitable by the Board, in its sole discretion, to prevent dilution or enlargement of benefits or potential benefits intended to be made available under the Plan.

          “Plan” means this deferred compensation plan, which shall be known as the CH Energy Group, Inc. Directors and Executives Deferred Compensation Plan.

          “Retirement” means with respect to an Eligible Employee, his Separation from Service on or after the date he attains age 55 and with respect to a Director, his Separation from Service.

          “Retirement Sub-Account” means the bookkeeping Retirement Sub-Account maintained by the Committee on behalf of each Participant pursuant to Section 2.4 hereof.

          “Separation from Service” means a termination of employment or service with the Affiliated Group in such a manner as to constitute a “separation from service” as defined under Section 409A of the Code. Upon a sale or other disposition of the assets of the Company or any member of the Affiliated Group to an unrelated purchaser, the Committee reserves the right, to the extent permitted by Section 409A of the Code, to determine whether Participants providing services to the purchaser after and in connection with the purchase transaction have experienced a Separation from Service.

          “Specified Employee” means a “specified employee”, as defined in Section 409A of the Code (with such classification to be determined in accordance with the methodology established by the Committee from time to time in its sole discretion) of the Company or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code.

          “Sub-Account” means each bookkeeping In-Service Sub-Account, Retirement Sub-Account, Company Contribution Sub-Account and Director Stock Sub-Account maintained by the Committee on behalf of each Participant pursuant to the Plan.

          “Subsequent Payment Election” has the meaning given to such term in Section 6.1(c) hereof.

          “Transferred Amounts” shall have the meaning provided in Section 10.1(b).

          “Unforeseeable Emergency” means an “unforeseeable emergency” as defined under Section 409A of the Code.

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ARTICLE II
ELIGIBILITY; SUB-ACCOUNTS

          2.1.          Selection by Committee. Participation in the Plan is limited to (a) those employees of the Affiliated Group who are (i) expressly selected by the Committee, in its sole discretion, to participate in the Plan, and (ii) a member of a “select group of management or highly compensated employees,” within the meaning of Sections 201, 301 and 401 of ERISA (the “Eligible Employees”), and (b) Directors. In lieu of expressly selecting Eligible Employees for Plan participation, the Committee may establish eligibility criteria (consistent with the requirements of paragraph (a)(ii) of this Section) providing for participation of all Eligible Employees who satisfy such criteria. The Committee may at any time, in its sole discretion, change the eligibility criteria for Eligible Employees, or determine that one or more Participants will cease to be an Eligible Employee.

          2.2.          Enrollment Requirements. As a condition to participation, each selected Eligible Employee and each Director shall complete, execute and return to the Committee a Deferral Election, Payment Election (if applicable) and Beneficiary Designation Form no later than the date or dates specified by the Committee. In addition, the Committee may establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.

          2.3.          Commencement Date

                          (a)          Each Eligible Employee and each Director shall commence participation on the date designated by the Committee (the “Commencement Date”). For each Eligible Employee and Director, the Committee shall assign one Commencement Date that relates to the right to defer Base Salary, Incentive Compensation or Director Fees (a “Deferral Commencement Date”) and a separate Commencement Date that applies to the right to receive credits of Company Contributions or Director Stock Contributions (a “Company Contribution Commencement Date”). If an Eligible Employee or Director has not satisfied the applicable enrollment requirements of Section 2.2 within thirty (30) days of his Deferral Commencement Date (or such earlier date as specified by the Committee), such individual’s Deferral Commencement Date shall instead be the first day of the calendar year next following the date that he or she satisfies such enrollment requirements.

                          (b)          A Participant shall have no right to defer Base Salary, Incentive Compensation or Director Fees under the Plan prior to his Deferral Commencement Date and shall have no right to receive credits of Company Contributions or Director Stock Contributions under the Plan prior his Company Contribution Commencement Date.

                          (c)          Any Eligible Employee as of the Effective Date with respect to whom Transferred Amounts are credited hereunder shall have a Deferral Commencement Date and a Company Contribution Commencement Date of January 1, 2008.

          2.4.          Sub-Accounts.

                          (a)          Establishment. The Committee shall establish and maintain separate Retirement Sub-Accounts, Company Contribution Sub-Accounts, Director Stock Sub-Accounts

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and In-Service Sub-Accounts for each Participant, as applicable, for each year in which the Participant allocates Base Salary, Incentive Compensation, or Director Fees to such Sub-Accounts and for each year in which the Company makes a Company Contribution or Director Stock Contribution to such Sub-Accounts on behalf of a Participant. Amounts credited to a Retirement Sub-Account, Company Contribution Sub-Account or Director Stock Sub-Account shall commence to be paid following the Participant’s Separation from Service, death or Disability as provided in Article VI. Amounts credited to an In-Service Sub-Account shall commence to be paid in a year specified by the Participant as provided in Section 3.4(a) and Article VI below that occurs before the Participant’s Separation from Service.

                          (b)          Adjustments.

                                         (i)          A Participant’s Retirement Sub-Account and In-Service Sub-Account shall be credited with deferrals of Base Salary, Incentive Compensation or Director Fees, if any, in accordance with Article III hereof. Base Salary, Incentive Compensation or Director Fees that a Participant elects to defer shall be treated as if they were set aside in a Retirement Sub-Account or an In-Service Sub-Account on the date the Base Salary, Incentive Compensation or Director Fees would otherwise have been paid to the Participant.

                                         (ii)          A Participant’s Company Contribution Sub-Account shall be credited with Company Contributions, if any, in accordance with Section 4.1 hereof. Company Contributions shall be treated as if they were set aside in a Company Contribution Sub-Account on the date specified by the Committee in its sole discretion. A Participant’s Director Stock Sub-Account shall be credited with Director Stock Contributions of Phantom Shares, if any, in accordance with Section 4.2 hereof. Director Stock Contributions shall be treated as if they were set aside in a Director Stock Sub-Account on the dates set forth in Section 4.2.

                                         (iii)          A Participant’s Sub-Accounts shall be credited with gains, losses and earnings as provided in Article V hereof and shall be debited for any payments made to the Participant as provided in Article VI hereof.

          2.5.          Termination.

                          (a)          Deferrals. An individual’s right to defer Base Salary or Director Fees shall cease with respect to the calendar year following the calendar year in which he ceases to be an Eligible Employee or Director, although such individual shall continue to be subject to all of the terms and conditions of the Plan for as long as he remains a Participant. A Participant’s right to defer payment of Incentive Compensation shall cease as of the date of his Separation from Service.

                          (b)          Company Contributions and Director Stock Contributions. An individual’s right to receive credits of Company Contributions and Director Stock Contributions, as the case may be, shall cease on the date provided by the Committee in its sole discretion.

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ARTICLE III
DEFERRAL ELECTIONS

          3.1.          New Participants.

                          (a)          Application. This Section 3.1 applies to each Eligible Employee or Director who is a Newly Eligible Participant in the portion of the Plan relating to the right to defer Base Salary or Director Fees and whose Deferral Commencement Date occurs after the first day of a calendar year but prior to December 1 of such calendar year (or such earlier date as specified by the Committee from time to time).

                          (b)          Deferral Election. An Eligible Employee described in Section 3.1(a) may elect to defer his Base Salary earned during such calendar year and a Director described in Section 3.1(a) may elect to defer his Director Fees earned during such calendar year, as the case may be, by filing a Deferral Election with the Committee in accordance with the following rules:

                                         (i)          Timing; Irrevocability. The Deferral Election must be filed with the Committee by, and shall become irrevocable as of, the thirtieth (30th) day following the Participant’s Deferral Commencement Date (or such earlier date as specified by the Committee on the Deferral Election).

                                         (ii)          Base Salary. The Deferral Election shall only apply to Base Salary earned during such calendar year beginning with the first payroll period that begins immediately after the date that the Deferral Election becomes irrevocable in accordance with Section 3.1(b)(i) hereof.

                                         (iii)          Director Fees. The Deferral Election shall only apply to Director Fees earned after the date that the Deferral Election becomes irrevocable in accordance with Section 3.1(b)(i) hereof.

                          (c)          Incentive Compensation. Newly Eligible Participants may elect to defer Incentive Compensation only in accordance with Section 3.2

          3.2.          Annual Deferral Elections. Unless Section 3.1 applies, an Eligible Employee may elect to defer his Base Salary and Incentive Compensation earned during a calendar year and a Director may elect to defer his Director Fees earned during a calendar year, as the case may be, by filing a Deferral Election with the Committee in accordance with the following rules:

                          (a)          Base Salary. The Deferral Election with respect to Base Salary must be filed with the Committee by, and shall become irrevocable as of, December 31 (or such earlier date as specified by the Committee on the Deferral Election) of the calendar year next preceding the calendar year for which such Base Salary would otherwise be earned.

                          (b)          Incentive Compensation. The Deferral Election with respect to Incentive Compensation must be filed with the Committee by, and shall become irrevocable as of, December 31 (or such earlier date as specified by the Committee on the Deferral Election) of the calendar year next preceding the first day of the Performance Period for which such Incentive Compensation would otherwise be earned.

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                          (c)          Performance-Based Compensation.

                                         (i)          Notwithstanding anything contained in this Section 3.2 to the contrary, and only to the extent permitted by the Committee, the Deferral Election with respect to Incentive Compensation that constitutes Performance-Based Compensation must be filed with the Committee by, and shall become irrevocable as of, the date that is six months before the end of the applicable Performance Period (or such earlier date as specified by the Committee on the Deferral Election), provided that in no event may such Deferral Election be made after such Incentive Compensation has become “readily ascertainable” within the meaning of Section 409A of the Code.

                                         (ii)          In order to make a Deferral Election under this Section 3.2(c), the Participant must perform services continuously from the later of the beginning of the Performance Period or the date the performance criteria are established through the date a Deferral Election becomes irrevocable under this Section 3.2(c).

                                         (iii)          A Deferral Election made under this Section 3.2(c) shall not apply to any portion of the Performance-Based Compensation that is actually earned by a Participant regardless of satisfaction of the performance criteria.

                                         (iv)          To the extent permitted by the Committee, an Eligible Employee described in Section 3.1(a) hereof shall be permitted to make a Deferral Election with respect to Performance-Based Compensation in accordance with this Section 3.2(c) provided that the Eligible Employee satisfies all of the other requirements of this Section.

                          (d)          Director Fees. The Deferral Election with respect to Director Fees must be filed with the Committee by, and shall become irrevocable as of, December 31 (or such earlier date as specified by the Committee on the Deferral Election) of the calendar year next preceding the calendar year for which such Director Fees would otherwise be earned.

          3.3.          Amount Deferred. A Participant shall designate on the Deferral Election the portion of his Base Salary, Incentive Compensation or, if applicable, Director Fees that is to be deferred in accordance with this Article III. Unless otherwise determined by the Committee, a Participant may defer (in 1% increments) up to 50% of his Base Salary, up to 100% of his Director Fees and up to 100% of his Incentive Compensation for any calendar year; provided, however, that the Participant shall not be permitted to defer less than 1% of each of his Base Salary, Director Fees or Incentive Compensation during any one calendar year or Performance Period, as the case may be, and any such attempted deferral shall not be effective.

          3.4.          Elections as to Time and Form of Payment. The Deferral Election for each year shall contain the Participant’s allocation of deferrals of Base Salary, Incentive Compensation and/or Director Fees among a Retirement Sub-Account and, to the extent permitted by the Committee from time to time, one or more In-Service Sub-Accounts. Such Retirement Sub-Account and In-Service Sub-Account shall be paid at such time and in such form as set forth below:

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                          (a)          Time of Payment.

                                         (i)          Retirement Sub-Account. Amounts allocated to a Retirement Sub-Account shall be paid on the Participant’s Separation from Service, death or Disability in accordance with Article VI.

                                         (ii)          In-Service Sub-Account. A Participant shall designate the year in which payments will commence to be paid from an In-Service Sub-Account, which date must be at least two years after the date in which such Deferral Election becomes irrevocable. The specified date designated on the Deferral Election will apply to all amounts deferred under the Plan for that year unless the Participant modifies the time and/or form of payment of the amounts allocated to the Sub-Account in accordance with the rules of Section 6.1(c).

                                         (iii)          Default. To the extent that a Participant does not designate the Sub-Account to which deferrals of Base Salary, Incentive Compensation or Director Fees shall be credited on a Deferral Election for a year as provided in this Section 3.4 (or such designation does not comply with the terms of the Plan), such deferrals for that year shall be credited to the Participant’s Retirement Sub-Account.

                          (b)          Form of Payment.

                                         (i)          Retirement Sub-Account. Pursuant to the Deferral Election filed by a Participant under Sections 3.1 or 3.2 for a year, a Participant shall elect the form of payment for the amounts credited to his Retirement Sub-Account. The Participant shall make one election that applies to amounts payable due to Retirement or Disability, and one election that applies to amounts payable due to a Change in Control Termination. In each case, the Participant may select payment in a single lump sum or in a number of approximately equal quarterly installments over a five, ten or fifteen year period. Such payment elections will apply to all amounts credited to the Retirement Sub-Account under the Plan for the year unless the Participant modifies such payment elections in accordance with the rules of Section 6.1(c). In the event a Participant fails to designate a payment form of a Retirement Sub-Account on his Deferral Election (or such designation does not comply with the terms of the Plan) for a year, the amounts allocated to the Retirement Sub-Account for that year shall be paid in a single-lump sum payment.

                                         (ii)          In-Service Sub-Account. Amounts allocated to an In-Service Sub-Account shall be paid in cash in a single lump-sum.

          3.5.          Duration and Cancellation of Deferral Elections.

                          (a)          Duration. Once irrevocable, a Deferral Election shall only be effective for the calendar year or Performance Period with respect to which such election was timely filed with the Committee. Except as provided in Section 3.5(b) hereof, a Deferral Election, once irrevocable, cannot be cancelled during a calendar year or Performance Period.

                          (b)          Cancellation.

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                                         (i)          The Committee may, in its sole discretion, cancel a Participant’s Deferral Election where such cancellation occurs by the later of the end of the Participant’s taxable year or the 15th day of the third month following the date the Participant incurs a “disability.” For purposes of this Section 3.5(b)(i), a disability refers to any medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months.

                                         (ii)          The Committee may, in its sole discretion, cancel a Participant’s Deferral Election due to an Unforeseeable Emergency or a hardship distribution pursuant to Treasury Regulation Section 1.401(k)-1(d)(3).

                                         (iii)          If a Participant’s Deferral Election is cancelled with respect to a particular calendar year or Performance Period in accordance with this Section 3.5(b), he may make a new Deferral Election for a subsequent calendar year or Performance Period, as the case may be, only in accordance with Section 3.2 hereof.

          3.6.          Vested Interest in Deferrals. Each Participant shall at all times have a fully vested and nonforfeitable interest in his Retirement Sub-Account and his In-Service Sub-Account balance.

ARTICLE IV
COMPANY CONTRIBUTIONS

          4.1.          Company Contributions. For each calendar year, any entity in the Affiliated Group, in its sole discretion, may, but is not required to, credit any amount it desires to any Eligible Employee’s Company Contribution Sub-Account. The amount so credited to an Eligible Employee may be smaller or larger than an amount credited to any other Eligible Employee, and the amount credited to any Employee for a year may be zero even though one or more Eligible Employees receive a Company Contribution for that year. No credits of Company Contributions may be allocated to a Retirement Sub-Account or an In-Service Sub-Account.

          4.2.          Director Stock Contributions. The Company shall establish and maintain a Director Stock Sub-Account for each Director. Except as otherwise provided under Section 4.3, the Company shall credit each Director’s Director Stock Sub-Account in accordance with the following rules:

                          (a)          Current Directors. Except as provided in Section 4.2(c) hereof, on the fifth business day following the Annual Valuation Date of a year and on the first business day of each calendar quarter thereafter during such year (each a “Crediting Date”), the Company shall credit to the Director Stock Sub-Account of each currently serving Director a number of Phantom Shares calculated by: (x) dividing $55,000 (or such other amount established by the Board) by the closing price of a share of CH Energy Group, Inc. common stock on the New York Stock Exchange on the Annual Valuation Date, and (y) dividing the result so determined by four (and then rounding to the nearest tenth). For purposes of this Section 4.2(a), the first Monday following the first Tuesday in January of each year shall be the Annual Valuation Date.

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                          (b)          Newly Appointed Directors. Notwithstanding anything contained in Section 4.2(a), and except as provided in Section 4.2(c) hereof, the number of Phantom Shares to be credited during any calendar year to the Director Stock Sub-Account of a person who first becomes a Director on a date during such year after the fifth business day following the Annual Valuation Date shall be pro-rated and shall be calculated on the basis of the closing price of a share of CH Energy Group, Inc. common stock on the New York Stock Exchange on the first business day following the date on which the person first becomes a Director. A Director whose Company Contribution Commencement Date begins after January 1 of a year shall be deemed to have elected to receive payment of his Director Stock Sub-Account credit for such year in a lump-sum upon his Separation from Service.

                          (c)          Directors Who Satisfy Ownership Guidelines. No later than the end of each calendar year (or with respect to a newly-appointed Director described in Section 4.2(b) hereof, no later than the date of his appointment), the Committee shall determine, in its sole discretion but after consulting with each Director, whether any Director satisfies the then-applicable Director stock ownership guidelines for that year, or whether any Director will satisfy the then-applicable Director stock ownership guidelines for the immediately following calendar year based on the anticipated credits of Phantom Shares to the Director Stock Sub-Account for that year as set forth in Sections 4.2(a) or (b) hereof. If the Committee determines, in its sole discretion, that a Director either satisfies or will satisfy the then-applicable Director stock ownership guidelines, then that Director shall receive a cash payment in lieu of the Phantom Shares that would have otherwise been credited to his Director Stock Sub-Account for any Crediting Date that occurs after the date on which the Director satisfies the then-applicable Director stock ownership guidelines (which date shall be set forth by the Committee in writing, after consulting with the Director, no later than the end of the applicable time period set forth in the first sentence of this Section 4.2(c)). The cash payment in lieu of Phantom Shares for any Crediting Date shall equal $13,750 (or such other amount established by the Board or as required by Section 4.2(b) hereof) and shall be treated as a Director Fee for all purposes of the Plan. The Director may elect to defer the cash payments described in this Section 4.2(c) to a Retirement Sub-Account or an In-Service Sub-Account pursuant to the rules applicable to the deferral of Director Fees in Article III hereof and may invest the deferrals in any permitted investment option of the Plan as provided in Section 5.2 hereof. To the extent that all or any portion of a cash payment described in this Section 4.2(c) for any Crediting Date is not deferred under this Plan, it shall be paid to the Director within 10 days after the applicable Crediting Date.

          4.3.          Payment Elections. A Participant shall file a Payment Election for his Company Contribution Sub-Account or Director Stock Sub-Account, as the case may be, for a year in accordance with the following rules:

                          (a)          Timing; Irrevocability. Each Newly Eligible Participant shall file with the Committee a Payment Election with respect to Company Contributions and Director Stock Contributions, as the case may be, by, and such Payment Election shall become irrevocable as of, the thirtieth (30th) day following the Participant’s Company Contribution Commencement Date (or such earlier date as specified by the Committee on the Payment Election). Each other Eligible Employee or Director shall file a Payment Election with the Committee with respect to Company Contributions or Director Stock Contributions for a year by, and such Payment Election shall become irrevocable as of, December 31 (or such earlier date as specified by the

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Committee on the Deferral Election) of the year that precedes the year in which the Company Contribution or Director Stock Contribution is to be made by the Company to the Company Contribution Sub-Account or Director Stock Sub-Account. Once irrevocable, a Payment Election with respect to a Company Contribution Sub-Account or a Director Stock Sub-Account for a year may only be changed in accordance with Section 6.1(c) hereof.

                          (b)          Form of Payment. The Participant shall designate on the Payment Election that he files with the Committee for a year the form of payment of the Company Contribution Sub-Account or Director Stock Sub-Account. The Participant shall make one election that applies to amounts payable due to Retirement or Disability, and one election that applies to amounts payable due to a Change in Control Termination. In each case, the Participant may select payment in a single lump sum or in a number of approximately equal quarterly installments over a five, ten or fifteen year period. Such Payment Election will apply to all amounts credited to the Company Contribution Sub-Account or the Director Stock Sub-Account under the Plan for the year unless the Participant modifies such Payment Election in accordance with the rules of Section 6.1(c). In the event that a Participant does not designate the form of payment of a Company Contribution Sub-Account or Director Stock Sub-Account on a Payment Election as provided in this Section 4.3(b) (or such designation does not comply with the terms of the Plan), such Sub-Account shall be paid in a single lump-sum payment.

                          (c)          Time of Payment. Company Contribution Sub-Accounts and Director Stock Sub-Accounts shall be paid upon a Participant’s Separation from Service, death or Disability in accordance with Article VI.

          4.4.          Vesting. Each Participant’s Company Contribution Sub-Account shall be subject to such vesting schedule as may be determined by the Company or other member of the Affiliated Group from time to time. The vesting schedule need not be the same for each Participant. Amounts credited to a Director’s Director Stock Sub-Account shall be fully vested at all times.

ARTICLE V
CREDITING OF GAINS, LOSSES AND EARNINGS TO ACCOUNTS

          5.1.          Director Stock Sub-Account. The amounts credited to the Director Stock Sub-Account will be credited with gains, losses and earnings based on the performance of the Phantom Share Fund for all periods prior to a Director’s Separation from Service. Immediately following a Director’s Separation from Service, the amounts credited to his Director Stock Sub-Account may be invested in any investment option available under the Plan, subject to the rules set forth in Section 5.2 hereof.

          5.2.          Retirement Sub-Account, In-Service Sub-Account and Company Contribution Sub-Account. To the extent provided by the Committee in its sole discretion, and except as provided in Section 5.1 hereof, each Participant’s Sub-Accounts will be credited with gains, losses and earnings based on investment directions made by the Participant in accordance with investment deferral crediting options and procedures established from time to time by the Committee. Subject to the investment procedures established by the Committee, Participants may elect to invest amounts allocated to a Sub-Account in the Phantom Share Fund. The

13

Committee specifically retains the right in its sole discretion to change the investment deferral crediting options and procedures from time to time.

          5.3.          Limitation of Rights with Respect to Investments. By electing to defer any amount under the Plan (or by receiving or accepting any benefit under the Plan), each Participant acknowledges and agrees that the Affiliated Group is not and shall not be required to make any investment in connection with the Plan, nor is it required to follow the Participant’s investment directions in any actual investment it may make or acquire in connection with the Plan or in determining the amount of any actual or contingent liability or obligation of the Company or any other member of the Affiliated Group thereunder or relating thereto. Any amounts credited to a Participant’s Sub-Accounts (other than the Director Stock Sub-Account) with respect to which a Participant does not provide investment direction shall be credited with gains, losses and earnings as if such amounts were invested in an investment option to be selected by the Committee in its sole discretion.

ARTICLE VI
PAYMENTS

          6.1.          Date of Payment of Sub-Accounts. Except as otherwise provided in this Article VI, a Participant’s Sub-Accounts shall commence to be paid as follows:

                          (a)          Retirement Sub-Account; Company Contribution Sub-Account and Director Stock Sub-Account. The vested amounts credited to a Participant’s Retirement Sub-Account, Company Contribution Sub-Account and Director Stock Sub-Account shall commence to be paid within 30 days of the last day of the calendar quarter in which the Participant’s Retirement, Disability or Change in Control Termination occurs, or such later date required by Section 6.2. In the event of the Participant’s Retirement, Disability or Change in Control Termination, the Participant’s Retirement Sub-Accounts shall be paid in the form selected by the Participant in accordance with Section 3.4(b) and the Company Contribution Sub-Accounts and the Director Stock Sub-Accounts, as applicable, shall be paid in the form selected by the Participant in accordance with Section 4.3(b). In the event a Participant incurs a Separation from Service other than due to Retirement, Disability or Change in Control Termination, the Participant’s Retirement Sub-Account and Company Contribution Sub-Account shall be paid in a single lump sum.

                          (b)          In-Service Sub-Account.

                                         (i)          In general, the vested amounts credited to a Participant’s In-Service Sub-Account shall commence to be paid in a single lump sum in January of the year specified by the Participant for such Sub-Account in accordance with Section 3.4(a) hereof.

                                         (ii)          If a Participant’s Separation from Service occurs prior to the commencement of one or more In-Service Sub-Accounts, the amounts credited to such In-Service Sub-Accounts shall immediately be transferred to the Participant’s Retirement Sub-Account of the same year and payment of the transferred amounts shall thereafter be governed by the terms and conditions applicable to the Retirement Sub-Account of the same year, including, without limitation, Section 6.2 hereof.

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                          (c)          Subsequent Payment Elections. A Participant may elect on a form provided by the Committee to change the time and or form of payment with respect to one or more of his Sub-Accounts (a “Subsequent Payment Election”). The Subsequent Payment Election shall become irrevocable upon receipt by the Committee and shall be made in accordance with the following rules:

                                         (i)          In General. The Subsequent Payment Election may not take effect until at least twelve (12) months after the date on which it is accepted by the Committee. The Subsequent Payment Election most recently accepted by the Committee and that satisfies the requirements of this Section 6.1(c) shall govern the payout of the Sub-Accounts notwithstanding anything contained in Section 6.1(a) or (b) hereof to the contrary.

                                         (ii)          Retirement Sub-Account; Company Contribution Sub-Account; Director Stock Sub-Account. A Participant may make an election (to the extent permitted by the Committee in its sole discretion) to change the form of payment for each of his Retirement Sub-Accounts, Company Contribution Sub-Accounts and Director Stock Sub-Accounts to a form otherwise permitted under the Plan. Except in the event of the death or Unforeseeable Emergency of the Participant, the payment of such Sub-Account will be delayed until the fifth (5th) anniversary of the first day of the month that the Sub-Account would otherwise have been paid under the Plan if such Subsequent Payment Election had not been made (or, in the case of installment payments, which are treated as a single payment for purposes of this Section, on the fifth (5th) anniversary of the first day of the month that the first installment payment was scheduled to be made).

                                         (iii)          In-Service Sub-Account. A Participant may make one or more elections to delay the payment date of one or more In-Service Sub-Account(s) to a payment date permitted for In-Service Sub-Accounts under the Plan. Such Subsequent Payment Election must be filed with the Committee at least twelve (12) months before the first day of the month the amount would have otherwise been paid under the Plan. On such Subsequent Payment Election, the Participant must delay the payment date for a period of at least five (5) years after the first day of the month that the Sub-Account would otherwise have been paid under the Plan.

                                         (iv)          Acceleration Prohibited. The Committee shall disregard any Subsequent Payment Election by a Participant to the extent such election would result in an acceleration of the time or schedule of any payment or amount scheduled to be paid under the Plan within the meaning of Section 409A of the Code.

                          (d)          Calculation of Installment Payments. In the event that a Sub-Account is paid in installments: (i) the first installment shall commence on the date specified in Section 6.1 (subject to Section 6.2), and each subsequent installment shall be paid quarterly until the Sub-Account has been fully paid; (ii) the amount of each installment shall equal the quotient obtained by dividing the Participant’s vested Sub-Account balance as of the end of the month immediately preceding the month of such installment payment (the “Installment Calculation Date”) by the number of installment payments remaining to be paid at the time of the calculation; and (iii) the amount of such Sub-Account remaining unpaid shall continue to be credited with gains, losses and earnings as provided in Article V hereof. By way of example, if the Participant elects to receive payments of a Sub-Account in equal quarterly installments over a period of five (5)

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years, the first payment shall equal 1/20th of the vested Sub-Account balance, calculated as described in this Section 6.1(d). The following quarter, the payment shall be 1/19 of the vested Sub-Account balance, calculated as described in this Section 6.1(d).

          6.2.          Mandatory Six-Month Delay. Except as otherwise provided in Sections 6.5(a), (b) and (c), and to the extent required in order to comply with Section 409A of the Code, all payments under this Agreement that are made as a result of the Separation from Service of a Specified Employee (including a Disability termination that occurs at the same time as the Separation from Service) and that would otherwise be paid during the first six months following such Separation from Service shall be accumulated through and paid within 30 days after the first business day of the seventh month following the Participant’s Separation from Service (or if earlier, upon the Participant’s death).

          6.3.          Death of Participant.

                          (a)          Each Participant shall file a Beneficiary Designation Form with the Committee at the time the Participant files an initial Deferral Election or Payment Election. A Participant’s Beneficiary Designation Form may be changed at any time prior to his death by the execution and delivery of a new Beneficiary Designation Form. The Beneficiary Designation Form on file with the Committee that bears the latest date at the time of the Participant’s death shall govern. If a Participant fails to properly designate a Beneficiary in accordance with this Section 6.3(a), then his Beneficiary shall be his estate.

                          (b)          In the event of the Participant’s death, the remaining amount of the Participant’s vested Sub-Accounts shall be paid to the Beneficiary or Beneficiaries designated on a Beneficiary Designation Form in a single lump sum within 30 days of the Participant’s death.

          6.4.          Withdrawal Due to Unforeseeable Emergency. A Participant shall have the right to request, on a form provided by the Committee, an accelerated payment of all or a portion of his Account in a lump sum if he experiences an Unforeseeable Emergency. The Committee shall have the sole discretion to determine whether to grant such a request and the amount to be paid pursuant to such request.

                          (a)          Determination of Unforeseeable Emergency. Whether a Participant is faced with an unforeseeable emergency permitting a payment under this Section 6.4 is to be determined based on the relevant facts and circumstances of each case, but, in any case, a payment on account of an Unforeseeable Emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of deferrals under the Plan. Payments because of an Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, local, or foreign income taxes or penalties reasonably anticipated to result from the payment). Determinations of amounts reasonably necessary to satisfy the emergency need must take into account any additional compensation that is available if the Plan provides for cancellation of a Deferral Election upon a payment due to an Unforeseeable Emergency. However, the determination of amounts reasonably necessary to satisfy the emergency need is not required to

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take into account any additional compensation that is available from a qualified plan of the Company as defined in Section 409A of the Code (including any amount available by obtaining a loan under such plan), or that due to the Unforeseeable Emergency is available under another nonqualified deferred compensation plan but has not actually been paid (including a plan that would provide for deferred compensation except due to the application of the effective date provisions of Section 409A of the Code).

                          (b)          Payment of Account. Payment shall be made within 30 days following the determination by the Committee that a withdrawal will be permitted under this Section 6.4, or such later date as may be required under Section 6.2 hereof.

          6.5.          Discretionary Acceleration of Payments. To the extent permitted by Section 409A of the Code, the Committee may, in its sole discretion, accelerate the time or schedule of a payment under the Plan as provided in this Section. The provisions of this Section are intended to comply with the exception to accelerated payments under Treasury Regulation Section 1.409A-3(j) and shall be interpreted and administered accordingly.

                          (a)          Domestic Relations Orders. The Committee may, in its sole discretion, accelerate the time or schedule of a payment under the Plan to an individual other than the Participant as may be necessary to fulfill a domestic relations order (as defined in Section 414(p)(1)(B) of the Code).

                          (b)          Conflicts of Interest. The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to the extent necessary for any Federal officer or employee in the executive branch to comply with an ethics agreement with the Federal government. Additionally, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan the to the extent reasonably necessary to avoid the violation of an applicable Federal, state, local, or foreign ethics law or conflicts of interest law (including where such payment is reasonably necessary to permit the Participant to participate in activities in the normal course of his or her position in which the Participant would otherwise not be able to participate under an applicable rule).

                          (c)          Employment Taxes. The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to pay the Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101, 3121(a), and 3121(v)(2) of the Code, or the Railroad Retirement Act (RRTA) tax imposed under Sections 3201, 3211, 3231(e)(1), and 3231(e)(8) of the Code, where applicable, on compensation deferred under the Plan (the FICA or RRTA amount). Additionally, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment, to pay the income tax at source on wages imposed under Section 3401 of the Code or the corresponding withholding provisions of applicable state, local, or foreign tax laws as a result of the payment of the FICA or RRTA amount, and to pay the additional income tax at source on wages attributable to the pyramiding Section 3401 of the Code wages and taxes. However, the total payment under this acceleration provision must not exceed the aggregate of the FICA or RRTA amount, and the income tax withholding related to such FICA or RRTA amount.

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                          (d)          Limited Cash-Outs. Subject to Section 6.2 hereof, the Committee may, in its sole discretion, require a mandatory lump sum payment of amounts deferred under the Plan that do not exceed the applicable dollar amount under Section 402(g)(1)(B) of the Code, provided that the payment results in the termination and liquidation of the entirety of the Participant’s interest under the Plan, including all agreements, methods, programs, or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Section 409A of the Code.

                          (e)          Payment Upon Income Inclusion Under Section 409A. Subject to Section 6.2 hereof, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan at any time the Plan fails to meet the requirements of Section 409A of the Code. The payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Section 409A of the Code.

                          (f)          Certain Payments to Avoid a Nonallocation Year under Section 409(p). Subject to Section 6.2 hereof, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to prevent the occurrence of a nonallocation year (within the meaning of Section 409(p)(3) of the Code) in the plan year of an employee stock ownership plan next following the plan year in which such payment is made, provided that the amount paid may not exceed 125 percent of the minimum amount of payment necessary to avoid the occurrence of a nonallocation year.

                          (g)          Payment of State, Local, or Foreign Taxes. Subject to Section 6.2 hereof, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to reflect payment of state, local, or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan before the amount is paid or made available to the Participant (the state, local, or foreign tax amount). Such payment may not exceed the amount of such taxes due as a result of participation in the Plan. The payment may be made in the form of withholding pursuant to provisions of applicable state, local, or foreign law or by payment directly to the Participant. Additionally, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to pay the income tax at source on wages imposed under Section 3401 of the Code as a result of such payment and to pay the additional income tax at source on wages imposed under Section 3401 of the Code attributable to such additional wages and taxes. However, the total payment under this acceleration provision must not exceed the aggregate of the state, local, and foreign tax amount, and the income tax withholding related to such state, local, and foreign tax amount.

                          (h)          Certain Offsets. Subject to Section 6.2 hereof, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as satisfaction of a debt of the Participant to the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code), where such debt is incurred in the ordinary course of the service relationship between the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) and the Participant, the entire amount of reduction in any of the taxable years of the Company (or any entity which would be

18

considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.

                          (i)          Bona Fide Disputes as to a Right to a Payment. Subject to Section 6.2 hereof, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan where such payments occur as part of a settlement between the Participant and the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) of an arm’s length, bona fide dispute as to the Participant’s right to the deferred amount.

                          (j)          Plan Terminations and Liquidations. Subject to Section 6.2 hereof, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as provided in Section 8.2 hereof.

                          (k)          Other Events and Conditions. Subject to Section 6.2 hereof, a payment may be accelerated upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

Except as otherwise specifically provided in this Plan, including but not limited to Section 3.5(b), this Section 6.5 and Section 8.2 hereof, the Committee may not accelerate the time or schedule of any payment or amount scheduled to be paid under the Plan within the meaning of Section 409A of the Code.

          6.6.          Delay of Payments. To the extent permitted under Section 409A of the Code, the Committee may, in its sole discretion, delay payment under any of the following circumstances, provided that the Committee treats all payments to similarly situated Participants on a reasonably consistent basis:

                          (a)          Federal Securities Laws or Other Applicable Law. A Payment may be delayed where the Committee reasonably anticipates that the making of the payment will violate Federal securities laws or other applicable law; provided that the delayed payment is made at the earliest date at which the Committee reasonably anticipates that the making of the payment will not cause such violation. For purposes of the preceding sentence, the making of a payment that would cause inclusion in gross income or the application of any penalty provision or other provision of the Code is not treated as a violation of applicable law.

                          (b)          Other Events and Conditions. A payment may be delayed upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

          6.7.          Actual Date of Payment. To the extent permitted by Section 409A of the Code, the Committee may delay payment in the event that it is not administratively possible to make payment on the date (or within the periods) specified in this Article VI, or the making of the payment would jeopardize the ability of the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) to continue as a going concern. Notwithstanding the foregoing, payment must be made no later than the latest possible date permitted under Section 409A of the Code.

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          6.8.          Discharge of Obligations. The payment to a Participant or his Beneficiary of a his Sub-Account in a single lump sum or the number of installments elected by the Participant pursuant to this Article VI shall discharge all obligations of the Affiliated Group to such Participant or Beneficiary under the Plan with respect to that Sub-Account.

ARTICLE VII
ADMINISTRATION

          7.1.          General. The Company, through the Committee, shall be responsible for the general administration of the Plan and for carrying out the provisions hereof. In general, the Committee shall have the full power, discretion and authority to carry out the provisions of the Plan; in particular, the Committee shall have full discretion to (a) interpret all provisions of the Plan, (b) resolve all questions relating to eligibility for participation in the Plan and the amount in the Account of any Participant and all questions pertaining to claims for benefits and procedures for claim review, (c) resolve all other questions arising under the Plan, including any factual questions and questions of construction, (d) determine all claims for benefits, and (e) take such further action as the Company shall deem advisable in the administration of the Plan. The actions taken and the decisions made by the Committee hereunder shall be final, conclusive, and binding on all persons, including the Company, its shareholders, the other members of the Affiliated Group, employees, Participants, and their estates and Beneficiaries.

          7.2.          Compliance with Section 409A of the Code.

                          (a)          It is intended that the Plan comply with the provisions of Section 409A of the Code, so as to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year that is prior to the taxable year or years in which such amounts would otherwise actually be paid or made available to Participants or Beneficiaries. This Plan shall be construed, administered, and governed in a manner that effects such intent, and the Committee shall not take any action that would be inconsistent with such intent.

                          (b)          Although the Committee shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of deferrals under this Plan is not warranted or guaranteed. Neither the Company, the other members of the Affiliated Group, the Board, nor the Committee (nor its designee) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by any Participant, Beneficiary or other taxpayer as a result of the Plan.

                          (c)          Any reference in this Plan to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service. For purposes of the Plan, the phrase “permitted by Section 409A of the Code,” or words or phrases of similar import, shall mean that the event or circumstance shall only be permitted to the extent it would not cause an amount deferred or payable under the Plan to be includible in the gross income of a Participant or Beneficiary under Section 409A(a)(1) of the Code.

          7.3.          Claims Procedure. If a Participant (including a Director) or his Beneficiary, as the case may be, disagrees with a decision made regarding his Account or payment from his

20

Account, the Participant or his Beneficiary, as the case may be, should outline his claim in a letter and submit it to the Committee. A claim must be signed by the Participant, the Participant’s Beneficiary, or the Participant’s authorized representative (the “Claimant”). In the event that a Claimant’s claim is wholly or in part denied by the Committee (or its designee), the Committee (or its designee) will provide written notice of the denial within 90 calendar days (or within 180 days if special circumstances exist) after it received the claim. This notice will state, in a manner designed to be understood by the Claimant, the following:

• the specific reason or reasons for the denial,

• specific reference to the Plan provision(s) on which the denial is based,

• a description of any additional material or information which the Claimant may need to perfect the claim with an explanation as to why such material or information is necessary,

• a statement that the Claimant has the right, upon request and free of charge, to review and obtain copies of records and documents relating to his claim which are held by the Committee (or its designee), and

• an explanation of the appeal right and procedure described in the next paragraph, including timelines and a statement of the Claimant’s right to file suit under ERISA §502(a) if the Claimant’s claim is denied on review.

If a Claimant’s claim is denied, wholly or in part, the Claimant has the right of an appeal to the Committee for review of the denial. The following provisions apply to such right of appeal.

• The request for review must be filed with the Committee within 60 calendar days following the Claimant’s receipt of written notice of denial of the claim.

• The request must be in writing from the Claimant and must state the specific portions of the claim denial that the Committee is asked to review.

• The Claimant has the right, upon request and free of charge, to review and obtain copies of records and documents relating to the Claimant’s claim that are held by the Committee (or its designee).

• The Claimant may submit issues, arguments, and other comments in writing to the Committee with any documentary evidence in support of his claim.

• The Committee’s review will take into account all information submitted by the Claimant, without regard to whether the information was submitted or considered in the initial benefit determination.

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• Written notice of the Committee’s decision will be given to the Claimant within 60 calendar days of receipt of the Claimant’s request for review (or within 120 calendar days if special circumstances exist). This notice will state specific reasons for the decision, including specific reference to the Plan provision(s) on which the decision is based in language designed to be understood by the Claimant. It will also include a statement that the Claimant is entitled to receive, free of charge and upon request, copies of documents and other information relevant to his claim, and that the Claimant has the right to bring a civil action under ERISA §502(a) if the Committee’s decision on review is adverse to the Claimant.

No lawsuit by a Claimant may be filed prior to exhausting the Plan’s administrative appeal process. Any lawsuit must be filed no later than the earlier of one year after the Claimant’s claim for benefit was denied or the date the cause of action first arose.

ARTICLE VIII
AMENDMENT AND TERMINATION

          8.1.          Amendment. The Company reserves the right to amend, terminate or freeze the Plan, in whole or in part, at any time by action of the Board. Moreover, the Committee may amend the Plan at any time in its sole discretion to ensure that the Plan complies with the requirements of Section 409A of the Code or other applicable law; provided, however, that such amendments, in the aggregate, may not materially increase the benefit costs of the Plan to the Company. In no event shall any such action by the Board or Committee adversely affect any Participant or Beneficiary who has an Account, or result in any change in the timing or manner of payment of the amount of any Account (except as otherwise permitted under the Plan), without the consent of the Participant or Beneficiary, unless the Board or the Committee, as the case may be, determines in good faith that such action is necessary to ensure compliance with Section 409A of the Code. To the extent permitted by Section 409A of the Code, the Committee may, in its sole discretion, modify the rules applicable to Deferral Elections, Payment Elections and Subsequent Payment Elections to the extent necessary to satisfy the requirements of the Uniformed Service Employment and Reemployment Rights Act of 1994, as amended, 38 U.S.C. 4301-4334.

          8.2.          Payments Upon Termination of Plan. In the event that the Plan is terminated, the amounts allocated to a Participant’s Sub-Accounts shall be paid to the Participant or his Beneficiary on the dates on which the Participant or his Beneficiary would otherwise receive payments hereunder without regard to the termination of the Plan. Notwithstanding the preceding sentence, and subject to Section 6.2 hereof:

                          (a)          Liquidation; Bankruptcy. The Board shall have the authority, in its sole discretion, to terminate the Plan and pay each Participant’s entire Account to the Participant or, if applicable, his Beneficiary within twelve (12) months of a corporate dissolution taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. 503(b)(1)(A), provided that the amounts are included in the Participant’s gross income in the latest of the following years (or, if earlier, the taxable year in which the amount is actually or

22

constructively received): (i) the calendar year in which the Plan termination and liquidation occurs; (ii) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture as defined under Section 409A of the Code; or (iii) the first calendar year in which the payment is administratively practicable.

                          (b)          Change in Control. The Board shall have the authority, in its sole discretion, to terminate the Plan and pay each Participant’s entire Account to the Participant or, if applicable, his Beneficiary pursuant to an irrevocable action taken by the Board within the 30 days preceding or the 12 months following a Change in Control, provided that this paragraph will only apply if all agreements, methods, programs, and other arrangements sponsored by the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) immediately after the time of the Change in Control event with respect to which deferrals of compensation are treated as having been deferred under a single plan under Section 409A of the Code are terminated and paid with respect to each Participant that experienced the Change in Control event, so that under the terms of the termination and payment all such Participants are required to receive all amounts of compensation deferred under the terminated agreements, methods, programs, and other arrangements within 12 months of the date the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) irrevocably takes all necessary action to terminate and liquidate the agreements, methods, programs, and other arrangements.

                          (c)          Discretionary Terminations. The Board shall have the authority, in its sole discretion, to terminate the Plan and pay each Participant’s entire Account to the Participant or, if applicable, his Beneficiary, provided that: (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code); (ii) The Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) terminates and liquidates all agreements, methods, programs, and other arrangements sponsored by the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) that would be aggregated with any terminated and liquidated agreements, methods, programs, and other arrangements under Section 409A of the Code if the same Participant had deferrals of compensation under all of the agreements, methods, programs, and other arrangements that are terminated and liquidated; (iii) no payments in liquidation of the Plan are made within 12 months of the date the Board takes all necessary action to irrevocably terminate and liquidate the Plan other than payments that would be payable under the terms of the Plan if the action to terminate and liquidate the Plan had not occurred; (iv) all payments are made within 24 months of the date the Board takes all necessary action to irrevocably terminate and liquidate the Plan; and (v) the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) does not adopt a new plan that would be aggregated with any terminated and liquidated plan under Section 409A of the Code if the same Participant participated in both plans, at any time within three years following the date the Board takes all necessary action to irrevocably terminate and liquidate the Plan.

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                          (d)          Other Events. The Board shall have the authority, in its sole discretion, to terminate the Plan and pay each Participant’s entire Account to the Participant or, if applicable, his Beneficiary upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

ARTICLE IX
MISCELLANEOUS

          9.1.          Non-alienation of Deferred Compensation. Except as permitted by the Plan, no right or interest under the Plan of any Participant or Beneficiary shall, without the written consent of the Company, be (i) assignable or transferable in any manner, (ii) subject to alienation, anticipation, sale, pledge, encumbrance, attachment, garnishment or other legal process or (iii) in any manner liable for or subject to the debts or liabilities of the Participant or Beneficiary. Notwithstanding the foregoing, to the extent permitted by Section 409A of the Code and subject to Section 6.5(a) hereof, the Committee shall honor a judgment, order or decree from a state domestic relations court which requires the payment of part or all of a Participant’s or Beneficiary’s interest under this Plan to an “alternate payee” as defined in Section 414(p) of the Code.

          9.2.          Participation by Employees of Affiliated Group Members. Any member of the Affiliated Group may, by action of its board of directors or equivalent governing body and with the consent of the Board, adopt the Plan; provided that the Board may waive the requirement that such board of directors or equivalent governing body effect such adoption. By its adoption of or participation in the Plan, the adopting member of the Affiliated Group shall be deemed to appoint the Company its exclusive agent to exercise on its behalf all of the power and authority conferred by the Plan upon the Company and accept the delegation to the Committee of all the power and authority conferred upon it by the Plan. The authority of the Company to act as such agent shall continue until the Plan is terminated as to the participating affiliate. An Eligible Employee who is employed by a member of the Affiliated Group and who elects to participate in the Plan shall participate on the same basis as an Eligible Employee of the Company. The Account of a Participant employed by a participating member of the Affiliated Group shall be paid in accordance with the Plan solely by such member to the extent attributable to Base Salary, Incentive Compensation or Director Fees that would have been paid by such participating member in the absence of deferral pursuant to the Plan, unless the Board otherwise determines that the Company shall be the obligor.

          9.3.          Interest of Participant.

                          (a)          The obligation of the Company and any other participating member of the Affiliated Group under the Plan to make payment of amounts reflected in an Account merely constitutes the unsecured promise of the Company (or, if applicable, the participating members of the Affiliated Group) to make payments from their general assets and no Participant or Beneficiary shall have any interest in, or a lien or prior claim upon, any property of the Affiliated Group. Nothing in the Plan shall be construed as guaranteeing future employment to Eligible Employees. It is the intention of the Affiliated Group that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA. The Company may create a trust to hold funds to be used in payment of its and the Affiliated Group’s obligations under the Plan, and may fund such trust;

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provided, however, that any funds contained therein shall remain liable for the claims of the general creditors of the Company and the other participating members of the Affiliated Group.

                          (b)          In the event that, in the sole discretion of the Committee, the Company and/or the other members of the Affiliated Group purchases an insurance policy or policies insuring the life of any Participant (or any other property) to allow the Company and/or the other members of the Affiliated Group to recover the cost of providing the benefits, in whole or in part, hereunder, neither the Participants nor their Beneficiaries or other distributees shall have nor acquire any rights whatsoever therein or in the proceeds therefrom. The Company and/or the other members of the Affiliated Group shall be the sole owner and beneficiary of any such policy or policies and, as such, shall possess and may exercise all incidents of ownership therein. A Participant’s participation in the underwriting or other steps necessary to acquire such policy or policies may be required by the Company and, if required, shall not be a suggestion of any beneficial interest in such policy or policies to such Participant or any other person.

          9.4.          Claims of Other Persons. The provisions of the Plan shall in no event be construed as giving any other person, firm or corporation any legal or equitable right as against the Affiliated Group or the officers, employees or directors of the Affiliated Group, except any such rights as are specifically provided for in the Plan or are hereafter created in accordance with the terms and provisions of the Plan.

          9.5.          Severability. The invalidity and unenforceability of any particular provision of the Plan shall not affect any other provision hereof, and the Plan shall be construed in all respects as if such invalid or unenforceable provision were omitted.

          9.6.          Governing Law. Except to the extent preempted by federal law, the provisions of the Plan shall be governed and construed in accordance with the laws of the State of New York.

          9.7.          Relationship to Other Plans. The Plan is intended to serve the purposes of and to be consistent with any incentive compensation plan approved by the Committee for purposes of the Plan.

          9.8.          Successors. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume this Plan. This Plan shall be binding upon and inure to the benefit of the Company and any successor of or to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Company whether by sale, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Plan), and the heirs, beneficiaries, executors and administrators of each Participant.

          9.9.          Withholding of Taxes. Subject to Section 6.5 hereof, to the extent required by the law in effect at the time payments are made, the Affiliated Group may withhold or cause to be withheld from any amounts deferred or payable under the Plan all Federal, state, local and other taxes as shall be legally required. The Affiliated Group shall have the right in its sole discretion to (i) require a Participant to pay or provide for payment of the amount of any taxes

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that the Affiliated Group may be required to withhold with respect to amounts that the Company credits to a Participant’s Account or (ii) deduct from any amount of salary, bonus, incentive compensation or other payment otherwise payable in cash to the Participant the amount of any taxes that the Company may be required to withhold with respect to amounts that the Company credits to a Participant’s Account.

          9.10.          Electronic or Other Media. Notwithstanding any other provision of the Plan to the contrary, including any provision that requires the use of a written instrument, the Committee may establish procedures for the use of electronic or other media in communications and transactions between the Plan or the Committee and Participants and Beneficiaries. Electronic or other media may include, but are not limited to, e-mail, the Internet, intranet systems and automated telephonic response systems.

          9.11.          Headings; Interpretation. Headings in this Plan are inserted for convenience of reference only and are not to be considered in the construction of the provisions hereof. Unless the context clearly requires otherwise, the masculine pronoun wherever used herein shall be construed to include the feminine pronoun.

          9.12.          Participants Deemed to Accept Plan. By accepting any benefit under the Plan, each Participant and each person claiming under or through any such Participant shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, all of the terms and conditions of the Plan and any action taken under the Plan by the Board, the Committee or the Company or the other members of the Affiliated Group, in any case in accordance with the terms and conditions of the Plan.

ARTICLE X
EFFECTIVE DATE AND TRANSITION RULES

          10.1.          Effective Date. This amendment and restatement of the Plan is effective as of January 1, 2008 (the “Effective Date”). In order to comply with section 409A of the Code, effective immediately before January 1, 2008, the Plan is divided into two parts, one of which shall be named “Part One” and the other of which shall be named “Part Two”. Part One of the Plan shall be governed by the terms and conditions of the Plan as in effect on October 3, 2004. Part Two of the Plan shall be governed by the terms and conditions set forth herein.

                            (a)          Pre-2005 Deferrals. Any “amounts deferred” in taxable years beginning before January 1, 2005 (within the meaning of Section 409A of the Code) and any earnings thereon shall be governed by the terms of Part One of the Plan, and it is intended that such amounts and the earnings thereon shall be exempt from the application of Section 409A of the Code. Nothing contained herein is intended to materially enhance a benefit or right existing under Part One of the Plan as of October 3, 2004, or add a new material benefit or right to Part One of the Plan. As of January 1, 2008, Part One of the Plan is frozen, and neither the Company, its affiliates nor any individual shall make or permit to be made any additional contributions or deferrals under Part One of the Plan (other than earnings) on or after that date.

                            (b)          Post-2004 Deferrals. Any “amounts deferred” in taxable years beginning on or after January 1, 2005 (within the meaning of Section 409A of the Code) and any earnings

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thereon shall be governed by the terms and conditions of Part Two of the Plan. To the extent that any of those amounts were deferred under the Plan prior to the Effective Date (the “Transferred Amounts”), then the Committee shall transfer the Transferred Amounts from Part One of the Plan to Part Two of this Plan and credit those amounts to the appropriate Sub-Accounts under Part Two of this Plan, as selected by the Committee in its sole discretion. As a result of such transfer and crediting, all of the Company’s obligations and Participant’s rights with respect to the Transferred Amounts under Part One of the Plan, if any, shall automatically be extinguished and become obligations and rights under Part Two of this Plan without further action.

          10.2.          Transition Relief for Payment Elections. A Participant designated by the Committee may, no later than a date specified by the Committee (provided that such date occurs no later than December 31, 2008) elect on a form provided by the Committee to (i) change the date of payment of his Sub-Accounts to a date otherwise permitted for that Sub-Account under the Plan; or (ii) change the form of payment of his Sub-Accounts to a form of payment otherwise permitted for that Sub-Account under the Plan, without complying with the special timing requirements of Section 6.1(c). A Participant designated by the Committee may, no later than a date specified by the Committee (provided that such date occurs no later than December 31, 2008) elect on a form provided by the Committee to defer any Incentive Compensation designated by the Committee in its sole discretion without complying with the special timing requirements for Deferral Elections under Article III. Any such change or election shall be subject to such terms and conditions as the Committee may specify in its sole discretion. This Section 10.2 is intended to comply with the requirements of Notice 2007-86 and the applicable proposed and final Treasury Regulations issued under Section 409A of the Code and shall be interpreted in a manner consistent with such intent.

          IN WITNESS WHEREOF, CH Energy Group, Inc. has caused this instrument to be executed by its duly authorized officer on this ___ day of December, 2007.

CH ENERGY GROUP, INC.
By:	/s/Steven V. Lant
	Steven V. Lant, Chairman, President and
	Chief Executive Officer of CH Energy
	Group, Inc.

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EX-10.(III)32

Exhibit (10)(iii)32

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

          AGREEMENT by and between CH Energy Group Inc. (“Energy Group”), a New York corporation, and Steven V. Lant (the “Executive”), dated as of the 1st day of January, 2008.

          The Board of Directors of Energy Group (the “Board”) has determined that it is in the best interests of Energy Group and its shareholders to assure that Energy Group will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of Energy Group. The Board believes it is impeto diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to Energy Group currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused Energy Group to enter into this Agreement with the Executive.

          NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

          1.          This Employment Agreement shall be between Energy Group and the Executive named above for all periods during which the Executive serves in the capacity as an officer of Energy Group or any of its affiliated companies. Energy Group and the Executive are parties to an Employment Agreement dated as of July 31, 2005 (the “Original Agreement”). Energy Group and the Executive hereby amend and restate the Original Agreement so that this Agreement replaces and supersedes the Original Agreement in its entirety.

          2.          Certain Definitions.

                       (a)          As used in this Agreement, “Energy Group” shall mean CH Energy Group, Inc. as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

                       (b)          As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with Energy Group.

                       (c)          The “Effective Date” shall mean the first date during the Change of Control Period (as defined in Section 2(d)) on which a Change of Control (as defined in Section 3) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment with Energy Group or any of its affiliated companies is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii)

otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately prior to the date of such termination of employment, and the Executive shall be entitled to all payments and benefits under this Agreement as though the Executive had terminated his employment for Good Reason. For purposes of the immediately preceding sentence, a Change of Control means a Change of Control that also constitutes a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of Energy Group within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). For purposes of determining the timing of payments and benefits to Executive under Section 7, the date of the actual Change of Control (as defined in the immediately preceding sentence) shall be treated as Executive’s Date of Termination (in lieu of the date set forth in Section 6(e)).

                       (d)          The “Change of Control Period” shall mean the period commencing on the date hereof and ending on the following July 31, which July 31 and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”. Unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate one year from such Renewal Date. Notwithstanding the foregoing, this Agreement may be terminated by either the Executive or Energy Group or any of its affiliated companies at any time prior to the Effective Date by providing 60 days’ written notice to the other party, in which case the Executive shall have no further rights under this Agreement; provided, that such a notice shall be null and void if it is reasonably demonstrated by the Executive that such notice was given (i) at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise in connection with or anticipation of a Change of Control.

                       (e)          The “Multiple” shall mean (i) three if the Executive’s Date of Termination (as defined herein) occurs on or prior to the first anniversary of the Effective Date, (ii) two if the Executive’s Date of Termination occurs after the first anniversary of the Effective Date but on or prior to the second anniversary of the Effective Date, and (iii) one if the Executive’s Date of Termination occurs after the second anniversary of the Effective Date but on or prior to the third anniversary of the Effective Date.

          3.          Change of Control. For the purpose of this Agreement, a “Change of Control” shall mean:

                       (a)          The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (x) the then outstanding shares of common stock of Energy Group (the “Outstanding Energy Group Common Stock”) or (y) the combined voting power of the then outstanding voting securities of Energy Group entitled to vote generally in the election of directors (the “Outstanding Energy Group Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from Energy Group, (ii) any acquisition by Energy Group, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Energy Group or its affiliated companies or (iv) any acquisition by any

2

corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 3; or

                      (b)          Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Energy Group’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

                       (c)          Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Energy Group (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Energy Group Common Stock and Outstanding Energy Group Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Energy Group or all or substantially all of Energy Group’s assets either directly or through one or more of its affiliated companies) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Common Stock and Outstanding Energy Group Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of Energy Group or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business combination; or

                       (d)          Approval by the shareholders of Energy Group of a complete liquidation or dissolution of Energy Group.

          4.          Employment Period. Energy Group hereby agrees to continue, or cause to be continued, the Executive in its employ, or in the employ of any of its affiliated companies, and the Executive hereby agrees to remain in the employ of Energy Group or any of its affiliated companies subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of such date (the “Employment Period”).

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          5.          Terms of Employment.

                      (a)          Position and Duties.

                                    (i)          During the Employment Period, the Executive’s authority, duties and responsibilities shall, in the aggregate, be at least commensurate in all material respects with the most significant of those exercised and assigned at any time during the 120-day period immediately preceding the Effective Date, and neither a reduced scope of the Executive’s responsibilities resulting from the fact that the Change of Control has created a larger organization, nor a change in the Executive’s position (including status, offices, titles and reporting requirements) shall be the sole basis for determining whether the requirements of this Section 5(a)(i) are met.

                                    (ii)          During the Employment Period, the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than 50 miles from such location.

                                    (iii)          During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of Energy Group or any of its affiliated companies and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to serve on civic or charitable boards or committees, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of Energy Group or any of its affiliated companies in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to Energy Group or any of its affiliated companies.

                      (b)          Compensation.

                                    (i)          Base Salary. During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by Energy Group or any of its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as used in this Agreement shall refer to Annual Base Salary as so increased.

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                                  (ii)          Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in cash at least equal to the average of the bonuses payable under Energy Group’s Executive Annual Incentive Plan, if applicable, or any comparable annual bonus under any predecessor or successor plan, for the last three full fiscal years prior to the Effective Date, or if the Executive was eligible to earn such a bonus for less than the last three full fiscal years, for the fiscal years during which the Executive was eligible to earn such a bonus immediately prior to the Effective Date (annualized in the event that the Executive was not employed by Energy Group or its affiliated companies (or was not eligible to earn such a bonus) for the whole of each such fiscal year) (the “Average Annual Bonus”). If the Executive was not eligible to earn such an annual bonus for any fiscal year ending on or before the Effective Date, then the Average Annual Bonus shall be deemed to equal the Executive’s target annual bonus as in effect immediately prior to the Effective Date. Each such Annual Bonus shall be paid no later than two and one-half months after the end of the fiscal year next following the fiscal year for which the Annual Bonus is awarded.

                                 (iii)          Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of Energy Group or its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by Energy Group or its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of Energy Group or its affiliated companies.

                                 (iv)          Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by Energy Group or its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of Energy Group or its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of Energy Group or its affiliated companies.

                                  (v)          Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of Energy Group or any

5

of its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies.

                                 (vi)          Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of Energy Group or any of its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies.

                                 (vii)          Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of Energy Group or any of its affiliated companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies.

                                 (viii)          Certain Exclusions. In determining the benefits provided in subclauses (i) through and including (viii) of this paragraph (b), there shall be excluded from consideration any such benefits provided by any of the affiliated companies during the measuring periods, if any, referred to in such subclauses if Energy Group has elected not to enter into Employment Agreements (of this Type) with executives of such affiliated companies.

          6.          Termination of Employment.

                      (a)       Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If Energy Group or any of its affiliated companies determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 16(b) of this Agreement of its intention to terminate the Executive’s employment; provided that such notice is provided no later than 9 months following the Executive’s first day of Disability. In such event, the Executive’s employment with Energy Group or any of its affiliated companies shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with Energy Group or any of its affiliated companies on a full-time basis for at least 180 consecutive business days as a result of any medically determinable physical or mental impairment resulting in the Executive’s inability to perform the duties of his position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months. The determination of Disability shall be made by a physician

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selected by Energy Group or its insurers and acceptable to the Executive or the Executive’s legal representative.

                     (b)        Cause. The Executive’s employment during the Employment Period may be terminated for Cause. For purposes of this Agreement, “Cause” shall mean:

                         (i)          the willful and continued failure of the Executive to perform substantially the Executive’s duties with Energy Group or any of its affiliated companies (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of Energy Group which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive’s duties;

                         (ii)          the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to Energy Group or any of its affiliated companies;

                         (iii)          the repeated use of alcohol by the Executive that materially interferes with Executive’s duties, use of illegal drugs by the Executive, or a violation by the Executive of the drug and/or alcohol policies of Energy Group or any of its affiliated companies;

                         (iv)          a conviction, guilty plea or plea of nolo contendere of the Executive for any crime involving moral turpitude or for any felony;

                         (v)          a breach by the Executive of his fiduciary duties of loyalty or care to Energy Group or any of its affiliated companies or a material violation of the Code of Business Conduct and Ethics, or similar policies, of Energy Group or any of its affiliated companies; or

                         (vi)          the breach by the Executive of the confidentiality provision set forth in Section 11(a) hereof.

          For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of Energy Group or any of its affiliated companies. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of Energy Group or any of its affiliated companies based upon the advice of counsel for Energy Group shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of Energy Group or any of its affiliated companies. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after

7

reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) through and including (vi) above, and specifying the particulars thereof in detail.

          (c)        Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

                         (i)          any material reduction in the Executive’s authority, duties or responsibilities that is not permitted by Section 5(a)(i) of this Agreement, without the Executive’s written consent, excluding for this purpose an action not taken in bad faith and which is remedied by Energy Group or any of its affiliated companies promptly after receipt of notice thereof given by the Executive;

                         (ii)          any failure by Energy Group or any of its affiliated companies to comply with any of the provisions of Section 5(b) of this Agreement, other than a failure not occurring in bad faith and which is remedied by Energy Group or any of its affiliated companies promptly after receipt of notice thereof given by the Executive;

                         (iii)          Energy Group or any of its affiliated companies requiring the Executive to be based at any office or location other than as provided in Section 5(a)(ii) of this Agreement;

                         (iv)          any purported termination by Energy Group or any of its affiliated companies of the Executive’s employment otherwise than as expressly permitted by this Agreement; or

                         (v)          any failure by Energy Group or any of its affiliated companies to comply with and satisfy Section 12(c) of this Agreement.

          For purposes of this Section 6(c), any claim by the Executive that Good Reason exists shall be presumed to be correct unless Energy Group establishes by clear and convincing evidence that Good Reason does not exist.

                      (d)       Notice of Termination. Any termination by Energy Group or any of its affiliated companies for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 16(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or Energy Group or any of its affiliated companies to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or Energy Group or any of its affiliated companies, respectively, hereunder or preclude the Executive or Energy Group or any of its

8

affiliated companies, respectively, from asserting such fact or circumstance in enforcing the Executive’s or Energy Group’s or any of its affiliated company’s rights hereunder.

                      (e)        Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by Energy Group or any of its affiliated companies for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive’s employment is terminated by Energy Group or any of its affiliated companies other than for Cause or Disability, the Date of Termination shall be the date on which Energy Group or any of its affiliated companies notifies the Executive of such termination and (iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. Energy Group and the Executive shall take all steps necessary (including with regard to any post-termination services by the Executive) to ensure that any termination described in this Section 6(e) constitutes a “separation from service” within the meaning of Section 409A of the Code, and the date on which such separation from service takes place shall be the “Date of Termination.”

          7.          Obligations of Energy Group and its Affiliated Companies upon Termination. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, Energy Group or any of its affiliated companies shall terminate the Executive’s employment other than for Cause or Disability or the Executive shall terminate employment for Good Reason:

                         (i)          Energy Group shall pay, or cause to be paid, to the Executive in a lump sum in cash the sum of: (A) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) the product of (x) the Average Annual Bonus and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365 and (C) any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (A), (B), and (C) shall be hereinafter referred to as the “Accrued Obligations”). The amounts described in clauses (A) and (C) shall be paid within 30 days after the Date of Termination. The amounts described in clause (B) shall be paid within the 30-day period commencing on the 60th day following the Date of Termination, or such later date set forth in Section 17(a).

                         (ii)          Energy Group shall pay, or cause to be paid, to the Executive in twelve (12) equal monthly installments, the product of (1) the Multiple and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Average Annual Bonus. The first installment shall commence within the 30 day period commencing on the 60th day following the Date of Termination, or such later date set forth in Section 17(a).

                         (iii)          For a number of years after the Executive’s Date of Termination equal to the Multiple, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, Energy Group or any of its affiliated companies shall continue benefits to the Executive and/or the Executive’s family at least equal to those which would have been provided to them in accordance with the plans,

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programs, practices and policies described in Section 5(b)(iv) of this Agreement if the Executive’s employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until the expiration of a number of years after the Date of Termination equal to the Multiple and to have retired on the last day of such period. The continued benefits described in this Section 7(a)(iii) that are taxable benefits (and that are not disability pay or death benefit plans within the meaning of Section 409A of the Code) are intended to comply, to the maximum extent possible, with the exception to Section 409A of the Code set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations. To the extent that any of those benefits either do not qualify for that exception, or are provided beyond the applicable time periods set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations, then they shall be subject to the following additional rules: (A) any reimbursement of eligible expenses shall be paid within 10 calendar days following Executive’s written request for reimbursement, or such later date set forth in Section 17(a); provided that the Executive provides written notice no later than 15 calendar days prior to the last day of the calendar year following the calendar year in which the expense was incurred; (B) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, during any other calendar year; and (C) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

                         (iv)        Energy Group or any of its affiliated companies shall, at its sole expense as incurred, provide the Executive with outplacement services from a recognized outplacement service provider, the scope of which shall be selected by the Executive in his sole discretion; provided that (i) the cost to Energy Group shall not exceed $30,000, and (ii) in no event shall the outplacement services be provided beyond the end of the second calendar year after the calendar year in which the Date of Termination occurs.

                         (v)        To the extent not theretofore paid or provided, Energy Group or any of its affiliated companies shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of Energy Group or any of its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

Notwithstanding the foregoing, except with respect to payments and benefits under Sections 7(a)(i)(A), 7(a)(i)(C) and 7(a)(v), all payments and benefits shall cease in the event Executive breaches any of his obligations under Section 11 hereof.

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                      (b)          Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 7(b) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by Energy Group or any of its affiliated companies to the estates and beneficiaries of peer executives of Energy Group and any such affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other peer executives of Energy Group or any of its affiliated companies and their beneficiaries.

                      (c)          Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, this Agreement shall terminate as of the Disability Effective Date, without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash at the same time as set forth in Section 7(a)(i). With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 7(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by Energy Group or any of its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect at any time thereafter generally with respect to other peer executives of Energy Group or any of its affiliated companies and their families.

                      (d)          Cause; Other than for Good Reason. If the Executive’s employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary through the Date of Termination, and (y) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash at the same time as set forth in Section 7(a)(i).

          8.         Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided

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by Energy Group or any of its affiliated companies and for which the Executive may qualify, nor, subject to Section 16(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with Energy Group or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with Energy Group or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

          9.          Full Settlement.

                       (a)          Except as otherwise provided in Section 7(a) hereof, Energy Group’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which Energy Group or any of its affiliated companies may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment.

                       (b)          Except as otherwise provided in this Section 9 or Section 11 of this Agreement, Energy Group agrees to pay as incurred (within 10 calendar days following Energy Group’s receipt of an invoice from the Executive), to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur at any time from the date of this Agreement through the Executive’s remaining lifetime or, if longer, through the 20th anniversary of the date of the Change of Control, including the legal fees and expenses of any arbitration proceeding, as a result of any contest (regardless of the outcome thereof) by Energy Group or any of its affiliated companies, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided, that the Executive shall have submitted an invoice for such fees and expenses at least 15 calendar days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred. Notwithstanding the foregoing, Energy Group shall not be obligated to pay any legal fees or expenses incurred by the Executive in any contest in which the trier of fact determines that the Executive’s position was frivolous or maintained in bad faith. The amount of such legal fees and expenses that Energy Group is obligated to pay in any given calendar year shall not affect the legal fees and expenses that Energy Group is obligated to pay in any other calendar year, and the Executive’s right to have Energy Group pay such legal fees and expenses may not be liquidated or exchanged for any other benefit. Energy Group’s obligation to pay Executive’s eligible legal fees and expenses under this Section 9(b) shall not be conditioned upon Executive’s termination of employment.

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          10.          Certain Additional Payments by Energy Group or its Affiliated Companies.

                         (a)          Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by Energy Group or any of its affiliated companies to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 10(a), if it shall be determined that the Executive is entitled to a Gross-Up Payment, but that the Payments do not exceed 110% of the greatest amount (the “Reduced Amount”) that could be paid to the Executive such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. If a reduction in Payments is necessary pursuant to the immediately preceding sentence, then the reduction shall occur in the following order: (i) cash payments; (ii) cancellation of accelerated vesting of performance-based equity awards (based on the reverse order of the date of grant); (iii) cancellation of accelerated vesting of other equity awards (based on the reverse order of the date of grant); (iv) reduction in retirement benefits under the Supplemental Executive Retirement Plan; and (v) reduction of welfare benefits. Energy Group’s obligation to make Gross-Up Payments under this Section 10 shall not be conditioned upon Executive’s termination of employment.

                         (b)          Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment, whether and in what amount any Payments are to be reduced pursuant to the second sentence of Section 10(a), and the assumptions to be utilized in arriving at such determination, shall be made by a major accounting firm with expertise in such matters designated by the Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to Energy Group and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by Energy Group. Any determination by the Accounting Firm shall be binding upon Energy Group and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by Energy Group should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that Energy Group exhausts its remedies pursuant to Section 10(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be

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promptly paid, or caused to be paid, by Energy Group to or for the benefit of the Executive, as provided in Section 10(e).

                         (c)       The Executive shall notify Energy Group in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by Energy Group of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise Energy Group of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to Energy Group (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If Energy Group notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

                           (i)          give Energy Group any information reasonably requested by Energy Group relating to such claim,

                           (ii)          take such action in connection with contesting such claim as Energy Group shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by Energy Group,

                           (iii)          cooperate with Energy Group in good faith in order effectively to contest such claim, and

                           (iv)          permit Energy Group to participate in any proceedings relating to such claim;

provided, however, that Energy Group shall bear and pay, or cause to be paid, directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses as provided in Section 10(e). Without limitation on the foregoing provisions of this Section 10(c), Energy Group shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as Energy Group shall determine; provided, however, that if Energy Group directs the Executive to pay such claim and sue for a refund, Energy Group shall advance, or cause to be advanced, the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance, as provided in Section 10(e); and further provided

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that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, Energy Group’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

                         (d)          If, after the receipt by the Executive of an amount advanced, or caused to be advanced, by Energy Group pursuant to Section 10(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to Energy Group’s complying with the requirements of Section 10(c)) promptly pay to Energy Group the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced, or caused to be advanced, by Energy Group pursuant to Section 10(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and Energy Group does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

                         (e)          Any Gross-Up Payment shall be paid by Energy Group within 5 calendar days of receipt of the Accounting Firm’s determination as described in this Section 10, or such later date as provided in Section 17(a), provided that Executive submits written notice of a Payment no later than 30 calendar days prior to the end of the calendar year next following the calendar year in which the Excise Tax on a Payment is remitted to the Internal Revenue Service or any other applicable taxing authority. The Gross-Up Payment, if any, shall be paid to the Executive; provided that Energy Group, in its sole discretion, may withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of any Gross-Up Payment, and the Executive hereby consents to such withholding. Any reimbursement or payment by Energy Group of expenses incurred by the Executive in connection with a tax audit or litigation relating to the Excise Tax, as provided for in this Section 10, shall be paid within 5 calendar days of written request by the Executive, or such later date as provided in Section 17(a), provided that Executive submits the written request no later than 30 calendar days prior to the end of the calendar year following the calendar year in which the Excise Taxes that are subject to the audit or litigation are remitted to the Internal Revenue Service or any other applicable taxing authority, or where as a result of the audit or litigation, no Excise Taxes are remitted, the end of the calendar year next following the calendar year in which the audit is completed or there is a final and nonappealable settlement or other resolution of the litigation.

                         (f)          All fees and expenses of the Accounting Firm for services performed pursuant to this Section 10 at any time from the date of this Agreement through the Executive’s remaining lifetime or, if longer, through the 20th anniversary of the date of the Change of Control, shall be borne solely by Energy Group. Energy Group shall pay such fees and expenses not later than the end of the calendar year following the calendar year in which the related work is performed or the expenses are incurred by the Accounting Firm, subject to Section 17(a). The

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amount of such fees and expenses that Energy Group is obligated to pay in any given calendar year shall not affect the fees and expenses that Energy Group is obligated to pay in any other calendar year, and the Executive’s right to have Energy Group pay such fees and expenses may not be liquidated or exchanged for any other benefit.

          11.          Restrictive Covenants.

                         (a)          The Executive shall hold in a fiduciary capacity for the benefit of Energy Group or any of its affiliated companies all secret or confidential information, knowledge or data relating to Energy Group or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by Energy Group or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). The Executive hereby covenants and agrees that during the Employment Period and thereafter, the Executive shall not, without the prior written consent of Energy Group, communicate or divulge any such information, knowledge or data to anyone other than Energy Group and those designated by it. Notwithstanding the foregoing, the Executive or his representatives may disclose any such information if such disclosure is compelled by subpoena or other legal process, provided that if the Executive is so compelled, he shall provide Energy Group prompt written notice of such subpoena or legal process in order to permit Energy Group to seek appropriate protective orders. The Executive agrees to contact Energy Group for written clarification if the Executive has any question regarding what information, knowledge or data would be considered by Energy Group to be confidential and subject to this provision. The Executive’s obligations under this Section 11(a) are in addition to, and not in limitation of or preemption of, all other obligations of confidentiality which the Executive may have to Energy Group or any of its affiliated companies under general legal or equitable principles, and federal, state or local law.

                         (b)          The Executive agrees that for a period of one year after his Date of Termination he will not, directly or indirectly, induce, attempt to induce, or assist others in inducing or attempting to induce, any employee of Energy Group or any of its affiliated companies to terminate such person’s employment relationship with Energy Group or any of its affiliated companies.

                         (c)          The Executive acknowledges and agrees that any breach or threatened breach of this Section 11 by him will cause injury to Energy Group and its affiliated companies for which money damages alone will not provide an adequate remedy; that if he commits or threatens to commit any such breach, Energy Group or any of its affiliated companies should have the right to have the provisions of this Section 11 specifically enforced by any court having jurisdiction. The Executive agrees that he will not assert in any such enforcement action that Energy Group or any of its affiliated companies have an adequate remedy in damages; and that such rights and remedies will be in addition to and not in lieu of any other rights or remedies available to Energy Group or any of its affiliated companies at law or in equity. The Executive agrees that if any court determines that he has breached this Section 11, he shall be liable to and will pay Energy Group its reasonable legal fees and expenses incurred in connection with such proceedings, including appeals therefrom, and Energy Group shall not be obligated to reimburse

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the Executive for the legal fees and expenses incurred by the Executive in connection with such proceedings, including appeals therefrom. In addition, while the duration of the covenants contained in this Section 11 will be determined generally in accordance with their terms, if the Executive violates any of these covenants, he agrees to an extension of such covenant on the same terms and conditions for an additional period of time equal to the time that elapses from the commencement of such violation to the later of (i) the termination of such violation or (ii) the final resolution of any litigation stemming from such violation.

                         (d)          If any covenant contained in this Section 11, or any portion of such covenant, is found by a court of competent jurisdiction to be invalid or unenforceable for any reason, the Executive hereby authorizes and requests such court to exercise its discretion to reform such covenant to the end that he will be subject to covenants that are reasonable under the circumstances and enforceable by Energy Group or any of its affiliated companies. In any event, if any provision is found to be unenforceable for any reason, such provision shall remain in force and effect to the maximum extent allowable, all non-affected provisions shall remain fully valid and enforceable, and such finding shall in no way affect the subsequent enforceability of any such provision against a different employee of Energy Group.

                         (e)          The Executive agrees that the promises and obligations made by Energy Group in this Agreement (specifically including, but not limited to, the payments and benefits provided for under Section 7(a) hereof (other than payments and benefits under Sections 7(a)(i)(A), 7(a)(i)(C) and 7(a)(v)) constitute sufficient consideration for the covenants contained in this Section 11. The Executive further acknowledges that it is not Energy Group’s intention to interfere in any way with his employment opportunities, except in such situations where the same conflict with the legitimate business interests of Energy Group or any of its affiliated companies. The Executive agrees that he will notify Energy Group in writing if he has, or reasonably should have, any questions regarding the applicability of this Section 11.

          12.          Successors.

                         (a)          This Agreement is personal to the Executive and without the prior written consent of Energy Group shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

                         (b)          This Agreement shall inure to the benefit of and be binding upon Energy Group and its successors and assigns.

                         (c)          Energy Group will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Energy Group to assume expressly and agree to perform this Agreement in the same manner and to the same extent that Energy Group would be required to perform it if no such succession had taken place.

          13.          Early Termination. This agreement shall terminate as of the date Executive becomes employed by any of the affiliated companies to which Energy Group has elected not to

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enter into employment agreements (of this Type) with executives of such affiliated companies; provided such employment becomes effective prior to a Change of Control.

          14.          Arbitration. Except as otherwise provided herein, any dispute, controversy or claim between the parties arising out of or relating to this Agreement (or any subsequent amendments thereof or waivers thereto) (hereinafter, a “Claim” or “Claims”) shall be submitted to final and binding arbitration. Claims which are subject to this section include, but are not limited to, the following: (i) claims relating to this Agreement’s existence, enforceability, validity, interpretation, performance or breach, (ii) claims for compensation or benefits, and (iii) claims of wrongful or discriminatory termination based on any federal, state or local statute, regulation, ordinance, tort, public policy, contract or promissory estoppel theory, including any dispute as to the cause or reason for termination. All Claims submitted to arbitration pursuant to this Section 14 shall be subject to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, effective January 1, 2004, except as hereinafter provided:

          (a)          A request to arbitrate a Claim must be made within 180 days of the date the Claim arose;

          (b)          Energy Group shall pay any and all fees and expenses of the arbitrator;

          (c)          The arbitration hearing shall be held in Poughkeepsie, New York, unless the parties mutually agree to another location;

          (d)          Each party shall exchange documents to be utilized as exhibits in the arbitration hearing and each party shall be limited to five (5) pre-hearing depositions of no more than ten hours each, unless the arbitrator orders additional discovery;

          (e)          The arbitrator shall be appointed in accordance with Rule 12 of the above-referenced Rules of the American Arbitration Association, except that if, for any reason, an arbitrator cannot be selected by the process described in Rule 12, subparts (i) through (iii), the American Arbitration Association shall submit the names of seven (7) additional arbitrators from its roster and the parties shall select the arbitrator by alternately striking names with the party requesting arbitration first striking; and

          (f)          Either party shall be entitled to seek and obtain injunctive or other appropriate equitable relief in any federal or state court having jurisdiction in order to enforce the arbitration provisions of this Agreement; and Energy Group shall be entitled to seek and obtain such injunctive or other appropriate equitable relief in order to prevent (pending arbitration) any breach of the Restrictive Covenants set forth in Section 11 of this Agreement in any federal or state court having jurisdiction.

Subject to paragraph (f) of this Section 14, above, it is the intention of the parties to avoid litigation in any court of any and all Claims concerning this Agreement, or otherwise arising from the Executive’s employment with Energy Group or its affiliate entities, and that all such claims will be subject to this arbitration agreement. Neither party shall commence or pursue any

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litigation on any claim that is or was the subject of arbitration under this Agreement. Each party agrees that this agreement to arbitrate, and any award arising out of any arbitration contemplated by this Agreement, are enforceable under, and subject to, the Federal Arbitration Act, 11 U.S.C. § I, et seq. Both parties consent that judgment upon any arbitration award may be entered in any federal or state court having jurisdiction.

          15.          Release. Notwithstanding anything contained herein to the contrary, Energy Group shall only be obligated to make the payments or provide any benefit under Section 7(a) hereof (other than payments and benefits under Sections 7(a)(i)(A), 7(a)(i)(C) and 7(a)(v)) if: (a) within the 50-day period after the Date of Termination, the Executive executes a release, in a form provided by Energy Group, of all current or future claims, known or unknown, against Energy Group, its affiliated companies, its officers, directors, shareholders, employees and agents arising on or before the date of the release, including but not limited to all claims arising out of the Executive’s employment with Energy Group or its affiliated companies or the termination of such employment, and (b) the Executive does not revoke the release during the seven-day revocation period prescribed by the Age Discrimination in Employment Act of 1967, as amended, or any similar revocation period, if applicable. Energy Group shall be obligated to provide such release to the Executive promptly following the Date of Termination.

          16.          Miscellaneous.

                         (a)          This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

                         (b)          All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:
	Steven V. Lant
	59 Colburn Drive
	Poughkeepsie, NY 12603
If to Energy Group:
	CH Energy Group, Inc.
	284 South Avenue
	Poughkeepsie, New York 12601-4879
	Attention: Chief Executive Officer

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or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

                         (c)          The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

                         (d)          Energy Group may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

                         (e)          The Executive’s or Energy Group’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or Energy Group may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

                         (f)          The Executive and Energy Group acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and Energy Group, or any of its affiliated companies, the employment of the Executive by Energy Group or any of its affiliated companies is “at will” and, subject to Section 2(c) hereof, the Executive’s employment may be terminated at any time prior to the Effective Date by either the Executive or Energy Group or any of its affiliated companies, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

          17.          Compliance with Section 409A of the Code.

                         (a)          Notwithstanding anything contained in this Agreement to the contrary, if the Executive is a “specified employee,” as determined under Energy Group’s policy for determining specified employees on the Date of Termination, then to the extent required in order to comply with Section 409A of the Code, all payments, benefits or reimbursements paid or provided under this Agreement that constitute a “deferral of compensation” within the meaning of Section 409A of the Code, that are provided as a result of a “separation from service” within the meaning of Section 409A and that would otherwise be paid or provided during the first six months following such Date of Termination shall be accumulated through and paid or provided (together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the Date of Termination) within 30 days after the first business day following the six month anniversary of such Date of Termination (or, if the Executive dies during such six-month period, within 30 days after the Executive’s death).

                         (b)          It is intended that the payments and benefits provided under this Agreement shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Code. This Agreement shall be construed, administered, and governed in a manner that effects such intent, and Energy Group shall not take any action that would be

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inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under this Agreement may not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon Executive. Although Energy Group shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither Energy Group, its affiliates, directors, officers, employees nor its advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Executive or other taxpayer as a result of the Agreement. Any reference in this Agreement to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, Energy Group has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

	Steven V. Lant
CH Energy Group, Inc.
By
	Christopher M. Capone
	EVP and CFO

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EX-10.(III)33

Exhibit (10)(iii)33

FORM OF AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

          AGREEMENT by and between CH Energy Group Inc. (“Energy Group”), a New York corporation, and Tier I Executive (the “Executive”), dated as of the ___________.

          The Board of Directors of Energy Group (the “Board”) has determined that it is in the best interests of Energy Group and its shareholders to assure that Energy Group will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of Energy Group. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to Energy Group currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused Energy Group to enter into this Agreement with the Executive.

          NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

          1.          This Employment Agreement shall be between Energy Group and the Executive named above for all periods during which the Executive serves in the capacity as an officer of Energy Group or any of its affiliated companies. Energy Group and the Executive are parties to an Employment Agreement dated as of __________ (the “Original Agreement”). Energy Group and the Executive hereby amend and restate the Original Agreement so that this Agreement replaces and supersedes the Original Agreement in its entirety.

          2.          Certain Definitions.

                       (a)           As used in this Agreement, “Energy Group” shall mean CH Energy Group, Inc. as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

                       (b)          As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with Energy Group.

                       (c)          The “Effective Date” shall mean the first date during the Change of Control Period (as defined in Section 2(d)) on which a Change of Control (as defined in Section 3) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment with Energy Group or any of its affiliated companies is

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terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately prior to the date of such termination of employment, and the Executive shall be entitled to all payments and benefits under this Agreement as though the Executive had terminated his employment for Good Reason. For purposes of the immediately preceding sentence, a Change of Control means a Change of Control that also constitutes a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of Energy Group within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). For purposes of determining the timing of payments and benefits to Executive under Section 7, the date of the actual Change of Control (as defined in the immediately preceding sentence) shall be treated as Executive’s Date of Termination (in lieu of the date set forth in Section 6(e)).

                       (d)          The “Change of Control Period” shall mean the period commencing on the date hereof and ending on the following July 31, which July 31 and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”. Unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate one year from such Renewal Date. Notwithstanding the foregoing, this Agreement may be terminated by either the Executive or Energy Group or any of its affiliated companies at any time prior to the Effective Date by providing 60 days’ written notice to the other party, in which case the Executive shall have no further rights under this Agreement; provided, that such a notice shall be null and void if it is reasonably demonstrated by the Executive that such notice was given (i) at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise in connection with or anticipation of a Change of Control.

                       (e)          The “Multiple” shall mean (i) three if the Executive’s Date of Termination (as defined herein) occurs on or prior to the first anniversary of the Effective Date, (ii) two if the Executive’s Date of Termination occurs after the first anniversary of the Effective Date but on or prior to the second anniversary of the Effective Date, and (iii) one if the Executive’s Date of Termination occurs after the second anniversary of the Effective Date but on or prior to the third anniversary of the Effective Date.

          3.          Change of Control. For the purpose of this Agreement, a “Change of Control” shall mean:

                       (a)          The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (x) the then outstanding shares of common stock of Energy Group (the “Outstanding Energy Group Common Stock”) or (y) the combined voting power of the then outstanding voting securities of Energy Group entitled to vote generally in the election of directors (the “Outstanding Energy Group Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a

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Change of Control: (i) any acquisition directly from Energy Group, (ii) any acquisition by Energy Group, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Energy Group or its affiliated companies or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 3; or

                       (b)          Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Energy Group’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

                       (c)          Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Energy Group (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Energy Group Common Stock and Outstanding Energy Group Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Energy Group or all or substantially all of Energy Group’s assets either directly or through one or more of its affiliated companies) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Common Stock and Outstanding Energy Group Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of Energy Group or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business combination; or

                       (d)          Approval by the shareholders of Energy Group of a complete liquidation or dissolution of Energy Group.

          4.          Employment Period. Energy Group hereby agrees to continue, or cause to be continued, the Executive in its employ, or in the employ of any of its affiliated companies, and

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the Executive hereby agrees to remain in the employ of Energy Group or any of its affiliated companies subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the third anniversary of such date (the “Employment Period”).

          5.          Terms of Employment.

                        (a)          Position and Duties.

                                       (i)          During the Employment Period, the Executive’s authority, duties and responsibilities shall, in the aggregate, be at least commensurate in all material respects with the most significant of those exercised and assigned at any time during the 120-day period immediately preceding the Effective Date, and neither a reduced scope of the Executive’s responsibilities resulting from the fact that the Change of Control has created a larger organization, nor a change in the Executive’s position (including status, offices, titles and reporting requirements) shall be the sole basis for determining whether the requirements of this Section 5(a)(i) are met.

                                      (ii)          During the Employment Period, the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than 50 miles from such location.

                                       (iii)          During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of Energy Group or any of its affiliated companies and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to serve on civic or charitable boards or committees, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of Energy Group or any of its affiliated companies in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to Energy Group or any of its affiliated companies.

                       (b)          Compensation.

                                      (i)          Base Salary. During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by Energy Group or any of its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall

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be reviewed no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as used in this Agreement shall refer to Annual Base Salary as so increased.

                                       (ii)          Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in cash at least equal to the average of the bonuses payable under Energy Group’s Executive Annual Incentive Plan, if applicable, or any comparable annual bonus under any predecessor or successor plan, for the last three full fiscal years prior to the Effective Date, or if the Executive was eligible to earn such a bonus for less than the last three full fiscal years, for the fiscal years during which the Executive was eligible to earn such a bonus immediately prior to the Effective Date (annualized in the event that the Executive was not employed by Energy Group or its affiliated companies (or was not eligible to earn such a bonus) for the whole of each such fiscal year) (the “Average Annual Bonus”). If the Executive was not eligible to earn such an annual bonus for any fiscal year ending on or before the Effective Date, then the Average Annual Bonus shall be deemed to equal the Executive’s target annual bonus as in effect immediately prior to the Effective Date. Each such Annual Bonus shall be paid no later than two and one-half months after the end of the fiscal year next following the fiscal year for which the Annual Bonus is awarded.

                                       (iii)          Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of Energy Group or its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by Energy Group or its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of Energy Group or its affiliated companies.

                                       (iv)          Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by Energy Group or its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of Energy Group or its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to

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the Executive, those provided generally at any time after the Effective Date to other peer executives of Energy Group or its affiliated companies.

                                       (v)          Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of Energy Group or any of its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies.

                                       (vi)          Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of Energy Group or any of its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies.

                                       (vii)          Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of Energy Group or any of its affiliated companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies.

                                       (viii)          Certain Exclusions. In determining the benefits provided in subclauses (i) through and including (viii) of this paragraph (b), there shall be excluded from consideration any such benefits provided by any of the affiliated companies during the measuring periods, if any, referred to in such subclauses if Energy Group has elected not to enter into Employment Agreements (of this Type) with executives of such affiliated companies.

          6.          Termination of Employment.

                        (a)          Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If Energy Group or any of its affiliated companies determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 16(b) of this Agreement of its intention to terminate the Executive’s employment; provided that such notice is provided no later than 9 months following the Executive’s first day of Disability. In such event, the Executive’s employment with Energy Group or any of its affiliated companies shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability”

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shall mean the absence of the Executive from the Executive’s duties with Energy Group or any of its affiliated companies on a full-time basis for at least 180 consecutive business days as a result of any medically determinable physical or mental impairment resulting in the Executive’s inability to perform the duties of his position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months. The determination of Disability shall be made by a physician selected by Energy Group or its insurers and acceptable to the Executive or the Executive’s legal representative.

                        (b)             Cause. The Executive’s employment during the Employment Period may be terminated for Cause. For purposes of this Agreement, “Cause” shall mean:

                                 (i)          the willful and continued failure of the Executive to perform substantially the Executive’s duties with Energy Group or any of its affiliated companies (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of Energy Group which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive’s duties;

                                 (ii)          the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to Energy Group or any of its affiliated companies;

                                 (iii)          the repeated use of alcohol by the Executive that materially interferes with Executive’s duties, use of illegal drugs by the Executive, or a violation by the Executive of the drug and/or alcohol policies of Energy Group or any of its affiliated companies;

                                 (iv)          a conviction, guilty plea or plea of nolo contendere of the Executive for any crime involving moral turpitude or for any felony;

                                 (v)          a breach by the Executive of his fiduciary duties of loyalty or care to Energy Group or any of its affiliated companies or a material violation of the Code of Business Conduct and Ethics, or similar policies, of Energy Group or any of its affiliated companies; or

                                 (vi)          the breach by the Executive of the confidentiality provision set forth in Section 11(a) hereof.

          For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of Energy Group or any of its affiliated companies. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief

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Executive Officer or a senior officer of Energy Group or any of its affiliated companies based upon the advice of counsel for Energy Group shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of Energy Group or any of its affiliated companies. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) through and including (vi) above, and specifying the particulars thereof in detail.

                         (c)          Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

                                 (i)          any material reduction in the Executive’s authority, duties or responsibilities that is not permitted by Section 5(a)(i) of this Agreement, without the Executive’s written consent, excluding for this purpose an action not taken in bad faith and which is remedied by Energy Group or any of its affiliated companies promptly after receipt of notice thereof given by the Executive;

                                 (ii)          any failure by Energy Group or any of its affiliated companies to comply with any of the provisions of Section 5(b) of this Agreement, other than a failure not occurring in bad faith and which is remedied by Energy Group or any of its affiliated companies promptly after receipt of notice thereof given by the Executive;

                                 (iii)          Energy Group or any of its affiliated companies requiring the Executive to be based at any office or location other than as provided in Section 5(a)(ii) of this Agreement;

                                 (iv)          any purported termination by Energy Group or any of its affiliated companies of the Executive’s employment otherwise than as expressly permitted by this Agreement; or

                                 (v)          any failure by Energy Group or any of its affiliated companies to comply with and satisfy Section 12(c) of this Agreement.

          For purposes of this Section 6(c), any claim by the Executive that Good Reason exists shall be presumed to be correct unless Energy Group establishes by clear and convincing evidence that Good Reason does not exist.

                          (d)          Notice of Termination. Any termination by Energy Group or any of its affiliated companies for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 16(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice

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which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or Energy Group or any of its affiliated companies to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or Energy Group or any of its affiliated companies, respectively, hereunder or preclude the Executive or Energy Group or any of its affiliated companies, respectively, from asserting such fact or circumstance in enforcing the Executive’s or Energy Group’s or any of its affiliated company’s rights hereunder.

                        (e)          Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by Energy Group or any of its affiliated companies for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive’s employment is terminated by Energy Group or any of its affiliated companies other than for Cause or Disability, the Date of Termination shall be the date on which Energy Group or any of its affiliated companies notifies the Executive of such termination and (iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. Energy Group and the Executive shall take all steps necessary (including with regard to any post-termination services by the Executive) to ensure that any termination described in this Section 6(e) constitutes a “separation from service” within the meaning of Section 409A of the Code, and the date on which such separation from service takes place shall be the “Date of Termination.”

          7.          Obligations of Energy Group and its Affiliated Companies upon Termination. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, Energy Group or any of its affiliated companies shall terminate the Executive’s employment other than for Cause or Disability or the Executive shall terminate employment for Good Reason:

                                 (i)          Energy Group shall pay, or cause to be paid, to the Executive in a lump sum in cash the sum of: (A) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) the product of (x) the Average Annual Bonus and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365 and (C) any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (A), (B), and (C) shall be hereinafter referred to as the “Accrued Obligations”). The amounts described in clause (B) shall be paid within the 30-day period commencing on the 60th day following the Date of Termination, or such later date set forth in Section 17(a).

                                  (ii)          Energy Group shall pay, or cause to be paid, to the Executive in twelve (12) equal monthly installments the product of (1) the Multiple and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Average Annual Bonus. The first

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installment shall commence within the 30 day period commencing on the 60th day following the Date of Termination, or such later date set forth in Section 17(a).

                                 (iii)          For a number of years after the Executive’s Date of Termination equal to the Multiple, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, Energy Group or any of its affiliated companies shall continue benefits to the Executive and/or the Executive’s family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 5(b)(iv) of this Agreement if the Executive’s employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until the expiration of a number of years after the Date of Termination equal to the Multiple and to have retired on the last day of such period. The continued benefits described in this Section 7(a)(iii) that are taxable benefits (and that are not disability pay or death benefit plans within the meaning of Section 409A of the Code) are intended to comply, to the maximum extent possible, with the exception to Section 409A of the Code set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations. To the extent that any of those benefits either do not qualify for that exception, or are provided beyond the applicable time periods set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations, then they shall be subject to the following additional rules: (A) any reimbursement of eligible expenses shall be paid within 10 calendar days following Executive’s written request for reimbursement, or such later date set forth in Section 17(a); provided that the Executive provides written notice no later than 15 calendar days prior to the last day of the calendar year following the calendar year in which the expense was incurred; (B) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, during any other calendar year; and (C) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

                                 (iv)          Energy Group or any of its affiliated companies shall, at its sole expense as incurred, provide the Executive with outplacement services from a recognized outplacement service provider, the scope of which shall be selected by the Executive in his sole discretion; provided that (i) the cost to Energy Group shall not exceed $30,000, and (ii) in no event shall the outplacement services be provided beyond the end of the second calendar year after the calendar year in which the Date of Termination occurs.

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                                 (v)          to the extent not theretofore paid or provided, Energy Group or any of its affiliated companies shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of Energy Group or any of its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

Notwithstanding the foregoing, except with respect to payments and benefits under Sections 7(a)(i)(A), 7(a)(i)(C) and 7(a)(v), all payments and benefits shall cease in the event Executive breaches any of his obligations under Section 11 hereof.

                        (b)          Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 7(b) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by Energy Group or any of its affiliated companies to the estates and beneficiaries of peer executives of Energy Group and any such affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other peer executives of Energy Group or any of its affiliated companies and their beneficiaries.

                        (c)          Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, this Agreement shall terminate as of the Disability Effective Date, without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash at the same time as set forth in Section 7(a)(i). With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 7(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by Energy Group or any of its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect at any time thereafter generally with respect to other peer executives of Energy Group or any of its affiliated companies and their families.

                         (d)          Cause; Other than for Good Reason. If the Executive’s employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without

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further obligations to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary through the Date of Termination, and (y) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash at the same time as set forth in Section 7(a)(i).

          8.          Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by Energy Group or any of its affiliated companies and for which the Executive may qualify, nor, subject to Section 16(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with Energy Group or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with Energy Group or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

          9.          Full Settlement.

                       (a)          Except as otherwise provided in Section 7(a) hereof, Energy Group’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which Energy Group or any of its affiliated companies may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment.

                       (b)          Except as otherwise provided in this Section 9 or Section 11 of this Agreement, Energy Group agrees to pay as incurred (within 10 calendar days following Energy Group’s receipt of an invoice from the Executive), to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur at any time from the date of this Agreement through the Executive’s remaining lifetime or, if longer, through the 20th anniversary of the date of the Change of Control, including the legal fees and expenses of any arbitration proceeding, as a result of any contest (regardless of the outcome thereof) by Energy Group or any of its affiliated companies, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided, that the Executive shall have submitted an invoice for such fees and expenses at least 15 calendar days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred. Notwithstanding the foregoing, Energy Group shall not be obligated to pay any legal fees or

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expenses incurred by the Executive in any contest in which the trier of fact determines that the Executive’s position was frivolous or maintained in bad faith. The amount of such legal fees and expenses that Energy Group is obligated to pay in any given calendar year shall not affect the legal fees and expenses that Energy Group is obligated to pay in any other calendar year, and the Executive’s right to have Energy Group pay such legal fees and expenses may not be liquidated or exchanged for any other benefit. Energy Group’s obligation to pay Executive’s eligible legal fees and expenses under this Section 9(b) shall not be conditioned upon Executive’s termination of employment.

          10.          Certain Additional Payments by Energy Group or its Affiliated Companies.

                         (a)          Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by Energy Group or any of its affiliated companies to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then, prior to the making of any Payment to Executive, a calculation shall be made comparing (i) the net after-tax benefit to Executive of the Payment after payment of the Excise Tax, to (ii) the net after-tax benefit to Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under clause (i) above is less than the amount calculated under clause (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “Reduced Amount”). If a reduction in Payments is necessary pursuant to the immediately preceding sentence, then the reduction shall occur in the following order: cash payments; cancellation of accelerated vesting of performance-based equity awards (based on the reverse order of the date of grant); cancellation of accelerated vesting of other equity awards (based on the reverse order of the date of grant); reduction in retirement benefits under the Supplemental Executive Retirement Plan; and reduction of welfare benefits.

                         (b)          All determinations required to be made under this Section 10, including whether an Excise Tax would be imposed, the amount of such Excise Tax, the calculation of the amounts referred to in clauses (i) and (ii) of Section 10(a), whether and in what amount any Payments are to be reduced pursuant to Section 10(a) and the assumptions to be utilized in arriving at such determination, shall be made by a major accounting firm with expertise in such matters designated by the Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to Energy Group and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by Energy Group. Any determination by the Accounting Firm shall be binding upon Energy Group and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to Section 10(a), could have been made without the imposition of the Excise Tax (“Underpayment”). In such event, upon the Executive’s request, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall thereafter be promptly paid, or caused to be paid, by Energy Group to or for the benefit of the Executive.

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                         (c)          All fees and expenses of the Accounting Firm for services performed pursuant to this Section 10 at any time from the date of this Agreement through the Executive’s remaining lifetime or, if longer, through the 20th anniversary of the date of the Change of Control, shall be borne solely by Energy Group. Energy Group shall pay such fees and expenses not later than the end of the calendar year following the calendar year in which the related work is performed or the expenses are incurred by the Accounting Firm, subject to Section 17(a). The amount of such fees and expenses that Energy Group is obligated to pay in any given calendar year shall not affect the fees and expenses that Energy Group is obligated to pay in any other calendar year, and the Executive’s right to have Energy Group pay such fees and expenses may not be liquidated or exchanged for any other benefit.

          11.          Restrictive Covenants.

                         (a)          The Executive shall hold in a fiduciary capacity for the benefit of Energy Group or any of its affiliated companies all secret or confidential information, knowledge or data relating to Energy Group or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by Energy Group or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). The Executive hereby covenants and agrees that during the Employment Period and thereafter, the Executive shall not, without the prior written consent of Energy Group, communicate or divulge any such information, knowledge or data to anyone other than Energy Group and those designated by it. Notwithstanding the foregoing, the Executive or his representatives may disclose any such information if such disclosure is compelled by subpoena or other legal process, provided that if the Executive is so compelled, he shall provide Energy Group prompt written notice of such subpoena or legal process in order to permit Energy Group to seek appropriate protective orders. The Executive agrees to contact Energy Group for written clarification if the Executive has any question regarding what information, knowledge or data would be considered by Energy Group to be confidential and subject to this provision. The Executive’s obligations under this Section 11(a) are in addition to, and not in limitation of or preemption of, all other obligations of confidentiality which the Executive may have to Energy Group or any of its affiliated companies under general legal or equitable principles, and federal, state or local law.

                         (b)          The Executive agrees that for a period of one year after his Date of Termination he will not, directly or indirectly, induce, attempt to induce, or assist others in inducing or attempting to induce, any employee of Energy Group or any of its affiliated companies to terminate such person’s employment relationship with Energy Group or any of its affiliated companies.

                         (c)          The Executive acknowledges and agrees that any breach or threatened breach of this Section 11 by him will cause injury to Energy Group and its affiliated companies for which money damages alone will not provide an adequate remedy; that if he commits or threatens to commit any such breach, Energy Group or any of its affiliated companies should

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have the right to have the provisions of this Section 11 specifically enforced by any court having jurisdiction. The Executive agrees that he will not assert in any such enforcement action that Energy Group or any of its affiliated companies have an adequate remedy in damages; and that such rights and remedies will be in addition to and not in lieu of any other rights or remedies available to Energy Group or any of its affiliated companies at law or in equity. The Executive agrees that if any court determines that he has breached this Section 11, he shall be liable to and will pay Energy Group its reasonable legal fees and expenses incurred in connection with such proceedings, including appeals therefrom, and Energy Group shall not be obligated to reimburse the Executive for the legal fees and expenses incurred by the Executive in connection with such proceedings, including appeals therefrom. In addition, while the duration of the covenants contained in this Section 11 will be determined generally in accordance with their terms, if the Executive violates any of these covenants, he agrees to an extension of such covenant on the same terms and conditions for an additional period of time equal to the time that elapses from the commencement of such violation to the later of (i) the termination of such violation or (ii) the final resolution of any litigation stemming from such violation.

                         (d)          If any covenant contained in this Section 11, or any portion of such covenant, is found by a court of competent jurisdiction to be invalid or unenforceable for any reason, the Executive hereby authorizes and requests such court to exercise its discretion to reform such covenant to the end that he will be subject to covenants that are reasonable under the circumstances and enforceable by Energy Group or any of its affiliated companies. In any event, if any provision is found to be unenforceable for any reason, such provision shall remain in force and effect to the maximum extent allowable, all non-affected provisions shall remain fully valid and enforceable, and such finding shall in no way affect the subsequent enforceability of any such provision against a different employee of Energy Group.

                         (e)          The Executive agrees that the promises and obligations made by Energy Group in this Agreement (specifically including, but not limited to, the payments and benefits provided for under Section 7(a) hereof (other than payments and benefits under Sections 7(a)(i)(A), 7(a)(i)(C) and 7(a)(v)) constitute sufficient consideration for the covenants contained in this Section 11. The Executive further acknowledges that it is not Energy Group’s intention to interfere in any way with his employment opportunities, except in such situations where the same conflict with the legitimate business interests of Energy Group or any of its affiliated companies. The Executive agrees that he will notify Energy Group in writing if he has, or reasonably should have, any questions regarding the applicability of this Section 11.

          12.          Successors.

                         (a)          This Agreement is personal to the Executive and without the prior written consent of Energy Group shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

                         (b)          This Agreement shall inure to the benefit of and be binding upon Energy Group and its successors and assigns.

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                         (c)          Energy Group will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Energy Group to assume expressly and agree to perform this Agreement in the same manner and to the same extent that Energy Group would be required to perform it if no such succession had taken place.

          13.          Early Termination. This agreement shall terminate as of the date Executive becomes employed by any of the affiliated companies to which Energy Group has elected not to enter into employment agreements (of this Type) with executives of such affiliated companies; provided such employment becomes effective prior to a Change of Control.

          14.          Arbitration. Except as otherwise provided herein, any dispute, controversy or claim between the parties arising out of or relating to this Agreement (or any subsequent amendments thereof or waivers thereto) (hereinafter, a “Claim” or “Claims”) shall be submitted to final and binding arbitration. Claims which are subject to this section include, but are not limited to, the following: (i) claims relating to this Agreement’s existence, enforceability, validity, interpretation, performance or breach, (ii) claims for compensation or benefits, and (iii) claims of wrongful or discriminatory termination based on any federal, state or local statute, regulation, ordinance, tort, public policy, contract or promissory estoppel theory, including any dispute as to the cause or reason for termination. All Claims submitted to arbitration pursuant to this Section 14 shall be subject to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, effective January 1, 2004, except as hereinafter provided:

          (a)          A request to arbitrate a Claim must be made within 180 days of the date the Claim arose;

          (b)          Energy Group shall pay any and all fees and expenses of the arbitrator;

          (c)          The arbitration hearing shall be held in Poughkeepsie, New York, unless the parties mutually agree to another location;

          (d)           Each party shall exchange documents to be utilized as exhibits in the arbitration hearing and each party shall be limited to five (5) pre-hearing depositions of no more than ten hours each, unless the arbitrator orders additional discovery;

          (e)           The arbitrator shall be appointed in accordance with Rule 12 of the above-referenced Rules of the American Arbitration Association, except that if, for any reason, an arbitrator cannot be selected by the process described in Rule 12, subparts (i) through (iii), the American Arbitration Association shall submit the names of seven (7) additional arbitrators from its roster and the parties shall select the arbitrator by alternately striking names with the party requesting arbitration first striking; and

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          (f)           Either party shall be entitled to seek and obtain injunctive or other appropriate equitable relief in any federal or state court having jurisdiction in order to enforce the arbitration provisions of this Agreement; and Energy Group shall be entitled to seek and obtain such injunctive or other appropriate equitable relief in order to prevent (pending arbitration) any breach of the Restrictive Covenants set forth in Section 11 of this Agreement in any federal or state court having jurisdiction.

Subject to paragraph (f) of this Section 14, above, it is the intention of the parties to avoid litigation in any court of any and all Claims concerning this Agreement, or otherwise arising from the Executive’s employment with Energy Group or its affiliate entities, and that all such claims will be subject to this arbitration agreement. Neither party shall commence or pursue any litigation on any claim that is or was the subject of arbitration under this Agreement. Each party agrees that this agreement to arbitrate, and any award arising out of any arbitration contemplated by this Agreement, are enforceable under, and subject to, the Federal Arbitration Act, 11 U.S.C. § I, et seq. Both parties consent that judgment upon any arbitration award may be entered in any federal or state court having jurisdiction.

          15.           Release. Notwithstanding anything contained herein to the contrary, Energy Group shall only be obligated to make the payments or provide any benefit under Section 7(a) hereof (other than payments and benefits under Sections 7(a)(i)(A), 7(a)(i)(C) and 7(a)(v)) if: (a) within the 50-day period after the Date of Termination, the Executive executes a release, in a form provided by Energy Group, of all current or future claims, known or unknown, against Energy Group, its affiliated companies, its officers, directors, shareholders, employees and agents arising on or before the date of the release, including but not limited to all claims arising out of the Executive’s employment with Energy Group or its affiliated companies or the termination of such employment, and (b) the Executive does not revoke the release during the seven-day revocation period prescribed by the Age Discrimination in Employment Act of 1967, as amended, or any similar revocation period, if applicable. Energy Group shall be obligated to provide such release to the Executive promptly following the Date of Termination.

          16.           Miscellaneous.

                          (a)          This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

                          (b)          All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

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If to the Executive:
	Carl E. Meyer
	5 Charles Lane
	Rhinebeck, NY 12572
If to Energy Group:
	CH Energy Group, Inc.
	284 South Avenue
	Poughkeepsie, New York 12601-4879
	Attention: Chief Executive Officer

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

                          (c)          The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

                          (d)          Energy Group may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

                          (e)          The Executive’s or Energy Group’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or Energy Group may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

                          (f)          The Executive and Energy Group acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and Energy Group, or any of its affiliated companies, the employment of the Executive by Energy Group or any of its affiliated companies is “at will” and, subject to Section 2(c) hereof, the Executive’s employment may be terminated at any time prior to the Effective Date by either the Executive or Energy Group or any of its affiliated companies, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

          17.          Compliance with Section 409A of the Code.

                          (a)          Notwithstanding anything contained in this Agreement to the contrary, if the Executive is a “specified employee,” as determined under Energy Group’s policy for

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determining specified employees on the Date of Termination, then to the extent required in order to comply with Section 409A of the Code, all payments, benefits or reimbursements paid or provided under this Agreement that constitute a “deferral of compensation” within the meaning of Section 409A of the Code, that are provided as a result of a “separation from service” within the meaning of Section 409A and that would otherwise be paid or provided during the first six months following such Date of Termination shall be accumulated through and paid or provided (together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the Date of Termination) within 30 days after the first business day following the six month anniversary of such Date of Termination (or, if the Executive dies during such six-month period, within 30 days after the Executive’s death).

                          (b)          It is intended that the payments and benefits provided under this Agreement shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Code. This Agreement shall be construed, administered, and governed in a manner that effects such intent, and Energy Group shall not take any action that would be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under this Agreement may not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon Executive. Although Energy Group shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither Energy Group, its affiliates, directors, officers, employees nor its advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Executive or other taxpayer as a result of the Agreement. Any reference in this Agreement to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, Energy Group has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

Carl E. Meyer
CH Energy Group, Inc.
By
	Steven V. Lant
	Chairman of the Board and
	Chief Executive Officer

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EX-10.(III)34

Exhibit (10)(iii)34

FORM OF EMPLOYMENT AGREEMENT

          AGREEMENT by and between CH Energy Group Inc. (“Energy Group”), a New York corporation, and Tier II Executive (the “Executive”), dated as of the _____________.

          The Board of Directors of Energy Group (the “Board”) has determined that it is in the best interests of Energy Group and its shareholders to assure that Energy Group will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of Energy Group. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to Energy Group currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused Energy Group to enter into this Agreement with the Executive.

          NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

          1.          This Employment Agreement shall be between Energy Group and the Executive named above for all periods during which the Executive serves in the capacity as an officer of Energy Group or any of its affiliated companies.

          2.          Certain Definitions.

                       (a)          As used in this Agreement, “Energy Group” shall mean CH Energy Group, Inc. as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

                       (b)          As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with Energy Group.

                       (c)          The “Effective Date” shall mean the first date during the Change of Control Period (as defined in Section 2(d)) on which a Change of Control (as defined in Section 3) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment with Energy Group or any of its affiliated companies is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately prior to the date of such

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termination of employment, and the Executive shall be entitled to all payments and benefits under this Agreement as though the Executive had terminated his employment for Good Reason. For purposes of the immediately preceding sentence, a Change of Control means a Change of Control that also constitutes a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of Energy Group within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). For purposes of determining the timing of payments and benefits to Executive under Section 7, the date of the actual Change of Control (as defined in the immediately preceding sentence) shall be treated as Executive’s Date of Termination (in lieu of the date set forth in Section 6(e)).

                       (d)          The “Change of Control Period” shall mean the period commencing on the date hereof and ending on the following July 31, which July 31 and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”. Unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate one year from such Renewal Date. Notwithstanding the foregoing, this Agreement may be terminated by either the Executive or Energy Group or any of its affiliated companies at any time prior to the Effective Date by providing 60 days’ written notice to the other party, in which case the Executive shall have no further rights under this Agreement; provided, that such a notice shall be null and void if it is reasonably demonstrated by the Executive that such notice was given (i) at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise in connection with or anticipation of a Change of Control.

                       (e)          The “Multiple” shall mean (i) two if the Executive’s Date of Termination (as defined herein) occurs on or prior to the first anniversary of the Effective Date, and (ii) one if the Executive’s Date of Termination occurs after the first anniversary of the Effective Date but on or prior to the second anniversary of the Effective Date.

          3.          Change of Control. For the purpose of this Agreement, a “Change of Control” shall mean:

                       (a)          The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (x) the then outstanding shares of common stock of Energy Group (the “Outstanding Energy Group Common Stock”) or (y) the combined voting power of the then outstanding voting securities of Energy Group entitled to vote generally in the election of directors (the “Outstanding Energy Group Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from Energy Group, (ii) any acquisition by Energy Group, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Energy Group or its affiliated companies or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 3; or

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                       (b)          Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Energy Group’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

                        (c)          Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Energy Group (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Energy Group Common Stock and Outstanding Energy Group Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Energy Group or all or substantially all of Energy Group’s assets either directly or through one or more of its affiliated companies) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Common Stock and Outstanding Energy Group Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of Energy Group or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business combination; or

                       (d)          Approval by the shareholders of Energy Group of a complete liquidation or dissolution of Energy Group.

          4.          Employment Period. Energy Group hereby agrees to continue, or cause to be continued, the Executive in its employ, or in the employ of any of its affiliated companies, and the Executive hereby agrees to remain in the employ of Energy Group or any of its affiliated companies subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the second anniversary of such date (the “Employment Period”).

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          5.          Terms of Employment.

                       (a)         Position and Duties.

                                     (i)         During the Employment Period, the Executive’s authority, duties and responsibilities shall, in the aggregate, be at least commensurate in all material respects with the most significant of those exercised and assigned at any time during the 120-day period immediately preceding the Effective Date, and neither a reduced scope of the Executive’s responsibilities resulting from the fact that the Change of Control has created a larger organization, nor a change in the Executive’s position (including status, offices, titles and reporting requirements) shall be the sole basis for determining whether the requirements of this Section 5(a)(i) are met.

                                     (ii)        During the Employment Period, the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than 50 miles from such location.

                                     (iii)       During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of Energy Group or any of its affiliated companies and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to serve on civic or charitable boards or committees, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of Energy Group or any of its affiliated companies in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to Energy Group or any of its affiliated companies.

                       (b)         Compensation.

                                     (i)          Base Salary. During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by Energy Group or any of its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual

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Base Salary shall not be reduced after any such increase and the term Annual Base Salary as used in this Agreement shall refer to Annual Base Salary as so increased.

                                     (ii)          Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in cash at least equal to the average of the bonuses payable under Energy Group’s Executive Annual Incentive Plan, if applicable, or any comparable annual bonus under any predecessor or successor plan, for the last three full fiscal years prior to the Effective Date, or if the Executive was eligible to earn such a bonus for less than the last three full fiscal years, for the fiscal years during which the Executive was eligible to earn such a bonus immediately prior to the Effective Date (annualized in the event that the Executive was not employed by Energy Group or its affiliated companies (or was not eligible to earn such a bonus) for the whole of each such fiscal year) (the “Average Annual Bonus”). If the Executive was not eligible to earn such an annual bonus for any fiscal year ending on or before the Effective Date, then the Average Annual Bonus shall be deemed to equal the Executive’s target annual bonus as in effect immediately prior to the Effective Date. Each such Annual Bonus shall be paid no later than two and one-half months after the end of the fiscal year next following the fiscal year for which the Annual Bonus is awarded.

                                     (iii)          Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of Energy Group or its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by Energy Group or its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of Energy Group or its affiliated companies.

                                     (iv)          Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by Energy Group or its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of Energy Group or its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of Energy Group or its affiliated companies.

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                                     (v)          Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of Energy Group or any of its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies.

                                     (vi)         Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of Energy Group or any of its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies.

                                     (vii)        Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of Energy Group or any of its affiliated companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies.

                                     (viii)       Certain Exclusions. In determining the benefits provided in subclauses (i) through and including (viii) of this paragraph (b), there shall be excluded from consideration any such benefits provided by any of the affiliated companies during the measuring periods, if any, referred to in such subclauses if Energy Group has elected not to enter into Employment Agreements (of this Type) with executives of such affiliated companies.

          6.          Termination of Employment.

                       (a)          Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If Energy Group or any of its affiliated companies determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 16(b) of this Agreement of its intention to terminate the Executive’s employment; provided that such notice is provided no later than 9 months following the Executive’s first day of Disability. In such event, the Executive’s employment with Energy Group or any of its affiliated companies shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with Energy Group or any of its affiliated companies on a full-time basis for at least 180 consecutive business days as a result of any medically determinable physical or mental impairment resulting in the Executive’s

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inability to perform the duties of his position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months. The determination of Disability shall be made by a physician selected by Energy Group or its insurers and acceptable to the Executive or the Executive’s legal representative.

                       (b)        Cause. The Executive’s employment during the Employment Period may be terminated for Cause. For purposes of this Agreement, “Cause” shall mean:

                          (i)         the willful and continued failure of the Executive to perform substantially the Executive’s duties with Energy Group or any of its affiliated companies (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of Energy Group which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive’s duties;

                          (ii)        the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to Energy Group or any of its affiliated companies;

                          (iii)      the repeated use of alcohol by the Executive that materially interferes with Executive’s duties, use of illegal drugs by the Executive, or a violation by the Executive of the drug and/or alcohol policies of Energy Group or any of its affiliated companies;

                          (iv)       a conviction, guilty plea or plea of nolo contendere of the Executive for any crime involving moral turpitude or for any felony;

                          (v)        a breach by the Executive of his fiduciary duties of loyalty or care to Energy Group or any of its affiliated companies or a material violation of the Code of Business Conduct and Ethics, or similar policies, of Energy Group or any of its affiliated companies; or

                          (vi)       the breach by the Executive of the confidentiality provision set forth in Section 11(a) hereof.

          For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of Energy Group or any of its affiliated companies. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of Energy Group or any of its affiliated companies based upon the advice of counsel for Energy Group shall be conclusively presumed to be done, or

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omitted to be done, by the Executive in good faith and in the best interests of Energy Group or any of its affiliated companies.

          (c)          Good Reason.  The Executive’s employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

                          (i)          any material reduction in the Executive’s authority, duties or responsibilities that is not permitted by Section 5(a)(i) of this Agreement, without the Executive’s written consent, excluding for this purpose an action not taken in bad faith and which is remedied by Energy Group or any of its affiliated companies promptly after receipt of notice thereof given by the Executive;

                         (ii)          any failure by Energy Group or any of its affiliated companies to comply with any of the provisions of Section 5(b) of this Agreement, other than a failure not occurring in bad faith and which is remedied by Energy Group or any of its affiliated companies promptly after receipt of notice thereof given by the Executive;

                        (iii)          Energy Group or any of its affiliated companies requiring the Executive to be based at any office or location other than as provided in Section 5(a)(ii) of this Agreement;

                        (iv)          any purported termination by Energy Group or any of its affiliated companies of the Executive’s employment otherwise than as expressly permitted by this Agreement; or

                        (v)           any failure by Energy Group or any of its affiliated companies to comply with and satisfy Section 12(c) of this Agreement.

          For purposes of this Section 6(c), any claim by the Executive that Good Reason exists shall be presumed to be correct unless Energy Group establishes by clear and convincing evidence that Good Reason does not exist.

                       (d)       Notice of Termination. Any termination by Energy Group or any of its affiliated companies for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 16(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or Energy Group or any of its affiliated companies to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or Energy Group or any of its affiliated companies, respectively, hereunder or preclude the Executive or Energy Group or any

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of its affiliated companies, respectively, from asserting such fact or circumstance in enforcing the Executive’s or Energy Group’s or any of its affiliated company’s rights hereunder.

                       (e)       Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by Energy Group or any of its affiliated companies for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive’s employment is terminated by Energy Group or any of its affiliated companies other than for Cause or Disability, the Date of Termination shall be the date on which Energy Group or any of its affiliated companies notifies the Executive of such termination and (iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. Energy Group and the Executive shall take all steps necessary (including with regard to any post-termination services by the Executive) to ensure that any termination described in this Section 6(e) constitutes a “separation from service” within the meaning of Section 409A of the Code, and the date on which such separation from service takes place shall be the “Date of Termination.”

          7.          Obligations of Energy Group and its Affiliated Companies upon Termination. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, Energy Group or any of its affiliated companies shall terminate the Executive’s employment other than for Cause or Disability or the Executive shall terminate employment for Good Reason:

                          (i)          Energy Group shall pay, or cause to be paid, to the Executive in a lump sum in cash the sum of: (A) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) the product of (x) the Average Annual Bonus and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365 and (C) any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (A), (B), and (C) shall be hereinafter referred to as the “Accrued Obligations”). The amounts described in clause (B) shall be paid within the 30-day period commencing on the 60th day following the Date of Termination, or such later date set forth in Section 17(a).

                          (ii)          Energy Group shall pay, or cause to be paid, to the Executive in twelve (12) equal monthly installments the product of (1) the Multiple and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Average Annual Bonus. The first installment shall commence within the 30 day period commencing on the 60th day following the Date of Termination, or such later date set forth in Section 17(a).

                          (iii)          For a number of years after the Executive’s Date of Termination equal to the Multiple, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, Energy Group or any of its affiliated companies shall continue benefits to the Executive and/or the Executive’s family at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 5(b)(iv) of this Agreement if the

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Executive’s employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of Energy Group or any of its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. For purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until the expiration of a number of years after the Date of Termination equal to the Multiple and to have retired on the last day of such period. The continued benefits described in this Section 7(a)(iii) that are taxable benefits (and that are not disability pay or death benefit plans within the meaning of Section 409A of the Code) are intended to comply, to the maximum extent possible, with the exception to Section 409A of the Code set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations. To the extent that any of those benefits either do not qualify for that exception, or are provided beyond the applicable time periods set forth in Section 1.409A-1(b)(9)(v) of the Treasury Regulations, then they shall be subject to the following additional rules: (A) any reimbursement of eligible expenses shall be paid within 10 calendar days following Executive’s written request for reimbursement, or such later date set forth in Section 17(a); provided that the Executive provides written notice no later than 15 calendar days prior to the last day of the calendar year following the calendar year in which the expense was incurred; (B) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any calendar year shall not affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, during any other calendar year; and (C) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

                         (iv)         Energy Group or any of its affiliated companies shall, at its sole expense as incurred, provide the Executive with outplacement services from a recognized outplacement service provider, the scope of which shall be selected by the Executive in his sole discretion; provided that (i) the cost to Energy Group shall not exceed $30,000, and (ii) in no event shall the outplacement services be provided beyond the end of the second calendar year after the calendar year in which the Date of Termination occurs.

                         (v)          to the extent not theretofore paid or provided, Energy Group or any of its affiliated companies shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of Energy Group or any of its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

Notwithstanding the foregoing, except with respect to payments and benefits under Sections 7(a)(i)(A), 7(a)(i)(C) and 7(a)(v), all payments and benefits shall cease in the event Executive breaches any of his obligations under Section 11 hereof.

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                       (b)          Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 7(b) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by Energy Group or any of its affiliated companies to the estates and beneficiaries of peer executives of Energy Group and any such affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other peer executives of Energy Group or any of its affiliated companies and their beneficiaries.

                       (c)          Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, this Agreement shall terminate as of the Disability Effective Date, without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash at the same time as set forth in Section 7(a)(i). With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 7(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by Energy Group or any of its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect at any time thereafter generally with respect to other peer executives of Energy Group or any of its affiliated companies and their families.

                       (d)          Cause; Other than for Good Reason. If the Executive’s employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (x) his Annual Base Salary through the Date of Termination, and (y) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash at the same time as set forth in Section 7(a)(i).

          8.          Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided

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by Energy Group or any of its affiliated companies and for which the Executive may qualify, nor, subject to Section 16(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with Energy Group or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with Energy Group or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

          9.          Full Settlement.

                       (a)          Except as otherwise provided in Section 7(a) hereof, Energy Group’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which Energy Group or any of its affiliated companies may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment.

                       (b)          Except as otherwise provided in this Section 9 or Section 11 of this Agreement, Energy Group agrees to pay as incurred (within 10 calendar days following Energy Group’s receipt of an invoice from the Executive), to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur at any time from the date of this Agreement through the Executive’s remaining lifetime or, if longer, through the 20th anniversary of the date of the Change of Control, including the legal fees and expenses of any arbitration proceeding, as a result of any contest (regardless of the outcome thereof) by Energy Group or any of its affiliated companies, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided, that the Executive shall have submitted an invoice for such fees and expenses at least 15 calendar days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred. Notwithstanding the foregoing, Energy Group shall not be obligated to pay any legal fees or expenses incurred by the Executive in any contest in which the trier of fact determines that the Executive’s position was frivolous or maintained in bad faith. The amount of such legal fees and expenses that Energy Group is obligated to pay in any given calendar year shall not affect the legal fees and expenses that Energy Group is obligated to pay in any other calendar year, and the Executive’s right to have Energy Group pay such legal fees and expenses may not be liquidated or exchanged for any other benefit. Energy Group’s obligation to pay Executive’s eligible legal fees and expenses under this Section 9(b) shall not be conditioned upon Executive’s termination of employment.

          10.         Certain Additional Payments by Energy Group or its Affiliated Companies.

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                       (a)          Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by Energy Group or any of its affiliated companies to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then, prior to the making of any Payment to Executive, a calculation shall be made comparing (i) the net after-tax benefit to Executive of the Payment after payment of the Excise Tax, to (ii) the net after-tax benefit to Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under clause (i) above is less than the amount calculated under clause (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “Reduced Amount”). If a reduction in Payments is necessary pursuant to the immediately preceding sentence, then the reduction shall occur in the following order: cash payments; cancellation of accelerated vesting of performance-based equity awards (based on the reverse order of the date of grant); cancellation of accelerated vesting of other equity awards (based on the reverse order of the date of grant); reduction in retirement benefits under the Supplemental Executive Retirement Plan; and reduction of welfare benefits.

                       (b)          All determinations required to be made under this Section 10, including whether an Excise Tax would be imposed, the amount of such Excise Tax, the calculation of the amounts referred to in clauses (i) and (ii) of Section 10(a), whether and in what amount any Payments are to be reduced pursuant to Section 10(a) and the assumptions to be utilized in arriving at such determination, shall be made by a major accounting firm with expertise in such matters designated by the Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to Energy Group and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by Energy Group. Any determination by the Accounting Firm shall be binding upon Energy Group and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Payments which the Executive was entitled to, but did not receive pursuant to Section 10(a), could have been made without the imposition of the Excise Tax (“Underpayment”). In such event, upon the Executive’s request, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall thereafter be promptly paid, or caused to be paid, by Energy Group to or for the benefit of the Executive.

                       (c)          All fees and expenses of the Accounting Firm for services performed pursuant to this Section 10 at any time from the date of this Agreement through the Executive’s remaining lifetime or, if longer, through the 20th anniversary of the date of the Change of Control, shall be borne solely by Energy Group. Energy Group shall pay such fees and expenses not later than the end of the calendar year following the calendar year in which the related work is performed or the expenses are incurred by the Accounting Firm, subject to Section 17(a). The amount of such fees and expenses that Energy Group is obligated to pay in any given calendar year shall not affect the fees and expenses that Energy Group is obligated to pay in any other

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calendar year, and the Executive’s right to have Energy Group pay such fees and expenses may not be liquidated or exchanged for any other benefit.

          11.          Restrictive Covenants.

                         (a)          The Executive shall hold in a fiduciary capacity for the benefit of Energy Group or any of its affiliated companies all secret or confidential information, knowledge or data relating to Energy Group or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by Energy Group or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). The Executive hereby covenants and agrees that during the Employment Period and thereafter, the Executive shall not, without the prior written consent of Energy Group, communicate or divulge any such information, knowledge or data to anyone other than Energy Group and those designated by it. Notwithstanding the foregoing, the Executive or his representatives may disclose any such information if such disclosure is compelled by subpoena or other legal process, provided that if the Executive is so compelled, he shall provide Energy Group prompt written notice of such subpoena or legal process in order to permit Energy Group to seek appropriate protective orders. The Executive agrees to contact Energy Group for written clarification if the Executive has any question regarding what information, knowledge or data would be considered by Energy Group to be confidential and subject to this provision. The Executive’s obligations under this Section 11(a) are in addition to, and not in limitation of or preemption of, all other obligations of confidentiality which the Executive may have to Energy Group or any of its affiliated companies under general legal or equitable principles, and federal, state or local law.

                         (b)          The Executive agrees that for a period of one year after his Date of Termination he will not, directly or indirectly, induce, attempt to induce, or assist others in inducing or attempting to induce, any employee of Energy Group or any of its affiliated companies to terminate such person’s employment relationship with Energy Group or any of its affiliated companies.

                         (c)          The Executive acknowledges and agrees that any breach or threatened breach of this Section 11 by him will cause injury to Energy Group and its affiliated companies for which money damages alone will not provide an adequate remedy; that if he commits or threatens to commit any such breach, Energy Group or any of its affiliated companies should have the right to have the provisions of this Section 11 specifically enforced by any court having jurisdiction. The Executive agrees that he will not assert in any such enforcement action that Energy Group or any of its affiliated companies have an adequate remedy in damages; and that such rights and remedies will be in addition to and not in lieu of any other rights or remedies available to Energy Group or any of its affiliated companies at law or in equity. The Executive agrees that if any court determines that he has breached this Section 11, he shall be liable to and will pay Energy Group its reasonable legal fees and expenses incurred in connection with such proceedings, including appeals therefrom, and Energy Group shall not be obligated to reimburse the Executive for the legal fees and expenses incurred by the Executive in connection with such

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proceedings, including appeals therefrom. In addition, while the duration of the covenants contained in this Section 11 will be determined generally in accordance with their terms, if the Executive violates any of these covenants, he agrees to an extension of such covenant on the same terms and conditions for an additional period of time equal to the time that elapses from the commencement of such violation to the later of (i) the termination of such violation or (ii) the final resolution of any litigation stemming from such violation.

                         (d)          If any covenant contained in this Section 11, or any portion of such covenant, is found by a court of competent jurisdiction to be invalid or unenforceable for any reason, the Executive hereby authorizes and requests such court to exercise its discretion to reform such covenant to the end that he will be subject to covenants that are reasonable under the circumstances and enforceable by Energy Group or any of its affiliated companies. In any event, if any provision is found to be unenforceable for any reason, such provision shall remain in force and effect to the maximum extent allowable, all non-affected provisions shall remain fully valid and enforceable, and such finding shall in no way affect the subsequent enforceability of any such provision against a different employee of Energy Group.

                         (e)          The Executive agrees that the promises and obligations made by Energy Group in this Agreement (specifically including, but not limited to, the payments and benefits provided for under Section 7(a) hereof (other than payments and benefits under Sections 7(a)(i)(A), 7(a)(i)(C) and 7(a)(v)) constitute sufficient consideration for the covenants contained in this Section 11. The Executive further acknowledges that it is not Energy Group’s intention to interfere in any way with his employment opportunities, except in such situations where the same conflict with the legitimate business interests of Energy Group or any of its affiliated companies. The Executive agrees that he will notify Energy Group in writing if he has, or reasonably should have, any questions regarding the applicability of this Section 11.

          12.          Successors.

                         (a)          This Agreement is personal to the Executive and without the prior written consent of Energy Group shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

                         (b)          This Agreement shall inure to the benefit of and be binding upon Energy Group and its successors and assigns.

                         (c)          Energy Group will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Energy Group to assume expressly and agree to perform this Agreement in the same manner and to the same extent that Energy Group would be required to perform it if no such succession had taken place.

          13.          Early Termination. This agreement shall terminate as of the date Executive becomes employed by any of the affiliated companies to which Energy Group has elected not to

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enter into employment agreements (of this Type) with executives of such affiliated companies; provided such employment becomes effective prior to a Change of Control.

          14.          Arbitration. Except as otherwise provided herein, any dispute, controversy or claim between the parties arising out of or relating to this Agreement (or any subsequent amendments thereof or waivers thereto) (hereinafter, a “Claim” or “Claims”) shall be submitted to final and binding arbitration. Claims which are subject to this section include, but are not limited to, the following: (i) claims relating to this Agreement’s existence, enforceability, validity, interpretation, performance or breach, (ii) claims for compensation or benefits, and (iii) claims of wrongful or discriminatory termination based on any federal, state or local statute, regulation, ordinance, tort, public policy, contract or promissory estoppel theory, including any dispute as to the cause or reason for termination. All Claims submitted to arbitration pursuant to this Section 14 shall be subject to the National Rules for the Resolution of Employment Disputes of the American Arbitration Association, effective January 1, 2004, except as hereinafter provided:

          (a)          A request to arbitrate a Claim must be made within 180 days of the date the Claim arose;

          (b)         Energy Group shall pay any and all fees and expenses of the arbitrator;

          (c)          The arbitration hearing shall be held in Poughkeepsie, New York, unless the parties mutually agree to another location;

          (d)         Each party shall exchange documents to be utilized as exhibits in the arbitration hearing and each party shall be limited to five (5) pre-hearing depositions of no more than ten hours each, unless the arbitrator orders additional discovery;

          (e)          The arbitrator shall be appointed in accordance with Rule 12 of the above-referenced Rules of the American Arbitration Association, except that if, for any reason, an arbitrator cannot be selected by the process described in Rule 12, subparts (i) through (iii), the American Arbitration Association shall submit the names of seven (7) additional arbitrators from its roster and the parties shall select the arbitrator by alternately striking names with the party requesting arbitration first striking; and

          (f)          Either party shall be entitled to seek and obtain injunctive or other appropriate equitable relief in any federal or state court having jurisdiction in order to enforce the arbitration provisions of this Agreement; and Energy Group shall be entitled to seek and obtain such injunctive or other appropriate equitable relief in order to prevent (pending arbitration) any breach of the Restrictive Covenants set forth in Section 11 of this Agreement in any federal or state court having jurisdiction.

Subject to paragraph (f) of this Section 14, above, it is the intention of the parties to avoid litigation in any court of any and all Claims concerning this Agreement, or otherwise arising from the Executive’s employment with Energy Group or its affiliate entities, and that all such

16

claims will be subject to this arbitration agreement. Neither party shall commence or pursue any litigation on any claim that is or was the subject of arbitration under this Agreement. Each party agrees that this agreement to arbitrate, and any award arising out of any arbitration contemplated by this Agreement, are enforceable under, and subject to, the Federal Arbitration Act, 11 U.S.C. § I, et seq. Both parties consent that judgment upon any arbitration award may be entered in any federal or state court having jurisdiction.

          15.          Release. Notwithstanding anything contained herein to the contrary, Energy Group shall only be obligated to make the payments or provide any benefit under Section 7(a) hereof (other than payments and benefits under Sections 7(a)(i)(A), 7(a)(i)(C) and 7(a)(v)) if: (a) within the 50-day period after the Date of Termination, the Executive executes a release, in a form provided by Energy Group, of all current or future claims, known or unknown, against Energy Group, its affiliated companies, its officers, directors, shareholders, employees and agents arising on or before the date of the release, including but not limited to all claims arising out of the Executive’s employment with Energy Group or its affiliated companies or the termination of such employment, and (b) the Executive does not revoke the release during the seven-day revocation period prescribed by the Age Discrimination in Employment Act of 1967, as amended, or any similar revocation period, if applicable. Energy Group shall be obligated to provide such release to the Executive promptly following the Date of Termination.

          16.          Miscellaneous.

                         (a)          This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

                         (b)          All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:
	Paul E. Haering
	9 Masten Road
	Pleasant Valley, New York 12569
If to Energy Group:
	CH Energy Group, Inc.
	284 South Avenue
	Poughkeepsie, New York 12601-4879
	Attention:  Chief Executive Officer

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or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

                         (c)          The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

                         (d)          Energy Group may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

                         (e)          The Executive’s or Energy Group’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or Energy Group may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 6(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

                         (f)          The Executive and Energy Group acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and Energy Group, or any of its affiliated companies, the employment of the Executive by Energy Group or any of its affiliated companies is “at will” and, subject to Section 2(c) hereof, the Executive’s employment may be terminated at any time prior to the Effective Date by either the Executive or Energy Group or any of its affiliated companies, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

          17.          Compliance with Section 409A of the Code.

                         (a)          Notwithstanding anything contained in this Agreement to the contrary, if the Executive is a “specified employee,” as determined under Energy Group’s policy for determining specified employees on the Date of Termination, then to the extent required in order to comply with Section 409A of the Code, all payments, benefits or reimbursements paid or provided under this Agreement that constitute a “deferral of compensation” within the meaning of Section 409A of the Code, that are provided as a result of a “separation from service” within the meaning of Section 409A and that would otherwise be paid or provided during the first six months following such Date of Termination shall be accumulated through and paid or provided (together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the Date of Termination) within 30 days after the first business day following the six month anniversary of such Date of Termination (or, if the Executive dies during such six-month period, within 30 days after the Executive’s death).

                         (b)          It is intended that the payments and benefits provided under this Agreement shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Code. This Agreement shall be construed, administered, and governed in a

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manner that effects such intent, and Energy Group shall not take any action that would be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under this Agreement may not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon Executive. Although Energy Group shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither Energy Group, its affiliates, directors, officers, employees nor its advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Executive or other taxpayer as a result of the Agreement. Any reference in this Agreement to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, Energy Group has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

	Paul E. Haering
CH Energy Group, Inc.
By
	Steven V. Lant
	Chairman of the Board and
	Chief Executive Officer

19

EX-10.(III)35

Exhibit (10)(iii)35

AMENDMENT TO

CH ENERGY GROUP, INC.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
(2000 Plan)

          The CH Energy Group, Inc. Long-Term Performance-Based Incentive Plan (the “Plan”) is amended, effective December 31, 2007, as follows:

          1.       The fourth paragraph of Section 3 of the Plan (and the corresponding section of each outstanding award agreement that incorporates this Section 3 of the Plan) is hereby superseded and replaced in its entirety as set forth below:

“In the event of any change in corporate capitalization, such as a stock split or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Corporation, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete liquidation of the Corporation (“Corporate Transaction”), the Committee or Board shall make such equitable substitution or adjustments in the aggregate number and kind of shares reserved for issuance under the Plan, in the number, kind and option price of shares subject to outstanding Stock Options and Stock Appreciation Rights, in the number and kind of shares subject to other outstanding Awards granted under the Plan and/or such other equitable substitution or adjustments as it may determine to be appropriate in its sole discretion to prevent dilution or enlargement of the rights of Covered Employees that otherwise would result from such events; provided however, that the number of shares subject to any Award shall always be a whole number. Such adjusted option price shall also be used to determine the amount payable by the Corporation upon the exercise of any Stock Appreciation Right associated with any Stock Option. In no event shall any adjustment be required if the Committee or the Board determines that such action could cause a Stock Option to fail to satisfy the conditions of an applicable exception from the requirements of Section 409A of the Code or otherwise could subject a Covered Employee to the additional tax imposed under Section 409A of the Code in respect of an outstanding Stock Option.”
2.	The Plan is hereby amended by deleting Sections 5(k) and 13(j) in their entirety.
3.	Section 18 of the Plan is hereby superseded and replaced in its entirety as set forth below:
	“SECTION 14. COMPLIANCE WITH SECTION 409A OF THE CODE
Awards granted under this Plan shall be designed and administered in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A of the Code. Notwithstanding any other provision of the Plan or any Award agreement, an Award shall not be granted, deferred, accelerated, extended, paid

out, settled, substituted or modified under this Plan in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon a Covered Employee. Although the Corporation intends to administer the Plan so that Awards will be exempt from, or will comply with, the requirements of Section 409A of the Code, the Corporation does not warrant that any Award under the Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local, or non-United States law. Neither the Corporation, its Affiliates, nor their respective directors, officers, employees or advisers shall be liable to any Covered Employee or any other person for any tax, interest, or penalties the Covered Employee might owe as a result of the grant, holding, vesting, exercise, or payment of any Award under the Plan. Any reference in this Plan to Section 409A of the Code will also include the applicable proposed, temporary or final regulations, or any other guidance, issued with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.”

4.

Except as explicitly set forth herein, the Plan will remain in full force and effect.

CH ENERGY GROUP, INC.
By:	/s/ Steven V. Lant
Steven V. Lant, Chairman, President and
Chief Executive Officer of
CH Energy Group, Inc.

2

EX-10.(III)36

Exhibit (10)(iii)36

AMENDMENT TO

CH ENERGY GROUP, INC.
LONG-TERM EQUITY INCENTIVE PLAN
(2006 Plan)

          The CH Energy Group, Inc. Long-Term Equity Incentive Plan (the “Plan”) is amended, effective December 31, 2007, as follows:

          1.     The introductory language to the definition of “Change in Control” contained in Section 2 of the Plan is hereby superseded and replaced in its entirety as set forth below:

                  “‘Change in Control’ means if at any time any of the following events shall have occurred (except as may be otherwise prescribed by the Board in an Evidence of Award):”

          2.     The definition of “Subsidiary” contained in Section 2 of the Plan is hereby superseded and replaced in its entirety as set forth below:

          “‘Subsidiary’ means a corporation, company or other entity which is designated by the Board and in which the Company has a direct or indirect ownership or other equity interest, provided, however, that (i) for purposes of determining whether any person may be a Participant with respect to any grant of Incentive Stock Options, the term “Subsidiary” has the meaning given to such term in Section 424 of the Code, as interpreted by the regulations thereunder and applicable law; and (ii) for purposes of determining whether any person may be a Participant with respect to any grant of Option Rights or Appreciation Rights that are intended to be exempt from Section 409A of the Code, the term “Subsidiary” means any corporation or other entity as to which the Company is an “eligible issuer of service recipient stock” (within the meaning of 409A of the Code).”

3.       Section 12 of the Plan is hereby superseded and replaced in its entirety as set forth below:

          “12.          Adjustments. The Board shall make or provide for such adjustments in the numbers of Common Shares covered by outstanding Option Rights, Appreciation Rights, Performance Shares, Restricted Stock Units and share-based awards described in Section 10 of this Plan granted hereunder, in the Option Price and Base Price provided in outstanding Option Rights and Appreciation Rights, and in the kind of shares covered thereby, as the Board, in its sole discretion, exercised in good faith, may determine is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from (a) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Company, or (b) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets (including, without limitation, a special or large non-recurring dividend), issuance of rights or

warrants to purchase securities, or (c) any other corporate transaction or event having an effect similar to any of the foregoing. Moreover, in the event of any such transaction or event, the Board, in its discretion, may provide in substitution for any or all outstanding awards under this Plan such alternative consideration (including cash) as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced. The Board may also make or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan as the Board in its sole discretion, exercised in good faith, may determine is appropriate to reflect any transaction or event described in this Section 12; provided, however, that any such adjustment to the number specified in Section 3(c)(i) shall be made only if and to the extent that such adjustment would not cause any Option Right intended to qualify as an Incentive Stock Option to fail so to qualify. In no event shall any adjustment be required under this Section 12 if the Board determines that such action could cause an award to fail to satisfy the conditions of an applicable exception from the requirements of Section 409A of the Code or otherwise could subject a Participant to the additional tax imposed under Section 409A of the Code in respect of an outstanding award.”

4.       Section 18 of the Plan is hereby superseded and replaced in its entirety as set forth below:

          “18. Compliance with Section 409A of the Code. Awards granted under this Plan shall be designed and administered in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A of the Code. To the extent that the Board determines that any award granted under the Plan is subject to Section 409A of the Code, the Evidence of Award shall incorporate the terms and conditions necessary to avoid the imposition of an additional tax under Section 409A of the Code upon a Participant. Notwithstanding any other provision of the Plan or any Evidence of Award (unless the Evidence of Award provides otherwise with specific reference to this Section), an award shall not be granted, deferred, accelerated, extended, paid out, settled, substituted or modified under this Plan in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon a Participant. Although the Company intends to administer the Plan so that awards will be exempt from, or will comply with, the requirements of Section 409A of the Code, the Company does not warrant that any award under the Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local, or non-United States law. Neither the Company, its Subsidiaries, nor their respective directors, officers, employees or advisers shall be liable to any Participant or any other person for any tax, interest, or penalties the Participant might owe as a result of the grant, holding, vesting, exercise, or payment of any award under the Plan. Any reference in this Plan to Section 409A of the Code will also include the applicable proposed, temporary or final regulations, or any other guidance, issued with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.”

2

5. Except as explicitly set forth herein, the Plan will remain in full force and effect.

CH ENERGY GROUP, INC.

By: /s/ Steven V. Lant

Steven V. Lant, Chairman, President and

Chief Executive Officer of

CH Energy Group, Inc.

3

EX-10.(III)37

Exhibit (10)(iii)37

CH ENERGY GROUP, INC.

CH ENERGY GROUP, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

EFFECTIVE JANUARY 1, 2006
(As Amended January 1, 2008)

CH ENERGY GROUP, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

EFFECTIVE JANUARY 1, 2006
(As Amended January 1, 2008)

TABLE OF CONTENTS

INTRODUCTION & HISTORY		2
ARTICLE I	NAME, PURPOSE, LEGAL STATUS	3
ARTICLE II	GENERAL DEFINITIONS	4
ARTICLE III	PARTICIPATION	6
ARTICLE IV	SERP ACCRUED BENEFIT	7
ARTICLE V	VESTING	9
ARTICLE VI	NORMAL RETIREMENT BENEFIT	10
ARTICLE VII	EARLY RETIREMENT BENEFIT	11
ARTICLE VIII	EFFECT OF DEATH AND DISABILITY ON BENEFITS	12
ARTICLE IX	SPECIAL PROVISIONS	13
ARTICLE X	ADMINISTRATION AND FINANCING	21
ARTICLE XI	AMENDMENT AND TERMINATION	24
ARTICLE XII	MISCELLANEOUS	26

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CH ENERGY GROUP, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

EFFECTIVE JANUARY 1, 2006
(As Amended January 1, 2008)

INTRODUCTION & HISTORY

Effective January 1, 2006, CH Energy Group, Inc. (the “Company”) originally established the CH Energy Group, Inc. Supplemental Executive Retirement Plan (the “Plan”), which was established to provide supplemental retirement benefits for eligible executives.

The Company hereby amends the Plan, effective January 1, 2008, to incorporate changes required by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

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ARTICLE I
NAME, PURPOSE, LEGAL STATUS

1.1	Name. The plan hereunder shall be known as the CH Energy Group, Inc. Supplemental Executive Retirement Plan (the “Plan”), effective January 1, 2006 (the “Effective Date”), as amended January 1, 2008.
1.2	Purpose. The purpose of the Plan is to provide supplemental retirement benefits for eligible executives of the Company and Participating Affiliates.
1.3	Legal Status. The Company intends the Plan to be an unfunded deferred compensation plan for a select group of management or highly compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
1.4	Code Section 409A. The Company intends the Plan to comply with Section 409A of the Code, but does not warrant or guarantee compliance therewith.

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ARTICLE II
GENERAL DEFINITIONS

2.1	“Affiliate” means each entity with whom the Company would be considered a single employer under Sections 414(b) and 414(c) of the Code, provided that in applying Section 1563(a)(1), (2), and (3) for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Section 1563(a)(1), (2), and (3), and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c), “at least 50 percent” is used instead of “at least 80 percent” each place it appears in that regulation. Such term shall be interpreted in a manner consistent with the definition of “service recipient” contained in Section 409A of the Code.
2.2	“Affiliated Group” means (i) the Company and (ii) all Affiliates.
2.3	“Board” means the Board of Directors of the Company.
2.4	“Change in Control” means the transactions or events defined in Section 9.3. However, solely for Section 11.2(b), a “Change in Control” means the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of the Company or an Affiliate within the meaning of Section 409A of the Code.
2.5	“Code” means the Internal Revenue Code of 1986, as amended.
2.6	“Committee” means the Compensation Committee of the Board or its delegate as provided in Section 10.1.
2.7	“Company” means CH Energy Group, Inc., a New York corporation, or any corporate successor thereto.
2.8	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
2.9	“Effective Date” means the effective date of the Plan, which date is January 1, 2006.
2.10	“Earliest Retirement Date” means the date provided in Section 7.2.
2.11	“Employee” means a common law employee of the Affiliated Group.
2.12	“Eligible Executive” means an Employee who is (i) an Employee of the Company or of Central Hudson Gas & Electric Corporation who holds an officer position with the Company or with Central Hudson Gas & Electric Corporation, unless otherwise determined by the Committee and (ii) a member of a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a) of ERISA.
2.13	“Normal Retirement Date” means the date described in Section 6.2.
2.14	“Participant” means an Eligible Executive who (i) becomes a Participant in the Plan under Section 3.1 and (ii) continues to be a Participant under Section 3.3.

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2.15	“Participating Affiliate” means an Affiliate that adopts the Plan with the consent of the Company.
2.16	“Pension Plan” means the Retirement Income Plan of Central Hudson Gas & Electric Corporation.
2.17	“Plan” means this CH Energy Group, Inc. Supplemental Executive Retirement Plan, and any amendment thereto.
2.18	“Restoration Plan” means the Central Hudson Gas & Electric Corporation Retirement Benefit Restoration Plan.
2.20	“SERP Accrued Benefit” means the amount determined under Section 4.1.
2.21	“SRP” means the CH Energy Group, Inc. Supplementary Retirement Plan, as in effect prior to January 1, 2008.
2.22	“Termination of Employment” means, subject to Section 9.12(b), the termination of an Employee’s employment with the Affiliated Group as a result of his voluntary termination, retirement, discharge, death or his becoming eligible to receive disability benefits under the Company’s or an Affiliate’s long-term disability plan.
2.23	“Years of Benefit Service” or “Benefit Service” means the years of service described in Section 4.3.
2.24	“Years of Vesting Service” or “Vesting Service” means the years of service described in Section 7.2.

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ARTICLE III
PARTICIPATION

3.1	Participant. An Eligible Executive shall become a Participant in the Plan on the date he first becomes an Eligible Executive, or such later date as designated by the Committee.
3.2	Suspension of Participation. A Participant who has an employment status change as provided under Section 9.2, or incurs a Termination of Employment, shall be suspended from active participation in the Plan. A Participant who has been suspended from active participation in the Plan may be reinstated as a Participant at the discretion of the Committee.
3.3	Termination of Participation. A Participant will cease to be a Participant upon the complete distribution or forfeiture of his benefit under the Plan. A Participant who has ceased to be a Participant may be reinstated as a Participant at the discretion of the Committee.

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ARTICLE IV
SERP ACCRUED BENEFIT

4.1	SERP Accrued Benefit. A Participant’s monthly SERP Accrued Benefit payable commencing on his Normal Retirement Date shall equal the amount, if any, by which (i) the Participant’s monthly Target Retirement Benefit (as defined in the next sentence) exceeds (ii) the sum of the Participant’s Pension Monthly Benefit, Restoration Monthly Benefit and SRP Monthly Benefit (all as defined below in this Article IV). Subject to Section 7.1, the Participant’s monthly “Target Retirement Benefit” shall be determined pursuant to the following formula:
	(57% x Final Average Pay) 12 months	x	Years of Benefit Service (not to exceed 30 years)           30 years
4.2	Final Average Pay. A Participant’s “Final Average Pay” is the sum of his highest annual compensation (as defined herein) during the three consecutive calendar years of the ten consecutive calendar years which immediately precede his Termination of Employment, divided by three.
	The Participant’s “annual compensation” is his base salary and annual incentive compensation from the Affiliated Group during a calendar year (including any years prior to his Plan participation). The Participant’s annual compensation shall not be reduced by any elective contributions or deferrals from his base salary or annual incentive compensation made to the Central Hudson Gas & Electric Company Savings Incentive Plan, any Code Section 125 plan maintained by the Affiliated Group or any nonqualified deferred compensation plan maintained by the Affiliated Group.
	A Participant’s “annual compensation” shall not include compensation received by a Participant during any period that precedes the date the Participant’s employer became an Affiliate.
	If the Participant does not have three calendar years of “annual compensation,” his Final Average Pay is the average of his monthly compensation while employed with the Affiliated Group, multiplied by twelve.
4.3	Years of Benefit Service. A Participant’s “Years of Benefit Service” shall equal his years of benefit service under Section 1.34 of the Pension Plan, or any successor provision thereto. However, a Participant shall not receive credit for periods of service with the Company or an Affiliate after his suspension from participation in the Plan under Section 3.2.
4.4	Pension Monthly Benefit. The “Pension Monthly Benefit” is the Participant’s monthly retirement benefit under the Pension Plan, paid as a single life annuity, in the amount payable on his Normal Retirement Date, which shall include the social security supplement payable to the Participant under Section 3.3 of the Pension Plan, or any successor provision thereto, actuarially converted to a single life annuity, but shall not include the retirement account component of the Pension Plan as described in Article XI of the Pension Plan. The foregoing actuarial conversion shall be made using the actuarial assumptions provided in Section 9.7.
4.5	Restoration Monthly Benefit. The “Restoration Monthly Benefit” is the Participant’s monthly retirement benefit under the Restoration Plan, paid as a single life annuity, in the amount payable on his Normal Retirement Date, but shall not include the retirement account component of the

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Restoration Plan as described in Section 2.01(ii) of the Restoration Plan. The Restoration Plan shall pay the Participant’s Restoration Monthly Benefit in the same annuity form of payment as the Participant’s retirement benefit from the Plan under Article VI or VII (as applicable), using the same actuarial assumptions as provided under Section 9.7.

4.6

SRP Monthly Benefit. The “SRP Monthly Benefit” is the actuarial equivalent monthly amount of the Participant’s retirement benefit under the SRP (if any) payable as of his Normal Retirement Date. For this purpose, actuarial equivalence shall be determined (i) by converting the participant’s SRP benefit payable on his Normal Retirement Date to an equivalent single life annuity payable on his Normal Retirement Date based on the Participant’s single life expectancy as of his Normal Retirement Date and (ii) based on actuarial assumptions and procedures prescribed by the Committee. This Section 4.6 shall not apply to any Participant whose SRP Monthly Benefit has not commenced by January 1, 2008.

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ARTICLE V
VESTING

5.1 Vesting Requirements. A Participant must become vested to be entitled to receive a SERP Accrued Benefit. The Participant shall become “vested” in the SERP Accrued Benefit under the Plan under any one of the following circumstances while an Employee:

(a)	Attaining age 61 (under Section 5.2).
(b)	Attaining Earliest Retirement Date (under Section 5.3).
(c)	A Change in Control of the Company (under Section 5.5).

5.2	Attaining Age 61. A Participant shall become vested if he is an Employee of the Company or an Affiliate on or after the day he attains age 61. A Participant does not need 10 Years of Vesting Service to become vested in this case.
5.3	Earliest Retirement Date. A Participant shall also be vested if he is an Employee of the Company or an Affiliate on or after his Earliest Retirement Date as defined in Section 7.2. A Participant shall be entitled to a reduced benefit if the Participant begins to receive his benefit before attaining age 61, but after his Earliest Retirement Date, as provided for under Article VII.
5.4	Non-Vested Termination. Upon a Participant’s Termination of Employment with the Affiliated Group before meeting any of the vesting requirements under Section 5.1, he shall not receive any benefit from the Plan whatsoever. If a Participant is reemployed, he may receive credit for his prior years of service under Section 9.6.
5.5	Change in Control. If a Participant is not otherwise vested under Section 5.1, a Participant shall become vested upon a Change in Control of the Company as provided in Section 9.3.
5.6	Forfeiture Events. Even if vested, a Participant shall cease to be vested, and thereafter not entitled to any benefit from the Plan (regardless if it has commenced), under certain prescribed circumstances involving his conduct under Section 9.5.

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ARTICLE VI
NORMAL RETIREMENT BENEFIT

6.1	SERP Benefit. If a Participant is vested under Article V under Section 5.2, he shall receive his SERP Accrued Benefit effective as of the first day of the month after his Termination of Employment (in this Article, the “commencement date”) as calculated in Section 4.1, to be paid in accordance with Section 6.3.
6.2	Normal Retirement Date. A Participant’s “Normal Retirement Date” means the first day of the month following the later of the Participant’s (i) Termination of Employment or (ii) 61st birthday.
6.3	Actual Payment. A Participant’s benefit shall commence during the 90-day period that begins on the six month anniversary of his commencement date under Section 6.1. The Participant’s first payment shall include the value (without interest) of the payments the Participant would have received had his payment from the Plan begun on his commencement date.
6.4	Normal Annuity Form. A Participant’s SERP Accrued Benefit is payable monthly in the form of a single life annuity. However, if the Participant is married, his retirement benefit is payable in a joint and 100% survivor annuity with his spouse which is the actuarial equivalent of the single life annuity. The normal annuity form of his SERP Accrued Benefit, therefore, shall not be the actual annuity form in which he receives his retirement benefit from the Pension Plan. Rather, the normal annuity form is based solely on his marital status at the commencement of his SERP Accrued Benefit.
6.5	Alternative Annuity Forms of Payment. Before the commencement date, a Participant may elect to receive his SERP Accrued Benefit in one of the following annuity forms of payment that is the actuarial equivalent of the single life annuity form of payment, subject to such rules and procedures as established by the Committee:

(a)	A single life annuity.
(b)	A 30%, 40%, 50%, 75% or 100% joint and survivor annuity.
(c)	Any other annuity form of payment, as may be permitted by the Committee.

The Committee shall disregard any election by a Participant to change the form of his SERP Accrued Benefit to the extent such election would result in an impermissible acceleration of the payment of the Participant’s benefit under the Plan within the meaning of Section 409A of the Code.

At the election of the Participant, the joint and survivor annuity may provide that, if the Participant’s joint annuitant dies before the Participant, the Participant’s monthly benefit will increase to the amount he would have received had he originally elected the single life annuity form of payment. The joint and survivor annuity that includes this feature will be the actuarial equivalent of a single life annuity form of payment as provided above.

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ARTICLE VII
EARLY RETIREMENT BENEFIT

7.1	Early Retirement Benefit. If a Participant is vested under Section 5.3, he shall receive an early retirement benefit effective as of the first day of the month after his Termination of Employment (in this Article, the “commencement date”), to be paid in accordance with Section 7.3. The Participant’s early retirement benefit shall equal his SERP Accrued Benefit determined in accordance with Section 4.1, except that, for purposes of this calculation, the Participant’s (i) monthly Target Retirement Benefit shall be reduced by one-third of one percent per month (or 4% per year) for each full month by which the commencement date of his SERP Accrued Benefit precedes the first day of the month after he attains age 61 and (ii) the benefit offset amounts under Sections 4.4, 4.5 and 4.6 shall be determined as of his commencement date.
7.2	Earliest Retirement Date. A Participant’s “Earliest Retirement Date” means the date he has both (i) attained age 55 and (ii) been credited with at least 10 Years of Vesting Service. A Participant’s “Years of Vesting Service” shall equal his years of vesting service under Section 1.35 of the Pension Plan, or any successor provision thereto.
7.3	Actual Payment. A Participant’s benefit shall commence during the 90-day period that begins on the six month anniversary of his commencement date under Section 7.1. The Participant’s first payment shall include the value (without interest) of the payments the Participant would have received had his payment from the Plan begun on his commencement date.
7.4	Normal Annuity Form. A Participant’s SERP Accrued Benefit is payable in the “normal” annuity form based on his marital status on the commencement date of his SERP Accrued Benefit, as provided in Section 6.4.
7.5	Alternative Annuity Forms of Payment. Before the commencement date, a Participant may elect to receive his SERP Accrued Benefit in one of the following annuity forms of payment that is the actuarial equivalent of the single life annuity form of payment, subject to such rules and procedures as established by the Committee:

(a)	A single life annuity.
(b)	A 30%, 40%, 50%, 75% or 100% joint and survivor annuity.
(c)	Any other annuity form of payment, as may be permitted by the Committee.

The Committee shall disregard any election by a Participant to change the form of his SERP Accrued Benefit to the extent such election would result in an impermissible acceleration of the payment of the Participant’s benefit under the Plan within the meaning of Section 409A of the Code.

At the election of the Participant, the joint and survivor annuity may provide that, if the Participant’s joint annuitant dies before the Participant, the Participant’s monthly benefit will increase to the amount he would have received had he originally elected the single life annuity form of payment. The joint and survivor annuity that includes this feature will be the actuarial equivalent of single life annuity form of payment as provided above.

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ARTICLE VIII
EFFECT OF DEATH AND DISABILITY ON BENEFITS

8.1	Death Benefit. If a Participant dies before becoming vested in his SERP Accrued Benefit under Article V, the Participant shall not be entitled to any benefit under the Plan.
	If a Participant is vested in his SERP Accrued Benefit under Article V and dies before the commencement date of his SERP Accrued Benefit (under Article VI or VII, or Section 9.4(a), as applicable), his surviving spouse (if marrried for at least the one year period ending on his death) shall receive a benefit for the life of the surviving spouse in an amount equal to the monthly amount that would have been payable as a single life annuity to the Participant as of the date of his death. Payments shall commence effective as the first day of the first month coincident with or after the date the Participant would have been eligible to receive his SERP Accrued Benefit (under Article VI or VII, or Section 9.4(a), as applicable) assuming his Termination of Employment occurred as of the date of his death, with payments beginning within 90 days thereof. The surviving spouse’s first payment shall include the value (without interest) of the payments the spouse would have received had his payment from the Plan begun on such commencement date.
	If the Participant dies without a surviving spouse, the death benefit is not paid to any person.
	If a Participant dies after the commencement date of his SERP Accrued Benefit, no death benefit will be payable under this Section 8.1. In this case, the Plan will pay only whatever survivor benefit is payable under the terms of the annuity form of payment in which the Participant elected to receive his SERP Accrued Benefit (under Article VI or VII, as applicable).
8.2	Disability. If a Participant who is vested under Article V becomes disabled (within the meaning of the Company’s or Affiliate’s long-term disability plan) while an Eligible Executive, the Participant’s benefit shall be paid following the Participant’s Termination of Employment in accordance with Article VI or VII (subject to Section 9.4(a)). For purposes of calculating the Participant’s SERP Accrued Benefit under Article IV, he shall accrue additional Years of Benefit Service under the Plan to the same extent he accrues benefit service under Sections 1.34 and 3.6 of the Pension Plan (up to a maximum of five Years of Benefit Service).

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ARTICLE IX
SPECIAL PROVISIONS

9.1	Leaves of Absence, Severance Pay. A Participant’s Years of Benefit Service and Years of Vesting Service shall include leaves of absence authorized by the Company and such other periods of employment as determined by the Committee. However, the Participant’s annual compensation, Years of Vesting Service, and Years of Benefit Service shall not include any period following his Termination of Employment during which he receives severance pay, unless otherwise provided in Section 9.4.
9.2	Changes of Employment Status. If a Participant transfers employment to a non-Participating Affiliate, is reassigned to a position other than a position described in Section 2.12, ceases to be an Eligible Executive or otherwise fails to be eligible to participate in the Plan, he shall be suspended from participation in the Plan. A Participant whose participation in the Plan has been suspended shall cease to accrue additional benefits after the effective date of such employment status change. Such Participant’s SERP Accrued Benefit under Section 4.1 shall be calculated as if he incurred a Termination of Employment on the date of the employment status change.
9.3	Change in Control of the Company. A Participant shall vest in his SERP Accrued Benefit under Section 5.5 upon the occurrence of one of the following “Change in Control” events:

(a)	The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (x) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 9.3; or
(b)	Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(c)	Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding

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		Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more of its affiliated companies) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business combination; or
	(d)	Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
9.4	Effect of a Change in Control on a SERP Accrued Benefit.
	(a)	If a Participant who is vested under Article V as a result of a Change in Control incurs a Termination of Employment (and is not otherwise vested under Section 5.1(a) or (b)), he will receive his SERP Accrued Benefit on the later of (i) the first day of the seventh month immediately following the month of the Participant’s Termination of Employment, or (ii) the date the Participant attains age 55. Subject to Section 9.4(b), the amount and form of payment of the Participant’s SERP Accrued Benefit shall be determined in accordance with Article VII.
	(b)	If a Participant’s Termination of Employment occurs under circumstances entitling him to severance pay or benefits under an employment agreement between the Participant and the Company that becomes effective as a result of the Change in Control, then the amount (but not the time for payment) of the SERP Accrued Benefit shall be computed as if the Participant’s employment with the Company or a Participating Affiliate had continued for a number of years equal to the multiple (as defined in such employment agreement), with annual compensation equal to the annual compensation required by the employment agreement.
9.5	Forfeiture Events. Even if a Participant is vested in his SERP Accrued Benefit under Article V, he shall cease to be vested, and thereafter not be entitled to any benefit from the Plan (regardless if it commenced), if the Participant’s employment with the Company or an Affiliate is terminated for any one or more of the following reasons:
	(a)	The Participant’s willful and continued failure to perform substantially his duties with the Company or an Affiliate (other than any such failure resulting from incapacity due to

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		physical or mental illness), after a written demand for substantial performance is delivered to the Participant which specifically identifies the manner in which the Participant has not substantially performed his duties;
	(b)	the willful engaging by the Participant in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company or an Affiliate;
	(c)	the repeated use of alcohol by the Participant that materially interferes with Participant’s duties, use of illegal drugs by the Participant, or a violation by the Participant of the drug and/or alcohol policies of the Company or Affiliate;
	(d)	a conviction, guilty plea or plea of nolo contendere of the Participant for any crime involving moral turpitude or for any felony;
	(e)	a breach by the Participant of his fiduciary duties of loyalty or care to the Company or Affiliate or a material violation of the Code of Business Conduct and Ethics, or similar policies, of the Company or an Affiliate; or
	(f)	the breach by the Participant of the confidentiality provision set forth in his Employment Agreement with the Company.
	Further, even if a Participant is vested, he shall cease to be vested, and thereafter not be entitled to any benefit from the Plan (regardless if it commenced), if (i) his death occurs during the first 24 months of participation in the Plan as a result of suicide or (ii) he made a material misrepresentation in any form or document provided by him to or for the benefit of the Company or an Affiliate.
9.6	Reemployment. Upon a Participant’s non-vested Termination of Employment, his Years of Vesting Service and his Years of Benefit Service shall be immediately forfeited. If the Participant is ever reemployed as an Employee eligible to participate in the Plan under Section 3.1, the Committee may, in its sole discretion, reinstate him as a Participant of the Plan and/or may, in its sole discretion, reinstate all or some of his Years of Benefit Service for purposes of calculating the Participant’s SERP Accrued Benefit under Section 4.1 and all or some of his Years of Vesting Service for purposes of determining his eligibility for an early retirement benefit under Section 7.1 to the extent such service is not otherwise credited under Sections 1.34 or 1.35 of the Pension Plan, or any successor provision thereto.
	If a Participant was vested under Section 5.2, Section 5.3 or Section 5.5 as of his Termination of Employment and he is ever reemployed and eligible to participate in the Plan under Section 3.1, he shall participate in the Plan and continue to accrue increases to his SERP Accrued Benefit under Section 4.1, offset by the previous amount of his SERP Accrued Benefit. If the Participant’s retirement benefit had commenced, the benefit shall not be suspended. To the extent permitted under Section 409A, upon subsequent retirement, his retirement benefit shall be calculated based on the foregoing subsequent increase to his SERP Accrued Benefit.
9.7	Actuarial Assumptions. For purposes of the Plan, “actuarial equivalence” or “actuarially equivalent” shall be determined using actuarial assumptions of (i) mortality using the applicable mortality table, as defined in Section 417(e)(3)(B) of the Code, as in effect for the calendar year of the determination of the actuarial equivalent value of a benefit, as published by the Internal Revenue Service, assuming (whether applicable) the Participant is male and the contingent annuitant is female and (ii) interest at the rate of 7½% compounded annually. The determination

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	of actuarial equivalence shall be made as an “immediate annuity” (i.e., as the actuarial equivalent value of the benefit payable as of the date specified by the Plan therefor).
	The Company may amend the Plan to change the Actuarial Assumptions, subject to applicable law and the requirements of Section 409A of the Code. A Participant or any beneficiary shall not be entitled to any grandfathering of benefits in the event of any change in Actuarial Assumptions, subject to applicable law and the requirements of Section 409A of the Code.
	For purposes of actuarially equivalent alternative annuity forms of payment under Sections 6.5 and 7.5, at any given time the same actuarial assumptions and methods must be used in valuing each alternative annuity form in determining whether the payments are actuarially equivalent and such actuarial assumptions and methods must be reasonable. The foregoing requirement applies over the entire term of the Participant’s participation in the Plan, such that the payments under the alternative annuity form must be actuarially equivalent at all times. The same actuarial assumptions and methods need not be used over the term of a Participant’s participation in the Plan. Accordingly, the Company may amend the Plan to change the actuarial assumptions and methods used to determine the payments under the alternative annuity forms, provided that all of the actuarial assumptions and methods are reasonable.
9.8	Discretionary Acceleration of Payments. To the extent permitted by Section 409A of the Code, the Committee may, in its sole discretion, accelerate the time or schedule of a payment under the Plan as provided in this Section. The provisions of this Section are intended to comply with the exception to accelerated payments under Treasury Regulation Section 1.409A-3(j) and shall be interpreted and administered accordingly.
	(a)	Domestic Relations Orders. The Committee may, in its sole discretion, accelerate the time or schedule of a payment under the Plan to an individual other than the Participant as may be necessary to fulfill a domestic relations order (as defined in Section 414(p)(1)(B) of the Code).
	(b)	Conflicts of Interest. The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to the extent necessary for any Federal officer or employee in the executive branch to comply with an ethics agreement with the Federal government. Additionally, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to the extent reasonably necessary to avoid the violation of an applicable Federal, state, local, or foreign ethics law or conflicts of interest law (including where such payment is reasonably necessary to permit the Participant to participate in activities in the normal course of his or her position in which the Participant would otherwise not be able to participate under an applicable rule).
	(c)	Employment Taxes. The Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to pay the Federal Insurance Contributions Act (FICA) tax imposed under Sections 3101, 3121(a), and 3121(v)(2) of the Code, or the Railroad Retirement Act (RRTA) tax imposed under Sections 3201, 3211, 3231(e)(1), and 3231(e)(8) of the Code, where applicable, on compensation deferred under the plan (the FICA or RRTA amount). Additionally, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment, to pay the income tax at source on wages imposed under Section 3401 of the Code or the corresponding withholding provisions of applicable state, local, or foreign tax laws as a result of the payment of the FICA or RRTA amount, and to pay the

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	additional income tax at source on wages attributable to the pyramiding Section 3401 of the Code wages and taxes. However, the total payment under this acceleration provision must not exceed the aggregate of the FICA or RRTA amount, and the income tax withholding related to such FICA or RRTA amount.
(d)	Limited Cash-Outs. Subject to Section 9.12(a), the Committee may, in its sole discretion, require a mandatory lump sum payment of amounts deferred under the Plan that do not exceed the applicable dollar amount under Section 402(g)(1)(B) of the Code, provided that the payment results in the termination and liquidation of the entirety of the Participant’s interest under the Plan, including all agreements, methods, programs, or other arrangements with respect to which deferrals of compensation are treated as having been deferred under a single nonqualified deferred compensation plan under Section 409A of the Code.
(e)	Payment Upon Income Inclusion Under Section 409A. Subject to Section 9.12(a), the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan at any time the plan fails to meet the requirements of Section 409A of the Code. The payment may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Section 409A of the Code.
(f)	Certain Payments to Avoid a Nonallocation Year Under Section 409(p). Subject to Section 9.12(a), the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to prevent the occurrence of a nonallocation year (within the meaning of Section 409(p)(3) of the Code) in the plan year of an employee stock ownership plan next following the plan year in which such payment is made, provided that the amount paid may not exceed 125 percent of the minimum amount of payment necessary to avoid the occurrence of a nonallocation year.
(g)	Payment of State, Local, or Foreign Taxes. Subject to Section 9.12(a), the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to reflect payment of state, local, or foreign tax obligations arising from participation in the Plan that apply to an amount deferred under the Plan before the amount is paid or made available to the participant (the state, local, or foreign tax amount). Such payment may not exceed the amount of such taxes due as a result of participation in the Plan. The payment may be made in the form of withholding pursuant to provisions of applicable state, local, or foreign law or by payment directly to the participant. Additionally, the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan to pay the income tax at source on wages imposed under Section 3401 of the Code as a result of such payment and to pay the additional income tax at source on wages imposed under Section 3401 of the Code attributable to such additional wages and taxes. However, the total payment under this acceleration provision must not exceed the aggregate of the state, local, and foreign tax amount, and the income tax withholding related to such state, local, and foreign tax amount.
(h)	Certain Offsets. Subject to Section 9.12(a), the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as satisfaction of a debt of the Participant to the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section

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		414(c) of the Code), where such debt is incurred in the ordinary course of the service relationship between the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) and the Participant, the entire amount of reduction in any of the service recipient’s (as defined in Section 409A of the Code) taxable years does not exceed $5,000, and the reduction is made at the same time and in the same amount as the debt otherwise would have been due and collected from the Participant.
	(i)	Bona Fide Disputes As To A Right To A Payment. Subject to Section 9.12(a), the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan where such payments occur as part of a settlement between the Participant and the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) of an arm’s length, bona fide dispute as to the Participant’s right to the deferred amount.
	(j)	Plan Terminations and Liquidations. Subject to Section 9.12(a), the Committee may, in its sole discretion, provide for the acceleration of the time or schedule of a payment under the Plan as provided in Section 11.2.
	(k)	Other Events and Conditions. Subject to Section 9.12(a), a payment may be accelerated upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.
	Except as otherwise specifically provided in the Plan, the Committee may not accelerate the time or schedule of any payment or amount scheduled to be paid under the Plan within the meaning of Section 409A of the Code.
9.9	Delay of Payments. To the extent permitted under Section 409A of the Code, the Committee may, in its sole discretion, delay payment under any of the following circumstances, provided that the Committee treats all payments to similarly situated Participants on a reasonably consistent basis:
	(a)	Payments Subject To Section 162(m). A payment may be delayed to the extent that the Committee reasonably anticipates that if the payment were made as scheduled, the Company’s deduction with respect to such payment would not be permitted due to the application of Section 162(m) of the Code. If a payment is delayed pursuant to this Section, then the payment must be made either (i) during the Company’s first taxable year in which the Committee reasonably anticipates, or should reasonably anticipate, that if the payment is made during such year, the deduction of such payment will not be barred by application of Section 162(m) of the Code, or (ii) during the period beginning with the first business day of the seventh month immediately following the Participant’s “separation from service” as defined in Section 9.12(b) (the “six month anniversary”) and ending on the later of (I) the last day of the taxable year of the Company in which the six month anniversary occurs or (II) the 15th day of the third month following the six month anniversary. Where any scheduled payment to a specific Participant in a Company’s taxable year is delayed in accordance with this paragraph, all scheduled payments to that Participant that could be delayed in accordance with this paragraph must also be delayed. The Committee may not provide the Participant an election with respect to the timing of the payment under this Section. For purposes of this Section, the term Company includes

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		any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code.
	(b)	Federal Securities Laws or Other Applicable Law. A Payment may be delayed where the Committee reasonably anticipates that the making of the payment will violate federal securities laws or other applicable law; provided that the delayed payment is made at the earliest date at which the Committee reasonably anticipates that the making of the payment will not cause such violation. For purposes of the preceding sentence, the making of a payment that would cause inclusion in gross income or the application of any penalty provision or other provision of the Code is not treated as a violation of applicable law.
	(c)	Other Events and Conditions. A payment may be delayed upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.
9.10	Actual Date of Payment. To the extent permitted by Section 409A of the Code, the Committee may delay payment in the event that it is not administratively possible to make payment on the date (or within the periods) specified in the Plan, or the making of the payment would jeopardize the ability of the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) to continue as a going concern. Notwithstanding the foregoing, payment must be made no later than the latest possible date permitted under Section 409A of the Code.
9.11	Discharge of Obligations. The payment to a Participant or his beneficiary of his entire benefit under the Plan shall discharge all obligations of the Affiliated Group to such Participant or beneficiary under the Plan with respect to that Plan benefit.
9.12	Compliance with Section 409A of the Code.
	(a)	Notwithstanding anything contained in the Plan to the contrary, if the Participant is a “specified employee,” as determined under the Company’s policy for identifying specified employees on the date of his “separation from service” within the meaning of Section 409A of the Code, then to the extent required in order to comply with Section 409A of the Code, all amounts payable under the Plan that constitute a “deferral of compensation” within the meaning of Section 409A of the Code, that are provided as a result of a “separation from service” within the meaning of Section 409A of the Code and that would otherwise be paid during the first six months following such separation from service shall be accumulated through and paid or provided on the first day of the seventh month immediately following the month of such separation from service (or, if the Participant dies during such six-month period, within 30 days after the Participant’s death).
	(b)	Notwithstanding anything contained in the Plan to the contrary, the term “Termination of Employment” or words or phrases of similar import shall mean a “separation from service” as defined in Section 409A of the Code and the effective date of a Participant’s “separation from service” as defined in Section 409A of the Code shall constitute the effective date of his “Termination of Employment”. The Company and the Participant shall take all steps necessary to ensure that a Termination of Employment shall constitute a “separation from service” within the meaning of Section 409A of the Code, and any benefit payable as a result of a Participant’s Termination of Employment shall be paid or

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provided, if and only if, such Termination of Employment constitutes a “separation from service” within the meaning of Section 409A of the Code. Upon a sale or other disposition of the assets of the Company or any Affiliate to an unrelated purchaser, the Committee reserves the right, to the extent permitted by Section 409A of the Code, to determine whether Participants providing services to the purchaser after and in connection with the purchase transaction have experienced a “separation from service” as defined in Section 409A of the Code.

(c)

It is intended that the payments and benefits provided under the Plan shall comply with the requirements of Section 409A of the Code. The Plan shall be construed, administered, and governed in a manner that effects such intent, and the Company shall not take any action that would be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under the Plan may not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon the Participant. Although the Company shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of the benefits provided under the Plan is not warranted or guaranteed. Neither the Company, its affiliates, directors, officers, employees nor its advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Participant or other taxpayer as a result of the Plan. Any reference in the Plan to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.

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ARTICLE X
ADMINISTRATION AND FINANCING

10.1	Plan Administration. The Plan is administered by the Committee. The Committee is responsible for the administration of the Plan and may also delegate certain administrative functions to other persons, including the Central Hudson Gas & Electric Corporation Benefits Committee. The Committee possesses the sole and absolute discretionary authority to interpret and construe the provisions of the Plan, as well as to make all determinations under the Plan, such as eligibility, benefits, service credit and distributions. The Committee’s interpretations and determinations are conclusive on all interested parties.
10.2	Claims Procedures. Any Participant or beneficiary (a “Claimant”) who believes that he is entitled to a benefit under the Plan which he has not received may submit a claim to the Committee. Claims for benefits under the Plan shall be made in writing, signed by the Claimant or his authorized representative, and must specify the basis of the Claimant’s complaint and the facts upon which he relies in making such claim. A claim shall be deemed filed when received by the Committee.
	In the event a claim for benefits is wholly or partially denied by the Committee, the Committee shall notify the Claimant in writing of the denial of the claim within a reasonable period of time, but not later than ninety (90) days after receipt of the claim, unless special circumstances require an extension of time for processing, in which case the ninety (90) day period may be extended to 180 days. The Committee shall notify the Claimant in writing of any such extension. A notice of denial shall be written in a manner reasonably calculated to be understood by the Claimant, and shall contain (i) the specific reason or reasons for denial of the claim, (ii) a specific reference to the pertinent Plan provisions upon which the denial is based, (iii) a description of any additional material or information necessary for the Claimant to perfect the claim, together with an explanation of why such material or information is necessary and (iv) an explanation of the Plan’s review procedure.
	Within sixty (60) days of the receipt by the Claimant of the written notice of denial of the claim, the Claimant may appeal by filing with the Committee a written request for a full and fair review of the denial of the Claimant’s claim for benefits. Appeal requests under the Plan shall be made in writing, signed by the Claimant or his authorized representative, and must specify the basis of the Claimant’s complaint and the facts upon which he relies in making such appeal. An appeal request shall be deemed filed when received by the Committee.
	The Committee shall render a decision on the claim appeal promptly, but not later than sixty (60) days after the receipt of the Claimant’s request for review, unless special circumstances (such as the need to hold a hearing, if necessary), require an extension of time for processing, in which case the sixty (60) day period may be extended to 120 days. The Committee shall notify the Claimant in writing of any such extension. The decision upon review shall be written in a manner reasonably calculated to be understood by the Claimant, and shall contain (i) the specific reason or reasons for denial of the claim, (ii) a specific reference to the pertinent Plan provisions upon which the denial is based, (iii) a statement that the Claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits and (iv) a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA, if the adverse benefit determination is sustained on appeal.

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	No lawsuit by a Claimant may be filed prior to exhausting the Plan’s administrative appeal process. Any lawsuit must be filed no later than the earlier of one year after the Claimant’s claim for benefit was denied or the date the cause of action first arose.
10.3	Committee Authority. The Committee shall have the authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions including interpretations of the Plan, as provided under Section 10.1. A majority vote of the Committee members shall control any decision.
10.4	Agents. The Committee may, from time to time, employ other agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company.
10.5	Binding Effect of Decisions. The decision or action of the Committee in respect of any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.
10.6	Indemnity of Committee. The Company shall indemnify and hold harmless the members of the Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to the Plan on account of such member’s service on the Committee except in the case of gross negligence or willful misconduct.
10.7	Unfunded Plan. The Plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensated employees” within the meaning of Sections 201, 301, and 401 of ERISA, and therefore is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly, to the extent permitted under Section 409A of the Code, the Company or Participating Affiliate may terminate the Plan and make no further benefit payments, or remove certain employees as Participants if it is determined by the United States Department of Labor, a court of competent jurisdiction, or an opinion of counsel that the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA (as currently in effect or hereafter amended) which is not so exempt.
10.8	Company Obligation. The obligation to make benefit payments to any Participant under the Plan shall be an obligation solely of the Company or a Participating Affiliate with respect to the benefit receivable from the Company or a Participating Affiliate and shall not be an obligation of another company. Such obligation of the Company or Participating Affiliate shall be based on the services provided by the Participant for the Company and Participating Affiliate, respectively.
10.9	Interest of Participants. A Participant and his beneficiaries shall have no legal or equitable rights, interest or claims in any property or assets of the Company or a Participating Affiliate, nor shall they be beneficiaries of, or have any rights, claims or interests in, any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Company or a Participating Affiliate. Such policies or other assets shall not be held for the benefit of Participants and their beneficiaries, or held in any way as collateral security for the fulfilling of the obligations of the Company or a Participating Affiliate under the Plan. Any and all of the assets of the Company and a Participating Affiliate shall be, and remain, the general, unpledged, unrestricted assets thereof. The Company and Participating Affiliate’s obligations under the Plan shall be that of an unfunded and unsecured promise to pay money in the future.

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10.10 Trust Fund. The Company or a Participating Affiliate shall be responsible for the payment of all benefits provided under the Plan regarding a Participant employed by the Company or Participating Affiliate. At its discretion, the Company may establish one or more trusts, with such trustees as the Company may approve, for the purpose of providing for the payment of such benefits. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company or Participating Affiliate’s general creditors. To the extent any benefits provided under the Plan are actually paid from any such trust, the Company or Participating Affiliate shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Company or Participating Affiliate.

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ARTICLE XI
AMENDMENT AND TERMINATION

11.1	Amendment. The plan sponsor of the Plan is the Company, which has the right to terminate or amend the provisions of the Plan for any reason and at any time, including the reduction of accrued benefits and optional forms of payment under the Plan. Any amendment may provide different benefits or amounts of benefits from those set forth hereunder. However, the termination or amendment of the Plan shall not violate applicable law or the requirements of Section 409A of the Code.
11.2	Payments Upon Termination of Plan. In the event that the Plan is terminated, the benefits of a Participant shall be paid to the Participant or his beneficiary on the dates on which the Participant or his beneficiary would otherwise receive payments hereunder without regard to the termination of the Plan. Notwithstanding the preceding sentence, and Section 9.12(a):
	(a)	Liquidation; Bankruptcy. The Board shall have the authority, in its sole discretion, to terminate the Plan and pay each Participant’s entire benefit to the Participant or, if applicable, his beneficiary within twelve (12) months of a corporate dissolution taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. 503(b)(1)(A), provided that the amounts are included in the Participant’s gross income in the latest of the following years (or, if earlier, the taxable year in which the amount is actually or constructively received): (i) the calendar year in which the Plan termination and liquidation occurs; (ii) the first calendar year in which the amount is no longer subject to a substantial risk of forfeiture as defined under Section 409A of the Code; or (iii) the first calendar year in which the payment is administratively practicable.
	(b)	Change in Control. The Board shall have the authority, in its sole discretion, to terminate the Plan and pay each Participant’s entire benefit to the Participant or, if applicable, his beneficiary pursuant to an irrevocable action taken by the Board within the 30 days preceding or the 12 months following a Change in Control, provided that this subsection will only apply if all agreements, methods, programs, and other arrangements sponsored by the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) immediately after the time of the Change in Control event with respect to which deferrals of compensation are treated as having been deferred under a single plan under Section 409A of the Code are terminated and paid with respect to each Participant that experienced the Change in Control event, so that under the terms of the termination and payment all such Participants are required to receive all amounts of compensation deferred under the terminated agreements, methods, programs, and other arrangements within 12 months of the date the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) irrevocably takes all necessary action to terminate and liquidate the agreements, methods, programs, and other arrangements.
	(c)	Discretionary Terminations. The Board shall have the authority, in its sole discretion, to terminate the Plan and pay each Participant’s entire benefit to the Participant or, if applicable, his beneficiary, provided that: (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Company (or any entity which would be considered to be a single employer with the Company under Section

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414(b) or Section 414(c) of the Code); (ii) the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) terminates and liquidates all agreements, methods, programs, and other arrangements sponsored by the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) that would be aggregated with any terminated and liquidated agreements, methods, programs, and other arrangements under Section 409A of the Code if the same Participant had deferrals of compensation under all of the agreements, methods, programs, and other arrangements that are terminated and liquidated; (iii) no payments in liquidation of the Plan are made within 12 months of the date the Board takes all necessary action to irrevocably terminate and liquidate the Plan other than payments that would be payable under the terms of the Plan if the action to terminate and liquidate the Plan had not occurred; (iv) all payments are made within 24 months of the date the Board takes all necessary action to irrevocably terminate and liquidate the Plan; and (v) the Company (or any entity which would be considered to be a single employer with the Company under Section 414(b) or Section 414(c) of the Code) does not adopt a new plan that would be aggregated with any terminated and liquidated plan under Section 409A of the Code if the same Participant participated in both plans, at any time within three years following the date the Board takes all necessary action to irrevocably terminate and liquidate the Plan.

(d)

Other Events. The Board shall have the authority, in its sole discretion, to terminate the Plan and pay each Participant’s entire benefit to the Participant or, if applicable, his beneficiary upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin.

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ARTICLE XII
MISCELLANEOUS

12.1	Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable under the Plan, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by the Participant or any other person, nor be transferable by operation of law in the event of the Participant’s or any other person’s bankruptcy or insolvency.
	However, if, as a result of a divorce, a Participant is responsible for child support, alimony, or marital property rights payments, his benefit under the Plan may be assigned to meet those payments, if a qualifying domestic relations order has been issued for the Plan, as approved by the Committee.
12.2	Protective Provisions. A Participant will cooperate with the Company by furnishing any and all information requested by the Company, in order to facilitate the payment of benefits hereunder and by taking such physical examinations as the Company may deem necessary and taking such other action as may be requested by the Company.
12.3	Gender and Number. Whenever any words are used herein in the masculine, they shall be construed as though they were used in the feminine and the neuter in all cases where they would so apply; and wherever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.
12.4	Captions. The captions of the articles, sections and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
12.5	Governing Law. The provisions of the Plan shall be construed and interpreted according to the laws of the State of New York, except to the extent preempted by ERISA.
12.6	Validity. In case any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.
12.7	Notice. Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail to any member of the Committee or the Secretary of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Mailed notice to the Committee shall be directed to the Company’s address. Mailed notice to a Participant, eligible spouse, surviving spouse or beneficiary shall be directed to the individual’s last known address in the Company’s records.
12.8	Successors. The provisions of the Plan shall bind and inure to the benefit of the Company and a Participating Affiliate and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation,

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	purchase or otherwise, acquire all or substantially all of the business and assets of the Company or a Participating Affiliate, and successors of any such corporation or other business entity.
12.9	Withholding. The Company shall withhold from payments made hereunder to any Participant or beneficiary any taxes required to be withheld from such payments under federal, state or local law.
12.10	Payment to Guardian. If a Plan benefit is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of property, the Committee may direct payment of such Plan benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Committee may require proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the Plan benefit. Such distribution shall completely discharge the Company and Participating Affiliate from all liability with respect to such benefit.
12.11	Release. Notwithstanding anything contained herein to the contrary, neither the Company nor any Affiliate shall be obligated to make payment of any benefit to a Participant under the Plan unless such Participant first executes prior to the date that benefits are scheduled to commence under the Plan a release of claims, in a form provided by the Company, whereby the Participant fully releases the Company, all of its Affiliates, the Committee and all of their respective officers, employees, directors and agents, from any and all rights and claims that such Participant, or his heirs, representatives, successors and assigns, may at any time have with respect to the receipt of benefits under the SERP and of all current or future claims, known or unknown, out of the Participant’s employment with the Company or its Affiliates or the termination of such employment, and to the extent such payment is subject to the seven-day revocation period prescribed by the Age Discrimination in Employment Act of 1967, as amended, or to any similar revocation period in effect on the date of termination of the Participant’s employment, such revocation period has expired. The release must become effective and irrevocable in accordance with its terms no later than the first business day of the seventh month following the Participant’s Termination of Employment. If he fails to furnish the release, or if the release furnished by him has not become effective and irrevocable by the first business day of the seventh month after his Termination of Employment, then he will not be entitled to any payment under the Plan.
12.12	Miscellaneous Employment. The establishment of the Plan does not give a Participant the legal right to continued employment with the Company or Affiliate. Further, a Participant’s eligibility or his right to benefits under the Plan should not be interpreted as any guarantee of employment.
	In the event that any lawsuit or any settlement thereof or any claim, or if any governmental agency, court or other governing body, requires the Company to reclassify the employment status of any individual who is excluded from participation under the Plan, such reclassified individual nevertheless shall not be considered an Eligible Executive or otherwise eligible for the Plan and, therefore, not be entitled to accrue benefits under the Plan as a result thereof.

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          IN WITNESS WHEREOF, CH Energy Group, Inc. has caused this instrument to be executed by its duly authorized officer on this ___ day of December, 2007.

CH ENERGY GROUP, INC.

By: /s/ Steven V. Lant

Title: Chairman of the Board, President and Chief

           Executive Officer

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EX-10.(III)38

Exhibit (10)(iii)38

AMENDMENT TO
CH ENERGY GROUP, INC.
SUPPLEMENTARY RETIREMENT PLAN

          WHEREAS, CH Energy Group, Inc. (“Energy Group”) maintains the Supplementary Retirement Plan (the “Plan”); and

          WHEREAS, Energy Group desires to amend the Plan to ensure that the benefits payable under the plan that are subject to Section 409A of the Internal Revenue Code will be paid in a manner that complies with Section 409A,

          NOW, THEREFORE, Energy Group hereby amends the Plan by adding a new Section 3.14 to the end thereof as set forth below.

          “3.14 Payment of Benefits Deferred After December 31, 2004. Notwithstanding any provision of the Plan to the contrary, it is intended that the payments and benefits provided under the Plan that were deferred after December 31, 2004 (within the meaning of Treasury Regulation Section 1.409A-6(a)) shall be paid in a manner that complies with the requirements of Section 409A of the Code. The Plan shall be construed, administered, and governed in a manner that effects such intent, and Energy Group shall not take any action that would be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under the Plan that are subject to Section 409A shall be paid in equal installments over the period described in Section 2.01 and the time and form of payment of such amounts may not be deferred, accelerated, extended, paid or modified in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon the Participant. Although Energy Group shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of the benefits provided under the Plan is not warranted or guaranteed. Neither Energy Group, its affiliates, directors, officers, employees nor its advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Participant or other taxpayer as a result of the Plan.”

          IN WITNESS WHEREOF, this Amendment has been executed as of this ___ day of December, 2007.

CH ENERGY GROUP, INC.
By:	/s/ Steven. V. Lant
Steven V. Lant, Chairman, President and Chief Executive Officer of CH Energy Group, Inc.

EX-10.(III)39

Exhibit (10)(iii)39

CENTRAL HUDSON GAS & ELECTRIC CORPORATION
RETIREMENT BENEFIT RESTORATION PLAN
AMENDED AND RESTATED AS OF JANUARY 1, 2008

Introduction & History

          Effective May 1, 1993, Central Hudson Gas & Electric Corporation (“Central Hudson”) originally established the Central Hudson Gas & Electric Corporation Retirement Benefit Restoration Plan (the “Plan”), which was established to provide excess retirement benefits for eligible executives, and subsequently amended and restated the Plan effective January 1, 2000. Effective as of December 31, 2005, all benefit accruals under the Plan were frozen with respect to vested Participants and the Plan was terminated with respect all non-vested Participants.

          Central Hudson hereby amends and restates the Plan, effective January 1, 2008, to incorporate changes required by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), in the manner provided hereunder. In order to comply with section 409A of the Code, effective immediately before January 1, 2008, the Plan is divided into two parts, one of which shall be named “Part One” and the other of which shall be named “Part Two”. Part One of the Plan shall be governed by the terms and conditions of the Plan as in effect on October 3, 2004, as amended effective December 31, 2005, and shall apply to “Grandfathered Participants” under Section 4.06. Part Two of the Plan shall be governed by the terms and conditions of the Plan as set forth herein, and as it may be amended from time to time hereafter, and shall apply to the individuals, other than Grandfathered Participants, who participated in the Plan on or after January 1, 2005 as listed on Exhibit A (the “Covered Participants”). Part Two of the Plan is intended to comply with Section 409A of the Code.

Article I. Definitions

          1.01          “Act” shall mean the Employee Retirement Income Security Act of 1974 (“ERISA”), as from time to time amended.

          1.02           “Affiliate” means each entity with whom Central Hudson would be considered a single employer under Sections 414(b) and 414(c) of the Code, provided that in applying Section 1563(a)(1), (2), and (3) for purposes of determining a controlled group of corporations under Section 414(b) of the Code, the language “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Section 1563(a)(1), (2), and (3), and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Section 414(c), “at least 50 percent” is used instead of “at least 80 percent” each place it appears in that regulation. Such term shall be interpreted in a manner consistent with the definition of “service recipient” contained in Section 409A of the Code.

          1.03           “Affiliated Group” means (i) Central Hudson and (ii) all Affiliates.

          1.04           “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

          1.05           “Central Hudson” shall mean Central Hudson Gas & Electric Corporation.

          1.06           “Effective Date” shall mean May 1, 1993.

          1.07           “Employment Agreement” shall mean a Change of Control Employment Agreement between a Participant and Energy Group.

          1.08           “Energy Group” shall mean CH Energy Group, Inc., the parent corporation of Central Hudson.

          1.09           “Maximum Benefit” shall mean the benefit or benefits to be paid to a Participant under the Pension Plan which corresponds to his Unrestricted Benefit.

          1.10           “Participant” shall mean those individuals listed on Exhibit A.

          1.11           “Pension Plan” shall mean the Retirement Income Plan of Central Hudson Gas & Electric Corporation, as from time to time amended.

          1.12           “Plan” shall mean Central Hudson Retirement Benefit Restoration Plan, as from time to time amended, which shall be an unfunded and uninsured pension benefit plan for a select group of highly compensated management employees of Central Hudson and/or Energy Group.

          1.13           “SERP” shall mean the CH Energy Group, Inc. Supplemental Executive Retirement Plan.

          1.14           “Termination of Employment” means, subject to Section 4.05(b), the termination of an Employee’s employment with the Affiliated Group as a result of his voluntary termination, retirement, discharge, death or his becoming eligible to receive disability benefits under Central Hudson’s or an Affiliate’s long-term disability plan.

          1.15           “Unrestricted Benefit” shall mean whichever of the following is applicable: (i) the monthly retirement income benefit under the Pension Plan (“Retirement Income Benefit”) and (ii) if applicable, the benefit under the Cash Balance Account (“Cash Balance Benefit”) of the Pension Plan, all determined under the Pension Plan without regard to the limitations imposed by Code Sections 401(a)(17) and 415.

Article II. Benefits

          2.01           Benefit, Commencement. Upon a Participant’s Termination of Employment, such Participant shall be entitled to (i) a Retirement Income Benefit equal to his or her Unrestricted Benefit less the Maximum Benefit (as determined under Section 3.09), in the amount thereof payable as of the first day of the first month following the later of his or her 55th birthday or Termination of Employment and (ii) if applicable, a Cash Balance Benefit equal to his or her Unrestricted Benefit less the Maximum Benefit (as determined under Section 3.09), in the amount thereof payable as of the date of the commencement of his or her Benefit hereunder. A Participant’s Retirement Income Benefit shall commence, and his or her Cash Balance Benefit shall be paid, to him or her as of the first day of the first month following the later of (i) his 55th birthday or (ii) the six-month anniversary of his or her Termination of Employment; with actual payment(s) commencing or paid within 90 days thereof. If payments of his or her Retirement Income Benefit commences as a result of the foregoing clause (ii), the first payment thereof shall include any monthly payments (without interest) that would have been made had the Retirement Income Benefit commenced on the first day of the month following his or her Termination of Employment.

          2.02           Spouse’s Pension Benefit. Subject to Section 2.03 below, upon the death of a Participant whose spouse is eligible for an annuity under the Pension Plan, the Participant’s surviving spouse shall be entitled to (i) a monthly benefit equal to the surviving spouse benefit annually determined in accordance

2

with the provisions of the Pension Plan without regard to any limitations imposed by the Code Sections 401(a)(17) and 415, less the related Maximum Benefit to which such spouse is entitled and (ii) if applicable, a Cash Balance Benefit determined in accordance with the provisions of the Pension Plan without regard to any limitations imposed by Code Sections 401(a)(17) and 415, less the related Maximum Benefit to which such spouse is entitled and less any amount of the Cash Balance Benefit previously paid to the Participant. Payments shall commence under this Section 2.02 as soon as administratively practicable on the first day of the first month coincident with or after the date the Participant would have been able to receive his benefit under Section 2.01 assuming the Participant’s Termination of Employment occurred as of the date of his death, with actual payment(s) commencing or paid within 90 days thereof.

          2.03           Forms of Benefit Payment. A Participant’s Cash Balance Benefit shall be paid in the form of a lump sum. A Participant’s Retirement Income Benefit shall be paid in the annuity forms available under the SERP and the amount thereof shall be the actuarial equivalent of the Retirement Income Benefit under Section 2.01 payable in a single life annuity, using the actuarial assumptions provided under Section 9.7 of the SERP. However, if the Participant is a participant in the SERP, his Retirement Income Benefit shall be paid in the same annuity form of payment as he elects the payment of his retirement benefit under the SERP and the amount thereof shall be the actuarial equivalent of the Retirement Income Benefit under Section 2.01 payable in a single life annuity, using the actuarial assumptions provided under Section 9.7 of the SERP.

          2.04           Reemployment. If a Participant is receiving annuity payments under this Article and he is subsequently reemployed by the Affiliated Group, the annuity payments shall continue to be paid at the same time and form as in effect before his reemployment.

Article III. Administration of the Plan

          3.01           Administrator. The Plan shall be administered by the Board of Directors of Central Hudson (or its designee), which shall have the authority to interpret the Plan and issue such proceedings as it deems appropriate. The Administrator shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. The Administrator’s interpretations, determinations, regulations and calculations shall be final and binding on all persons and parties concerned.

          3.02           Amendment and Termination. The Administrator may amend or terminate the Plan at any time, provided, however, that no such amendment or termination shall deprive any Participant or beneficiary of the benefits to which such Participant is entitled, under Section 2.01 hereof, as of the date of such amendment or termination unless the Participant or beneficiary becomes entitled to an amount equal to such benefit under another plan or practice adopted by Central Hudson. Notwithstanding the foregoing, for three years following a “Change in Control” (as defined in the SERP), (i) the Plan may not be amended in any manner adverse to any individual who is a Participant in the Plan immediately before the Change-of-Control (a “Protected Participant”), or a beneficiary of a Protected Participant and (ii) the Plan may not be terminated with respect to Protected Participants and their beneficiaries.

          3.03           Payments. Central Hudson will pay all benefits arising under this Plan and all costs, charges and expenses relating thereto.

          3.04           Non-Assignability of Benefits. Except as otherwise permitted or required by law, the benefits payable hereunder or the right to receive future benefits under the Plan may not be anticipated, alienated, pledged, encumbered, or subjected to any charge or legal process, and if any attempt is made to do so, or a person eligible for any benefits becomes bankrupt, the interest under the Plan of the person

3

affected may be terminated by the Administrator which, in its sole discretion, may cause the same to be held or applied for the benefit of one or more of the dependents of such person or make any other disposition of such benefits that it deems appropriate.

          3.05           Status of Plan. The benefits under this Plan shall not be funded, but shall constitute liabilities of Central Hudson payable when due.

          3.06           Nonguarantee of Employment. Nothing contained in this Plan shall be construed as a contract of employment between Central Hudson and any Participant, or as a right of any Participant to be continued in employment of Central Hudson, or as a limitation on the right of Central Hudson to discharge any of its employees, with or without cause.

          3.07           Applicable Law. All questions pertaining to the construction, validity and effect of the Plan shall be determined in accordance with the laws of the United States and to the extent not pre-empted by such laws, by the laws of the State of New York.

          3.08           Inclusion of Energy Group Participants. This Plan shall only apply to Energy Group Participants if Energy Group’s Board of Directors adopts this Plan.

          3.09           Accrual of Benefits and Participation after December 31, 2005. Effective as of December 31, 2005, the Plan is terminated with no future Benefit payable with respect to any Participant who, as of December 31, 2005, is not vested in a Benefit under Article II of the Plan (as determined under the Pension Plan) and no employee of Energy Group or Central Hudson may become a Participant in the Plan on or after December 31, 2005. A Participant who, as of December 31, 2005, has a vested benefit under Article II will not accrue any additional Benefit under the Plan after December 31, 2005 and his Benefit under the Plan will be determined as of December 31, 2005, based on the Participant’s Unrestricted Benefit and Maximum Benefit as of December 31, 2005.

          3.10           Pre-2008 Payments. If a Participant commences payment of benefits in conjunction with his benefit under the Pension Plan prior to January 1, 2008, then such benefit shall be payable for the remainder of 2007 and subsequent calendar years at the same time and in the same form elected by the Participant under the Pension Plan. Such time and form of payment shall not be subject to change after January 1, 2008 and shall not be affected by any changes in the time or form of payment of the benefit under the Pension Plan that occur on or after January 1, 2008.

Article IV. Section 409A Provisions

          4.01           Discretionary Acceleration of Payments. Subject to Sections 3.02 and 4.05(a), to the extent permitted by Section 409A of the Code, the Plan Administrator may, in its sole discretion, accelerate the time or schedule of a payment under the Plan. The provision is intended to comply with the exception to accelerated payments under Treasury Regulation Section 1.409A-3(j) and shall be interpreted and administered accordingly.

          4.02           Delay of Payments. To the extent permitted under Section 409A of the Code, the Plan Administrator may, in its sole discretion, delay payment under any of the following circumstances, provided that the Plan Administrator treats all payments to similarly situated Participants on a reasonably consistent basis:

                            (a)          A Payment may be delayed where the Plan Administrator reasonably anticipates that the making of the payment will violate federal securities laws or other applicable law; provided that the delayed payment is made at the earliest date at which the Plan Administrator reasonably anticipates

4

that the making of the payment will not cause such violation. For purposes of the preceding sentence, the making of a payment that would cause inclusion in gross income or the application of any penalty provision or other provision of the Code is not treated as a violation of applicable law.

                            (b)           A payment may be delayed upon such other events and conditions as the Internal Revenue Service may prescribe in generally applicable guidance published in the Internal Revenue Bulletin. To the extent permitted under Section 409A of the Code, the Plan Administrator may, in its sole discretion, delay payment under any of the following circumstances, provided that the Plan Administrator treats all payments to similarly situated Participants on a reasonably consistent basis:

          4.03           Actual Date of Payment. To the extent permitted by Section 409A of the Code, the Plan Administrator may delay payment in the event that it is not administratively possible to make payment on the date (or within the periods) specified in the Plan, or the making of the payment would jeopardize the ability of Central Hudson (or any entity which would be considered to be a single employer with Central Hudson under Section 414(b) or Section 414(c) of the Code) to continue as a going concern. Notwithstanding the foregoing, payment must be made no later than the latest possible date permitted under Section 409A of the Code.

          4.04           Discharge of Obligations. The payment to a Participant or his beneficiary of his entire benefit under the Plan shall discharge all obligations of the Affiliated Group to such Participant or beneficiary under the Plan with respect to that Plan benefit.

          4.05           Compliance with Section 409A of the Code.

                           (a)          Notwithstanding anything contained in the Plan to the contrary, if the Participant is a “specified employee,” as determined under Central Hudson’s policy for identifying specified employees on the date of his “separation from service” within the meaning of Section 409A of the Code, then to the extent required in order to comply with Section 409A of the Code, all amounts payable under the Plan that constitute a “deferral of compensation” within the meaning of Section 409A of the Code, that are provided as a result of a “separation from service” within the meaning of Section 409A of the Code and that would otherwise be paid during the first six months following such separation from service shall be accumulated through and paid or provided on the first day of the seventh month immediately following the month of such separation from service (or, if the Participant dies during such six-month period, within 30 days after the Participant’s death).

                           (b)           Notwithstanding anything contained in the Plan to the contrary, the term “Termination of Employment” or words or phrases of similar import shall mean a “separation from service” as defined in Section 409A of the Code and the effective date of a Participant’s “separation from service” as defined in Section 409A of the Code shall constitute a “Termination of Employment”. Central Hudson and the Participant shall take all steps necessary to ensure that a Termination of Employment shall constitute a “separation from service” within the meaning of Section 409A of the Code, and any benefit payable as a result of a Participant’s Termination of Employment shall be paid or provided, if and only if, such Termination of Employment constitutes a “separation from service” within the meaning of Section 409A of the Code. Upon a sale or other disposition of the assets of Central Hudson or any Affiliate to an unrelated purchaser, Central Hudson reserves the right, to the extent permitted by Section 409A of the Code, to determine whether Participants providing services to the purchaser after and in connection with the purchase transaction have experienced a “separation from service” as defined in Section 409A of the Code.

                           (c)          It is intended that the payments and benefits provided under the Plan shall comply with the requirements of Section 409A of the Code. The Plan shall be construed, administered,

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and governed in a manner that effects such intent, and Central Hudson shall not take any action that would be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under the Plan may not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon the Participant. Although Central Hudson shall use its best efforts to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of the benefits provided under the Plan is not warranted or guaranteed. Neither Central Hudson, its affiliates, directors, officers, employees nor its advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Participant or other taxpayer as a result of the Plan. Any reference in the Plan to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.

          4.06           Grandfathered Participants. The individuals who were participants of the Plan, vested, and terminated employment as of December 31, 2004 (the “Grandfathered Participants”) and, therefore, whose entire benefit under Article V of Part One of the Plan qualifies as an “amount deferred” prior to January 1, 2005 within the meaning of Section 409A of the Code, shall participate in, and be governed by the terms and conditions of, Part One of the Plan. It is intended that such amounts shall be exempt from the application of Section 409A of the Code. Nothing contained herein is intended to materially enhance a benefit or right existing under Part One of the Plan or add a new material benefit or right to Part One of the Plan with respect to Grandfathered Participants.

          IN WITNESS WHEREOF, Central Hudson Gas & Electric Corporation has caused this instrument to be executed by its duly authorized officer on this ___ day of December, 2007.

CENTRAL HUDSON GAS & ELECTRIC CORPORATION
By:	/s/ Steven V. Lant
		Steven V. Lant, Chairman, Chief Executive Officer of Central Hudson Gas & Electric Corporation

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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
RETIREMENT BENEFIT RESTORATION PLAN
AMENDED AND RESTATED AS OF JANUARY 1, 2008

Exhibit A—Covered Participants

Steven V. Lant

Carl E. Meyer

Joseph J. DeVirgilio, Jr

Charles A. Freni

Thomas C. Brocks

Donna S. Doyle

Michael L. Mosher

Stacey A. Renner