UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-Q

(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, 2007

                                       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 a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of
the Exchange Act. (Check One):

LARGE ACCELERATED FILER [X]   ACCELERATED FILER [ ]   NON-ACCELERATED FILER [ ]

<PAGE>


         Indicate by check mark whether Central Hudson Gas & Electric
Corporation is a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of "accelerated filer and large
accelerated filer" in Rule 12b-2 of the Exchange Act (Check One):

LARGE ACCELERATED FILER [ ]   ACCELERATED FILER [ ]   NON-ACCELERATED FILER [X]

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

         YES [ ]      NO [X]

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

         YES [ ]      NO [X]

         As of the close of business on May 1, 2007, (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).




<PAGE>


                 FORM 10-Q FOR THE QUARTER ENDED March 31, 2007

                                      INDEX

         PART I - FINANCIAL INFORMATION                                  PAGE
         ------------------------------                                  ----
Item 1 - Consolidated Financial Statements (Unaudited)

          CH ENERGY GROUP, INC.
          Consolidated Statement of Income -                               1
           Three Months Ended March 31, 2007, and 2006

          Consolidated Statement of Comprehensive Income -                 2
           Three Months Ended March 31, 2007, and 2006

          Consolidated Balance Sheet - March 31, 2007,                     3
           December 31, 2006, and March 31, 2006

          Consolidated Statement of Cash Flows -                           5
           Three Months Ended March 31, 2007, and 2006

          CENTRAL HUDSON GAS & ELECTRIC CORPORATION
          -----------------------------------------
          Consolidated Statement of Income -                               6
           Three Months Ended March 31, 2007, and 2006

          Consolidated Statement of Comprehensive Income -                 7
           Three Months Ended March 31, 2007, and 2006

          Consolidated Balance Sheet - March 31, 2007,                     8
           December 31, 2006, and March 31, 2006

          Consolidated Statement of Cash Flows -                          10
           Three Months Ended March 31, 2007, and 2006

          Notes to Consolidated Financial Statements (Unaudited)          11



<PAGE>


                                      INDEX

PART I - FINANCIAL INFORMATION                                       PAGE
------------------------------                                       ----

Item 2 - Management's Discussion and Analysis of                      31
              Financial Condition and Results of Operations

Item 3 - Quantitative and Qualitative Disclosures                     49
              about Market Risk

Item 4 - Controls and Procedures                                      49

         PART II - OTHER INFORMATION
         ---------------------------

Item 1 - Legal Proceedings                                            50

Item 1A - Risk Factors                                                51

Item 6 - Exhibits                                                     52

Signatures                                                            53

Exhibit Index                                                         54

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

Filing Format

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




<PAGE>

                         PART I - FINANCIAL INFORMATION
                         ------------------------------


                   ITEM I - CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


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

<TABLE>
<CAPTION>
                                                                                             For the 3 Months Ended March 31,
                                                                                                   2007            2006
                                                                                                  ---------    ---------
                                                                                                  (Thousands of Dollars)
<S>                                                                                               <C>          <C>
Operating Revenues
  Electric ....................................................................................   $ 151,675    $ 136,047
  Natural gas .................................................................................      64,191       70,809
  Competitive business subsidiaries ...........................................................     127,512      110,375
                                                                                                  ---------    ---------
      Total Operating Revenues ................................................................     343,378      317,231
                                                                                                  ---------    ---------

Operating Expenses
  Operation:
    Purchased electricity and fuel used in
       electric generation ....................................................................      94,036       85,840
    Purchased natural gas .....................................................................      43,336       51,727
    Purchased petroleum .......................................................................      94,560       84,858
    Other expenses of operation - regulated activities ........................................      37,649       28,495
    Other expenses of operation - competitive business subsidiaries ...........................      18,792       15,670
  Depreciation and amortization ...............................................................       9,105        8,952
  Taxes, other than income tax ................................................................       8,488        7,604
                                                                                                  ---------    ---------
      Total Operating Expense..................................................................     305,966      283,146
                                                                                                  ---------    ---------

Operating Income ..............................................................................      37,412       34,085
                                                                                                  ---------    ---------

Other Income and Deductions
  Income from unconsolidated affiliates .......................................................       1,195          190
  Interest on regulatory assets and investment income .........................................       2,227        2,737
  Other - net .................................................................................        (583)        (720)
                                                                                                  ---------    ---------
      Total Other Income.......................................................................       2,839        2,207
                                                                                                  ---------    ---------

Interest Charges
  Interest on long-term debt ..................................................................       4,492        3,953
  Interest on regulatory liabilities and other interest .......................................         949        1,038
                                                                                                  ---------    ---------
      Total Interest Charges...................................................................       5,441        4,991
                                                                                                  ---------    ---------

Income before income taxes and preferred dividends of subsidiary ..............................      34,810       31,301

Income taxes ..................................................................................      12,963       12,759
Minority Interest .............................................................................         (93)           -
                                                                                                  ---------    ---------

Income before preferred dividends of subsidiary ...............................................      21,940       18,542
Cumulative preferred stock dividends of subsidiary ............................................         242          242
                                                                                                  ---------    ---------

Net Income ....................................................................................      21,698       18,300
Dividends Declared on Common Stock ............................................................       8,511        8,511
                                                                                                  ---------    ---------

Balance Retained in the Business ..............................................................   $  13,187    $   9,789
                                                                                                  =========    =========

Common Stock:
    Average Shares Outstanding - Basic ........................................................      15,762       15,762
                               - Diluted ......................................................      15,790       15,777

    Earnings Per Share - Basic ................................................................   $    1.38    $    1.16
                       - Diluted ..............................................................   $    1.37    $    1.16

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


</TABLE>


                 See Notes to Consolidated Financial Statements


                                      -1-
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                            For the 3 Months Ended March 31,
                                                                                                   2007           2006
                                                                                                 -------         -------
                                                                                                  (Thousands of Dollars)
<S>                                                                                              <C>             <C>
Net Income .............................................................................         $21,698         $18,300

Other Comprehensive Income:

Net unrealized gains net of tax and net income realization:
      FAS 133 Designated Cash Flow Hedges - net of tax of $(233) and $(7) ..............             349              11
      Investments - net of tax of $(111) and $(83) .....................................             167             126
                                                                                                 -------         -------

Other comprehensive income .............................................................             516             137
                                                                                                 -------         -------

Comprehensive Income ...................................................................         $22,214         $18,437
                                                                                                 -------         -------
</TABLE>



                 See Notes to Consolidated Financial Statements




                                      -2-
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                     March 31,        December 31,        March 31,
                                                ASSETS                                 2007              2006              2006
                                                                                    ----------        ----------        ----------
                                                                                                (Thusands of Dollars)
<S>                                                                                 <C>               <C>               <C>
Utility Plant
       Electric ............................................................        $  774,857        $  768,808        $  742,799
       Natural gas .........................................................           240,683           239,317           227,360
       Common ..............................................................           114,232           112,426           108,009
                                                                                    ----------        ----------        ----------
                                                                                     1,129,772         1,120,551         1,078,168

       Less:  Accumulated depreciation .....................................           351,477           344,540           338,414
                                                                                    ----------        ----------        ----------
                                                                                       778,295           776,011           739,754

       Construction work in progress .......................................            59,208            51,041            45,929
                                                                                    ----------        ----------        ----------
               Net Utility Plant ...........................................           837,503           827,052           785,683
                                                                                    ----------        ----------        ----------

Other Property and Plant - net .............................................            33,917            33,822            22,806
                                                                                    ----------        ----------        ----------


Current Assets
       Cash and cash equivalents ...........................................            22,654            24,121            38,908
       Short-term investments - available-for-sale securities ..............            30,549            42,611            39,600
       Accounts receivable -
             net of allowance for doubtful accounts of
             $5.5 million, $5.8 million, and $5.0 million,
             respectively ..................................................           115,371            80,862           105,312
       Accrued unbilled utility revenues ...................................             9,995             9,772             8,444
       Other receivables ...................................................             7,232             7,706             5,177
       Fuel, materials and supplies ........................................            21,890            27,930            29,376
       Regulatory assets ...................................................            34,149            31,332            20,156
       Prepaid income taxes ................................................                 -            11,244                 -
       Fair value of derivative instruments ................................                 -                 -                61
       Special deposits and prepayments ....................................            26,605            23,655            23,134
       Accumulated deferred income tax .....................................             4,201             5,875            14,147
                                                                                    ----------        ----------        ----------
                Total Current Assets .......................................           272,646           265,108           284,315
                                                                                    ----------        ----------        ----------

Deferred Charges and Other Assets
       Regulatory assets - related to pension plan costs ...................            95,050            99,281           109,235
       Regulatory assets - related to other
              post-employment benefit (OPEB) costs .........................            34,386            36,392            13,032
       Intangible asset - pension plan .....................................                 -                 -            20,217
       Goodwill ............................................................            57,225            52,828            51,493
       Other intangible assets - net .......................................            31,850            27,550            27,810
       Regulatory assets ...................................................            83,236            83,102            45,243
       Unamortized debt expense ............................................             3,967             4,041             3,899
       Investments in unconsolidated affiliates ............................            12,902            12,651            11,431
       Other ...............................................................            19,479            18,705            20,993
                                                                                    ----------        ----------        ----------
                Total Deferred Charges and Other Assets ....................           338,095           334,550           303,353
                                                                                    ----------        ----------        ----------

                          Total Assets .....................................        $1,482,161        $1,460,532        $1,396,157
                                                                                    ==========        ==========        ==========

</TABLE>


                 See Notes to Consolidated Financial Statements


                                      -3-
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                     March 31,      December 31,       March 31,
                    CAPITALIZATION AND LIABILITIES                                      2007            2006             2006
                                                                                    -----------      -----------      -----------
                                                                                               (Thousands of Dollars)
<S>            <C>                                                                  <C>              <C>              <C>
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 .....................................................         220,242          207,055          207,805
        Treasury stock (1,100,087 shares) .....................................         (46,252)         (46,252)         (46,252)
        Accumulated comprehensive loss ........................................             (13)            (529)            (383)
        Capital stock expense .................................................            (328)            (328)            (328)
                                                                                    -----------      -----------      -----------
                Total Common Shareholders' Equity .............................         526,565          512,862          513,758
                                                                                    -----------      -----------      -----------

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

        Long-term debt ........................................................         370,889          337,889          310,886
                                                                                    -----------      -----------      -----------
                Total Capitalization ..........................................         918,481          871,778          845,671
                                                                                    -----------      -----------      -----------

Current Liabilities
        Current maturities of long-term debt ..................................               -           33,000           33,000
        Notes payable .........................................................          43,000           13,000           29,000
        Accounts payable ......................................................          33,872           41,840           41,900
        Accrued interest ......................................................           2,512            5,645            2,697
        Dividends payable .....................................................           8,754            8,754            8,754
        Accrued vacation and payroll ..........................................           6,628            5,963            5,785
        Customer advances .....................................................          12,478           25,732            3,455
        Customer deposits .....................................................           8,009            7,954            7,125
        Regulatory liabilities ................................................          18,612           21,651            3,200
        Fair value of derivative instruments ..................................             209            3,582              137
        Accrued environmental remediation costs ...............................           2,400            3,400                -
        Accrued income taxes ..................................................           7,104                -           11,325
        Deferred revenues .....................................................           4,960            5,455            3,866
        Other .................................................................          13,434           14,112           11,112
                                                                                    -----------      -----------      -----------
                Total Current Liabilities .....................................         161,972          190,088          161,356
                                                                                    -----------      -----------      -----------

Deferred Credits and Other Liabilities
        Regulatory liabilities ................................................         106,745          107,796          152,395
        Operating reserves ....................................................           4,910            4,906            6,393
        Accrued environmental remediation costs ...............................          17,362           17,354           22,709
        Accrued OPEB costs ....................................................          69,479           68,818           27,639
        Accrued pension costs .................................................          48,073           47,299           28,347
        Other .................................................................          14,248           12,566           13,507
                                                                                    -----------      -----------      -----------
                Total Deferred Credits and Other Liabilities ..................         260,817          258,739          250,990
                                                                                    -----------      -----------      -----------

Minority Interest .............................................................           1,373            1,481                -
                                                                                    -----------      -----------      -----------

Accumulated Deferred Income Tax ...............................................         139,518          138,446          138,140
                                                                                    -----------      -----------      -----------

Commitments and Contingencies (Note 11)

                         TOTAL CAPITALIZATION AND LIABILITIES .................     $ 1,482,161      $ 1,460,532      $ 1,396,157
                                                                                    ===========      ===========      ===========


</TABLE>

                 See Notes to Consolidated Financial Statements



                                      -4-
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                                     For the 3 Months Ended
                                                                                                           March 31,
                                                                                                       2007        2006
                                                                                                     --------    --------
                                                                                                    (Thousands of Dollars)
<S>                                                                                                  <C>         <C>
OPERATING ACTIVITIES:

      Net Income .................................................................................   $ 21,698    $ 18,300

            Adjustments to reconcile net income to net
                cash provided by (used in) operating activities:
                     Depreciation and amortization ...............................................      9,105       8,952
                     Deferred income taxes - net .................................................      3,045          99
                     Provision for uncollectibles ................................................      1,296       1,673
                     Accrued/deferred pension costs ..............................................      3,725      (3,858)
                     Undistributed equity in earnings of unconsolidated affiliates ...............       (886)       (190)
                     Minority interest ...........................................................        (93)          -
                     Gain on sale of property and plant ..........................................       (168)          -

                Changes in operating assets and liabilities - net of business
                     acquisitions:
                     Accounts receivable, unbilled revenues and other receivables ................    (35,554)     (1,162)
                     Fuel, materials and supplies ................................................      7,312      (1,026)
                     Special deposits and prepayments ............................................     (2,950)     (2,634)
                     Accounts payable ............................................................     (4,879)    (13,026)
                     Accrued taxes and interest ..................................................     15,219       8,866
                     Accrued OPEB costs ..........................................................      2,247       2,694
                     Customer advances ...........................................................    (13,254)     (6,322)
                     Regulatory liability-rate moderation ........................................     (6,447)          -
                     Deferred natural gas and electric costs .....................................     (4,501)     10,734
                     Customer benefit fund .......................................................          -      (2,474)
                     Other - net .................................................................      1,167      (9,186)
                                                                                                     --------    --------

            NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ..................................     (3,918)     11,440
                                                                                                     --------    --------

INVESTING ACTIVITIES:
            Proceeds from sale of property and plant .............................................        174           -
            Purchase of short-term investments ...................................................    (32,748)    (10,200)
            Proceeds from sale of short-term investments .........................................     44,810      12,700
            Additions to utility plant and other property and plant ..............................    (21,074)    (12,390)
            Issuance of notes receivable .........................................................          -      (1,590)
            Acquisitions made by competitive business subsidiaries ...............................    (11,356)       (405)
            Other - net ..........................................................................      1,176        (525)
                                                                                                     --------    --------

            NET CASH USED IN INVESTING ACTIVITIES ................................................    (19,018)    (12,410)
                                                                                                     --------    --------

FINANCING ACTIVITIES:
            Redemption of long-term debt .........................................................    (33,000)          -
            Proceeds from issuance of long-term debt .............................................     33,000           -
            Net borrowings (repayments) of short-term debt........................................     30,000      (1,000)
            Dividends paid on common stock .......................................................     (8,511)     (8,511)
            Debt issuance costs ..................................................................        (20)        (21)
                                                                                                     --------    --------

            NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ..................................     21,469      (9,532)
                                                                                                     --------    --------

NET CHANGE IN CASH AND CASH EQUIVALENTS ..........................................................     (1,467)    (10,502)

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR ....................................................     24,121      49,410
                                                                                                     --------    --------

CASH AND CASH EQUIVALENTS - END OF PERIOD ........................................................   $ 22,654    $ 38,908
                                                                                                     ========    ========

Supplemental Disclosure of Cash Flow Information and Non Cash Investing Activities

            Interest paid ........................................................................   $  9,090    $  7,621

            Federal and State income tax paid ....................................................   $     58    $    138

            Additions to plant included in accounts payable ......................................   $  1,205    $  1,129

</TABLE>


                 See Notes to Consolidated Financial Statements


                                      -5-
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                 For the 3 Months Ended March 31,
                                                                                         2007         2006
                                                                                       ---------    ---------
                                                                                       (Thousands of Dollars)
<S>                                                                                    <C>          <C>
Operating Revenues
  Electric .........................................................................   $ 151,675    $ 136,047
  Natural gas ......................................................................      64,191       70,809
                                                                                       ---------    ---------
      Total Operating Revenues .....................................................     215,866      206,856
                                                                                       ---------    ---------
Operating Expenses
  Operation:
    Purchased electricity and fuel used in electric generation .....................      93,217       85,840
    Purchased natural gas ..........................................................      43,336       51,727
    Other expenses of operation ....................................................      37,649       28,495
  Depreciation and amortization ....................................................       7,286        7,455
  Taxes, other than income tax .....................................................       8,334        7,527
                                                                                       ---------    ---------
      Total Operating Expenses................................................., ...     189,822      181,044
                                                                                       ---------    ---------

Operating Income ...................................................................      26,044       25,812
                                                                                       ---------    ---------

Other Income and Deductions
  Interest on regulatory assets and other interest income ..........................       1,541        1,929
  Other - net ......................................................................        (345)        (119)
                                                                                       ---------    ---------
      Total Other Income............................................................       1,196        1,810
                                                                                       ---------    ---------
Interest Charges
  Interest on long-term debt .......................................................       4,492        3,953
  Interest on regulatory liabilities and other interest ............................         949        1,038
                                                                                       ---------    ---------
      Total Interest Charges........................................................       5,441        4,991
                                                                                       ---------    ---------

Income before income taxes .........................................................      21,799       22,631

Income taxes .......................................................................       8,428        9,578
                                                                                       ---------    ---------

Net Income .........................................................................      13,371       13,053

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

Income Available for Common Stock ..................................................   $  13,129    $  12,811
                                                                                       =========    =========

</TABLE>


                 See Notes to Consolidated Financial Statements


                                      -6-
<PAGE>


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

                                               For the 3 Months Ended March 31,
                                                     2007            2006
                                                   -------          -------
                                                   (Thousands of Dollars)

Net Income ..............................          $13,371          $13,053

Other Comprehensive Income ..............                -                -
                                                   -------          -------

Comprehensive Income ....................          $13,371          $13,053
                                                   =======          =======





                 See Notes to Consolidated Financial Statements


                                      -7-
<PAGE>

                    CENTRAL HUDSON GAS & ELECTRIC CORPORATION
                           CONSOLIDATED BALANCE SHEET
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                         March 31,     December 31,      March 31,
                                                                                           2007            2006            2006
                                                                                        ----------      ----------      ----------
                                                                                                  (Thousands of Dollars)
<S>                                                                                     <C>             <C>             <C>
                                    ASSETS
Utility Plant
       Electric ..................................................................      $  774,857      $  768,808      $  742,799
       Natural gas ...............................................................         240,683         239,317         227,360
       Common ....................................................................         114,232         112,426         108,009
                                                                                        ----------      ----------      ----------
                                                                                         1,129,772       1,120,551       1,078,168

       Less:  Accumulated depreciation ...........................................         351,477         344,540         338,414
                                                                                        ----------      ----------      ----------
                                                                                           778,295         776,011         739,754

       Construction work in progress .............................................          59,208          51,041          45,929
                                                                                        ----------      ----------      ----------
               Net Utility Plant .................................................         837,503         827,052         785,683
                                                                                        ----------      ----------      ----------
Other Property and Plant - net ...................................................             427             434             723
                                                                                        ----------      ----------      ----------
Current Assets
       Cash and cash equivalents .................................................           4,875           1,710           3,233
       Accounts receivable -
             net of allowance for doubtful accounts of $3.6 million,
             $3.8 million, and $3.7 million, respectively ........................          73,367          48,611          65,239
       Accrued unbilled utility revenues .........................................           9,995           9,772           8,444
       Other receivables .........................................................           2,947           3,034           2,376
       Fuel, materials and supplies - at average cost ............................          15,866          22,804          23,278
       Regulatory assets .........................................................          34,149          31,332          20,156
       Fair value of derivative instruments ......................................               -               -              61
       Prepaid income taxes ......................................................               -          10,477               -
       Special deposits and prepayments ..........................................          22,525          21,009          18,533
       Accumulated deferred income tax ...........................................           3,161           4,600          13,217
                                                                                        ----------      ----------      ----------
                Total Current Assets .............................................         166,885         153,349         154,537
                                                                                        ----------      ----------      ----------
Deferred Charges and Other Assets
       Regulatory assets - related to pension plan costs .........................          95,050          99,281         109,235
       Regulatory assets - related to OPEB costs .................................          34,386          36,392          13,032
       Intangible asset - pension plan ...........................................               -               -          20,217
       Regulatory assets .........................................................          83,236          83,102          45,243
       Unamortized debt expense ..................................................           3,967           4,041           3,899
       Other .....................................................................          13,133          12,172          12,080
                                                                                        ----------      ----------      ----------
                Total Deferred Charges and Other Assets ..........................         229,772         234,988         203,706
                                                                                        ----------      ----------      ----------

                          TOTAL ASSETS ...........................................      $1,234,587      $1,215,823      $1,144,649
                                                                                        ==========      ==========      ==========


</TABLE>


                 See Notes to Consolidated Financial Statements



                                      -8-
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                 March 31,         December 31,         March 31,
                                                                                   2007               2006                2006
                                                                                -----------        -----------        -----------
                                                                                              (Thousands of Dollars)

<S>                                                                             <C>                <C>                <C>
                        CAPITALIZATION AND LIABILITIES

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 ...............................................            81,839             68,710             56,121
        Capital stock expense ...........................................            (4,961)            (4,961)            (4,961)
                                                                                -----------        -----------        -----------
                Total Common Shareholder's Equity .......................           336,169            323,040            310,451
                                                                                -----------        -----------        -----------

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

        Long-term debt ..................................................           370,889            337,889            310,886
                                                                                -----------        -----------        -----------
                Total Capitalization ....................................           728,085            681,956            642,364
                                                                                -----------        -----------        -----------

Current Liabilities
        Current maturities of long-term debt ............................                 -             33,000             33,000
        Notes payable ...................................................            43,000             13,000             29,000
        Accounts payable ................................................            22,994             32,418             31,209
        Accrued interest ................................................             2,512              5,645              2,697
        Dividends payable - preferred stock .............................               242                242                242
        Accrued vacation and payroll ....................................             5,024              4,682              4,632
        Customer advances ...............................................             5,600             15,907                  -
        Customer deposits ...............................................             7,863              7,811              6,959
        Regulatory liabilities ..........................................            18,612             21,651              3,200
        Fair value of derivative instruments ............................               180              2,971                  -
        Accrued income taxes ............................................             4,632                  -             10,306
        Accrued environmental remediation costs .........................             2,400              3,400                  -
        Other ...........................................................             7,463              8,884              5,704
                                                                                -----------        -----------        -----------
                Total Current Liabilities ...............................           120,522            149,611            126,949
                                                                                -----------        -----------        -----------

Deferred Credits and Other Liabilities
        Regulatory liabilities ..........................................           106,745            107,796            152,395
        Operating reserves ..............................................             3,883              3,936              5,319
        Accrued environmental remediation costs .........................            15,514             15,457             19,500
        Accrued OPEB costs ..............................................            69,479             68,818             27,639
        Accrued pension costs ...........................................            48,073             47,299             28,347
        Other ...........................................................            12,640             11,802             11,343
                                                                                -----------        -----------        -----------
                Total Deferred Credits and Other Liabilities ............           256,334            255,108            244,543
                                                                                -----------        -----------        -----------

Accumulated Deferred Income Tax .........................................           129,646            129,148            130,793
                                                                                -----------        -----------        -----------

Commitments and  Contingencies (Note 11)

                TOTAL CAPITALIZATION AND LIABILITIES ....................       $ 1,234,587        $ 1,215,823        $ 1,144,649
                                                                                ===========        ===========        ===========

</TABLE>


                 See Notes to Consolidated Financial Statements


                                      -9-
<PAGE>

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

<TABLE>
<CAPTION>

                                                                                                For the 3 Months Ended
                                                                                                      March 31,
                                                                                                   2007         2006
                                                                                                 --------      --------
                                                                                                 (Thousands of Dollars)
<S>                                                                                              <C>           <C>
OPERATING ACTIVITIES:

      Net Income ...........................................................................     $ 13,371      $ 13,053

            Adjustments to reconcile net income to net
                cash provided by (used in) operating activities:
                     Depreciation and amortization .........................................        7,286         7,455
                     Deferred income taxes - net ...........................................        2,238          (174)
                     Provision for uncollectibles ..........................................        1,030         1,366
                     Accrued/deferred pension costs ........................................        3,725        (3,858)
                     Gain on sale of property and plant ....................................         (168)            -

            Changes in operating assets and liabilities - net:
                     Accounts receivable, unbilled revenues and other receivables ..........      (25,922)          606
                     Fuel, materials and supplies ..........................................        6,938           133
                     Special deposits and prepayments ......................................       (1,516)       (2,365)
                     Accounts payable ......................................................       (6,371)       (9,675)
                     Accrued taxes and interest ............................................       11,976         7,523
                     Accrued OPEB costs ....................................................        2,247         2,694
                     Customer advances .....................................................      (10,307)       (4,774)
                     Regulatory liability-rate moderation ..................................       (6,447)            -
                     Deferred natural gas and electric costs ...............................       (4,501)       10,734
                     Customer benefit fund .................................................            -        (2,474)
                     Other - net ...........................................................          170        (7,811)
                                                                                                 --------      --------

            NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ............................       (6,251)       12,433
                                                                                                 --------      --------

INVESTING ACTIVITIES:

            Proceeds from sale of property and plant .......................................          174             -
            Additions to plant .............................................................      (20,505)      (11,986)
            Other - net ....................................................................            9          (183)
                                                                                                 --------      --------

            NET CASH USED IN INVESTING ACTIVITIES ..........................................      (20,322)      (12,169)
                                                                                                 --------      --------

FINANCING ACTIVITIES:

            Redemption of long-term debt ...................................................      (33,000)            -
            Proceeds from issuance of long-term debt .......................................       33,000             -
            Net borrowings (repayments) of short-term debt .................................       30,000        (1,000)
            Dividends paid on cumulative preferred stock ...................................         (242)         (242)
            Debt issuance costs ............................................................          (20)          (21)
                                                                                                 --------      --------

            NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ............................       29,738        (1,263)
                                                                                                 --------      --------

NET CHANGE IN CASH AND CASH EQUIVALENTS ....................................................        3,165          (999)

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR ..............................................        1,710         4,232
                                                                                                 --------      --------

CASH AND CASH EQUIVALENTS - END OF PERIOD ..................................................     $  4,875      $  3,233
                                                                                                 ========      ========

Supplemental Disclosure of Cash Flow Information and Non Cash Investing Activities

            Interest paid ..................................................................     $  8,107      $  6,733
            Federal and State income tax paid ..............................................     $      -      $     30
            Additions to plant included in Accounts Payable ................................     $  1,179      $  1,129


</TABLE>

                 See Notes to Consolidated Financial Statements



                                      -10-
<PAGE>

                              CH ENERGY GROUP, INC.
                    CENTRAL HUDSON GAS & ELECTRIC CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

         This Quarterly Report on Form 10-Q is a combined report of CH Energy
Group, Inc. ("CH 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 CH Energy Group and
Central Hudson. CH Energy Group's Consolidated Financial Statements include the
accounts of CH Energy Group and its wholly owned subsidiaries, which include
Central Hudson and CH Energy Group's non-utility subsidiary, Central Hudson
Enterprises Corporation ("CHEC" and, together with its subsidiaries, the
"competitive business subsidiaries"). CHEC subsidiary Griffith Energy Services,
Inc. ("Griffith") is sometimes referred to herein as the "fuel distribution
business." CHEC subsidiary Lyonsdale Biomass, LLC ("Lyonsdale") operating
results are consolidated in the financial statements of CH Energy Group. The
minority interest shown on CH Energy Group's Consolidated Financial Statements
represents the minority owner's proportionate share of the income and equity of
Lyonsdale.

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

         The accompanying Consolidated Financial Statements of CH 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 CH Energy Group/Central
Hudson Annual Report on Form 10-K for the year ended December 31, 2006 (the
"Corporations' 10-K Annual Report").

         CH Energy Group's and Central Hudson's balance sheets as of March 31,
2006, are not required to be included in this Quarterly Report on Form 10-Q;
however, these balance sheets are included for supplemental analysis purposes.

CASH AND CASH EQUIVALENTS

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



                                      -11-
<PAGE>

ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

CENTRAL HUDSON

         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, 2007, the total fair value of open Central Hudson
derivatives, which hedge electric and natural gas commodity purchases was an
unrealized loss of ($0.2) million. This compares to a fair value at December 31,
2006, of ($3.0) million, a net unrealized loss, and a fair value of $61,000 at
March 31, 2006, a net unrealized gain. Central Hudson recorded actual net losses
of ($3.4) million on such hedging activities for the quarter ended March 31,
2007, as compared to a net loss of ($4.2) million for the same period in 2006.

         Realized gains and losses, in addition to unrealized gains and losses,
serve to either decrease or increase actual energy costs and are deferred for
return to or 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, titled ACCOUNTING FOR THE EFFECTS
OF CERTAIN TYPES OF REGULATION ("SFAS 71"). Central Hudson also entered into
weather derivative contracts to hedge the effect of weather on sales of
electricity and natural gas for February and March of the heating season ended
March 31, 2007, and for the three months of the heating season ended March 31,
2006. Under the terms of these weather-hedging contracts, no settlement payments
were made to or from counter parties for either of the periods covered.

GRIFFITH

         The fair value of Griffith's open derivative positions at March 31,
2007, and 2006, was not material. The fair value of derivative instruments at
December 31, 2006, was a net unrealized loss of ($0.6) million. Derivatives
outstanding at March 31, 2007, included call and put options designated as cash
flow hedges for fuel oil purchases through June 2007. In the first quarter of
2007, Griffith also entered into derivative contracts to hedge a portion
(336,000 gallons) of firm delivery contract volumes assumed from acquired
companies for the months of March, April and June 2007. These derivative
instruments, comprised of calendar average New York Mercantile Exchange
("NYMEX") swaps, were designated as fair value hedges and the fair value of open
positions at March 31, 2007, was not material. The hedged gallons for all open
positions represent approximately 13.1% of Griffith's total projected fuel oil
requirements for the months of April through June 2007. A total actual net loss
was recorded during the three months ended March 31, 2007, including premium
expense, in the amount of ($0.6) million. A net loss was also recorded during
the same period in 2006 that was not material.



                                      -12-
<PAGE>

          Griffith entered into weather derivative contracts for selected months
of the heating season ended March 31, 2007, and due to weather that was colder
than the contractual strike point paid $0.9 million to the related counter
party. The settlement amount for the weather-hedging contract covering the
three-month period ended March 31, 2006, was not material.

PARENTAL GUARANTEES

         CH Energy Group and CHEC 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. Reference is made to Note 1 - "Summary of Significant Accounting
Policies" to the Consolidated Financial Statements of the Corporations' 10-K
Annual Report under the captions "Parental Guarantees" and "Product Warranties."

         The guarantees described above have been issued to counter-parties to
assure the payment, when due, of certain obligations incurred by CH Energy Group
subsidiaries in physical and financial transactions related to heating oil,
propane, other petroleum products, and weather and commodity hedges. At March
31, 2007, the aggregate amount of subsidiary obligations covered by these
guarantees was $7.2 million. Where liabilities exist under the commodity-related
contracts subject to these guarantees, these liabilities are included in CH
Energy Group's Consolidated Balance Sheet. CH Energy Group's approximate
aggregate potential liability for product warranties at March 31, 2007, had not
changed from that reported at December 31, 2006, which was $64,000. CH Energy
Group's approximate aggregate potential liability for product warranties at
March 31, 2006, which had not changed from that reported at December 31, 2005,
was $101,000.

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 applicable depreciation rates have been approved by
the PSC.

         Financial Accounting Standards Board ("FASB") SFAS No. 143, titled
ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS ("SFAS 143"), precludes the
recognition of expected future retirement obligations as a component of
depreciation expense or accumulated depreciation. Central Hudson, however, is
required to use depreciation methods and



                                      -13-
<PAGE>

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 accordance with SFAS
143, Central Hudson has classified $45.3 million, $44.6 million, and $94.1
million of net cost of removal as regulatory liabilities as of March 31, 2007,
December 31, 2006, and March 31, 2006, respectively. The amount of this
liability as of December 31, 2006, was reduced by the transfer of $52.5 million
of excess electric depreciation reserve pursuant to the Order Establishing Rate
Plan ("2006 Order") issued to Central Hudson by the PSC on July 24, 2006. For
further information, see Note 1 - "Summary of Significant Accounting Policies"
under the caption "Depreciation and Amortization" to the Consolidated Financial
Statements of the Corporations' 10-K Annual Report.

         For financial statement purposes, both Griffith and Lyonsdale have
depreciation provisions that 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 Griffith was $18 million, $17.3 million,
and $15.3 million as of March 31, 2007, December 31, 2006, and March 31, 2006,
respectively.

         Accumulated depreciation for Lyonsdale was $0.8 million and $0.6
million as of March 31, 2007 and December 31, 2006, respectively.

         Amortization of intangibles (other than goodwill) is computed on the
straight-line method over an asset's expected useful life. See Note 5 -
"Goodwill and Other Intangible Assets" for further discussion.

EARNINGS PER SHARE

         Reference is made to Note 1 - "Summary of Significant Accounting
Policies" to the Consolidated Financial Statements of the Corporations' 10-K
Annual Report under the caption "Earnings Per Share."

         In the calculation of earnings per share (basic and diluted) of CH
Energy Group's common stock ("Common Stock"), earnings for CH Energy Group are
reduced by the preferred stock dividends of Central Hudson. The average dilutive
effect of CH Energy Group's stock options and performance shares was 28,092
shares and 14,971 shares for the quarters ended March 31, 2007, and 2006,
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 some of the periods
presented. Excluded from the calculation were options for 35,700 shares for the
three-month period ended March 31, 2006. For the first quarter of 2007, there
are no stock options excluded from the calculation. For additional information
regarding stock options and performance shares, see Note 10 - "Equity-Based
Compensation Incentive Plans."



                                      -14-
<PAGE>

EQUITY-BASED COMPENSATION

         CH Energy Group has an equity-based employee compensation plan that is
described in Note 10 - "Equity-Based Compensation Incentive Plans."

FIN 46R - CONSOLIDATION OF VARIABLE INTEREST ENTITIES

         Reference is made to the subcaption "FIN 46 - Consolidation of Variable
Interest Entities" of Note 1 - "Summary of Significant Accounting Policies" to
the Consolidated Financial Statements of the Corporations' 10-K Annual Report.
CH 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.

INCOME TAX

         On April 9, 2007, New York State enacted its' 2007 - 2008 budget, which
included amendments to the state income tax. Those amendments included a
reduction in the Corporate Net Income Tax Rate to 7.1% from 7.5%, as well as the
adoption of a single sales factor for apportioning taxable income to New York
State. Both amendments are effective January 1, 2007. CH Energy Group and
Central Hudson are evaluating the effects of the amendments, but believe they
will not be material to 2007 results.

RECLASSIFICATION

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

NOTE 2 - REGULATORY MATTERS

         Reference is made to Note 2 - "Regulatory Matters" under captions
"Expiring Rate Proceedings - Electric and Natural Gas" and "New Rate Proceedings
- Electric and Natural Gas" to the Consolidated Financial Statements of the
Corporations' 10-K Annual Report.

NON-UTILITY LAND SALES

CENTRAL HUDSON

         During the three months ended March 31, 2007, Central Hudson sold one
parcel of non-utility real property for $0.2 million in excess of book value and
transaction costs, which is recorded as a reduction to Other Expenses of
Operation-regulated activities.

NOTE 3 - NEW ACCOUNTING STANDARDS AND OTHER FASB PROJECTS

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



                                      -15-
<PAGE>

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

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------------
IMPACT*        STATUS         CATEGORY            REFERENCE              TITLE                         ISSUED DATE  EFFECTIVE DATE
----------------------------------------------------------------------------------------------------------------------------------
<S>      <C>                 <C>                 <C>              <C>                                     <C>             <C>
   1     Under Assessment    Fair Value          SFAS 157         Fair Value Measurement                  Sep-06          Jan-08
----------------------------------------------------------------------------------------------------------------------------------
   1     Under Assessment    Fair Value          SFAS 159         Establishing the Fair Value             Feb-07          Jan-08
                                                                  Option for Financial Assets and
                                                                  Liabilities
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
   2     Recognition of      Pension,            SFAS 158         Employers' Accounting for               Sep-06          Dec-06
         Funded Status       Postretirement                       Defined Benefit Pension and
         Implemented                                              Other Postretirement Plans
----------------------------------------------------------------------------------------------------------------------------------
   2     Implemented         Taxes               FIN 48           Accounting for Uncertainty in           Jul-06          Jan-07
                                                                  Income Taxes - an Interpretation
                                                                  of FASB Statement No. 109
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
   3     Not Currently       Derivatives         Statement 133    Embedded Derivatives:                   Dec-06          Jan-07
         Applicable                              Issue B40        Application of Paragraph 13 (b)
                                                                  to Securitized Interests in
                                                                  Prepayable Financial Assets
----------------------------------------------------------------------------------------------------------------------------------
   3     Not Currently       Financial           SFAS 155         Accounting for Certain Hybrid           Feb-06          Jan-07
         Applicable          Instruments                          Financial Instruments, an
                                                                  Amendment of FASB Statements No.
                                                                  133 and 140
----------------------------------------------------------------------------------------------------------------------------------
   3     Not Currently       Financial Assets    SFAS No. 156     Accounting for Servicing of             Mar-06          Jan-07
         Applicable                                               Financial Assets
----------------------------------------------------------------------------------------------------------------------------------
   3     Not Currently       Derivatives         Statement 133    Cash Flow Hedges:  Hedging              Dec-06          Apr-07
         Applicable                              Issue G26        Interest Cash Flows on
                                                                  Variable-Rate Assets and
                                                                  Liabilities that are not Based
                                                                  on a Benchmark Rate
----------------------------------------------------------------------------------------------------------------------------------

</TABLE>

*IMPACT KEY:
1 - No significant impact on the financial condition, results of operations or
cash flows of CH Energy Group and its subsidiaries expected.
2 - Following the chart, the impacts are separately disclosed as of standard
effective dates.
3 - No current impact on the financial condition, results of operations or cash
flows of CH Energy Group and its subsidiaries.



                                      -16-
<PAGE>

STANDARDS UNDER ASSESSMENT

         SFAS 157 defines fair value, establishes a framework for measuring fair
value in GAAP, and expands disclosures about fair value measurements. The
changes to current practice resulting from the application of SFAS 157 relate to
the definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurement.

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

STANDARDS IMPLEMENTED

         SFAS 158 requires an employer that sponsors a defined benefit pension
and other post-retirement plans to report the current economic status (i.e., the
overfunded or underfunded status) of the plan in its statement of financial
position by measuring plan assets and benefit obligations on the same date as
the employer's assets and liabilities. SFAS 158 became effective for fiscal
years ending after December 15, 2006, with an exception for the provision to
change the measurement date, which is effective and will be implemented for
fiscal years ending after December 15, 2008. Reference is made to Note 1 -
"Summary of Significant Accounting Policies" to the Consolidated Financial
Statements of the Corporations' 10-K Annual Report under the caption "Employers'
Accounting for Defined Benefit Pension and Other Postretirement Plans."

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



                                      -17-
<PAGE>


currently open for audit for tax years 2002 through 2006, and tax years 2002
through 2004 are currently under audit.

NOTE 4 - ACQUISITIONS AND INVESTMENTS

         Reference is made to Note 4 - "Acquisitions and Investments" to the
Consolidated Financial Statements of the Corporations' 10-K Annual Report.

ACQUISITIONS

         During the first quarter of 2007, Griffith acquired fuel distribution
companies as follows:

<TABLE>
<CAPTION>

-----------------  ------------   ----------------------   -----------------------   ---------------   ---------------
                                      (in Millions)            (in Millions)          (in Millions)     (in Millions)

                       # of                                                                                 Total
     Period          Acquired                                      Total                                   Tangible
     as of           Companies       Purchase Price        Intangible Assets((1))        Goodwill        Assets((2))
-----------------  ------------   ----------------------   -----------------------   ---------------   ---------------
<S>                 <C>              <C>                     <C>                      <C>               <C>
 March 31, 2007          3                $11.3                   $9.5                   $4.4              $1.8
-----------------  ------------   ----------------------   -----------------------   ---------------   ---------------

</TABLE>

(1) Including goodwill.

(2) Total tangible assets include $1.2 million in liquid petroleum and spare
    parts inventory, and $0.6 million in vehicles.

NOTE 5 - 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
average historical customer turnover. However, if customer turnover were to
substantially increase, a shorter amortization period would be used, resulting
in an increase in amortization expense. For example, if a ten-year amortization
period were used, annual amortization expense would increase by approximately
$1.6 million. The useful life of a covenant not to compete is based on the
expiration date of the covenant, generally between two and ten years. Intangible
assets with indefinite useful lives and goodwill are no longer amortized, but
instead are periodically reviewed for impairment. Annually in the fourth
quarter, Griffith tests the goodwill and intangible assets remaining on the
balance sheet for impairment and retests between annual tests if an event should
occur or circumstances arise that would more likely than not reduce the fair
value below its carrying amount.

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




                                      -18-
<PAGE>

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------
                                        March 31, 2007             December 31, 2006             March 31, 2006
-----------------------------------------------------------------------------------------------------------------------
                                      Gross                       Gross                       Gross
                                    Carrying   Accumulated      Carrying    Accumulated      Carrying    Accumulated
                                     Amount    Amortization      Amount     Amortization       Amount    Amortization
-----------------------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>           <C>            <C>          <C>            <C>
Customer Lists                       $47,515        $16,259       $42,479        $15,508      $40,578        $13,429
-----------------------------------------------------------------------------------------------------------------------
Covenants Not to Compete               1,410            816         1,350            771        1,699          1,038
-----------------------------------------------------------------------------------------------------------------------
Total Amortizable Intangibles        $48,925        $17,075       $43,829        $16,279      $42,277        $14,467
-----------------------------------------------------------------------------------------------------------------------

</TABLE>

         Amortization expense was $0.8 million and $0.7 million for each of the
three-month periods ended March 31, 2007, and 2006, respectively. The estimated
annual amortization expense for each of the next five years, assuming no new
acquisitions, is approximately $3.3 million.

         The carrying amount for goodwill not subject to amortization was $57.2
million as of March 31, 2007, $52.8 million as of December 31, 2006, and $51.5
million as of March 31, 2006.

NOTE 6 - SHORT-TERM INVESTMENTS

         CH Energy Group's short-term investments consist of Auction Rate
Securities ("ARS") and Variable Rate Demand Notes ("VRDN"), which have been
classified as current available-for-sale securities pursuant to the provisions
of SFAS No. 115, titled Accounting for Certain Investments in Debt and Equity
Securities. ARS and VRDN are debt instruments with a long-term nominal maturity
and a mechanism that resets the interest rate at regular intervals. CH Energy
Group's investments include tax-exempt ARS and VRDN with interest rates that are
reset anywhere from 7 to 35 days. These investments are available to fund
current operations or to provide funding in accordance with CH Energy Group's
strategy to redeploy equity into its subsidiaries. Due to the nature of these
securities with regard to their interest rate reset periods, the aggregate
carrying value approximates their fair value; as such, it does not impact
shareholders' equity with regard to unrealized gains and losses. The aggregate
fair value of these short-term investments was $30.5 million at March 31, 2007,
$42.6 million at December 31, 2006, and $39.6 million at March 31, 2006. Cash
flows from the purchases and liquidation of these investments are reported
separately as investing activities in CH Energy Group's Consolidated Statement
of Cash Flows.

NOTE 7 - FUEL, MATERIALS AND SUPPLIES

         Fuel, materials, and supplies for CH Energy Group includes the
following:

COMPANY                                  VALUATION METHOD
Central Hudson                           Average cost
Griffith                                 FIFO
Lyonsdale                                Weighted average cost




                                      -19-
<PAGE>

         The following is a summary of CH Energy Group's and Central Hudson's
fuel, and materials and supplies at March 31, 2007, December 31, 2006, and March
31, 2006:

                                                      CH ENERGY GROUP
--------------------------------------------------------------------------------
                                          March 31,    December 31,    March 31,
                                            2007          2006           2006
--------------------------------------------------------------------------------
(In Thousands)
--------------------------------------------------------------------------------
Natural Gas                               $ 8,528         $15,640       $16,404
--------------------------------------------------------------------------------
Petroleum Products and Propane              3,672           3,680         4,954
--------------------------------------------------------------------------------
Fuel Used In Electric Generation              617             393           262
--------------------------------------------------------------------------------
Materials and Supplies                      9,073           8,217         7,756
--------------------------------------------------------------------------------
Total                                     $21,890         $27,930       $29,376
--------------------------------------------------------------------------------

                                                      CENTRAL HUDSON
--------------------------------------------------------------------------------
                                          March 31,    December 31,    March 31,
                                            2007          2006           2006
--------------------------------------------------------------------------------
(In Thousands)
--------------------------------------------------------------------------------
Natural Gas                               $ 8,528         $15,640       $16,404
--------------------------------------------------------------------------------
Petroleum Products and Propane                385             493           478
--------------------------------------------------------------------------------
Fuel Used In Electric Generation              229             233           262
--------------------------------------------------------------------------------
Materials and Supplies                      6,724           6,438         6,134
--------------------------------------------------------------------------------
Total                                     $15,866         $22,804       $23,278
--------------------------------------------------------------------------------


NOTE 8 - LONG-TERM DEBT

         Reference is made to Note 8 - "Capitalization - Long-term Debt" to the
Consolidated Financial Statements of the Corporations' 10-K Annual Report.

         On March 23, 2007, Central Hudson issued $33 million of 30-year 5.80%
Series F notes. The proceeds were used to redeem maturing debt. On March 28,
2007, Central Hudson redeemed at maturity $33 million of 5-year 5.87% Series D
notes.

NOTE 9 - POST-EMPLOYMENT BENEFITS

         The following are the components of Central Hudson's net periodic
benefits costs for its pension and OPEB plans for the quarters ended March 31,
2007, and 2006. The OPEB amounts for both years reflect the effect of the
Medicare Prescription Drug, Improvement and Modernization Act of 2003 under the
provisions of FSP 106-2, titled ACCOUNTING AND DISCLOSURE REQUIREMENTS RELATED
TO THE MEDICARE PRESCRIPTION DRUG, IMPROVEMENT AND MODERNIZATION ACT OF 2003.



                                      -20-
<PAGE>

<TABLE>
<CAPTION>

                                                                    Quarter Ended March 31,
                                                       Pension Benefits                          OPEB
                                                   -------------------------           -------------------------
                                                     2007             2006               2007              2006
                                                         (In Thousands)                      (In Thousands)
                                                   -------------------------           -------------------------
<S>                                                <C>               <C>               <C>               <C>
Service cost                                       $ 1,977           $ 1,985           $   914           $ 1,070

Interest cost                                        5,928             5,577             2,078             2,258

Expected return on plan assets                      (6,999)           (6,709)           (1,584)           (1,433)

Amortization of:
     Prior service cost                                494               542              (314)             (314)
     Transitional (asset) or obligation                  -                 -               641               641

Recognized actuarial (gain) or loss                  3,344             3,240             1,259             1,848
                                                   -------           -------           -------           -------

Net periodic benefit cost                          $ 4,744           $ 4,635           $ 2,994           $ 4,070
                                                   =======           =======           =======           =======

</TABLE>


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

         Employer contributions for OPEB totaled $0.9 million and $1.2 million
during the three months ended March 31, 2007 and 2006, respectively. The total
contribution for the 2006 plan year was $4.9 million including a $1.7 million
contribution funded in April of 2007. The determination of future funding
depends on a number of factors, including the discount rate, expected return,
and medical claims assumptions used. If these factors remain stable, annual
funding for the 2007 plan year is expected to approximate the 2006 amount.

         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.

NOTE 10 - 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, to the description of CH Energy Group's Long-Term Performance-Based
Incentive Plan (the "2000 Plan"), and to the description of CH Energy Group's
Long-Term Equity Incentive Plan (the "2006 Plan") described therein.



                                      -21-
<PAGE>


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

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------
                                          Performance Shares      Performance Shares
     Plan              Grant Date              Granted           Outstanding at 3/31/07
----------------------------------------------------------------------------------------
<S>                  <C>                  <C>                     <C>
   2000 Plan         March 24, 2005             23,000                  23,000
----------------------------------------------------------------------------------------
   2006 Plan         April 25, 2006             20,710                  20,710
----------------------------------------------------------------------------------------
   2006 Plan        January 25, 2007            20,920                  20,920
----------------------------------------------------------------------------------------
</TABLE>

         The ultimate number of shares earned under the awards is based on
metrics established by the Compensation Committee at the beginning of the award
cycle. Compensation expense is recorded as performance shares are earned over
the relevant three-year life of the performance share grant prior to its award.

---------------------------------------------------------------------------
         Description              Quarter ended        Quarter ended
                                  March 31, 2007       March 31, 2006
---------------------------------------------------------------------------
Performance shares -
compensation expense                 $287,000             $144,000
---------------------------------------------------------------------------
Stock options
---------------------------------------------------------------------------
     Compensation expense          Not material          Not material
---------------------------------------------------------------------------
     Balance accrued on
     outstanding options             $115,000             $204,000
---------------------------------------------------------------------------
     Intrinsic value of
     outstanding options           Not material          Not material
---------------------------------------------------------------------------

         A summary of the status of stock options awarded to executives and
non-employee Directors of CH Energy Group and its subsidiaries under the 2000
Plan as of March 31, 2007, is as follows:



                                                 Weighted      Weighted
                                                 Average       Average
                                 Stock Option    Exercise     Remaining
                                    Shares        Price     Life in Years
                                 ------------    --------   --------------
Outstanding at 12/31/06              45,260       $45.87         4.82
             Granted                   --           --            --
             Exercised              (4,780)       $44.23
             Expired/Cancelled         --           --            --
                                 ------------    --------   --------------
Outstanding at 3/31/07               40,480       $46.06         4.66
                                 ============    ========   ==============

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

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



                                      -22-
<PAGE>

         The following table summarizes information concerning outstanding and
exercisable stock options at March 31, 2007, by exercise price:

<TABLE>
<CAPTION>

                   Number of     Weighted Average      Number of          Number of
                    Options          Remaining          Options            Options
 Exercise Price   Outstanding      Life in Years      Exercisable     Remaining to Vest
 --------------   -----------      -------------      -----------     -----------------
<S>               <C>              <C>                <C>             <C>
    $31.94              320             2.75                320              ---
    $44.06           21,560             3.75             21,560              ---
    $48.62           18,600             5.75             15,495             3,105
                     ------             ----             ------             -----
                     40,480             4.66             37,375             3,105

</TABLE>

NOTE 11 - COMMITMENTS AND CONTINGENCIES

ELECTRICITY PURCHASE COMMITMENTS

         Reference is made to Note 11 - "Commitments and Contingencies" to the
Consolidated Financial Statements of the Corporations' 10-K Annual Report, to
the caption "Electric Purchase Commitments."

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

CONTINGENCIES

         CH 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.

CITY OF POUGHKEEPSIE

         On January 1, 2001, a fire destroyed a multi-family residence on Taylor
Avenue in the City of Poughkeepsie, New York resulting in several deaths and
damage to nearby residences. Eight separate lawsuits arising out of this
incident have been commenced in New York State Supreme Court, County of
Dutchess, by approximately 24 plaintiffs against Central Hudson and other
defendants, each lawsuit alleging that Central Hudson supplied the Taylor Avenue
residence with natural gas service for cooking purposes at the time of the fire.
The basis for the claimed liability of Central Hudson in these actions is that
it was allegedly negligent in the supply of such natural gas. The suits seek an
aggregate of $528 million in compensatory damages for alleged property damage,
personal injuries, wrongful death, and loss of consortium or services. Central
Hudson has notified its insurance carrier, has denied liability, and is
defending the lawsuits. Based on information known to Central Hudson at this
time, including



                                      -23-
<PAGE>


information from ongoing discovery proceedings in the lawsuits, Central Hudson
believes that the likelihood it will have a liability in these lawsuits is
remote.

ENVIRONMENTAL MATTERS

CENTRAL HUDSON:

         AIR

         In October 1999, Central Hudson was informed by the New York State
Attorney General ("Attorney General") that the Danskammer Point Steam Electric
Generating Station ("Danskammer Plant") was included in an investigation by the
Attorney General's Office into the compliance of eight older New York State
coal-fired power plants with federal and state air emissions rules.
Specifically, the Attorney General alleged that Central Hudson "may have
constructed, and continues to operate, major modifications to the Danskammer
Plant without obtaining certain requisite preconstruction permits." As part of
this investigation, Central Hudson has received several requests for information
from the Attorney General, the New York State Department of Environmental
Conservation ("DEC"), and the United States Environmental Protection Agency
("EPA") seeking information about the operation and maintenance of the
Danskammer Plant during the period from 1980 to 2000, including specific
information regarding approximately 45 projects conducted during that period. In
March 2000, the EPA assumed responsibility for the investigation. Central Hudson
has completed its production of documents in connection with the information
requests, and believes any permits required for these projects were obtained in
a timely manner. Notwithstanding Central Hudson's sale of the Danskammer Plant
on January 30, 2001, Central Hudson could retain liability depending on the type
of remedy, if any, imposed in connection with this matter. Central Hudson
presently has insufficient information with which to predict the outcome of this
matter.

         FORMER MANUFACTURED GAS PLANT FACILITIES

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

         The DEC, which regulates the timing and extent of remediation of MGP
sites, has notified Central Hudson that it believes Central Hudson or its
predecessors at one time owned and/or operated MGPs at eight sites in Central
Hudson's franchise territory. The DEC has further requested that Central Hudson
investigate and, if necessary, remediate these sites under a Consent Order,
Voluntary Cleanup Agreement, or Brownfield Cleanup Agreement. The DEC has placed
five of these sites on the New York State Environmental Site Remediation
Database. A number of the eight sites are now owned by third parties and have
been redeveloped for other uses.



                                      -24-
<PAGE>

         Central Hudson spent approximately $1.0 million during the three months
ended March 31, 2007, related to site remediation. In addition, Central Hudson
has developed estimates of the potential remediation costs for four of the eight
identified MGP sites indicating that the total costs could exceed $125 million
over the next 30 years. These estimates were based on DEC-approved remediation
plans for two sites, and conceptual plans for the other two sites. The cost
estimates involve assumptions relating to investigation expenses, remediation
costs, potential future liabilities, and post-remedial monitoring costs, and are
based on a variety of factors including projections regarding the amount and
extent of contamination, the location, size and use of the sites, proximity to
sensitive resources, status of regulatory investigations, and information
regarding remediation activities at other MGP sites in New York State. These
cost estimates also assume that proposed or anticipated remediation techniques
are technically feasible and that proposed remediation plans receive DEC
approval.

         Prior to 2007, Central Hudson recorded a $19.5 million estimated
liability regarding two of the four sites for which it has estimated future
costs. This amount represented the low end of the range of cost estimates for
these two sites since no amount within the range was considered to be most
likely. As of March 31, 2007, $17.9 million of this estimated liability has not
been spent; $2.4 million of this estimated liability is expected to be spent in
the remainder of 2007.

         Nothing has been accrued in connection with the other two sites for
which Central Hudson has estimated future costs because, absent DEC-approved
remediation plans, management cannot estimate what cost, if any, will be
incurred. The portion of the $125 million referenced above related to these two
sites is approximately $88 million.

         Central Hudson has performed limited site investigations with respect
to the remaining four of the eight identified MGP sites and does not have
sufficient information to estimate their potential remediation costs. For two
sites, Central Hudson estimates that it will be at least 2-3 years before
sufficient data has been obtained to estimate the potential remediation costs.
For the other two of these four sites Central Hudson now believes it has no
liability. For one of them, records show that Central Hudson did not own or
operate the site, and testing performed at the second site has not revealed any
data to indicate remediation is required. Central Hudson has submitted its
findings on these two sites to the DEC and is awaiting the DEC's response.

         Central Hudson has become aware of information contained in a DEC
Internet website indicating that, in addition to the eight sites referenced
above, Central Hudson is attributed with responsibility for three additional MGP
sites. Central Hudson does not believe that it ever owned one of these three
additional sites, and it believes that another of the identified locations was
never an MGP site. Central Hudson has provided the DEC with this information
about the two sites but it has not yet received a formal response. With respect
to the third site, Central Hudson has provided the DEC with information that it
believes demonstrates Central Hudson has no responsibility for the site, and
Central Hudson is awaiting the DEC's response.



                                      -25-
<PAGE>

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

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

         LITTLE BRITAIN ROAD

         In December 1977, Central Hudson purchased property at 4610 Little
Britain Road, New Windsor, New York. In June 1992, the DEC informed Central
Hudson that the DEC was preparing to conduct a Preliminary Site Assessment
("PSA") of the site. In February 1995, the DEC issued an Order on Consent in
which Central Hudson agreed to conduct the PSA. In November 2000, following
completion of the PSA, Central Hudson and the DEC entered into a Voluntary
Cleanup Agreement (VCA) that called for remediation of soil contamination.
Subsequently, Central Hudson removed approximately 3,100 tons of soil and has
conducted a routine groundwater sampling program since that time. Groundwater
sampling results show the presence of certain contaminants at levels exceeding
DEC criteria. In late 2005, Central Hudson installed a deep groundwater well and
sampled the well in early 2006. Levels of contaminants exceeding DEC criteria
were reported. In July and August 2006, Central Hudson, with DEC approval,
installed three additional deep groundwater wells. These, and other site
monitoring wells were sampled as part of the ongoing monitoring program in
August and December 2006 and showed that DEC criteria are still being exceeded
in several of the wells on-site, including the new deep wells. A report on the
results of the August and December sampling events was submitted to the DEC. The
DEC has responded with a request for a plan to address the situation. It has not
been determined if groundwater remediation will be required, or if Central
Hudson will be responsible for any such remediation. At this time, Central
Hudson does not have sufficient information to estimate potential remediation
costs. Central Hudson has put its insurers on notice regarding this matter and
intends to seek reimbursement from its insurers for amounts, if any, for which
it may become liable. Neither CH Energy Group nor Central Hudson can predict the
outcome of this matter.

         ORANGE COUNTY LANDFILL

          In June 2000, the DEC sent a letter to Central Hudson requesting that
it provide information about disposal of wastes at the Orange County Landfill
("Orange County Site") located in the Township of Goshen, New York.



                                      -26-
<PAGE>

         The DEC stated that its records indicate that Central Hudson, or a
predecessor entity, disposed, or may have disposed of, wastes at the Orange
County Site or that Central Hudson transported wastes to the Orange County Site
for disposal.

         Documents submitted by Central Hudson in response to the DEC's request
indicate that at least three shipments of wastes may have been disposed of by
Central Hudson at the Orange County Site: one of construction waste, one of
office and commercial waste, and one of asbestos waste. Central Hudson entered
into a Tolling Agreement (i.e., an agreement extending the applicable statute of
limitations) dated September 7, 2001, with the DEC and other state agencies
whereby Central Hudson agreed to toll the applicable statute of limitations by
the state agencies against Central Hudson for certain alleged causes of action
until February 28, 2002. The tolling agreement, through a series of sequential
agreements, was extended to January 31, 2007.

         On January 31, 2007, the New York State Attorney General filed a
compIaint and simultaneously proposed a settlement on consent in federal court
in New York City. If approved by the court, the settlement will require Central
Hudson to pay approximately $123,000 to resolve the State's claims, and will
provide contribution protection to Central Hudson. Central Hudson cannot predict
what action the court may take on the proposed settlement.

         Central Hudson has put its insurers on notice regarding this matter and
intends to seek reimbursement from its insurers for amounts for which it may
become liable. Neither CH Energy Group nor Central Hudson can predict the
outcome of this investigation at this time.

         NEWBURGH CONSOLIDATED IRON WORKS

         By letter from the EPA dated November 28, 2001, Central Hudson, among
others, was served with a Request For Information pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act regarding any shipments
of scrap or waste materials that Central Hudson may have made to Consolidated
Iron and Metal Co., Inc. ("Consolidated Iron"), a Superfund site located in
Newburgh, New York. Sampling by the EPA indicated that lead and polychlorinated
biphenyls (or "PCBs") are present at the site, and the EPA subsequently
commenced a remedial investigation and feasibility study at the site. Central
Hudson responded to the EPA's information request on January 30, 2002. In its
response, Central Hudson stated that it had entered into a contract with
Consolidated Iron under which Central Hudson sold scrap metal to Consolidated
Iron. The term of the contract was from 1988 to 1989. Records of eight and a
possible ninth shipment of scrap metal to Consolidated Iron have been
identified. No records were found which indicate that the material sold to
Consolidated Iron contained or was a hazardous substance. Central Hudson has put
its insurers on notice regarding this matter and intends to seek reimbursement
from its insurers for amounts, if any, for which it may become liable. Neither
CH Energy Group nor Central Hudson can predict the outcome of this investigation
at the present time.



                                      -27-
<PAGE>

         ASBESTOS LITIGATION

         As of March 31, 2007, of the 3,303 asbestos cases brought against
Central Hudson, 1,178 remain pending. Of the cases no longer pending against
Central Hudson, 1,975 have been dismissed or discontinued without payment by
Central Hudson, and Central Hudson has settled 150 cases. Central Hudson is
presently unable to assess the validity of the remaining asbestos lawsuits;
accordingly, it cannot determine the ultimate liability relating to these cases.
Based on information known to Central Hudson at this time, including Central
Hudson's experience in settling asbestos cases and in obtaining dismissals of
asbestos cases, Central Hudson believes that the costs which may be incurred in
connection with the remaining lawsuits will not have a material adverse effect
on either of CH Energy Group's or Central Hudson's financial position, results
of operations, or cash flows.

CHEC:

         Griffith has a voluntary environmental program in connection with the
West Virginia Division of Environmental Protection regarding Griffith's Kable
Oil Bulk Plant, located in West Virginia. During the first quarter of 2007,
$9,000 was spent on site remediation efforts. The State of West Virginia has
indicated that some additional remediation will be required and Griffith has
received an estimate of $300,000 for the environmental remediation. In addition,
Griffith spent $40,000 on remediation efforts in Maryland, Virginia, and
Connecticut in 2007. Griffith is to be reimbursed $466,000 from the State of
Connecticut under an environmental agreement and has recorded this amount as a
receivable.

         Griffith updated the remediation assessments for its environmental
sites. Based upon the results of these assessments, Griffith reduced its
environmental reserve by $1 million in 2006. The reserve is $1.8 million as of
March 31, 2007.

OTHER MATTERS

CENTRAL HUDSON:

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

NOTE 12 - 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.

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




                                      -28-
<PAGE>

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

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

         Central Hudson's and Griffith's operations are seasonal in nature and
weather-sensitive and, as a result, financial results for interim periods are
not necessarily indicative of trends for a twelve-month period. Demand for
electricity typically peaks during the summer, while demand for natural gas and
heating oil typically peaks during the winter.

         CH Energy Group, Inc. Segment Disclosure

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
                                                                  Quarter Ended March 31, 2007
  (In Thousands, Except                 -----------------------------------------------------------------------------
   Earnings Per Share)
                                           Central Hudson         Griffith      Other      Eliminations      Total
--------------------------------------------------------------------------    Businesses   --------------------------
                                                     Natural                     and
                                        Electric       Gas                   Investments
---------------------------------------------------------------------------------------------------------------------
<S>                                     <C>         <C>           <C>          <C>            <C>          <C>
Revenues from
external customers                      $151,675    $ 64,191      $125,990     $  1,522       $   -        $  343,378
---------------------------------------------------------------------------------------------------------------------
Intersegment revenues                   $      3    $    172      $    -       $      -       $(175)       $        -
---------------------------------------------------------------------------------------------------------------------
   Total revenues                       $151,678    $ 64,363      $125,990     $  1,522       $(175)       $  343,378
---------------------------------------------------------------------------------------------------------------------
Income before income taxes              $ 12,519    $  9,038      $ 10,707     $  2,397       $   -        $   34,661
---------------------------------------------------------------------------------------------------------------------
Net income                              $  7,653    $  5,476      $  6,424     $  2,145       $   -        $   21,698
---------------------------------------------------------------------------------------------------------------------
Earnings Per Share - Diluted            $   0.48    $  0.35       $   0.40     $  0.14(1)     $   -        $     1.37
---------------------------------------------------------------------------------------------------------------------
Segment Assets at March 31, 2007        $934,212    $300,375      $170,655     $76,526        $ 393(2)     $1,482,161
---------------------------------------------------------------------------------------------------------------------

</TABLE>

(1)  The amount of EPS attributable to CHEC's other business units was $0.06 per
     share, with the balance of $0.08 per share resulting primarily from
     investment activity.

(2)  Includes minority owner's interest of $1,373 related to Lyonsdale and
     elimination of affiliates' accounts receivable of ($980).



                                      -29-
<PAGE>

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
                                                                  Quarter Ended March 31, 2006
  (In Thousands, Except                 -----------------------------------------------------------------------------
   Earnings Per Share)
                                           Central Hudson         Griffith      Other      Eliminations      Total
--------------------------------------------------------------------------    Businesses   --------------------------
                                                     Natural                     and
                                        Electric       Gas                   Investments
---------------------------------------------------------------------------------------------------------------------
<S>                                     <C>         <C>           <C>          <C>            <C>          <C>
Revenues from
external customers                      $136,047    $ 70,809      $109,835     $   540        $   -        $  317,231
---------------------------------------------------------------------------------------------------------------------
Intersegment revenues                   $      3    $    205      $      -     $     -        $(208)       $        -
---------------------------------------------------------------------------------------------------------------------
   Total revenues                       $136,050    $ 71,014      $109,835     $   540        $(208)       $  317,231
---------------------------------------------------------------------------------------------------------------------
Income before income
taxes                                   $ 11,372    $ 11,017      $  7,196     $ 1,474        $   -        $   31,059
---------------------------------------------------------------------------------------------------------------------
Net income                              $  6,443    $  6,368      $  4,318     $ 1,171        $   -        $   18,300
---------------------------------------------------------------------------------------------------------------------
Earnings Per Share -
Diluted                                 $   0.41    $   0.40      $   0.27     $  0.08(1)     $   -        $     1.16
---------------------------------------------------------------------------------------------------------------------
Segment Assets at
March 31, 2006                          $850,339    $294,310      $158,549     $93,771        $(812)       $1,396,157
---------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  The amount of EPS attributable to CHEC's other business units was $0.02 per
     share, with the balance of $0.06 per share resulting primarily from
     investment activity.

CENTRAL HUDSON GAS & ELECTRIC CORPORATION SEGMENT DISCLOSURE

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------
              (In Thousands)                                   Quarter Ended March 31, 2007
------------------------------------------------------------------------------------------------------------
                                                                 Natural
                                                Electric           Gas         Eliminations         Total
------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>             <C>                <C>
Revenues from external customers              $  151,675       $   64,191      $         -        $  215,866
------------------------------------------------------------------------------------------------------------
Intersegment revenues                         $        3       $      172      $      (175)       $        -
------------------------------------------------------------------------------------------------------------
   Total Revenues                             $  151,678       $   64,363      $      (175)       $  215,866
------------------------------------------------------------------------------------------------------------
Income before income taxes                    $   12,659       $    9,140      $         -        $   21,799
------------------------------------------------------------------------------------------------------------
Income Available for Common Stock             $    7,653       $    5,476      $         -        $   13,129
------------------------------------------------------------------------------------------------------------
Segment Assets at March 31, 2007              $  934,212       $  300,375      $         -        $1,234,587
------------------------------------------------------------------------------------------------------------

<CAPTION>

------------------------------------------------------------------------------------------------------------
              (In Thousands)                                   Quarter Ended March 31, 2006
------------------------------------------------------------------------------------------------------------
                                                                 Natural
                                                Electric           Gas         Eliminations         Total
------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>             <C>                <C>
Revenues from external customers              $ 136,047        $   70,809      $          -       $  206,856
------------------------------------------------------------------------------------------------------------
Intersegment revenues                         $       3        $      205      $       (208)      $        -
------------------------------------------------------------------------------------------------------------
   Total Revenues                             $ 136,050        $   71,014      $       (208)      $  206,856
------------------------------------------------------------------------------------------------------------
Income before income taxes                    $  11,493        $   11,138      $          -       $   22,631
------------------------------------------------------------------------------------------------------------
Income Available for Common Stock             $   6,443        $    6,368      $          -       $   12,811
------------------------------------------------------------------------------------------------------------
Segment Assets at March 31, 2006              $ 850,339        $  294,310      $          -       $1,144,649
------------------------------------------------------------------------------------------------------------

</TABLE>


                                                         -30-
<PAGE>


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

EXECUTIVE SUMMARY

BUSINESS OVERVIEW

         CH Energy Group is a holding company with four business segments:

                    (1) Central Hudson's regulated electric utility business;

                    (2) Central Hudson's regulated natural gas utility business;

                    (3) Griffith's fuel distribution business; and

                    (4) CHEC's investments in renewable energy supply, energy
                    efficiency, an energy sector venture capital fund, and other
                    investments of CH Energy Group, consisting primarily of
                    investments in liquid short-term securities and
                    inter-company interest income.


         A breakdown of CH Energy Group's revenue and net income by segment for
the three months ended March 31, 2007, is below.


               ENERGY GROUP 2007 REVENUE BY SEGMENT - $343 million

      [THE FOLLOWING DATA REPRESENTS A PIE CHART IN THE PRINTED DOCUMENT.]

                      Central Hudson-Electric ........ 44%

                      Central Hudson-Natural Gas ..... 19%

                      Griffith ....................... 37%

                      Other Businesses and
                      Investments ....................  0%


              ENERGY GROUP 2007 NET INCOME BY SEGMENT - $22 million

      [THE FOLLOWING DATA REPRESENTS A PIE CHART IN THE PRINTED DOCUMENT.]

                      Central Hudson-Electric ........ 35%

                      Central Hudson-Natural Gas ..... 25%

                      Griffith ....................... 30%

                      Other Businesses and
                      Investments .................... 10%


                                       31
<PAGE>


CENTRAL HUDSON

         Central Hudson delivers electricity and natural gas to approximately
372,000 customers in a defined service territory in the Mid-Hudson Valley region
of New York State. Consistently ranking among the lowest cost electric utilities
in New York State, Central Hudson's earnings are derived primarily from customer
delivery charges. In addition to delivering electricity and natural gas, Central
Hudson procures supplies of electricity and natural gas for a majority of its
customers. Central Hudson recovers these supply costs from customers through
adjustment clauses without deriving profits from these activities.

         Central Hudson's rates are regulated by the PSC, which is responsible
for setting rates at a level that will recover the cost to provide safe and
reliable service and provide a fair and reasonable return on the capital
invested by shareholders.

         In addition to providing safe and reliable service, management's
attention is focused on managing costs and customer rate stabilization, and thus
maintaining above average levels of customer satisfaction. This approach
promotes high customer satisfaction and positive regulatory relations which
should translate into opportunities for shareholders.

GRIFFITH

          Griffith serves more than 100,000 customers in a market area comprised
primarily of parts of Connecticut, Delaware, Washington, D.C., Maryland,
Pennsylvania, Rhode Island, Virginia, and West Virginia. Griffith's revenues,
cash flows, and earnings are derived from the sale and delivery of heating oil,
gasoline, diesel fuel, kerosene, and propane and from the installation and
maintenance of heating, ventilating, and air conditioning equipment. Griffith's
gross profit by petroleum product and service and installations for the three
months ended March 31, 2007, is illustrated below.

       GRIFFITH 2007 GROSS PROFIT BY PRODUCT & SERVICE LINE - $29 million

      [THE FOLLOWING DATA REPRESENTS A PIE CHART IN THE PRINTED DOCUMENT.]

                     Heating Oil .................... 70%

                     Motor Fuels .................... 12%

                     Other Fuels ....................  3%

                     Service & Installation ......... 15%


          During the first quarter of 2007, Griffith's acquisition strategy
significantly contributed to earnings. In addition to the nine companies
acquired in 2006, Griffith acquired three companies during the three months
ended March 31, 2007, which


                                       32
<PAGE>

increased the company's customer base, providing additional sales during the
heating season. Griffith's earnings were also favorably impacted by higher
petroleum margins.

         Griffith's strong brand and marketing programs, effective cost
management practices, strong customer service capabilities, and access to
capital for a continuing acquisition program should be competitive advantages in
the fuel distribution market and are expected to drive improvements in
Griffith's performance over time.

OTHER BUSINESSES AND INVESTMENTS

         In addition to Griffith, CHEC derives earnings through investments in
the competitive energy markets. CHEC's investment objectives are to increase
earnings and cash flow while limiting earnings volatility to a level that
management believes is acceptable. CHEC faces strong competition for investment
opportunities in the energy industry. The existence of this competition may make
it difficult to make investments that offer appropriate risk-adjusted returns or
may slow the rate at which such investments can be made. Increasing government
support for certain investments (e.g., those related to renewable energy
sources) have made such investments more attractive but have also resulted in
increased competition for available opportunities.

OVERVIEW OF FIRST QUARTER RESULTS

         CH Energy Group's earnings during the first quarter of 2007 increased
by 19% compared to the same quarter of last year; from $1.16 per share (basic)
to $1.38 per share (basic).

         Approximately $0.17 per share, or about 77%, of the 2007 increase came
from the CHEC subsidiary, with $0.13 per share from Griffith and another $0.04
from CHEC's portfolio of renewable energy projects. The results reflect CH
Energy Group's efforts to profitably invest in the competitive energy markets
and to improve the operational effectiveness of CHEC's investment interests.

         As a result of the improved earnings, CH Energy Group is increasing its
earnings guidance for 2007 by $0.15 per share to total between $2.55 and $2.80
per share (basic).

CENTRAL HUDSON

         Calmer weather and higher rates for delivering electricity and natural
gas were the prime factors that improved Central Hudson's earnings, which
contributed $0.83 per share during the quarter -- an increase of $0.02 per share
over the same period of 2006. A decline in storms during the period reduced
expenses associated with restoring electric service, and increased revenues
stemming from the 2006 Order contributed $0.18 per share to quarterly earnings.
In addition, Central Hudson saw a softening in the conservation trend that had
been evidenced by its customers and actually had an increase in
weather-normalized sales growth during the period.

         It is now expected that Central Hudson will contribute between $1.90
and $2.00 per share to annual earnings, an increase of $0.10 from its earlier
projection, reflecting the colder-than-normal weather in February and March 2007
that offset the negative


                                       33
<PAGE>

impacts resulting from the warm weather experienced in December 2006 and January
2007.

GRIFFITH

         The timing of acquisitions added an estimated $0.06 per share during
the quarter, and increased margins on petroleum sales and services added another
$0.09, as compared to last year's results. Griffith earned $0.40 per share
during the first quarter, up from $0.27 during the first three months of 2006,
with the colder weather positively impacting earnings by approximately $0.03 per
share.

         In all, 12 acquisitions have been made since the first quarter of 2006,
expanding Griffith's customer count by 19% to more than 100,000 as it increased
its market share and entered a new market in Rhode Island.

         As a result of the segment's strong quarterly performance, CH Energy
Group has increased its estimates of annual earnings from Griffith by $0.05 to a
total of between $0.25 and $0.30 per share.

OTHER BUSINESSES AND INVESTMENTS

         Quarterly earnings for other businesses and investments, including CH
Energy Group's renewable energy portfolio, totaled $0.15 per share during the
quarter, nearly doubling the results of the same period of 2006. A favorable tax
adjustment, earnings from the Cornhusker Energy Lexington ethanol plant and
investments in two wind energy projects all contributed positively to the
quarterly results.

         It is CH Energy Group's belief that annual earnings for its other
businesses should total between $0.40 and $0.50 per share for 2007.

PSC PROCEEDINGS

NON-UTILITY LAND SALES

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

OTHER PSC PROCEEDINGS AND ADMINISTRATION INITIATIVES

         On April 19, 2007, the PSC issued an Order in Case 06-M-1017 -
Proceeding on Motion of the Commission as to Polices, Practices and Procedures
for Utility Commodity Supply Service to Residential and Small Commercial
Customers. The Order provided guidance on commodity supply and hedging practices
and directed Central Hudson and other New York State ("NYS") utilities, through
a collaborative or administrative process, to develop standards and goals for
measuring and constraining the supply price volatility on certain classes of
customers. Utilities will be required to report to the PSC Staff annually on
their strategies, aggregate supply portfolio, and the extent to which goals for
measuring and constraining energy price volatility have been


                                       34
<PAGE>

met. This case continues with a second phase to address long-term contracting,
supply resource planning, and other public policy issues.

         On April 19, 2007, Governor Eliot Spitzer delivered a speech announcing
a comprehensive energy strategy for New York, consisting of demand side and
supply side components to reduce energy costs and achieve economic and
environmental benefits. The strategy includes goals of reducing electricity
demands 15% by 2015 through new energy efficiency programs, new appliance
efficiency standards, and energy building codes. The plan also proposes a new
power plant siting law, and continued support for renewable energy resources, as
well as other proposed energy policies.

         On April 20, 2007, the PSC issued an Order in Cases 03-E-0640 and
06-G-0746 - Proceeding on Motion of the Commission to Investigate Potential
Electric and Gas Delivery Rate Disincentives Against the Promotion of Energy
Efficiency, Renewable Technologies and Distributed Generation. The Order
directed Central Hudson and other NYS utilities to develop proposals for
delivery service revenue decoupling mechanisms for consideration in a next rate
case filing. As a result of this Order, Central Hudson will be required to
propose mechanisms to true-up forecast and actual delivery service revenues.

         On April 23, 2007, the PSC issued an Order in Case 07-E-0136 - Central
Hudson Gas & Electric Corporation - Petition for Approval of the Transfer of the
Groveville Mills Hydroelectric Facility to Lower Saranac Corporation Pursuant to
Public Service Law Section 70. This Order approved the transfer of the Company's
ownership interests in its 900 kW hydroelectric facility located in Beacon, New
York to Lower Saranac Corporation. The Order also provides that the net-of-tax
proceeds, estimated at less than $300,000, be deferred for the benefit of
customers.

         On April 24, 2007, the PSC issued an Order in Case 07-M-0458 -
Proceeding on Motion of the Commission to Review Policies and Practices Intended
to Foster the Development of Competitive Retail Energy Markets. This Order
encouraged interested parties to examine and submit comments on existing
programs and practices of NYS utilities that promote retail market development
focusing on whether programs are still necessary; if market participants are
improperly subsidized; if risks and expenses are properly allocated among
ratepayers, utilities and market participants; and, also, the need to continue
programs or practices to prevent the re-building of barriers to entry in the
competitive markets. The Order also calls for the review and evaluation of
utility specific programs, practices and policies in on-going and future
electric and gas rate proceedings.

         CH Energy Group and Central Hudson are reviewing the above recently
released Orders and policies. Neither CH Energy Group nor Central Hudson can
predict the final outcome of the above PSC proceedings or the administration's
new energy policies at this time.



                                       35
<PAGE>


CAPITAL RESOURCES AND LIQUIDITY

         The growth of CH Energy Group's retained earnings in the three months
ended March 31, 2007, contributed to the increase in the book value per share of
its Common Stock from $32.54 at December 31, 2006, to $33.41 at March 31, 2007;
the common equity ratio decreased from 55.9% at December 31, 2006, to 54.8% at
March 31, 2007. Book value per share at March 31, 2006, was $32.60 and the
common equity ratio was 56.6%.

         Both CH 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 CH Energy Group's liquidity are the net
cash flows generated from the operations of its subsidiaries, subsidiary capital
expenditures and investments, the external financing of its subsidiaries, and
the dividends CH Energy Group pays to its shareholders.

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

         Central Hudson's cash flows are also affected by capital expenditures,
permanent financing for its growing asset base, fluctuations in working capital
caused by weather and energy prices, and other regulatory deferral mechanisms
whereby cash may be expended in one period and recovered from customers in a
subsequent period(s).

CH ENERGY GROUP - CASH FLOW SUMMARY

         Changes in CH Energy Group's cash and cash equivalents resulting from
operating, investing, and financing activities for the three months ended March
31, 2007, and 2006, are summarized in the following chart:

<TABLE>
<CAPTION>
----------------------------------- -------------------- -------------------- --------------------
                                        Three Months        Three Months
                                           Ended                 Ended              Variance
          CH ENERGY GROUP                March 2007           March 2006           2007 vs. 2006
----------------------------------- -------------------- -------------------- --------------------
Net Cash Provided By (Used In):                       (Millions of Dollars)
----------------------------------- --------------------------------------------------------------
<S>                                      <C>                   <C>                <C>
Operating Activities                     $   (4.0)             $   11.4           $   (15.4)
----------------------------------- -------------------- -------------------- --------------------
Investing Activities                        (19.0)                (12.4)               (6.6)
----------------------------------- -------------------- -------------------- --------------------
Financing Activities                         21.5                  (9.5)               31.0
----------------------------------- -------------------- -------------------- --------------------
Net change for the period                    (1.5)                (10.5)                9.0
----------------------------------- -------------------- -------------------- --------------------
Balance at beginning of period               24.1                  49.4               (25.3)
----------------------------------- -------------------- -------------------- --------------------
Balance at end of period                $    22.6             $    38.9          $    (16.3)
----------------------------------- -------------------- -------------------- --------------------
</TABLE>


                                       36
<PAGE>

         CH Energy Group's net cash flows used in operating activities of $4.0
million for the three months ended March 31, 2007 reflect lower sales volumes
due to warmer winter weather during the last part of the fourth quarter of 2006
and the early part of the first quarter of 2007 and higher wholesale costs for
purchased electricity, offset slightly by lower costs for purchased natural gas,
as compared to the same period last year. As a result, the timing of CH Energy
Group's peak seasonal accounts receivable is later in the first quarter of this
year than it was in the same period in 2006.

         Net cash flows used in investing activities of $19.0 million for the
three months ended March 31, 2007 were higher than the first three months of
2006 due to Central Hudson's increased investments in property and plant, and
three acquisitions made by Griffith in the first quarter of 2007. These
expenditures were offset by net proceeds from the sale of CH Energy Group's
short-term investments which were higher in the first three months of 2007 than
in the first three months of 2006.

         Net cash flows provided by financing activities of $21.5 million for
the three months ended March 31, 2007 were higher than the same period in 2006.
The increase in cash provided resulted primarily from an increase in Central
Hudson's net borrowings of short-term debt to fund working capital needs.

CENTRAL HUDSON - CASH FLOW SUMMARY

         Changes in Central Hudson's cash and cash equivalents resulting from
operating, investing, and financing activities for the three months ended March
31, 2007, and 2006, are summarized in the following chart:



<TABLE>
<CAPTION>
----------------------------------- -------------------- -------------------- --------------------
                                        Three Months        Three Months
                                           Ended                 Ended              Variance
CENTRAL HUDSON                           March 2007           March 2006           2007 vs. 2006
----------------------------------- -------------------- -------------------- --------------------
Net Cash Provided By (Used In):                       (Millions of Dollars)
----------------------------------- --------------------------------------------------------------
<S>                                      <C>                   <C>                <C>
Operating Activities                     $   (6.3)             $   12.4           $   (18.7)
----------------------------------- -------------------- -------------------- --------------------
Investing Activities                        (20.3)                (12.2)               (8.1)
----------------------------------- -------------------- -------------------- --------------------
Financing Activities                         29.7                  (1.2)               30.9
----------------------------------- -------------------- -------------------- --------------------
Net change for the period                     3.1                  (1.0)                4.1
----------------------------------- -------------------- -------------------- --------------------
Balance at beginning of period                1.7                   4.2                (2.5)
----------------------------------- -------------------- -------------------- --------------------
Balance at end of period                 $    4.8              $    3.2           $     1.6
----------------------------------- -------------------- -------------------- --------------------
</TABLE>

         Central Hudson's net cash flows used in operating activities of $6.3
million for the three months ended March 31, 2007 reflect the drivers
highlighted in the discussion of CH Energy Group's net operating cash flows.

         Central Hudson's cash flows used in investing activities of $20.3
million in the three months ended March 31, 2007, were comprised almost entirely
of investments in property and plant and construction and removal expenditures.

         Net cash flows related to financing activities were higher in the three
months ended March 31, 2007 as compared to the same period last year due to
higher net borrowings of short-term debt in the first quarter of 2007.


                                       37
<PAGE>

CONTRACTUAL OBLIGATIONS

         A review of capital resources and liquidity should also consider other
contractual obligations and commitments, which are further disclosed in Note 11
- "Commitments and Contingencies" to the Consolidated Financial Statements of
the Corporations' 10-K Annual Report and Note 11 - "Commitments and
Contingencies" of the Quarterly Report on Form 10-Q under the caption "Electric
Purchase Commitments."

         Central Hudson employer contributions for OPEB totaled $ 0.9 million
during the three months ended March 31, 2007. The total contribution for the
2006 plan year was $4.9 million including a $1.7 million contribution funded in
April of 2007. The determination of future funding depends on a number of
factors, including the discount rate, expected return, and medical claims
assumptions used. If these factors remain stable, annual funding for the 2007
plan year is expected to approximate the 2006 amount.

FINANCING PROGRAM

         At March 31, 2007, CH Energy Group, on a consolidated basis, had $43.0
million of short-term debt outstanding, cash and cash equivalents of $22.7
million, and short-term investments of $30.5 million.

         CH Energy Group, the holding company, has a $75 million revolving
credit agreement with several commercial banks which, as of March 31, 2007, had
no outstanding balance.

         As of March 31, 2007, Central Hudson had short-term debt outstanding of
$43.0 million, and cash and cash equivalents of $4.9 million. The short-term
debt outstanding is from the use of uncommitted credit lines. Central Hudson has
a $125 million revolving credit agreement with a group of commercial banks
which, as of March 31, 2007, had no outstanding balance. Central Hudson also has
uncommitted lines of credit with various banks. These agreements give Central
Hudson competitive options to minimize the cost of its short-term borrowing.

         On March 23, 2007 Central Hudson issued $33 million of 30-year 5.80%
Series F notes. The proceeds were used to redeem maturing debt of $33 million,
5-year 5.87% Series D notes, on March 28, 2007. Central Hudson expects to issue
approximately $30 million of additional notes during the remainder of 2007 to
finance ongoing investments in its capital expenditure program.

         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 Fitch Ratings.

         CH Energy Group and Central Hudson each 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.


                                       38
<PAGE>

         CHEC has a $15.0 million line of credit with a commercial bank which,
as of March 31, 2007, had no outstanding balance.

         For additional information related to CH Energy Group's and Central
Hudson's financing program, please see Note 6 - "Short-term Borrowing
Arrangements", Note 7 - "Capitalization - Common and Preferred Stock", and Note
8 - "Capitalization - Long-Term Debt" to the Consolidated Financial Statements
of the Corporations' 10-K Annual Report.

EARNINGS PER SHARE

CH ENERGY GROUP CONSOLIDATED EARNINGS

Earnings per Share (Basic)

<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED MARCH 31,
                                                                                     ----------------------------

                                                                              2007                 2006            CHANGE
                                                                              ----                 ----            ------
<S>                                                                        <C>                  <C>               <C>
Central Hudson - Electric ..........................................       $   0.48             $   0.41          $   0.07
Central Hudson - Natural Gas .......................................           0.35                 0.40             (0.05)
Griffith ...........................................................           0.40                 0.27              0.13
Other Businesses and Investments ...................................           0.15                 0.08              0.07
                                                                           --------             --------          --------
                                                                           $   1.38             $   1.16          $   0.22
                                                                           ========             ========          ========
</TABLE>

The increase in Energy Group's consolidated earnings in the first quarter of
2007 largely results from the sale of petroleum products and services by
Griffith, including the favorable impact of weather and recent acquisitions, and
favorable returns on CHEC's interests in renewable energy investments.

CENTRAL HUDSON

EARNINGS PER SHARE (BASIC)

<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED MARCH 31,
                                                                                     ----------------------------

                                                                              2007                 2006            CHANGE
                                                                              ----                 ----            ------
<S>                                                                        <C>                  <C>               <C>
Electric ...........................................................       $   0.48             $   0.41          $   0.07
Natural Gas ........................................................           0.35                 0.40             (0.05)
                                                                           --------             --------          --------
Total ..............................................................       $   0.83             $   0.81          $   0.02
                                                                           ========             ========          ========
</TABLE>



                                       39
<PAGE>


Central Hudson's earnings increased $0.02 per share in 2007 compared to 2006,
due to the following:

<TABLE>
<S>                                                                                                <C>
Regulatory Mechanisms:
     Reversal of shared earnings in 2006...............................................            $(0.06)
     Shared earnings recorded in 2007 .................................................             (0.04)
     Revenues recorded in 2006 per prior Settlement Agreement .........................             (0.06)
Rate Increases.........................................................................              0.08
Weather Impact on Sales................................................................             (0.01)
Lower Storm Restoration Expense in 2007 ...............................................              0.10
Interest Expense and Carrying Charges .................................................             (0.03)
Higher Weather-Normalized Sales Growth.................................................              0.04
                                                                                                   ------
                                                                                                   $ 0.02
                                                                                                   ======
</TABLE>

          Central Hudson recorded higher earnings resulting from the 2006 Order
which provides greater revenue support for the cost of providing service to
customers and recovery for previously deferred costs. Earnings in the first
quarter of 2007 were also improved by higher weather-normalized sales growth and
lower storm restoration expenses compared to last year. Regulatory mechanisms
lowered earnings compared to last year resulting from the difference in shared
earnings recorded in 2007 and 2006. Additionally, in 2006 Central Hudson
recorded revenues to restore earnings towards the allowed rate of return in
accordance with the provisions of the then-applicable rate plan. This regulatory
mechanism is no longer available under the terms of the 2006 Order.


GRIFFITH

Earnings per Share (Basic)
<TABLE>
<CAPTION>
                                                                                          THREE MONTHS ENDED MARCH 31,
                                                                                          ----------------------------

                                                                                   2007          2006                  CHANGE
                                                                                   ----          ----                  ------
<S>                                                                               <C>           <C>                    <C>
                                                                                  $0.40         $0.27                  $0.13
                                                                                  =====         =====                  =====
</TABLE>

         Griffith's earnings increased $0.13 per share in 2007 compared to 2006,
due to the following:

<TABLE>
<S>                                                                                                                    <C>
Acquisitions(1).................................................................                                       $  0.06
Margin on Petroleum Sales and Services..........................................                                          0.09
Weather Impact on Sales.........................................................                                          0.03
Operating Expenses..............................................................                                         (0.05)
                                                                                                                       -------
                                                                                                                       $  0.13
                                                                                                                       =======
</TABLE>

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

         The increase in earnings at Griffith was primarily due to its
acquisitions made since the beginning of 2006, and to higher margins. The higher
margins were partially offset by higher operating expenses resulting from
increased sales volumes.


                                       40
<PAGE>

OTHER BUSINESSES AND INVESTMENTS

Earnings per Share (Basic)
<TABLE>
<CAPTION>
                                                                                          THREE MONTHS ENDED MARCH 31,
                                                                                          ----------------------------

                                                                                   2007          2006                  CHANGE
                                                                                   ----          ----                  ------
<S>                                                                               <C>           <C>                    <C>
                                                                                  $0.15         $0.08                  $0.07
                                                                                  =====         =====                  =====
</TABLE>



         Earnings from CH Energy Group (the holding company) and CHEC's
partnership and other investment interests increased $0.07 per share in 2007 as
compared to 2006, due to the following:

<TABLE>
<S>                                                                                                                    <C>
Tax Adjustment in 2007..............................................................                                   $  0.02
Cornhusker Energy Lexington Investment..............................................                                      0.03
CH-Community Wind Energy Investment.................................................                                      0.01
Other...............................................................................                                      0.01
                                                                                                                       --------
                                                                                                                        $ 0.07
                                                                                                                       ========
</TABLE>

         Earnings from CH Energy Group's other unregulated businesses increased
primarily due to the contribution of CHEC's interests in renewable energy
investments. The 2007 tax adjustment resulted primarily from the New York State
income tax audits for 2002 through 2004.

RESULTS OF OPERATIONS

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

OPERATING REVENUES

         Details of CH Energy Group's consolidated operating revenue changes are
presented in the following charts and related discussions.

CENTRAL HUDSON

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



                                       41
<PAGE>




<TABLE>
<CAPTION>
  ------------------------------------------------------------------------------------------------------------------------
                                     Increase or (Decrease) from 2006-$9 million increase
                                                       (In Thousands)
                                             Three Months Ended March 31, 2007
  ------------------------------------------------------------------------------------------------------------------------
                                                                   Central Hudson
                                                    -------------------------------------------

                                                          Electric               Natural Gas                Total
                                                    --------------------     ------------------      ---------------------

<S>                                                    <C>                       <C>                    <C>
  Revenues with Matching Offsets: (a)
  ----------------------------------------------    --------------------     ------------------      ---------------------
           Energy Cost Adjustment                      $   8,231                 $(8,237)               $      (6)
           -------------------------------------    --------------------     ------------------      ---------------------
           Sales to Other Utilities                         (849)                   (490)                  (1,339)
           -------------------------------------    --------------------     ------------------      ---------------------
           Pension, OPEB and Other
             Revenues                                      7,926                   2,635                   10,561
           -------------------------------------    --------------------     ------------------      ---------------------
               Subtotal                                   15,308                  (6,092)                   9,216
           -------------------------------------    --------------------     ------------------      ---------------------

  Revenues Impacting Earnings:
           Customer Sales (b)                              4,252                     192                    4,444
           -------------------------------------    --------------------     ------------------      ---------------------
           Other Regulatory Mechanisms                    (3,699)                   (251)                  (3,950)
           -------------------------------------    --------------------     ------------------      ---------------------
           Sales to Other Utilities                           --                     (86)                     (86)
           -------------------------------------    --------------------     ------------------      ---------------------
           Weather-Hedging Contracts                         (81)                   (150)                    (231)
           -------------------------------------    --------------------     ------------------      ---------------------
           Other Revenues                                   (152)                   (231)                    (383)
           -------------------------------------    --------------------     ------------------      ---------------------
               Subtotal                                      320                    (526)                    (206)
           -------------------------------------    --------------------     ------------------      ---------------------
                   Total                               $  15,628                 $(6,618)                 $ 9,010
           -------------------------------------    --------------------     ------------------      ---------------------
</TABLE>

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

         Electric revenues increased due to higher revenues with matching
offsets. The increase reflects an increase in energy cost adjustment revenues
due to higher delivery volumes and higher wholesale costs and an increase in
revenues for pension and OPEB costs resulting from the 2006 Order.

         Natural gas revenues decreased largely due to lower energy cost
adjustment revenues. The related lower wholesale costs were partially offset by
an increase from higher delivery volumes. This decrease was partially offset by
an increase in revenues for pension and OPEB costs resulting from the 2006
Order.



                                       42
<PAGE>


GRIFFITH

                                Griffith Revenues
                        Increase or (Decrease) from 2006
                        Three Months Ended March 31, 2007
                                 (In Thousands)


Heating Oil
  Base Company(1)......................................              $   5,776
  Acquisitions(2) .....................................                 11,651
                                                                     ---------
           Total Heating Oil...........................              $  17,427
                                                                     ---------
Motor Fuels
  Base Company.........................................              $  (3,426)
  Acquisitions.........................................                  2,057
                                                                     ---------
           Total Motor Fuels...........................              $  (1,369)
                                                                     ---------
Service Revenues
   Base Company........................................              $     356
   Acquisitions........................................                    551
                                                                     ---------
           Total Service Revenues......................              $     907
                                                                     ---------
Other
  Propane..............................................              $     306
  Weather-Hedging Contracts............................                 (1,126)
  Other................................................                     10
                                                                     ---------
           Total Other ................................              $    (810)
                                                                     ---------

           Total Revenues..............................              $  16,155
                                                                     =========

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

(2) For the purposes of this chart, "Acquisitions" represents the incremental
effect of acquisitions made by Griffith in 2007 and 2006.

         Revenues, net of the effect of weather hedging contracts, increased
$16.2 million in 2007 due largely to an increase in revenues from petroleum
products resulting from an increase in heating oil volumes. This increase was
partially offset by a decline in revenues from the sale of motor fuels due to a
decrease in sales volumes.

DELIVERY AND SALES VOLUMES

         Delivery and sales volumes for both Central Hudson and Griffith vary in
response to weather conditions. Electric deliveries typically peak in the summer
and deliveries of natural gas and petroleum products used for heating purposes
typically peak in the winter. Sales also vary in response to the price of the
particular energy product and changes in local economic conditions.



                                       43
<PAGE>


CENTRAL HUDSON

          The following chart reflects the change in the level of electric and
natural gas deliveries for the quarter ended March 31, 2007, as compared to the
same period for 2006. Deliveries of electricity and natural gas to residential
and commercial customers contribute the most to Central Hudson's earnings.
Industrial sales and interruptible sales have a negligible impact on earnings.

<TABLE>
<CAPTION>
                                                                               INCREASE (DECREASE) FROM 2006
                                                                                    THREE MONTHS ENDED
                                                                                       MARCH 31,2007
                                                                                       -------------


                                                                           ELECTRIC                      NATURAL GAS
                                                                           --------                      -----------
                   <S>                                                       <C>                            <C>
                   Residential..................                              5%                              6%
                   Commercial...................                              6%                              8%
                   Industrial...................                             (4)%                             8%
                   Other(a).....................                             (1)%                           (11)%
                                                                             ----                           -----
                                          Total                               3%                              4%
</TABLE>
                  (a) Includes interruptible natural gas deliveries.

         Electric deliveries to residential and commercial customers in the
first quarter of 2007 increased due to more usage per customer and modest
customer growth. Weather had a minimal impact on deliveries as the change in
electric residential heating degree-days for the first quarter of 2007 was
relatively small as compared to last year.

         Despite a 2% decrease in residential natural gas heating degree-days,
natural gas deliveries to residential and commercial customers increased also
due to more usage per customer, and modest customer growth.


                                       44
<PAGE>


GRIFFITH

         Changes in sales volumes of petroleum products, including the impact of
acquisitions, are set forth below.

<TABLE>
<CAPTION>
                                                  SALES VOLUMES
                                    INCREASE (DECREASE) IN GALLONS FROM 2006
                                        THREE MONTHS ENDED MARCH 31, 2007

                                                                                           Volume Contributions
                                                                                                   To %
                                                              % Change                            Change
                                                       -----------------------        --------------------------------
<S>                                                             <C>                               <C>
Heating Oil
    Base Company(1) Volume                                       7%                                29%
    Acquisition(2) Volume                                       16%                                71%
                                                              ----                               ----
      Total Heating Oil                                         23%                               100%
                                                              ----                               ----
Motor Fuels
    Base Company Volume                                         (9)%                             (212)%
    Acquisition Volume                                           6%                               312%
                                                              ----                               ----
      Total Motor Fuels                                         (3)%                              100%
                                                              ----                               ----
Propane and Other
    Base Company Volume                                         22%                               100%
    Acquisition Volume                                           0%                                 0%
                                                              ----                               ----
      Total Propane and Other                                   22%                               100%
                                                              ----                               ----
Total
    Base Company Volume                                          2%                                11%
    Acquisition Volume                                          12%                                89%
                                                              ----                               ----
      Total                                                     14%                               100%
                                                              ====                               ====
</TABLE>

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

         Sales of petroleum products increased 14% in 2007 compared to 2006.
This was primarily a result of an increase in sales of heating oil, largely
attributable to acquisitions made in 2007 and colder weather in 2007 as compared
to 2006, partially offset by a decrease in motor fuel sales. Sales of propane
increased due primarily to colder weather in 2007 as compared to 2006. There was
an 11% increase in heating degree-days in 2007 as compared to 2006. Degree-day
variation is adjusted for the delay between the time actual weather occurs and
the time of product delivery.



                                       45
<PAGE>


OPERATING EXPENSES

CENTRAL HUDSON

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

         Total utility operating expenses for the three months ended March 31,
2007, increased $8.8 million, or 4.9%, from $181.0 million in 2006 to $189.8 in
2007. The following summarizes the change in operating expenses.

                                                                    Change
Expenses Currently Matched to Revenues(1):                       (In Thousands)
                                                                ---------------
         Purchased Electricity                                      $ 7,377
         Purchased Natural Gas                                       (8,391)
         Pensions                                                     7,615
         OPEBs                                                        2,432
         Stray Voltage Testing Program                                  550
         Other Matched Expenses                                         629
                                                                    -------
                              Subtotal                              $10,212
                                                                    -------

Other Expense Variations:
         Tree Trimming                                                  642
         Increase in Other Expenses                                     486
         Lower Storm Restoration Expenses in 2007                    (2,562)
                                                                     -------
                              Subtotal                               (1,434)
                                                                     -------

                    Total Increase in Operating Expenses            $ 8,778
                                                                    =======

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

         In addition to the required adjustment to match revenues collected from
customers, the increase in purchased electricity expense reflects higher
wholesale costs and increased delivery volumes resulting from an increase in
usage and customer growth. The decrease in purchased natural gas reflects lower
wholesale costs partially offset by an increase in volumes delivered due to an
increase in usage and customer growth. The increase in other revenue-matched
expenses, primarily pensions and OPEBs, is due to an increase in the level of
expense recorded due to a corresponding increase in revenues resulting from the
2006 Order.

         The increase in tree trimming expenses reflects Central Hudson's
efforts to improve system reliability. These costs are included in the higher
revenues resulting from the 2006 Order. The lower storm restoration costs
resulted from fewer and less severe storms in 2007 as compared to the first
quarter of 2006.



                                       46
<PAGE>

GRIFFITH

         For the three months ended March 31, 2007, operating expenses increased
$12.5 million, or 12.3%, from $101.9 million in 2006 to $114.4 million in 2007.
The cost of petroleum products increased $9.7 million, or 11.4%, due to an
increase in sales volume primarily due to the impact of acquisitions and colder
weather in 2007 as compared to 2006. Other operating expenses increased $2.8
million in 2007 due primarily to an increase in expenses associated with
increased sales volumes noted above.

REVENUES AND OPERATING EXPENSES

OTHER BUSINESSES AND INVESTMENTS

         On April 12, 2006, CHEC purchased a 75% interest in Lyonsdale from
Catalyst Renewables Corporation. The operating results of Lyonsdale have been
consolidated in the Financial Statements of CH Energy Group since the date of
purchase. Results for the quarter ended March 31, 2007, reflect operating
revenues of $1.5 million, total operating expenses of $1.9 million, and
favorable tax benefits of $0.4 million, including production tax credits of $0.2
million. The results reflect unplanned plant outages in February and March of
2007 due to mechanical and fuel supply problems.

OTHER INCOME AND DEDUCTIONS

CENTRAL HUDSON

         Other income and deductions for Central Hudson decreased $0.6 million
in the first quarter of 2007 as compared to the same period in 2006 due to a
decrease in pension related regulatory carrying charges due from customers. The
decrease resulted from reserve balances upon which these carrying charges are
calculated. These balances were significantly reduced due to the recovery, in
accordance with the 2006 Order, of accumulated pension costs that were in excess
of the revenues earned for those costs.

OTHER BUSINESSES AND INVESTMENTS

         Other income and deductions for CH Energy Group (the holding company)
and CHEC's investments in partnerships and other investments (other than
Griffith) increased $1.2 million in 2007. This was due to a $0.6 million
increase in pre-tax income from Cornhusker Holdings, a $0.4 million increase in
income from CHEC's limited partnership interest in two wind farm projects and
$0.2 million from other partnership interests.

INTEREST CHARGES

CENTRAL HUDSON

         Interest charges (which relate solely to Central Hudson) increased $0.5
million in the first quarter of 2007 as compared to 2006. The increase is
largely due to an


                                       47
<PAGE>

increase in long-term debt resulting from the issuance of medium-term notes in
November 2006 and March of 2007, the latter to refinance maturing debt.

INCOME TAXES

         Income taxes for Energy Group increased $0.2 million from $12.8 million
in the first quarter of 2006 to $13 million in the first quarter of 2007. The
increase in income taxes was primarily due to a $3.5 million increase in pretax
earnings, which was largely offset by the favorable impact of tax benefits from
the Medicare Part D prescription drug program at Central Hudson, as well as
production tax credits at CHEC from its renewable energy portfolio.

         Income taxes for Central Hudson decreased $1.2 million from $9.6
million in the first quarter of 2006 to $8.4 million in the first quarter of
2007. The decrease in income taxes was primarily due to a $0.8 million decrease
in pretax earnings and the favorable impact of tax benefits from the Medicare
Part D prescription drug program.

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 CH Energy Group's dividend payments. On March 30, 2007, the Board
of Directors of CH Energy Group declared a quarterly dividend of $0.54 per
share, payable May 1, 2007, to shareholders of record as of April 10, 2007.

OTHER MATTERS

         CHANGES IN ACCOUNTING STANDARDS: See Note 1 - "Summary of Significant
Accounting Policies" and Note 3 - "New Accounting Standards and Other FASB
Projects" for discussion of relevant changes, which discussion is incorporated
by reference herein.

FORWARD-LOOKING STATEMENTS

         Statements included in this Quarterly Report on Form 10-Q and any
documents incorporated by reference which are not historical in nature are
intended to be, and are hereby identified as, "forward-looking statements" for
purposes of the safe harbor provided by Section 21E of the Exchange Act.
Forward-looking statements may be identified by words including "anticipates,"
"intends," "estimates," "believes," "projects," "expects," "plans," "assumes,"
"seeks," and similar expressions. Forward-looking statements including, without
limitation, those relating to Registrants' future business prospects, revenues,
proceeds, working capital, liquidity, income, and margins, are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those indicated in the forward-looking statements, due to
several important factors, including those identified from time-to-time in the
forward-looking statements. Those factors include, but are not limited to:
weather; fuel prices; corn and ethanol prices; plant capacity factors; energy
supply and demand; interest rates; potential future acquisitions; developments
in the legislative, regulatory, and competitive


                                       48
<PAGE>

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 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.

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 CH 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."

ITEM 4 - CONTROLS AND PROCEDURES

         The Chief Executive Officer and Chief Financial Officer of CH 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.

         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.


                                       49
<PAGE>


         PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

CENTRAL HUDSON:

FORMER MANUFACTURED GAS PLANT FACILITIES

         For information about investigations and remediation efforts involving
MGP facilities owned or operated by Central Hudson or its predecessors, see Item
3 of the Corporations' 10-K Annual Report and Note 11 - "Commitments and
Contingencies" to the financial statements included in that report and Note 11 -
"Commitments and Contingencies" to the financial statements included in Part I,
Item 1 of this Quarterly Report on Form 10-Q under the subcaption "Former
Manufactured Gas Plant Facilities," which is incorporated herein by reference.

LITTLE BRITAIN ROAD

         For information about the Little Britain Road site, see Note 11 -
"Commitments and Contingencies" to the financial statements under the subcaption
"Little Britain Road" included in Part I, Item 1 of this Quarterly Report on
Form 10-Q, which is incorporated herein by reference.

ORANGE COUNTY LANDFILL

         For information about the Orange County Landfill matter, see Item 3 of
the Corporations' 10-K Annual Report and Note 11 - "Commitments and
Contingencies" to the financial statements included in that report and Note 11 -
"Commitments and Contingencies" to the financial statements under the subcaption
"Orange County Landfill" included in Part I, Item 1 of this Quarterly Report on
Form 10-Q, which is incorporated herein by reference.

ASBESTOS LITIGATION

         For information about asbestos lawsuits to which Central Hudson is a
party, see Item 3 of the Corporations' 10-K Annual Report and Note 11 -
"Commitments and Contingencies" to the financial statement included in that
report and Note 11 - "Commitments and Contingencies" to the financial statements
under the subcaption "Asbestos Litigation" included in Part I, Item 1 of this
Quarterly Report on Form 10-Q, which is incorporated herein by reference.

CHEC:

         For information concerning Griffith's remediation efforts at the Kable
Oil bulk plant in West Virginia, see Item 3 of the Corporations' 10-K Annual
Report and Note 11 - "Commitments and Contingencies" to the financial statements
included in that report and Note 11 - "Commitments and Contingencies" to the
financial statements included in


                                       50
<PAGE>

Part I, Item 1 of this Quarterly Report on Form 10-Q under the caption "CHEC,"
which is incorporated herein by reference.

         For information concerning Griffith's remediation efforts in
Connecticut, see Item 3 of the Corporations' 10-K Annual Report and Note 11 -
"Commitments and Contingencies" to the financial statements included in that
report and Note 11 - "Commitments and Contingencies" to the financial statements
included in Part I, Item 1 of this Quarterly Report on Form 10-Q under the
caption "CHEC," which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

         For a discussion identifying risk factors that could cause actual
results to differ materially from those anticipated, see the discussion under
Item 1A - Risk Factors of the Corporations' 10-K Annual Report.

         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'S 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 transactions, financings, and transactions between Central Hudson
and CH Energy Group or CH Energy Group's other subsidiaries.

         The Rate Plans under which Central Hudson operated from November 2001
through June 30, 2006, were superseded by a new Rate Plan (i.e., the 2006 Order)
covering the three-year period from July 1, 2006, to June 30, 2009. Rate Plans
generally may not be changed during their respective terms, absent unusual
circumstances. As a result, the new Rate Plan may not fully reflect all of the
future trends in revenues (including but not limited to those related to weather
patterns and energy conservation), expenses, construction costs, and other
important factors that will determine Central Hudson's financial performance.

         Moreover, proceedings have recently been established by the PSC to
review policies promoting competitive retail markets, to develop hedging
guidelines and performance measures, and to solicit proposals to promote
efficient energy use through the establishment of revenue decoupling mechanisms.
The Governor of New York has announced an energy strategy with both supply and
demand side components. Additionally, there may be federal energy legislation
enacted at some juncture. These potential changes in New York State and federal
policy may lead to changes to the Rate Plans applicable to Central Hudson or may
otherwise impact the company's financial performance. Additionally, the governor
of New York has announced an energy strategy with both supply and demand side
components. This strategy, as well as any changes to federal energy policies,
may also result in changes to Central Hudson's Rate Plan and impact the
company's financial performance.

         The previous effective Rate Plans and the new Rate Plan and the 2006
Joint Proposal (which formed the basis for the 2006 Order) are discussed in Note
2 -


                                       51
<PAGE>

"Regulatory Matters" to the Consolidated Financial Statements of the
Corporations' 10-K Annual Report.

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

         10.1                   Distribution Agreement dated March 19, 2007
                                between Central Hudson Gas and Electric
                                Corporation and Bank of America Securities LLC,
                                J.P. Morgan Securities Inc. and Mc Donald
                                Investments Inc., as agents [incorporated by
                                reference to Exhibit 1 to the Current Report on
                                Form 8-K filed by Central Hudson Gas and
                                Electric Corporation on March 20, 2007].

         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.


                                       52
<PAGE>


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 thereunto 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

Dated: May 2, 2007


                                       53
<PAGE>


                                  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

         10.1                   Distribution Agreement dated March 19, 2007
                                between Central Hudson Gas and Electric
                                Corporation and Bank of America Securities LLC,
                                J.P. Morgan Securities Inc. and Mc Donald
                                Investments Inc., as agents [incorporated by
                                reference to Exhibit 1 to the Current Report on
                                Form 8-K filed by Central Hudson Gas and
                                Electric Corporation on March 20, 2007].

         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.




                                       54