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FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

(Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended....................................March 31, 2005

OR

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

For the transition period from.....................to..........................

Commission Registrant, State of Incorporation IRS Employer
File Number Address and Telephone Number Identification No.
- ----------- ---------------------------- ------------------

0-30512 CH Energy Group, Inc. 14-1804460
(Incorporated in New York)
284 South Avenue
Poughkeepsie, New York 12601-4879
(845) 452-2000

1-3268 Central Hudson Gas & Electric Corporation 14-0555980
(Incorporated in New York)
284 South Avenue
Poughkeepsie, New York 12601-4879
(845) 452-2000

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 |_|



Indicate by check mark whether CH Energy Group, Inc. is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act):

Yes |X| No |_|

Indicate by check mark whether Central Hudson Gas & Electric Corporation
is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act):

Yes |_| No |X|

As of the close of business on May 2, 2005, (i) CH Energy Group, Inc. had
outstanding 15,762,000 shares of Common Stock ($0.10 per share par value) and
(ii) all of the outstanding 16,862,087 shares of Common Stock ($5 per share par
value) of Central Hudson Gas & Electric Corporation were held by CH Energy
Group, Inc.

CENTRAL HUDSON GAS & ELECTRIC CORPORATION MEETS THE CONDITIONS SET FORTH
IN GENERAL INSTRUCTIONS (H)(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING
THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTIONS
(H)(2)(a), (b) AND (c).



FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2005

INDEX

PART I - FINANCIAL INFORMATION PAGE
----

Item 1 - Consolidated Financial Statements (Unaudited)

CH ENERGY GROUP, INC.
Consolidated Statement of Income -
Three Months Ended March 31, 2005, and 2004 1

Consolidated Statement of Comprehensive Income -
Three Months Ended March 31, 2005, and 2004 2

Consolidated Balance Sheet - March 31, 2005,
December 31, 2004, and March 31, 2004 3

Consolidated Statement of Cash Flows -
Three Months Ended March 31, 2005, and 2004 5

CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Consolidated Statement of Income -
Three Months Ended March 31, 2005, and 2004 6

Consolidated Statement of Comprehensive Income -
Three Months Ended March 31, 2005, and 2004 7

Consolidated Balance Sheet - March 31, 2005,
December 31, 2004, and March 31, 2004 8

Consolidated Statement of Cash Flows -
Three Months Ended March 31, 2005, and 2004 10

Notes to Consolidated Financial Statements (Unaudited) 11



INDEX

PART I - FINANCIAL INFORMATION PAGE
----

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 24

Item 3 - Quantitative and Qualitative Disclosures
about Market Risk 37

Item 4 - Controls and Procedures 38

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings 38

Item 4 - Submission of Matters to a Vote of Security Holders 39

Item 6 - Exhibits 40

Signatures 41

Exhibit Index 42

Certifications 43

-------------------------------

Filing Format

This Quarterly Report on Form 10-Q is a combined quarterly report being
filed by two different registrants: CH Energy Group, Inc. ("Energy Group") and
Central Hudson Gas & Electric Corporation ("Central Hudson"), a wholly owned
subsidiary of Energy Group. Except where the content clearly indicates
otherwise, any reference in this report to Energy Group includes all
subsidiaries of Energy Group, including Central Hudson. Central Hudson makes no
representation as to the information contained in this report in relation to
Energy Group and its subsidiaries other than Central Hudson.



PART I - FINANCIAL INFORMATION

Item I - Consolidated Financial Statements

CH ENERGY GROUP, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)



For the 3 Months Ended March 31,
2005 2004
--------- ---------
(Thousands of Dollars)

Operating Revenues
Electric .................................................................. $ 126,658 $ 119,269
Natural gas ............................................................... 63,430 58,704
Competitive business subsidiaries ......................................... 96,001 85,020
--------- ---------
Total Operating Revenues .............................................. 286,089 262,993
--------- ---------

Operating Expenses
Operation:
Purchased electricity and fuel used in
electric generation .................................................. 78,421 72,153
Purchased natural gas ................................................... 43,204 39,484
Purchased petroleum ..................................................... 71,395 57,840
Other expenses of operation - regulated activities ...................... 24,730 23,254
Other expenses of operation - competitive business subsidiaries ......... 14,524 15,007
Depreciation and amortization ............................................. 9,086 8,601
Taxes, other than income tax .............................................. 7,916 7,189
--------- ---------
Total Operating Expense ............................................... 249,276 223,528
--------- ---------

Operating Income ............................................................ 36,813 39,465
--------- ---------

Other Income
Interest on regulatory assets and investment income ....................... 2,340 2,924
Other - net ............................................................... (522) 2,121
--------- ---------
Total Other Income .................................................... 1,818 5,045
--------- ---------

Interest Charges
Interest on long-term debt ................................................ 3,247 2,831
Interest on regulatory liabilities and other interest ..................... 1,031 2,175
--------- ---------
Total Interest Charges ................................................ 4,278 5,006
--------- ---------

Income before income taxes and preferred dividends of subsidiary ............ 34,353 39,504

Income Taxes ................................................................ 13,772 16,273
--------- ---------

Income before preferred dividends of subsidiary ............................. 20,581 23,231
Cumulative preferred stock dividends of subsidiary .......................... 242 242
--------- ---------

Net Income .................................................................. 20,339 22,989
Dividends Declared on Common Stock .......................................... 8,512 8,512
--------- ---------

Balance Retained in the Business ............................................ $ 11,827 $ 14,477
========= =========

Common Stock:
Average Shares Outstanding - Basic ...................................... 15,762 15,762
- Diluted .................................... 15,770 15,775

Earnings Per Share - Basic .............................................. $ 1.29 $ 1.46
- Diluted ............................................ $ 1.28 $ 1.45

Dividends Declared Per Share ............................................ $ 0.54 $ 0.54


See Notes to Consolidated Financial Statements


-1-


CH ENERGY GROUP, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)



For the 3 Months Ended March 31,
2005 2004
----------- -----------
(Thousands of Dollars)

Net Income ................................................................... $ 20,339 $ 22,989

Other comprehensive income:

Net unrealized gains (losses) net of tax and net income realization:
FAS 133 Designated Cash Flow Hedges - net of tax of $(39) and $45 ...... 58 (69)
Investments - net of tax of $(115) and $46 ............................. 172 (69)
----------- -----------

Other comprehensive income (loss) ............................................ 230 (138)
----------- -----------

Comprehensive Income ......................................................... $ 20,569 $ 22,851
=========== ===========


See Notes to Consolidated Financial Statements


-2-


CH ENERGY GROUP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)



March 31, December 31, March 31,
ASSETS 2005 2004 2004
------------ ------------ ------------
(Thousands of Dollars)

Utility Plant
Electric .............................................................. $ 703,958 $ 702,206 $ 658,153
Natural gas ........................................................... 215,414 214,866 202,293
Common ................................................................ 105,143 104,840 105,196
------------ ------------ ------------
1,024,515 1,021,912 965,642

Less: Accumulated depreciation ........................................ 320,434 315,691 306,947
------------ ------------ ------------
704,081 706,221 658,695

Construction work in progress ......................................... 47,279 38,846 64,273
------------ ------------ ------------
Net Utility Plant ............................................. 751,360 745,067 722,968
------------ ------------ ------------

Other Property and Plant - net ............................................... 22,943 23,139 21,211
------------ ------------ ------------

Current Assets
Cash and cash equivalents ............................................. 110,134 119,117 126,631
Accounts receivable -
net of allowance for doubtful accounts of
$5.9 million, $4.8 million, and $4.4 million,
respectively .................................................... 94,035 65,239 83,460
Accrued unbilled utility revenues ..................................... 8,862 9,130 7,549
Other receivables ..................................................... 3,904 4,548 3,881
Fuel and materials and supplies - at average cost ..................... 14,938 21,459 14,291
Regulatory assets ..................................................... 11,572 17,454 265
Fair value of derivative instruments .................................. 502 -- 942
Special deposits and prepayments ...................................... 18,687 20,767 17,281
Accumulated deferred income tax ....................................... 13,762 9,454 12,953
------------ ------------ ------------
Total Current Assets ......................................... 276,396 267,168 267,253
------------ ------------ ------------

Deferred Charges and Other Assets
Regulatory assets - pension plan ...................................... 94,488 88,633 131,344
Intangible asset - pension plan ....................................... 22,291 22,291 24,447
Goodwill .............................................................. 50,462 50,462 50,462
Other intangible assets - net ......................................... 28,107 28,780 30,834
Regulatory assets ..................................................... 40,268 37,231 64,857
Unamortized debt expense .............................................. 3,950 4,041 3,954
Other ................................................................. 20,555 20,995 19,663
------------ ------------ ------------
Total Deferred Charges and Other Assets ...................... 260,121 252,433 325,561
------------ ------------ ------------

Total Assets ....................................... $ 1,310,820 $ 1,287,807 $ 1,336,993
============ ============ ============


See Notes to Consolidated Financial Statements


-3-


CH ENERGY GROUP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)



March 31, December 31, March 31,
CAPITALIZATION AND LIABILITIES 2005 2004 2004
------------ ------------ ------------
(Thousands of Dollars)

Capitalization
Common Stock Equity:
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 $ 1,686
Paid-in capital .......................................................... 351,230 351,230 351,230
Retained earnings ........................................................ 199,600 187,772 193,872
Treasury stock (1,100,087 shares) ........................................ (46,252) (46,252) (46,252)
Accumulated comprehensive income (loss) .................................. (413) (643) (445)
Capital stock expense .................................................... (328) (328) (328)
------------ ------------ ------------
Total Common Stock Equity ........................................ 505,523 493,465 499,763
------------ ------------ ------------

Cumulative Preferred Stock of a Consolidated Subsidiary
Not subject to mandatory redemption ................................. 21,027 21,030 21,030

Long-term debt - net of current portion .................................. 319,883 319,883 285,880
------------ ------------ ------------
Total Capitalization ............................................. 846,433 834,378 806,673
------------ ------------ ------------

Current Liabilities
Current maturities of long-term debt ..................................... -- -- 15,000
Notes payable ............................................................ 10,000 12,000 --
Accounts payable ......................................................... 37,982 43,418 37,801
Accrued interest ......................................................... 2,477 4,629 2,867
Dividends payable ........................................................ 8,754 8,754 8,754
Accrued vacation and payroll ............................................. 5,315 4,619 5,202
Customer deposits ........................................................ 6,586 6,496 6,130
Regulatory liabilities ................................................... 404 -- 4,872
Fair value of derivative instruments ..................................... -- 906 --
Accrued taxes payable .................................................... 15,545 -- 11,278
Deferred revenues ........................................................ 5,538 8,931 5,049
Other .................................................................... 10,161 11,749 13,062
------------ ------------ ------------
Total Current Liabilities ........................................ 102,762 101,502 110,015
------------ ------------ ------------

Deferred Credits and Other Liabilities
Regulatory liabilities ................................................... 152,838 156,339 233,070
Operating reserves ....................................................... 6,341 6,515 5,950
Deferred gain - sale of major generating assets .......................... -- -- 7,415
Accrued environmental remediation costs .................................. 19,500 19,500 19,460
Accrued other post-employment benefit costs .............................. 19,476 16,030 12,850
Accrued pension costs .................................................... 23,719 18,470 14,057
Other .................................................................... 13,932 14,298 19,956
------------ ------------ ------------
Total Deferred Credits and Other Liabilities ..................... 235,806 231,152 312,758
------------ ------------ ------------

Accumulated Deferred Income Tax .............................................. 125,819 120,775 107,547
------------ ------------ ------------

Total Capitalization and Liabilities ............................. $ 1,310,820 $ 1,287,807 $ 1,336,993
============ ============ ============


See Notes to Consolidated Financial Statements


-4-


CH ENERGY GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)



For the 3 Months Ended
March 31,
2005 2004
------------ ------------
Operating Activities: (Thousands of Dollars)

Net Income ..................................................................... $ 20,339 $ 22,989

Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization ............................................ 9,086 8,601
Deferred income taxes - net .............................................. 366 2,796
Provision for uncollectibles ............................................. 1,163 1,061
Accrued/deferred pension costs ........................................... (4,153) (4,092)
Amortization of fossil plant incentive ................................... -- (2,472)

Changes in operating assets and liabilities - net:
Accounts receivable, unbilled revenues and other receivables ............. (29,047) (14,565)
Fuel, materials and supplies ............................................. 6,521 5,556
Special deposits and prepayments ......................................... (1,155) (404)
Accounts payable ......................................................... (5,436) (2,801)
Accrued taxes and interest ............................................... 16,627 16,308
Deferred natural gas and electric costs .................................. 5,210 7,887
Customer benefit fund .................................................... (1,350) (8,064)
Proceeds from sale of emissions allowances ............................... -- 4,030
Other - net .............................................................. (3,114) (2,153)
------------ ------------

Net Cash Provided By Operating Activities .................................... 15,057 34,677
------------ ------------

Investing Activities:

Additions to utility plant and other property and plant ...................... (13,072) (15,273)
Other - net .................................................................. (453) (958)
------------ ------------

Net Cash Used in Investing Activities ........................................ (13,525) (16,231)
------------ ------------

Financing Activities:

Proceeds from issuance of long-term debt ..................................... -- 7,000
Redemption of cumulative preferred stock ..................................... (3) --
Net repayments of short-term debt ............................................ (2,000) (16,000)
Dividends paid on common stock ............................................... (8,512) (8,512)
Debt issuance costs .......................................................... -- (137)
------------ ------------

Net Cash Used in Financing Activities ........................................ (10,515) (17,649)
------------ ------------

Net Change in Cash and Cash Equivalents ............................................ (8,983) 797

Cash and Cash Equivalents - Beginning of Year ...................................... 119,117 125,834
------------ ------------

Cash and Cash Equivalents - End of Period .......................................... $ 110,134 $ 126,631
============ ============

Supplemental Disclosure of Cash Flow Information

Interest paid ................................................................ $ 6,202 $ 4,924

Federal and State income tax paid ............................................ $ 94 $ 90


As authorized in the 2004 Joint Proposal dated June 14, 2004, $3 millon of
deferred electric pension and OPEB costs, including carrying charges, were
offset against the Customer Benefit Fund with no impact to cash flow for the
three months ended March 31, 2005.

See Notes to Consolidated Financial Statements


-5-


CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)



For the 3 Months
Ended March 31,
2005 2004
----------- -----------
(Thousands of Dollars)

Operating Revenues
Electric .................................................................. $ 126,658 $ 119,269
Natural gas ............................................................... 63,430 58,704
----------- -----------
Total Operating Revenues .............................................. 190,088 177,973
----------- -----------

Operating Expenses
Operation:
Purchased electricity and fuel used in electric generation .............. 78,421 72,153
Purchased natural gas ................................................... 43,204 39,484
Other expenses of operation ............................................. 24,730 23,254
Depreciation and amortization ............................................. 7,502 7,064
Taxes, other than income tax .............................................. 7,830 7,129
----------- -----------
Total Operating Expenses .............................................. 161,687 149,084
----------- -----------

Operating Income ............................................................ 28,401 28,889
----------- -----------

Other Income
Interest on regulatory assets and other interest income ................... 1,881 2,703
Other - net ............................................................... (659) 1,781
----------- -----------
Total Other Income .................................................... 1,222 4,484
----------- -----------

Interest Charges
Interest on long-term debt ................................................ 3,247 2,831
Interest on regulatory liabilities and other interest ..................... 1,056 2,200
----------- -----------
Total Interest Charges ................................................ 4,303 5,031
----------- -----------

Income Before Income Taxes .................................................. 25,320 28,342

Income Taxes ................................................................ 10,330 11,854
----------- -----------

Net Income .................................................................. 14,990 16,488

Dividends Declared on Cumulative Preferred Stock ............................ 242 242
----------- -----------

Income Available for Common Stock ........................................... $ 14,748 $ 16,246
=========== ===========


See Notes to Consolidated Financial Statements


-6-


CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)

For the 3 Months Ended March 31,
2005 2004
--------- ---------
(Thousands of Dollars)

Net Income ................................. $ 14,990 $ 16,488

Other comprehensive income ................. -- --
--------- ---------

Comprehensive Income ....................... $ 14,990 $ 16,488
========= =========

See Notes to Consolidated Financial Statements


-7-


CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
(UNAUDITED)



March 31, December 31, March 31,
ASSETS 2005 2004 2004
------------ ------------ ------------
(Thousands of Dollars)

Utility Plant
Electric ..................................................................... $ 703,958 $ 702,206 $ 658,153
Natural Gas .................................................................. 215,414 214,866 202,293
Common ....................................................................... 105,143 104,840 105,196
------------ ------------ ------------
1,024,515 1,021,912 965,642

Less: Accumulated depreciation ............................................... 320,434 315,691 306,947
------------ ------------ ------------
704,081 706,221 658,695

Construction work in progress ................................................ 47,279 38,846 64,273
------------ ------------ ------------
Net Utility Plant .................................................... 751,360 745,067 722,968
------------ ------------ ------------

Other Property and Plant - net .................................................. 962 962 964
------------ ------------ ------------

Current Assets
Cash and cash equivalents .................................................... 3,090 8,227 12,949
Accounts receivable -
net of allowance for doubtful accounts of $4.7 million,
$3.8 million, and $2.8 million, respectively ........................... 58,199 37,704 54,071
Accrued unbilled utility revenues ............................................ 8,862 9,130 7,549
Other receivables ............................................................ 887 2,048 1,334
Fuel and materials and supplies - at average cost ............................ 10,794 17,207 10,645
Regulatory assets ............................................................ 11,572 17,454 265
Fair value of derivative instruments ......................................... 404 -- 909
Special deposits and prepayments ............................................. 15,766 20,354 14,565
Accumulated deferred income tax .............................................. 12,932 8,696 12,225
------------ ------------ ------------
Total Current Assets ................................................ 122,506 120,820 114,512
------------ ------------ ------------

Deferred Charges and Other Assets
Regulatory assets - pension plan ............................................. 94,488 88,633 131,344
Intangible asset - pension plan .............................................. 22,291 22,291 24,447
Regulatory assets ............................................................ 40,268 37,231 64,857
Unamortized debt expense ..................................................... 3,950 4,041 3,954
Other ........................................................................ 10,507 10,397 9,646
------------ ------------ ------------
Total Deferred Charges and Other Assets ............................. 171,504 162,593 234,248
------------ ------------ ------------

Total Assets .............................................. $ 1,046,332 $ 1,029,442 $ 1,072,692
============ ============ ============


See Notes to Consolidated Financial Statements


-8-


CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
(UNAUDITED)



March 31, December 31, March 31,
CAPITALIZATION AND LIABILITIES 2005 2004 2004
------------ ------------ ------------
(Thousands of Dollars)

Capitalization
Common Stock Equity:
Common stock, 30,000,000 shares authorized;
16,862,087 shares issued ($5 par value) ....................... $ 84,311 $ 84,311 $ 84,311
Paid-in capital ...................................................... 174,980 174,980 174,980
Retained earnings .................................................... 31,892 25,644 21,211
Capital stock expense ................................................ (4,961) (4,961) (4,961)
------------ ------------ ------------
Total Common Stock Equity .................................... 286,222 279,974 275,541
------------ ------------ ------------

Cumulative Preferred Stock
Not subject to mandatory redemption ............................. 21,027 21,030 21,030

Long-term Debt ....................................................... 319,883 319,883 285,880
------------ ------------ ------------
Total Capitalization ......................................... 627,132 620,887 582,451
------------ ------------ ------------

Current Liabilities
Current maturities of long-term debt ................................. -- -- 15,000
Notes Payable ........................................................ 10,000 12,000 --
Accounts payable ..................................................... 29,226 32,951 32,656
Accrued interest ..................................................... 2,477 4,629 2,867
Dividends payable - preferred stock .................................. 242 242 242
Accrued vacation and payroll ......................................... 5,315 4,619 5,202
Customer deposits .................................................... 6,443 6,359 5,992
Regulatory liabilities ............................................... 404 -- 4,872
Fair value of derivative instruments ................................. -- 907 --
Accrued taxes payable ................................................ 10,891 -- 5,737
Other ................................................................ 3,856 5,869 5,967
------------ ------------ ------------
Total Current Liabilities .................................... 68,854 67,576 78,535
------------ ------------ ------------

Deferred Credits and Other Liabilities
Regulatory liabilities ............................................... 152,838 156,339 233,070
Operating reserves ................................................... 5,686 5,969 5,425
Deferred gain - sale of major generating assets ...................... -- -- 7,415
Accrued environmental remediation costs .............................. 19,500 19,500 19,460
Accrued other post-employment benefit costs .......................... 19,476 16,030 12,850
Accrued pension costs ................................................ 23,719 18,470 14,057
Other ................................................................ 8,609 8,971 14,452
------------ ------------ ------------
Total Deferred Credits and Other Liabilities ................. 229,828 225,279 306,729
------------ ------------ ------------

Accumulated Deferred Income Tax .............................................. 120,518 115,700 104,977
------------ ------------ ------------

Total Capitalization and Liabilities ......................... $ 1,046,332 $ 1,029,442 $ 1,072,692
============ ============ ============


See Notes to Consolidated Financial Statements


-9-


CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)



For the 3 Months Ended
March 31,
2005 2004
------------ ------------
Operating Activities: (Thousands of Dollars)

Net Income ..................................................................... $ 14,990 $ 16,488

Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization ........................................ 7,502 7,064
Deferred income taxes - net .......................................... 213 2,881
Provision for uncollectibles ......................................... 916 800
Accrued/deferred pension costs ....................................... (4,153) (4,092)
Amortization of fossil plant incentive ............................... -- (2,472)

Changes in operating assets and liabilities - net:
Accounts receivable, unbilled revenues and other receivables ......... (19,982) (8,754)
Fuel, materials and supplies ......................................... 6,413 5,513
Special deposits and prepayments ..................................... 215 (351)
Accounts payable ..................................................... (3,725) (428)
Accrued taxes and interest ........................................... 13,112 12,620
Deferred natural gas and electric costs .............................. 5,210 7,887
Customer benefit fund ................................................ (1,350) (8,064)
Proceeds from sales of emissions allowances .......................... -- 4,030
Other - net .......................................................... (859) 193
------------ ------------

Net Cash Provided by Operating Activities .................................. 18,502 33,315
------------ ------------

Investing Activities:

Additions to plant ......................................................... (12,346) (14,578)
Other - net ................................................................ (548) (629)
------------ ------------

Net Cash Used in Investing Activities ...................................... (12,894) (15,207)
------------ ------------

Financing Activities:

Proceeds from issuance of long-term debt ................................... -- 7,000
Redemption of cumulative preferred stock ................................... (3) --
Net repayments of short-term debt .......................................... (2,000) (16,000)
Dividends paid on cumulative preferred stock ............................... (242) (242)
Dividends paid to parent - Energy Group .................................... (8,500) (8,500)
Debt issuance costs ........................................................ -- (137)
------------ ------------

Net Cash Used In Financing Activities ...................................... (10,745) (17,879)
------------ ------------

Net Change in Cash and Cash Equivalents ............................................ (5,137) 229

Cash and Cash Equivalents - Beginning of Year ...................................... 8,227 12,720
------------ ------------

Cash and Cash Equivalents - End of Period .......................................... $ 3,090 $ 12,949
============ ============

Supplemental Disclosure of Cash Flow Information

Interest paid .............................................................. $ 5,493 $ 4,336

Federal and State income tax paid .......................................... -- --


As authorized in the 2004 Joint Proposal dated June 14, 2004, $3 million of
deferred electric pension and OPEB costs, including carrying charges, were
offset against the Customer Benefit Fund with no impact to cash flow for the
three months ended March 31, 2005.

See Notes to Consolidated Financial Statements


-10-


CH ENERGY GROUP, INC.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Notes to Consolidated Financial Statements (Unaudited)

NOTE 1 - GENERAL

Basis of Presentation

This Quarterly Report on Form 10-Q is a combined report of CH Energy
Group, Inc. ("Energy Group") and its regulated electric and natural gas
subsidiary, Central Hudson Gas & Electric Corporation ("Central Hudson"). The
Notes to the Consolidated Financial Statements apply to both Energy Group and
Central Hudson. Energy Group's Consolidated Financial Statements include the
accounts of Energy Group and its wholly owned subsidiaries, which include
Central Hudson and Energy Group's non-utility subsidiary, Central Hudson
Enterprises Corporation ("CHEC" and, together with its subsidiaries, the
"competitive business subsidiaries").

Unaudited Consolidated Financial Statements

The accompanying Consolidated Financial Statements of Energy Group and
Central Hudson are unaudited but, in the opinion of Management, reflect
adjustments (which include normal recurring adjustments) necessary for a fair
statement of the results for the interim periods presented. These condensed,
unaudited, quarterly Consolidated Financial Statements do not contain the detail
or footnote disclosures concerning accounting policies and other matters which
would be included in annual Consolidated Financial Statements and, accordingly,
should be read in conjunction with the audited Consolidated Financial Statements
(including the Notes thereto) included in the combined Energy Group/Central
Hudson Annual Report on Form 10-K for the year ended December 31, 2004 (the
"Corporations' 10-K Annual Report").

Energy Group and Central Hudson's balance sheets for the three months
ended March 31, 2004, are not required to be included in this Quarterly Report
on Form 10-Q; however, these balance sheets are included for supplemental
analysis purposes.

Central Hudson's and CHEC's operations are seasonal in nature and weather-
sensitive and, as a result, financial results for interim periods are not
necessarily indicative of trends for a twelve-month period.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

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


11


Accounting for Derivative Instruments and Hedging Activities

Reference is made to the caption "Accounting for Derivative Instruments
and Hedging Activities" of Note 1 - "Summary of Significant Accounting Policies"
to the Consolidated Financial Statements of the Corporations' 10-K Annual
Report. At March 31, 2005, the total fair value of open Central Hudson
derivatives, which hedge electric and natural gas commodity purchases, was
$404,000 (net unrealized gain), which compares to a fair value at December 31,
2004, of ($907,000) (net unrealized loss). At March 31, 2005, Central Hudson had
open derivative contracts hedging approximately 1.6% of its projected
electricity requirements for the period May 2005 through October 2005 and 6.8%
of its projected natural gas requirements for the same period. Central Hudson
recorded actual net losses of $720,000 on such derivatives for the three months
ended March 31, 2005. This compares to a net loss of $155,000 for the same
period in 2004. These realized losses, in addition to unrealized losses, which
increase actual energy costs, were deferred for recovery from customers under
Central Hudson's electric and natural gas energy cost adjustment clauses as
authorized by the New York State Public Service Commission ("PSC") and in
accordance with the provisions of Statement of Financial Accounting Standard
("SFAS") No. 71, entitled Accounting for the Effects of Certain Types of
Regulation. Central Hudson also entered into weather derivative contracts for
the three months of the heating seasons ended March 31, 2005, and 2004, to hedge
the effect of weather on sales of electricity and natural gas. Payments made to
counter-parties during these three-month periods in 2005 and 2004 were not
material.

The fair values of CHEC's open derivative positions at March 31, 2005, and
at December 31, 2004, were not material. Derivatives outstanding at March 31,
2005, included a number of call options designated as cash flow hedges for fuel
oil purchases through June 2005. At March 31, 2005, CHEC had open derivative
contracts hedging approximately 3.2% of its total projected fuel oil
requirements for the period April 2005 through June 2005. Actual net gains
recorded during the quarters ended March 31, 2005, and 2004, for put and call
options hedging fuel oil purchase transactions were also not material. CHEC also
entered into weather derivative contracts during these periods, which resulted
in no payment to or from counter-parties due to near normal weather conditions.

Goodwill and Other Intangible Assets

Reference is made to Note 5 - "Goodwill and Other Intangible Assets" to
the Consolidated Financial Statements of the Corporations' 10-K Annual Report.

Intangible assets include separate, identifiable, intangible assets such
as customer lists and covenants not to compete. Intangible assets with finite
lives are amortized over their useful lives. The estimated useful life for
customer lists is 15 years, which is believed to be appropriate in view of
currently experienced 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 used, annual amortization expense


12


would increase by approximately $1.3 million. The useful life for a covenant not
to compete is based on the expiration date of the covenant. Intangible assets
with indefinite useful lives and goodwill are no longer amortized, but instead
are periodically reviewed for impairment. Substantially all of CHEC's intangible
assets are the result of business combinations. Goodwill balances are retested
for impairment on an annual basis in the fourth quarter of each year.

The components of amortizable intangible assets of Energy Group are
summarized as follows (thousands of dollars):



- ---------------------------------------------------------------------------------------------------------
March 31, 2005 December 31, 2004
- ---------------------------------------------------------------------------------------------------------
Gross Carrying Accumulated Gross Carrying Accumulated
Amount Amortization Amount Amortization
- ---------------------------------------------------------------------------------------------------------

Customer Lists $ 38,371 $ 10,811 $ 38,371 $ 10,170
- ---------------------------------------------------------------------------------------------------------
Covenants Not to Compete 1,439 892 1,439 860
- ---------------------------------------------------------------------------------------------------------
Total Amortizable
Intangibles $ 39,810 $ 11,703 $ 39,810 $ 11,030
- ---------------------------------------------------------------------------------------------------------


Amortization expense was $672,000 and $684,000 for the three months ended
March 31, 2005, and 2004, respectively. The estimated annual amortization
expense for each of the next five years, assuming no new acquisitions, is
approximately $2.7 million.

The carrying amount for goodwill not subject to amortization was $50.5
million as of both March 31, 2005, and December 31, 2004.

Depreciation and Amortization

Reference is made to the caption "Depreciation and Amortization" of Note 1
- - "Summary of Significant Accounting Policies" to the Consolidated Financial
Statements of the Corporations' 10-K Annual Report. 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 value 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 depreciation rates are approved by the PSC.

Financial Accounting Standards Board ("FASB") SFAS No. 143, entitled
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 71, Central Hudson continues to
accrue for the future cost of removal for its rate-regulated natural gas and
electric utility assets. In connection with the adoption of


13


SFAS 143, Central Hudson has classified $89.6 million and $88.2 million of net
cost of removal as regulatory liabilities as of March 31, 2005, and December 31,
2004, respectively.

For financial statement purposes, the competitive business subsidiaries'
depreciation provisions are computed on the straight-line method using
depreciation rates based on the estimated useful lives of 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.

Accumulated depreciation for the competitive business subsidiaries was
$12.5 million as of March 31, 2005, and $11.7 million as of December 31, 2004.

Amortization of intangibles (other than goodwill) is computed on the
straight-line method over an asset's expected useful life. See the caption
"Goodwill and Other Intangible Assets" of this Note 2 for further discussion.

Earnings Per Share

In the calculation of earnings per share (basic and diluted), earnings for
Energy Group reflect the inclusion of preferred stock dividends of Central
Hudson. The average dilutive effect of Energy Group's stock options and
performance shares was 8,191 shares and 12,636 shares for the quarters ended
March 31, 2005, and 2004, respectively. Certain stock options are excluded from
the calculation of diluted earnings per share because the exercise prices of
those options were greater than the average market price per share of Common
Stock for each of the years presented. The number of shares of Common Stock
represented by the options excluded from the above calculation was 36,900 shares
each quarter for 2005 and 2004, respectively. For additional information
regarding stock options and performance shares, see Note 5 - "Equity-Based
Compensation Incentive Plans."

Equity-Based Compensation

Effective January 1, 2003, Energy Group adopted the fair value recognition
provisions of FASB 123, utilizing the modified prospective methods under the
provisions of SFAS 148, entitled Accounting for Stock-Based Compensation -
Transition and Disclosure. Compensation cost recorded in the first quarters of
2005 and of 2004 was not material. At March 31, 2005, Energy Group had an
equity-based employee compensation plan described more fully in Note 5 -
"Equity-Based Compensation Incentive Plans."


14


FIN 46R - Consolidation of Variable Interest Entities

Reference is made to the subcaption "FIN 46 - Consolidation of Variable
Interest Entities" under the caption "New Accounting Standards and Other FASB
Projects - Standards Implemented" of Note 1 - "Summary of Significant Accounting
Policies" to the Consolidated Financial Statements of the Corporations' 10-K
Annual Report. Energy Group and its subsidiaries do not have any interests in
special purpose entities and are not affiliated with any variable interest
entities that currently require consolidation under the provisions of FIN 46R.

Reclassification

Certain amounts in the 2004 Consolidated Financial Statements have been
reclassified to conform to the 2005 presentation.

NOTE 3 - SEGMENTS AND RELATED INFORMATION

Reference is made to Note 12 - "Segments and Related Information" to the
Consolidated Financial Statements of the Corporations' 10-K Annual Report.

Energy Group's reportable operating segments are the regulated electric
and natural gas operations of Central Hudson and the unregulated fuel oil
distribution activities of CHEC. The "Unregulated - Other" segment is comprised
of the investment and business development activities of Energy Group and the
energy efficiency and investment activities of CHEC. The fuel oil distribution
segment currently operates in the Northeast and Mid-Atlantic regions of the
United States.

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

Central Hudson's and CHEC's operations are seasonal in nature and
weather-sensitive and, as a result, financial results for interim periods are
not necessarily indicative of trends for a twelve-month period.


15


CH Energy Group, Inc. Segment Disclosure



- ------------------------------------------------------------------------------------------------------------------------------------
Quarter Ended March 31, 2005
---------------------------------------------------------------------------------------------------
(In Thousands, Except
Earnings Per Share)
- ------------------------------------------------------------------------------------------------------------------------------------
Regulated Unregulated Eliminations Total
- ------------------------------------------------------------------------------------------------------------------------------------
Natural Fuel Oil
Electric Gas Distribution Other
- ------------------------------------------------------------------------------------------------------------------------------------

Revenues from
external customers $ 126,658 $ 63,430 $ 95,756 $ 245 $ -- $ 286,089
- ------------------------------------------------------------------------------------------------------------------------------------
Intersegment revenues 3 167 -- -- (170) --
Total revenues $ 126,661 $ 63,597 $ 95,756 $ 245 $ (170) $ 286,089
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings before income
taxes $ 12,839 $ 12,239 $ 7,770 $ 1,263 $ -- $ 34,111
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 7,494 $ 7,254 $ 4,663 $ 928 $ -- $ 20,339
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share -
Diluted $ 0.47 $ 0.46 $ 0.30 $ 0.05(1) $ -- $ 1.28
- ------------------------------------------------------------------------------------------------------------------------------------
Segment Assets at
March 31, 2005 $ 781,049 $ 265,283 $ 149,049 $ 116,230 $ (791) $1,310,820
- ------------------------------------------------------------------------------------------------------------------------------------


(1) The amount attributable to CHEC's other business activities was
$0.01; the balance of $0.04 was related to Energy Group's investment
and business development activities.



- ------------------------------------------------------------------------------------------------------------------------------------
Quarter Ended March 31, 2004
---------------------------------------------------------------------------------------------------
(In Thousands, Except
Earnings Per Share)
- ------------------------------------------------------------------------------------------------------------------------------------
Regulated Unregulated Eliminations Total
- ------------------------------------------------------------------------------------------------------------------------------------
Natural Fuel Oil
Electric Gas Distribution Other
- ------------------------------------------------------------------------------------------------------------------------------------

Revenues from
external customers $ 119,269 $ 58,704 $ 84,782 $ 238 $ -- $ 262,993
- ------------------------------------------------------------------------------------------------------------------------------------
Intersegment revenues 3 150 -- -- (153) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues $ 119,272 $ 58,854 $ 84,782 $ 238 $ (153) $ 262,993
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings before income
taxes $ 16,131 $ 11,969 $ 10,116 $ 1,046 $ -- $ 39,262
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 9,364 $ 6,882 $ 6,070 $ 673 $ -- $ 22,989
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share -
Diluted $ 0.59 $ 0.44 $ 0.38 $ 0.04(1) $ -- $ 1.45
- ------------------------------------------------------------------------------------------------------------------------------------
Segment Assets at
March 31, 2004 $ 827,688 $ 245,004 $ 143,574 $ 121,187 $ (460) $1,336,993
- ------------------------------------------------------------------------------------------------------------------------------------


(1) The amount attributable to CHEC's other business activities was
$0.01; the balance of $0.03 was related to Energy Group's investment
activities.


16


Central Hudson Gas & Electric Corporation Segment Disclosure



- ----------------------------------------------------------------------------------------------------------------------
(In Thousands) Quarter Ended March 31, 2005
- ----------------------------------------------------------------------------------------------------------------------
Natural
Electric Gas Eliminations Total
- ----------------------------------------------------------------------------------------------------------------------

Revenues from external customers $ 126,658 $ 63,430 $ -- $ 190,088
- ----------------------------------------------------------------------------------------------------------------------
Intersegment revenues 3 167 (170) --
- ----------------------------------------------------------------------------------------------------------------------
Total Revenues $ 126,661 $ 63,597 $ (170) $ 190,088
- ----------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 13,021 $ 12,299 $ -- $ 25,320
- ----------------------------------------------------------------------------------------------------------------------
Net Income $ 7,676 $ 7,314 $ -- $ 14,990
- ----------------------------------------------------------------------------------------------------------------------
Income Available for Common Stock $ 7,494 $ 7,254 $ -- $ 14,748
- ----------------------------------------------------------------------------------------------------------------------
Segment Assets at March 31, 2005 $ 781,049 $ 265,283 $ -- $1,046,332
- ----------------------------------------------------------------------------------------------------------------------


- ----------------------------------------------------------------------------------------------------------------------
(In Thousands) Quarter Ended March 31, 2004
- ----------------------------------------------------------------------------------------------------------------------
Natural
Electric Gas Eliminations Total
- ----------------------------------------------------------------------------------------------------------------------

Revenues from external customers $ 119,269 $ 58,704 $ -- $ 177,973
- ----------------------------------------------------------------------------------------------------------------------
Intersegment revenues 3 150 (153) --
- ----------------------------------------------------------------------------------------------------------------------
Total Revenues $ 119,272 $ 58,854 $ (153) $ 177,973
- ----------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 16,313 $ 12,029 $ -- $ 28,342
- ----------------------------------------------------------------------------------------------------------------------
Net Income $ 9,546 $ 6,942 $ -- $ 16,488
- ----------------------------------------------------------------------------------------------------------------------
Income Available for Common Stock $ 9,364 $ 6,882 $ -- $ 16,246
- ----------------------------------------------------------------------------------------------------------------------
Segment Assets at March 31, 2004 $ 827,688 $ 245,004 $ -- $1,072,692
- ----------------------------------------------------------------------------------------------------------------------


NOTE 4 - NEW ACCOUNTING STANDARDS AND OTHER FASB PROJECTS

Reference is made to the captions "New Accounting Standards and Other FASB
Projects" of Note 1 - "Summary of Significant Accounting Policies" to the
Consolidated Financial Statements of the Corporations' 10-K Annual Report.

FIN 47 - Accounting for Conditional Asset Retirement Obligations

In March 2005, the FASB issued Interpretation No. 47, entitled Accounting
for Conditional Asset Retirement Obligations ("FIN 47"), which clarifies that
the term "conditional asset retirement obligation" as used in SFAS 143 refers to
a legal obligation to perform an asset retirement activity when the timing
and/or method of settlement are conditional on a future event that may or may
not be in the control of the entity. This legal obligation is absolute, despite
the uncertainty regarding the timing and/or method of settlement. In addition,
the fair value of a liability for the conditional asset retirement obligation
should be recognized when incurred: generally upon acquisition, construction, or
development and/or through normal operation of the asset. Diverse accounting
practices have developed with respect to the timing of liability recognition for
these legal obligations based on whether the liability's fair value can be
reasonably estimated. FIN 47 also clarifies when an entity would have sufficient
information to reasonably estimate the fair value of an asset retirement
obligation. FIN 47 is effective


17


for years ending after December 31, 2005. The implementation of FIN 47 is not
expected to have any material impact on the financial condition, results of
operations, or cash flows of Energy Group or its subsidiaries.

Equity-Based Compensation

In March 2005, the Securities and Exchange Commission ("SEC") approved a
new rule that amended the compliance dates for public companies implementing
FASB Statement No. 123(R), entitled Accounting for Stock-Based Compensation
("SFAS 123(R)"). For public companies, the new ruling makes the effective date
beginning the first annual, rather than interim, period beginning after June 15,
2005, giving an additional six months to develop an implementation plan for most
companies. In addition, the delayed effective date will alleviate the potential
problem of comparability between quarterly reports that may have arisen. Until
the time of the new effective date for SFAS 123(R), the provisions of SFAS 123
will remain in effect.

For Energy Group, the effective date for the new accounting and disclosure
requirements under SFAS 123(R) is January 1, 2006.

The SEC also released Staff Accounting Bulletin No. 107, which provides
guidance related to share-based payment transactions with non-employees, the
transition from non-public to public entity status, valuation methods, the
accounting for certain redeemable financial instruments issued under share-based
payment arrangements, the classification of compensation expense, non-GAAP
financial measures, first-time adoption of SFAS 123(R) in an interim period,
capitalization of compensation cost related to share-based payment arrangements,
the accounting for income tax effects of share-based payment arrangements upon
adoption of SFAS 123(R), and disclosures in Management's Discussion and Analysis
of Financial Condition and Results of Operations subsequent to adoption of SFAS
123(R).

Energy Group adopted the fair value method of accounting for equity-based
compensation under the provisions of SFAS 123 in the first quarter of 2003. It
is not anticipated that the adoption of SFAS 123(R) will significantly impact
the financial condition, results of operations, or cash flows of Energy Group or
its subsidiaries.

NOTE 5 - EQUITY-BASED COMPENSATION INCENTIVE PLANS

Reference is made to Note 10 - "Equity-Based Compensation Incentive Plans"
to the Consolidated Financial Statements of the Corporations' 10-K Annual Report
and to the description of Energy Group's Long-Term Performance-Based Incentive
Plan ("Plan") described therein.

Performance shares were granted, in aggregate, to executives covered under
the Plan in the amount of 14,800 shares, 29,300 shares, and 23,000 shares on
January 1, 2003, January 1, 2004, and January 1, 2005, respectively. As of March
31, 2005, the number of these performance shares that remain outstanding are as
follows: 9,700 from the January 1, 2003, grant; 19,800 from the January 1, 2004,
grant; and


18


23,000 from the January 1, 2005, grant. The ultimate number of shares awarded is
based on metrics established by Energy Group's Board of Directors at the
beginning of the award cycle. Compensation expense is recorded as performance
shares are earned over the three-year life of the relevant performance share
grant prior to its award. The amounts recorded for the quarter-ended March 31,
2005, or the quarter ended March 31, 2004, were not material.

A summary of the status of stock options awarded to executives and
non-employee Directors of Energy Group and its subsidiaries under the Plan as of
March 31, 2005, is as follows:

Weighted Weighted
Average Average
Exercise Remaining
Shares Price Contract Life
------------------------------------------
Outstanding at 12/31/04 91,400 $ 45.15 6.75
Granted -- -- --
Exercised (9,220) 43.64
Forfeited -- --
----------- ---------- ----------
Outstanding at 3/31/05 82,180 $ 45.32 6.58 years
=========== ========== ==========

Total Shares Outstanding 15,762,000
Potential Dilution 0.5%

A total of 9,220 non-qualified stock options were exercised during the
quarter ended March 31, 2005. These options had exercise prices of $31.94 and
$44.06.

In addition, effective January 1, 2003, Energy Group adopted the fair
value method of recording stock-based compensation utilizing the "modified
prospective" approach, whereby existing options are expensed prospectively over
their respective vesting periods. Under the fair value method, employee stock
option grants and other stock-based compensation are expensed over their
respective vesting periods based on the fair value at the date the stock-based
compensation is granted. Compensation expense recorded for the quarters ended
March 31, 2005, and 2004, resulting from the implementation of fair value
accounting for stock options was not material.


19


The following table summarizes information concerning outstanding and
exercisable stock options at March 31, 2005, by exercise price:

Weighted Average
Remaining
Number of Options Contractual Number of Options
Exercise Price Outstanding Life in Years Exercisable
-------------- ----------- ------------- -----------
$31.94 5,320 4.75 5,320
$44.06 39,960 5.75 37,992
$48.62 36,900 7.75 24,480
------ ---- ------
82,180 6.58 67,792

NOTE 6 - INVENTORY

Inventory for Central Hudson is valued at average cost. Inventory for CHEC is
valued using the "first-in, first-out" (or "FIFO") inventory method.

-----------------------------------------------------------------------------
Energy Group
-----------------------------------------------------------------------------
March 31, December 31,
2005 2004
-----------------------------------------------------------------------------
(In Thousands)
-----------------------------------------------------------------------------

Natural Gas $ 4,261 $ 10,856
-----------------------------------------------------------------------------

Petroleum Products and Propane 3,222 3,389
-----------------------------------------------------------------------------

Materials and Supplies 7,455 7,214
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
Total $ 14,938 $ 21,459
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
Central Hudson
-----------------------------------------------------------------------------
March 31, December 31,
2005 2004
-----------------------------------------------------------------------------
(In Thousands)
-----------------------------------------------------------------------------

Natural Gas $ 4,261 $ 10,856
-----------------------------------------------------------------------------

Petroleum Products and Propane 632 613
-----------------------------------------------------------------------------

Materials and Supplies 5,901 5,738
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
Total $ 10,794 $ 17,207
-----------------------------------------------------------------------------


20


NOTE 7 - POST-EMPLOYMENT BENEFITS

The following are the components of Central Hudson's net periodic benefits
costs for its Pension and Other Post-Employment Benefits (the latter, "OPEB")
plans for the quarters ended March 31, 2005, and 2004. The OPEB amounts for both
years reflect the effect of the Medicare Act under the FASB issued provisions of
FSP 106-2, entitled Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of 2003.



Quarter Ended March 31,
Pension Benefits OPEB
---------------------- ----------------------
2005 2004 2005 2004
(In Thousands) (In Thousands)
---------------------- ----------------------

Service cost $ 1,837 $ 1,739 $ 968 $ 829

Interest cost 5,489 5,378 2,395 2,252

Expected return on plan assets (5,808) (5,510) (1,279) (1,296)

Amortization of:
Prior service cost 535 538 (37) (37)
Transitional (asset) or obligation -- -- 642 641

Recognized actuarial (gain) or loss 3,331 2,209 1,669 734
------- ------- ------- -------

Net periodic benefit cost $ 5,384 $ 4,354 $ 4,358 $ 3,123
======= ======= ======= =======


Decisions to fund the pension plan are made annually and are primarily
affected by the discount rate used to determine benefit obligations and the
projection of pension plan assets. Contributions would be made to eliminate any
Pension Benefit Guaranty Corporation variable rate premiums or to maintain a 90%
gateway current liability funded level. Central Hudson does not presently
anticipate a contribution to the pension plan in 2005.

Employer contributions made during the quarter ended March 31, 2005, for
OPEB totaled $952,000. The total contribution expected to be made in 2005 will
be determined based on the maximum tax-deductible contribution, which is
expected to approximate $6 million.

For additional information related to pensions and OPEB, please see Note 9
- - "Post-Employment Benefits" to the Consolidated Financial Statements of the
Corporations' 10-K Annual Report.


21


NOTE 8 - COMMITMENTS AND CONTINGENCIES

Energy Group and Central Hudson face a number of contingencies which arise
during the normal course of business and which have been discussed in Note 11 -
"Commitments and Contingencies" to the Consolidated Financial Statements of the
Corporations' 10-K Annual Report, and to which reference is made.

Asbestos Litigation

For a discussion of lawsuits against Central Hudson involving asbestos,
see Note 11 - "Commitments and Contingencies" under the caption "Asbestos
Litigation" in the Consolidated Financial Statements of the Corporations' 10-K
Annual Report.

As of April 15, 2005, of the 3,219 cases brought against Central Hudson,
1,524 remain pending. Of the 1,695 cases no longer pending against Central
Hudson, 1,551 have been dismissed or discontinued without payment by Central
Hudson, and Central Hudson has settled 144 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 cost which may be incurred in connection
with the remaining lawsuits will not have a material adverse effect on either of
Energy Group's or Central Hudson's financial position or results of operations.

Environmental Matters

For a discussion of Central Hudson's environmental matters see Note 11 -
"Commitments and Contingencies" to the Consolidated Financial Statements under
the caption "Environmental Matters" of the Corporations' 10-K Annual Report.

Central Hudson:

Former Manufactured Gas Plant Facilities

City of Newburgh: Reference is made to the discussion under the subcaption
"Central Hudson - Former Manufactured Gas Plant Facilities - City of Newburgh"
in Note 11 to the Consolidated Financial Statements of the Corporations' 10-K
Annual Report. On February 24, 2005, the New York State Department of
Environmental Control ("DEC") issued a Proposed Remedial Action Plan ("PRAP")
for public review and comment. The PRAP proposes a $22.9 million remediation
plan, which is similar in scope to one previously submitted by Central Hudson,
although it also includes a contingency fund and a projected expense for
continued maintenance and monitoring at the site. The PRAP was the subject of a
public meeting in the City of Newburgh on March 17, 2005. A public comment
period remained open until April 30, 2005. After the public comment period ends,
the DEC will issue a Record of Decision ("ROD") that


22


will specify a remediation plan for Central Hudson's implementation. It is
anticipated that a ROD will be issued by the DEC in the second quarter of 2005.
Neither Energy Group nor Central Hudson can make any prediction as to the full
financial effect of this matter on either Energy Group or Central Hudson,
including the extent, if any, of insurance reimbursement and including
implementation of environmental cleanup under the Order on Consent. However,
Central Hudson has put its insurers on notice of this matter and intends to seek
reimbursement from its insurers for the cost of any liability. Two of the
insurers have denied coverage. Subject to the provisions of a PSC Order issued
on June 3, 1997, the costs of remediation are being deferred in anticipation of
future rate recovery.

Other MGP Sites: Reference is made to the discussion under the subcaption
"Central Hudson - Former Manufactured Gas Plant Facilities - Other MGP Sites" in
Note 11 to the Consolidated Financial Statements of the Corporations' 10-K
Annual Report. Central Hudson had requested that the Voluntary Cleanup Agreement
covering the North Water Street site be converted into a Brownfield Cleanup
Agreement under New York State's new Brownfield Cleanup Program. The execution
of the Brownfield Cleanup Agreement with the DEC, which was expected to occur in
the first quarter of 2005, is now expected to occur in the second quarter of
2005. Central Hudson believes that if a Brownfield Cleanup Agreement is
executed, it is unlikely to significantly change the amount or cost of any
potential remediation of the North Water Street site, but will permit the
recovery by Central Hudson of some of the remediation costs through tax credits.

Orange County Landfill

Reference is made to the discussion under the subcaption "Orange County
Landfill" in Note 11 to the Consolidated Financial Statements of the
Corporations' 10-K Annual Report. The Tolling Agreement dated September 7, 2001,
whereby Central Hudson agreed to toll the applicable statute of limitations by
certain state agencies against Central Hudson for certain alleged causes of
action, was extended to November 30, 2005. Neither Energy Group nor Central
Hudson can predict the outcome of this investigation at this time.

CHEC:

Reference is made to the discussion under the caption "CHEC" in Note 11 to
the Consolidated Financial Statements of the Corporations' 10-K Annual Report.
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. Griffith anticipates that less than
$50,000 will be expended in 2005 on oil site remediation efforts.


23


Other CHEC Matter

Reference is made to the discussion under subcaption "Other CHEC Matter"
in Note 11 - "Commitments and Contingencies" to the Consolidated Financial
Statements of the Corporations' 10-K Annual Report. In September 2004, the State
of Maryland issued a Notice of Assessment for Motor Fuel Tax to Griffith in the
amount of $2.5 million for the period from 2001 to 2003. As of December 2004,
Griffith had reserved $500,000 for this assessment. Griffith has since paid
$528,000 to the State of Maryland and settled the claim in full.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

EXECUTIVE SUMMARY

Earnings per share (basic) for the first quarter of 2005 for Energy Group
were $1.29 per share versus the $1.46 per share earned during the first quarter
of 2004, a decline of $0.17. The primary drivers of the decrease were the
anticipated expiration of a multi-year amortization of gains from the sale of
Central Hudson's major generating assets, increased expenses for electric
service restoration following storms, and lower delivery volumes within its fuel
oil delivery business units.

First-quarter results were impacted by increased expenses from restoring
service to Central Hudson's electric customers following several winter storms,
as well as reduced delivery volumes experienced by the competitive business
subsidiaries due to customer attrition and conservation associated with record
oil prices. However, on the positive side, Central Hudson saw continued strong
trend growth in its regulated electric and natural gas utility sales. Operating
expenses, other than those associated with storm recovery, were well controlled.

Energy Group believes it will still achieve its targeted, full-year
earnings projections, despite the events of the first quarter. Earnings for the
fuel delivery segment could fall slightly below the target range, but it is
expected that projected earnings from both Central Hudson and parent Energy
Group segments will be strong enough to maintain Energy Group's consolidated
earnings for 2005 within the target range of $2.55 to $2.75 per share.

Regulated Electric and Gas Business

Central Hudson's contribution to first quarter earnings was $0.94 per
share, a decrease of $0.09 from the $1.03 per share posted during the same
period of 2004. Electric and natural gas revenues increased by $12.1 million
between the first quarters of 2004 and 2005, of which $9.4 million related to
the recovery of the costs of electricity and natural gas from customers. The
number of electric and natural gas customers grew by nearly 2% during the
period. Total utility expenses, however, grew by $11.1 million to $172 million
compared to the first quarter of 2004, due largely to price


24


increases for natural gas and electricity purchased on behalf of customers and
service restoration following storms. First-quarter earnings in 2004 also
contained $0.09 per share from the last installment of an $18-million (net of
tax) incentive associated with the sale of Central Hudson's major generating
assets and $0.04 per share from a regulatory revenue restoration mechanism that
was not in place during the first quarter 2005.

Unregulated Fuel Distribution Businesses

The fuel oil distribution businesses of CHEC contributed $0.30 per share
to the quarterly results, down $0.09 from the $0.39 per share posted in the
first quarter of 2004. The decline in earnings resulted largely from apparent
price-induced conservation and fuel switching by customers, as well as customer
attrition, in an environment of high oil prices.

Unregulated - Other Businesses

The holding company, Energy Group, and CHEC partnership investments
contributed $0.05 per share to earnings during the first quarter, which was
$0.01 above the same period for 2004. Increases in interest rates for
investments were somewhat offset by expenses associated with the cost of
developing new business ventures.

CAPITAL RESOURCES AND LIQUIDITY

The growth of Energy Group's retained earnings in the first three months
of 2005 contributed to the increase in the book value per share of its Common
Stock from $31.31 at December 31, 2004, to $32.07 at March 31, 2005; the common
equity ratio increased from 58.3% at December 31, 2004, to 59% at March 31,
2005.

Both Energy Group's and Central Hudson's liquidity reflect cash flows from
operating, investing, and financing activities, as shown on their respective
Consolidated Statements of Cash Flows and as discussed below.

The principal factors affecting Energy Group's liquidity are the dividends
it pays to its shareholders and, as it relates to both Central Hudson and CHEC,
cash flows generated from operations and capital expenditures. Central Hudson's
liquidity is affected by dividends paid to Energy Group and also its debt
obligations.

Central Hudson's cash flows from operating activities reflect principally
its energy sales and deliveries and costs of operations. The volume of energy
sales and deliveries is dependent primarily on factors external to Central
Hudson, such as weather and economic conditions. Prices at which Central Hudson
provides energy to its customers are determined in accordance with rate plans
approved by the PSC. In general, changes in the cost of purchased electricity,
fuel, and natural gas may affect the timing of cash flows but not net income
because these costs are fully recovered through its electric and natural gas
cost adjustment mechanisms.


25


Central Hudson's cash flows are also affected by other regulatory deferral
mechanisms whereby cash may be expended in one period and recovery of the cash
from customers may not occur until a subsequent period.

Changes in Energy Group's cash and temporary cash investments resulting
from operating, investing, and financing activities for the quarters ended March
31, 2005, and March 31, 2004, are summarized in the following chart.



- ------------------------------------------------------------------------------------
First Quarter First Quarter Variance
Energy Group 2005 2004 2005 vs. 2004
- ------------------------------------------------------------------------------------
(Millions of Dollars)
- ------------------------------------------------------------------------------------

Operating Activities $ 15.0 $ 34.7 $ (19.7)
- ------------------------------------------------------------------------------------
Investing Activities (13.5) (16.2) 2.7
- ------------------------------------------------------------------------------------
Financing Activities (10.5) (17.7) 7.2
- ------------------------------------------------------------------------------------
Net change for the period (9.0) 0.8 (9.8)
-------- -------- --------
- ------------------------------------------------------------------------------------
Balance at beginning of period 119.1 125.8 (6.7)
-------- -------- --------
- ------------------------------------------------------------------------------------
Balance at end of period $ 110.1 $ 126.6 $ (16.5)
======== ======== ========
- ------------------------------------------------------------------------------------


Energy Group's net cash flows provided by operating activities in the
first quarter of 2005 were $19.7 million lower as compared to the first quarter
of 2004. Cash flow decreased primarily because of a large increase in customer
accounts receivable and the absence of proceeds from the sale of emission
allowances in 2004 by Central Hudson. The large increase in customer accounts
receivable is a reflection of higher amounts billed to customers by Central
Hudson and by CHEC's fuel oil distribution companies for purchased electricity,
natural gas, and petroleum products, due largely to an increase in the wholesale
cost of each as compared to the same period in 2004. Increased sales for Central
Hudson also contributed to this increase in accounts receivable, reflecting
customer growth for residential and commercial customers and the absence of the
2001 amended Utility Service Tax refund that Central Hudson received in 2004.
Slightly offsetting these decreases in cash flow was a reduction in costs
related to various programs funded by the Customer Benefit Fund, including
customer refunds for electric customers and pension and OPEB offsets.

As authorized in the 2004 Joint Proposal approved by the PSC, deferred
electric pension and OPEB costs, including carrying charges, were offset against
the Customer Benefit Fund with no impact to cash flow. The total amount offset
in the first quarter of 2005 was $3 million. Central Hudson will continue to use
the Customer Benefit Fund to offset the cost of various programs, subject to
certain limitations. For further details see Note 2 - "Regulatory Matters" under
the caption "Rate Proceedings - Electric and Natural Gas" in the Consolidated
Financial Statements of the Corporations' 10-K Annual Report.

Net cash flows related to investing activities were $2.7 million higher in
the first quarter of 2005 as compared to the first quarter of 2004, as a result
of decreased expenditures related to property, plant and equipment.


26


Net cash flows related to financing activities were $7.2 million higher in
the first quarter of 2005 as compared to the first quarter of 2004. The
resulting increase in cash flows was primarily driven by lower net repayments of
short-term debt by Central Hudson in the first quarter of 2005 as compared to
the same quarter of 2004. There were no issuances of medium-term notes in the
first quarter of 2005 by Central Hudson and in the first quarter of 2004 there
were issuances of $7 million.

Energy Group has a $75 million revolving credit facility with several
commercial banks. The credit facility was amended on April 27, 2005, extending
the termination date until April 27, 2010.

At March 31, 2005, Energy Group had no current maturities of long-term
debt and $10 million of short-term debt outstanding. Cash and cash equivalents
for Energy Group were $110.1 million at March 31, 2005.

Changes in Central Hudson's cash and temporary cash investments resulting
from operating, investing, and financing activities for the quarters ended March
31, 2005, and March 31, 2004, are summarized in the following chart.



- ----------------------------------------------------------------------------------------
First Quarter First Quarter Variance
Central Hudson 2005 2004 2005 vs. 2004
- ----------------------------------------------------------------------------------------
(Millions of Dollars)
- ----------------------------------------------------------------------------------------

Operating Activities $ 18.5 $ 33.3 $ (14.8)
- ----------------------------------------------------------------------------------------
Investing Activities (12.9) (15.2) 2.3
- ----------------------------------------------------------------------------------------
Financing Activities (10.7) (17.9) 7.2
- ----------------------------------------------------------------------------------------
Net change for the period (5.1) 0.2 (5.3)
-------- -------- --------
- ----------------------------------------------------------------------------------------
Balance at beginning of period 8.2 12.7 (4.5)
-------- -------- --------
- ----------------------------------------------------------------------------------------
Balance at end of period $ 3.1 $ 12.9 $ (9.8)
======== ======== ========
- ----------------------------------------------------------------------------------------


Central Hudson's net cash flows provided by operating activities in the
first quarter of 2005 were $14.8 million lower as compared to the first quarter
of 2004, for the reasons indicated in the discussion of Energy Group's net cash
flows provided by operating activities.

Net cash flows related to investing activities were $2.3 million higher in
the first quarter of 2005 as compared to the first quarter of 2004 as a result
of decreased expenditures related to property, plant and equipment.

Net cash flows related to financing activities were $7.2 million higher in
the first quarter of 2005 as compared to the first quarter of 2004. The
resulting increase in cash flows was primarily driven by lower net repayments of
short-term debt in 2005 as compared to the same quarter of 2004. There were no
issuances of medium-term notes in the first quarter of 2005 and in the first
quarter of 2004 there were issuances of $7 million.


27


As of March 31, 2005, Central Hudson had short-term debt outstanding of
$10 million and cash and cash equivalents of $3.1 million. Central Hudson has a
$75 million revolving credit agreement with a group of commercial banks. Central
Hudson also has committed short-term credit facilities totaling $1 million with
a regional bank and certain uncommitted lines of credit with various banks.
These agreements give Central Hudson competitive options to minimize the cost of
its short-term borrowing. Existing PSC authorization limits the amount of
short-term borrowing Central Hudson may have outstanding at any time to $77
million in aggregate.

Central Hudson's current senior unsecured debt ratings/outlook is
A2/stable by Moody's Investors Service and A/stable by both Standard and Poor's
Corporation and by Fitch Ratings.

Each of Energy Group and Central Hudson believes that it will be able to
meet its reasonably likely short-term and long-term cash requirements, assuming
that Central Hudson's current and future rate plans reflect the costs of
service, including a reasonable return on invested capital.

CHEC has a $15 million line of credit with a commercial bank and, as of
March 31, 2005, there was no outstanding balance.

Energy Group and certain of the competitive business subsidiaries have
issued guarantees in conjunction with certain commodity and derivative contracts
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. In addition, Energy Group
agreed to guarantee the post-closing obligations of CH Services under the
agreement related to the sale of CH Resources, which guarantee now applies to
CHEC. Reference is made to Note 1 - "Summary of Significant Accounting Policies"
under the captions "Parental Guarantees" and "Product Warranties" and to Note 11
- - "Commitments and Contingencies" under the caption "CHEC" to the Consolidated
Financial Statements of the Corporations' 10-K Annual Report.

The guarantees described have been issued to counter-parties to assure the
payment, when due, of certain obligations incurred by the Energy Group
subsidiaries in physical and financial transactions related to heating oil,
propane, other petroleum products, weather and commodity hedges, and certain
obligations related to the sale of CH Resources. At March 31, 2005, the
aggregate amount of subsidiary obligations (excluding obligations related to CH
Resources) covered by these guarantees was $6.1 million. Where liabilities exist
under the commodity-related contracts subject to these guarantees, these
liabilities are included in the Energy Group's Consolidated Balance Sheet.
Energy Group's approximate aggregate potential liability for product warranties
at March 31, 2005, has not changed from that reported at December 31, 2004,
which was $504,000.


28


On July 25, 2002, the Board of Directors of 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 three months
ended March 31, 2005, or for the twelve months ended December 31, 2004. Energy
Group intends to set repurchase targets, if any, each year based on
circumstances then prevailing. Repurchases have been suspended while Energy
Group assesses opportunities to redeploy its cash reserves in regulated and
competitive energy-related businesses. Energy Group reserves the right to
modify, suspend, or terminate the Repurchase Program at any time without notice.

EARNINGS PER SHARE

Energy Group's consolidated earnings per share (basic) for the first
quarter of 2005 were $1.29 versus $1.46 for the first quarter of 2004, a
decrease of $0.17 per share.

Earnings for Central Hudson decreased $0.09 per share due to the
following:

o $0.09 per share due to the completion of the amortization of Central
Hudson's share of the gain from the 2001 sale of its interest in
major generating assets. This gain was recorded as deferred income
beginning July 1, 2001, and its amortization was completed in
December 2004.

o $0.05 per share from an increase in operating expenses mostly
related to storm restoration efforts in March 2005.

o $0.04 per share from an increase in property taxes and depreciation
and amortization of utility plant assets.

Partially offsetting these decreases were the following:

o An increase of $0.03 per share from an increase in electric net
operating revenues from sales, net of the cost of purchased
electricity, purchased fuel, and revenue taxes. The increase in
sales was attributable to increased usage by existing industrial
customers and customer growth for residential and commercial sales.

o A favorable impact of $0.03 per share from certain electric and
natural gas regulatory mechanisms, primarily lower shared earnings
for electric and natural gas operations, which were partially offset
by the absence of the amortization of previously deferred electric
and natural gas delivery revenues that ended June 30, 2004. Both
electric and natural gas shared earnings decreased largely due to
lower ratemaking operating income and a change in the sharing
arrangements effective July 1, 2004.


29


o An increase of $0.01 per share from natural gas net operating
revenues from sales, net of the cost of natural gas and revenue
taxes. Sales to residential and commercial customers, largely space
heating sales, increased mostly due to customer growth. The increase
in sales also reflects an increase in usage by existing industrial
customers.

o An increase of $0.02 per share from the net effect of various other
items including a reduction in income taxes partially offset by an
increase in interest charges due to the issuance of long-term debt
in February and November of 2004.

Earnings from CHEC's unregulated fuel oil distribution companies decreased
$0.09 per share for the quarter ended March 31, 2005, as compared to last year
due to a decrease in gross margins (revenues net of fuel and other related
expenses). The reduction resulted from lower volumes related to customer
attrition, price-induced customer conservation and fuel switching, and milder
weather. The reduction in earnings was partially offset by higher margins in
2005 as compared to 2004.

The balance of Energy Group's unregulated activities for the quarter ended
March 31, 2005 contributed an additional $0.01 per share to earnings as compared
to the same period in 2004, due to an increase in investment income from
short-term investments held by Energy Group, the holding company. The increase
in earnings reflects higher investment returns due to higher interest rates.

RESULTS OF OPERATIONS

The following discussion and analyses includes explanations of significant
changes in revenues and expenses between the three-month period ended March 31,
2005, and the three-month period ended March 31, 2004, for Energy Group, Central
Hudson, and CHEC.


30


OPERATING REVENUES

Energy Group's operating revenues increased $23.1 million, or 8.8%, for
the first quarter of 2005 as compared to the same period in 2004. Details of
these revenue changes by electric, natural gas, and unregulated subsidiaries are
as follows:



- -----------------------------------------------------------------------------------------------------
2005/2004 INCREASE (DECREASE)
(Thousands of Dollars) THREE MONTHS ENDED MARCH 31, 2005
- ----------------------------------------------------------------------------------------------------
Unregulated
- -----------------------------------------------------------------------------------------------------
Natural Fuel Oil
Electric Gas Distribution Other Total
- -----------------------------------------------------------------------------------------------------

Customer Sales $ 1,104(a) $ 1,213(b) $ 10,974 $ 7 $ 13,298
- -----------------------------------------------------------------------------------------------------
Sales to Other Utilities 189 54 -- -- 243
- -----------------------------------------------------------------------------------------------------
Energy Cost Adjustment 6,247 3,125 -- -- 9,372
- -----------------------------------------------------------------------------------------------------
Deferred Revenues(c) 129 651 -- -- 780
- -----------------------------------------------------------------------------------------------------
Miscellaneous (280) (317) -- -- (597)
- -----------------------------------------------------------------------------------------------------
Total $ 7,389 $ 4,726 $ 10,974 $ 7 $ 23,096
- -----------------------------------------------------------------------------------------------------


(a) Includes an offsetting restoration of amounts from Central Hudson's
Customer Benefit Fund (described under the captions "Summary of Regulatory
Assets and Liabilities" and "Rate Proceedings - Electric and Natural Gas"
in Note 2 - "Regulatory Matters" to the Consolidated Financial Statements
of the Corporations' 10-K Annual Report) for customer refunds to all
customers and back-out credits for retail access customers.

(b) Includes both firm and interruptible customers.

(c) Includes the restoration of other revenues from Central Hudson's Customer
Benefit Fund for other authorized programs and the restoration of
previously deferred delivery revenues, and the deferral of electric and
natural gas shared earnings in accordance with the provisions of Central
Hudson's current rate agreement with the PSC (described in Note 2 -
"Regulatory Matters" of the Corporations' 10-K Annual Report).

Central Hudson's electric and natural gas operating revenues increased
$12.1 million, or 6.8%, from $178 million in 2004 to $190.1 million in 2005.
Electric revenues increased $7.4 million, or 6.2%, and natural gas revenues
increased by $4.7 million, or 8.1%, due primarily to an increase in electric and
natural gas sales and an increase in amounts collected through Central Hudson's
cost adjustment mechanisms to recover its costs of purchased electricity and
natural gas.

Operating revenues for CHEC's fuel oil distribution operations increased
$11 million, or 13%, from $84.8 million for the quarter ended March 31, 2004, to
$95.8 million for the quarter ended March 31, 2005. The increase in revenues
primarily reflects an increase in the average selling price of petroleum in 2005
in comparison to 2004 due to an increase in wholesale costs. The increase is
partially offset by a reduction in petroleum volumes due to customer attrition,
price-induced customer conservation and fuel switching, and milder weather in
the first quarter of 2005 in comparison to the same period in 2004.


31


DELIVERY OF ELECTRICITY AND NATURAL GAS

Central Hudson's deliveries vary in response to weather conditions.
Electric deliveries peak in the summer, and natural gas deliveries peak in the
winter.

Total kilowatthour deliveries of electricity within Central Hudson's
service territory increased 2% and firm deliveries of natural gas increased 2%
in the first quarter of 2005 as compared to the first quarter of 2004. Changes
in Central Hudson's electric and natural gas deliveries from last year by major
customer classifications are set forth below.

INCREASE (DECREASE) FROM 2004
-----------------------------
3 MONTHS ENDED MARCH 31
-----------------------
Electric Natural Gas
-------- -----------
Residential..................... 2% 1%
Commercial...................... 3% 4%
Industrial...................... 2% 3%
Interruptible................... N/A 11%

Sales to electric residential and commercial customers increased due to
customer growth, which more than offset the impact on sales from a 3% drop in
electric billing heating degree-days from the prior year. The change in
industrial sales is due primarily to an increase in usage by a large industrial
customer.

Deliveries of natural gas to firm Central Hudson customers also increased
2% in 2005 as compared to the same period in 2004. Despite a decrease in natural
gas billing heating degree-days of 4%, sales to residential customers increased
1% while sales to commercial customers increased 4%, both due largely to
customer growth. Industrial sales, which were 4% of total firm sales in the
quarters ended March 31, 2005, and 2004, increased 3%. Interruptible sales
increased 11% due to a greater availability of natural gas for use by
interruptible customers resulting from the lower billing degree-days.

SALES - COMPETITIVE BUSINESS SUBSIDIARIES

Sales of petroleum products by CHEC's fuel oil distribution companies
decreased by 8.5 million gallons, or 14%, from 59.1 million gallons in the first
quarter of 2004 to 50.6 million gallons in the first quarter of 2005.

Nearly half of the variation was reduced sales to lower margin commercial
customers with dual fuel capabilities. The primary alternative fuel, natural
gas, had a price advantage in the fuel distribution companies' markets due to
high oil prices during the quarter.

The remaining variation was attributed primarily to residential customers
and delivered motor fuels. The variation from residential customer gallons was
driven by price-induced conservation efforts and customer attrition. Also, the
fuel oil distribution


32


companies implemented a marketing strategy focused on service-oriented accounts
rather than price-sensitive accounts, contributing to attrition. Delivered motor
fuel gallons were lower as a result of conservation in reaction to high retail
gasoline prices.

Weather in the fuel distribution companies' markets also contributed to a
year-over-year decrease in gallons used for heating. Temperatures were warmer in
the first quarter of 2005, as evidenced by a 2% decrease in heating degree-days
in the first quarter of 2005 as compared to the same period in 2004.

OPERATING EXPENSES

Central Hudson's total operating expenses, including income taxes,
increased $11.1 million, or 6.9%, from $160.9 million in the first quarter of
2004 to $172 million in the first quarter of 2005. The increase in operating
expenses largely results from an increase in purchased electricity and natural
gas expense. Purchased electricity and natural gas expense increased $6.3
million and $3.7 million, respectively, due largely to an increase in the
wholesale cost of electricity and natural gas. The increase in the cost of
natural gas also reflects an increase in volumes purchased due to an increase in
sales to full service customers. Other operating expenses increased $1.1 million
due primarily to an increase in the cost of storm restoration, an increase in
depreciation and amortization of utility plant, and an increase in property
taxes. This increase was partially offset by a reduction in income taxes due to
a decrease in taxable income.

Operating expenses for the fuel oil distribution subsidiaries, including
income taxes, increased $12.2 million, or 15.6%, from $78.2 million in the first
quarter of 2004 to $90.4 million in the first quarter of 2005 due to an increase
in purchased petroleum expense. The cost of petroleum increased $13.6 million
due primarily to an increase in the wholesale cost of petroleum in 2005 as
compared to 2004. The increase was partially offset by a reduction in other
expenses of operation of $500,000 partially due to a decrease of distribution
costs related to lower volumes sold. Also offsetting the increase in petroleum
costs was a reduction in income taxes of $900,000 resulting from lower taxable
income.

OTHER INCOME

Other income for Central Hudson decreased $3.3 million in the first
quarter of 2005 as compared to the same period in 2004 due to the completion of
the amortization in December 2004 of Central Hudson's share of the gain from the
2001 sale of its interests in its major generating assets and a reduction in
carrying charges due from customers related to pension costs. In Central
Hudson's 2004 Joint Proposal, the PSC authorized the use of the Customer Benefit
Fund to offset pension under-collection balances, which reduced the balance upon
which carrying charges for pension costs are determined. This reduction in
carrying charges was offset by a reduction in carrying charges related to the
Customer Benefit Fund as discussed below.


33


INTEREST CHARGES

Interest charges for Central Hudson decreased $700,000 due primarily to a
reduction of regulatory carrying charges resulting from the substantial use, by
December 31, 2004, of the principal balance of the Customer Benefit Fund for
customer refunds and other authorized programs. In accordance with Central
Hudson's current settlement agreement, carrying charges were accrued on the
unused balance for the future benefit of customers. This reduction in carrying
charges was partially offset by an increase in interest charges on long-term
debt due to the issuance of medium-term notes in February and November 2004.

COMMON STOCK DIVIDENDS

Reference is made to the caption "Common Stock Dividends and Price Ranges"
of Part II, Item 7 of the Corporations' 10-K Annual Report for a discussion of
Energy Group's dividend payments. On March 24, 2005, the Board of Directors of
Energy Group declared a quarterly dividend of $0.54 per share, payable May 2,
2005, to shareholders of record as of April 11, 2005.

OTHER MATTERS

Changes in Accounting Standards: See Note 2 - "Summary of Significant
Accounting Policies" and Note 4 - "New Accounting Standards and Other FASB
Projects" for discussion of relevant changes.

FORWARD-LOOKING STATEMENTS

Statements included in this Quarterly Report on Form 10-Q and the
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 Securities Exchange
Act of 1934, as amended ("Exchange Act"). Forward-looking statements may be
identified by words including "anticipates," "believes," "projects," "intends,"
"estimates," "expects," "plans," "assumes," "seeks," and similar expressions.
Forward-looking statements including, without limitation, those relating to
Energy Group's and Central Hudson's ("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; energy supply and demand; fuel prices; interest rates; potential future
acquisitions; developments in the legislative, regulatory and competitive
environment; 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


34


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.

RISK FACTORS

Redeployment of Capital

Energy Group is seeking to invest approximately $90 million in
energy-related assets and/or utility assets. These funds were generated from the
sales of Central Hudson's interests in its major generating assets and Energy
Group's sale of CH Resources and are currently held in low risk and low return
money market instruments and short-term securities. Investments in new business
ventures may provide returns that are not commensurate with their risk profile,
including potential losses or write offs, and they may cause Energy Group's
earnings to be more volatile.

Energy Group may not be successful in finding suitable new investments
and, therefore, Energy Group may not achieve the earnings accretion such
investments could produce.

No projected income from such future investments in energy-related assets
has been included in any earnings guidance issued to date by Energy Group for
2005.

Storms and Other Events Beyond Central Hudson's Control May Interfere with
the Operation of its Transmission and Distribution Facilities in the
Mid-Hudson Valley Region

Central Hudson's revenues are generated by the delivery of electricity
over transmission and distribution lines and by the delivery of natural gas
through pipelines. These facilities, which are owned and operated by Central
Hudson or by third party entities, are at risk of damage from storms, natural
disasters, wars, terrorist acts, and other catastrophic events. If Central
Hudson is unable to repair its facilities in a timely manner, or if the third
parties that own and operate the interconnected facilities are unable to repair
their facilities in a timely manner, Central Hudson's customers may experience a
service disruption and Central Hudson may experience lower revenues or increased
expenses, or both, that Central Hudson may not be able to recover fully through
rates, insurance, sales margins, or other means in a timely manner, or at all.


35


Storms and Other Events Beyond the Control of CHEC's Subsidiaries May
Interfere with the Operation of their Fuel Oil Delivery Businesses in the
Mid-Atlantic and in the Northeast Region

CHEC's revenues from its fuel oil delivery businesses are generated by the
delivery of various petroleum products within their areas of operation. In order
to conduct these businesses, CHEC's subsidiaries need access to petroleum
supplies from storage facilities in their service territories. Some of these
storage facilities are owned or leased by CHEC's subsidiaries, and some are
owned and operated by third party entities. These facilities are at risk of
damage from storms, natural disasters, wars, terrorist acts, and other
catastrophic events and supply of petroleum products to these facilities could
be delayed, curtailed, or lost due to developments in the world oil markets. If
such damage or disruption were to occur, and if the affected CHEC subsidiary
were unable to procure petroleum from alternative sources of supply in a timely
manner, the customers of such subsidiary could experience a service disruption
and the subsidiary could experience lower revenues, or increased expenses, or
both, that the subsidiary might not be able to recover fully through insurance,
sales margins, or other means in a timely manner, or at all.

Unusual Temperatures in Central Hudson and CHEC's Service Territories
Could Adversely Impact Earnings

Central Hudson's service territory is the mid-Hudson Valley region. CHEC's
subsidiaries serve the mid-Atlantic region and northeast U.S. These areas
typically experience seasonal fluctuations in temperature. If, however, the
regions were to experience unusually mild winters and/or cooler summers, Central
Hudson's and CHEC's earnings could be adversely impacted. A considerable portion
of Central Hudson's total electric deliveries is directly or indirectly related
to weather-sensitive end uses such as air conditioning and space heating. Much
of the fuel oil delivered by CHEC's subsidiaries is used for space heating, as
is the majority of the natural gas delivered by Central Hudson. As a result,
sales fluctuate and vary from normal expected levels based on variations in
weather from normal seasonal levels. Such variations in sales volumes could
affect results of operations significantly. Central Hudson and CHEC's
subsidiaries have programs in place to constrain the potential variability in
results of operations through the use of derivative instruments. However, no
assurance can be given that suitable risk management instruments will remain
available.

Central Hudson's Rate Plans Limit its Ability to Pass Through Increased
Costs to its Customers; If Central Hudson's Rate Plans Are Modified by
State Regulatory Authorities, Central Hudson Revenues May Be Lower Than
Expected

As a transmission and distribution company delivering electricity and
natural gas within New York State, Central Hudson is regulated by the PSC, which
regulates retail rates, terms and conditions of service, various business
practices and


36


transactions, financings, and transactions between Central Hudson and Energy
Group or Energy Group's competitive business subsidiaries. The PSC's Order
Establishing Rates in Central Hudson's rate proceeding, which was issued on
October 25, 2001, and became effective November 1, 2001, and the PSC's Joint
Proposal Order issued on June 14, 2004, and effective July 1, 2004, (together
the "Rate Plans") cover the rates Central Hudson can charge customers and
contain a number of related provisions. Rates charged to customers generally may
not be changed during the respective limited terms of the Rate Plans, other than
for the recovery of energy costs and limited other exceptions. As a result, the
Rate Plans may not reflect all of the increased construction and other costs
that may be experienced after the date the Rate Plans became effective. The
approval of new rate plans or changes to existing Rate Plans (including the
modification or elimination of Central Hudson's energy cost adjustment clauses)
could have a significant effect on Central Hudson's financial condition, results
of operations, or cash flows. The current Rate Plans and material matters
relating to potential rate changes are described in Note 2 - "Regulatory
Matters" to the Consolidated Financial Statements of the Corporations' 10-K
Annual Report. The current Rate Plans permit Central Hudson to file for changes
in rates at any time, but rates are generally not changed by the PSC until
eleven months after the filing of proposed rate changes. Central Hudson expects
to file for new retail rates within the next two-year period. Central Hudson
cannot predict the rates that will be established by the PSC, or whether its
business may be adversely affected by the rates determined, in such proceeding.

Central Hudson Is Subject to Risks Relating to Asbestos Litigation and
Manufactured Gas Plant Facilities

Litigations have been commenced 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
manufactured gas plant sites. Reference is made to Note 11 - "Commitments and
Contingencies" to the Consolidated Financial Statements of the Corporations'
10-K Annual Report and in particular to the subcaptions in Note 11 regarding
"Asbestos Litigation" and "Former Manufactured Gas Plant Facilities."

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Reference is made to Part II, Item 7A of the Corporations' 10-K Annual
Report for a discussion of market risk. There has been no material change in
either the market risks or the practices employed by Energy Group and Central
Hudson to mitigate these risks discussed in the Corporations' 10-K Annual
Report. For related discussion on this activity, see, in the Consolidated
Financial Statements of the Corporations' 10-K Annual Report, Note 1 - "Summary
of Significant Accounting Policies" under the caption "Accounting for Derivative
Instruments and Hedging Activities" and Item 7 - "Management's Discussion and
Analysis of Financial Condition and Results of Operations" under subcaption
"Capital Resources and Liquidity."


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ITEM 4 - CONTROLS AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer of Energy Group
and Central Hudson evaluated the effectiveness of the disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934, as amended) as of the end of the period covered by this Quarterly Report
on Form 10-Q and based on that evaluation, concluded that, as of the end of the
period covered by this Quarterly Report on Form 10-Q, the Registrants' controls
and procedures are effective for recording, processing, summarizing, and
reporting information required to be disclosed in their reports under the
Securities Exchange Act of 1934, as amended, within the time periods specified
in the SEC's rules and forms.

A significant deficiency in general computer controls at one of Energy
Group's fuel oil distribution subsidiaries was described in Item 9A of the
Corporations' 10-K Annual Report. Substantial remediation of this deficiency has
taken place and is expected to be completed by mid-year 2005. Access to programs
and data by the software vendor is now restricted and controlled by the
subsidiary. Employee access to programs and data is undergoing revision to limit
the access to meet the needs of job classifications.

Other than noted above, there were no changes to the Registrants' internal
control over financial reporting that occurred during the Registrants' last
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Registrants' internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

For a discussion of certain legal proceedings and certain administrative
matters involving Central Hudson and the competitive business subsidiaries, see
Note 8 - "Commitments and Contingencies," which discussion is incorporated
herein by reference.


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Item 4. Submission of Matters to a Vote of Security Holders.

The Annual Meeting of Shareholders of Energy Group was held on April 26,
2005. One matter voted upon at such meeting was the election of three nominees
proposed as directors by the Board of Directors as Class II directors with terms
expiring at the Annual Meeting of Shareholders to be held in 2008. No other
nominees were proposed and these three nominees were elected. The total number
of shares voted was 13,381,839. The number of shares voted for each of these
directors and the number of shares withheld were as follows:

--------------------------------------------------------------

Name of Director Shares For Shares Withheld
--------------------------------------------------------------

Margarita K. Dilley 13,164,922 216,917
--------------------------------------------------------------

Steven M. Fetter 13,171,597 210,242
--------------------------------------------------------------

Stanley J. Grubel 13,175,822 206,017
--------------------------------------------------------------

There were no broker non-votes or abstentions on the matter submitted to a
vote.

The other directors of Energy Group are: Steven V. Lant, Heinz K.
Fridrich, Edward F. X. Gallagher, E. Michel Kruse, and Jeffrey D. Tranen.

A second matter voted upon at such meeting was the ratification of the
appointment of PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as Energy Group's independent public accountants for 2005.
Although shareholder ratification of the appointment is not required by law, the
Board of Directors believes that it is good corporate governance to give
shareholders an opportunity to ratify this selection. This proposal was ratified
by a majority vote of 13,209,652 shares for, 64,844 shares against, and 107,343
shares abstaining. There were no broker non-votes on the matter submitted to a
vote.

Immediately following Energy Group's Annual Meeting of Shareholders, the
Board of Directors elected Steven V. Lant as Chairman of the Board, President
and Chief Executive Officer and Heinz K. Fridrich as Vice Chairman of the Board.
The Board of Directors also made the following appointments: Christopher M.
Capone, Chief Financial Officer and Treasurer; Carl E. Meyer, Executive Vice
President; Joseph J. DeVirgilio, Jr., Executive Vice President - Corporate
Services & Administration; Arthur R. Upright, Senior Vice President; Donna S.
Doyle, Vice President - Accounting and Controller; Denise D. VanBuren, Vice
President - Corporate Communications and Community Relations; Lincoln E.
Bleveans, Secretary and Assistant Treasurer; and John E. Gould, Assistant
Secretary.


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In addition, the Board of Directors designated Steven M. Fetter as
Chairman of the Audit Committee; Stanley J. Grubel as Chairman of the
Compensation Committee; Heinz K. Fridrich as Chairman of the Governance and
Nominating Committee; and E. Michel Kruse as Chairman of the Strategy and
Finance Committee.

The Annual Meeting of the Shareholder of Central Hudson was held on March
16, 2005. All of the nominees proposed as directors by the Board of Directors
were elected, and no other nominees were proposed. The sole shareholder of
Central Hudson, Energy Group, voted all of its shares of Common Stock for the
nominees. The directors are: Christopher M. Capone, Joseph J. DeVirgilio, Jr.,
Jack Effron, Steven V. Lant, Carl E. Meyer, and Arthur R. Upright.

Immediately following Central Hudson's Annual Meeting of the Shareholder,
Central Hudson's Board of Directors made the following appointments: Steven V.
Lant as Chairman of the Board and Chief Executive Officer; Carl E. Meyer,
President and Chief Operating Officer; Christopher M. Capone, Chief Financial
Officer and Treasurer; Joseph J. DeVirgilio, Jr., Executive Vice President -
Corporate Services and Administration; Arthur R. Upright, Senior Vice President
- - Regulatory Affairs; Charles A. Freni, Senior Vice President - Customer
Services; Donna S. Doyle, Vice President - Accounting and Controller; James P.
Lovette, Vice President - Engineering and Environmental Affairs; Denise D. Van
Buren, Vice President - Corporate Communications and Community Relations; Thomas
C. Brocks, Assistant Vice President - Human Resources; Lincoln E. Bleveans,
Secretary and Assistant Treasurer; and John E. Gould, Assistant Secretary.

Item 6. Exhibits

(a) The following exhibits are furnished in accordance with the provisions
of Item 601 of Regulation S-K.

Exhibit No.
Regulation S-K
Item 601
Designation Exhibit Description

12 Statements Showing Computation of the Ratio of Earnings to
Fixed Charges and the Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.

31.1 Rule 13a-14(a)/15d-14(a) Certification by Mr. Lant.

31.2 Rule 13a-14(a)/15d-14(a) Certification by Mr. Capone.

32.1 Section 1350 Certification by Mr. Lant.

32.2 Section 1350 Certification by Mr. Capone.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunder duly authorized.

CH ENERGY GROUP, INC.
(Registrant)

By: /s/ Donna S. Doyle
----------------------------------------
Donna S. Doyle
Vice President - Accounting and Controller


CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Co-Registrant)

By: /s/ Donna S. Doyle
----------------------------------------
Donna S. Doyle
Vice President - Accounting and Controller

Dated: May 3, 2005


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EXHIBIT INDEX

Following is the list of Exhibits, as required by Item 601 of Regulation
S-K, filed as part of this Quarterly Report on Form 10-Q:

Exhibit No.
Regulation S-K
Item 601
Designation Exhibit Description

12 Statements Showing Computation of the Ratio of Earnings to
Fixed Charges and the Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.

31.1 Rule 13a-14(a)/15d-14(a) Certification by Mr. Lant.

31.2 Rule 13a-14(a)/15d-14(a) Certification by Mr. Capone.

32.1 Section 1350 Certification by Mr. Lant.

32.2 Section 1350 Certification by Mr. Capone.


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