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 1934For the
  quarterly period
  ended......................................................June 30, 2007ORo TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934For the
  transition period from...............................to..............................................  Commission
  
  File Number
  
  Registrant,
  State of Incorporation
  Address and Telephone Number
  
  IRS
  Employer
  Identification No.0-30512
  
  CH Energy
  Group, Inc.
  
  14-1804460(Incorporated
  in New York)284 South
  AvenuePoughkeepsie,
  New York 12601-4879(845)
  452-20001-3268
  
  Central
  Hudson Gas & Electric Corporation
  
  14-0555980(Incorporated
  in New York)284 South
  AvenuePoughkeepsie,
  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. YesxNo  o 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   
xAccelerated Filero        
           
Non-Accelerated Filero     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   oAccelerated Filero                   
Non-Accelerated FilerxIndicate
by check mark whether CH Energy Group, Inc. is a shell company (as defined in
Rule 12b-2 of the Exchange Act):

YesoNo  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  oNox

As
of the close of business on August 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).
FORM 10-Q FOR THE QUARTER ENDED June 30, 2007

INDEX

PAGEPART I - FINANCIAL INFORMATIONItem
  1  Consolidated Financial Statements (Unaudited)CH ENERGY
  GROUP, INC.Consolidated
Statement of Income 
  Three Months Ended June 30, 2007, and 2006
  1Consolidated
Statement of Income 
  Six Months Ended June 30, 2007, and 2006
  2Consolidated
Statement of Comprehensive
  Income 
  Three Months Ended June 30, 2007, and 2006
  3Consolidated
  Statement of Comprehensive Income 
  Six Months Ended June 30, 2007, and 2006
  3Consolidated
  Balance Sheet  June 30, 2007,
  December 31, 2006, and June 30, 2006
  4Consolidated
  Statement of Cash Flows 
  Six Months Ended June 30, 2007, and 2006
  6CENTRAL
  HUDSON GAS & ELECTRIC CORPORATIONConsolidated
  Statement of Income 
  Three Months Ended June 30, 2007, and 2006
  7Consolidated
  Statement of Income 
  Six Months Ended June 30, 2007, and 2006
  8Consolidated
  Statement of Comprehensive Income 
  Three Months Ended June 30, 2007, and 2006
  9Consolidated
  Statement of Comprehensive Income 
  Six Months Ended June 30, 2007, and 2006
  9Consolidated
  Balance Sheet  June 30, 2007,
  December 31, 2006, and June 30, 2006
  10Consolidated
  Statement of Cash Flows 
  Six Months Ended June 30, 2007, and 2006
  12Notes
  to Consolidated Financial Statements (Unaudited)
  13INDEXPAGEITEM
  2 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS
  35ITEM
  3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  58ITEM
  4 - CONTROLS AND PROCEDURES
  58PART
  II  OTHER INFORMATION
  59ITEM
  1 - LEGAL PROCEEDINGS
  59ITEM
  1A - RISK FACTORS
  59ITEM
  4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  60ITEM
  6 - EXHIBITS
  61SIGNATURES
  62EXHIBIT
  INDEX
  63CERTIFICATIONS
  66Filing 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.

PART I - FINANCIAL INFORMATION

Item I - Consolidated Financial
Statements

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

For
  the 3 Months Ended June 30,2007

2006(Thousands
  of Dollars)Operating RevenuesElectric

$
150,445

$
107,930Natural
gas


40,242


36,458Competitive
business subsidiaries


80,296


69,503Total
Operating Revenues


270,983


213,891Operating ExpensesOperation:Purchased
electricity and fuel used in
  electric generation


97,232


63,609Purchased
natural gas


27,925


25,329Purchased
petroleum


60,818


55,512Other expenses
of operation - regulated
  activities


39,493


29,985Other expenses
of operation - competitive
  business subsidiaries


17,756


15,023Depreciation
and amortization


9,026


9,124Taxes, other
than income tax


8,660


8,517Total
Operating Expense


260,910


207,099Operating Income


10,073


6,792Other Income and
DeductionsIncome from
unconsolidated affiliates


349


741Interest on
regulatory assets and
  investment income


2,254


2,955Other -
net


(538
)

810Total Other
Income


2,065


4,506Interest ChargesInterest on
long-term debt


4,495


4,071Interest on
regulatory liabilities and
  other interest


923


946Total
Interest Charges


5,418


5,017Income Before Income Taxes and
Preferred
  Dividends of Subsidiary


6,720


6,281Income Taxes


1,293


2,099Minority Interest


(4
)

(128
)Income Before Preferred
Dividends of
  Subsidiary


5,431


4,310Cumulative Peferred Stock
Dividends of
  Subsidiary


242


242Net Income


5,189


4,068Dividends Declared on Common
Stock


8,512


8,512Balance Retained in the
Business

$
(3,323
)
$
(4,444
)Common Stock:Average Shares
Outstanding - Basic


15,762


15,762- Diluted


15,784


15,775Earnings Per
Share - Basic

$
0.33

$
0.26- Diluted

$
0.33

$
0.26Dividends
Declared Per Share

$
0.54

$
0.54See Notes to Consolidated Financial Statements

1

PART I - FINANCIAL INFORMATION

Item I - Consolidated Financial Statements

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

For the 6 Months Ended June 30,2007

2006(Thousands of Dollars)Operating
  RevenuesElectric

$
302,120

$
243,977Natural
gas


104,433


107,267Competitive
business subsidiaries


207,809


179,879Total
Operating Revenues


614,362


531,123Operating
  ExpensesOperation:Purchased
electricity and fuel used in
  electric generation


191,268


149,449Purchased
natural gas


71,261


77,056Purchased
petroleum


155,378


140,370Other expenses
of operation - regulated
  activities


77,142


58,480Other expenses
of operation - competitive
  business subsidiaries


36,549


30,693Depreciation
and amortization


18,131


18,077Taxes, other
than income tax


17,147


16,121Total
Operating Expense


566,876


490,246Operating
  Income


47,486


40,877Other Income
  and DeductionsIncome from
unconsolidated affiliates


1,544


931Interest on
regulatory assets and
  investment income


4,394


5,692Other -
net


(1,034
)

90Total Other
Income


4,904


6,713Interest
  ChargesInterest on
long-term debt


8,986


8,024Interest on
regulatory liabilities and
  other interest


1,873


1,983Total
Interest Charges


10,859


10,007Income
  Before Income Taxes and Preferred Dividends of Subsidiary


41,531


37,583Income Taxes


14,256


14,858Minority
  Interest


(97
)

(128
)Income
  Before Preferred Dividends of Subsidiary


27,372


22,853Cumulative
  Preferred Stock Dividends of Subsidiary


485


485Net Income


26,887


22,368Dividends
  Declared on Common Stock


17,023


17,023Balance
  Retained in the Business

$
9,864

$
5,345Common
  Stock:Average Shares
Outstanding - Basic


15,762


15,762- Diluted


15,784


15,776Earnings Per
Share - Basic

$
1.71

$
1.42- Diluted

$
1.70

$
1.41Dividends
Declared Per Share

$
1.08

$
1.08See Notes to Consolidated Financial Statements

2

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

For the 3 Months Ended June 30,2007

2006(Thousands of Dollars)Net Income

$
5,189

$
4,068Other Comprehensive
  Income:Net unrealized gains net
  of tax and net income realization:FAS 133
Designated Cash Flow Hedges - net of tax of $(12) and $(4)


18


6Investments -
net of tax of $(286) and $(0)


428


Other comprehensive income


446


6Comprehensive Income

$
5,635

$
4,074For
  the 6 Months Ended June 30,2007

2006(Thousands
  of Dollars)Net Income

$
26,887

$
22,368Other Comprehensive
  Income:Net unrealized gains net
  of tax and net income realization:FAS 133
Designated Cash Flow Hedges - net of tax of $(245) and $(10)


367


17Investments -
net of tax of $(397) and $(83)


595


126Other comprehensive income


962


143Comprehensive Income

$
27,849

$
22,511See Notes to Consolidated Financial Statements

3

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

ASSETS

June
  30,
  2007

December
  31,
  2006

June
  30,
  2006(Thousands
  of Dollars)Utility PlantElectric

$
788,734

$
768,808

$
748,419Natural
gas


240,870


239,317


231,934Common


113,937


112,426


109,8001,143,541


1,120,551


1,090,153Less:
Accumulated depreciation


348,975


344,540


342,116794,566


776,011


748,037Construction
work in progress


56,165


51,041


49,434Net Utility
Plant


850,731


827,052


797,471Other Property and Plant -
net


33,469


33,822


33,810Current AssetsCash and cash
equivalents


22,039


24,121


36,968Short-term
investments - available-for-sale
  securities


28,950


42,611


40,200Accounts
receivable -net of allowance for
  doubtful accounts of $4.5 million, $5.8 million, and $5.2 million,
  respectively


93,485


80,862


76,026Accrued
unbilled utility revenues


6,846


9,772


5,563Other
receivables


6,186


7,706


5,871Fuel,
materials and supplies


28,955


27,930


29,239Regulatory
assets


32,525


31,332


18,719Prepaid income
taxes





11,244


Special
deposits and prepayments


25,029


23,655


27,422Accumulated
deferred income tax


6,584


5,875


15,335Total Current
Assets


250,599


265,108


255,343Deferred Charges and Other
AssetsRegulatory
assets - related to pension plan
  costs


91,532


99,281


115,564Regulatory
assets - related to other
  post-employment benefit (OPEB) costs


32,766


36,392


13,622Regulatory
assets


83,219


83,102


46,576Intangible
asset - pension plan








20,217Goodwill


57,539


52,828


52,198Other
intangible assets - net


30,926


27,550


27,831Unamortized
debt expense


4,217


4,041


3,816Investments in
unconsolidated affiliates


13,417


12,651


12,504Other


20,273


18,705


20,204Total Deferred
Charges and Other Assets


333,889


334,550


312,532Total
Assets

$
1,468,688

$
1,460,532

$
1,399,156See Notes to
Consolidated Financial Statements

4

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

CAPITALIZATION
AND LIABILITIES

June 30,
  2007

December 31,
  2006

June 30,
  2006(Thousands of Dollars)CapitalizationCommon 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

$
1,686Paid-in
capital


351,230


351,230


351,230Retained
earnings


216,919


207,055


203,362Treasury stock
(1,100,087 shares)


(46,252
)

(46,252
)

(46,252
)Accumulated
comprehensive income (loss)


433


(529
)

(377
)Capital stock
expense


(328
)

(328
)

(328
)Total Common
Shareholders Equity


523,688


512,862


509,321Cumulative
Preferred StockNot subject to
mandatory redemption


21,027


21,027


21,027Long-term
debt


370,890


337,889


310,887Total
Capitalization


915,605


871,778


841,235Current LiabilitiesCurrent
maturities of long-term debt





33,000


33,000Notes
payable


29,000


13,000


33,500Accounts
payable


38,705


41,840


32,236Accrued
interest


5,546


5,645


5,594Dividends
payable


8,754


8,754


8,754Accrued
vacation and payroll


7,198


5,963


5,936Customer
advances


12,969


25,732


10,681Customer
deposits


8,152


7,954


7,324Regulatory
liabilities


15,261


21,651


3,140Fair value of
derivative instruments


6,546


3,582


2,236Accrued
environmental remediation costs


2,604


3,400


4,000Accrued income
taxes


374





4,735Deferred
revenues


5,053


5,455


3,966Other


12,790


14,112


9,972Total Current
Liabilities


152,952


190,088


165,074Deferred Credits and Other
LiabilitiesRegulatory
liabilities


104,762


107,796


150,016Operating
reserves


5,245


4,906


6,756Accrued
environmental remediation costs


14,678


17,354


18,529Accrued OPEB
costs


68,172


68,818


27,694Accrued
pension costs


48,760


47,299


32,854Other


14,078


12,566


14,025Total
Deferred Credits and Other Liabilities


255,695


258,739


249,874Minority Interest


1,369


1,481


1,494Accumulated Deferred Income
Tax


143,067


138,446


141,479Commitments and Contingencies
(Note 11)Total
Capitalization and
  Liabilities

$
1,468,688

$
1,460,532

$
1,399,156See Notes to Consolidated Financial Statements

5

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

For
  the 6 Months Ended
  June 30,2007

2006(Thousands
  of Dollars)Operating
  Activities:Net
Income

$
26,887

$
22,368Adjustments to
reconcile net income to net
  cash provided by (used in) operating activities:Depreciation and
amortization


18,131


18,077Deferred income
taxes - net


3,043


3,403Provision for
uncollectibles


2,422


3,000Undistributed
equity in earnings of unconsolidated affiliates


(844
)

(891
)Accrued (deferred)
pension costs


6,800


(6,884
)Regulatory
liability-rate moderation


(12,547
)

Minority
interest


(97
)

(128
)Gain on sale of
property and plant


(468
)

(697
)Changes in
operating assets and liabilities
  - net of business acquisitions:Accounts
receivable, unbilled revenues and other receivables


(10,599
)

44,448Fuel, materials
and supplies


246


(811
)Special deposits
and prepayments


(1,374
)

(6,903
)Prepaid income
taxes


11,244


Accounts
payable


(2,691
)

(22,864
)Accrued taxes and
interest


275


5,174Accrued OPEB
costs


2,527


2,749Customer
advances


(12,763
)

(15,051
)Deferred natural
gas and electric costs


4,605


13,834Customer benefit
fund





(6,412
)Other -
net


(1,077
)

(7,251
)Net Cash
  Provided By Operating Activities


33,720


45,161Investing
  Activities:Proceeds from
sale of property and plant


1,021


765Purchase of
short-term investments


(43,101
)

(21,000
)Proceeds from
sale of short-term
  investments


56,762


22,900Additions to
utility plant and other
  property and plant


(39,235
)

(30,614
)Issuance of
notes receivable





(315
)Acquisitions
made by competitive business
  subsidiaries


(11,585
)

(12,843
)Other -
net


1,718


(2,941
)Net Cash
Used
  in Investing Activities


(34,420
)

(44,048
)Financing
  Activities:Redemption of
long-term debt


(33,000
)

Proceeds from
issuance of long-term debt


33,000


Net borrowings
of short-term debt


16,000


3,500Dividends paid
on common stock


(17,023
)

(17,023
)Debt issuance
costs


(359
)

(32
)Net Cash Used
  in Financing Activities


(1,382
)

(13,555
)Net Change in
  Cash and Cash Equivalents


(2,082
)

(12,442
)Cash and Cash
  Equivalents - Beginning of Year


24,121


49,410Cash and Cash
  Equivalents - End of Period

$
22,039

$
36,968Supplemental Disclosure of Cash
Flow
  Information and Non-Cash Investing ActivitiesInterest
paid

$
9,979

$
9,986Federal and
state income tax paid

$
8,023

$
5,733Additions to
plant included in accounts
  payable

$
3,749

$
2,454See Notes to Consolidated Financial Statements

6

CENTRAL HUDSON GAS & ELECTRIC CORPORATIONCONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)



For
  the 3 Months Ended June 30,2007

2006(Thousands
  of Dollars)Operating RevenuesElectric

$
150,445

$
107,930Natural
gas


40,242


36,458Total
Operating Revenues


190,687


144,388Operating ExpensesOperation:Purchased
electricity and fuel used in electric generation


95,796


62,970Purchased
natural gas


27,925


25,329Other expenses
of operation


39,493


29,985Depreciation
and amortization


7,144


7,462Taxes, other
than income tax


8,522


8,431Total
Operating Expenses


178,880


134,177Operating Income


11,807


10,211Other Income and
DeductionsInterest on
regulatory assets and other interest income


1,634


2,121Other -
net


(317
)

(214
)Total Other
Income


1,317


1,907Interest ChargesInterest on
long-term debt


4,495


4,071Interest on
regulatory liabilities and other interest


923


945Total
Interest Charges


5,418


5,016Income Before Income
Taxes


7,706


7,102Income Taxes


2,444


2,979Net Income


5,262


4,123Dividends Declared on
Cumulative Preferred Stock


242


242Income Available for Common
Stock

$
5,020

$
3,881See Notes to Consolidated Financial Statements

7

CENTRAL HUDSON GAS & ELECTRIC CORPORATIONCONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)

For
  the 6 Months Ended June 30,2007

2006(Thousands
  of Dollars)Operating RevenuesElectric

$
302,120

$
243,977Natural
gas


104,433


107,267Total
Operating Revenues


406,553


351,244Operating ExpensesOperation:Purchased
electricity and fuel used in electric generation


189,013


148,810Purchased
natural gas


71,261


77,056Other expenses
of operation


77,142


58,480Depreciation
and amortization


14,430


14,917Taxes, other
than income tax


16,857


15,958Total
Operating Expenses


368,703


315,221Operating Income


37,850


36,023Other Income and
DeductionsInterest on
regulatory assets and other interest income


3,088


4,050Other -
net


(575
)

(333
)Total Other
Income


2,513


3,717Interest ChargesInterest on
long-term debt


8,986


8,024Interest on
regulatory liabilities and other interest


1,873


1,983Total
Interest Charges


10,859


10,007Income Before Income
Taxes


29,504


29,733Income Taxes


10,871


12,556Net Income


18,633


17,177Dividends Declared on
Cumulative Preferred Stock


485


485Income Available for Common
Stock

$
18,148

$
16,692See Notes to Consolidated Financial Statements

8

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

For
  the 3 Months Ended June 30,2007

2006(Thousands
  of Dollars)Net Income


$
5,262



$
4,123Other
  Comprehensive Income








Comprehensive
  Income


$
5,262



$
4,123For
  the 6 Months Ended June 30,2007

2006(Thousands
  of Dollars)Net Income


$
18,633



$
17,177Other
  Comprehensive Income








Comprehensive
  Income


$
18,633



$
17,177See Notes to Consolidated Financial
Statements

9

CENTRAL HUDSON GAS & ELECTRIC CORPORATIONCONSOLIDATED BALANCE SHEET
(UNAUDITED)

ASSETS

June
  30,
  2007

December
  31,
  2006

June
  30,
  2006(Thousands
  of Dollars)Utility PlantElectric

$
788,734

$
768,808

$
748,419Natural
gas


240,870


239,317


231,934Common


113,937


112,426


109,8001,143,541


1,120,551


1,090,153Less:
Accumulated depreciation


348,975


344,540


342,116794,566


776,011


748,037Construction
work in progress


56,165


51,041


49,434Net Utility
Plant


850,731


827,052


797,471Other Property and Plant -
net


416


434


722Current AssetsCash and cash
equivalents


1,810


1,710


1,738Accounts
receivable -net of allowance for doubtful accounts of $2.6 million,
  $3.8 million, and $3.8 million, respectively


61,136


48,611


46,953Accrued
unbilled utility revenues


6,846


9,772


5,563Other
receivables


3,299


3,034


3,190Fuel,
materials and supplies - at average cost


23,487


22,804


23,163Regulatory
assets


32,525


31,332


18,719Prepaid income
taxes


87


10,477


Special
deposits and prepayments


21,179


21,009


22,838Accumulated
deferred income tax


5,569


4,600


14,379Total Current
Assets


155,938


153,349


136,543Deferred Charges and Other
AssetsRegulatory
assets - related to pension plan costs


91,532


99,281


115,564Regulatory
assets - related to OPEB costs


32,766


36,392


13,622Regulatory
assets


83,219


83,102


46,576Intangible
asset - pension plan








20,217Unamortized
debt expense


4,217


4,041


3,816Other


13,136


12,172


12,651Total Deferred
Charges and Other Assets


224,870


234,988


212,446Total
Assets

$
1,231,955

$
1,215,823

$
1,147,182See Notes to Consolidated Financial
Statements

10

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

CAPITALIZATION
  AND LIABILITIES

June
  30,
  2007

December
  31,
  2006

June
  30,
  2006(Thousands of Dollars)CapitalizationCommon Stock
Equity:Common stock,
30,000,000 shares authorized; 16,862,087 shares issued
  ($5 par value)

$
84,311

$
84,311

$
84,311Paid-in
capital


174,980


174,980


174,980Retained
earnings


86,858


68,710


51,501Capital stock
expense


(4,961
)

(4,961
)

(4,961
)Total Common
Shareholders Equity


341,188


323,040


305,831Cumulative
Preferred StockNot subject to mandatory redemption


21,027


21,027


21,027Long-term
debt


370,890


337,889


310,887Total
Capitalization


733,105


681,956


637,745Current LiabilitiesCurrent
maturities of long-term debt





33,000


33,000Notes
payable


29,000


13,000


33,500Accounts
payable


29,967


32,418


24,526Accrued
interest


5,546


5,645


5,594Dividends
payable - preferred stock


242


242


242Accrued
vacation and payroll


5,121


4,682


4,759Customer
advances


4,439


15,907


5,231Customer
deposits


8,018


7,811


7,165Regulatory
liabilities


15,261


21,651


3,140Fair value of
derivative instruments


6,546


2,971


1,983Accrued income
taxes








3,825Accrued
environmental remediation costs


2,004


3,400


4,000Other


7,699


8,884


5,470Total Current
Liabilities


113,843


149,611


132,435Deferred Credits and Other
LiabilitiesRegulatory
liabilities


104,762


107,796


150,016Operating
reserves


4,088


3,936


5,512Accrued
environmental remediation costs


13,573


15,457


15,500Accrued OPEB
costs


68,172


68,818


27,694Accrued
pension costs


48,760


47,299


32,854Other


13,056


11,802


11,862Total Deferred
Credits and Other Liabilities


252,411


255,108


243,438Accumulated Deferred Income
Tax


132,596


129,148


133,564Commitments and Contingencies
(Note 11)Total
Capitalization and Liabilities

$
1,231,955

$
1,215,823

$
1,147,182See Notes to Consolidated Financial
Statements

11

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

For
  the 6 Months Ended
  June 30,2007

2006(Thousands
  of Dollars)Operating
Activities:Net
Income

$
18,633

$
17,177Adjustments to
reconcile net income to net cash provided by (used in)
  operating activities:Depreciation
and amortization


14,430


14,917Deferred
income taxes - net


2,251


2,675Provision for
uncollectibles


1,945


2,507Accrued
(deferred) pension costs


6,800


(6,884
)Regulatory
liability-rate moderation


(12,547
)

Gain on sale
of property and plant


(468
)

Changes in
operating assets and liabilities - net:Accounts
receivable, unbilled revenues and other receivables


(11,809
)

30,952Fuel,
materials and supplies


(683
)

248Special
deposits and prepayments


(170
)

(6,670
)Prepaid
income tax


10,390


Accounts
payable


(2,007
)

(16,358
)Accrued taxes
and interest


(99
)

3,939Accrued OPEB
costs


2,527


2,749Customer
advances


(11,468
)

(10,676
)Deferred
natural gas and electric costs


4,605


13,834Customer
benefit fund





(6,412
)Other -
net


(566
)

(8,630
)Net Cash
Provided by Operating Activities


21,764


33,368Investing
Activities:Proceeds from
sale of property and plant


1,021


Additions to
utility plant


(37,988
)

(29,314
)Other -
net


147


(1,031
)Net Cash
Used in Investing Activities


(36,820
)

(30,345
)Financing
Activities:Redemption of
long-term debt


(33,000
)

Proceeds from
issuance of long-term debt


33,000


Net borrowings
of short-term debt


16,000


3,500Dividends paid
on cumulative preferred stock


(485
)

(485
)Dividends paid
to parent - CH Energy Group





(8,500
)Debt issuance
costs


(359
)

(32
)Net Cash
Provided by (Used In) Financing Activities


15,156


(5,517
)Net Change
in Cash and Cash Equivalents


100


(2,494
)Cash and Cash Equivalents -
Beginning of Year


1,710


4,232Cash and Cash Equivalents -
End of Period

$
1,810

$
1,738Supplemental
Disclosure of Cash Flow Information and Non-Cash
  Investing ActivitiesInterest paid

$
9,979

$
8,117Federal and
state income tax paid

$
7,230

$
6,626Additions to
plant included in accounts payable

$
3,749

$
2,454See Notes to Consolidated Financial
Statements

12

CH ENERGY GROUP, INC.
CENTRAL HUDSON GAS & ELECTRIC CORPORATIONNotes 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).
Operating results of CHECs wholly owned subsidiary Griffith Energy
Services, Inc. (Griffith) and its subsidiary Lyonsdale Biomass, LLC
(Lyonsdale) are consolidated in the financial statements of CH Energy Group.
The minority interest shown on CH Energy Groups Consolidated Financial
Statements represents the minority owners proportionate share of the income
and equity of Lyonsdale.

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 June 30, 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.

13

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 June 30, 2007, the total fair value of
open Central Hudson derivatives, which hedge electric and natural gas commodity
purchases, was an unrealized loss of ($6.5) million.  This compares to a fair value at December 31, 2006, of ($3.0)
million, a net unrealized loss, and a fair value of ($2.0) million at June 30,
2006, a net unrealized loss.  At June
30, 2007, Central Hudson had open derivative contracts hedging approximately
38.2% of its projected electricity requirements for the period July 2007
through December 2007 and 15.0% of its projected natural gas requirements for
the period November 2007 through March 2008.
Central Hudson recorded actual net losses of ($1.3) million on such
hedging activities for the quarter ended June 30, 2007, as compared to a net
loss of ($1.5) million for the
same period in 2006.  Comparative
amounts for the six months ended June 30, 2007, and 2006, were net losses of
($4.7) million and ($5.7) million, respectively.

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.  The periods covered were the months of February
and March of the heating season ended March 31, 2007, the three months of the
heating season ended March 31, 2006, the three months of the cooling season
ended August 31, 2007, and the months of July and August 2006.  Under the terms of these weather-hedging
contracts, no settlement payments were made to or from counter-parties for any
of the periods covered.

Griffith

The
fair value of Griffiths open derivative positions at June 30, 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
June 30, 2007, include call options designated as cash flow hedges for fuel oil
purchases from September 2007 through June 2008, which hedge approximately 1.6%
of Griffiths total projected fuel oil requirements for this period.  Settlement amounts recorded for the quarters
ended June 30, 2007, and 2006, were not material.  A total actual net loss was recorded June 30, 2007, including
premium expense, in the amount of ($0.6) million.  A net gain was recorded during the same period in 2006 that was
not material.

14

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 ceiling price 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 June 30, 2007, the aggregate amount of
subsidiary obligations covered by these guarantees was $5.6 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.

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 Public Service
Commission (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 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 $46.4 million, $44.6 million, and $95.7 million of net cost of
removal as

15

regulatory
liabilities as of June 30, 2007, December 31, 2006, and June 30, 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 $18.8 million, $17.3 million, and $16.1 million
as of June 30, 2007, December 31, 2006, and June 30, 2006, respectively.
Accumulated depreciation for Lyonsdale was $0.9 million, $0.6 million and $0.1
million as of June 30, 2007 and December 31, 2006, and June 30, 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 21,807 shares and 13,368 shares for the quarters ended June 30,
2007, and 2006, and 22,338 shares and 13,619 shares for the six months ended
June 30, 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 18,420 shares for the three-month and six-month
periods ended June 30, 2007, and 35,700 shares for the three-month and
six-month periods ended June 30, 2006.
For additional information regarding stock options and performance
shares, see Note 10  Equity-Based Compensation Incentive Plans.

16

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, and are not material to
CH Energy Group and Central Hudson.

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.

Utility Land Sales

Central Hudson

On
April 23, 2007, the PSC issued an Order approving the proposed transfer of
Central Hudsons ownership interest in its 900 kW Groveville Mills
Hydroelectric facility and the deferral of any gain realized upon the transfer
for the benefit of customers.

In
the second quarter, Central Hudson sold utility property, including the
Groveville Mills Hydroelectric facility, for $0.5 million in excess of book
value plus transaction costs, which excess was recorded as a regulatory
liability.

17

Non-Utility Land Sales

Central Hudson

During
the six months ended June 30, 2007, Central Hudson sold four parcels of
non-utility real property for $0.5 million in excess of book value plus
transaction costs, which is recorded as a reduction to Other Expenses of
Operation.

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.

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.



        Impact*

                

                Status

                

                Category

                

                Reference

                

                Title

                

                Issued
                    Date

                

                Effective
                    Date1

                

                Under
                    Assessment

                

                Fair Value

                

                SFAS 159

                

                Establishing the Fair
                    Value Option for Financial Assets and Liabilities

                

                Feb-07

                

                Jan-081

                

                Under
                    Assessment

                

                Fair Value

                

                SFAS 157

                

                Fair Value
                    Measurement

                

                Sep-06

                

                Jan-082

                

                Implemented

                

                Pension,
                    Postretirement

                

                SFAS 158

                

                Employers’
                    Accounting for Defined Benefit Pension and Other Postretirement
                    Plans

                

                Sep-06

                

                Dec-062

                

                Implemented

                

                Taxes

                

                FIN 48

                

                Accounting for
                    Uncertainty in Income Taxes - an Interpretation of FASB Statement No.
                    109

                

                Jul-06

                

                Jan-072

                

                Implemented

                

                Taxes

                

                FIN 48-1

                

                Definition of Settlement
                    in FASB Interpretation
                    No. 48

                

                May-07

                

                Jan-073

                

                Not Currently
                    Applicable

                

                Derivatives

                

                SFAS 133 Issue
                    B40

                

                Embedded Derivatives:
                    Application of Paragraph 13 (b) to Securitized Interests in Prepayable
                    Financial Assets

                

                Dec-06

                

                Jan-073

                

                Not Currently
                    Applicable

                

                Financial
                    Assets

                

                SFAS 156

                

                Accounting for Servicing
                    of Financial Assets

                

                Mar-06

                

                Jan-073

                

                Not Currently
                    Applicable

                

                Financial
                    Instruments

                

                SFAS 155

                

                Accounting for Certain
                    Hybrid Financial Instruments, an Amendment of FASB Statements No. 133 and
                    140

                

                Feb-06

                

                Jan-073

                

                Not Currently
                    Applicable

                

                Derivatives

                

                FIN
                    39-1

                

                Amendment of FASB
                    Interpretation No. 39, Offsetting of Amounts Related to Certain
                    Contracts

                

                Apr-07

                

                Jan-073

                

                Not Currently
                    Applicable

                

                Derivatives

                

                SFAS 133
                    Issue G26

                

                Cash Flow Hedges:
                    Hedging Interest Cash Flows on Variable-Rate Assets and Liabilities that are
                    not Based on a Benchmark Rate

                

                Dec-06

                

                Apr-0718

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

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

SFAS
157 defines fair value, establishes a framework for measuring fair value in
accordance with General Accepted Accounting Principles, 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.

Standards Implemented

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

19

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

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

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 six months ended June 30, 2007, Griffith acquired fuel distribution
companies as follows (in Millions):

20

3 Month
Period
Ended

# of
Acquired
Companies

Purchase

Price

Total
Intangible
Assets(1)

Goodwill(3)

Total
Tangible
Assets(2)March 31, 2007


3

$
11.4

$
9.5

$
4.6

$
1.9June 30, 2007


1

$
0.2

$
0.2

$
0.1


Total


4

$
11.6

$
9.7

$
4.7

$
1.9(1)
Including goodwill.(2)
Total tangible assets
  include $1.3 million in liquid petroleum and spare parts inventory, and $0.6
  million in vehicles.(3)
The amount of purchase
  price assigned to goodwill is based upon preliminary assessment and may be
  subject to adjustment.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
(in Thousands):

June 30, 2007


December 31, 2006


June 30, 2006Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
AmortizationCustomer Lists

$
47,427

$
17,051

$
42,479

$
15,508

$
41,315

$
14,117Covenants Not to Compete


1,410


860


1,350


771


1,714


1,081Total Amortizable
  Intangibles

$
48,837

$
17,911

$
43,829

$
16,279

$
43,029

$
15,198Amortization
expense was $1.6 million and $1.4 million for each of the six-month periods ended
June 30, 2007, and 2006, respectively. The estimated annual

21

amortization expense for each of the next five years,
assuming no new acquisitions, is approximately $3.3 million.

The
carrying amount for goodwill was $57.5 million as of June 30, 2007, $52.8
million as of December 31, 2006, and $52.2 million as of June 30, 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 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 $29 million at June 30, 2007, $42.6 million at
December 31, 2006, and $40.2 million at June 30, 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
  MethodCentral
  Hudson
Average costGriffith
FIFOLyonsdale
Weighted
  average costThe following
is a summary of CH Energy Groups and Central Hudsons fuel, materials and
supplies at June 30, 2007, December 31, 2006, and June 30, 2006:

22

CH Energy GroupJune 30,
  2007

December 31,
  2006

June 30,
  2006(In Thousands)Natural gas


$
16,091



$
15,640



$
16,231Petroleum products and
propane



3,420




3,680




4,390Fuel used in electric
generation



416




393




642Materials and
supplies



9,028




8,217




7,976Total


$
28,955



$
27,930



$
29,239Central HudsonJune 30,
  2007

December 31,
  2006

June 30,
  2006(In Thousands)Natural
  gas


$
16,091



$
15,640



$
16,231Petroleum
  products and propane



385




493




478Fuel
  used in electric generation



229




233




262Materials
  and supplies



6,782




6,438




6,192Total


$
23,487



$
22,804



$
23,163NOTE 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 at maturity $33 million of 5-year, 5.87%
Series D notes, on March 28, 2007.

NOTE 9  POST-EMPLOYMENT BENEFITS

The
following are the components of Central Hudsons net periodic benefit costs for
its pension and other postretirement benefits (OPEB) plans for the quarters
and six months ended June 30, 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 Financial Staff Position
(FSP) 106-2, titled Accounting and

23

Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003.

Quarter Ended June 30,Pension Benefits

OPEB2007

2006

2007

2006(In Thousands)

(In Thousands)Service
  cost

$
1,977

$
1,985

$
914

$
592Interest
  cost


5,928


5,577


2,078


1,752Expected
  return on plan assets


(6,999
)

(6,709
)

(1,584
)

(1,560
)Amortization
  of:Prior service
cost


494


542


(314
)

(314
)Transitional
obligation (asset)








641


642Recognized
  actuarial loss


3,344


3,240


1,259


305Net
  periodic benefit cost

$
4,744

$
4,635

$
2,994

$
1,417Six Months Ended June 30,Pension Benefits

OPEB2007

2006

2007

2006(In Thousands)

(In Thousands)Service
  cost

$
3,954

$
3,970

$
1,828

$
1,662Interest
  cost


11,856


11,153


4,155


4,010Expected
  return on plan assets


(13,999
)

(13,418
)

(3,168
)

(2,993
)Amortization
  of:Prior
  service cost


988


1,084


(628
)

(628
)Transitional
  obligation (asset)








1,283


1,283Recognized
  actuarial loss


6,689


6,481


2,518


2,153Net
  periodic benefit cost

$
9,488

$
9,270

$
5,988

$
5,487Decisions
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.

24

Employer
contributions for OPEB totaled $3.5 million and $2.4 million during the six
months ended June 30, 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 on plan assets,
medical claims assumptions used, and corporate resources. 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.

A
summary of the status of performance shares granted to executives under the
2000 Plan and 2006 Plan as of June 30, 2007 is as follows:

Plan

Grant
  Date
Performance
  Shares
  Granted
Performance
  Shares Outstanding
  at 6/30/072000
  Plan

March
  24, 2005
23,000
20,9002006
  Plan

April
  25, 2006
20,710
18,9902006
  Plan

January
  25, 2007
20,920
20,480The
ultimate number of shares earned under the awards is based on metrics
established by the Compensation Committee at the beginning of the award cycle.
Compensation expense is recorded as performance shares are earned over the
relevant three-year life of the performance share grant prior to its award. Due
to the retirement of one of CH Energy Groups executive officers on January 1,
2007, a pro-rated number of shares under the 2005 and 2006 grants were paid out
in April 2007. Additionally, outstanding performance shares for all grants were
reduced in the second quarter of 2007 for forfeitures.

Quarter
  Ended June 30,

Six
  Months Ended June 30,Description

2007

2006

2007

2006Performance shares
   compensation expense

$70,000

$276,000

$357,000

$419,000Stock options Compensation
expense

Not
  material

Not
  material

Not
  material

Not
  materialBalance
accrued on outstanding options

$121,000

$207,000

$121,000

$207,000Intrinsic
value of outstanding options

Not
  material

Not
  material

Not
  material

Not
  material25

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
June 30, 2007, is as follows:

Stock
  Option
  Shares

Weighted
  Average
  Exercise Price

Weighted
  Average
  Remaining Life
  in YearsOutstanding at 12/31/06

45,260



$
45.87


4.82Granted









Exercised

(4,780
)


$
44.23Expired/Forfeited

(180
)


$
48.62Outstanding at 6/30/07

40,300



$
46.05


4.41Total Shares Outstanding

15,762,000Potential 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 six months ended June 30, 2007. Total
intrinsic value of options exercised was not material.

The following
table summarizes information concerning outstanding and exercisable stock
options at June 30, 2007, by exercise price:

Exercise
  Price


Number
  of
  Options
  Outstanding

Weighted
  Average
  Remaining
  Life in Years

Number
  of
  Options
  Exercisable

Number
  of
  Options
  Remaining to Vest$31.94



320


2.50


320


$44.06



21,560


3.50


21,560


$48.62



18,420


5.50


16,440


1,98040,300


4.41


38,320


1,980NOTE 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 Indian 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. On an annual basis, the
electricity purchased through the

26

Entergy
contracts represents close to 19% of Central Hudsons full-service customer
load requirements, or 832,250 MWh.

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 against Central Hudson and other defendants. The basis for the
claimed liability of Central Hudson in these actions is that it was allegedly
negligent in the supply of natural gas. The suits seek an aggregate of $528
million in compensatory damages. Central Hudson has notified its insurance carrier,
has denied liability, and is defending the lawsuits. Based on information known
to Central Hudson at this time, including information from ongoing discovery
proceedings in the lawsuits, Central Hudson believes that the likelihood it
will have a liability in these lawsuits is remote.

Environmental Matters

Central Hudson:

Air

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

27

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.

Central
Hudson spent approximately $3.4 million during the six months ended June 30,
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 June
30, 2007, $15.6 million of this estimated liability has not been spent; $1.0
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.

With
respect to the remaining four of the eight identified MGP sites, Central Hudson
now believes that for two of these sites it has no liability. For the first
site, records show that Central Hudson did not own or operate the site. Central
Hudson has

28

submitted its
findings to the DEC and is awaiting the DECs response. Testing performed at
the second site has not revealed any data to indicate remediation is required.
Central Hudson has submitted its findings to the DEC and the DEC has agreed
that no further investigation or remedial action is required at that site. For
one of the four sites, Central Hudson has reached agreement with the DEC on the
scope of remediation work and expects to complete the $0.5 million of
remediation during 2007. For the remaining site, Central Hudson estimates that
it will be at least 2-3 years before sufficient data has been obtained to
estimate the potential remediation costs.

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.

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 customers via
collection in 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 610 Little Britain Road,
New Windsor, New York. In 1992, the DEC informed Central Hudson that the DEC
was preparing to conduct a Preliminary Site Assessment (PSA) of the site and
in 1995, the DEC issued an Order on Consent in which Central Hudson agreed to
conduct the PSA. In 2000, following completion of the PSA, Central Hudson and
the DEC entered into a Voluntary Cleanup Agreement (VCA) whereby Central
Hudson removed approximately 3,100 tons of soil and has conducted a routine
groundwater sampling program since that time. Groundwater sampling results show
the presence of certain contaminants at levels exceeding DEC criteria. Deep
groundwater wells were installed in 2005 and 2006 which also show contaminants
exceeding DEC criteria. The DEC 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

29

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
2000, the DEC informed Central Hudson that its records indicate that Central
Hudson, or a predecessor entity, disposed, or may have disposed of, wastes at
the Orange County Landfill (Orange County Site) in Goshen, New York.

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.

On
January 31, 2007, the New York State Attorney General filed a complaint and
simultaneously proposed a settlement on consent in federal court in New York
City. The court approved the settlement for Central Hudson and other parties on
May 16, 2007. Central Hudson has since paid its share of the settlement cost,
which was $123,500.

Newburgh Consolidated Iron Works

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

Asbestos Litigation

As
of June 30, 2007, of the 3,306 asbestos cases brought against Central Hudson,
1,181 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

30

costs which
may be incurred in connection with the remaining lawsuits will not have a
material adverse effect on either of CH Energy Groups or Central Hudsons
financial position, results of operations, or cash flows.

CHEC:

Griffith
has a voluntary environmental program in connection with the West Virginia
Division of Environmental Protection regarding Griffiths Kable Oil Bulk Plant,
located in West Virginia. The State of West Virginia has indicated that some
additional remediation will be required and Griffith has received an estimate
of $300,000 for the environmental remediation. During the six months ended June
30, 2007, $143,000 was spent on site remediation efforts. In addition, Griffith
spent $50,000 on remediation efforts in Maryland, Virginia, and Connecticut in
2007. Griffith is to be reimbursed $406,000 from the State of Connecticut under
an environmental agreement and has recorded this amount as a receivable.

Griffith
has a reserve for environmental remediation which is $1.7 million as of June
30, 2007, of which approximately $0.6 million is expected to be spent in the
next twelve months.

Other Matters

Central Hudson:

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

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 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.

31

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
(In Thousands, Except
  Earnings Per Share)

Quarter
  Ended June 30, 2007Central
  Hudson

Griffith

Other
  Businesses
  and
  Investments

Eliminations

TotalElectric

Natural
  GasRevenues from external
customers

$
150,445

$
40,
  242


$
77,792


$
2,504



$



$
270,983Intersegment revenues


3


35











(38
)


Total
Revenues


150,448


40,277


77,792



2,504




(38
)


270,983Income before income
taxes


5,826


1,638


(2,430
)


1,448








6,482Net income


3,840


1,180


(1,458
)


1,627








5,189Earnings per share 
diluted


0.24


0.08


(0.09
)


0.10
(1)







0.33Segment assets at June 30, 2007

$
932,220

$
299,735

$
159,347


$
78,119



$
(733
)(2)

$
1,468,688(1)
The amount of EPS
  attributable to CHECs other business units was $0.04 per share, with the
  balance of $0.06 per share resulting primarily from interest income.(2)
Includes minority owners
  interest of $1,369 related to Lyonsdale and elimination of affiliates
  accounts receivable of ($2,102).CH Energy Group, Inc.
Segment Disclosure(In Thousands, Except
  Earnings Per Share)

Quarter
  Ended June 30, 2006Central
  Hudson

Griffith

Other
  Businesses
  and
  Investments

Eliminations

TotalElectric

Natural
  GasRevenues from external
customers

$
107,930

$
36,458

$
68,224


$
1,279



$



$
213,891Intersegment revenues


3


34











(37
)


Total
Revenues


107,933


36,492


68,224



1,279




(37
)


213,891Income before income
taxes


4,821


2,039


(3,407
)


2,714








6,167Net income


2,864


1,017


(2,044
)


2,231








4,068Earnings per share 
diluted


0.18


0.07


(0.13
)


0.14
(1)







0.26Segment assets at June 30,
2006

$
852,221

$
294,961

$
146,796


$
105,885



$
(707)
(2)

$
1,399,156(1)
The amount of EPS
  attributable to CHECs other business units was $0.04 per share, with the
  balance of $0.10 per share resulting primarily from interest income.(2)
Includes minority owners
  interest of $1,494 related to Lyonsdale and elimination of affiliates
  accounts receivable of ($2,201).32

CH Energy Group, Inc.
Segment Disclosure

Six
  Months Ended June 30, 2007(In Thousands, Except
  Earnings Per Share)

Central
  Hudson

Griffith

Other
  Businesses
  and
  Investments

Eliminations

TotalElectric

Natural
  GasRevenues from external
customers

$
302,120

$
104,433

$
203,782


$
4,027



$



$
614,362Intersegment revenues


6


207











(213
)


Total
Revenues


302,126


104,640


203,782



4,027




(213
)


614,362Income before income
taxes


18,362


10,657


8,277



3,847








41,143Net income


11,493


6,655


4,966



3,773








26,887Earnings per share
 diluted


0.73


0.42


0.31



0.24
(1)







1.70Segment assets at June 30,
2007

$
932,220

$
299,735

$
159,347


$
78,119



$
(733
)(2)

$
1,468,688(1)
The amount of EPS
  attributable to CHECs other business units was $0.10 per share, with the
  balance of $0.14 per share resulting primarily from interest income.(2)
Includes minority owners
  interest of $1,369 related to Lyonsdale and elimination of affiliates
  accounts receivable of ($2,102).CH Energy Group, Inc.
Segment Disclosure

Six
  Months Ended June 30, 2006(In Thousands, Except
  Earnings Per Share)

Central
  Hudson

Griffith

Other
  Businesses
  and
  Investments

Eliminations

TotalElectric

Natural
  GasRevenues from external
customers

$
243,977

$
107,267

$
178,059


$
1,820



$



$
531,123Intersegment revenues


6


239











(245
)


Total
Revenues


243,983


107,506


178,059



1,820




(245
)


531,123Income before income
taxes


16,221


13,027


3,789



4,189








37,226Net income


9,307


7,385


2,274



3,402








22,368Earnings per share
 diluted


0.59


0.47


0.14



0.21
(1)







1.41Segment assets at June 30,
2006

$
852,221

$
294,961

$
146,796


$
105,885



$
(707
)(2)

$
1,399,156(1)
The amount of EPS
  attributable to CHECs other business units was $0.06 per share, with the
  balance of $0.15 per share resulting primarily from interest income.(2)
Includes minority owners
  interest of $1,494 related to Lyonsdale and elimination of affiliates
  accounts receivable of ($2,201).33

Central Hudson Gas & Electric Corporation
Segment Disclosure

(In Thousands)

Quarter
  Ended June 30, 2007Electric

Natural
  Gas

Eliminations

TotalRevenues from external
customers

$
150,445

$
40,242


$



$
190,687Intersegment revenues


3


35



(38
)


Total
Revenues


150,448


40,277



(38
)


190,687Income before income
taxes


6,010


1,696







7,706Income available for common
stock


3,840


1,180







5,020Segment assets at June 30,
2007

$
932,220

$
299,735


$



$
1,231,955Central Hudson Gas & Electric Corporation
Segment Disclosure

(In Thousands)

Quarter
  Ended June 30, 2006Electric

Natural
  Gas

Eliminations

TotalRevenues from external
  customers

$
107,930

$
36,458


$



$
144,388Intersegment revenues


3


34



(37
)


Total
Revenues


107,933


36,492



(37
)


144,388Income before income taxes


5,000


2,102







7,102Income available for
  common stock


2,864


1,017







3,881Segment assets at June 30,
  2006

$
852,221

$
294,961


$



$
1,147,182Central Hudson Gas & Electric Corporation
Segment Disclosure

(In Thousands)

Six
  Months Ended June 30, 2007Electric

Natural
  Gas

Eliminations

TotalRevenues from external
  customers

$
302,120

$
104,433


$



$
406,553Intersegment revenues


6


207



(213
)


Total
Revenues


302,126


104,640



(213
)


406,553Income before income taxes


18,668


10,836







29,504Income available for
  common stock


11,493


6,655







18,148Segment assets at June 30,
  2007

$
932,220

$
299,735


$



$
1,231,955Central Hudson Gas
& Electric Corporation Segment Disclosure

(In Thousands)

Six
  Months Ended June 30, 2006Electric

Natural
  Gas

Eliminations

TotalRevenues from external
  customers

$
243,977

$
107,267


$



$
351,244Intersegment revenues


6


239



(245
)


Total
Revenues


243,983


107,506



(245
)


351,244Income before income taxes


16,493


13,240







29,733Income available for
  common stock


9,307


7,385







16,692Segment assets at June 30,
  2006

$
852,221

$
294,961


$



$
1,147,18234

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 operating revenues and net income by segment for
the quarter and the six months ended June 30, 2007, is below.

(BAR CHART)

35

(BAR CHART)

The
change in composition of net income for the three months ended June 30, 2007,
versus six months ended June 30, 2007 is due to the seasonal nature of Central
Hudsons natural gas business and Griffiths fuel distribution business. The
highest concentration of net income for these two businesses is during the
heating season months of January through March and November through December.

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. With authorization from the PSC, Central Hudson recovers these
supply costs from customers 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.

36

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 six months ended
June 30, 2007, is illustrated below.

(BAR CHART)

During
the first six months of 2007, Griffiths acquisition strategy significantly
contributed to earnings. In addition to the nine companies acquired in 2006,
Griffith acquired four companies during the six months ended June 30, 2007,
which increased the companys customer base, providing additional sales during
the heating season. Griffiths earnings were also favorably impacted by higher
petroleum margins and contributions from acquisitions.

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 financial
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

37

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 Second Quarter and Year-to-Date
Results

CH
Energy Groups earnings during the second quarter of 2007 climbed by nearly 27%
as compared to the same quarter of last year. Earnings per share for the second
quarter of 2007 totaled $0.33 per share, versus $0.26 per share during the
second quarter of 2006. Year-to-date earnings stand at $1.71 per share, in
comparison to $1.42 per share for the first half of 2006  reflecting a 20%
improvement. As a result of the strong performance, CH Energy Group reiterates
its 2007 guidance of earnings per share totaling between $2.55 to $2.80 per
share for all business units.

The
improved second-quarter results were primarily driven by colder weather in the
late winter and early spring. Continued growth in Central Hudsons customer
base and control of operating expenses also contributed to a solid quarter.

The
following summarizes quarterly results by business unit:

Central Hudson

In
addition to cold, late-winter weather that increased energy usage, sales growth
and improved cost recovery resulting from higher delivery rates helped to raise
earnings at Central Hudson. The utility earned $0.32 per share during the
second quarter, as compared to the $0.25 per share posted during the same
period of the prior year, an increase of 28%. Thus far this year, Central
Hudson has not experienced additional conservation that affected sales in 2006,
and continues to see modest growth in the number of customers it serves.

It
is projected that Central Hudson will contribute between $1.90 and $2.00 per
share to annual earnings. Earnings year-to-date total $1.15 per share.

Griffith

Improved
net margins and weather helped to enhance Griffiths quarter-over-quarter
performance. Griffith posted a loss of $0.09 per share for the quarter, an
expected outcome given the seasonal nature of the industry  but improved
results from the $0.13 per share loss incurred during the second quarter of
2006.

CH
Energy Group has expended nearly $12 million in four promising acquisitions so
far in 2007, and believes that there are additional opportunities still
available to acquire the type of firms that meet its performance and
profitability standards. Griffith now serves more than 100,000 customers, a 17%
increase over the same period of last year.

38

Griffiths
year-to-date earnings total $0.31 per share. CH Energy Group projects 2007
earnings from the subsidiary to total between $0.25 and $0.30 per share.

Other Businesses and Investments

Quarterly
earnings per share for other businesses and investments, including CH Energy
Groups renewable energy portfolio, totaled $0.10 per share during the quarter,
down from $0.14 per share during the second quarter of last year, which
included a $0.03 per share gain from the sale of property. Earnings for the
first six months of 2007 from these investments totaled $0.25 per share, $0.03
per share (or 14%) above the same period of 2006.

Annual
earnings for CH Energy Groups other businesses are projected to 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 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 NYS, consisting of demand side and supply
side components to reduce energy costs and achieve economic and environmental
benefits. The strategy includes goals of reducing electricity 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.

39

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 in its next rate case
filing.

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 (Groveville) 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 May 22, 2007, Central Hudson filed
with the Commission, a Petition for Reconsideration and Rehearing requesting
that the Commission review its determination that the net-of-tax proceeds from
the sale of Groveville be allocated to customers rather than shareholders. At
the July 18, 2007 Commission session, the Commission denied the companys
request for rehearing.

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 ongoing and future electric and gas rate
proceedings.

CH
Energy Group and Central Hudson are continuing to review the above 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.

CAPITAL RESOURCES AND LIQUIDITY

The
growth of CH Energy Groups retained earnings in the six months ended June 30,
2007, contributed to the increase in the book value per share of its Common
Stock from $32.54 at December 31, 2006, to $33.22 at June 30, 2007. Book value
per share at June 30, 2006, was $32.31 and the common equity ratio was 56.1%.
Common equity comprised 55.4% of total capital (including short-term debt) at
June 30, 2007, a decrease from 55.9% at December 31, 2006.

40

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
resulting 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 and changes in
customer behavior. 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 primarily
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 six months ended June 30, 2007, and
2006, are summarized in the following chart:

CH Energy Group
Six
  Months
  Ended
  June 2007
Six
  Months
  Ended
  June 2006
Variance
  2007 vs. 2006(In
  Millions)Net Cash Provided By (Used
  In):Operating Activities

$
33.7


$
45.2


$
(11.5
)Investing Activities


(34.4
)


(44.0
)


9.6Financing Activities


(1.4
)


(13.6
)


12.2Net change for the period


(2.1
)


(12.4
)


10.3Balance at beginning of
  period


24.1



49.4



(25.3
)Balance at end of period

$
22.0


$
37.0


$
(15.0
)CH
Energy Groups net cash flows provided by operating activities of $33.7 million
were $11.5 million lower than the first six months of 2006 due primarily to an
increase in accounts receivable resulting from the arrival of colder
temperatures later in the winter season, more cooling degree-days in 2007,
higher weather-adjusted per customer usage, continued customer growth, and
higher wholesale costs for purchased electricity, as compared to the same
period last year.

41

Net
cash flows used in investing activities of $34.4 million for the six months
ended June 30, 2007, were lower than the first six months of 2006 due to higher
net proceeds from the sale of CH Energy Groups short-term investments in 2007.
These net proceeds were used by CH Energy Group to pay dividends in the second
quarter of 2007, but not in the second quarter of 2006.

Net
cash flows used in financing activities of $1.4 million for the six months
ended June 30, 2007, were lower than the same period in 2006. The increase in
cash resulted primarily from an increase in Central Hudsons net borrowings of
short-term debt in the first half of 2007.

Central Hudson  Cash Flow Summary

Changes
in Central Hudsons cash and cash equivalents resulting from operating,
investing, and financing activities for the six months ended June 30, 2007, and
2006, are summarized in the following chart:

Central
  Hudson
Six
  Months
  Ended
  June 2007
Six
  Months
  Ended
  June 2006
Variance
  2007 vs. 2006(In
  Millions)Net Cash Provided By (Used
  In):Operating Activities

$
21.7


$
33.4


$
(11.7
)Investing Activities


(36.8
)


(30.4
)


(6.4
)Financing Activities


15.2



(5.5
)


20.7Net change for the period


0.1



(2.5
)


2.6Balance at beginning of
  period


1.7



4.2



(2.5
)Balance at end of period

$
1.8


$
1.7


$
0.1Central
Hudsons net cash flows provided by operating activities of $21.7 million for
the six months ended June 30, 2007, reflect the cash flow drivers highlighted
in the discussion of CH Energy Groups net operating cash flows.

Central
Hudsons cash flows used in investing activities of $36.8 million in the six
months ended June 30, 2007, were higher than the same period last year as a
result of increased investments in plant and equipment and construction and
removal expenditures in 2007.

Net
cash flows provided by financing activities were higher in the first six months
of 2007 as compared to the same period last year due to higher net borrowings
of short-term debt in the first half of 2007, and dividends paid by Central
Hudson to CH Energy Group in the second quarter of 2006, but not the second
quarter of 2007.

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

42

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 $3.5 million during the six
months ended June 30, 2007. Of the $3.5 million, $1.7 million was contributed
for the 2006 plan year and $1.8 million was contributed for the 2007 plan year.
The total contribution for the 2006 plan year was $4.9 million, including the
$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 on plan assets, 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
June 30, 2007, CH Energy Group, on a consolidated basis, had $29 million of
short-term debt outstanding, cash and cash equivalents of $22 million, and
short-term investments of $29 million.

CH
Energy Group, the holding company, has a $75 million revolving credit agreement
with several commercial banks, which as of June 30, 2007, had no outstanding
balance.

As
of June 30, 2007, Central Hudson had short-term debt outstanding of $29
million, and cash and cash equivalents of $1.8 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 June 30, 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 capital improvements.

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 believe they will be able to meet their
reasonably likely short-term and long-term cash requirements, assuming that
Central Hudsons current and future rate plans reflect the costs of service, including
a reasonable return on invested capital.

CHEC
has a $15.0 million line of credit with a commercial bank, which as of June 30,
2007, had no outstanding balance.

43

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 ConsolidatedEarnings per
  Share (Basic)

Three Months Ended June 30,2007

2006

ChangeCentral
  Hudson  Electric

$
0.24

$
0.18

$
0.06Central
  Hudson  Natural Gas


0.08


0.07


0.01Griffith


(0.09
)

(0.13
)

0.04Other
  Businesses and Investments


0.10


0.14


(0.04
)$
0.33

$
0.26

$
0.07Six Months Ended June 30,2007

2006

ChangeCentral
  Hudson  Electric

$
0.73

$
0.59

$
0.14Central
  Hudson  Natural Gas


0.42


0.47


(0.05
)Griffith


0.31


0.14


0.17Other
  Businesses and Investments


0.25


0.22


0.03$
1.71

$
1.42

$
0.29The
increase in CH Energy Groups consolidated earnings in the second quarter of
2007 largely results from increased deliveries of electricity by Central
Hudson, including the favorable impact of weather.

The
increase in CH Energy Groups consolidated earnings in the first six months of
2007 results primarily from the increased sale of petroleum products and
services by Griffith and deliveries of electricity by Central Hudson, both
impacted by favorable weather conditions. The increase in earnings for Griffith
also reflects the favorable impact of recent acquisitions.

Central HudsonEarnings
  per share (Basic)

Three Months Ended June 30,2007

2006

ChangeElectric

$
0.24

$
0.18

$
0.06Natural Gas


0.08


0.07


0.01Total

$
0.32

$
0.25

$
0.0744

Central
Hudsons earnings increased $0.07 per share for the quarter ended June 30,
2007, as compared to the same period in 2006, due to the following

Rate Increases

$
0.11Weather
  Impact on Sales


0.07Higher
  Weather-Normalized Sales Growth


0.05Line
  Clearance Expense


(0.03
)Interest
  Expense and Carrying Charges


(0.03
)Regulatory
  Mechanisms:Revenues
recorded in 2006 per prior
  Settlement Agreement


(0.09
)Shared
earnings recorded in 2007


(0.01
)$
0.07Earnings per
  share (Basic)

Six Months Ended June 30,2007

2006

ChangeElectric

$
0.73

$
0.59


$
0.14
)Natural Gas


0.42


0.47



(0.05
)Total

$
1.15

$
1.06


$
0.09Central
Hudsons earnings year-to-date increased $0.09 per share in 2007 compared to
the same period in 2006, due to the following:

Rate
  Increases

$
0.13Higher
  Weather-Normalized Sales Growth


0.11Weather
  Impact on Sales


0.06Lower Storm
  Restoration Expense in 2007


0.10Line
  Clearance Expense


(0.05
)Interest
  Expense and Carrying Charges


(0.07
)Regulatory
  Mechanisms:Revenues
recorded in 2006 per prior
  Settlement Agreement


(0.14
)Reversal of
shared earnings in 2006


(0.08
)Shared
earnings recorded in 2007


(0.05
)Other


0.08$
0.09During
the second quarter and first six months of 2007, 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 of previously
deferred costs. Earnings in the second quarter of 2007 and for the six months
ended June were also

45

improved by
higher weather-normalized sales usage. Absent the favorable impact of weather,
earnings in the second quarter would have been flat compared to last year,
despite the challenge of replacing the 2006 earnings that were provided by a
regulatory mechanism that is no longer effective. Lower storm restoration
expenses as compared to last year also favorably affected year-to-date
earnings. Regulatory mechanisms related to shared earnings and the recording of
revenues in 2006 to restore earnings towards the allowed rate of return lowered
earnings compared to last year during both the second quarter and first six
months of 2007. The latter mechanism was in accordance with the terms of the
then-applicable rate plan and is no longer available under the provisions of
the 2006 Order.

Griffith




Earnings
  per Share (Basic)

Three Months Ended June 30,2007

2006

Change$
(0.09
)
$
(0.13
)

$
0.04Griffiths
earnings increased $0.04 per share in 2007 compared to 2006, due to the
following:

Acquisitions(1)

$
(0.01
)Margin on
  Petroleum Sales and Services


0.06Weather
  Impact on Sales


0.02Operating
  Expenses


(0.03
)$
0.04Earnings
  per Share (Basic)

Six Months Ended June 30,2007

2006

Change$
0.31

$
0.14



$0.17Griffiths
earnings increased $0.17 per share in 2007 compared to 2006, due to the
following:

Acquisitions(1)

$
0.06Margin on
  Petroleum Sales and Services


0.17Weather
  Impact on Sales


0.03Operating
  Expenses


(0.08
)Other


(0.01
)$
0.17(1) For the purposes of the above charts,
Acquisitions represents the incremental effect of acquisitions made by
Griffith in 2007 and 2006.The
increase in earnings for the quarter and year-to-date resulted primarily from
higher margins and the favorable impact of weather conditions on sales. The higher

46

margins were
partially offset by higher operating expenses resulting from increased sales
volumes. Year-to-date earnings also improved due to acquisitions made since
mid-2006.

Other Businesses and Investments

Earnings per Share (Basic)

Three
  Months Ended June 30,2007

2006

Change$
0.10

$
0.14


$
(0.04
)Earnings
from CH Energy Group (the holding company) and CHECs partnership and other
investment interests decreased $0.04 per share in the three months ended June
30, 2007, as compared to 2006, due to the following:

Gain on Sale of Non-Strategic
Property in
  2006

$
(0.03
)Cornhusker Energy Lexington
Investment


(0.02
)Lyonsdale Investment


0.02Other


(0.01
)$
(0.04
)Earnings per Share (Basic)

Six
  Months Ended June 30,2007

2006

Change$
0.25

$
0.22


$
0.03Earnings
from CH Energy Group (the holding company) and CHECs partnership and other
investment interests increased $0.03 per share in the six months ended June 30,
2007, as compared to 2006, due to the following:

Tax
  Adjustment in 2007

$
0.02Gain on Sale
  of Non-Strategic Property in 2006


(0.03
)Cornhusker
  Energy Lexington Investment


0.01CH-Community
  Wind Energy Investment


0.01Lyonsdale
  Investment


0.02$
0.03Earnings
for the six months ended June 30, 2007 increased $0.03 per share due primarily
to the contribution of CHECs interests in renewable energy investments. The
2007 tax adjustment resulted primarily from the NYS 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 and six months ended June 30,

47

2007, and the
three and six months ended June 30, 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 in the current period (matching revenues), and those that impact
earnings. Matching revenues recover Central Hudsons actual costs for
particular expenses. Any difference between these revenues and the actual
expenses incurred is deferred for future recovery from or refund to customers
and therefore does not impact earnings.

Increase (Decrease) from 2006  $46 million increase
  (In Thousands)Three Months Ended June 30, 2007Central
  HudsonElectric

Natural
  Gas

TotalRevenues
  with Matching Offsets: (a)Energy cost
adjustment

$
31,993


$
6,185



$
38,178Sales to other
utilities


756



(4,504
)



(3,748
)Pension, OPEB
and other revenues


7,202



2,089




9,291Subtotal


39,951



3,770




43,721Revenues
  Impacting Earnings:Customer sales
(b)


4,759



1,758




6,517Other
regulatory mechanisms


(2,188
)


(361
)



(2,549
)Sales to other
utilities






(795
)



(795
)Weather-hedging contracts


(67
)







(67
)Other
revenues


60



(588
)



(528
)Subtotal


2,564



14




2,578Total

$
42,515


$
3,784



$
46,29948

Increase (Decrease) from 2006  $55 million increase
  (In Thousands)Six Months Ended June 30, 2007Central
  HudsonElectric

Natural
  Gas

TotalRevenues
  with Matching Offsets: (a)Energy cost
adjustment

$
40,224


($2,052
)


$
38,172Sales to other
utilities


(93
)


(4,994
)



(5,087
)Pension, OPEB
and other revenues


15,128



4,724




19,852Subtotal


55,259



(2,322
)



52,937Revenues
  Impacting Earnings:Customer sales
(b)


9,011



1,950




10,961Other
regulatory mechanisms


(5,887
)


(612
)



(6,499
)Sales to other
utilities






(881
)



(881
)Weather-hedging contracts


(148
)


(150
)



(298
)Other
revenues


(92
)


(819
)



(911
)Subtotal


2,884



(512
)



2,372Total

$
58,143


($2,834
)


$
55,309(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 for the three and six months ended June 30, 2007 as compared
to the three and six months ended June 30, 2006 due to higher revenues with
matching expense offsets. The increase reflects an increase in energy cost
adjustment revenues due to higher wholesale costs and higher delivery volumes,
as well as an increase in revenues for pension and OPEB costs resulting from
the 2006 Order, which offset related costs and do not impact earnings.

Natural
gas revenues increased for the three months ended June 30, 2007 largely due to
higher revenues with matching offsets. The increase reflects an increase in
energy cost adjustment revenues due to higher wholesale costs and higher delivery
volumes as well as an increase in revenues for pension and OPEB costs resulting
from

49

the 2006
Order. These increases were partially offset by a decrease in sales to other
utilities.

Natural
gas revenues decreased for the six months ended June 30, 2007, largely due to
lower revenues with matching offsets. The decrease reflects a decrease in
energy cost adjustment revenues due to lower wholesale costs partially offset
by higher delivery volumes as well as a decrease in sales to other utilities.
These decreases were partially offset by an increase in revenues for pension
and OPEB costs resulting from the 2006 Order.

Griffith

Griffith Revenues
Increase (Decrease) from 2006
(In Thousands)

Three
  Months
  Ended 
  June 30, 2007

Six
  Months 
  Ended June 30, 2007Heating OilBase
Company1


$
3,601



$
9,376Acquisitions2



4,624




16,274Total Heating
Oil


$
8,225



$
25,650Motor FuelsBase
Company


$
(2,822
)


$
(6,248
)Acquisitions



2,277




4,335Total Motor
Fuels


$
(545
)


$
(1,913
)Service
  RevenuesBase
Company


$
968



$
1,324Acquisitions



616




1,167Total Service
Revenues



1,584



$
2,491OtherPropane



293



$
598Weather-Hedging Contracts








(1,126
)Other



11




23Total
Other


$
304



$
(505
)Total
Revenues


$
9,568



$
25,7231For 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).2For the purposes of this
  chart, Acquisitions represents the incremental effect of acquisitions made
  by Griffith in 2007 and 2006.Revenues,
net of the effect of weather hedging contracts, increased in the three and six
months ended June 30, 2007 in comparison to the three and six months ended June
30, 2006 due largely to an increase in revenues from petroleum products
resulting

50

from an
increase in heating oil volumes and revenues from acquisitions made in 2006 and
2007. These increases were 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 and customer behavior. 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 as customers
respond to the price of the particular energy product and changes in local
economic conditions.

Central Hudson

The
following chart reflects the change in the level of electric and natural gas
deliveries for the quarter and six months ended June 30, 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.

Increase (Decrease) from 2006 
  Three Months Ended 
  June 30, 2007

Increase (Decrease) from 2006 Six Months Ended June
30, 2007Electric

Natural Gas

Electric

Natural GasResidential



12
%



25
%



8
%



11
%Commercial



7
%



18
%



6
%



11
%Industrial



(3
)%



10
%



(4
)%



9
%Other(a)



0
%



2
%



0
%



(5
)%Total
  Deliveries



5
%



15
%



4
%



7
%(a)
Includes interruptible natural gas deliveries.

In
the second quarter of 2007, electric deliveries to residential and commercial
customers increased due to colder weather in April and early May, and warmer
weather in the latter part of May and in June, an increase in non-weather
related usage per customer and modest customer growth. It is too soon to assess
whether the increase in per customer weather-adjusted usage is a continuing
trend, or a one-time occurrence. Residential electric heating degree-days for
the months of April and May increased 15% over last year and residential
electric cooling degree-days for the months of May and June increased 32%.

Natural gas deliveries to residential and
commercial customers in the second quarter also increased due to the colder
weather in April and early May, more usage per

51

customer and
modest customer growth. Residential natural gas heating degree-days increased
19% for these two months as compared to last year.

Electric
deliveries were higher during the six months ended June 30, 2007, for the
reasons noted above for the quarter ended June 30, 2007. Residential electric
heating degree-days increased 4% as compared to last year and residential
cooling degree-days increased 32%.

Deliveries
of natural gas for the six months ended June 30, 2007 also increased due to
higher usage per customer, including the effect of colder weather in the early
part of the second quarter, and customer growth. Residential natural gas
heating degree-days increased 5% in this period as compared to last year.

Griffith

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

Sales Volumes
Increase (Decrease) in Gallons from 2006

Griffiths
volumes increased by 12% and 13% in the second quarter and six months of 2007
compared to 2006 respectively. As shown below, the increase was driven by
heating oil, the majority of which resulted from Griffiths acquisition
strategy.

Sales
of petroleum products increased 12% in the second quarter of 2007 compared to
the second quarter of 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 a 14% 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.

52

(BAR CHART)
(BAR CHART)
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 13% in the six months ended June 30, 2007 compared
to the six months ended June 30, 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 a 12% 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.
(BAR CHART)
(BAR CHART)
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.

53

OPERATINGEXPENSES

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 June 30, 2007, increased
$44.7 million, or 33.3%, from $134.2 million in 2006 to $178.9 in 2007. For the
six months ended June 30, 2007, total utility operating expenses increased
$53.5 million, or 17.0%, from $315.2 million in 2006 to $368.7 million in 2007.
The following summarizes the change in operating expenses.

(Change In Thousands)

Three Months
Ended
June 30, 2007

Six Months
Ended
June 30, 2007Expenses Currently Matched to Revenues (1):Purchased
electricity


$
32,826



$
40,203Purchased
natural gas



2,596




(5,795
)Pensions



6,134




13,749OPEBs



2,024




4,455Stray voltage
testing program



550




1,100Other matched
expenses



350




980Subtotal


$
44,480



$
54,692Other Expense Variations:Tree
trimming



647




1,289(Decrease)
Increase in other
  expenses



(410
)



78Lower storm
restoration expenses
  in 2007



(14
)



(2,577
)Subtotal


$
223



$
(1,210
)Total Increase in Operating Expenses


$
44,703



$
53,482(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 for the quarter and year-to-

54

date reflects
higher wholesale costs and increased delivery volumes resulting from an
increase in usage and customer growth. The increase in natural gas costs for
the quarter also reflects higher wholesale costs and increased delivery volumes
due to an increase in usage and customer growth. Natural gas costs,
year-to-date, decreased largely due to lower wholesale costs. 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 continuing efforts
to improve system reliability. These costs are included in the higher revenues
resulting from the 2006 Order. The lower storm restoration costs year-to-date
resulted from fewer and less severe storms in 2007 as compared to the same
period in 2006.

Griffith

For
the three months ended June 30, 2007, operating expenses increased $8.2 million,
or 11.5%, from $71.1 million in 2006 to $79.3 million in 2007. The cost of
petroleum products increased $5.3 million, or 9.6%, 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 $2.9 million in 2007
due primarily to an increase in expenses associated with increased sales
volumes noted above.

For
the six months ended June 30, 2007, operating expenses increased $20.8 million,
or 12.0%, from $173.0 million in 2006 to $193.8 million in 2007. The cost of
petroleum products increased $15.0 million, or 10.7%, 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 $5.8 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 June 30, 2007, reflect operating
revenues of $2.5 million, total operating expenses of $2.6 million, and
favorable tax benefits of $0.5 million, including production tax credits of
$0.4 million. Results for the six months ended June 30, 2007, reflect operating
revenues of $4.0 million, total operating expenses of $4.4 million, and
favorable tax benefits of $0.9 million, including production tax credits of
$0.6 million.

55

OTHER INCOME AND DEDUCTIONS

Central Hudson

Other
income and deductions for Central Hudson decreased $0.6 million in the three
months ended June 30, 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
income and deductions for the six months ended June 30, 2007, decreased $1.2
million also due to the reasons noted above for the quarter.

Other Businesses and Investments

Other
income and deductions for the balance of CH Energy Group, primarily the holding
company and CHECs investments in partnerships and other investments (other
than Griffith), decreased $1.8 million for the three months ended June 30,
2007, and $0.6 million for the six months ended June 30, 2007.

For
the three and six months ended June 30, 2007, these decreases are primarily
attributable to the sale of non-strategic property in 2006, and decreases in
investment income related to the redeployment of capital in CH Energy Groups
subsidiaries and renewable energy investments. Additionally, for the three months
ended June 30, 2007, the decreases include lower income from CHECs investments
in energy efficiency and renewable energy projects.

INTEREST CHARGES

Central Hudson

Interest
charges (which relate solely to Central Hudson) increased $0.4 million in
the second quarter of 2007 as compared to 2006 and $0.9 million for the six
months ended June 30, 2007. The increases are largely due to an increase in
long-term debt resulting from the issuance of $27.0 million of medium-term
notes in November 2006.

INCOME TAXES

Income
taxes for CH Energy Group decreased $0.8 million from $2.1 million in the
second quarter of 2006 to $1.3 million in the second quarter of 2007. The
decrease in income taxes was primarily due to the favorable impact of items related
to plant and reserves at Central Hudson, as well as production tax credits at
CHEC from its renewable energy portfolio.

Income
taxes for CH Energy Group decreased $0.6 million from $14.9 million in the six
months ended June 30, 2006 to $14.3 million in the six months ended June 30,

56

2007. The
decrease in income taxes was primarily due to the favorable impact of items
related to plant reserves at Central Hudson and the favorable impact of the tax
benefits from the Medicare Part D prescription drug program at Central Hudson.
Income taxes also decreased due to the favorable impact of production tax
credits at CHEC from its renewable energy portfolio. These favorable items were
partially offset by an increase in income taxes due to an increase in pretax
earnings.

Income
taxes for Central Hudson decreased $0.6 million from $3.0 million in the second
quarter of 2006 to $2.4 million in the second quarter of 2007. The decrease in
income taxes was primarily due to the favorable impact of the flow-through
items related to plant and reserves.

Income
taxes for Central Hudson decreased $1.7 million from $12.6 million in the six
months ended June 30, 2006 to $10.9 million in the six months ended June 30,
2007. The decrease in income taxes was primarily due to the favorable impact of
flow-through items related to plant and reserves and the favorable impact of
the 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.
On May 24, 2007, the Board of Directors of CH Energy Group declared a quarterly
dividend of $0.54 per share, payable August 1, 2007, to shareholders of record
as of July 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

57

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 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 Corporations
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 Corporations internal control over financial reporting
that occurred during the Corporations last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the Corporations
internal control over financial reporting.

58

PART
II  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For
information about developments regarding certain legal proceedings, see Item 3
(Legal Proceedings) of the Corporations 10-K Annual Report, and Note 11 
Commitments and Contingencies of that 10-K and Note 11  Commitments and
Contingencies of this 10-Q.

Central Hudson:

Former
  Manufactured Gas Plant FacilitiesLittle
  Britain RoadOrange
  County LandfillAsbestos
  LitigationCHEC:

Griffiths
remediation efforts at its Kable Oil bulk plant.

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, and the following:

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 ExpectedAs
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.

59

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.

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 
Regulatory Matters to the Consolidated Financial Statements of the
Corporations 
10-K Annual Report.

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

The
Annual Meeting of Shareholders of CH Energy Group was held on April 24, 2007.
The one matter voted upon at such meeting was the election of two nominees
proposed as directors by the Board of Directors as Class I directors with terms
expiring at the Annual Meeting of Shareholders to be held in 2010. No other nominees
were proposed and these two nominees were elected. The total number of shares
voted was 13,609,502. The number of shares voted for each of these directors
and the number of shares withheld were as follows:

Name of
  Director

Shares For

Shares WithheldSteven V. Lant

13,309,119

300,383Jeffrey D. Tranen

13,345,382

264,120There
were no broker non-votes or abstentions on the matter submitted to a vote.

The
other Directors of CH Energy Group are: Margarita K. Dilley, Steven M. Fetter,
Stanley J. Grubel, Manuel J. Iraola, E. Michel Kruse, and Ernest R. Verebelyi.

60

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
Description12

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.61

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. DoyleDonna S. DoyleVice President - Accounting and ControllerCENTRAL HUDSON GAS & ELECTRIC
  CORPORATION(Co-Registrant)By:
/s/ Donna S. DoyleDonna S. DoyleVice President - AccountingDated: August
2, 2007

62

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
Description12

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.63