EXHIBIT 10(iii)32

                              EMPLOYMENT AGREEMENT

       AGREEMENT by and between CH Energy Group, Inc., ("Energy Group"), a New
York corporation, and Paul J. Ganci (the "Executive"), dated as of the 15th day
of December, 1999.

       The Board of Directors of Energy Group (the "Board"), has determined that
it is in the best interests of Energy Group and its shareholders to assure that
Energy Group will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of Energy Group. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to Energy Group
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused Energy Group to enter into this Agreement with the Executive.

                 NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

       1.     This Employment Agreement shall be between Energy Group and the
Executive named above for all periods during which the Executive serves in the
capacity as an officer of Energy Group or any of its affiliated companies.

       2.     CERTAIN DEFINITIONS.

              (a)    As used in this Agreement, "Energy Group" shall mean CH
Energy Group, Inc., hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law or otherwise.

              (b)    As used in this Agreement, the term "affiliated companies"
shall include any company controlled by, controlling or under common control
with Energy Group.

              (c)    The "Effective Date" shall mean the first date during the
Change of Control Period (as defined in Section 2 (d)) on which a Change of
Control (as defined in Section 3) occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the Executive's
employment with Energy Group or any of its affiliated companies is terminated
prior to the date on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment

                     (i)    was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or

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                     (ii)   otherwise arose in connection with or anticipation
of a Change of Control, then for all purposes of this Agreement the "Effective
Date" shall mean the date immediately prior to the date of such termination of
employment.

              (d)    The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the following July 31, which July 31
and each annual anniversary thereof shall be hereinafter referred to as the
"Renewal Date". Unless previously terminated, the Change of Control Period shall
be automatically extended so as to terminate one year from such Renewal Date,
unless at least 60 days prior to the Renewal Date Energy Group shall give notice
to the Executive that the Change of Control Period shall not be so extended;
provided, that such a notice shall be null and void if it is reasonably
demonstrated by the Executive that such notice was given

                     (i)    at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or

                     (ii)   otherwise in connection with or anticipation of a
Change of Control; and provided, further, that in any event the Change of
Control Period shall end on May 1, 2003.

       3.     CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall mean:

              (a)    The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (x) the then outstanding shares of common stock of Energy Group
(the "Outstanding Energy Group Common Stock") or (y) the combined voting power
of the then outstanding voting securities of Energy Group entitled to vote
generally in the election of directors (the "Outstanding Energy Group Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of Control:

                     (i)    any acquisition directly from Energy Group,

                     (ii)   any acquisition by Energy Group,

                     (iii)  any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Energy Group or its affiliated
companies or

                     (iv)   any acquisition by any corporation pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of
this Section 3; or

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              (b)    Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by Energy Group's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

              (c)    Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of Energy
Group (a "Business Combination"), in each case, unless, following such Business
Combination,

                     (i)    all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Energy
Group Common Stock and Outstanding Energy Group Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns Energy
Group or all or substantially all of Energy Group's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Energy Group Common Stock and Outstanding Energy Group Voting Securities, as the
case may be,

                     (ii)   no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related trust) of
Energy Group or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and

                     (iii)  at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

              (d)    Approval by the shareholders of Energy Group of a complete
liquidation or dissolution of Energy Group.

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       4.     EMPLOYMENT PERIOD. Energy Group hereby agrees to continue, or
cause to be continued, the Executive in its employ, or in the employ of any of
its affiliated companies, and the Executive hereby agrees to remain in the
employ of Energy Group or any of its affiliated companies subject to the terms
and conditions of this Agreement, for the period commencing on the Effective
Date and ending on May 1, 2003 (the "Employment Period"). It is understood and
agreed that the termination of the Executive's employment for any reason,
whether before, at or after the end of the Employment Agreement, shall be
considered to be a retirement of the Executive for all purposes of the employee
benefit plans, practices, policies and programs of Energy Group and its
affiliated companies.

       5.     TERMS OF EMPLOYMENT.

              (a)    POSITION AND DUTIES.

                     (i)    During the Employment Period, (A) the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate in all
material respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately preceding the
Effective Date and (B) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the Effective
Date or any office or location within Energy Group's service territory (as it
existed immediately before the Effective Date); provided, that the Executive may
be required to relocate outside such service territory if Energy Group or any of
its affiliated companies provides the Executive with relocation benefits at
least as favorable as those that would have been provided under Energy Group's,
or any affiliated companies' applicable relocation policy as in effect
immediately before the Effective Date.

                     (ii)   During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of Energy Group or any of its affiliated
companies and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive's reasonable best
efforts to perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the Executive's
responsibilities as an employee of Energy Group or any of its affiliated
companies in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such activities
(or the conduct of activities similar in nature and scope thereto) subsequent to
the Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to Energy Group or any of its
affiliated companies.

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              (b)    COMPENSATION.

                     (i)    BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve times the highest
monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by Energy Group or any of its affiliated
companies in respect of the twelve-month period immediately preceding the month
in which the Effective Date occurs. During the Employment Period, the Annual
Base Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Executive prior to the Effective Date and thereafter at
least annually. Any increase in Annual Base Salary shall not serve to limit or
reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase and the term Annual Base
Salary as used in this Agreement shall refer to Annual Base Salary as so
increased.

                     (ii)   ANNUAL BONUS. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
Executive's highest bonus under Energy Group's Executive Compensation Program,
if applicable, or any comparable annual bonus under any predecessor or successor
plan, for the last three full fiscal years prior to the Effective Date
(annualized in the event that the Executive was not employed by Energy Group or
its affiliated company for the whole of such fiscal year) (the "Recent Annual
Bonus"). Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the Annual
Bonus is awarded.

                     (iii)  INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of Energy Group or its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by Energy Group or its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the 120-day period immediately preceding the Effective Date or if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of Energy Group or its affiliated
companies.

                     (iv)   WELFARE BENEFIT PLANS. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by Energy Group or its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of


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Energy Group or its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with benefits which are
less favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Executive at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of Energy Group or its affiliated
companies.

                     (v)    EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of Energy Group or any of its affiliated
companies in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of Energy Group or any of its affiliated companies.

                     (vi)   FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
use of an automobile and payment of related expenses, in accordance with the
most favorable plans, practices, programs and policies of Energy Group or any of
its affiliated companies in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of Energy Group or any of its affiliated companies.

                     (vii)  OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office and support staff at least
equal to the most favorable of the foregoing provided to the Executive by Energy
Group or any of its affiliated companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer
executives of Energy Group or any of its affiliated companies.

                     (viii) VACATION. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of Energy Group or any of its
affiliated companies as in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of Energy Group or any of its affiliated companies.

                     (ix)   CERTAIN EXCLUSIONS. In determining the benefits
provided in subclauses (i) through and including (viii) of this paragraph (b),
there shall be excluded from consideration any such benefits provided by any of
the affiliated companies during the measuring periods, if any, referred to in
such subclauses if Energy Group has elected not to enter into Employment
Agreements (of this Type) with executives of such affiliated companies.

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       6.     TERMINATION OF EMPLOYMENT.

              (a)    DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If Energy Group or any of its affiliated companies determines in good faith that
the Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 13(b) of this Agreement of
its intention to terminate the Executive's employment. In such event, the
Executive's employment with Energy Group or any of its affiliated companies
shall terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with Energy Group or any of its affiliated companies on a full-time basis for
180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by Energy Group or its insurers and acceptable to the Executive or the
Executive's legal representative.

              (b)    CAUSE. The Executive's employment during the Employment
Period may be terminated for Cause. For purposes of this Agreement, "Cause"
shall mean:

                     (i)    the willful and continued failure of the Executive
to perform substantially the Executive's duties with Energy Group or any of its
affiliated companies (other than any such failure resulting from incapacity due
to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive
Officer of Energy Group which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive's duties, or

                     (ii)   the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
Energy Group or any of its affiliated companies.

       For purposes of this provision, no act or failure to act, on the part of
the Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of Energy Group or any
of its affiliated companies.. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of Energy Group
or any of its affiliated companies based upon the advice of counsel for Energy
Group shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of Energy Group or any of its
affiliated companies. The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been delivered to the
Executive a copy


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of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in subparagraph (i) or
(ii) above, and specifying the particulars thereof in detail.

              (c)    BY THE EXECUTIVE. The Executive's employment may be
terminated by the Executive for any reason.

              (d)    NOTICE OF TERMINATION. Any termination by Energy Group or
any of its affiliated companies for Cause or by the Executive for any reason
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 13(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which

                     (i)    indicates the specific termination provision in this
Agreement relied upon,

                     (ii)   to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Executive or Energy
Group or any of its affiliated companies to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Cause
shall not waive any right of the Executive or Energy Group or any of its
affiliated companies, respectively, hereunder or preclude the Executive or
Energy Group or any of its affiliated companies, respectively, from asserting
such fact or circumstance in enforcing the Executive's or Energy Group's or any
of its affiliated companies' rights hereunder.

              (e)    DATE OF TERMINATION. "Date of Termination" means

                     (i)    if the Executive's employment is terminated by
Energy Group or any of its affiliated companies for Cause, or by the Executive
for any reason, the date of receipt of the Notice of Termination or any later
date specified therein, as the case may be,

                     (ii)   if the Executive's employment is terminated by
Energy Group or any of its affiliated companies other than for Cause or
Disability, the Date of Termination shall be the date on which Energy Group or
any of its affiliated companies notifies the Executive of such termination and

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                     (iii)  if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be.

       7.     OBLIGATIONS OF ENERGY GROUP AND ITS AFFILIATED COMPANIES UPON
TERMINATION.

              (a)    OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the
Employment Period, Energy Group or any of its affiliated companies shall
terminate the Executive's employment other than for Cause or Disability or the
Executive shall terminate employment for any reason:

                     (i)    until the last day of the Employment Period, or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, Energy Group or any of its affiliated companies shall
continue benefits to the Executive and/or the Executive's family at least equal
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 5(b)(iv) of this Agreement
if the Executive's employment had not been terminated or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of Energy Group or any of its affiliated companies and
their families, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until May 1, 2003 and to
have retired on May 1, 2003; and

                     (ii)   to the extent not theretofore paid or provided,
Energy Group or any of its affiliated companies shall timely pay or provide to
the Executive any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program, policy or
practice or contract or agreement of Energy Group or any of its affiliated
companies (such other amounts and benefits shall be hereinafter referred to as
the "Other Benefits").

              (b)    DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 7(b) shall include, without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive, benefits
at least equal to the most favorable benefits provided by Energy Group or any of
its affiliated companies to the

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estates and beneficiaries of peer executives of Energy Group and such affiliated
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate and/or the
Executive's beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of Energy Group or any of its affiliated
companies and their beneficiaries.

              (c)    DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate as of the Disability Effective Date, without further
obligations to the Executive, other than for payment of Accrued Obligations and
the timely payment or provision of Other Benefits, and except as provided in
Section 7(e). Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as used in this Section 7(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the most favorable
of those generally provided by Energy Group or any of its affiliated companies
to disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at any
time thereafter generally with respect to other peer executives of Energy Group
or any of its affiliated companies and their families.

              (d)    CAUSE. If the Executive's employment shall be terminated
for Cause during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive (x) his Annual Base Salary through the Date of Termination, (y) the
amount of any compensation previously deferred by the Executive, and (z) Other
Benefits, in each case to the extent theretofore unpaid.

              (e)    RETIREMENT BENEFITS. Notwithstanding the foregoing and the
provisions of Energy Group's Executive Deferred Compensation Plan and Retirement
Benefit Restoration Plan (together, the "Nonqualified Plans"), following the
termination of the Executive's employment during the Employment Period for any
reason other than by Energy Group for Cause or as a result of the Executive's
death, the Executive and his beneficiaries shall receive benefits under the
Nonqualified Plans (the "Guaranteed Retirement Benefits") such that the total
benefits received under the Nonqualified Plans (as modified hereby), together
with the actual benefits they receive under Central Hudson Gas & Electric
Corporation's Retirement Income Plan and any successor thereto in which the
Executive participates (collectively, the "Qualified Plan"), equal the benefits
the Executive and his beneficiaries would have received if (A) the Executive had
continued to be employed through May 1, 2003, with the compensation and benefits
required by Section 5 of this Agreement, except that it shall be assumed that
the Executive's base salary and other cash compensation would each have
increased by 10% annually on each October 1 from and after the actual Date of
Termination, (B) the Executive had


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then retired on May 1, 2003, and (C) the Nonqualified Plans and Qualified Plan
had remained in effect without amendment adverse to the Executive and his
beneficiaries after the Effective Date (but taking into account any amendments
after the Effective Date that are favorable to the Executive and his
beneficiaries). The Guaranteed Retirement Benefits shall begin to be paid
immediately following the Date of Termination except to the extent otherwise
elected by the Executive in accordance with the applicable plans.

       8.     NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by Energy Group or any of its affiliated
companies and for which the Executive may qualify, nor, subject to Section
13(f), shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with Energy Group or any of
its affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy, practice or
program of or any contract or agreement with Energy Group or any of its
affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.

       9.     FULL SETTLEMENT. Energy Group's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which Energy Group or any of its
affiliated companies may have against the Executive or others. In no event shall
the Executive be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment. Energy Group agrees to pay as
incurred, to the full extent permitted by law, all legal fees and expenses which
the Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by Energy Group or any of its affiliated companies, the
Executive or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").

       10.    CERTAIN ADDITIONAL PAYMENTS BY ENERGY GROUP OR ITS AFFILIATED
COMPANIES.

              (a)    Anything in this Agreement to the contrary notwithstanding
and except as set forth below, in the event it shall be determined that any
payment or distribution by Energy Group or any of its affiliated companies to or
for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise


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tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 10(a), if it shall be
determined that the Executive is entitled to a Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that
could be paid to the Executive such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive
and the Payments, in the aggregate, shall be reduced to the Reduced Amount.

              (b)    Subject to the provisions of Section 10(c), all
determinations required to be made under this Section 10, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by a major accounting firm with expertise in such matters designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to Energy Group and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by Energy Group. All fees and expenses of the
Accounting Firm shall be borne solely by Energy Group. Any Gross-Up Payment, as
determined pursuant to this Section 10, shall be paid, or caused to be paid, by
Energy Group to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon Energy Group and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by Energy Group should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that Energy Group exhausts its remedies pursuant to Section 10(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid, or caused to be paid, by
Energy Group to or for the benefit of the Executive.

              (c)    The Executive shall notify Energy Group in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by Energy Group of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise Energy Group of
the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to Energy Group
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If Energy Group notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall:

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<PAGE>


                     (i)    give Energy Group any information reasonably
requested by Energy Group relating to such claim,

                     (ii)   take such action in connection with contesting such
claim as Energy Group shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by Energy Group,

                     (iii)  cooperate with Energy Group in good faith in order
effectively to contest such claim, and

                     (iv)   permit Energy Group to participate in any
proceedings relating to such claim;

provided, however, that Energy Group shall bear and pay, or cause to be paid,
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 10(c), Energy Group shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as
Energy Group shall determine; provided, however, that if Energy Group directs
the Executive to pay such claim and sue for a refund, Energy Group shall
advance, or cause to be advanced, the amount of such payment to the Executive,
on an interest-free basis and shall indemnify and hold the Executive harmless,
on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, Energy Group's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

              (d)    If, after the receipt by the Executive of an amount
advanced, or caused to be advanced, by Energy Group pursuant to Section 10(c),
the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to Energy Group's complying with the requirements
of Section 10(c)) promptly pay to Energy Group the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If,


                                       13
<PAGE>


after the receipt by the Executive of an amount advanced, or caused to be
advanced, by Energy Group pursuant to Section 10(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and Energy Group does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

       11.    CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of Energy Group or any of its affiliated companies all
secret or confidential information, knowledge or data relating to Energy Group
or any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by Energy
Group or any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination of the Executive's
employment with Energy Group or any of its affiliated companies, the Executive
shall not, without the prior written consent of Energy Group or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than Energy Group and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 11 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

       12.    SUCCESSORS.

              (a)    This Agreement is personal to the Executive and without the
prior written consent of Energy Group shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.

              (b)    This Agreement shall inure to the benefit of and be binding
upon Energy Group and its successors and assigns.

              (c)    Energy Group will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Energy Group to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that Energy Group would be required to perform it if no such succession
had taken place.

       13.    EARLY TERMINATION. This agreement shall terminate as of the date
Executive becomes employed by any of the affiliated companies to which Energy
Group has elected not to enter into employment agreements (of this Type) with
executives of such affiliated companies; provided such employment becomes
effective prior to a Change of Control.

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<PAGE>


       14.    MISCELLANEOUS.

              (a)    This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

              (b)    All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

              IF TO THE EXECUTIVE:

              Paul J. Ganci
              50 Pleasant Ridge
              Poughkeepsie, New York 12603


              IF TO ENERGY GROUP:

              CH Energy Group, Inc.
              284 South Avenue
              Poughkeepsie, New York 12601-4879

              Attention:  Chief Executive Officer

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

              (c)    The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

              (d)    Energy Group may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

              (e)    The Executive's or Energy Group's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or Energy Group may have hereunder, including, without
limitation, the right of the Executive to terminate


                                       15
<PAGE>


employment for any reason pursuant to Section 6(c) of this Agreement, shall not
be deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.

              (f)    The Executive and Energy Group acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and Energy Group, or any of its affiliated companies, the employment
of the Executive by Energy Group or any of its affiliated companies is "at will"
and, subject to Section 2(c) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or Energy Group or any of its affiliated companies at any time prior
to the Effective Date, in which case the Executive shall have no further rights
under this Agreement; provided, that this Agreement may not be terminated by
Energy Group or any of its affiliated companies if it is reasonably demonstrated
by the Executive that such termination

                     (i)    was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or

                     (ii)   otherwise arose in connection with or anticipation
of a Change of Control. From and after the Effective Date, this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof, other than the letter dated May 30, 1990 regarding
confidentiality.


       IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, Energy Group has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

                                               ---------------------------------
                                                         Paul J. Ganci


                                               CH ENERGY GROUP, INC.


                                               By_______________________________
                                                      Corporate Secretary

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