UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D. C. 20549

                                   FORM 10-K
                                ---------------

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

For the fiscal year ended......................December 31, 1999

                       Commission file number:  0-30512

                            CH ENERGY GROUP, INC.
             ---------------------------------------------------
            (Exact name of registrant as specified in its charter)

            New York                               14-1804460
-------------------------------                  --------------
(State or other jurisdiction of                  (I.R.S. Employer
incorporation or organization)                  Identification No.)

284 South Avenue, Poughkeepsie, New York                12601-4879
----------------------------------------                ----------
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code (914) 452-2000

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

                                                Name of each exchange
Title of each class                              on which registered
Common Stock, $0.10 par value                   New York Stock Exchange

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

                                     NONE

<PAGE>

      Indicate by check mark whether the Registrant (1) has 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 Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

            No  [ X ]                Yes  [   ]

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

      The aggregate market value of the voting and non-voting
common equity held by non-affiliates of the Registrant as of
February 18, 2000, was $465,815,153 based upon the lowest price
at which Registrant's Common Stock was traded on such date, as
reported on the New York Stock Exchange listing of composite
transactions.

      The number of shares outstanding of Registrant's Common
Stock, as of February 18, 2000 was 16,862,087.


                      DOCUMENTS INCORPORATED BY REFERENCE

      Registrant's definitive Proxy Statement, to be dated
March 1, 2000, and to be used in connection with its Annual
Meeting of Shareholders to be held on April 25, 2000, is
incorporated by reference in Part III hereof.

<PAGE>
                               TABLE OF CONTENTS

                                                                        Page
                                                                        ----
Table of Contents
-----------------                 PART I
                                  ------

ITEM 1      BUSINESS                                                       1
------

ITEM 2      PROPERTIES                                                    16
------

ITEM 3      LEGAL PROCEEDINGS                                             24
------

ITEM 4      SUBMISSION OF MATTERS TO A VOTE OF SECURITY
------      HOLDERS                                                       26

                                    PART II
                                    -------

ITEM 5      MARKET FOR THE CORPORATION'S COMMON EQUITY
------      AND RELATED STOCKHOLDER MATTERS                               26

ITEM 6      SELECTED FINANCIAL DATA OF THE CORPORATION AND
------      ITS AFFILIATES                                                27

ITEM 7      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
------      FINANCIAL CONDITION AND RESULTS OF OPERATIONS                 29

ITEM 7A     QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
-------     MARKET RISK                                                   48

ITEM 8      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                   49
------

ITEM 9      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
------      ON ACCOUNTING AND FINANCIAL DISCLOSURE                       103

                                   PART III
                                   --------

ITEM 10     DIRECTORS AND EXECUTIVE OFFICERS OF THE
-------     CORPORATION                                                  103

ITEM 11     EXECUTIVE COMPENSATION                                       103
-------

ITEM 12     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
-------     OWNERS AND MANAGEMENT                                        104

ITEM 13     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS               104
-------
                                    PART IV
                                    -------

ITEM 14     EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND
-------     REPORTS ON FORM 8-K                                          104

SIGNATURES                                                               107
                                      (i)

<PAGE>
                                    PART I
                                    ------

FORWARD-LOOKING STATEMENTS

      This Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 ("Form 10-K Annual Report") and the documents
incorporated by reference may contain statements which, to the
extent they are not recitations of historical fact, constitute
"forward-looking statements" within the meaning of the Securities
Litigation Reform Act of 1995 ("Reform Act").  These statements
will contain words such as "believes," "expects," "intends,"
"plan," and other similar words.  All such forward-looking
statements are intended to be subject to the safe harbor
protection provided by the Reform Act.  A number of important
factors affecting the Corporation's business and financial
results could cause actual results to differ materially from
those stated in the forward-looking statements.  Those factors
include weather, energy supply and demand, developments in the
legislative, regulatory and competitive environment, electric and
gas industry restructuring and cost recovery, future market
prices for energy, capacity and ancillary services, nuclear
industry regulation, the outcome of pending litigation, and
certain environmental matters, particularly ongoing development
of air quality regulations and industrial waste remediation
requirements.

      ITEM 1 - BUSINESS
      -----------------

Holding Company

      CH Energy Group, Inc. ("Corporation") was formed in April
1998 as a wholly-owned subsidiary of Central Hudson Gas &
Electric Corporation ("Central Hudson").  On December 15, 1999,
effective upon a one-for-one common stock share exchange between
the Corporation and the shareholders of Central Hudson, the
Corporation became the holding company parent corporation of
Central Hudson and its existing subsidiary companies ("Holding
Company Restructuring").  Central Hudson's preferred stock and
debt were not exchanged and remain securities of Central Hudson.
As a result of the Corporation becoming the holding company
parent of Central Hudson on December 15, 1999, the prior years'
Consolidated Financial Statements herein represent the accounts
of Central Hudson on a consolidated basis as predecessor of the
Corporation.  For further information regarding the Holding
Company Restructuring and/or the Amended and Restated Settlement
Agreement, dated January 2, 1998, among Central Hudson, the Staff
of the Public Service Commission of the State of New York ("PSC")
and certain others ("Agreement") entered into in the PSC's
Competitive Opportunities Proceeding, which Agreement permitted
the Holding Company Restructuring and which Agreement may affect
future operations of the Corporation, see Item 7 hereof, under

                                      1
<PAGE>


the caption "Competition/Deregulation" and the caption
"Competitive Opportunities Proceeding Settlement Agreement" in
Note 2 - "Regulatory Matters" of the Notes to the Financial
Statements referred to in Item 8 of this Form 10-K Annual Report
(each such Note being hereinafter called the "Note").

      Because of its ownership of Central Hudson, the Corporation
is a "public utility holding company" under the Public Utility
Holding Company Act of 1935 ("PUHCA").  However, the Corporation
is exempt from the provisions of PUHCA under the intrastate
exemption provisions of Section 3(a)(1) of PUHCA, except that, under
Section 9(a)(2) of such Act, the approval of the Securities and
Exchange Commission ("SEC") is required for a direct or indirect
acquisition by a public utility holding company of five percent
(5%) or more of the voting securities of any electric or gas
utility company subject to PUHCA.

      The Corporation is not an operating company, but merely
holds stock in its affiliates.

      On November 3, 1999, Central Hudson Energy Services, Inc.
("Services") was formed as a wholly-owned subsidiary of the
Corporation for the purpose of becoming, upon the effective date
of the Holding Company Restructuring, the sub-holding company
parent corporation for each of the Corporation's competitive
business affiliates.  Effective as of the Holding Company
Restructuring date, the Corporation acquired each of Central
Hudson's then existing wholly-owned subsidiary companies (with
the exception of Phoenix Development Company, Inc. which remains
a subsidiary of Central Hudson).  Also upon the Holding Company
Restructuring, Services became the parent corporation of each of
the Corporation's directly and indirectly owned subsidiaries:
namely, Central Hudson Enterprises Corporation, SCASCO, Inc.,
Prime Industrial Energy Services, Inc., CH Resources, Inc., CH
Syracuse Properties, Inc., CH Niagara Properties, Inc. and Greene
Point Development Corporation ("competitive business
affiliates").  For further information regarding affiliates of
the Corporation, see Part 1, Item 1 of this Form 10-K Annual
Report under the captions "Central Hudson" and "Other Affiliates
of the Corporation."

Central Hudson

      Generally:  Central Hudson is the principal affiliate of the
Corporation.  Central Hudson is a New York gas and electric
corporation formed on December 31, 1926, as a consolidation of
several operating utilities which had been accumulated under one
management during the previous 26 years.  Central Hudson
generates, purchases, sells at wholesale and distributes
electricity, and purchases and distributes gas in New York State.

                                      2
<PAGE>

      Central Hudson, in the opinion of its general counsel, has,
with minor exceptions, valid franchises, unlimited in duration,
to serve a territory extending about 85 miles along the Hudson
River and about 25 to 40 miles east and west from such River.
The southern end of the territory is about 25 miles north of New
York City, and the northern end is about 10 miles south of the
City of Albany.  The territory, comprising approximately 2,600
square miles, has a population estimated at 623,500.  Electric
service is available throughout the territory, and natural gas
service is provided in and about the cities of Poughkeepsie,
Beacon, Newburgh and Kingston and in certain outlying and
intervening territories.  The number of Central Hudson employees,
at December 31, 1999, was 1,107.

      Central Hudson's territory reflects a diversified economy,
including manufacturing industries, research firms, farms,
governmental agencies, public and private institutions, resorts
and wholesale and retail trade operations.  For information
concerning revenues, certain expenses, earnings per share and
information regarding assets for the Central Hudson Electric,
Gas, and Other segments, which are currently the most significant
industry segments of the Corporation, see Note 10 - "Segments and
Related Information."

      In 1999, the competitive marketplace continued to develop
for electric utilities and certain Central Hudson electric
customers were given the opportunity to purchase energy and
related services from sources other than their local utility.
These opportunities also exist for Central Hudson natural gas
customers.

Rates - Central Hudson

      Generally:  The electric and gas rates of Central Hudson
applicable to service supplied to retail customers within the
  State of New York are regulated by the PSC.  Transmission rates
and rates for electricity sold for resale in interstate commerce
by Central Hudson are regulated by the Federal Energy Regulatory
Commission ("FERC").

      Central Hudson's present full-service retail rate structure
consists of various service classifications covering residential,
commercial and industrial customers.  During 1999, the average
price of electricity to such customers was 8.51 cents per
kilowatthour ("kWh"), representing a 0.7% increase from the 1998
average price.

      Rate Proceedings - Electric and Gas:  For information
regarding Central Hudson's most recent electric and gas cases
filed with the PSC, see Item 7 hereof under the caption "Rate
Proceedings - Central Hudson."


                                      3
<PAGE>

      Cost Adjustment Clauses:  For information with respect to
Central Hudson's electric and gas cost adjustment clauses, see
Note 1 - "Summary of Significant Accounting Policies" hereof
under the caption "Rates, Revenues and Cost Adjustment Clauses."

Regulation

      Generally:  Central Hudson is subject to regulation by the
PSC with respect to, among other things, service rendered
(including the rates charged), major transmission facility
siting, accounting procedures and issuance of securities.  For
certain restrictions on Central Hudson's activities imposed by
the Agreement, see Note 2 hereof under the caption "Competitive
Opportunities Proceeding Settlement Agreement."

      Certain of the Central Hudson and affiliate activities,
including accounting and the acquisition and disposition of
certain property, are subject to regulation by the FERC, under
the Federal Power Act, by reason of Central Hudson's transmission
facilities and Central Hudson's and certain affiliates' sales for
resale of electric energy in interstate commerce.

      Central Hudson is not subject to the provisions of the
Natural Gas Act.

      In the opinion of general counsel for Central Hudson,
Central Hudson's major hydroelectric facilities are not required
to be licensed under the Federal Power Act.

Construction Program and Financing - Central Hudson

      For estimates of construction expenditures, internal funds
available, mandatory and optional redemption of long-term
securities, and working capital requirements of Central Hudson
for the year 2000, see the subcaption "Central Hudson
Construction Program" in Item 7 hereof under the caption "Capital
Resources and Liquidity."

      For a discussion of Central Hudson's capital structure,
financing program and short-term borrowing arrangements, see
Notes 5, 6 and 7 "Short-Term Borrowing Arrangements,"
"Capitalization - Capital Stock" and "Capitalization - Long-Term
Debt," respectively, and Item 7 hereof under the subcaptions
"Capital Structure," "Financing Program of the Corporation and
Central Hudson" and "Short-Term Debt" of the caption "Capital
Resources and Liquidity."

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

                                      4

<PAGE>

      Central Hudson's various debt instruments include
limitations as to the amount of additional funded indebtedness
which Central Hudson can issue.  The Corporation believes such
limitations will not impair Central Hudson's ability to issue any
or all of the debt described under the above-referenced
subcaption "Financing Program of the Corporation and Central
Hudson."

Fuel Supply and Cost - Central Hudson

      Central Hudson's two primary fossil fuel-fired electric
generating stations are the Roseton Steam Electric Generating
Plant ("Roseton Plant") (described in Item 2 hereof under the
subcaptions "Central Hudson - Electric" and "Central Hudson -
Roseton Plant") and the Danskammer Point Steam Electric
Generating Station ("Danskammer Plant") (referred to in Item 2
hereof under the subcaption "Central Hudson - Electric").  Units
1 and 2 of the Roseton Plant are fully equipped to burn both
residual oil and natural gas.  Units 1 and 2 of the Danskammer
Plant, which are equipped to burn residual oil or natural gas,
are operated when economical.  Units 3 and 4 of the Danskammer
Plant, which are operated predominantly, are capable of burning
coal, natural gas, or residual oil.  For a discussion of Central
Hudson's plan under the Agreement to sell, by auction, its
interests in the Roseton and Danskammer Plants, see Note 2 hereof
under the caption "Competitive Opportunities Proceeding
Settlement Agreement."

      For the 12 months ended December 31, 1999, the sources and
related costs of electric generation for Central Hudson were as
follows:
                          Aggregate
Sources of             Percentage of             Costs in 1999
Generation            Energy Generated               ($000)
----------            ----------------           -------------

Purchased Power               25.7%                   $ 48,051
Coal                          33.3                      34,747
Gas                            7.9                      13,978
Nuclear                       12.5                       3,760
Oil                           18.9                      31,322
Hydroelectric                  1.7                         200
                             -----
                             100.0%
                             =====

Nitrogen Oxide ("NOx") Allowances                          645
Fuel Handling Costs                                      1,438
Deferred Fuel Cost                                      (2,562)
                                                         -----
                                                      $131,579
                                                       =======
      Residual Oil:  At December 31, 1999, there were 1,038,775
barrels of fuel oil in inventory in Central Hudson-owned tanks

                                      5
<PAGE>

for use in the Danskammer and Roseton Plants, which aggregate
amount represents an average daily supply for 42 days at an
average of 25,000 barrels per day.  The total oil storage
capacity as of December 31, 1999, for these Plants was 16,251 and
1,079,000 barrels, respectively.  Central Hudson's share of the
Roseton Plant's oil storage capacity is 377,650 barrels.

      During 1999, Central Hudson purchased 6,185 barrels of fuel
oil for the Danskammer Plant.

      During 1999, the Roseton Plant's fuel oil requirements were
supplied by spot market purchases.  The prices under these spot
contracts were determined on the basis of published market
indices in effect at the time of delivery.  During 1999, Central
Hudson purchased just over six million barrels of fuel oil for
the Roseton Plant.

      Coal: In order to provide for its future requirements for
coal to be burned in Units 3 and 4 at the Danskammer Plant,
Central Hudson entered into three supply contracts for the
purchase of an aggregate of 720,000 tons per year of low-sulfur
(0.7% maximum) coal.

      Two contracts provide for the delivery of coal by water from
sources in Venezuela and Colombia, South America.  The third
contract provides for the delivery of domestic coal by water.
The base price of purchases under all three contracts is
renegotiated by the parties on an annual basis.  The contracts,
as last renegotiated, cover the term through December 31, 2001.
All three contracts can be terminated, effective December 31,
2000, with six-months written notice to the supplier.

      In 1999, Central Hudson purchased 856,000 tons of coal which
arrived by water.  Central Hudson purchased 36,000 tons of this
coal on the spot market, with the remainder being provided under
its three supply contracts.

      Nuclear:  For information regarding fuel reloading at Unit
No. 2 of the Nine Mile Point Nuclear Station ("Nine Mile 2
Plant"), of which Central Hudson owns a 9% interest, see Item 7
hereof under the subcaption "Nuclear Operations" of the caption
"Results of Operations."

Environmental Quality Regulation - Central Hudson

      Central Hudson is subject to regulation by federal, state
and, to some extent, local authorities with respect to the
environmental effects of its operations, including regulations
relating to air and water quality, aesthetics, levels of noise,
hazardous wastes, toxic substances, protection of vegetation and
wildlife and limitations on land use.  In connection with such

                                      6

<PAGE>

regulation, certain permits are required with respect to Central
Hudson's facilities, which permits have been obtained and/or are
in the renewal process.  Generally, the principal environmental
areas and requirements to which Central Hudson is subject are as
follows:

      Air:  State regulations affecting Central Hudson's existing
electric generating plants govern the sulfur content of fuel used
therein, the emission of particulate matter and certain other
pollutants therefrom and the visibility of such emissions.  In
addition, federal and state ambient air quality standards for
sulfur dioxide ("SO2"), NOx and suspended particulates must be
complied with in the area surrounding Central Hudson's generating
plants.  Based on the operation of continuous emission stack
monitoring systems, the Corporation believes that present air
quality standards for NOx, SO2 and particulates are satisfied in
those areas.

      Beginning in 1997 the New York State Department of
Environmental Conservation ("NYSDEC") began an initiative seeking
penalties from all New York electric utilities for past opacity
variances and requiring various opacity reduction measures and
stipulated penalties for future excursions after execution of a
consent order.  Each New York State electric utility, including
Central Hudson, is in the process of negotiating, or has
negotiated, the various terms and conditions of a draft consent
order with the NYSDEC.  Central Hudson and the NYSDEC entered
into an Order on Consent, effective April 26, 1999, pursuant to
which Central Hudson, in settlement of a claim by the NYSDEC that
emissions from the Roseton and Danskammer Plants exceeded
applicable opacity emissions standards, agreed to a civil penalty
of $1.5 million for both Plants, of which $500,000 was paid to
the NYSDEC, and the remaining $1.0 million of such penalty was
suspended upon Central Hudson causing certain environmentally
beneficial projects in Dutchess and Orange Counties, New York to
be implemented as set forth in said Order.  Said Order also
provides for (i) a new level of stipulated penalty provisions for
future opacity exceedences and (ii) an Opacity Reduction Program,
all with respect to said Plants.

      The Danskammer Plant burns coal having a maximum sulfur
content of 0.7%, fuel oil having a maximum sulfur content of 1%
and natural gas.  The sulfur content of the oil burned at the
Roseton Plant is limited by stipulation with, among others, the
NYSDEC, to an amount not exceeding 1.5% maximum and 1.3% weighted
annual average.  Such sulfur content limitation at the Roseton
Plant can be modified by the NYSDEC in the event of technological
changes at such Plant, provided that the SO2 and NOx emissions
are limited to that which would have been generated by the use of
oil with a sulfur content of 1.3% on a weighted annual average.
Natural gas is also burned at the Roseton Plant.

                                      7

<PAGE>

      For information on the impact of the (i) Clean Air Act
Amendments of 1990 ("CAA Amendments") on Central Hudson's efforts
to attain and maintain national ambient air quality standards for
emissions from its fossil-fueled electric power plants, (ii) the
proposal of the federal Environmental Protection Agency ("EPA")
to modify emission standards for NOx and suspended particulates,
(iii) the proposal of the NYSDEC to modify NOx standards for
generating facilities operating in New York State, (iv)
settlements with the NYSDEC by Central Hudson of alleged opacity
violations, (v) the New York State Governor's initiatives
relating to air quality standards and (vi) an investigation
started by the New York State Attorney General regarding air
emissions from coal-fired generating plants, see Note 9 -
"Commitments and Contingencies," hereof under the caption,
"Environmental Matters - Air."

      Water:  Central Hudson is required to comply with applicable
state and federal laws and regulations governing the discharge of
pollutants into receiving waters.

      The discharge of any pollution into navigable waterways is
prohibited except in compliance with a permit issued by the EPA
under the National Pollutant Discharge Elimination System
("NPDES") established under the Clean Water Act.  Likewise, under
the New York Environmental Conservation Law, pollutants cannot be
discharged into state waters without a State Pollutant Discharge
Elimination System ("SPDES") permit issued by the NYSDEC.
Issuance of a SPDES permit satisfies the NPDES permit
requirement.

      Central Hudson has received SPDES permits for both the
Roseton Plant and the Danskammer Plant, its Eltings Corners
maintenance and warehouse facility, and its Rifton Recreation and
Training Center.  The SPDES permits for the Roseton and
Danskammer Plants expired on October 1 and November 1, 1992,
respectively, and such permit renewal applications for such
permits are pending before the NYSDEC.  It is the Corporation's
belief that the expired SPDES permits continue in full force and
effect pending issuance of the new SPDES permits.  Restriction on
use of water for cooling purposes at the Roseton Plant is being
considered as part of the Roseton Plant application (as referred
to in Item 3 hereof under the caption "Environmental
Litigation").

      For further discussion of Central Hudson's compliance with
the Clean Water Act and Central Hudson's SPDES permit renewal
proceeding, see Note 9 - "Commitments and Contingencies," hereof
under the caption "Environmental Matters - Water."

      For a description of litigation commenced against Central
Hudson for alleged violation of the Endangered Species Act with
respect to the Roseton and Danskammer Plants, see Item 3 hereof.

                                      8
<PAGE>

      Toxic Substances and Hazardous Wastes:  Central Hudson is
subject to state and federal laws and regulations relating to the
use, handling, storage, treatment, transportation and disposal of
industrial, hazardous and toxic wastes.

      The NYSDEC, in 1986, added to the New York State Registry of
Inactive Hazardous Waste Disposal Sites ("Registry") six
locations at which gas manufacturing plants owned or operated by
Central Hudson or by predecessors to Central Hudson were once
located.  Two other sites, which formerly contained gas
manufacturing plants, were identified by Central Hudson but not
placed on the Registry.  Central Hudson studied these eight sites
to determine whether they contain any hazardous wastes which
could pose a threat to the environment or public health and, if
such wastes were located at such sites, to determine the remedial
actions which may be appropriate.

      All of these eight sites were studied by Central Hudson
using the Phase I guidelines of the NYSDEC and five such sites
were studied using the more extensive Phase II guidelines of the
NYSDEC.  As a result of these studies, Central Hudson concluded
that no remedial actions were required at any of these sites.  In
1991, the NYSDEC advised Central Hudson that four of the six
sites which had been originally placed on the Registry had been
deleted from such Registry.  In 1992, the NYSDEC advised Central
Hudson that the two remaining sites listed on the Registry had
been deleted from the Registry.  The NYSDEC also indicated that
such deletions of the sites were subject to reconsideration in
the future, at which time new analytical tests could be required
to determine whether or not wastes on site are hazardous.  In
February 1999, Central Hudson was notified by the NYSDEC that it
suspected that hazardous waste has been disposed at three of the
previously identified sites, one located in Beacon, New York and
two located in Poughkeepsie, New York.  The Corporation expects
Central Hudson will perform preliminary site assessments itself
under consent orders reached with the NYSDEC.  If the NYSDEC
determines that significant quantities of residues are not
present or that the residues pose no threat to public health or
the environment given the current uses of these three sites,
NYSDEC will not require additional investigations and/or
remediation at such sites.  If, after its review of each such
site assessment, NYSDEC determines that significant residues are
present, or the residues pose a threat to public health or the
environment at a site, Central Hudson will likely be responsible
for any required remediation.  The Corporation can make no
prediction as to the outcome of this matter.

      If, as a result of such potential new analytical tests, or
otherwise, remedial actions are ultimately required at any of
these eight sites by the NYSDEC, the cost thereof could have a
material adverse effect (the extent of which cannot be reasonably
estimated) on the financial condition of the Corporation if

                                      9

<PAGE>

Central Hudson could not recover all, or a substantial portion
thereof, through insurance and rates.  Central Hudson has put its
insurers on notice as to this matter and it intends to seek
reimbursement from such carriers for amounts for which it may
become liable.

      For a discussion of litigation filed by the City of
Newburgh, New York against Central Hudson involving one of
Central Hudson's eight former manufactured gas sites and a court
ruling related thereto, see Note 9 - "Commitments and
Contingencies," hereof under the subcaption "Environmental
Matters - Former Manufactured Gas Plant Facilities."

      In August 1992, the NYSDEC notified Central Hudson that the
NYSDEC suspected that Central Hudson's offices at Little Britain
Road in New Windsor, New York, may constitute an inactive
hazardous waste disposal site.  As a result of the NYSDEC's
review of a site assessment report prepared by Central Hudson's
consultant and submitted to the NYSDEC in 1996, Central Hudson
agreed to perform additional testing, which testing detected a
limited amount of subsurface soil contamination near one corner
of the site and contaminants in the groundwater beneath the site.
Operations conducted on the site by Central Hudson since it
purchased the property in 1978 are not believed to have
contributed to either the soil or the groundwater contamination.
Central Hudson and the NYSDEC have reached an agreement in
principle that Central Hudson will conduct a voluntary clean-up
of the site on terms to be further negotiated between the
parties.  The Corporation believes that the cost of such site
assessment and remediation will not be material.

      Other:  Central Hudson expenditures attributable, in whole
or in substantial part, to environmental considerations totaled
$10.2 million in 1999, of which approximately $1.5 million
related to capital projects and $8.7 million were charged to
expense.  It is estimated that in 2000 the total of such
expenditures will be approximately $10.6 million.  Neither the
Corporation nor Central Hudson is involved as a defendant in any
court litigation with respect to environmental matters and, to
the best of its knowledge, no litigation against it is threatened
with respect thereto, except with respect to the litigation
described in Item 3 "Legal Proceedings" hereof under the
subcaption "Environmental Litigation - Roseton and Danskammer
Plants," and as described in Note 9 - "Commitments and
Contingencies," hereof under the subcaption "Environmental
Matters - Former Manufactured Gas Plant Facilities."

                                     10
<PAGE>

Other Central Hudson Matters

      Labor Relations:  Central Hudson has agreements with the
International Brotherhood of Electrical Workers ("IBEW") for its
779 unionized employees, representing production and maintenance
employees, customer representatives, service workers and clerical
employees (excluding persons in managerial, professional or
supervisory positions), which agreements were renegotiated
effective July 1, 1998.  An agreement with each of Locals 2218
and 320 of the IBEW Non-Production Plant Workers continues
through April 30, 2003, and an agreement with IBEW Local 320
Production Plant Workers expires on August 31, 2003.  The
agreements provide for an average annual general wage increase of
3.0% and certain additional fringe benefits.  Effective August 1,
1999, Local 2218 merged with Local 320 and Local 320 assumed the
agreement between Central Hudson and Local 2218.

      Phoenix Development Company, Inc.:  Phoenix Development
Company, Inc. ("Phoenix"), a New York corporation, is a wholly-
owned subsidiary of Central Hudson.  Phoenix was established to
hold or lease real property for the future use of Central Hudson,
or to participate in energy-related ventures.  Currently, the
assets held by Phoenix are not material.

Other Affiliates of the Corporation

      Central Hudson Energy Services, Inc.:  As set forth above
under the caption "Holding Company Restructuring," Services was
established on November 3, 1999 as a New York corporation and
became a wholly-owned subsidiary of the Corporation on
November 19, 1999.  Services was formed for the purpose of
becoming, effective upon the Holding Company Restructuring, the
holding company parent for each of the Corporation's competitive
business affiliates, other than Phoenix Development Corporation.
Services is not an operating company.

      Central Hudson Enterprises Corporation:  Central Hudson
Enterprises Corporation ("CHEC"), a New York corporation, is a
wholly-owned subsidiary of Services, and is engaged in the
business of marketing electricity, gas and oil and related
services to retail and wholesale customers; conducting energy
audits; providing services including, but not limited to, the
design, financing, installation and maintenance of energy
conservation measures and generation systems for private
businesses, institutional organizations and governmental
entities; and participating in cogeneration, small hydro,
alternate fuel and energy production projects and services.

      Prime Industrial Energy Services, Inc.:  In June 1999, CHEC
formed Prime Industrial Energy Services, Inc. ("Prime"), a New
York corporation, as a wholly-owned subsidiary, to acquire the

                                     11
<PAGE>

assets of an ongoing business engaged in project construction and
providing services with respect to electric generators installed
on customers' property, heating, ventilation and air
conditioning.

      SCASCO, Inc.:  SCASCO, Inc. ("SCASCO"), a Connecticut
corporation, is a wholly-owned subsidiary of CHEC.  SCASCO
conducts a fuel oil distribution business in Connecticut.  In
February 1999, SCASCO purchased Island Sound Commercial Energy
Sales, Inc. ("Island Sound"), a Delaware corporation which held
contracts to sell natural gas to customers in Connecticut and
Rhode Island.  In December 1999, Island Sound merged into SCASCO.
In December 1999, SCASCO acquired the assets of Lindstedt Oil
Company, an oil distribution company, to expand its fuel oil
sales in Connecticut.  SCASCO operates Lindstedt Oil Company as a
division.

      CH Resources, Inc.:  CH Resources, Inc. ("Resources"), a New
York corporation, is a wholly-owned subsidiary of Services
established for the purpose of acquiring, developing and
operating electric generation facilities, the output of which is
sold at the wholesale level to CHEC and other energy services
companies, as well as through the New York State Independent
System Operator described in the caption "New York Power Pool/
Independent System Operator" of Item 2 herein.  For a description
of the electric generating assets operated by Resources, see
Item 2 under the caption "Resources."

      CH Syracuse Properties, Inc. and CH Niagara Properties,
Inc.:  CH Syracuse Properties, Inc. ("CH Syracuse") and CH
Niagara Properties, Inc. ("CH Niagara"), are New York
corporations and wholly-owned subsidiaries of Resources used to
lease real property for the Niagara Falls and Syracuse (Solvay,
New York) electric generating facilities owned and operated by
Resources.

      Greene Point Development Corporation:  Greene Point
Development Corporation ("Greene Point"), a New York corporation,
is a wholly-owned subsidiary of Services, which develops and
evaluates business opportunities for the affiliate companies of
Services.  The current assets held by this subsidiary are not
material.

                                     12

<PAGE>

Executive Officers of the Corporation

      The names of the current officers of the Board of Directors
and the executive officers of the Corporation, their positions
held and business experience during the past five (5) years and
ages (at December 31, 1999) are as follows:


                                Principal Occupation or Employment
Name of Officer, Age                  and Positions and Offices
 and Position Held                during the past five (5) years
--------------------            -------------------------------------
                    Officers of the Board
                    ---------------------

Paul J. Ganci, 61,              Present position since November 2,
 Chairman of the                1999; a director of Central Hudson
 Board, President               since 1994; Chairman of the Board and
 and Chief Executive            Chief Executive Officer of Central
 Officer                        Hudson, April 1999 to present;
                                President and Chief Executive Officer
                                of Central Hudson, August 1998 - April
                                1999; President and Chief Operating
                                Officer of Central Hudson, December
                                1994 - August 1998; a director of
                                Services since November 1999; Chairman
                                of the Board and Chief Executive
                                Officer of Services since November
                                1999.


John E. Mack III, 65,           Present position since November 19,
 Chairman of the                1999; Chairman of the Board and Chief
 Committee on Finance           Executive Officer of the Corporation,
                                April 1998 - November 2, 1999; a
                                director of Central Hudson from
                                December 1994 - December 15, 1999;
                                Chairman of the Board of Central
                                Hudson, August 1998 - April 1999.
                                Chairman of the Board and Chief
                                Executive Officer of Central Hudson,
                                December 1994 - August 1998.


Jack Effron, 66,                Present position since November 19,
 Chairman of                    1999; a director of Central Hudson
 Committee on                   from December 1994 - December 15,
 Compensation and               1999; Chairman of the Board of EFCO
 Succession/Retirement          Products, a bakery ingredients
                                corporation; member of the St. Francis
                                Health Care Foundation.

                                     13

<PAGE>

                                Principal Occupation or Employment
Name of Officer, Age                  and Positions and Offices
 and Position Held                during the past five (5) years
--------------------            -------------------------------------
                    Officers of the Board (Cont'd)
                    ---------------------



Heinz K. Fridrich, 66,          Present position since November 19,
 Chairman of the                1999; Courtesy Professor, University
 Committee on Audit             of Florida at Gainesville since 1994.

                 Executive Officers of the Corporation
                 -------------------------------------

Carl E. Meyer, 52,              Present position since November 19,
 Executive Vice                 1999.  For Central Hudson - a director
 President                      since December 15, 1999;  President
                                and Chief Operating Officer, April
                                1999 to present; Executive Vice
                                President, April 1998 - April 1999;
                                Senior Vice President - Customer
                                Services, April 1996 - April 1998;
                                Vice President - Customer Services,
                                December 1994 - April 1996.


Allan R. Page, 52,              Present position since November 19,
 Executive Vice                 1999.  For Central Hudson - Vice
 President                      President, November 1999 to present;
                                Executive Vice President, April 1998 -
                                November 1999; Senior Vice President -
                                Corporate Services, April 1996 - April
                                1998; Vice President - Corporate
                                Services, December 1994 - April 1996;
                                For Services - a director since
                                November 12, 1999; President and Chief
                                Operating Officer since December 3,
                                1999.


                                Principal Occupation or Employment
Arthur R. Upright, 56           Present position since November 19,
 Senior Vice President          1999.  For Central Hudson - a director
                                since December 15, 1999; Senior Vice
                                President - November 1998 to present;
                                Assistant Vice President - Cost & Rate
                                and Financial Planning, December 1994
                                - November 1998; a director of
                                Services since November 1999.

                                     14

<PAGE>

                                Principal Occupation or Employment
Name of Officer, Age                  and Positions and Offices
 and Position Held                during the past five (5) years
--------------------            -------------------------------------

                 Executive Officers of the Corporation (Cont'd)
                 -------------------------------------

Steven V. Lant, 42,             Present position since November 19,
 Chief Financial                1999; except Chief Financial Officer,
 Officer and Treasurer          Treasurer and Secretary, November 2,
                                1999 - November 19, 1999.  For Central
                                Hudson - a director since December 15,
                                1999; Chief Financial Officer and
                                Treasurer, November 1999 to present;
                                Chief Financial Officer, Treasurer and
                                Corporate Secretary, November 1998 -
                                November 1999; Treasurer and Assistant
                                Corporate Secretary, December 1994 -
                                November 1998; a director of Services
                                since November 1999.


Donna S. Doyle, 51,             Present position since November 19,
 Vice President -               1999; except Controller, November 2,
 Accounting and                 1999 - November 19, 1999.  For Central
 Controller                     Hudson - Vice President - Accounting
                                and Controller, November 1999 to
                                present; Controller, April 1995 -
                                November 1999; Assistant Controller
                                and Manager of Taxes, Budgets &
                                Customer Accounting, December 1994 -
                                April 1995.



Gladys L. Cooper, 48,           Present position since November 19,
 Corporate Secretary            1999; except Assistant Secretary,
 and Assistant Vice             November 2, 1999 - November 19, 1999.
 President -                    For Central Hudson - Corporate
 Governmental                   Secretary and Assistant Vice President
 Relations                      - Governmental Relations, November
                                1999 to present; Assistant Vice
                                President - Governmental Relations,
                                September 1995 - November  1999; leave
                                of absence for educational purposes,
                                December 1994 - September 1995.


                                     15

<PAGE>

                                Principal Occupation or Employment
Name of Officer, Age                  and Positions and Offices
 and Position Held                during the past five (5) years
--------------------            -------------------------------------

                 Executive Officers of the Corporation (Cont'd)
                 -------------------------------------

Denise D. VanBuren, 38          Present position since November 19,
 Assistant Vice                 1999; Manager - Corporate
 President - Corporate          Communications, October 1998 -
 Communications                 November 19, 1999; Director - Media
                                Relations, December 1994 - October
                                1998.

      There are no family relationships existing among any of the
executive officers of the Corporation.

      Each of the above executive officers is elected or appointed
annually by the Board of Directors.

      ITEM 2 - PROPERTIES
      -------------------

Central Hudson

      Electric:  The net capability of Central Hudson's electric
generating plants as of December 31, 1999, the net output of each
plant for the year ended December 31, 1999, and the year each
plant was placed in service or rehabilitated are as set forth
below:


                                      16

<PAGE>
<TABLE>

                                                                  Megawatt ("MW")*
Electric                                                           Net Capability          1999 Unit
Generating                                      Year Placed       (99)      (98-99)       Net Output
Plant             Type of Fuel                  In Service       Summer      Winter         (MWh)
----------        ------------                  -----------      ------      ------       ----------
<S>               <C>                           <C>               <C>         <C>         <C>
Danskammer        Residual Oil, Natural         1951-1967         500         501         2,393,799
Plant **          Gas and Coal


Roseton Plant     Residual Oil                  1974              425         413         1,367,433
(35% share)**     and Natural Gas

Neversink         Water                         1953               23          22            45,170
Hydro Station

Dashville         Water                         1920                5           5            10,527
Hydro Station

Sturgeon Pool     Water                         1924               16          16            46,916
Hydro Station

High Falls        Water                         1986                3          3              5,343
Hydro Station

Coxsackie Gas     Kerosene or                   1969               19         24              4,161
Turbine ("GT")    Natural Gas

So. Cairo GT      Kerosene                      1970               18         22              2,856

Nine Mile 2       Nuclear                       1988              103        105            786,507
Plant (9%
share)                                                          -----      -----          ---------
                  Total                                         1,112      1,111          4,662,712
                                                                =====      =====          =========

*   Reflects maximum one-hour net capability of Central Hudson's ownership of generation
    resources and, therefore, does not include firm purchases or sales.
**  Plants subject to auction based on the Agreement as described in Item 7
    hereof under the caption "Competition/Deregulation - Competitive Opportunities
    Proceeding Settlement Agreement" and in Note 2 - "Regulatory Matters" hereof under the
    caption "Competitive Opportunities Proceeding Settlement Agreement."
</TABLE>

                                      17

<PAGE>

      Central Hudson has a contract with the Power Authority of
the State of New York ("PASNY") which entitles Central Hudson to
49 MW net capability from the Blenheim-Gilboa Pumped Storage
Hydroelectric Plant through 2002.

      Central Hudson owns 83 substations having an aggregate
transformer capacity of 4.9 million kVa.  The transmission system
consists of 588 pole miles of line and the distribution system of
7,333 pole miles of overhead lines and 881 trench miles of
underground lines.

      Load and Capacity:  Central Hudson's maximum one-hour demand
within its own territory, for the year ended December 31, 1999,
occurred on July 6, 1999, and amounted to 1,015 MW.  Central
Hudson's maximum one-hour demand within its own territory, for
that part of the 1999-2000 winter capability period, through
February 18, 2000, occurred on January 17, 2000 and amounted to
860 MW.

      Based on current projections of peak one-hour demands for
the 2000 summer capability period, it is estimated that Central
Hudson will have capacity available to satisfy its projected peak
demands plus the estimated installed reserve generating capacity
requirements Central Hudson is required to maintain as a member
of the New York State Independent System Operator ("ISO").

      See Note 2 under the caption "Independent System Operator"
for information regarding the termination of the New York Power
Pool ("NYPP") and the formation of the ISO and the New York State
Reliability Council ("Reliability Council") to coordinate
reliability and operation of New York State's bulk power
transmission systems.

      Central Hudson plans to sell by auction its interests in the
Roseton and Danskammer Plants under the terms of the Agreement.
This sale is expected to occur by early 2001.  For further
information regarding the Agreement and such auction and sale,
see Note 2 - "Regulatory Matters" and the captions thereunder of
"Competitive Opportunities Proceeding Settlement Agreement" and
"Auction of Fossil Generation Plants."  Following such sale,
Central Hudson will no longer own sufficient capacity to serve
the peak demands of its transmission and distribution customers
and will need to rely on purchased capacity from third party
providers to meet such demands.



                                      18
<PAGE>


<TABLE>
<CAPTION>

The following table sets forth the amounts of any excess capacity of Central Hudson by
summer and winter capability periods for 2000 and 2001:


                          Forecasted     Forecasted
                            Peak -         Peak -        Peak Plus                        Excess of Capacity
                            Total           Full         Installed                       over Peak Plus NYSISO
                           Delivery       Service       Reserve of      Available          Installed Reserve
      Capability          Rqts. (MW)     Rqts. Only      18% (MW)        Capacity            Requirements
        Period               (1)            (2)             (3)            (MW)            (MW)(3) Percent(3)

<S>         <C>              <C>            <C>            <C>            <C>              <C>           <C>

2000        Summer           985            935            1,103          1,178            75            6.2
2000-2001   Winter           840            800            1,103*         1,177            74            6.7


*     Summer period peak plus reserve requirements carry over to the following winter
      period.

(1)   Total delivery requirements include requirements for both full service (delivery and
      energy) and retail access (delivery only) customers
(2)   Excludes retail access customer requirements
(3)   Based on full service requirements
</TABLE>


                                      19

<PAGE>

      Roseton Plant:  The Roseton Plant is located in Central
Hudson's franchise area at Roseton, New York, and is owned by
Central Hudson, Consolidated Edison Company of New York, Inc.
("Con Edison") and Niagara Mohawk Power Corporation ("Niagara
Mohawk") as tenants-in-common.  The Roseton Plant, placed in
commercial operation in 1974, has a generating capacity of 1,200
MW consisting of two 600 MW generating units, both of which are
capable of being fired either by residual oil or natural gas (see
subcaption below entitled "Gas - Sufficiency of Supply and Future
Gas Supply").  Central Hudson is acting as agent for the owners
with respect to operation of the Roseton Plant.  Generally, the
owners share the costs and expenses of the operation of such
Plant in accordance with their respective ownership interests.

      Central Hudson, under a 1968 agreement, has the option to
purchase the interests of Niagara Mohawk (25%) and of Con Edison
(40%) in the Roseton Plant in December 2004.  The exercise of
this option is subject to PSC approval.  In December 1999,
Central Hudson, in conjunction with the proposed auction and sale
of Central Hudson's interest in the Roseton Plant, notified Con
Edison of its intention to exercise its option, as defined in the
May 14, 1969 Option Agreement among the Roseton Plant co-tenants,
to purchase the interest of Con Edison in the Roseton Plant on
December 31, 2004.

      For information with respect to Central Hudson's PSC
obligation to sell its interest in the Roseton and Danskammer
Plants, see Note 2 - "Regulatory Matters," under the captions
"Competitive Opportunities Proceeding Settlement Agreement" and
"Auction of Fossil Generation Plants."

      The 345 kV transmission lines and related facilities to
connect the Roseton Plant with other points in the system of
Central Hudson and with the systems of Con Edison and Niagara
Mohawk to the north and west of such Plant are 100%-owned by
Central Hudson.  The share of each of the parties in the output
of the Roseton Plant is transmitted over these lines pursuant to
a certain transmission agreement relating to such Plant, which
provides, among other things, for compensation to Central Hudson
for such use by the other parties.  In addition, Central Hudson
has contract rights which entitle Central Hudson to the lesser of
300 MW, or one quarter of the capacity in a 345 kV transmission
line owned by PASNY, which connects the Roseton Plant with a Con
Edison substation to the east of such Plant in East Fishkill, New
York.  In exchange for these rights, Central Hudson agreed to
provide PASNY capacity in the 345 kV transmission lines Central
Hudson owns from the Roseton Plant, to the extent it can do so
after satisfying its obligations to Con Edison and Niagara
Mohawk.

      Nine Mile 2 Plant: For a discussion of Central Hudson's
ownership interest in, costs for, proposals of certain other


                                     20
<PAGE>

owners to sell their interests in and certain operating matters
relating to the Nine Mile 2 Plant, see Item 7 hereof under the
subcaption "Nuclear Operations," Note 3 - "Nine Mile 2 Plant,"
and Note 1 - "Summary of Significant Accounting Policies," under
the subcaption "Jointly-Owned Facilities."

      Gas:  Central Hudson's gas system consists of 161 miles of
transmission pipelines and 996 miles of distribution pipelines.

      During 1999, natural gas was available to firm gas customers
at a price competitive with that of alternative fuels.  As
compared to 1998, in 1999 firm retail gas sales, normalized for
weather, decreased by 2% and the average number of firm gas
customers increased by 1%.  Sales to interruptible sales and
transportation customers increased 5% in 1999 as compared to
1998.  As compared to 1998, in 1999 firm retail transportation
sales, normalized for weather, increased by 116% due to the
average number of customers using firm retail transportation
service increasing to 190 customers.  In total, as compared with
1998 normalized, firm gas sales plus firm transportation
increased by 1% in 1999.

      For further information regarding Central Hudson's incentive
arrangements for interruptible gas sales, see Item 7 hereof under
the subcaption "Sales - Central Hudson - Interruptible Gas
Sales."

      For the year ended December 31, 1999, the total amount of
gas purchased by Central Hudson from all sources was 20,812,937
thousand cubic feet ("Mcf."), which includes 2,145,478 Mcf.
purchased directly for use as a boiler fuel at the Roseton Plant.

      Central Hudson also owns two propane-air mixing facilities
for emergency and peak shaving purposes located in Poughkeepsie
and in Newburgh, New York.  Each facility is capable of supplying
8,000 Mcf. per day with propane storage capability adequate to
provide maximum facility sendout for up to three consecutive
days.

      Sufficiency of Supply and Future Gas Supply:  The peak daily
demand for natural gas by Central Hudson's customers for the year
ended December 31, 1999, occurred on January 14, 1999, and
amounted to 109,676 Mcf.  Central Hudson's firm peak-day gas
capability in 1999 was 116,918 Mcf.  The peak daily demand for
natural gas by Central Hudson's customers for that part of the
1999-2000 heating season through February 18, 2000, occurred on
January 27, 2000, and amounted to 107,964 Mcf.

      Other Gas Matters:  FERC permits non-discriminatory access
to the pipeline facilities of interstate gas pipeline
transmission companies subject to the jurisdiction of FERC under
the Natural Gas Act.  This rule allows access to such pipelines

                                     21

<PAGE>

by the pipeline transmission company's customers enabling them to
transport gas purchased directly from third parties and spot
sources through such pipelines.  Such access also permits
industrial customers of gas distribution utilities to connect
directly with the pipeline transmission company and to contract
directly with the pipeline transmission companies to transport
gas, thereby bypassing the distribution utility.  None of Central
Hudson's customers have elected this bypass option.

      The PSC has authorized New York State distribution gas
utilities to transport customer-owned gas through their
facilities upon request of a customer.  Currently, interstate
pipeline transmission companies are located in certain areas
where Central Hudson provides retail gas service (the Towns of
Carmel, Pleasant Valley, Coxsackie, and LaGrange in New York
State).

      For a discussion of the PSC proceeding relating to issues
associated with the restructuring of the natural gas market, see
Item 7 hereof under the subcaption "Natural Gas - PSC
Restructuring Policy Statement."

      Other Central Hudson Matters:  The Danskammer Plant and the
Roseton Plant and all of the other principal generating plants
and important property units of Central Hudson are held by it in
fee simple, except (1) certain rights-of-way, and (2) a portion
of the property used in connection with the hydroelectric plants
of Central Hudson  consisting of flowage or other riparian
rights.  Central Hudson's present interests in the Roseton Plant
and the Nine Mile 2 Plant are owned as undivided interests as a
tenant-in-common with the other utility owners thereof.  Certain
of the properties of Central Hudson are subject to rights-of-way
and easements which do not interfere with Central Hudson's
operations.  In the case of certain distribution lines, Central
Hudson owns only a part interest in the poles upon which its
wires are installed, the remaining interest being owned by
telephone companies.  Certain electric transmission facilities
owned by others are used by Central Hudson pursuant to long-term
contractual arrangements.

      All of the physical properties of Central Hudson, other than
property such as material and supplies excluded in Central
Hudson's First Mortgage Bond Indenture ("Mortgage") and its
franchises, are subject to the lien of the Mortgage under which
all of its Mortgage Bonds are outstanding.  Such properties are
from time to time subject to liens for current taxes and
assessments which Central Hudson pays regularly as and when due.

      During the three-year period ended December 31, 1999,
Central Hudson made gross property additions of $136.0 million
and property retirements and adjustments of $27.7 million,


                                     22

<PAGE>

resulting in a net increase (including Construction Work in
Progress) in utility plant of $108.3 million, or 7.3%.

Resources

      Resources owns a 100 MW combined cycle gas turbine facility
in Solvay, New York ("Syracuse Plant"), a 100 MW combined cycle
gas turbine facility in Beaver Falls, New York ("Beaver Falls
Plant"), and in June 1999 acquired a 50 MW fluidized bed, coal-
fired plant in Niagara County, New York ("Niagara Falls Plant").
Because these electric generating facilities are used exclusively
for selling electricity at wholesale, Resources is an "exempt
wholesale generator" under Section 32(e) of PUHCA and, therefore,
is exempt from the provisions of the Act.

      The Niagara Falls Plant burns coal with a maximum sulfur
content of 5% in a fluidized-bed boiler that effectively captures
90% of the sulfur or more.  Total annual usage is 200,000 tons of
coal, all of which is bought on the spot market.  In addition,
the Niagara Falls Plant is permitted under applicable
environmental regulations to burn petroleum coke (with a maximum
sulfur content of 5%), a solid fuel derived from the distillation
of crude oil, up to a maximum of 70% of that Plant's total fuel
consumption.  NOx emissions from such Plant are limited to 0.30
pounds per Million British Thermal Units.  Upon the purchase of
the Niagara Falls Plant in June 1999, Resources assumed a NYSDEC
Consent Order from the prior owner which required such owner to
install a $350,000 ammonia DeNOx system to effect compliance.
Resources expects to have such system in place by May 1, 2000 as
required in such Consent Order, the cost of which is not
material.

      The Syracuse Plant and the Beaver Falls Plant each burn
natural gas and No. 2 fuel oil.

      SPDES permits are in effect for the Beaver Falls Plant and
the Syracuse Plant with expiration dates of May 1, 2003 and
December 1, 2001, respectively.  All of the Niagara Falls Plant's
discharge flows into the local municipal wastewater system
subject to local permit (which have been obtained) limits.

      The operation of these Plants by Resources is subject to the
same environmental quality regulations to which Central Hudson is
subject, as described under the caption "Central Hudson -
Environmental Quality Regulation - Central Hudson" in Item 1
hereof.


                                     23

<PAGE>

      ITEM 3 - LEGAL PROCEEDINGS
      --------------------------

Asbestos Litigation

      For a discussion of litigation against Central Hudson
involving asbestos, see Note 9 - "Commitments and Contingencies,"
hereof under the caption "Asbestos Litigation."

Environmental Litigation

      Roseton Plant:  On March 23, 1992, a Consent Order was
approved by the Supreme Court of the State of New York, Albany
County, in an action against the NYSDEC and Central Hudson
brought in 1991 by the Natural Resources Defense Council, Inc.,
the Hudson River Fisherman's Association and Scenic Hudson, Inc.

      Such Consent Order provides for certain operating
restrictions at the Roseton Plant relating to the use of river
water for plant cooling purposes, which restrictions have not,
and are not expected to impose material additional costs on the
Corporation.  The Consent Order has since lapsed; however, both
the NYSDEC and Central Hudson continue to consider themselves
bound by its terms.  For a description of the pending NYSDEC
proceeding involving the renewal of the SPDES permit for the
Roseton Plant, see Item 1 hereof under the subcaption
"Environmental Quality Regulation - Central Hudson - Water," and
Note 9 - "Commitments and Contingencies," under the caption
"Environmental Matters - Water."  For a description of Central
Hudson's negotiations with the NYSDEC on a consent order for
alleged opacity violations, see Item 1 hereof under the
subcaption "Environmental Quality Regulation - Central Hudson -
Air."

      Roseton and Danskammer Plants:  In 1999, Riverkeeper, Inc.,
commenced a citizen suit, in the United States District Court for
the Southern District of New York, against Central Hudson under
Section 11 of the Endangered Species Act, 16 U.S.C. Section 1540,
seeking injunctive relief from Central Hudson's alleged
unpermitted takings of the endangered shortnose sturgeon through
the Roseton and Danskammer Plants on the Hudson River.

      Although the Corporation believes Central Hudson has not
violated such Act, if the court were to grant the relief
requested by plaintiffs, Central Hudson could be required
temporarily to cease operations of the Roseton and Danskammer
Plants.  If Central Hudson were required to cease such operations
for a substantial period of time, it could have a material
adverse effect on the Corporation's financial position and
results of operations.


                                     24

<PAGE>

      Newburgh Manufactured Gas Site:  For a discussion of
litigation filed against Central Hudson by the City of Newburgh,
New York, on May 26, 1995, in the United States District Court,
Southern District of New York, and Central Hudson's response
thereto, see Note 9 - "Commitments and Contingencies," under the
subcaption "Environmental Matters - Former Manufactured Gas Plant
Facilities."

Catskill Incident

      An explosion occurred in a dwelling in Central Hudson's gas
service territory in Catskill, New York in November, 1992 which
resulted in personal injuries, the death of an occupant and
property damage.  Lawsuits were commenced against Central Hudson
arising out of such incident.  All but one of these suits were
settled during 1999 on terms which will not have a material
effect on Central Hudson.

      The remaining lawsuit was commenced by complaint, dated
October 18, 1993, and filed in the Supreme Court of the State of
New York, Greene County, by Frank Reyes for unspecified personal
injuries and property damage alleged to have been caused by the
Catskill explosion described above.  The complaint seeks $2
million in compensatory damages and $2 million in punitive
damages from Central Hudson, based on theories of negligence and
gross negligence.  In January 2000, the Court dismissed this suit
on the merits because of the plaintiff's failure to prosecute the
case, but the time to appeal has not expired.

      Central Hudson believes it has adequate insurance with
regard to the above Reyes claim for compensatory damages.
Central Hudson's insurance, however, does not extend to punitive
damages.  If the Reyes lawsuit were to be reinstated and if
punitive damages were ultimately awarded, such award could have a
material adverse effect on the financial condition of the
Corporation.

Wappingers Falls Incident

      Two consecutive fires and explosions occurred on
February 12, 1994, destroying a residence and commercial
establishment in the Village of Wappingers Falls, New York, in
Central Hudson's service territory.  Lawsuits have been commenced
against Central Hudson arising out of such incident, including
the following:

      On August 31, 1994, Central Hudson was served with a summons
and complaint in an action brought by John DeLorenzo against
Central Hudson and the Village of Wappingers Falls in the Supreme
Court of the State of New York, County of Dutchess.  The
complaint seeks unspecified amounts of damages, based on a theory

                                     25

<PAGE>

of negligence, for personal injuries and property damage alleged
to have been caused by the incident.

      On March 9, 1995, Central Hudson was served with a summons
and complaint in an action brought in the Supreme Court of the
State of New York, County of Dutchess, by Cengiz Ceng, indivi-
dually and as executor under the last will and testament of
Nizamettin Ceng, and Tarkan Thomas Ceng against Central Hudson
and the Village of Wappingers Falls.  The complaint seeks
recovery of $250,000 from Central Hudson, based on the theory of
negligence, for property damages alleged to have been caused by
the incident.

      The above lawsuits have been consolidated into one action
against Central Hudson; however, no trial date has been set.

      The Corporation continues to investigate the Wappingers
Falls claims and presently has insufficient information on which
to predict their outcome.  The Corporation believes that it has
adequate insurance with regard to the claims for compensatory
damages.

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

      By unanimous written consent, dated November 19, 1999, of
Central Hudson as sole shareholder of the Corporation, effective
on such date, the appointment of Paul J. Ganci and John E. Mack
III as directors of the Corporation were ratified, confirmed and
approved and the following individuals were appointed as
directors of the Corporation until the first annual meeting of
shareholders of the Corporation or until his/her successor is
elected and qualified:  Jack Effron, Heinz K. Fridrich, Edward P.
Swyer, Edward F. X. Gallagher, Stanley J. Grubel, Charles LaForge
and Frances D. Fergusson.


                                    PART II
                                    -------

      ITEM 5 -  MARKET FOR THE CORPORATION'S COMMON EQUITY AND
      ------    RELATED STOCKHOLDER MATTERS
                ----------------------------------------------

      For information regarding the market for the Corporation's
common stock and related stockholder matters, see Item 7 hereof
under the captions "Capital Resources and Liquidity - Financing
Program of the Corporation and Central Hudson" and "Common Stock
Dividends and Price Ranges" and Note 6 - "Capitalization -
Capital Stock."

      Pursuant to applicable statutes and its Certificate of
Incorporation, Central Hudson may pay dividends on shares of its
Preferred Stock only out of surplus.



                                      26

<PAGE>
<TABLE>
<CAPTION>

      ITEM 6 - SELECTED FINANCIAL DATA OF THE CORPORATION AND ITS AFFILIATES
      ------   -------------------------------------------------------------

FIVE-YEAR SUMMARY OF CONSOLIDATED OPERATIONS AND SELECTED FINANCIAL DATA*
(In Thousands)
                                                         1999          1998             1997              1996           1995
                                                         ----          ----             ----              ----           ----
<S>                                                   <C>           <C>             <C>               <C>           <C>
Operating Revenues
  Electric........................................    $ 427,809     $ 418,507       $ 416,429         $  418,761    $  409,445
  Gas.............................................       94,131        84,962         103,848             95,210       102,770
                                                        -------       -------         -------            -------       -------
    Total.........................................      521,940       503,469         520,277            513,971       512,215
                                                        -------       -------         -------            -------       -------

Operating Expenses
  Operations......................................      284,149       266,472        284,714             267,779       274,665
  Maintenance.....................................       28,213        26,904         27,574              28,938        29,440

  Depreciation and amortization...................       46,913        45,560         43,864              42,580        41,467
  Taxes, other than income tax....................       64,269        63,458         64,879              66,145        66,709
  Federal income tax..............................       27,758        29,775         29,190              32,700        29,040
                                                        -------       -------        -------             -------       -------

    Total.........................................      451,302       432,169        450,221             438,142       441,321
                                                        -------       -------        -------             -------       -------

Operating Income..................................       70,638        71,300         70,056              75,829        70,894
                                                        -------       -------        -------             -------       -------

Other Income
  Equity Earnings - Competitive Business
   Affiliates.....................................            4           756            362                 792           201
  Allowance for equity funds
   used during construction.......................            -           585            387                 466           986
  Federal income tax..............................       (1,167)        1,187          2,953               1,632           353
  Other - net.....................................       11,942         6,070          7,717               4,023         8,685
                                                         ------        ------         ------              ------        ------
    Total.........................................       10,779         8,598         11,419               6,913        10,225
                                                         ------        ------         ------              ------        ------

Income before Interest Charges....................       81,417        79,898         81,475              82,742        81,119
Interest Charges..................................       29,614        27,354         26,389              26,660        28,397
                                                         ------        ------         ------              ------        ------
Premium on Preferred Stock Redemption - Net.......            -             -              -                 378           169
Preferred Stock Dividends of Central Hudson.......        3,230         3,230          3,230               3,230         4,903
                                                         ------        ------         ------              ------        ------
</TABLE>

                                     27

<PAGE>
<TABLE>
<CAPTION>

FIVE-YEAR SUMMARY OF CONSOLIDATED OPERATIONS AND SELECTED FINANCIAL DATA*, (CONT'D)
(In Thousands)

                                                           1999         1998             1997             1996           1995
                                                           ----         ----             ----             ----           ----
<S>                                                   <C>               <C>             <C>               <C>           <C>

Net Income........................................    $   48,573        49,314          51,856            52,474        47,650

Dividends Declared on Common Stock................        36,422        36,567          37,137            37,128        36,459
                                                         -------       -------         -------           -------       -------
Amount Retained in the Business...................        12,151        12,747          14,719            15,346        11,191
Common Stock Retirement...........................       (12,642)            -               -                 -             -
Retained Earnings - beginning of year.............       133,287       120,540         105,821            90,475        79,284
                                                         -------       -------         -------           -------       -------
Retained Earnings - end of year...................    $  132,796    $  133,287      $  120,540        $  105,821    $   90,475
                                                         =======       =======         =======           =======       =======

Common Stock
  Average shares outstanding (000s)...............        16,862        17,034          17,435            17,549        17,380
  Earnings per share on
   average shares outstanding.....................         $2.88         $2.90           $2.97             $2.99         $2.74
  Dividends declared per share....................         $2.16        $2.155          $2.135            $2.115        $2.095
  Book value per share (at year-end)..............        $28.80        $28.00          $27.61            $26.87        $25.96

Total Assets......................................    $1,335,899    $1,316,038      $1,252,090        $1,249,106    $1,250,092
Long-term Debt....................................       335,451       356,918         361,829           362,040       389,245
Cumulative Preferred Stock........................        56,030        56,030          56,030            56,030        69,030
Common Equity.....................................       484,406       472,180         477,104           471,709       454,239

* This summary should be read in conjunction with the Consolidated Financial Statements and Notes
  thereto included in Item 8 of this Form 10-K Annual Report.
</TABLE>


                                      28

<PAGE>


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

COMPETITION/DEREGULATION

CH Energy Group, Inc.

      As part of the Holding Company Restructuring, all of the
outstanding shares of Central Hudson common stock were exchanged
on a share-for-share basis for shares of the Corporation and
Central Hudson became a subsidiary of the Corporation.
Certificates for shares of Central Hudson common stock are
automatically valid as certificates of the Corporation and do not
have to be replaced.  The transfer does not affect the value of
the stock or the Corporation's dividend policy.  The Corporation
trades on the New York Stock Exchange under the symbol "CHG."

      The holding company structure was formed to permit quick
response to changes in the evolving competitive energy industry.
The new structure permits the use of financing techniques that
are better suited to the particular requirements, characteristics
and risks of competitive operations without affecting the capital
structure or creditworthiness of Central Hudson.  This increases
the Corporation's financial flexibility by allowing it to
establish different capital structures for each of its individual
lines of business.

      The Corporation is not an operating entity.  The
Corporation's operations are being conducted through its
principal affiliates, Central Hudson and Services as described
under the captions "Central Hudson" and "Other Affiliates of the
Corporation" in Item 1 hereof.

      Central Hudson remains subject to regulation of retail rates
by the PSC and wholesale rates by the FERC.  However, as a result
of competition/deregulation initiatives and policy changes
instituted by these agencies, Central Hudson is experiencing
increased electric and gas competition as described in Item 1
hereof.


Competitive Opportunities Proceeding Settlement Agreement

      For a discussion of the Agreement approved by the PSC in its
Competitive Opportunities Proceeding and a discussion of the
impact of the Agreement on the Corporation's Accounting Policies,
see the caption "Competitive Opportunities Proceeding Settlement
Agreement" in Note 2 - "Regulatory Matters" hereof.


                                      29

<PAGE>

FERC - Electric

      For information with respect to the establishment of the ISO
and Reliability Council and termination of the NYPP, the caption
"Independent System Operator" of Note 2 herein.

Natural Gas - PSC Restructuring Policy Statement

      In November 1998, the PSC, by Order, issued its "Policy
Statement Concerning the Future of the Natural Gas Industry in
New York State and Order Terminating Capacity Assignment" which
sets forth the PSC's view of how best to ensure a competitive
market for natural gas in New York State.  That Order required
local distribution companies ("LDCs") to cease assigning capacity
to migrating customers no later than April 1, 1999, and indicated
LDCs will also be provided a reasonable opportunity to recover
strandable capacity costs.  LDCs are also required to develop
individual plans to effectuate the changes required by the PSC
and each LDC must address gas supply and stranded cost
strategies, rates and customer education.  In such Order, the PSC
also identified several generic issues related to the gas
industry which must be addressed.  The PSC has indicated a desire
to address these issues through collaborative sessions on a
state-wide basis.

The Year 2000 Issue - Central Hudson

      Certain computer systems and programs were designed to
identify the year with two digits.  Concern existed prior to 2000
that such systems might read dates in the year 2000 and
thereafter as if those dates represent the year 1900 or
thereafter.  As a result, errors would occur because computers
would not distinguish between 1900 and 2000.  All mainframe and
personal computers, and related system, application code and
process control systems using embedded chip technology could have
been adversely affected by the use of two digit definitions for
the identification of the year component of date information.  If
such adverse effects were not successfully remediated before
December 31, 1999, interruption to Central Hudson's electric
and/or natural gas service could have occurred, with attendant
lost revenues and adverse customer relations impacts.

      Central Hudson, in 1998, began a project ("Project") to
remediate the year 2000 computer problems affecting all aspects
of its operations.  As a result of the Project, Central Hudson
did not experience any interruptions to its critical operational
or customer systems on January 1, 2000 or thereafter as a result
of this year 2000 computer problem.

      The total cost of the Project was estimated not to exceed
$3.0 million.  The actual cost of the Project was approximately

                                     30

<PAGE>

$2.8 million, of which $1.3 million was expended in 1999 and $1.5
million was expended in 1998.

      None of the Corporation's other competitive business
affiliates were affected as a result of the Year 2000 issue.

Rate Proceedings - Central Hudson

      Electric

      See the caption "Competitive Opportunities Proceeding
Settlement Agreement" in Note 2 hereof.

      Gas

      Central Hudson currently does not have a gas rate case on
file with the PSC.  Central Hudson will continue to monitor the
financial position of its gas business to determine the necessity
of filing a gas rate case in the future.

CAPITAL RESOURCES AND LIQUIDITY

Construction Program - Central Hudson

      As shown in the Consolidated Statement of Cash Flows, the
cash expenditures related to Central Hudson's construction
program amounted to $46.5 million in 1999, a $1.4 million
increase from the $45.1 million expended in 1998.  As shown in
the table below, cash construction expenditures for 2000 are
estimated to be $59.1 million, an increase of $12.6 million
compared to 1999 expenditures.

      In 2000, Central Hudson expects to satisfy its external
funding requirements, either through short-term borrowings or
issuances of Medium Term Notes.



                                      31

<PAGE>

      Central Hudson's estimates of construction expenditures,
internal funds available, mandatory and optional redemption or
repurchase of long-term securities, and working capital
requirements for 2000 are set forth in the following table:

                                                                   2000
                                                                   ----
                                                              (In Thousands)
Construction Expenditures*
  Cash Construction Expenditures..................                $59,100

Internal Funds Available..........................                 55,200
                                                                   ------
Balance of Construction Requirements to be
 Financed..........................................                 3,900
                                                                   ------
Mandatory Refunding of Long-Term Securities
  Long-Term Debt...................................                35,100

Other Cash Requirements............................                 3,000

Equity Transfers to the Corporation for Competitive
 Business Affiliates...............................                38,000
                                                                   ------
    Total Cash Requirements........................               $80,000
                                                                   ======

* Excluding the equity portion of Allowance for Funds Used During
  Construction ("AFDC"), a noncash item.

     Estimates of construction expenditures are subject to
continuous review and adjustment, and actual expenditures may
vary from estimates.  These construction expenditures include
capitalized overheads, nuclear fuel and the debt portion of AFDC
and assume that the planned divestiture of the Roseton and
Danskammer Plants occurs on or about January 1, 2001.  The actual
date of divestiture is likely to occur in the first quarter of
2001 at the earliest.

     As shown in the table above, it is presently estimated that
funds available from internal sources will finance 93% of Central
Hudson's cash construction expenditures in 2000.  During this
same period, total external financing requirements of Central
Hudson are projected to amount to $80 million, of which
$35.1 million is related to mandatory redemption of long-term
securities and $38.0 million is related to the equity transfers
to the Corporation for allocation to the Corporation's
competitive business affiliates.



                                      32

<PAGE>

Capital Structure

     Since 1996 Central Hudson maintained its common equity ratio
between 50-53%, which range was targeted in order to maintain a
solid A senior debt rating.  Central Hudson's senior debt
ratings, all reaffirmed during 1999, are A2 by Moody's Investors
Service and A by Standard and Poor's Corporation, Duff & Phelps
Credit Rating Company and Fitch/IBCA.

     Central Hudson, under the terms of the Agreement, will
divest its fossil generation assets no later than June 30, 2001.
A portion of the proceeds of such divestiture is planned to be
used to redeem a portion of the existing debt of Central Hudson.
While the total proceeds to be realized and portion of such
proceeds to be used for debt reduction cannot be accurately
predicted, Central Hudson intends to redeem sufficient debt to
maintain a strong investment grade rating after divestiture.  The
capital structure required to realize this goal will depend on
the still-evolving policies of the credit rating agencies, the
perceived risk profile of Central Hudson after divestiture, and
its prospective financial ratios.

     Central Hudson represents 93% of the Corporation's capital
structure, which is set forth below at the end of 1999, 1998 and
1997:

                                     Year-end Capital Structure
                                     --------------------------
                                    1999          1998           1997
                                    ----          ----           ----
Long-term debt...........           38.6%         41.0%(a)       40.5%
Short-term debt..........            5.2           1.9            -
Preferred stock..........            5.8           6.1            6.3
Common equity............           50.4          51.0           53.2
                                   -----         -----          -----
                                   100.0%        100.0%         100.0%
                                   =====         =====          =====

(a) Excludes $16.7 million of bonds issued through the New York
    Energy Research and Development Authority ("NYSERDA") on
    December 2, 1998, see Note 7 - "Capitalization - Long-Term
    Debt."

Financing Program of the Corporation and Central Hudson

     Central Hudson's Stock Purchase Plan, which can be either an
original issue plan or an open market purchase plan and is
currently an open-market purchase plan, was assumed by the
Corporation upon the Holding Company Restructuring.

     Central Hudson has petitioned the PSC to amend the Agreement
to extend the time in which it may transfer up to $100 million to
its competitive business affiliates.  Currently, such transfer
must be made prior to the Holding Company Restructuring.  The
petition requests an extension prior to the receipt of proceeds


                                     33

<PAGE>


from the auction of Central Hudson's fossil generation assets.
Approximately $51.5 million has been transferred to such
affiliates as of December 31, 1999.  Central Hudson may, pursuant
to this authorization, issue, not later than June 30, 2001, up to
$100 million of new securities, including up to one million
shares of common stock in furtherance of its business plan.

     The Corporation has established a program to repurchase up
to one million shares of its Common Stock and future repurchases
will be established as conditions warrant.

     For a discussion of Central Hudson's refinancings on
August 3, 1999 of its 1984 7 3/8% Series and 1985 and 1987 Series
A and B Pollution Control Revenue Bonds, and the issuance and
sale of unsecured Medium Term Notes, Series C, on January 15,
1999 and January 31, 2000, see Note 7 hereof.

     During 2000, two Central Hudson debt series totaling $35
million will mature.  Additionally, Central Hudson will be
required to finance a portion of its planned construction
expenditures externally, as discussed above, along with potential
transfers of up to $50 million of additional equity to the
competitive business affiliates.  These cash requirements will be
financed by a combination of temporary cash reserves, short-term
borrowing and the issuance of Medium Term Notes.

     In addition to the potential equity transfers from Central
Hudson, the competitive business affiliates will fund their
acquisitions in 2000 through the Corporation's $50 million
revolving credit agreement, discussed under the subcaption
"Short-Term Debt."

     For more information with respect to Central Hudson's
financing program in general, see Note 6 - "Capitalization -
Capital Stock" and Note 7 - "Capitalization - Long-Term Debt."


Short-Term Debt

     As part of the Holding Company Restructuring, the
Corporation has established a revolving credit agreement with
three commercial banks for borrowing up to $50 million through
December 4, 2001.

     As more fully discussed in Note 5 - "Short-Term Borrowing
Arrangements" hereof, Central Hudson has a revolving credit
agreement with four commercial banks for borrowing up to $50
million through October 23, 2001.  In addition, Central Hudson
has several committed and uncommitted bank facilities ranging
from $.5 million to $50 million from which it may obtain short-
term financing.  Such agreements give Central Hudson competitive
options to minimize its cost of short-term borrowing.
Authorization from the PSC limits the amount Central Hudson may
have outstanding at any time under all of its short-term
borrowing arrangements to $52 million in the aggregate.


                                     34

<PAGE>

     Services has short-term lines of credit totaling
$10.5 million.

RESULTS OF OPERATIONS

     The following discussion and analysis includes an
explanation of the significant changes in revenues and expenses
when comparing the 1998 results of Central Hudson to the 1999
results of the Corporation and the 1998 results of Central Hudson
to the 1997 results of Central Hudson.  Additional information
relating to changes between these years is provided in the Notes.

Earnings

     Earnings per share of common stock are shown after provision
for dividends on preferred stock and are computed on the basis of
the average number of common shares outstanding during the year.
The number of common shares, the earnings per share and the rate
of return earned on average common equity are as follows:

                                               1999        1998        1997
                                               ----        ----        ----
Average shares outstanding (000s)..           16,862      17,034      17,435
Earnings per share*................           $ 2.88      $ 2.90      $ 2.97
Return earned on common equity
 per financial statements..........            10.0%       10.3%       10.8%

*See Note 10 - "Segments and Related Information" for earnings
 per share of the competitive business affiliates.


     Earnings per share in 1999, when compared to 1998, decreased
$.02 per share.  This decrease resulted primarily from increased
employee welfare costs due to a favorable premium adjustment
recorded in 1998, plus an increase in 1999 in labor costs charged
to operations expense instead of capital construction costs.  In
addition, the decrease was due to increased depreciation on
Central Hudson's plant and equipment and an increase in
maintenance costs due largely to scheduled maintenance performed
on one of the electric generating plants.

     The decreased earnings in 1999 were partially offset by the
net effect of various nonrecurring items, including the sale of
the Corporation's New York Stock Exchange symbol in 1999 and, in
1998, the write-off of nonrecoverable purchased power expenses.
Additional offsets include increases in electric net operating
revenues from an increase in own-territory sales due largely to
warmer summer weather (cooling degree days were 32% higher than
last year) and from sales of electricity for resale.  These
increases were reduced, in accordance with the Agreement's return
on equity cap provision, by the deferral of revenues in excess of


                                  35
<PAGE>

the cap.  Gas net operating revenues remained flat compared to
last year.  Firm gas sales increased by 8%; however, the
resulting increase in net operating revenues in 1999 was offset
by the effect of a favorable reconciling gas cost adjustment
recorded in 1998.  A further offsetting item is the favorable
impact of Central Hudson's common stock repurchase program of
$.03.

     Earnings per share in 1998 when compared to 1997 decreased
$.07 per share.  This decrease resulted primarily from the net
effect of nonrecurring items recorded in 1998 and 1997.  The 1998
nonrecurring items are the final provision for the nonrecoverable
portion of a purchased power contract and the gain on the sale of
an investment.  Nonrecurring items in 1997 included the recording
of tax adjustments from the favorable settlement of various
Internal Revenue Service ("IRS") audits and the initial provision
for the nonrecoverable portion of a purchased power contract.
Also contributing to the decrease was increased depreciation on
Central Hudson's plant and equipment and decreased net operating
revenues.  The reduction in net operating revenues was primarily
from a decrease in gas usage by residential, commercial and
industrial customers due to milder weather.  Heating billing
degree days, as compared to 1997, were 11% lower in 1998.

     These decreased earnings in 1998 were partially offset by
the favorable earnings impact of decreased operation and
maintenance expenses, including a reduction in employee
compensation due to fewer employees and associated employee
welfare costs and the favorable impact of Central Hudson's common
stock repurchase program of $.07.

     The Corporation has established a projection for earnings in
calendar year 2000 of $2.97 per share.  This projected level,
which is $.09 per share above the actual 1999 level of $2.88 per
share, reflects the planned transfer of equity capital from
Central Hudson's operations to competitive business affiliates
over the course of the year.  These transfers will fund expansion
of competitive business affiliates into new competitive energy
markets to take advantage of opportunities expected to develop
due to industry restructuring.  As a result of the Corporation's
strong financial condition and conservative dividend policy, the
Corporation expects that new business development activities will
not impact the Corporation's ability to maintain the current
level of dividend, although no assurances can be given.



                                      36

<PAGE>
<TABLE>
<CAPTION>

Operating Revenues

     Total operating revenues increased $18.5 million (4%) in 1999 as compared to 1998 and
decreased $16.8 million (3%) in 1998, as compared to 1997.

     See the table below for details of the variations:

                                            Increase or (Decrease) from Prior Year
                                            --------------------------------------
                                                   1999                                 1998
                                    --------------------------------      --------------------------------
                                    Electric      Gas         Total       Electric      Gas          Total
                                    --------      ---         -----       --------      ---          -----
                                                               (In Thousands)
<S>                                 <C>         <C>         <C>           <C>        <C>          <C>
Operating Revenues*
  Customer sales.............       $  7,527    $ 8,432     $ 15,959      $   770    $(12,797)    $(12,027)
  Sales to other utilities...          2,254       (436)       1,818        6,991         561        7,552
  Fuel cost adjustment.......          8,473      2,727       11,200        1,743      (8,172)      (6,429)
  Deferred revenues..........        (10,195)    (1,844)     (12,039)      (7,013)      1,563       (5,450)
  Miscellaneous..............          1,243        290        1,533         (412)        (42)        (454)
                                      ------      -----       ------       ------      ------       ------
      Total................         $  9,302    $ 9,169     $ 18,471      $ 2,079    $(18,887)    $(16,808)
                                      ======      =====       ======       ======      ======       ======


*These operating revenues reflect only Central Hudson revenues since the competitive
 business affiliates' earnings are included based on the equity method of accounting.
</TABLE>

                                      37

<PAGE>

Sales - Central Hudson

     Central Hudson's sales vary seasonally in response to
weather.  Generally, electric revenues peak in the summer and gas
revenues peak in the winter.

     Sales of electricity within Central Hudson's service
territory, including electricity supplied by others, increased 4%
in 1999 compared to 1998 primarily due to the hotter weather in
1999.  Cooling degree days in 1999 were 32% higher than in 1998.
In 1998, electric sales to residential, commercial and industrial
customers increased 1%, 3% and 2%, respectively.

     Sales of firm natural gas within Central Hudson's service
territory, including gas supplied by others, increased by 8% from
1998 to 1999 resulting, in part, from a 3% increase in heating
degree days due to colder weather experienced in 1999.

     Firm sales of natural gas (which excludes interruptible and
transportation sales) decreased 10% in 1998 due primarily to a
decrease in usage by residential and commercial customers largely
due to the unseasonable weather conditions experienced in 1998.

     Changes in sales from prior years by major customer
classification, including interruptible gas sales are set forth
below.  Also included are the changes related to energy delivery
service.
                             % Increase (Decrease) from Prior Year
                             -------------------------------------
                                Electric (MWh)             Gas (Mcf)
                                --------------             ---------
                               1999        1998        1999         1998
                               ----        ----        ----         ----
Residential...........           6           1           6          (11)
Commercial............           5           3           7           (7)
Industrial............           1           2          11          (15)
Interruptible.........          N/A         N/A         14          (15)

     Residential and Commercial Sales:  Residential electric and
gas sales are primarily affected by the growth in the number of
customers and the change in customer usage.  In 1999, sales of
electricity to residential customers increased 6% due to an
increase in usage per customer.  Commercial sales increased 5%
resulting primarily from a 3% increase in usage per customer.
Hotter weather conditions (cooling degree days were 32% higher)
contributed to the increase in residential and commercial sales
of electricity.  Sales of gas to residential customers increased
6% due primarily to a 5% increase in usage per customer.
Commercial sales increased 7% due to a 5% increase in usage per
customer and a 2% increase in the number of customers.

     In 1998, sales of electricity to residential customers
increased 1% due primarily to an increase in usage per customer.
Commercial electric sales increased 3% which was largely the

                                     38

<PAGE>

result of an increase in the number of customers.  Unseasonable
weather conditions (billing degree days were 11% lower) was a
significant factor in the decrease in residential and commercial
sales of gas.  Sales of gas to residential customers decreased
11% due to the net effect of a 12% decrease in usage per customer
and a 1% increase in the number of customers.  Commercial sales
decreased 7% due to the net effect of a 10% decrease in usage per
customer and a 3% increase in the number of customers.

     Industrial Electric Sales:  In 1999, as compared to 1998,
industrial electric sales increased 1%.  In 1998, as compared to
1997, industrial electric sales increased 2% primarily due to
increases in usage by several large industrial customers.

     Industrial Gas Sales:  In 1999, firm gas sales to industrial
customers increased 11% primarily because of an increase in usage
by a large industrial customer.  Firm gas sales to industrial
customers for 1998 decreased 15% primarily because of decreased
usage by a large industrial customer and conversion of several
customers to firm transportation service.

     Interruptible Gas Sales:  In 1999, interruptible gas sales,
including transportation and boiler fuel, increased 14% largely
due to an increase in boiler gas usage for electric generation.
Interruptible gas sales decreased 15% in 1998, due largely to a
decrease in natural gas sold for use as a boiler fuel for
electric generation.  The use of gas as a boiler fuel at the
Roseton Plant is dependent upon its economic benefit as compared
to the use of oil for generation or the purchase of electricity
to meet Central Hudson's load requirements.  Due to sharing
arrangements, as described in the caption "Incentive
Arrangements" of Item 7 hereof that are in place for
interruptible gas sales and interruptible transportation of
customer-owned gas, variations from year to year typically have a
minimal impact on earnings.


Incentive Arrangements

     Pursuant to certain incentive formulas approved by the PSC,
Central Hudson either shares with its customers, certain revenues
and/or cost savings exceeding defined predetermined levels, or is
penalized in some cases for shortfalls from the targeted levels
or defined performance standards.

     Incentive formulas are in place for fuel cost variations,
sales of electricity to other utilities, interruptible gas sales,
gas capacity release transactions and customer satisfaction,
electric reliability and keeping customer appointments.


                                     39

<PAGE>

     The net results of these incentive formulas were to increase
pretax earnings by $2.3 million, $1.0 million and $700,000 during
1999, 1998, and 1997, respectively.

Operating Expenses

      Changes from the prior year in the components of Central
Hudson's operating expenses are listed below:

                                           Increase or (Decrease)
                                               from Prior Year
                                    ----------------------------------------
                                            1999                 1998
                                            ----                 ----
                                       Amount     %         Amount     %
                                       ------    ---        ------    ---
                                               (In Thousands)
Operating Expenses*:
  Fuel and purchased
   electricity...............        $ 6,318      5       $  3,280       3
  Purchased natural gas......          8,993     20        (16,550)    (27)
  Other expenses of
   operation.................          2,366      3         (4,972)     (5)
  Maintenance................          1,309      5           (670)     (2)
  Depreciation and
   amortization..............          1,353      3          1,696       4
  Taxes, other than
   income tax................            811      1         (1,421)     (2)
  Federal income tax.........         (2,017)   (17)           585       2
                                      ------     --         ------      --
          Total..............        $19,133      4%      $(18,052)     (4)%
                                      ======     ==         ======      ==

*These operating expenses reflect only Central Hudson expenses
 since the competitive business affiliates' earnings are included
 in other income based on the equity method of accounting.

      The most significant elements of operating expenses are fuel
and purchased electricity in Central Hudson's electric department
and purchased natural gas in Central Hudson's gas department.
Approximately 31% in 1999, and 30% in 1998 of every revenue
dollar billed by Central Hudson's electric department was
expended for the combined cost of fuel used in electric
generation and purchased electricity.  The corresponding figures
in Central Hudson's gas department for the cost of purchased gas
were 57% and 53%, respectively.

      In an effort to keep the cost of electricity at the lowest
reasonable level, Central Hudson purchases energy from sources
such as the ISO, Canadian hydro sources and energy marketers
whenever energy can be purchased at a unit cost lower than the
incremental cost of generating the energy in Central Hudson's
plants.

      Fuel and purchased electricity increased $6.3 million (5%)
in 1999 due to the increase in electric sales as well as sales of
electricity for resale.


                                     40

<PAGE>

      Purchased natural gas costs increased $9.0 million (20%) in
1999 largely due to higher firm and interruptible gas sales,
including gas used as a boiler fuel.  Purchased natural gas
decreased $16.6 million (27%) in 1998 primarily due to lower firm
and interruptible gas sales, including gas used as a boiler fuel.
Other expenses of operation increased by $2.4 million (3%) in
1999 largely due to an increase in employee welfare costs and an
increase in the amount of labor costs charged to operations
instead of capital construction activities.  The increase in
employee welfare costs is primarily due to the effect of a
favorable premium adjustment recorded in 1998.  In 1998 other
expenses of operations decreased $5.0 million (5%) resulting from
decreased employee compensation due to fewer employees and
associated fringe benefits.  See Note 4 - "Federal Income Tax,"
hereof for an analysis and reconciliation of the federal income
tax.

Other Income and Interest Charges

      Other income and deductions increased $2.2 million in 1999
as compared to 1998.  The net increase results primarily from
income (nonrecurring) derived from the sale of the Corporation's
stock symbol; interest earned on proceeds held in escrow from
debt issued for the scheduled refinancing of existing debt and an
increase in carrying charges due Central Hudson on accumulated
pension expense credits (noncash) used to reduce customer rates.
The net increase in other income was also offset by increases in
federal income tax, a reduction in allowance for funds used
during construction and a reduction in equity earnings from
competitive business affiliates.  The reduction in competitive
business affiliates' earnings is due to start-up costs of the
generating plants acquired by Resources and a nonrecurring item
recorded in 1998 for the gain on the sale of an investment.  In
1998 other income and deductions decreased $3 million (27%),
primarily due to interest refunded in 1997 from the settlement of
various IRS audits.

      Total interest charges (excluding AFDC) increased $2.3
million (8%) in 1999 and increased $1.0 million (4%) in 1998
because of an increase in financing activity.  Interest earned on
the escrow funds discussed above largely offset the increase in
interest on debt in 1999.


                                     41

<PAGE>

      The following table sets forth some of the pertinent data on
the Corporation's outstanding debt:
                                            1999        1998        1997
                                            ----        ----        ----
                                                   (In Thousands)
Long-term debt:
  Debt retired................           $ 25,818    $     90    $     85
  Outstanding at year-end:*
   Amount (including current
    portion)..................            371,180     396,998     363,744
   Effective rate.............              6.43%       6.56%       6.78%
Short-term debt:
  Average daily amount
   outstanding ...............           $ 10,274    $  1,171    $  1,692
  Weighted average
   interest rate .............              6.22%       5.51%       5.54%

*Including debt of competitive business affiliates of $9.0
 million in 1998 and $7.6 million in 1997.

See Note 5 - "Short-Term Borrowing Arrangements" and Note 7 -
"Capitalization - Long-Term Debt" hereof for additional
information on short-term and long-term debt of the Corporation.

Nuclear Operations

     Nine Mile 2 Plant:  The Nine Mile 2 Plant is owned, as
tenants-in-common, by Central Hudson, Niagara Mohawk, New York
State Electric & Gas Company ("NYSEG"), Long Island Lighting
Company ("LILCO"), a subsidiary of the Long Island Power
Authority ("LIPA"), and Rochester Gas and Electric Corporation
("Rochester").  Niagara Mohawk operates the Nine Mile 2 Plant.

     Central Hudson owns a 9% interest of the Nine Mile 2 Plant,
which is discussed in Note 3 - "Nine Mile 2 Plant."

     Central Hudson's share of operating expenses, taxes and
depreciation pertaining to the operation of the Nine Mile 2 Plant
are included in the Corporation's financial results.  In both
1999 and 1998, underruns in costs of operations and maintenance
expenses were entirely deferred for the future benefit of
customers (see Note 2 - "Regulatory Matters").

     For a discussion of the agreements among and proposals of
Niagara Mohawk, NYSEG and Rochester regarding disposition of
their interests in the Nine Mile 2 Plant, see Note 3 hereof.

     In August 1997, the PSC Staff issued a "Notice Soliciting
Comments on Nuclear Generation" requesting comments and
alternative approaches by interested parties on a "Staff Report
on Nuclear Generation" ("Nuclear Report").  The Nuclear Report
concludes that nuclear generation along with non-nuclear


                                     42

<PAGE>

generation facilities, should be subject to the discipline of
market-based pricing.

     In March 1998, the PSC initiated a proceeding to examine a
number of issues raised by the Nuclear Report and the comments
received in response to it.  In reviewing the Nuclear Report and
parties' comments, the PSC, among others:  (a) adopted, as a
rebuttable presumption, the premise that nuclear power should be
priced on a market basis to the same degree as power from other
sources, with parties challenging that premise having to bear a
substantial burden of persuasion, (b) characterized the proposals
in the Staff paper as by and large consistent in concept with the
PSC's goal of a competitive, market-based electricity industry,
and (c) questioned PSC Staff's position that would leave funding
and other decommissioning responsibilities with the sellers of
nuclear power interests.  The parties in this proceeding
developed a consensus report that discusses ownership and rate-
making alternatives for future consideration, which report was
submitted to the PSC in June 1999.

     For information on the NRC Plant Performance Review of Nine
Mile 1 and Nine Mile 2 Plants, see Note 3 - "Nine Mile 2 Plant"
hereof.

     Nuclear Decommissioning:  A decommissioning study for the
Nine Mile 2 Plant was completed in 1995.  The study's estimate of
the cost to decommission that Plant is significantly higher than
previous estimates.  The Corporation believes that
decommissioning costs, if higher than currently estimated, will
ultimately be recovered in rates by Central Hudson, although no
such assurance can be given.  However, future developments in the
utility industry, including the effects of deregulation and
increasing competition, could change this conclusion.  The
Corporation cannot predict the outcome of these developments.
For further information on decommissioning, see Note 3 - "Nine
Mile 2 Plant."

     In February 1996, the Financial Accounting Standards Board
("FASB") issued an exposure draft entitled "Accounting for
Certain Liabilities Related to Closure and Removal of Long-Lived
Assets," which includes nuclear plant decommissioning.  Over the
past four years, this exposure draft has been the source of
continual debate.  The FASB has committed to completing this
project and is proceeding toward issuance of another exposure
draft expected in the first quarter of 2000 with an effective
date for financial statements for fiscal years beginning after
June 15, 2001.  If the accounting standard proposed in such
exposure draft is adopted, it could result in higher annual
provisions for removal or decommissioning to be recognized
earlier in the operating life of nuclear and other generating
units and an accelerated recognition of the decommissioning
obligation.  The FASB is continuing to explore various issues

                                     43

<PAGE>

associated with this project including liability measurement and
recognition issues.  The FASB is deliberating this issue and the
resulting final pronouncement could be different from that
proposed in the exposure draft.  The Corporation can make no
prediction at this time as to the ultimate form of such proposed
accounting standard, assuming it is adopted, nor can it make any
prediction as to its ultimate effect(s) on the financial
condition of the Corporation.

     The NRC issued a policy statement on the Restructuring and
Economic Deregulation of the Electric Utility Industry ("Policy
Statement") in 1997.  The Policy Statement addresses NRC's
concerns about the adequacy of decommissioning funds and about
the potential impact on operational safety and reserves.  It
gives the NRC the right, in highly unusual situations where
adequate protection of public health and safety would be
compromised, to consider imposing joint and several liability on
minority co-owners when one or more co-owners have defaulted on
their contractual obligations.  On January 5, 1999, the NRC
commenced a rulemaking proceeding initiated by a group of
utilities which are non-operating joint owners of nuclear plants.
These utilities request that the enforcement provisions of the
NRC regulations be amended to clarify NRC policy regarding the
potential liability of joint owners if other joint owners become
financially incapable of bearing their share of the burden for
safe operation or decommissioning of a nuclear power plant.
Current NRC regulations allow a utility to set aside
decommissioning funds annually over the estimated life of a
plant.  In addition to the above Policy Statement, the NRC is
proposing to amend its regulations on decommissioning funding to
reflect conditions expected from deregulation of the electric
power industry.  Central Hudson is unable to predict how such
increased stringency may affect the results of operations or
financial condition of the Nine Mile 2 Plant.

     Refueling Outage:  The Nine Mile 2 Plant is scheduled to
commence its seventh refueling outage March 3, 2000.

Other Matters

     New Accounting Standards:  In June 1998, the FASB issued
Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS 133").
This Statement establishes accounting and reporting standards for
derivative instruments and for hedging activities.  It requires
that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at
fair value.  Any gain or loss resulting from changes in such fair
value is required to be recognized in earnings to the extent the
derivatives are not effective as hedges.  The Corporation
currently owns derivative instruments under an energy trading

                                     44

<PAGE>

risk management program implemented in 1999 to manage the price
risks associated with fuel purchases for generation, natural gas
purchases for native load customers and wholesale power
transactions.  The Corporation uses various financial
instruments, such as futures, options, swaps, caps, floors and
collars to stabilize the price volatility of these commodities.
At this time, the Corporation believes that the hedging program
will not have a material impact on its financial position or
results of operations.

     The FASB issued Statement No. 137 "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133" in June 1999, amending SFAS 133
to defer the effective date by one year to all fiscal quarters of
all fiscal years beginning after June 15, 2000.  This proposed
change is made in response to requests to consider delaying the
effective date to provide more time to study, understand and
implement the provisions of the SFAS 133.

     For information about market risk and activities relating to
derivative financial instruments and other financial instruments,
see Item 7A - "Quantitative and Qualitative Disclosure about
Market Risk."

     Other Issues: On an ongoing basis, Central Hudson assesses
environmental issues which could impact Central Hudson and its
customers.  Note 3 - "Nine Mile 2 Plant" and Note 9 -
"Commitments and Contingencies" discuss current environmental
issues affecting Central Hudson, including (i) the 1995
decommissioning cost study of the Nine Mile 2 Plant, (ii) the
Clean Water Act and the CAA Amendments, which Amendments require
control of emissions from fossil-fueled electric generating
units, and air opacity settlements, (iii) a lawsuit filed against
Central Hudson by the Riverkeeper, Inc., (iv) the environmental
initiatives of the New York State Governor, (v) the investigation
by the New York State Attorney General of older New York State
power plants for possible violation of air emission rules and
(vi) a legal action filed in 1995 against Central Hudson by the
City of Newburgh, New York.



                                     45

<PAGE>
<TABLE>
<CAPTION>

FINANCIAL INDICES

     Selected financial indices for the last five years are set forth in the following
table:

                                                                     1999    1998    1997    1996    1995
                                                                     ----    ----    ----    ----    ----
<S>                                                                  <C>     <C>     <C>     <C>     <C>

Pretax coverage of total interest charges:
     Including AFDC.....................................             3.59x   3.83x   3.94x   4.08x   3.68x
     Excluding AFDC.....................................             3.30x   3.54x   3.69x   3.83x   3.43x
     Funds from Operations..............................             4.34x   4.39x   5.18x   5.29x   4.69x

Pretax coverage of total interest
 charges and preferred stock dividends..................             3.09x   3.27x   3.37x   3.47x   2.97x

Percent of construction expenditures
 financed from internal funds...........................             100%    100%     100%    100%    100%

AFDC and Mirror CWIP* as a percentage
 of income available for common stock...................              19%     17%     13%      13%     16%

Effective tax rate......................................              36%     35%      32%     36%     35%

*Refer to Note 2 - "Regulatory Matters" under the caption "Summary of Regulatory Assets
 and Liabilities" and the subcaptions "Deferred Finance Charges and Deferred Nine Mile 2
 Plant Costs" for a definition of Mirror CWIP.

</TABLE>

                                      46
<PAGE>

COMMON STOCK DIVIDENDS AND PRICE RANGES

     Central Hudson and its principal predecessors have paid
dividends on its common stock in each year commencing in 1903,
and such common stock has been listed on the New York Stock
Exchange since 1945.  The price ranges and the dividends paid for
each quarterly period during the last two fiscal years are as
follows:

                         1999                            1998
             ------------------------------   --------------------------
               High       Low      Dividend    High       Low   Dividend
               ----       ---      --------    ----       ---   --------
1st Quarter  $45         35 3/4      .54     $43 3/4    $39 5/8  $.535
2nd Quarter   42 3/8     35 15/16    .54      46         38 7/8   .535
3rd Quarter   42 3/4     38 7/8      .54      47 1/16    40 7/8   .54
4th Quarter*  40 1/4     31 7/8      .54      45 1/8     39 7/8   .54

*On December 15, 1999, the Holding Company Restructuring took
 place.

     On June 26, 1998, Central Hudson increased its quarterly
dividend rate to $.54 per share from $.535 per share.  In 1999,
Central Hudson maintained its quarterly dividend rate at $.54 per
share.

     Following the Holding Company Restructuring, all future
declarations of dividends will be made by the Corporation.  Any
determination with regard to future dividend declarations, and
the amounts and dates of such dividends, will depend on the
circumstances at the time of consideration of such declaration.

     The Agreement provides certain dividend payment restrictions
on Central Hudson, including the following:  in the event of a
downgrade of Central Hudson senior debt rating below BBB+ by more
than one credit rating agency, if the stated reason(s) for the
downgrade is the performance of, or concerns about, the financial
condition of the Corporation or any affiliate other than Central
Hudson, dividends will be limited to a rate of not more than 75%
of the average annual income available for dividends on a two-
year rolling average basis.  In the event that Central Hudson's
senior debt is placed on "Credit Watch" (or the equivalent) for a
rating below BBB by more than one credit rating agency, if the
stated reason(s) for the downgrade is the performance of, or
concerns about, the financial condition of the Corporation or any
affiliate other than Central Hudson, dividends will be limited to
a rate of not more than 50% of the average annual income
available for dividends on a two-year rolling average basis.  In
the event of a downgrade of Central Hudson's senior debt rating
below BBB- by more than one credit rating agency, if the action
is stated as being due in substantial part to the performance of,
or concerns about, the financial condition of the Corporation or


                                     47

<PAGE>

any affiliate other than Central Hudson, no dividends will be
paid by Central Hudson until Central Hudson's senior debt rating
has been restored to BBB- or higher by all credit rating agencies
then rating Central Hudson.

     The number of registered holders of common stock of the
Corporation as of December 31, 1999, was 20,472.  Of these,
19,757 were accounts in the names of individuals with total
holdings of 4,746,116 shares, or an average of 240 shares per
account.  The 715 other accounts, in the names of institutional
or other non-individual holders, for the most part, hold shares
of common stock for the benefit of individuals.

     ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
     -------   MARKET RISK
               ---------------------------------------------

     The Corporation's primary market risks are commodity price
risk and interest rate risk and, lie principally, in terms of
materiality, with Central Hudson, its principal affiliate
company.  However, Central Hudson's exposure to commodity price
risk related to its purchases of natural gas, fuel for electric
generation and other power supplies is mitigated by its electric
and gas cost adjustment clauses.  These adjustment mechanisms
provide for the return or collection of costs to or from
customers for costs below or in excess of base costs included in
rates charged to customers.  Additionally, variations in electric
fuel costs are subject to a fuel costs incentive mechanism with
an annual exposure of up to $3.0 million in additional revenues
or costs.

     In 1999, Central Hudson implemented an energy risk
management program (assumed by the Corporation upon the Holding
Company Restructuring) with its primary goal being to further
manage, through the use of defined risk management practices,
price risk associated with commodity purchases in its operations.
The Corporation's written policy and procedures for this program
allows for the use of derivative financial instruments to hedge
price risk and prohibits the use of these instruments for
speculative purposes.  Additionally, the PSC in a Memorandum and
Resolution ("Resolution"), effective April 13, 1999, authorized
the inclusion of risk management costs as a recoverable component
of the Gas Adjustment Clause ("GAC").  The Resolution defines
these costs as "costs associated with transactions that are
intended to reduce price volatility or reduce overall costs to
customers.  These costs include transaction costs, and gains and
losses associated with other risk management entities."

     Central Hudson, starting in September 1999, purchased
derivative instruments to hedge a small portion of its total gas
supply requirements for the period November 1999 through October
2000.  The fair value of these derivative financial instruments


                                     48

<PAGE>

at December 31, 1999 is not material to the Corporation's
financial position or results of operations.  Additionally,
resultant transaction gains and losses actually realized in 1999
were included in Central Hudson's GAC, as authorized by the PSC.
With regard to electric energy operations, Central Hudson and
Services have begun to enter into derivative instruments to hedge
purchased electric transactions.  There were no electric
derivative instruments outstanding at December 31, 1999, and the
transactions occurring in 1999 were not material to the
Corporation's financial position or results of operations.

     Central Hudson manages its interest rate risk through the
issuance of fixed-rate debt with varying maturities and through
economic refundings of debt through optional refunding.  A
portion of Central Hudson's long-term debt consists of variable
rate debt for which interest is reset on a periodic basis
reflecting current market conditions.  The difference between
costs associated with actual interest rates and costs embedded in
customer rates are deferred for eventual passback or recovery to
or from customers.

     ITEM 8 -  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
     ------    -------------------------------------------

I - Index to Financial Statements:                                Page
                                                                  ----
       Report of Independent Accountants                           50
       Statement of Management's Responsibility                    51
       Consolidated Statement of Income for the
         three years ended December 31, 1999                       53
       Consolidated Statement of Retained Earnings
         for the three years ended December 31, 1999               55
       Consolidated Balance Sheet at
         December 31, 1999 and 1998                                56
       Consolidated Statement of Cash Flows for the
         three years ended December 31, 1999                       58
       Notes to Consolidated Financial Statements                  60
       Selected Quarterly Financial Data (Unaudited)              101

II - Schedule II - Reserves

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

Supplementary Data

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



                                      49

<PAGE>

Report of Independent Accountants

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

     In our opinion, the consolidated financial statements listed
in the accompanying index present fairly, in all material
respects, the financial position of CH Energy Group, Inc. and its
subsidiaries at December 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
These financial statements are the responsibility of the
Corporation's management; our responsibility is to express an
opinion on these financial statements based on our audits.  We
conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States
which require that we plan and perform the audit to obtain
reasonable assurance about whether or not the financial
statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for the
opinion expressed above.










PRICEWATERHOUSECOOPERS LLP

New York, New York
January 28, 2000




                                      50

<PAGE>

STATEMENT OF MANAGEMENT'S RESPONSIBILITY

     Management is responsible for the preparation, integrity and
objectivity of the consolidated financial statements of CH Energy
Group, Inc. and its competitive business affiliates
(collectively, the "Corporation") as well as all other
information contained in this Form 10-K Annual Report for the
fiscal year ended December 31, 1999.  The consolidated financial
statements have been prepared in conformity with generally
accepted accounting principles and, in some cases, reflect
amounts based on the best estimates and judgements of the
Corporation's Management, giving due consideration to
materiality.

     The Corporation maintains adequate systems of internal
control to provide reasonable assurance, that, among other
things, transactions are executed in accordance with Management's
authorization, that the consolidated financial statements are
prepared in accordance with generally accepted accounting
principles and that the assets of the Corporation are properly
safeguarded.  The systems of internal control are documented,
evaluated and tested by the Corporation's internal auditors on a
continuing basis.  Due to the inherent limitations of the
effectiveness of internal controls, no internal control system
can provide absolute assurance that errors will not occur.
Management believes that the Corporation has maintained an
effective system of internal control over the preparation of its
financial information including the consolidated financial
statements of the Corporation as of December 31, 1999.

     Independent accountants were engaged to audit the
consolidated financial statements of the Corporation and issue
their report thereon.  The Report of Independent Accountants,
which is presented above, does not limit the responsibility of
Management for information contained in the consolidated
financial statements and elsewhere in this Form 10-K Annual
Report.

     The Corporation's Board of Directors maintains a Committee
on Audit which is composed of Directors who are not employees of
the Corporation.  The Committee on Audit meets with Management,
the  Internal Auditing Manager, and the Corporation's independent

                                      51

<PAGE>

accountants several times a year to discuss internal controls and
accounting matters, the Corporation's consolidated financial
statements, the scope and results of the audits performed by the
independent accountants and the Internal Auditing Department.
The independent accountants and the Internal Auditing Manager
have direct access to the Committee on Audit.






PAUL J. GANCI                                DONNA S. DOYLE
Chairman of the Board, President             Vice President - Accounting
and Chief Executive Officer                  and Controller


                                                       February 4, 2000

                                      52

<PAGE>

CONSOLIDATED STATEMENT OF INCOME
(In Thousands)
                                            Year ended December 31,
                                       1999          1998           1997
                                       ----          ----           ----
Operating Revenues
  Electric...................       $427,809       $418,507       $416,429
  Gas........................         94,131         84,962        103,848
                                     -------        -------        -------
    Total Operating Revenues.        521,940        503,469        520,277
                                     -------        -------        -------
Operating Expenses
 Operation:
  Fuel used in electric
   generation................         85,848         84,688         66,117
  Purchased electricity......         45,731         40,573         55,864
  Purchased natural gas......         53,957         44,964         61,514
  Other expenses of operation         98,613         96,247        101,219
 Maintenance.................         28,213         26,904         27,574
 Depreciation and amortization
 (Note 1)....................         46,913         45,560         43,864
 Taxes, other than income
  tax........................         64,269         63,458         64,879
 Federal income tax
 (Note 4)....................         27,758         29,775         29,190
                                     -------        -------        -------
    Total Operating Expenses.        451,302        432,169        450,221
                                     -------        -------        -------
Operating Income.............         70,638         71,300         70,056
                                     -------        -------        -------
Other Income
  Equity Earnings - Competitive
   Business Affiliates.......              4            756            362
  Allowance for equity funds
   used during construction
   (Note 1)..................              -            585            387
  Federal income tax (Note 4)         (1,167)         1,187          2,953
  Other - net................         11,942          6,070          7,717
                                      ------         ------         ------
    Total Other Income.......         10,779          8,598         11,419
                                      ------         ------         ------
Income before Interest
  Charges....................         81,417         79,898         81,475
                                      ------         ------         ------


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

                                      53

<PAGE>

CONSOLIDATED STATEMENT OF INCOME (CONT'D)
(In Thousands)
                                            Year ended December 31,
                                       1999          1998           1997
                                       ----          ----           ----
Interest Charges
 Interest on long-term debt..         24,151         23,115         23,097
 Other interest..............          4,860          3,639          2,647
 Allowance for borrowed
  funds used during
  construction (Note 1)......           (390)          (324)          (261)
 Amortization of expense on
  debt.......................            993            924            906
                                      ------         ------         ------
   Total Interest Charges....         29,614         27,354         26,389
                                      ------         ------         ------
Preferred Stock Dividends of
 Central Hudson..............          3,230          3,230          3,230
                                      ------         ------         ------
Net Income...................       $ 48,573       $ 49,314       $ 51,856
                                      ======         ======         ======
Common Stock:
  Average shares outstanding
  (000s).....................         16,862         17,034         17,435
  Earnings per share (basic
   and diluted)..............          $2.88          $2.90          $2.97

















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





                                      54

<PAGE>

CONSOLIDATED STATEMENT OF RETAINED EARNINGS
(In Thousands)
                                            Year ended December 31,
                                        1999          1998          1997
                                        ----          ----          ----
Balance at beginning of
 year........................       $133,287       $120,540       $105,821

Net Income...................         48,573         49,314         51,856

Common Stock Retirement
  (cancellation).............        (12,642)             -              -

Dividends declared:
  On common stock ($2.16 per
   share 1999; $2.155 per
   share 1998; $2.135 per
   share 1997................        (36,422)       (36,567)       (37,137)
                                     -------        -------        -------

Balance at end of year.......       $132,796       $133,287       $120,540
                                     =======        =======        =======
















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





                                      55

<PAGE>

CONSOLIDATED BALANCE SHEET
(In Thousands)
                                                        December 31,

ASSETS                                                1999            1998
                                                      ----            ----
Utility Plant
  Electric...............................          $1,250,456     $1,222,743
  Gas....................................             164,767        158,165
  Common.................................             100,659         94,271
  Nuclear fuel...........................              42,847         42,317
                                                    ---------      ---------
                                                    1,558,729      1,517,496

  Less: Accumulated depreciation.........             638,910        597,383
        Nuclear fuel amortization........              38,354         35,381
                                                    ---------      ---------
                                                      881,465        884,732

  Construction work in progress..........              39,951         43,512
                                                    ---------      ---------
    Net Utility Plant....................             921,416        928,244
                                                    ---------      ---------
Other Property and Plant.................              31,544         19,059
                                                    ---------      ---------
Investments and Other Assets
  Prefunded pension costs................              46,038         40,218
  Other..................................              21,226         18,209
                                                    ---------      ---------
    Total Investments and Other Assets...              67,264         58,427
                                                    ---------      ---------
Current Assets
  Cash and cash equivalents..............              20,385         10,499
  Accounts receivable from customers -
   net of allowance for doubtful accounts;
   $2.9 million in 1999 and $2.4 million
   in 1998...............................              57,600         45,564
  Accrued unbilled utility revenues......              16,327         15,233
  Other receivables......................               4,092          4,555
  Materials and supplies, at average cost:
    Fuel.................................              19,053         11,797
    Construction and operating...........              12,432         11,790
  Special deposits and prepayments.......              17,533         34,823
                                                    ---------      ---------
    Total Current Assets.................             147,422        134,261
                                                    ---------      ---------
Deferred Charges
  Regulatory assets (Note 2).............             137,487        149,261
  Unamortized debt expense...............               5,016          5,062
  Other..................................              25,750         21,724
                                                    ---------      ---------
    Total Deferred Charges...............             168,253        176,047
                                                    ---------      ---------
           TOTAL ASSETS                            $1,335,899     $1,316,038
                                                    =========      =========

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



                                      56

<PAGE>

CONSOLIDATED BALANCE SHEET  (CONT'D)
(In Thousands)
                                                           December 31,
CAPITALIZATION AND LIABILITIES                          1999           1998
                                                        ----           ----
Capitalization
 Common Stock Equity
   Common stock, $.10 par value
    (Note 6).............................          $    1,686     $   87,775
   Paid-in capital (Note 6)..............             351,230        284,465
   Retained earnings.....................             132,796        133,287
   Reacquired capital stock (Note 6).....                   -        (27,143)
   Capital stock expense.................              (1,306)        (6,204)
                                                    ---------      ---------
    Total Common Stock Equity............             484,406        472,180
                                                    ---------      ---------
 Cumulative Preferred Stock (Note 6)
   Not subject to mandatory redemption...              21,030         21,030
   Subject to mandatory redemption.......              35,000         35,000
                                                    ---------      ---------
    Total Cumulative Preferred Stock.....              56,030         56,030
                                                    ---------      ---------
 Long-term Debt (Note 7).................             335,451        356,918
                                                    ---------      ---------
    Total Capitalization.................             875,887        885,128
                                                    ---------      ---------
Current Liabilities
 Current maturities of long-term debt....              35,100         39,507
 Notes payable...........................              50,000         18,000
 Accounts payable........................              36,746         23,591
 Dividends payable.......................               9,913          9,913
 Accrued taxes and interest..............                (162)         6,334
 Accrued vacation .......................               4,344          4,400
 Customer deposits.......................               4,471          4,248
 Other...................................               7,545          7,932
                                                    ---------      ---------
    Total Current Liabilities............             147,957        113,925
                                                    ---------      ---------
Deferred Credits and Other Liabilities
 Regulatory liabilities (Note 2).........              87,039         81,065
 Operating reserves......................               6,294          5,995
 Other...................................              19,101         27,251
  Total Deferred Credits and                        ---------      ---------
   Other Liabilities.....................             112,434        114,311
                                                    ---------      ---------
Deferred Income Tax (Note 4).............             199,621        202,674
                                                    ---------      ---------
Commitments and contingencies
  (Notes 2, 3 and 9).....................           ---------      ---------

 TOTAL CAPITALIZATION AND LIABILITIES              $1,335,899     $1,316,038
                                                    =========      =========


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

                                       57
<PAGE>


CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)                                  Year ended December 31,
                                             1999        1998        1997
                                             ----        ----        ----
Operating Activities
  Net Income.......................       $ 48,573    $ 49,314    $ 51,856
  Adjustments to reconcile net
      income to net cash provided
      by operating activities:
       Depreciation and amortization
         including nuclear fuel
         amortization...............        51,186      49,011      48,348
     Deferred income taxes, net....          4,219        (116)     14,077
     Allowance for equity funds used
       during construction..........             -        (585)       (387)
     Nine Mile 2 Plant deferred
       finance charges, net.........        (4,855)     (4,855)     (4,855)
     Provisions for uncollectibles.          2,930       2,639       3,493
     Net accrued deferred pension
      costs........................        (10,968)    (12,277)     (8,555)
      Deferred gas costs...........          3,080       1,072       3,475
      Deferred gas refunds..........           (19)     (1,640)      1,695
     Other - net...................          9,423       4,888       7,233
  Changes in current assets and
   liabilities, net:
     Accounts receivable and unbilled
       utility revenues.............       (15,474)        (46)     (4,420)
     Materials and supplies........         (7,898)        513       3,995
     Special deposits and
       prepayments..................        17,291     (20,613)       (770)
     Accounts payable..............         13,155        (777)     (1,769)
     Accrued taxes and interest....         (6,665)      3,094      (2,107)
     Other current liabilities.....           (175)      1,695         (61)
  Net cash provided by operating           -------     -------     -------
   activities......................        103,803      71,317     111,248
                                           -------     -------     -------






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

                                       58

<PAGE>

CONSOLIDATED STATEMENT OF CASH FLOWS (CONT'D)
(In Thousands)                               1999      1998          1997
                                             ----      ----          ----
Investing Activities
  Additions to plant...............       (46,495)  (45,661)      (43,868)
  Allowance for equity funds used
   during construction.............             -       585           387
  Net additions to plant...........       (46,495)  (45,076)      (43,481)
                                           ------    ------        ------
  Competitive Business Affiliates
   fixed asset additions...........       (11,945)  (19,460)            -
  Nine Mile 2 Plant decommissioning
   trust fund......................          (868)     (868)         (868)
  Other - net......................          (589)     (801)          396
  Net cash used in investing               ------    ------        ------
   activities......................       (59,897)  (66,205)      (43,953)
                                           ------    ------        ------
Financing Activities
  Proceeds from issuance of:
    long-term debt.................       176,250    35,250         2,000
  Net borrowings (repayments) of
   short-term debt.................        32,000    18,000       (15,600)
  Retirement & redemption
   of long-term debt...............      (201,318)   (2,466)       (2,282)
  Dividends paid on common
   stock...........................       (36,422)  (36,706)      (37,196)
  Debt issuance costs..............        (4,530)        -             -
  Reacquired capital stock.........             -   (17,745)       (9,398)
  Net cash used in financing               ------    ------        ------
   activities......................       (34,020)   (3,667)      (62,476)
                                           ------    ------        ------

Net Change in Cash and Cash
 Equivalents.......................         9,886     1,445         4,819
Cash and Cash Equivalents at
 Beginning of Year.................        10,499     9,054         4,235
Cash and Cash Equivalents at End           ------    ------        ------
 of Year...........................      $ 20,385  $ 10,499      $  9,054
                                           ======    ======        ======
Supplemental Disclosure of Cash
 Flow Information
    Interest paid (net of amounts
    capitalized)...................      $ 26,307  $ 24,002      $ 24,309
    Federal income taxes paid......        29,025    26,900        17,111



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


                                       59

<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

      The consolidated financial statements include the accounts of
CH Energy Group, Inc. ("Corporation"), and its subsidiaries.
Intercompany balances and transactions have been eliminated.

      The Corporation's subsidiaries are each directly or
indirectly wholly owned and their businesses are comprised of an
electric and gas utility landholding, cogeneration, fuel oil,
electric generating or energy management companies and electric
and gas sales.  The net income of the Corporation's subsidiaries,
other than Central Hudson, is reflected in the Consolidated
Statement of Income as "Equity Earnings - Competitive Business
Affiliates."

      In April 1998, Central Hudson Gas & Electric Corporation
("Central Hudson") formed a wholly-owned subsidiary named CH
Energy Group, Inc., which, after a one-for-one share exchange on
December 15, 1999 ("Holding Company Restructuring"), became the
holding company parent of Central Hudson and its existing
subsidiaries (with the exception of Phoenix Development Company,
Inc., which remains a subsidiary of Central Hudson).  On
November 3, 1999, Central Hudson Energy Services, Inc.
("Services") was formed as a New York corporation, and on
November 19, 1999, Services became a wholly-owned subsidiary of
the Corporation for the purpose of becoming, upon the Holding
Company Restructuring, the holding company parent of Central
Hudson Enterprises Corporation, SCASCO, Inc., Prime Industrial
Energy Services, Inc., CH Resources, Inc., CH Syracuse Properties,
Inc., CH Niagara Properties, Inc. and Greene Point Development
Corporation ("competitive business affiliates").  See Note 2 -
"Regulatory Matters," under the caption "Competitive Opportunities
Proceeding Settlement Agreement" for further details.

Rates, Revenues and Cost Adjustment Clauses

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

      Central Hudson's tariff for retail electric service includes
a fuel cost adjustment clause pursuant to which electric rates are
adjusted to reflect changes in the average cost of fuels used for
electric generation and in certain purchased power costs, from the
average of such costs included in base rates.  Central Hudson's

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<PAGE>

tariff for gas service contains a comparable clause to adjust gas
rates for changes in the price of purchased natural gas.

Utility Plant

      The costs of additions to utility plant and replacements of
retired units of property are capitalized at original cost.
Central Hudson's share of the costs of Unit No. 2 of the Nine Mile
Point Nuclear Station ("Nine Mile 2 Plant") are capitalized at
original cost, less the disallowed investment of $169.3 million
which was recorded in 1987.  Capitalized costs include labor,
materials and supplies, indirect charges for such items as
transportation, certain taxes, pension and other employee benefits
and Allowance for the Cost of Funds Used During Construction
("AFDC"), a noncash item, or capitalized interest.  Replacement of
minor items of property is included in maintenance expenses.

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

Jointly-Owned Facilities

      Central Hudson has a 9%, or 103 megawatt ("MW"), undivided
interest in the 1,143 MW Nine Mile 2 Plant (see Note 3 - "Nine
Mile 2 Plant") and a 35%, or 420 MW, undivided interest in the
1,200 MW Roseton Electric Generating Station ("Roseton Plant").

      Central Hudson's share of the respective investments in the
Nine Mile 2 Plant and the Roseton Plant, as included in its
Consolidated Balance Sheet at December 31, 1999 and 1998, were:

                                                1999             1998
                                                ----             ----
                                                    (In Thousands)
Nine Mile 2 Plant

  Plant in service..................          $314,844         $315,358
  Accumulated depreciation..........           (81,799)         (77,178)
                                               -------          -------
    Net Plant.......................           233,045          238,180
  Construction work in progress.....             2,204            2,132

Roseton Plant
  Plant in service..................          $135,561         $135,197
  Accumulated depreciation..........           (83,754)         (80,486)
                                               -------          -------
    Net Plant.......................            51,807           54,711
  Construction work in progress.....               325              213

Allowance For Funds Used During Construction

      Central Hudson's regulated utility plant includes AFDC, which
is defined in applicable regulatory systems as the net cost of
borrowed funds used for construction purposes and a reasonable

                                     61
<PAGE>

rate on other funds when so used.  The concurrent credit for the
amount so capitalized is reported in the Consolidated Statement of
Income as follows:  the portion applicable to borrowed funds is
reported as a reduction of interest charges while the portion
applicable to other funds (the equity component, a noncash item)
is reported as other income.  The AFDC rate was 6.25% in 1999,
8.5% in 1998 and 8.0% in 1997.

      For a discussion of the effect of Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of
Certain Types of Regulation ("SFAS 71"), as issued by the
Financial Accounting Standards Board ("FASB"), on Central Hudson's
fossil-fueled generating plants, see Note 2 - "Regulatory
Matters," under the caption "Impact of Settlement Agreement on
Accounting Policies."  Accordingly, beginning in 1998, significant
capital projects relating to the fossil-fueled generating plants
include capitalized interest instead of AFDC.  For 1999 and 1998,
no such projects met the criteria for capitalized interest.

Depreciation and Amortization

      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, with the exception of
the Nine Mile 2 Plant which is depreciated on a remaining life
amortization method.  The year 2026, the year in which the Nine
Mile 2 Plant operating license expires, is used as the end date in
the development of the remaining life amortization.  Central
Hudson performs depreciation studies on a continuing basis and,
upon approval by the PSC, periodically adjusts the rates of its
various classes of depreciable property.

      Central Hudson's composite rates for depreciation were 3.22%
in 1999, 3.21% in 1998 and 3.16% in 1997 of the original cost of
average depreciable property.  The ratio of the amount of
accumulated depreciation to the cost of depreciable property at
December 31 was 41.0% in 1999, 39.6% in 1998 and 38.2% in 1997.

      For federal income tax purposes, the Corporation uses an
accelerated method of depreciation and generally uses the shortest
life permitted for each class of assets.

      The cost of the Nine Mile 2 Plant nuclear fuel assemblies and
components is amortized to operating expense based on the quantity
of heat produced for the generation of electric energy.


                                     62

<PAGE>

Cash and Cash Equivalents

      For purposes of the Consolidated Statement of Cash Flows, the
Corporation considers temporary cash investments with a maturity,
when purchased, of three months or less to be cash equivalents.

Federal Income Tax

      The Corporation and its affiliates file a consolidated
federal income tax return.  Federal income taxes are allocated to
operating expenses and other income and deductions in the
Consolidated Statement of Income.  Federal income taxes are
deferred under the liability method in accordance with Financial
Accounting Standard No. 109, "Accounting for Income Taxes," ("SFAS
109").  Under the liability method, deferred income taxes are
provided for all differences between financial statement and tax
basis of assets and liabilities.  Additional deferred income taxes
and offsetting regulatory assets or liabilities are recorded by
Central Hudson to recognize that income taxes will be recoverable
or refundable through future revenues.


Use of Estimates

      Preparation of the financial statements in accordance with
generally accepted accounting principles includes the use of
estimates and assumptions by management that affect the reported
amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and
reported amount of revenues and expenses during the reporting
period.  Actual results may differ from those estimates.

New Accounting Standards and Other FASB Projects

      In June 1998, the FASB issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133").  This Statement
establishes accounting and reporting standards for derivative
instruments and for hedging activities.  It requires that an
entity recognize all derivatives as either assets or liabilities
in the balance sheet and measure those instruments at fair value.
Any gain or loss resulting from changes in such fair value is
required to be recognized in earnings to the extent the
derivatives are not effective as hedges.  The Corporation has
implemented an energy trading risk management program to manage
the price risks associated with fuel purchases for generation,
natural gas purchases for native load customers, and wholesale
power transactions.  The Corporation may utilize various financial
instruments, such as futures, options, swaps, caps, floors and
collars to stabilize the price volatility of these commodities.


                                     63

<PAGE>

At this time, the Corporation believes that the hedging program
will not have a material impact on its financial position or
results of operations.

      In June 1999, the FASB issued FASB Statement No. 137
"Accounting for Derivative Instruments and Hedging Activities -
Deferral of the Effective Date of FASB Statement No. 133,"
amending SFAS 133 to defer the effective date by one year to all
fiscal quarters of all fiscal years beginning after June 15, 2000.
This proposed change is made in response to requests to consider
delaying the effective date to provide more time to study,
understand and implement the provisions of the SFAS 133.

      Plant Decommissioning:  In February 1996, the FASB issued an
exposure draft entitled "Accounting for Certain Liabilities
Related to Closure and Removal of Long-Lived Assets," which
includes nuclear plant decommissioning.  Over the past four years,
this exposure draft has been the source of continual debate.  The
FASB has committed to completing the project and is proceeding
toward issuance of another exposure draft expected in the first
quarter of 2000 with an effective date for financial statements
for fiscal years beginning after June 15, 2001.  If the accounting
standard proposed in such exposure draft were adopted, it could
result in higher annual provisions for removal or decommissioning
to be recognized earlier in the operating life of nuclear and
other generating units and an accelerated recognition of the
decommissioning obligation.  The FASB is continuing to explore
various issues associated with this project, including liability
measurement and recognition issues.  The FASB is deliberating this
issue and the resulting final pronouncement could be different
from that proposed in the exposure draft.  The Corporation can
make no prediction at this time as to the ultimate form of such
proposed accounting standard, assuming it is adopted, nor can it
make any prediction as to its ultimate effect(s) on the financial
condition of the Corporation.

NOTE 2 - REGULATORY MATTERS

Competitive Opportunities Proceeding Settlement Agreement

      In response to the May 1996 Order of the PSC issued in its
generic Competitive Opportunities Proceeding ("Proceeding"),
Central Hudson, the PSC Staff and certain other parties entered
into an Amended and Restated Settlement Agreement, dated
January 2, 1998, ("Agreement").  The PSC approved the Agreement by
its final Order issued and effective June 30, 1998.

      Shortly after the PSC issued its May 1996 Order, Central
Hudson and other electric utilities filed a court challenge to
such Order.  The challenge was denied and Central Hudson and other
electric utilities appealed such denial.  The Public Utility Law


                                     64

<PAGE>


Project ("PULP"), which had intervened in the proceeding, filed a
similar appeal.  PULP subsequently filed a court challenge to the
PSC's Order approving the Agreement of Central Hudson and filed
similar challenges to similar agreements of other electric
utilities.  Central Hudson subsequently moved to dismiss PULP's
challenge to the Agreement.  In August 1999, Central Hudson and
other electric utilities filed with the court a request to
withdraw their appeal with respect to the denial of the challenge
to the PSC's May 1996 Order without prejudice to restoration of
such appeal should PULP's challenge to the restructuring agreement
of any of the electric utilities be successful.  Said request to
withdraw the appeal without prejudice was granted by the Appellate
Court on January 12, 2000.  The appeal of PULP remains pending at
this time, and the Corporation can make no prediction as to the
potential outcome.

      The Agreement generally includes the following provisions:
(i) continuation of a basic electric rate freeze, along with a
phase-in of retail access, for residential, commercial and small
industrial customers through June 2001; (ii) a 5% reduction in
base electric rates for large industrial customers; (iii) a 10.6%
return on equity ("ROE") cap with excess earnings, if any,
deferred for stranded cost mitigation (as of December 31, 1999,
Central Hudson has recorded an estimated regulatory liability of
$3.5 million due to excess earnings); (iv) a reasonable
opportunity to recover all prudently incurred strandable costs,
defined as "production expenditures made by Central Hudson in
fulfilling its obligation to serve and provide safe, reliable
electric service to customers within its franchise territory which
are not expected to be recoverable in a competitive electricity
market"; (v) functional separation of Central Hudson's Danskammer
Steam Generating Station ("Danskammer Plant") and its interest in
the Roseton Plant in 1998; (vi) transfer of title by an auction of
Central Hudson's Danskammer Plant and its interest in the Roseton
Plant to be completed by June 30, 2001 (an affiliate of Central
Hudson's was given the option to bid, and the PSC reserved its
authority to require an auction and transfer of Central Hudson's
fossil-fueled electric generating assets prior to June 30, 2001 if
such action is found by the PSC to be in the public interest);
(vii) approval to effect a holding company restructuring not later
than June 30, 2001; and (viii) certain regulation of Central
Hudson's operations; (ix) standards of conduct in transactions
between Central Hudson and its competitive business affiliates
including the Corporation; (x) prohibitions against Central Hudson
making loans to the Corporation or any other affiliate or Central
Hudson guaranteeing debt of the Corporation or any other
affiliate; (xi) limitations on the transfer of Central Hudson
employees to affiliates and on the use of Central Hudson officers
in common with affiliates and (xii) permission for Central Hudson
to transfer up to $100 million of equity to competitive business
affiliates prior to such holding company restructuring; however,
Central Hudson has petitioned the PSC to extend such period until

                                     65

<PAGE>


receipt of the proceeds from the auction of its fossil generation
assets.

      In addition, the PSC directed the PSC Staff to provide
assurance that Central Hudson does not incur imprudent generation
costs which could be avoided by divestiture of fossil-fueled
electric generating assets prior to June 30, 2001, and added a
provision dealing with mergers and acquisitions; namely, pursuant
to a petition filed jointly or individually by Central Hudson,
Central Hudson will have the flexibility to retain, on a
cumulative basis, all savings associated with an acquisition or
merger with another utility for a period of five years from the
date of closing of any merger or acquisition, up to the amount of
the acquisition premium paid over the lesser of book value or fair
market value of assets merged or acquired.  Savings in excess of
the recovery of such premium will be disposed of by the PSC for
the benefit of customers.

      The consideration received by Central Hudson in an auction,
referred to in (vi) of the second preceding paragraph above, will,
up to the net book value of the assets sold, be available for
disposition for the benefit of shareholders without PSC approval.
Any excess over such net book value will be required to be used to
offset Central Hudson's fossil-fueled generation related
regulatory assets and, to the extent of any remaining
consideration, to reduce the book cost of Central Hudson's
investment in the Nine Mile 2 Plant.  In the event that the sale
price of any such assets is below Central Hudson's then current
net book value, the difference will be preserved for recovery as
strandable costs.  Central Hudson's potential strandable costs are
those prior utility investments and commitments that may not be
recoverable in a competitive energy market, which are
predominantly related to Central Hudson's investment in the Nine
Mile 2 Plant.  During the period ending June 30, 2001, Central
Hudson will continue to recover its potential electric strandable
costs in the rates it charges its transmission and distribution
customers.  Following June 30, 2001, Central Hudson will be given
a reasonable opportunity to recover, through a non-bypassable
charge to customers, all prudently incurred, verifiable and
appropriately mitigated electric strandable costs.

      In November 1999 Central Hudson filed a proposal with the PSC
that no Central Hudson affiliate would bid in its auction,
provided that the PSC approve Central Hudson's auction plan and
certain related accounting and rate-making proposals.  For further
information, see the subcaption below "Auction of Fossil
Generation Plants."



                                       66

<PAGE>

      After such divestiture, Central Hudson expects to be
obligated to continue to serve a portion of its electric
customers.  The Corporation cannot predict the amount of such
service which Central Hudson will be obligated to provide or the
cost or availability of electricity to satisfy customer service
obligations.

Impact of Settlement Agreement on Accounting Policies

      The Agreement created certain changes to the Corporation's
accounting policies.  The Corporation's accounting policies
conform to generally accepted accounting principles, which, for
regulated public utilities, include SFAS 71.  Under SFAS 71,
regulated companies apply AFDC to the cost of construction
projects.  Because Central Hudson's fossil-fueled generating
plants are no longer subject to SFAS 71, capitalized interest will
be applied instead of AFDC.  Under SFAS 71, regulated companies
defer costs and credits on the balance sheet as regulatory assets
and liabilities when it is probable that those costs and credits
will be allowed in the rate-making process in a period different
from when they otherwise would have been reflected in income.
These deferred regulatory assets and liabilities are then
reflected in the income statement in the period in which the same
amounts are reflected in rates.  If some of an enterprise's
operations are regulated and meet the appropriate criteria, SFAS
71 is applied only to the regulated portion of the enterprise's
operations.

      During 1997, the FASB Emerging Issues Task Force ("EITF")
concluded that an entity should discontinue application of
SFAS 71, to any portion of its business when a deregulation
transition plan is in place and the terms are known.  However, the
EITF further qualified, in its Issue No. 97-4, that regulatory
assets and liabilities should be evaluated based on where the cash
flows are to be derived in the determination of the applicability
of SFAS 71.  When the cash flows are from rates to be charged to
customers of the regulated business for recovery and settlement,
respectively, of regulatory assets and liabilities, they should
not be eliminated until:  a) they are recovered or settled through
the regulated cash flows or b) they are individually impaired or
the regulator eliminates the individual obligation or c) the
portion of the business providing the regulated cash flows no
longer meets the criteria of SFAS 71.  None of these conditions
has occurred as it applies to Central Hudson's fossil-fueled
generation regulatory assets and liabilities even though the
Agreement put into place a deregulation transition plan with the
ultimate goal of divesting Central Hudson's fossil-fueled
generating plant assets.  Therefore, these balances continue to be
reflected in the total for regulatory assets and liabilities in
the Corporation's Consolidated Balance Sheet.  At December 31,
1999 and 1998, net regulatory assets associated with the fossil-



                                       67
<PAGE>

fueled generating assets totaled $1.0 million and $2.5 million,
respectively.  The fossil-fueled generating assets continue to be
recorded as utility plant.

Summary of Regulatory Assets and Liabilities

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

At December 31,                                        1999          1998
-----------------------------------------------------------------------------
Regulatory Assets (Debits):                   (In Thousands)
---------------------------
Deferred finance charges -
  Nine Mile 2 Plant.....................            $  66,181     $  67,326
Income taxes recoverable
  through future rates..................               26,426        35,221
Deferred Newburgh Gas Site (Note 9).....               15,114        22,679
Other...................................               29,766        24,035
                                                      -------       -------
  Total Regulatory Assets...............            $ 137,487     $ 149,261
                                                      -------       -------
Regulatory Liabilities (Credits):

Deferred finance charges -
  Nine Mile 2 Plant.....................            $   4,431     $  10,431
Income taxes refundable.................               15,978        17,574
Deferred Nine Mile 2 Plant costs........               20,895        15,790
Deferred pension costs overcollection
 (Note 8)...............................                6,545        11,693
Deferred OPEB costs overcollection
 (Note 8)...............................               13,035         9,796
Customer benefits account...............                9,158         5,447
Other...................................               16,997        10,334
                                                      -------       -------
  Total Regulatory Liabilities..........               87,039        81,065
                                                      -------       -------
     Net Regulatory Assets..............           $   50,448     $  68,196
                                                      =======       =======


      Some of the significant regulatory assets and liabilities
include:

      Deferred Finance Charges - Nine Mile 2 Plant:  During the
construction of the Nine Mile 2 Plant, the PSC authorized the
inclusion in rate base of increasing amounts of Central Hudson's
investment in that Plant.  Central Hudson did not accrue AFDC on
any of the Nine Mile 2 Plant construction work in progress
("CWIP") which was included in rate base and for which a cash
return was being allowed; however, the PSC ordered, effective
January 1, 1983, that amounts be accumulated in deferred debit and
credit accounts equal to the amount of AFDC which was not being
accrued on the CWIP included in rate base ("Mirror CWIP").  The
balance in the deferred credit account is available to reduce
future revenue requirements by amortizing portions of the deferred
credit to other income or by the elimination through writing off

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<PAGE>

other deferred balances as directed by the PSC.  The Corporation
expects such application of the deferred credit will occur over a
period substantially shorter than the life of the Nine Mile 2
Plant.  When amounts of such deferred credit are applied in order
to reduce revenue requirements, amortization is started for a
corresponding amount of the deferred debit, which amortization
continues on a level basis over the remaining life of the Nine
Mile 2 Plant, resulting in recovery of such corresponding amount
through rates.  Mirror CWIP is expected to be exhausted by the end
of the useful life of the Nine Mile 2 Plant either through the
amortization or write-off procedures described above or through
the write-off of the remaining debit and credit as directed by the
PSC.  The net effect of this procedure is that at the end of the
amortization period for the deferred credit, the accounting and
rate-making treatment will be the same as if the Nine Mile 2 Plant
CWIP had not been included in rate base during the construction
period.

      Pursuant to a PSC Order issued and effective February 11,
1994, in an electric rate proceeding, Central Hudson was
authorized to amortize $6 million annually of the deferred credit
beginning in December 1993.

      The $6 million amortization of the deferred credit will be
continued unless changed by a future PSC rate order or until it is
exhausted.  Under provisions of the Agreement, this amortization
will be replaced with other deferred credits to the extent
necessary to provide for full replacement of the expiring Mirror
CWIP credits.  The current level of the deferred debit
amortization of $1.1 million is based on the level of deferred
credits that have been utilized through the most recent rate year.
Credit amounts utilized subsequently are included in the deferred
debit amortization level at the time of the next PSC rate order
for the new rate year based on the then remaining life of the Nine
Mile 2 Plant.

      Income Taxes Recoverable/Refundable:  The adoption of SFAS
109 in 1993 increased Central Hudson's net deferred tax
obligation.  As it is probable that the increase will be recovered
from customers, Central Hudson established a net regulatory asset
for the recoverable future taxes.

      Deferred Nine Mile 2 Plant Costs: The existing rate-making
for the Nine Mile 2 Plant, as directed by the PSC in its Order on
Nine Mile 2 Operating and Capital Forecast for 1996 ("Supplement
No. 5"), provides for the deferral of the difference between
actual and authorized operating and maintenance expense.
Supplement No. 5 continues in effect until changed by a subsequent
rate order.  For 1999 and 1998, the Nine Mile 2 Plant incurred
less actual expense than authorized, and Central Hudson's share
has been recorded as a regulatory liability in accordance with
Supplement No. 5.




                                     69

<PAGE>

      Customer Benefits Account:  The Agreement requires that
Central Hudson set aside $10.0 million per calendar year in a
Customer Benefits Account to fund rate reductions and retail
access options.  Funding sources include $3.0 million from
shareholder sources, $3.5 million from fuel cost savings generated
by the installation of Central Hudson's coal dock unloading
facility at its Danskammer Plant and $3.5 million from deferred
credits related to the reconciliation of pension and OPEB costs.
The Agreement also stipulates that unused funding accumulated to
the end of the Agreement term is to be used for offsetting
strandable costs or providing other ratepayer benefits.

Auction of Fossil Generation Plants

      Under the Agreement, Central Hudson is required to sell its
fossil generation plants and transfer title by June 30, 2001.
Central Hudson has provided for the necessary internal and
external resources to carry out the auction that is called for in
the Agreement.  Central Hudson has agreements with Niagara Mohawk
Power Corporation ("Niagara Mohawk") and Consolidated Edison
Company of New York, Inc. ("Consolidated Edison") for the
disposition of their co-tenancy interests in the Roseton Plant in
conjunction with such auction.  On November 19, 1999, Central
Hudson filed with the PSC, for review and approval, an auction
plan for a combined auction of the Roseton Plant and the
Danskammer Plant ("Auction Plan").  The Auction Plan is intended
to maximize the value received by the assets and provide for an
orderly process and an objective bid evaluation.  The Auction Plan
filing also requests the PSC's approval for certain accounting and
rate-making proposals relating to the Agreement.

      In the Agreement, the consideration received by Central
Hudson, after transaction costs, in the sale of its interest in
such Plants is available to Central Hudson, up to the net book
value of such Plants, for investment in competitive business
affiliates or other disposition for the benefit of shareholders
without PSC approval ("Unregulated Investments").  In the
Agreement, Central Hudson also retained the right for an affiliate
to participate in the auction process of such Plants.  In the
event that no such affiliate were to bid in such auction, Central
Hudson would retain, for Unregulated Investments, an additional
amount of such consideration equal to 10% of the consideration of
such sale in excess of the net book value of its interest in such
Plants; such excess being hereinafter called the "Earned Auction
Incentive."  However, the aggregate of all such consideration to
be so available to Central Hudson cannot exceed $17.5 million
("Cap").  In the Auction Plan filing, Central Hudson stated to the
PSC that it is willing to waive the right of an affiliate of
Central Hudson to participate in such auction if the PSC approves
all the of the accounting and rate-making proposals described in
the Auction Plan filing, including the following:  (i) an increase


                                     70

<PAGE>

in the Cap, on a formula basis, not to exceed $18.5 million; (ii)
any Earned Auction Incentive recognized as income over a period of
three to five years and (iii) the Earned Auction Incentive would
apply not just to Central Hudson's interest in the Roseton Plant
and the Danskammer Plant, but would apply to the gross
consideration received from a combined auction of these Plants
less the gross proceeds to be provided to the other owners of the
Roseton Plant.

      On February 9, 2000, the PSC approved the Auction Plan
filing, subject to the issuance of one or more Orders which have
not yet been issued.  The Corporation can make no prediction as to
the terms of such Order(s).  Selection of the winning bidder(s) is
anticipated later in 2000, with the actual sale to take place in
early 2001 after all regulatory approvals are obtained.

Independent System Operator

      Central Hudson was a member of the New York Power Pool
("NYPP"), whose members, major investor-owned State electric
utility companies, Long Island Lighting Company ("LILCO"), as a
subsidiary of the Long Island Power Authority ("LIPA") and the
Power Authority of the State of New York ("PASNY"), by agreement,
provided for coordinated operation of their bulk power electric
systems.

      As part of the ongoing discussions regarding the
restructuring of the electric industry in New York State referred
to under the caption "Competitive Opportunities Proceeding
Settlement Agreement" of this Note 2, proposals were made to
terminate the NYPP and establish the following:  a new market
structure that included as its key elements the establishment of
an Independent System Operator ("ISO") and the New York State
Reliability Council ("Reliability Council"), collectively to
replace the NYPP.  On September 15, 1999, FERC gave its final
approval for the ISO and the Reliability Council.  In November
1999, the NYPP was terminated and the ISO and Reliability Council
began operations.

      The ISO is open to buyers, sellers, consumers and
transmission providers; each of these groups is represented on the
Board of Directors of the ISO, which is a not-for-profit New York
corporation.  The Reliability Council's mission is to promote and
preserve the reliability of the bulk power system within New York
State through its primary responsibility for the promulgation of
reliability rules; the ISO will develop the procedures necessary
to operate the system within these reliability rules.  The
Reliability Council is governed by a committee comprised of
transmission providers and representatives of buyers, sellers and
consumer and environmental groups.


                                       71
<PAGE>

      The Corporation does not expect that such NYPP restructuring
will have a material adverse effect on its financial position or
results of operations.

NOTE 3 - NINE MILE 2 PLANT

General

      The Nine Mile 2 Plant is located in Oswego County, New York,
and is operated by Niagara Mohawk.  The Nine Mile 2 Plant is owned
as tenants-in-common by Central Hudson (9% interest), Niagara
Mohawk (41% interest), New York State Electric & Gas Corporation
("NYSEG") (18% interest), LILCO, as a subsidiary of LIPA (18%
interest) and Rochester Gas and Electric Corporation ("Rochester")
(14% interest).  The output of the Nine Mile 2 Plant, which has a
rated net capability of 1,143 MW, is shared, and the operating
expenses of the Plant are allocated to the co-tenants in the same
proportions as the co-tenants' respective ownership interests.
Central Hudson's share of direct operating expense for the Nine
Mile 2 Plant is included in the appropriate expense
classifications in the accompanying Consolidated Statement of
Income.

      Under the Operating Agreement entered into by the co-tenants
in January 1993, Niagara Mohawk acts as operator of the Nine
Mile 2 Plant, and all five co-tenants share certain policy, budget
and managerial oversight functions.  The Operating Agreement
remains in effect subject to termination on six months notice.

      On September 30, 1999, the Nuclear Regulatory Commission
("NRC") issued a Plant Performance Review on the Nine Mile 2 and
Nine Mile 1 (wholly owned by Niagara Mohawk) Plants.  The NRC
stated that it will increase its scrutiny of the operation of the
Nine Mile Plants over the next six months as a result of a decline
in the performance of those Plants due to weaknesses in areas such
as plant maintenance, work planning and scheduling and engineering
support.  Niagara Mohawk has announced significant management
changes at the Nine Mile Plants, including the reassignment of
several experienced employees to the site.  If operating
performance of the Nine Mile 2 Plant deteriorates further,
significant expenditures may be required to improve performance,
the impact of which on the Corporation cannot now be predicted.

      Niagara Mohawk and NYSEG have each entered into an agreement
to sell their interest in the Nine Mile 2 Plant to AmerGen Energy
Company, L.L.C. ("AmerGen").  AmerGen would replace Niagara Mohawk
as the operator of the Nine Mile 2 Plant.  Niagara Mohawk has also
entered into an agreement to sell its 100% interest in the
adjacent Nine Mile Point Unit No. 1 Nuclear Plant ("Nine Mile 1
Plant") to AmerGen.


                                       72

<PAGE>


      The co-tenant owners of the Nine Mile 2 Plant have rights of
first refusal under the Basic Agreement, dated September 22, 1975,
creating the tenancy-in-common ownership of the Nine Mile 2 Plant.
Pursuant to such rights, each co-tenant has the right to acquire
all or a proportional share of another co-tenant's interest in the
Nine Mile 2 Plant by matching the terms of the co-tenant's sale of
its interest in the Nine Mile 2 Plant to a third party.

      In July 1999, AmerGen, Niagara Mohawk and NYSEG filed joint
petitions with the PSC, pursuant to Section 70 of the Public
Service Law of New York seeking the PSC's consent for the transfer
of such interests in the Nine Mile 2 Plant and Nine Mile 1 Plant.
In July 1999, Niagara Mohawk, NYSEG and AmerGen jointly filed for
requisite approvals with FERC with respect to such transfers.  In
September 1999, Niagara Mohawk, NYSEG and AmerGen filed jointly
with the NRC for requisite approvals with respect to such
transfers.  In early December 1999, NYSEG petitioned the PSC for
an emergency declaratory ruling as to whether Rochester may
acquire additional interests in the Nine Mile 1 Plant and the Nine
Mile 2 Plant.  By Order issued in December 1999, the NRC suspended
its proceeding pending the determination of Rochester, Central
Hudson and LILCO of their rights of first refusal with respect to
the proposed transfer to AmerGen.

      On December 21, 1999, Rochester exercised its right of first
refusal under the Nine Mile 2 Plant Basic Agreement to match the
AmerGen offer to purchase the collective 59% interests of Niagara
Mohawk and NYSEG in the Nine Mile 2 Plant.  Rochester would also
match AmerGen's offer to purchase Niagara Mohawk's 100% interest
in the Nine Mile 1 Plant.  Rochester publicly announced that it
had entered into arrangements with a subsidiary of Entergy
Corporation to operate the Nine Mile 2 Plant and the Nine Mile 1
Plant.  In December 1999, Central Hudson elected not to exercise
its right of first refusal with respect to the Nine Mile 2 Plant.

      The Corporation can make no prediction as to the outcome of
the proposed acquisition of interests in the Nine Mile 1 and Nine
Mile 2 Plants by AmerGen or Rochester or the effect of any such
acquisition on Central Hudson.

Radioactive Waste

      Niagara Mohawk has contracted with the U.S. Department of
Energy ("DOE") for disposal of high-level radioactive waste
("spent fuel") from the Nine Mile 2 Plant.  Despite a court order
reaffirming the DOE's obligation to accept spent nuclear fuel by
January 31, 1998, the DOE has forecasted the start of operations
of its high-level radioactive waste repository to be no earlier
than 2010.  Central Hudson has been advised by Niagara Mohawk that
the Nine Mile 2 Plant spent fuel storage pool has a capacity for
spent fuel that is adequate until 2012.  If DOE schedule slippage


                                       73

<PAGE>

should occur, facilities that extend the on-site storage
capability for spent fuel at the Nine Mile 2 Plant beyond 2012
would need to be acquired.

Nuclear Plant Decommissioning Costs

      Central Hudson's 9% share of costs to decommission the Nine
Mile 2 Plant is estimated to be approximately $209.6 million
($83.3 million in 1999 dollars) and assumes that decommissioning
will begin shortly after the operating license expires in the year
2026.  This estimate is based upon a site-specific study completed
in December 1995.

      In order to assist Central Hudson in meeting this obligation,
Central Hudson makes annual contributions of $868,000 to a
qualified external decommissioning trust fund.  The total annual
amount allowed in rates is $999,000, but the maximum annual tax
deduction allowed is $868,000.  Currently, the difference between
the rate allowance ($999,000) and the amount contributed to the
external qualified fund ($868,000) is recorded as an internal
reserve ($131,000), and the funds are held by Central Hudson.

      The qualified external decommissioning trust fund at
December 31, 1999 and 1998, amounted to $17.4 million and $13.9
million, respectively, including net reinvested earnings to date
of $9.0 million.  The qualified external decommissioning trust
fund is reflected in the Consolidated Balance Sheet in
"Investments and Other Assets-Other."  At December 31, 1999, the
external decommissioning trust fund investments carrying value
approximated fair market value.  The amount of accumulated
decommissioning costs recovered through rates (including both the
external fund and the internal reserve) and the net earnings of
the external decommissioning trust fund are reflected in
accumulated depreciation in the Consolidated Balance Sheet and
amount to $19.3 million and $15.6 million at December 31, 1999 and
1998, respectively.

      Reference is made to the subcaption "New Accounting Standards
and Other FASB Projects - Plant Decommissioning" in Note 1 -
"Summary of Significant Accounting Policies" for details of the
proposed changes in accounting for nuclear decommissioning costs.

      The Corporation believes that if decommissioning costs are
greater than currently estimated, such revised costs would be
recovered in Central Hudson's rates.  However, future developments
in the utility industry, including the effects of deregulation and
increasing competition, could change this belief.


                                      74

<PAGE>

NOTE 4 - FEDERAL INCOME TAX

Components of Federal Income Tax

      The following is a summary of the components of federal
income tax as reported in the Consolidated Statement of Income:

                                        1999        1998         1997
                                        ----        ----         ----
                                             (In Thousands)
Charged to operating expense:
  Federal income tax..........        $22,160     $28,408      $19,004
  Deferred income tax.........          5,598       1,367       10,186
    Income tax charged to              ------      ------       ------
      operating expense.......         27,758      29,775       29,190
                                       ------      ------       ------
Charged (credited) to other
 income and deductions:
  Federal income tax..........          2,545         296       (6,844)
  Deferred income tax.........         (1,378)     (1,483)       3,891
    Income tax (credited)             -------      ------       ------
      to other income and
       deductions..............         1,167      (1,187)      (2,953)
                                       ------      ------       ------
    Total federal income tax..        $28,925     $28,588      $26,237
                                       ======      ======       ======




                                      75

<PAGE>

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


                                        1999         1998        1997
                                        ----         ----        ----
                                                (In Thousands)
Net income....................        $48,573      $49,314     $51,856
Preferred Stock Dividend......          3,230        3,230       3,230
Federal income tax............         24,705       28,704      12,160
Deferred income tax...........          4,220         (116)     14,077
                                       ------       ------      ------
  Income before taxes.........        $80,728      $81,132     $81,323
                                       ======       ======      ======
Computed tax @ 35%
 statutory rate...............        $28,255      $28,396     $28,463
Increase (decrease) to computed
 tax due to:
  Pension expense.............         (3,697)      (4,486)     (2,855)
  Deferred finance charges -
   Nine Mile 2 Plant..........         (1,699)      (1,700)     (1,699)
  Deferred environmental
   remediation costs..........         (1,683)        (578)       (286)
  Alternative minimum tax.....              -       (1,048)     (7,350)
  Tax depreciation............           (550)       4,248      (4,225)
  Customer Benefits Account...          1,299        1,906         -
  Nine Mile 2 settlement costs          1,402        1,282       1,567
  Deferred gas costs..........          1,078          375       1,216
  Deferred storm costs........              -          -        (2,257)
  Other.......................            300          309        (414)
                                       ------       ------      ------
Federal income tax............         24,705       28,704      12,160
Deferred income tax...........          4,220         (116)     14,077
                                       ------       ------      ------
  Total federal income tax....        $28,925      $28,588     $26,237
                                       ======       ======      ======
 Effective tax rate...........          35.8%        35.2%       32.3%
                                       ======       ======      ======


                                      76

<PAGE>

      The following is a summary of the components of deferred
taxes at December 31, 1999 and 1998, as reported in the
Consolidated Balance Sheet:
                                                     1999        1998
                                                     ----        ----
                                                      (In Thousands)
Accumulated Deferred Income
   Tax Assets:
      Future tax benefits on
        investment tax credit basis
        difference.................               $ 13,229    $ 14,033
      Unbilled revenues............                  5,718       5,261
      Other........................                 37,844      32,938
 Accumulated Deferred Income                       -------     -------
   Tax Assets.....................                $ 56,791    $ 52,232
                                                   -------     -------
Accumulated Deferred Income
   Tax Liabilities:
      Tax depreciation.............               $179,927    $180,339
      Accumulated deferred investment
        tax credit.................                 24,569      26,062
      Future revenues - recovery of
        plant basis differences....                  8,787      11,319
      Other........................                 43,129      37,186
 Accumulated Deferred Income                       -------     -------
   Tax Liabilities................                 256,412     254,906
                                                   -------     -------
 Net Accumulated Deferred Income
   Tax Liability..................                $199,621    $202,674
                                                   =======     =======

NOTE 5 - SHORT-TERM BORROWING ARRANGEMENTS

      As part of its establishment as a holding company, the
Corporation has established a $50 million revolving credit
agreement with three commercial banks through December 4, 2001.
At December 31, 1999, the Corporation had no outstanding short-
term debt.

      In addition, Central Hudson has in effect a revolving credit
agreement with four commercial banks which allows it to borrow up
to $50 million through October 23, 2001, ("Borrowing Agreement").
The Borrowing Agreement gives Central Hudson the option of
borrowing at either the higher of the prime rate or the sum of the
federal funds rate plus 1/2 of 1%, or three other money market
rates, if such rates are lower.  Compensating balances are not
required under the Borrowing Agreement.  In addition, Central
Hudson maintains confirmed lines of credit totaling $1.5 million
with regional banks.  There were no outstanding loans under the
Borrowing Agreement or the line of credit at December 31, 1999 or
1998.  In order to diversify its sources of short-term financing,
Central Hudson has entered into short-term credit facilities



                                       77

<PAGE>

agreements with several commercial banks.  At December 31, 1999,
Central Hudson had outstanding short-term debt of $50 million.

      Authorization from the PSC limits the amount Central Hudson
may have outstanding, at any time, under all of its short-term
borrowing arrangements to $52 million in the aggregate.

      The subsidiaries of Services have lines of credit totaling
$10.5 million.  There were no borrowings against these lines of
credit at December 31, 1999.



                                     78

<PAGE>
<TABLE>
<CAPTION>

NOTE 6 - CAPITALIZATION - CAPITAL STOCK
Common Stock, $.10 par value; 30,000,000 shares authorized:
                                                                                           Reacquired
                                                         Common Stock          Paid-In      Capital
                                                    Shares          Amount     Capital       Stock
                                                  Outstanding       ($000)     ($000)        ($000)
                                                  -----------      --------    --------    ----------
<S>                                                <C>            <C>          <C>           <C>

January 1, 1997.....................               17,554,987     $ 87,775     $284,465      $    -
 Repurchased under common
  stock repurchase plan.............                 (275,200)         -            -          (9,398)
                                                   ----------      -------      -------       -------
December 31, 1997...................               17,279,787       87,775      284,465        (9,398)
 Repurchased under common
  stock repurchase plan.............                 (417,700)         -            -         (17,745)
                                                   ----------      -------      -------       -------
December 31, 1998...................               16,862,087       87,775      284,465       (27,143)
 Cancellation - Reacquired Stock....                      -         (3,465)     (11,227)       27,143
 Share Exchange - Formation of Holding
 Company
  Reduction in par value............                      -        (82,624)      82,624           -
  Transfer of capital stock expense.                      -            -         (4,632)          -
                                                   ----------      -------      -------       -------

December 31, 1999...................               16,862,087     $  1,686     $351,230      $    -
                                                   ==========      =======      =======       =======

</TABLE>

                                      79

<PAGE>

Cumulative Preferred Stock, Central Hudson, $100 par value;
1,200,000 shares authorized:


                         Final    Redemption       Shares Outstanding
                       Redemption   Price              December 31,
            Series        Date     12/31/99         1999          1998
            ------     ---------- ----------       -------------------

Not Subject to Mandatory
 Redemption:
            4 1/2%                 $107.00         70,300       70,300
            4.75%                   106.75         20,000       20,000
            4.35%                   102.00         60,000       60,000
            4.96%                   101.00         60,000       60,000
                                                  -------      -------
                                                  210,300      210,300
                                                  -------      -------
Subject to Mandatory
 Redemption:
            6.20%       10/1/08 (a)               200,000      200,000
            6.80%       10/1/27 (b)               150,000      150,000
                                                  -------      -------
                                                  350,000      350,000
                                                  -------      -------
                    Total                         560,300      560,300
                                                  =======      =======


(a)   Cannot be redeemed prior to October 1, 2003.  Subject to
      mandatory annual sinking fund payment of $1.0 million
      commencing October 1, 2003 with final payment of $15.0
      million on the final redemption date.

(b)   Cannot be redeemed prior to October 1, 2003.  Subject to
      mandatory annual sinking fund payment of $600,000 commencing
      October 1, 2003 through final redemption date.

      Central Hudson had no cumulative preferred stock redemptions
or issuances during 1999 and 1998.

      Expenses incurred on issuance of capital stock are
accumulated and reported as a reduction in common stock equity.
These expenses are not being amortized, except that, as directed
by the PSC, certain issuance and redemption costs and unamortized
expenses associated with certain issues of preferred stock that
were redeemed have been deferred and are being amortized over the
remaining lives of the issues subject to mandatory redemptions.


                                      80


<PAGE>

NOTE 7 - CAPITALIZATION - LONG-TERM DEBT

      Details of long-term debt are as follows:
         Series                Maturity Date              December 31,
         ------               -------------             -----------------
First Mortgage Bonds:                                   1999         1998
                                                        ----         ----
                                                         (In Thousands)
 6.10% (a)                    April 28, 2000         $ 10,000     $ 10,000
 7.70% (a)                    June 12,  2000           25,000       25,000
 7.97% (a)                    June 11,  2003            8,000        8,000
 7.97% (a)                    June 13,  2003            8,000        8,000
 6.46% (a)                    Aug. 11,  2003           10,000       10,000
 6 1/4%(b)                    June 1,   2007            4,230        4,325
 9 1/4%                       May 1,    2021           70,000       70,000
 8.12% (a)                    Aug. 29,  2022           10,000       10,000
 8.14% (a)                    Aug. 29,  2022           10,000       10,000
 8.375%(b)(d)                 Dec. 1,   2028                -       16,700
                                                      -------      -------
                                                      155,230      172,025
Promissory Notes:
1984 Series A (7 3/8%)(c)(e)    Oct. 1, 2014                -       16,700
1984 Series B (7 3/8%)(c)(e)    Oct. 1, 2014                -       16,700
1985 Series A (Var. rate)(c)(f) Nov. 1, 2020                -       36,250
1985 Series B (Var. rate)(c)(f) Nov. 1, 2020                -       36,000
1987 Series A (Var. rate)(c)(g) June 1, 2027                -       33,700
1987 Series B (Var. rate)(c)(g) June 1, 2027                -        9,900
1998 Series A (4.20%)(c)        Dec. 1, 2028           16,700       16,700
 5.38% (a)                      Jan. 15,1999                -       20,000
 5.93% (a)                      Sept.10,2001           15,000       15,000
 7.85% (a)                      July 2, 2004           15,000       15,000
1999 Series C (6%)(a)           Jan. 15,2009           20,000            -
1999 Series A (5.45%)(c)        Aug. 1, 2027           33,400            -
1999 Series B (Var. rate)(c)    July 1, 2034           33,700            -
1999 Series C (Var. rate)(c)    Aug. 1, 2028           41,150            -
1999 Series D (Var. rate)(c)    Aug. 1, 2028           41,000            -
                                                      -------      -------
                                                      215,950      215,950
Secured Notes Payable of Services                           -        9,023
Unamortized Discount on Debt                             (629)        (573)
                                                      -------      -------
                Total long-term debt                 $370,551     $396,425
                                                      -------      -------
Less Current Portion                                  (35,100)     (39,507)
                                                      -------      -------
                                                     $335,451     $356,918
                                                      =======      =======
(a)   Issued under Central Hudson's Medium Term Note Program.
(b)   First Mortgage Bonds issued in connection with the sale by
      the New York State Energy Research and Development Authority
      ("NYSERDA") of tax-exempt pollution control revenue bonds.
(c)   Promissory Notes issued in connection with the sale by
      NYSERDA of tax-exempt pollution control revenue bonds.
(d)   Redeemed March 1, 1999.
(e)   Redeemed October 1, 1999.
(f)  Redeemed November 1, 1999.
(g)  Redeemed September 1, 1999.

                                      81

<PAGE>

      The subsidiaries of Services had no long-term debt as of
December 31, 1999.

Long-Term Debt Maturities

      The aggregate principal amounts of Central Hudson long-term
debt maturing for the next five years, including sinking fund
requirements, and thereafter are as follows: $35.1 million in
2000, $22.6 million in 2001, including $7.5 million Medium Term
Notes issued January 31, 2000, $.1 million in 2002, $26.1 million
in 2003, $15.1 million in 2004 and $279.7 million thereafter.

First Mortgage Bonds

      Central Hudson, on December 2, 1998, refinanced the 8.375%
Series of pollution control bonds, issued on its behalf by NYSERDA
in 1988 in the aggregate principal amount of $16.7 million, which
bonds are supported by Central Hudson's First Mortgage Bonds of
like principal amount.  Such bonds were refinanced with lower cost
NYSERDA pollution control bonds, which bonds are supported by
Central Hudson's Promissory Note of like principal amount, at a
fixed rate of 4.20% for their initial term of five years and
thereafter are subject to repricing.  The 8.375% Series was
redeemed on March 1, 1999, in order to coordinate with the Article
XXI Mortgage Indenture requirements noted below under the
subcaption "Mortgage Indenture Covenant."  Accordingly, these
bonds have been included in the "Current Maturities of Long-Term
Debt" on the Corporation's Balance Sheet at December 31, 1998.

Medium Term Notes

      On January 15, 1999, Central Hudson issued and sold a $20
million tranche of its unsecured Medium Term Notes, Series C,
under its Medium Term Note program.  Such notes bear a fixed
annual interest rate of 6.00%, mature on January 15, 2009, and are
not redeemable at the option of Central Hudson prior to maturity.
The net proceeds to Central Hudson from the sale of such notes
were $19,875,000 or 99.875% (before deducting expenses).  Such
proceeds were applied to the payment at maturity on January 15,
1999, of a $20 million tranche of Central Hudson's unsecured
Medium Term Notes, Series A, that bore interest at a fixed annual
interest rate of 5.38%.


      On January 31, 2000, Central Hudson issued and sold a $7.5
million tranche of its unsecured Medium Term Notes, Series C,
under its Medium Term Note program.  Such notes bear a fixed
annual interest rate of 7.05%, mature June 30, 2001, and are not
redeemable prior to maturity.  The net proceeds to Central Hudson
from the sale of such notes were $7,488,750 or 99.85% (before
deducting expenses).  Such proceeds were applied to the payment of
working capital requirements of Central Hudson.


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<PAGE>

Settlement Agreement

      Central Hudson has petitioned the PSC to amend the Agreement
to extend the time in which it may transfer up to $100 million to
its competitive business affiliates.  Currently, such transfer
must be made prior to the Holding Company Restructuring.  The
petition requests an extension prior to the receipt of proceeds
from the auction of Central Hudson's fossil generation assets.
Approximately $51.5 million has been transferred to such
affiliates as of December 31, 1999.  Central Hudson may, pursuant
to this authorization, issue, no later than June 30, 2001, up to
$100 million of new securities, including up to one million shares
of common stock in furtherance of its business plan.  Central
Hudson expects to issue Medium Term Notes to finance such fund
transfers; however, the amount and timing of any such issuance is
not determinable at this time.

NYSERDA

      As discussed in the subcaption "First Mortgage Bonds" above,
Central Hudson refunded certain of its outstanding NYSERDA Bonds
in 1999.  On August 3, 1999, Central Hudson refinanced its 7 3/8%
Series pollution control bonds issued on its behalf in 1984 in the
aggregate principal amount of $33.4 million by NYSERDA by
refunding such bonds with the proceeds of the issuance and sale on
that date of $33.4 million aggregate principal amount of a new
series of NYSERDA bonds (the "1999 NYSERDA Bonds, Series A").  The
1999 NYSERDA Bonds, Series A carry an effective interest rate of
5.47%, are unsecured and are insured as to payment of principal
and interest as they become due by a municipal bond insurance
policy issued by AMBAC Assurance Corporation.  As a part of such
refinancing, the maturity of these bonds was extended from
October 1, 2014 to August 1, 2027.


      On August 3, 1999, Central Hudson refinanced its 1985 Series
A and B and its 1987 Series A and B NYSERDA Bonds, $115.85 million
aggregate principal amount, all of which series were subject to
weekly repricing, with three new series of NYSERDA Bonds:  1999
Series B, $33.7 million principal amount, 1999 Series C, $41.15
million principal amount and 1999 Series D, $41.0 million
principal amount (the "1999 NYSERDA Bonds, Series B, C, D").  The
1999 NYSERDA Bonds, Series B, C, D are in multi-modal form, which
allows Central Hudson to convert these series to various variable
rate modes as well as to fix the rate of interest for periods of
time up to the remaining life of the bonds.  The 1999 NYSERDA
Bonds, Series B, C, D were initially issued in Dutch Auction mode,
under which the rate of interest is determined every 35 days by an
auction process.  The 1999 NYSERDA Bonds, Series B, C, D are
unsecured and insured as to payment of principal and interest as
they become due by a municipal bond insurance policy issued by


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<PAGE>

AMBAC Assurance Corporation.  As part of the refinancing, the
maturities of such refinanced series were extended to August 1,
2028, except that the maturity date of the 1987 Series B, which is
subject to alternative minimum tax, was extended to July 1, 2034.
In its rate orders, the PSC has authorized deferred accounting for
the interest costs on Central Hudson's variable rate NYSERDA
Bonds.  The authorization provides for full recovery of the actual
interest costs supporting utility operations.  The percent of
interest costs supporting utility operations represents
approximately 95% of the total costs.  The deferred balances under
such accounting were $5.9 million and $4.9 million at December 31,
1999 and 1998, respectively, and were included in "Regulatory
Assets" in the Corporation's Consolidated Balance Sheet.  Such
deferred balances are to be addressed in future rate cases.

Letters of Credit

      Central Hudson had in place irrevocable letters of credit
which supported certain payments required to be made on the 1985
and 1987 NYSERDA Bonds.  Such letters of credit were terminated in
1999 as part of the refunding of the underlying NYSERDA bonds in a
format that does not require such letters of credit.

Debt Expense

      Expenses incurred on debt issues and any discount or premium
on debt are deferred and amortized over the lives of the related
issues.  Expenses incurred on debt redemptions prior to maturity
have been deferred and are generally being amortized over the
shorter of the remaining lives of the related extinguished issues
or the new issues as directed by the PSC.

Debt Covenants

      Certain debt agreements require the maintenance by Central
Hudson of certain financial ratios and contain other restrictive
covenants.

Mortgage Indenture Covenant

      Article XXI of Central Hudson's Indenture of Mortgage,
pursuant to which Central Hudson's First Mortgage Bonds are
outstanding (the "Mortgage"), requires generally that, to the
extent that the cost of property additions (as defined in the
Mortgage) acquired by Central Hudson during a calendar year is
less than the allowance for depreciation on property subject to
the Mortgage (calculated pursuant to the Mortgage) for such
calendar year, Central Hudson must deposit cash with the Mortgage

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<PAGE>

Trustee in the amount of such deficiency, less certain credits
available to Central Hudson under the Mortgage (the "Article XXI
Deficiency").

      Any cash deposited with the Mortgage Trustee as a result of
an Article XXI Deficiency may be withdrawn by Central Hudson in an
amount equal to the cost of property additions acquired by Central
Hudson subsequent to such calendar year, or may be applied by the
Mortgage Trustee, at the request of Central Hudson, to redeem or
purchase outstanding mortgage bonds in accordance with the
provisions of the Mortgage.  If any such cash left on deposit with
the Mortgage Trustee for 12 consecutive months or more is in
excess of $350,000, the amount of such cash in excess of $250,000
must be applied by the Mortgage Trustee to redeem or purchase
mortgage bonds, subject to certain exceptions set forth in the
Mortgage.  Article XXI of the Mortgage will remain in effect so
long as any of Central Hudson's mortgage bonds of any series
created prior to 1994 are outstanding under the Mortgage.


      For calendar year 1998, Central Hudson experienced an Article
XXI Deficiency in the approximate amount of $16.3 million, in
satisfaction of which it deposited with the Mortgage Trustee cash
in that amount received by Central Hudson from the proceeds of the
1998 NYSERDA Bonds.  Such cash deposited was applied by the
Mortgage Trustee, at the request of Central Hudson, to the
redemption, on March 1, 1999, of Central Hudson's First Mortgage
Bonds, 8.375% Series due 2028.  For calendar year 1999, Central
Hudson experienced an Article XXI Deficiency in the approximate
amount of $7.6 million, in satisfaction of which it deposited with
the Mortgage Trustee cash in that amount.  Such cash deposited
will be applied by the Mortgage Trustee, at the request of Central
Hudson to the redemption, on April 28, 2000, of the 6.10% Series
Mortgage Bonds.

NOTE 8 - POSTEMPLOYMENT BENEFITS

Pension Benefits

      Central Hudson has a non-contributory retirement income plan
("Retirement Plan") covering substantially all of its employees
and certain employees of Central Hudson Enterprises Corporation
("CHEC"), a wholly-owned subsidiary of Services.  The Retirement
Plan provides pension benefits that are based on the employee's
compensation and years of service.  It has been Central Hudson's
practice to provide periodic updates to the benefit formula stated
in the Retirement Plan.

      Central Hudson's funding policy is to make annual
contributions equal to the amount of net periodic pension cost,
but not in excess of the maximum allowable tax-deductible
contribution under the federal income tax law nor less than the

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<PAGE>

minimum requirement under the Employee Retirement Income Security
Act of 1974.

      The accounting for pension benefits reflects adoption of PSC-
prescribed provisions which, among other things, requires ten-year
amortization of actuarial gains and losses and deferral of
differences between actual pension expense and rate allowances.

      In addition to the Retirement Plan, Central Hudson sponsors
an Executive Deferred Compensation Plan for eligible officers and
a nonqualified Retirement Benefit Restoration Plan.

Other Postretirement Benefits

      Central Hudson provides certain health care and life
insurance benefits for retired employees through its
postretirement benefit plan ("Benefit Plan") (this includes
retirees of CHEC).  Substantially all of Central Hudson's
employees may become eligible for these benefits if they reach
retirement age while working for Central Hudson.  These and
similar benefits for active employees are provided through
insurance companies whose premiums are based on the benefits paid
during the year.  In order to reduce the total costs of these
benefits, Central Hudson requires employees who retired on or
after October 1, 1994, to contribute toward the cost of such
benefits.

      The Corporation is fully recovering its net periodic
postretirement costs in accordance with PSC guidelines.  Under
these guidelines, the difference between the amounts of
postretirement benefits recoverable in rates and the amounts of
postretirement benefits determined by the actuary under SFAS 106,
"Employers Accounting for Postretirement Benefits Other Than
Pensions," are deferred as either a regulatory asset or liability,
as appropriate.



                                     86

<PAGE>
<TABLE>
<CAPTION>

      Reconciliations of Pension and OPEB Plans' benefit obligation, plan assets and funded
status, as well as the components of net periodic pension cost and the weighted average
assumptions are as follows:


                                               Pension Benefits                   Other Benefits
                                               ----------------                   --------------
                                             1999            1998             1999            1998
                                             ----            ----             ----            ----
                                                 In Thousands                      In Thousands
<S>                                       <C>              <C>             <C>             <C>
Change in Benefit
 Obligation:
  Benefit obligation at
   beginning of year                      $270,504         $225,038        $ 93,471        $ 78,953
    Service cost                             6,417            5,205           2,525           2,076
    Interest cost                           17,546           16,234           5,832           5,610
    Participant contributions                  -                -               206             -
    Plan amendments                         10,633           14,439             -               -
    Benefits paid                          (13,344)         (12,433)         (3,396)         (2,973)
    Actuarial (gain)or loss                (38,629)          22,021         (18,641)          9,805
  Benefit Obligation at End of             -------          -------         -------         -------
   Year                                   $253,127         $270,504        $ 79,997        $ 93,471



Change in Plan Assets:
  Fair value of plan assets at
   beginning of year                      $309,037         $316,852        $ 57,180        $ 45,109
    Actual return on plan assets            46,487            6,040           5,166          10,607
    Employer contributions                     188               72           4,448           5,489
    Participant contributions                  -                  -             206             -
    Benefits paid                          (13,344)         (12,433)         (2,733)         (3,569)
    Administrative Expenses                   (995)          (1,494)           (259)           (456)
  Fair Value of Plan Assets at             -------          -------         -------         -------
   End of Year                            $341,373         $309,037        $ 64,008        $ 57,180

</TABLE>

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<PAGE>
<TABLE>


                                               Pension Benefits                   Other Benefits
                                               ----------------                   --------------
                                             1999            1998             1999            1998
                                             ----            ----             ----            ----
                                                 In Thousands                      In Thousands
<S>                                       <C>              <C>             <C>             <C>
Reconciliation of Funded status
  Funded status                           $ 88,246         $ 38,533        $(15,989)       $(36,291)
  Unrecognized actuarial (gain)            (73,051)         (18,985)        (28,862)         (9,800)
  Unrecognized transition
   (asset) or obligation                    (1,430)          (2,065)         40,465          43,579
  Unamortized prior service cost            29,309           20,179            (119)           (129)
                                           -------          -------         -------         -------
Accrued Benefit Cost                      $ 43,074         $ 37,662        $ (4,505)       $ (2,641)
Components of Net Periodic
 Benefit Cost
  Service cost                            $  6,417         $  5,205        $  2,525        $  2,076
  Interest cost                             17,546           16,234           5,832           5,610
  Expected return on plan assets           (24,314)         (27,325)         (3,756)         (2,867)
  Amortization of prior service
   cost                                      1,503              552             (10)            (10)
  Amortization of transitional
   (asset) or obligation                      (635)            (635)          3,114           3,114
  Recognized actuarial (gain) or
   loss                                     (5,742)         (10,162)         (1,686)         (1,789)
                                           -------          -------         -------         -------
Net Periodic Benefit Cost                 $ (5,225)        $(16,131)       $  6,019        $  6,134

Weighted-average assumptions as
of December 31
  Discount rate                               7.75%            6.50%          7.75%            6.50%
  Expected long-term rate of
   return on plan assets                      9.75%            8.50%          6.80%            6.80%
  Rate of compensation increase               4.00%            4.00%          4.00%            4.00%


</TABLE>

                                      88

<PAGE>

      For measurement purposes, a 9.0% (9.4% for participants over
age 65) annual rate of increase in the per capita cost of covered
health benefits is assumed for 2000.  The rate is assumed to
decrease gradually to 5.5% for 2008 and remain at that level
thereafter.

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

                                   One-Percentage-        One-Percentage-
                                   Point Decrease         Point Increase
                                   ---------------        ---------------
Effect on total of service
 and interest cost compo-
 nents for 1999                      $ 1,254,000            $(1,086,000)

Effect on year-end 1999
 postretirement benefit
 obligation                          $10,480,000            $(9,266,000)

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Nuclear Liability Insurance

      The Price-Anderson Act is a federal law which limits the
public liability which can be imposed with respect to a nuclear
incident at a licensed nuclear electric generating facility.  Such
Act also provides for assessment of owners of all licensed nuclear
units in the United States for losses in excess of certain limits
in the event of a nuclear incident at any such licensed unit.
Under the provisions of the Price-Anderson Act, Central Hudson's
potential assessment (based on its 9% ownership interest in the
Nine Mile 2 Plant and assuming that the other Nine Mile 2 Plant
co-tenants were to contribute their proportionate shares of the
potential assessments) would be $7.6 million (subject to
adjustment for inflation) and Central Hudson could be assessed
$380,000 (subject to adjustment for inflation) as an additional
surcharge, but would be limited to a maximum assessment of
$900,000 in any year with respect to any nuclear incident.  The
public liability insurance coverage of $200 million required under
the Price-Anderson Act for the Nine Mile 2 Plant is provided
through Niagara Mohawk.

      Central Hudson also carries insurance to cover the additional
costs of replacement power (under a Business Interruption and/or
Extra Expense Insurance Policy) incurred by Central Hudson in the
event of a prolonged accidental outage of the Nine Mile 2 Plant.
This insurance arrangement provides for payments of up to $409,000
per week if the Nine Mile 2 Plant experiences a continuous

                                     89
<PAGE>

accidental outage which extends beyond 12 weeks.  Such payments
will continue for 52 weeks after expiration of the 12-week
deductible period, and thereafter the insurer shall pay 80% of the
weekly indemnity for a second and third 52-week period.  Subject
to certain limitations, Central Hudson may request prepayment, in
a lump sum amount, of the insurance payments which would otherwise
be paid to it with respect to said third 52-week period,
calculated on a net present value basis.

      Central Hudson is insured as to its respective interest in
the Nine Mile 2 Plant under property damage insurance provided
through Niagara Mohawk.  The insurance coverage provides $500
million of primary property damage coverage for both Units of the
Nine Mile Point Nuclear Station and $2.25 billion of excess
property damage coverage solely for Unit 2 of that station.  Such
insurance covers decontamination costs, debris removal and repair
and/or replacement of property.

      The Corporation intends to maintain, or cause to be
maintained, insurance against such risks at the Nine Mile 2 Plant,
provided such coverage can be obtained at an acceptable cost.

Environmental Matters

      General:  On an ongoing basis, Central Hudson assesses
environmental issues which could impact Central Hudson and its
customers.

      Water: In 1992 Central Hudson filed renewal applications for
the State Pollution Discharge Elimination System ("SPDES") permits
for its Roseton and Danskammer Plants.  Such permits are required
to operate the Plants' cooling water systems and wastewater
treatment systems.  Central Hudson is a party to an active
proceeding with other New York utilities before the New York State
Department of Environmental Conservation ("NYSDEC") related to the
processing of the SPDES permit renewal application for the Roseton
Plant.  The utility participants in the proceeding prepared and
submitted a revised Draft Environmental Impact Statement ("DEIS")
on December 15, 1999.  At this stage of the proceeding, the
Corporation can make no determination as to the outcome of the
proceeding or the impact, if any, on the Corporation's financial
position.

      In 1999 Riverkeeper, Inc., commenced a citizen suit, in the
United States District Court for the Southern District of New
York, against Central Hudson under Section 11 of the Endangered
Species Act, 16 U.S.C. Section 1540, seeking injunctive relief
from Central Hudson's alleged unpermitted takings of the
endangered shortnose sturgeon through Central Hudson's Roseton and
Danskammer Plants on the Hudson River.  Central Hudson does not
believe it has violated such Act and intends to vigorously defend
this action.  The

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<PAGE>


Corporation can make no prediction as to the outcome of this litigation.

      Air:  The Clean Air Act Amendments of 1990 ("CAA Amendments")
added several new programs which address attainment and
maintenance of national ambient air quality standards.  These
include control of emissions from fossil-fueled electric
generating plants that affect "acid rain" and ozone.  As of
December 31, 1999, Central Hudson believes it is in full
compliance with regulations promulgated to date under the CAA
Amendments.  Ongoing federal and state clean air initiatives may
require Central Hudson to reduce its emissions in the future.

      Central Hudson's emissions of nitrogen oxides ("NOx") were
subject to additional controls, effective May 31, 1995 and May 1,
1999, under Title I of the CAA Amendments.  Central Hudson has
installed appropriate controls in compliance with the May 31, 1995
requirements.  The 1999 requirements were addressed by fuels and
operation management.  Backend controls were not required.  The
NYSDEC has recently promulgated regulations requiring a third
round of NOx reductions to go into effect in 2003.

      In July 1997, the Environmental Protection Agency ("EPA")
promulgated proposed revisions to the National Ambient Air Quality
Standards for ozone and particulates.  These regulations have been
stayed by the courts.  Further action by the EPA is pending.

      Beginning in 1997 the NYSDEC, began an initiative seeking
penalties from all New York electric utilities for past opacity
variances and requiring various opacity reduction measures and
stipulated penalties for future excursions after execution of a
consent order.  Each New York State electric utility, including
Central Hudson, is in the process of negotiating, or has
negotiated, the various terms and conditions of a draft consent
order with the NYSDEC.  Central Hudson and the NYSDEC entered into
an Order on Consent, effective April 26, 1999, pursuant to which
Central Hudson, in settlement of a claim by the NYSDEC that
emissions from the Roseton and Danskammer Plants exceeded
applicable opacity emissions standards, agreed to a civil penalty
of $1.5 million for both Plants, of which $500,000 was paid to the
NYSDEC.  The remaining $1.0 million of such penalty was suspended
upon Central Hudson causing certain environmentally beneficial
projects in Dutchess and Orange Counties, New York to be
implemented, as set forth in said Order.  Said Order also provides
for (i) a new level of stipulated penalty provisions for future
opacity exceedences and (ii) an Opacity Reduction Program, all
with respect to said Plants.

      In October 1999, New York State Governor Pataki indicated he
will cause a rulemaking proceeding to be initiated intended to
lead to regulations requiring electric generation plants in New
York State to reduce sulfur dioxide and nitrogen dioxide emissions


                                      91

<PAGE>

beyond the reductions mandated by federal law.  Until the issuance
and analysis of any such regulations, the Corporation can make no
prediction as to the effect of such regulations, on the cost of
operating the Danskammer and Roseton Plants or whether or not
capital improvements would be required.

      In October 1999, the New York State Attorney General
indicated he is investigating eight older New York State power
plants for possible violations of federal and state air emission
rules.  By letter dated October 12, 1999 from the Office of said
Attorney General, Central Hudson was notified that such
investigation indicates that Central Hudson, "may have
constructed, and continues to operate, major modifications to its
Danskammer [Plant...] without obtaining [certain] requisite
preconstruction permits."  Such letter requests that Central
Hudson provide certain information with respect to such
investigation.  The NYSDEC, by subpoena dated January 13, 2000,
has requested substantially the same information from Central
Hudson.  The Corporation believes that the NYSDEC has assumed
responsibility for such investigation, but Central Hudson has not
received formal notification thereof.  Central Hudson is reviewing
this matter in depth, and believes any required permits were
obtained.

Former Manufactured Gas Plant Facilities

      City of Newburgh:  In October 1995, Central Hudson and the
NYSDEC entered into an Order on Consent regarding the development
and implementation of an investigation and remediation program for
Central Hudson's former coal gasification plant ("Central Hudson
Site"), the City of Newburgh, New York's ("City") adjacent and
nearby property and the adjoining areas of the Hudson River.
Initial remediation investigations were completed in September
1997.  The investigations revealed the presence of contaminants in
the soil in portions of the study area.  In the majority of the
study area contaminants were found deep within the ground and are
not a threat to the public.  Contaminated ground water is
associated with the contaminated soil but it is not used as a
drinking water supply.  Impacted sediments were also present
within the Hudson River adjacent to the City's property which is
the location of its sewage treatment plant.

      In May 1995, the City filed suit against Central Hudson in
the United States District Court for the Southern District of New
York.  The City alleged that Central Hudson released certain
allegedly hazardous substances without a permit from the Central
Hudson Site in Newburgh, New York into the ground and into
adjacent and nearby property of the City, in violation of the
federal Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the federal Resources Conservation and
Recovery Act ("RCRA") and the federal Emergency Planning and


                                      92
<PAGE>

Community Right to Know Act ("EPCRA").  The City also alleged a
number of nuisance, trespass, damage and indemnification claims
pursuant to New York State law.

      The City sought injunctive relief against such alleged
disposal, storage or release of hazardous substances at the
Central Hudson Site, remediation and abatement of the conditions
alleged to lead to endangerment of the City's property, payment of
restitution of clean-up costs and monetary damages of at least $70
million, assessment of certain civil penalties under RCRA, CERCLA
and EPCRA, and recovery of the City's costs and attorneys' fees in
such action.

      Among the City's allegations was that the presence of
contamination on its site was preventing it from making required
improvements to its sewage treatment plant ("STP") on the site.
In partial settlement of the City's claims against Central Hudson,
the City and Central Hudson entered into an agreement, in July
1998, whereby the City would construct a clarifier at the STP and
deal appropriately with any contaminants that were encountered
during the construction, and Central Hudson would fund these
construction and related activities.  Construction of the
clarifier was completed in July 1999; however, all invoices for
the construction costs and related work have not yet been
received.  It is expected that the total cost will be
approximately $2.9 million.

      The trial on this matter began in November 1998, and in
December 1998, the jury made its determination that the proper
cost of environmental remediation on the City's property is $20
million and Central Hudson's share is 80% (or $16 million).  In
addition, the jury awarded the City $435,000 in damages for
increased costs of future operations of the City's STP due to the
existence of contaminants.

      Subsequent to the December 1998 jury award referred to above,
Central Hudson and the City entered into a Settlement Agreement,
dated May 4, 1999, which received court approval on the same date.

      Under the Settlement Agreement (i) said lawsuit was disposed
of and the City's claims were dismissed with prejudice; (ii) the
City waived its right to have the $16 million awarded by the jury
for the cost of said environmental remediation on the City's
property and Central Hudson agreed to remediate the City's
property at Central Hudson's cost pursuant to said NYSDEC's
October 1995 Order on Consent; (iii) Central Hudson paid the City
$2 million and will pay the City $500,000 in the future on the
occurrence of certain events; (iv) if the total cost of such
remediation is less than $16 million, Central Hudson will pay the
City an additional amount on a formula basis up to $500,000
depending on the extent to which the cost of remediation is less
than $16 million and (v) Central Hudson agreed to indemnify and

                                      93

<PAGE>

hold harmless the City against claims or lawsuits by any third
party against the City alleging injury, damages or violation of
law caused by or arising from the alleged contamination in said
lawsuit having migrated from Central Hudson's to the City's
property.

      Pursuant to said October 1995 Order on Consent with the
NYSDEC, Central Hudson conducted additional studies as part of the
required remedial investigation.  The results of these studies
were provided to the NYSDEC which determined that the contaminants
found in such investigation may pose a significant threat to human
health or the environment.  As a result, Central Hudson developed
a draft Feasibility Study Report ("Report") which was filed with
the NYSDEC on December 28, 1999.  The Report summarizes the nature
and location of the contamination at and around the City's
property, evaluates the potential ecological and human health
risks associated with that contamination and discusses clean-up
alternatives.  The Report recommends (1) limited soil removal from
the southern portion of the City's property, where there is
elevated contamination and (2) capping of contaminated sediments
in the Hudson River.  The estimated costs for the proposed
remediation activities are $3 million for the soil removal and
$2.5 million for the capping of sediment in the Hudson River.
Central Hudson, in December 1999, provided the Report to NYSDEC
and to the City.  Central Hudson expects that both NYSDEC and the
City will respond with comments on the Report.  Subject to
anticipated additional negotiations among Central Hudson, the City
and NYSDEC, NYSDEC will issue a Proposed Remedial Action Plan, for
public review and comment, which is expected to be issued in the
second quarter of 2000.  Following such public review, NYSDEC will
issue a Record of Decision which will specify a remediation plan
for Central Hudson's implementation.  Such remediation plan is not
expected to be issued until late in 2000.

      As of December 31, 1999, the Corporation recorded liabilities
of $6.5 million regarding this matter which are included in
"Deferred Credits and Other Liabilities - Other" in the
Corporation's Consolidated Balance Sheet.

      By letter dated June 3, 1997, Central Hudson received
authorization from the PSC to defer costs related to this matter,
including legal defense costs but excluding Central Hudson's
labor, related to environmental site investigation and remediation
actions.  Central Hudson has deferred costs expended to date that
it expects to be recovered in future rates.  The cumulative
deferred costs through 1999 amounted to $15.1 million and were
included in "Deferred Charges - Regulatory Assets" in the
Corporation's Consolidated Balance Sheet.

      The Corporation can make no prediction as to the full
financial effect this matter will have on it, including the
extent, if any, of insurance reimbursement and including


                                     94

<PAGE>

implementation of environmental clean-up under said Order on
Consent.  However, the Corporation has put its insurers on notice
of this matter and the Corporation intends to seek reimbursement
from such insurers for the cost of any such liability.  Two of
such insurers have denied coverage.

      Former Manufactured Gas Plant Sites:  In February 1999 the
NYSDEC informed Central Hudson of its intention to perform site
assessments at the sites of three manufactured gas plants formerly
operated by Central Hudson, two of which are located in
Poughkeepsie, New York and one in Beacon, New York.  Central
Hudson will conduct the site assessments under agreements
negotiated with NYSDEC for each site.  The purpose of the site
assessments will be to determine if there are significant
quantities of residues from the manufactured gas operations on the
sites.  If NYSDEC determines that significant quantities of
residues are not present or that the residues pose no threat to
public health or the environment given the current uses of the
sites, NYSDEC will not require additional investigations and/or
remediation at the respective sites.  If, after its review of each
site assessment, NYSDEC determines that significant residues are
present, or that residues pose a threat to public health or the
environment at a site, Central Hudson will likely be responsible
for any required remediation.  The Corporation can make no
prediction as to the outcome of these matters at present.  Central
Hudson has put its comprehensive general liability insurers on
notice of these matters, and Central Hudson intends to seek
reimbursement from its insurance carriers for amounts for which it
may become liable.

      Central Hudson has requested from the PSC permission to defer
the incremental costs of the investigations and potential
remediation of these sites.


Asbestos Litigation

      Since 1987, Central Hudson, along with many other parties,
has been joined as a defendant or third-party defendant in 1,972
asbestos lawsuits commenced in New York State and federal courts.
The plaintiffs in these lawsuits have each sought millions of
dollars in compensatory and punitive damages from all defendants.
The cases were brought by or on behalf of individuals who have
allegedly suffered injury from exposure to asbestos, including
exposure which allegedly occurred at Central Hudson facilities.

      To date, of the 1,972 cases that had been brought against
Central Hudson, 1,035 remained pending against Central Hudson.  Of
the 937 cases no longer pending against Central Hudson, 810 have
been dismissed or discontinued, and Central Hudson has settled 127
cases.  The Corporation is presently unable to assess the validity
of the remaining asbestos lawsuits; accordingly, it cannot


                                     95
<PAGE>

determine the ultimate liability relating to these cases.  Based
on information known to the Corporation at this time, including
Central Hudson's experience in settling asbestos cases and in
obtaining dismissals of asbestos cases, the Corporation believes
that the cost to be incurred in connection with the remaining
lawsuits will not have a material adverse effect on the
Corporation's financial position or results of operations.

      Central Hudson is insured under successive comprehensive
general liability policies issued by a number of insurers, has put
such insurers on notice of the asbestos lawsuits and has demanded
indemnification reimbursement for its defense costs and liability.
In December 1994, Central Hudson commenced a lawsuit against eight
such insurers in the New York State Supreme Court, Dutchess
County.  By order dated October 2, 1998, the Court granted a
motion by Central Hudson against one insurer, Travelers Casualty
and Surety Company (f/k/a The Aetna Casualty and Surety Company)
("Travelers"), seeking a declaration that Travelers owed Central
Hudson the cost of defense in the underlying asbestos litigation.
Travelers has since paid Central Hudson approximately $3.2
million, consisting of the undisputed portion of Central Hudson's
past defense costs together with prejudgment interest.  Travelers
has made this payment subject to the October 2, 1998 order of the
Court and without prejudice to its rights to appeal or to seek
contribution from the other insurers and from Central Hudson.

Purchased Power Commitments

      Under federal and New York State laws and regulations,
Central Hudson is required to purchase the electrical output of
unregulated cogeneration facilities ("IPPs") which meet certain
criteria for Qualifying Facilities, as such term is defined in the
appropriate legislation.  Purchases are made under long-term
contracts which require payment at rates higher than what can be
purchased on the wholesale market.  These costs are currently
fully recoverable through Central Hudson's electric fuel
adjustment clause, with one exception, for which the impaired
portion of the contract has been recognized as a reduction to
income.  IPPs with which Central Hudson has contracts represent 6%
of Central Hudson's energy purchases in 1999.

Other Matters

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



                                      96

<PAGE>

      Included in such proceedings are lawsuits against Central
Hudson arising from a November 1992 explosion in a dwelling in
Catskill, New York. One of these lawsuits involving claims for
personal injury and property damages was settled in December 1999
in amounts not considered material to the Corporation.  A lawsuit
alleging personal injuries and property damage and compensatory
and punitive damages in the sum of $4 million remains.  In January
2000, the court dismissed this lawsuit on the merits because of
plaintiff's failure to prosecute the case, but the time to appeal
has not expired.

      In addition to the above, on February 12, 1994, a fire and an
explosion destroyed a residence in the Village of Wappingers
Falls, New York, in Central Hudson's service territory.  A short
time later, a second explosion and fire destroyed a nearby
commercial facility.  Lawsuits commenced against Central Hudson
arising out of the Wappingers Falls incident include one alleging
property damage and seeking recovery of $250,000 in compensatory
damages and one alleging personal injuries and property damage and
seeking an unspecified amount of damages against Central Hudson.
All such lawsuits have been consolidated; however, no trial date
has been set.

      The Corporation is investigating the Wappingers Falls claims
and presently has insufficient information on which to predict
their outcome.  The Corporation believes that Central Hudson has
adequate insurance to cover any compensatory damages that might be
awarded.

NOTE 10 - SEGMENTS AND RELATED INFORMATION

      The Corporation's primary reportable operating segments are
the regulated electric and gas operations of Central Hudson.  The
Corporation's "Other" segment consists of the competitive business
affiliates of Services.  For 1999, "Other" also includes the
activity of CH Energy Group, Inc. prior to the formation of the
holding company on December 15, 1999.  The "Other" earnings per
share for 1999 is due to the sale of the Corporation's New York
Stock Exchange symbol.  All of the segments currently operate in
the Northeast region of the United States.

      Certain additional information regarding these segments is
set forth in the following table.  General corporate expenses,
property common to both segments and depreciation of such common
property have been allocated to the segments in accordance with
practice established for regulatory purposes.



                                      97

<PAGE>

                              CH Energy Group, Inc.
                          Segment Disclosure - FAS 131
                             Year Ended December 31,


                                                      1999
                                                      ----
       (In Thousands)           Electric       Gas         Other          Total
       --------------           --------       ----        -----          -----
Revenues from
 external customers          $  427,729     $ 93,099      $  -        $  520,828
Intersegment
 revenues                            80        1,032         -             1,112
                              ---------      -------     -------       ---------
   Total revenues               427,809       94,131         -           521,940
Depreciation and
 amortization                    42,157        4,756         -            46,913
Interest expense                 25,803        4,201         -            30,004
Interest income                   2,133          314         -             2,447
Income tax (credit)
 expense                         24,850        4,075         -            28,925
Earnings per share                 2.47         0.33        0.08            2.88
Segment assets                1,078,945      180,357      76,597       1,335,899
Construction
 Expenditures                    38,346        8,149         -            46,495


                                                      1998
                                                      ----
       (In Thousands)           Electric       Gas         Other          Total
       --------------           --------       ----        -----          -----
Revenues from
 external customers          $  418,427     $ 83,899      $  -        $  502,326
Intersegment
 revenues                            80        1,063         -             1,143
                              ---------      -------     -------       ---------
   Total revenues               418,507       84,962         -           503,469

Depreciation and
 amortization                    40,996        4,564         -            45,560
Interest expense                 23,803        3,875         -            27,678
Interest income                     695           87         -               782
Income tax (credit)
 expense                         24,910        3,678         -            28,588
Earnings per share                 2.51         0.35         0.04           2.90
Segment assets                1,093,455      169,587       52,996      1,316,038
Construction
 Expenditures                    39,183        6,478         -            45,661


                                      98

<PAGE>

                              CH Energy Group, Inc.
                          Segment Disclosure - FAS 131
                             Year Ended December 31,


                                                      1997
                                                      ----
      (In Thousands)           Electric        Gas        Other          Total
                              ---------      -------     -------       ---------
Revenues from
 external customers         $  416,346      $103,044      $  -        $  519,390
Intersegment                                                 -
 revenues                           83           804                         887
                              ---------      -------     -------       ---------
  Total revenues               416,429       103,848         -           520,277
Depreciation and
 amortization                   39,480         4,384         -            43,864
Interest expense                23,186         3,464         -            26,650
Interest income                  1,970           290         -             2,260
Income tax (credit)
 expense                        21,405         4,832         -            26,237
Earnings per share                2.58          0.37         0.02           2.97
Segment assets               1,067,042       163,021       22,027      1,252,090
Construction
 Expenditures                   36,685         7,183         -            43,868


NOTE 11 - FINANCIAL INSTRUMENTS

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

     Cash and Temporary Cash Investments:  The carrying amount
approximates fair value because of the short maturity of those
instruments.

     Cumulative Preferred Stock Subject to Mandatory Redemption:
The fair value is estimated based on the quoted market price of
similar instruments.

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

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



                                      99

<PAGE>

     The estimated fair values of the Corporation's financial
instruments are as follows:

                                                   December 31, 1999
                                                   -----------------
                                                Carrying           Fair
                                                 Amount            Value
                                                --------           -----
                                                     (In Thousands)
Cumulative preferred stock subject
  to mandatory redemption.............          $ 35,000         $ 34,455
Long-term debt (including
  current maturities).................           370,551          365,741


                                                   December 31, 1998
                                                   -----------------
                                                Carrying           Fair
                                                 Amount            Value
                                                --------           -----
Cumulative preferred stock subject
  to mandatory redemption.............          $ 35,000         $ 37,083
Long-term debt (including
  current maturities).................           396,425          413,905



                                      100

<PAGE>
<TABLE>
<CAPTION>

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

      Selected financial data for each quarterly period within 1999 and 1998 are presented
below:
                                                                                 Earnings Per
                                                                                    Average
                                                                                    Share of
                                                                                     Common
                               Operating        Operating           Net              Stock
                               Revenues          Income            Income         Outstanding
                               ---------        ---------          ------         -----------
                                            (In Thousands)                         (Dollars)
                               ------------------------------------------         -----------
Quarter Ended:

       1999
       ----
  <S>                         <C>               <C>               <C>               <C>
  March 31............        $146,471          $24,991           $18,297           $1.09
  June 30.............         117,035           14,439             8,630             .51
  September 30........         134,323           18,100            13,064             .77
  December 31.........         124,111           13,108             8,582             .51

       1998
       ----
  March 31............        $143,882          $24,003           $18,360           $1.06
  June 30.............         112,106           14,404             9,234             .54
  September 30........         125,723           18,350            13,003             .77
  December 31.........         121,758           14,543             8,717             .53


</TABLE>


                                       101

<PAGE>

<TABLE>
<CAPTION>
SCHEDULE II  - Reserves

                                                          Additions

                                                                                    Payments       Balance
                                    Balance at     Charged to        Charged to     Charged        at End
                                    Beginning      Cost and            Other           to            of
Description                         of Period      Expenses          Accounts       Reserves       Period
-----------                         ----------     ----------        ----------     --------       -------
YEAR ENDED DECEMBER 31, 1999
<S>                                 <C>            <C>              <C>            <C>          <C>
Operating Reserves........          $5,994,600     $2,158,546       $  520,700     $2,380,188   $6,293,658
                                     =========      =========        =========      =========    =========
Reserve for Uncollectible
 Accounts.................          $2,400,000     $2,972,556       $    -         $2,472,556   $2,900,000
                                     =========      =========        =========      =========    =========
YEAR ENDED DECEMBER 31, 1998

Operating Reserves........          $6,581,614     $7,474,979       $  103,700     $8,165,693   $5,994,600
                                     =========      =========        =========      =========    =========
Reserve for Uncollectible
 Accounts.................          $2,800,000     $2,638,719       $    -         $3,038,719   $2,400,000
                                     =========      =========        =========      =========    =========
YEAR ENDED DECEMBER 31, 1997

Operating Reserves........          $4,755,264     $2,142,391       $  334,700     $  650,741   $6,581,614
                                     =========      =========        =========      =========    =========
Reserve for Uncollectible
 Accounts.................          $3,200,000     $3,493,405       $    -         $3,893,405   $2,800,000
                                     =========      =========        =========      =========    =========

</TABLE>


                                      102

<PAGE>

      ITEM 9 -    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ------      ACCOUNTING AND FINANCIAL DISCLOSURE
                  ------------------------------------------------
      None.

                                    PART III
                                    --------

      ITEM 10 -   DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION
      -------     ---------------------------------------------------
      The information with respect to the Directors of the
Corporation required hereunder is incorporated by reference to the
caption "Proposal No. 1 - Election of Directors" in the
Corporation's definitive proxy statement, to be dated March 1,
2000, and to be used in connection with its Annual Meeting of
Shareholders to be held on April 25, 2000, which proxy statement
will be submitted to the SEC pursuant to that Commission's
Regulation S-T.

      The information with respect to the executive officers of the
Corporation required hereunder is incorporated by reference to
Item 1 herein, under the caption "Executive Officers of the
Corporation."

      Pursuant to Section 727(d) of the New York Business
Corporation Law, notice is hereby given to shareholders that the
Corporation has provided Directors' and Officers' Liability
Insurance through various contracts.  These contracts became
effective June 1, 1999 and provide aggregate coverage of $60
million with the following carriers:  Chubb Group of Insurance
Companies, Associated Electric & Gas Insurance Services, Ltd. and
American Casualty Excess Insurance, Ltd.

      The aggregate premium costs for this insurance, which covers
the Corporation and its directors and executive officers, are
approximately $238,000, a decrease of $165,000 when compared to
1998.

      ITEM 11 -   EXECUTIVE COMPENSATION

      The information required hereunder is incorporated by
reference to the caption "Executive Compensation" in the
Corporation's definitive proxy statement, to be dated March 1,
2000, and to be used in connection with its Annual Meeting of
Shareholders to be held on April 25, 2000.


                                      103
<PAGE>


      ITEM 12 -   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
      -------     AND MANAGEMENT
                  -----------------------------------------------
      The information required hereunder is incorporated by
reference to the caption "Security Ownership of Directors and
Officers" in the Corporation's  definitive proxy statement, to be
dated March 1, 2000, and to be used in connection with its Annual
Meeting of Shareholders to be held on April 25, 2000.

      ITEM 13 -   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
      -------     ----------------------------------------------
      There were no relationships or transactions of the type
required to be described by this Item.

                                     PART IV
                                     -------
      ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND
      -------   REPORTS ON FORM 8-K
                -------------------------------------------

(a)   Documents filed as part of this Report

      1. and 2. All Financial Statements and Financial Statement
      Schedules filed as part of this Report are included in Item 8
      of this Form 10-K and reference is made thereto.

      3. Exhibits

      Incorporated herein by reference to the Exhibit Index for
      this Report.  Such Exhibits include the following management
      contracts or compensatory plans or arrangements required to
      be filed as an Exhibit pursuant to Item 14(c) hereof:

      Description in the Exhibit List and Exhibit Nos. for this
      Report

      Central Hudson Directors' Deferred Compensation Plan,
      effective October 1, 1980, together with Amendment thereto,
      effective October 1, 1999, merged into the Directors and
      Executives Deferred Compensation Plan, effective January 1,
      2000.  (Exhibit (10)(iii)1 and 19)

      Executive Deferred Compensation Plan, effective March 1,
      1992, together with Amendments thereto effective December 17,
      1993 and December 1, 1998 and an instrument of assumption by
      the Corporation, dated December 15, 1999.  (Exhibits
      (10)(iii)2, 5, 17 and 20)



                                      104

<PAGE>


      Central Hudson Retirement Benefit Restoration Plan, effective
      May 1, 1993, together with Amendments thereto effective
      July 23, 1993 and December 1, 1998.  (Exhibits (10)(iii)3, 4
      and 18)

      Agreement, made March 14, 1994, by and between Central Hudson
      and Mellon Bank, N.A., amending and restating, effective
      April 1, 1994, Central Hudson's Savings Incentive Plan and
      related Trust Agreement with The Bank of New York, together
      with amendments dated July 22, 1994, and December 16, 1994.
      (Exhibits (10)(iii)7, 8 and 9)

      Central Hudson Executive Incentive Compensation Plan,
      effective January 3, 1993, as amended and restated, effective
      April 4, 1995 and terminated effective January 1, 2000.
      (Exhibits (10)(iii)6 and 10)

      Amended and Restated Stock Plan for Outside Directors, together
      with a form of assumption by the Corporation thereof, effective
      December 15,1999.   (Exhibit (10)(iii)11 and 21)

      Central Hudson Management Incentive Program, effective
      April 1, 1994, together with Amendment thereto, dated
      July 25, 1997.  (Exhibits (10)(iii)12 and 13)

      Change-of-Control Severance Policy, effective December 1,
      1998, for all management employees, and a form of instrument
      of assumption by the Corporation, dated December 15, 1999.
      (Exhibit (10)(iii)14 and 22)

      Form of Central Hudson Employment Agreement, dated
      October 23, 1998, effective December 1, 1998, for all
      officers, and a form of instrument of assumption by the
      Corporation, dated December 15, 1999. (Exhibit (10)(iii)15
      and 23)

      Central Hudson Employment Agreement, dated October 23, 1998,
      effective December 1, 1998, for Paul J. Ganci, and a form of
      instrument of assumption by the Corporation, dated
      December 15, 1999.  (Exhibit (10)(iii)16 and 24)

      Directors and Executives Deferred Compensation Plan, dated
      December 17, 1999, effective January 1, 2000.

      Trust and Agency Agreement, dated December 17, 1999 and
      effective January 1, 2000, between this Corporation and First
      America Trust Company for the Corporation's Directors and
      Executives Deferred Compensation Plan.

      Long-Term Performance-Based Incentive Plan, dated October 22, 1999,
      effective January 1, 2000.


                                      105
<PAGE>


(b)   Reports on Form 8-K

      During the last quarter of the period covered by this Report
      and including the period to the date hereof, the following
      Reports on Form 8-K were filed by Central Hudson and/or the
      Corporation:

      1)    Report dated November 12, 1999 for Central Hudson,
            relating to the change of Central Hudson's stock trading
            symbol from "CNH" to "CHG."

      2)    Report dated November 23, 1999 for Central Hudson,
            relating to the auction of the Roseton and Danskammer
            Plants, as reported in the caption, "Auction of Fossil
            Generation Plants," in Note 2 of the Notes to Financial
            Statements of this Annual Report on Form 10-K; and the
            appointment of officers of the Corporation.

      3)    Reports dated December 15, 1999 for the Corporation and
            Central Hudson, relating to the reorganization of
            Central Hudson into a holding company structure pursuant
            to an Agreement and Plan of Exchange between Central
            Hudson and the Corporation as more fully described in
            Item I hereof under the caption "Holding Company" and in
            Note 2 hereof under the caption "Competitive
            Opportunities Proceeding Settlement Agreement."

      4)    Report dated February 1, 2000 relating to Central
            Hudson's sale of a tranche of Medium Term Notes in the
            aggregate principal amount of $110 million, such sale
            being authorized under Central Hudson's shelf
            registration statement on Form S-3 (Registration No.
            333-65597), as filed with the SEC.


(c)   Exhibits Required by Item 601 of Regulation S-K

      Incorporated herein by reference to subpart (a)-3 of Item 14,
      above.

                                     106

<PAGE>

(d)   Financial Statement Schedule required by Regulation S-X which
      is excluded from the Corporation's Annual Report to
      Shareholders for the fiscal year ended December 31, 1999

      Not applicable, see Item 8 hereof.

                                   SIGNATURES
            Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Corporation has duly
caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                              CH ENERGY GROUP, INC.


                              By    /s/ Paul J. Ganci
                                -------------------------------
                                 Paul J. Ganci
                                 Chairman of the Board, President
                                 and Chief Executive Officer

Dated:  March 1, 2000

                                      107

<PAGE>

            Pursuant to the requirements of the Securities Exchange
Act of 1934, this Report has been signed below by the following
person on behalf of the Corporation and in the capacities and on
the date indicated:

      Signature                        Title                    Date
      ---------                        -----                    ----

(a) Principal Executive
      Officer or Officers:



   /s/ Paul J. Ganci
--------------------------
(Paul J. Ganci)                      Chairman of
                                     the Board, President
                                     and Chief Executive
                                     Officer                 March 1, 2000

(b) Principal Accounting
      Officer:


   /s/ DONNA S. DOYLE
--------------------------
(Donna S. Doyle)                     Vice President -
                                     Accounting and
                                     Controller              March 1, 2000

(c) Chief Financial
      Officer:


   /s/ STEVEN V. LANT
--------------------------
(Steven V. Lant)                    Chief Financial
                                    Officer and
                                    Treasurer                March 1, 2000


(d) A majority of Directors:

Jack Effron*, Frances D. Fergusson*,
Heinz K. Fridrich*, Edward F.X.Gallagher*,
Paul J. Ganci*, John E. Mack III* and
Edward P. Swyer*, Directors


By     /s/ Paul J. Ganci
--------------------------
(Paul J. Ganci)                                              March 1, 2000




                                      108

<PAGE>

--------------------------------
*Paul J. Ganci, by signing his name hereto, does thereby sign this
document for himself and on behalf of the persons named above
after whose printed name an asterisk appears, pursuant to powers
of attorney duly executed by such persons and filed with the SEC
as Exhibit 24 hereof.


                                     109