Exhibit 10.(iii)25


                                                                    May 10, 2002


PERSONAL & CONFIDENTIAL


BY HAND

Mr. Allan R. Page
6 Gaskin Road
Poughkeepsie, NY 12601

Dear Allan:

      This letter sets forth the agreement reached concerning your retirement
and separation of employment from CH Energy Group, Inc., including its
subsidiary and affiliated corporations, and their respective successors,
assigns, representatives, agents, attorneys, shareholders, officers, directors
and employees (hereinafter, these persons and entities are referred to
individually and collectively as "the Company").

      Allan, the terms and provisions of this letter agreement (this
"Agreement") are important, and we advise and encourage you to consult with an
attorney before signing it.

      You and the Company hereby agree as follows:

      1. Your retirement from the Company will be effective as of Thursday,
August 1, 2002. Your employment with the Company will end effective as of
Wednesday, July 31, 2002. Provided you execute and return this Agreement to
Joseph J. DeVirgilio, Jr., by 5 P.M. on Wednesday, June 5, 2002, the Company
will provide you with the following separation package.

      The Company will provide you or your estate with three lump sum payments
totaling $530,000 in the aggregate. These three payments, less applicable
withholdings, will be made as follows: (i) $230,000 on or before June 15, 2002;
(ii) $200,000 on or before January 15, 2003; and (iii) $100,000 on or before
June 15, 2003.


<PAGE>

Mr. Allan R. Page                      2                            May 10, 2002


            With the end of your employment on July 31, 2002, you will be a
retired employee under the Central Hudson Gas & Electric Corporation's retiree
health insurance program, subject to the terms of that program (the "Retiree
Health Insurance Program"). The Company will pay 100% of the costs for health
insurance coverage (medical/hospitalization, dental and vision) for you and your
eligible dependents under the Retiree Health Insurance Program until May 1,
2012, subject to your obligation to make a monthly contribution to the costs
equal to 1.5% of your monthly single life annuity amount under the Central
Hudson Gas & Electric Corporation Retirement Income Plan (the "Retirement Income
Plan"), provided that for the purposes of this calculation of your monthly
contribution, your aggregate annual annuity amount shall not be deemed to exceed
$100,000.

            After May 1, 2012, you will continue as a retiree and you will have
the same rights and obligations to receive and pay for health insurance coverage
as any other Company retiree at your then age.

            The Company's obligation under this paragraph 1 to pay 100% of the
costs for medical/hospitalization insurance coverage for you and your eligible
dependents until May 1, 2012 shall not be dependent upon whether or not the
Company continues to maintain the Retiree Health Insurance Program. If the
Company does not continue to maintain the Retiree Health Insurance Program or an
equivalent successor program, the Company agrees that it will pay 100% of the
costs for you to obtain medical/hospitalization insurance coverage for you and
your eligible dependents until May 1, 2012 that is comparable to the
medical/hospitalization insurance coverage last provided to you and your
eligible dependents under the Retiree Health Insurance Program.

            The Company's obligation under this paragraph 1 to pay 100% of the
costs for dental and vision insurance coverage for you and your eligible
dependents shall cease if the Company does not continue to maintain the Retiree
Health Insurance Program or an equivalent successor program.

            The severance payments totaling $530,000 in the aggregate, and the
payment of the costs for your health insurance coverage until May 1, 2012,
represent full consideration for you under this Agreement.

      2. With the end of your employment on July 31, 2002, you will be a retired
employee under the Retirement Income Plan, subject to the terms of the
Retirement Income Plan applicable to retired employees. In accordance with
applicable law, your eligible dependents will be eligible for COBRA coverage
when you have a qualifying event under COBRA and will receive notification under
separate cover regarding your COBRA rights.


<PAGE>

Mr. Allan R. Page                      23                           May 10, 2002

      3. As a retiree, and subject to the terms of the Long-Term
Performance-Based Incentive Plan and applicable securities laws:

      (i) your previously granted stock options for 7,200 shares of the Common
      Stock of the Company will be fully vested and exercisable; these options
      must be exercised no later than 5 years from the date of your retirement;
      and

      (ii) your previously granted Performance Shares, which are currently
      targeted at 1,500 shares, will be fully vested; the actual number of
      performance shares to be granted will be determined by the performance
      measurement against the targeted utility index from the date of the grants
      through the last completed quarter prior to your retirement and will be
      pro-rated accordingly (e.g., 750 performance shares x 14/12 quarters x
      Performance Factor).

            As a retiree, and subject to the terms of the Short-Term Incentive
Plan, your incentive opportunity for 2002 will be prorated for the period from
January 1, 2002 through May 31, 2002, subject to the evaluation of performance
against goals which evaluation will be at the sole discretion of the Board of
Directors. The fact that you are no longer an employee of the Company shall not
be a reason for the Board of Directors to fail to consider you for an incentive
opportunity.

      4. You acknowledge and agree that the payments by the Company provided for
in paragraph 1 of this Agreement are payments that you would not be entitled to
receive if you did not enter into this Agreement with the Company and provide
the Company with the General Release and Waiver contained in paragraph 5 of this
Agreement.

General Release and Waiver

      5. In exchange for the Company providing you with the consideration
described above in paragraph 1 of this Agreement, you, on your own behalf and on
behalf of your heirs, agents, attorneys, legal representatives and assigns, do
hereby release, waive and forever discharge the Company of and from any and all
claims, causes of action, obligations, demands and liabilities whatsoever, of
every name and nature, both in law and at equity, known and unknown, anticipated
and unanticipated, which you had, have or hereafter may have, or which any
person or entity may have on your behalf, against the Company because of or
arising from any matter, event or thing which has happened, developed or
occurred before your execution of this Agreement, including, but not limited to,
any and all claims (a) arising from or in connection with your employment with
the Company, (b) arising from or in connection with your retirement from the
Company and (c) arising under or in connection with the Age Discrimination in
Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964,
as amended, the New York State Human Rights Law, as amended, or any federal,
state or local statutes, laws or regulations.

<PAGE>

Mr. Allan R. Page                      4                            May 10, 2002

            Without in any way limiting the general and full scope of this
General Release and Waiver, you acknowledge and confirm that this General
Release and Wavier covers any and all claims based on theories of contract or
tort because of or arising from any matter, event or thing which has happened,
developed or occurred before your execution of this Agreement, including, but
not limited to, any and all claims of discrimination in employment, including,
but not limited to, claims of discrimination based on age, sex, national origin,
retaliation, sexual harassment, sexual orientation, race, color, religion,
disability, veterans status or marital status.

            To the extent consistent with applicable law and this Agreement, you
agree not to file any suit or complaint against the Company in any forum
whatsoever with respect to any matter which is covered by this General Release
and Waiver. Further, to the extent any such action has been or may be brought,
you expressly waive your right to any form of monetary or other damages, or any
form of recovery or relief in connection with such complaint or lawsuit or in
connection with any action brought by a third party. You also understand that
the consideration provided to you under the terms of this Agreement does not
constitute an admission by the Company that it has violated any such law or
legal obligation.

            Nothing in this Agreement prohibits you from seeking a determination
by a court of competent jurisdiction that the General Release and Waiver in this
paragraph 5 is, in whole or in part, invalid under applicable law.

            Notwithstanding the General Release and Waiver in this paragraph 5,
it is understood and agreed that any and all rights you may have by virtue of
your service as an employee and officer of the Company, and as a director of
subsidiaries of the Company, for indemnification with respect to third-party
claims and for protection with respect to third-party claims under Directors and
Officers insurance coverage maintained by the Company shall survive this
Agreement.

      6. In consideration of your agreement in paragraph 5 above to release and
discharge the Company from any and all claims you may have against it, the
Company hereby releases, waives and forever discharges you of and from any and
all claims, causes of action, obligations, demands and liabilities whatsoever,
of every name and nature, both in law and at equity, known and unknown,
anticipated and unanticipated, which it may have against you because of or
arising from any matter, event or thing which has happened, developed or
occurred before its execution of this Agreement, including, but not limited to,
rights arising out of or in any way connected with your employment relationship
with the Company, alleged violations of any contracts, express or implied, or
any tort, or any other transactions, occurrences, acts or omissions or any loss,
damage or injury whatsoever, known or unknown, suspected or unsuspected,
resulting from any act or omission by you committed or omitted prior to the date
of the execution of this Agreement.


<PAGE>

Mr. Allan R. Page                      5                            May 10, 2002

      7. Notwithstanding the General Release and Waiver contained in paragraph 5
of this Agreement and the General Release and Waiver contained in paragraph 6 of
this Agreement, you and the Company each agree that the agreements, promises,
commitments, representations, acknowledgements and confirmations made by you and
by the Company in this Agreement survive the date of this Agreement and shall be
fully effective and enforceable in the future.

      8. You will be on paid vacation from June 5, 2002 through July 31, 2002,
and you will continue to participate during this vacation period in all of the
Company's benefit plans and compensation programs in which you currently
participate. All benefit and compensation accruals or contributions made on your
behalf during or with respect to this vacation period shall not be an offset
against any amount otherwise owing to you under this Agreement; provided,
however, as set forth in paragraph 3 of this Agreement, your incentive
opportunity for 2002 with respect to the Short-Term Incentive Plan will pertain
only to the period from January 1, 2002 through May 31, 2002. During this
vacation period, you will not be expected to report to work at the Company. You
will have no accrued or unpaid vacation time as of July 31, 2002

      9. You hereby resign, effective as of June 5, 2002, from each and every
position you hold as an officer of the Company, as a director of the Company,
and as a member of committees of the Company. You acknowledge and agree that any
and all change of control understandings and agreements between you and the
Company, including specifically the Change of Control Employment Agreement
between you and CH Energy Group, Inc., dated as of December 15, 1999, are
terminated effective as of the date when this Agreement becomes effective in
accordance with paragraph 17 of this Agreement, i.e., the eighth day following
the date of your execution of this Agreement. The Company and you each agree and
confirm that this termination of your change of control understandings and
agreements, including the termination of the Change of Control Employment
Agreement, dated December 15, 1999, does not arise in connection with or in
anticipation of a change of control of the Company.

      10. (a) Except for the purpose of enforcing this Agreement, should that
ever be necessary, or as required by applicable law in the written opinion of
your legal counsel or as required by a court of competent jurisdiction, you
agree that during the period commencing June 5, 2002 and concluding on May 31,
2012, you will not disclose or cause to be disclosed any confidential
information or documents relating to your employment with the Company, the
operations of the Company, the terms of this Agreement, or the facts and
circumstances underlying this Agreement; provided, however, that you may
disclose the terms of this Agreement to the following persons after you inform
each such individual about the confidential nature of the information and obtain
an oral assurance from each such individual that during the period commencing
June 5, 2002 and concluding on May 31, 2012, he or she will receive and keep all
such information in confidence: (i) your spouse; and (ii) your tax, legal and
financial advisors who have a genuine need to know in connection with the
performance of their duties.


<PAGE>

Mr. Allan R. Page                      6                            May 10, 2002

      10. (b) Except for the purpose of enforcing this Agreement, should that
ever be necessary, the Company agrees that during the period commencing June 5,
2002 and concluding on May 31, 2012, it will not disclose or cause to be
disclosed any confidential information or documents relating to your employment
with the Company, the terms of this Agreement, or the facts and circumstances
underlying this Agreement to any persons other than (i) its officers, directors,
employees, attorneys and accountants who have a genuine need to know in
connection with the performance of their duties, or (ii) its shareholders or
members of the public if such disclosure is required by applicable law in the
written opinion of the Company's legal counsel or is required by a court of
competent jurisdiction. To the extent the Company makes disclosure of any of
such confidential information or documents to its officers, directors,
employees, attorneys and accountants, it will inform each such individual about
the confidential nature of the information and documents and obtain an oral
assurance from each such individual that, during the period commencing June 5,
2002 and concluding on May 31, 2012, he or she will receive and keep all such
information and documents in confidence.

      10. (c) You agree that during the period commencing June 5, 2002 and
concluding on May 31, 2012, you will not make any disparaging or derogatory
statements to anyone, whether oral or written, with respect to the Company,
including, but not limited to, statements with respect to the Company's products
or services or with respect to any of the Company's current or former officers,
directors, employees, attorneys and accountants.

      10. (d) The Company agrees that during the period commencing June 5, 2002
and concluding on May 31, 2012, CH Energy Group, Inc. will not issue any
disparaging or derogatory written statements about you to the public or to the
employees of the Company. In addition, the Company will orally inform the
officers and directors of CH Energy Group, Inc. about this commitment not to
issue any disparaging or derogatory written statements about you to the public
or to the employees of the Company, and the Company will obtain an oral
assurance from each officer and director of CH Energy Group, Inc. that, during
the period commencing June 5, 2002 and concluding on May 31, 2012, he or she
will not make any oral or written disparaging or derogatory statements about you
to the public or to the employees of the Company.

      11. You agree that during the period commencing June 5, 2002 and
concluding on December 31, 2003, you will not directly or indirectly (i) solicit
or induce any employee of the Company to terminate his or her employment with
the Company or to become employed elsewhere, (ii) solicit or induce away from
the Company, or cause to be solicited or induced away from the Company, any
business from any of the Company's customers, clients or accounts or (iii) have
any enterprise or have any relationship (e.g., employee, advisor, consultant,
partner, shareholder or otherwise) with any electric utility, gas utility or oil
distribution business that competes in any direct manner with any current
business activity of the Company; provided, however, that this commitment does
not prohibit you from owning less than 1% of any class of outstanding

<PAGE>

Mr. Allan R. Page                      7                            May 10, 2002

stock of a corporation that is listed on a national securities exchange or is
regularly traded on a national over-the-counter market.

      12. You acknowledge and agree that if you violate any of the terms of this
Agreement, in addition to any other remedy that the Company may have in law or
in equity, and if the Company so elects, from the date of your violation
forward, the Company shall have no further obligation under this Agreement.

      13. You acknowledge and agree that should you breach any aspect of
paragraph 10 (a), paragraph 10 (b), or paragraph 11 of this Agreement, the
Company will suffer immediate and irreparable harm and that money damages will
be inadequate to preserve and protect the status quo. In the event that a court
of competent jurisdiction finds that you have breached any aspect of paragraph
10 (a), paragraph 10 (b), or paragraph 11 of this Agreement, you agree that the
Company will be entitled, in addition to other remedies it may have, to
injunctive relief enforcing this Agreement. In the event that a court of
competent jurisdiction finds the Company has demonstrated a likelihood of
success on the merits of a claim by the Company that you have breached any
aspect of paragraph 10 (a), paragraph 10 (b), or paragraph 11 of this Agreement,
you agree that the Company will be entitled, in addition to other remedies it
may have, to temporary restraining order protection and preliminary injunctive
relief enforcing this Agreement.

      14. You have informed the Company that you would like to use the office
space identified as Suite B on the second floor of 110 Main Street,
Poughkeepsie, NY (the "Subject Space") for your own business activities. The
Company has a lease for this Subject Space, dated as of June 1, 1999, (the
"Lease") that will expire on May 31, 2004. The lessor of the Subject Space is
Marshall & Sterling Realty, Inc. (the "Lessor").

            If the Lessor, without requiring any payments or other consideration
from the Company because of the sublease, consents in writing to the Company
subleasing the Subject Space to you as provided for in this paragraph 14, and if
such a sublease to you will not prevent or limit the Company's ability to use,
sublease or terminate its lease(s) for the other spaces (Suite B on the first
floor and Suite C on the second floor) that it leases at 110 Main Street,
Poughkeepsie, NY, the Company hereby agrees that it, and you hereby agree that
you, will promptly enter into a Sublease Agreement (i.e., on or before July 1,
2002) for the remainder of the term of the Company's Lease for the Subject
Space.

            Such Sublease Agreement shall provide that the rent that you will
pay to the Company for the Subject Space shall be a total amount of $10.00 for
the remaining months in 2002, $10.00 for calendar year 2003 and $10.00 for the
portion of calendar year 2004 that is covered by the Sublease Agreement.

            Such Sublease Agreement also shall contain such terms and provisions
as are customarily contained in a sublease agreement for office space, including
but not limited to (i) a provision confirming that such sublease is subject to
all of the terms of the


<PAGE>

Mr. Allan R. Page                      8                            May 10, 2002

Lease except for the minimum rent provision in Section 2 of the Rider to the
Lease and the renewal options contained in Section 3 of the Rider to the Lease,
and (ii) indemnity and liability insurance provisions for the benefit of the
Company equivalent to those contained in the first paragraph of Section 9 of the
Rider to the Lease and in Section 12 of the Rider to the Lease. Such liability
insurance as provided by you shall name the Company and Lessor as additional
named insureds. Such Sublease Agreement shall also prohibit any assignment or
further subletting of the Subject Space by you without the Company's prior
written consent which may be granted or denied in the Company's sole discretion.

            You also have informed the Company of your desire to have the
ability to continue your occupancy of the Subject Space beyond May 31, 2004. If
the Lessor consents in writing to you having such an ability, and if the Lessor
does not require any payments or other consideration from the Company because of
the consent, and if the consent will not prevent or limit the Company's ability
to use, sublease or terminate its lease(s) for the other spaces (Suite B on the
first floor and Suite C on the second floor) that it leases at 110 Main Street,
Poughkeepsie, NY, the Company hereby agrees that it will waive and relinquish
its right to exercise any renewal option with respect to the Subject Space (but
not as to any other premises covered by the Lease) so as to allow you to have
the right to reach agreement with the Lessor for your continued use and
occupancy of the Subject Space from and after May 31, 2004. The Company agrees
that, after the eighth day following your execution of this Agreement, it will
waive and relinquish such right in writing promptly after receiving a copy of
the Lessor's written consent providing you with the right to reach agreement
with the Lessor to continue your occupancy of the Subject Space from and after
May 31, 2004. The Company further agrees to deliver such written waiver to the
Lessor so as to allow you to seek to formalize your continued occupancy with the
Lessor. You acknowledge and agree that the Company shall have no obligation to
exercise any renewal option contained in the Lease.

            The Company agrees to sell and convey to you, effective as of the
date the Sublease Agreement is executed, any and all of its furniture and
business equipment contained in the Subject Space for $10.00. The Company shall
deliver to you a bill of sale for such furniture and equipment which will
confirm that such furniture and equipment are being transferred and conveyed to
you in its "as is," "where is," "with all faults" condition and with no
representations or warranties as to title or condition.

            The Company agrees that it will continue to pay to the Landlord the
full costs of the Lease for the Subject Space until the Lease expires on May 31,
2004.

      15. You represent that you have returned to the Company, or will promptly
return to the Company all property belonging to the Company, including, but not
limited to, any and all credit cards, supplies, cell phones, computers,
automobiles, audio tapes, computer diskettes, equipment, identification cards,
keys, property, letters, files, documents or other items in your possession,
custody or control, if any, which were


<PAGE>

Mr. Allan R. Page                      9                            May 10, 2002

issued, provided and/or entrusted to you or prepared or created by you during
the course of your employment with the Company.

      16. You acknowledge and confirm that the Company has encouraged you to
consult a lawyer and that you have had the opportunity to consider this
Agreement for a period of up to 21 days. You also acknowledge and confirm that
you have been represented by Henry Morgenbesser, Esq., of the law firm of Allen
& Overy, 1221 Avenue of the Americas, New York, New York 10020, in connection
with the negotiation and execution of this Agreement and that you are executing
this Agreement after having fully and carefully reviewed all of its terms and
provisions with Mr. Morgenbesser, including specifically the General Release and
Waiver provisions contained in paragraph 5 of this Agreement.

      17. You acknowledge and agree that (i) you have the right to revoke this
Agreement by notifying Joseph J. DeVirgilio, Jr., in writing of your revocation
within seven days following the date on which you have executed this Agreement,
and (ii) you understand that this Agreement shall not become effective or
enforceable until this seven day revocation period has expired.

      18. You further acknowledge and agree that you are entering into this
Agreement, freely, knowingly, and voluntarily, with a full understanding of its
terms.

      19. This Agreement may not be changed or altered, except by a writing
signed by you and the Company. This Agreement supersedes all prior agreements
and understandings between you and the Company.

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

      21. This Agreement is entered into in the State of New York and the laws
of the State of New York, without regard to its conflict of law rules, shall
apply to any dispute concerning it.

      22. Whenever possible, each clause and provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any clause or provision is held to be prohibited by or invalid under
applicable law, such clause or provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of such
clause or such provision or the remaining clauses and provisions of this
Agreement.


<PAGE>

Mr. Allan R. Page                      10                           May 10, 2002

      23. You agree and acknowledge that after this Agreement becomes effective,
the Company will issue written announcements to the employees of the Company and
to the press substantially in the form of the document entitled "Content for Use
in Press Announcements of Mr. Page's Retirement" and attached hereto as Exhibit
A. Except as required by law in the written opinion of the Company's legal
counsel or as required by a court of competent jurisdiction, the Company agrees
that it will not issue announcements about your retirement to the employees of
the Company or to the press that differ in a material respect from the content
set forth in Exhibit A without your prior written approval, which approval you
agree will not be unreasonably withheld or delayed. You agree and acknowledge
that the Company may file a Current Report on Form 8-K with the Securities and
Exchange Commission attaching a copy of the press release issued by the Company
concerning your retirement and including such other information as the Company
deems appropriate.

      24. This Agreement may be executed in separate counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument. Executed counterparts may be delivered by the Company to
you and by you to the Company via facsimile, via U.S. Mail or via "by hand"
delivery.


                                             Very truly yours,


                                             ---------------------  ------------
                                             Steven V. Lant                 Date


AGREED AND ACCEPTED:

--------------------   ---------
Allan R. Page          Date

On this ____ day of ______, 2002, before me personally came Allan R. Page to me
known and known to me to be the individual described in, and who executed the
foregoing Agreement, and duly acknowledged to me that he executed the same.


------------------------------
Notary Public


<PAGE>

Mr. Allan R. Page                      11                           May 10, 2002

                                    EXHIBIT A

         Content for Use in Press Announcements of Mr. Page's Retirement

Allan R. Page, President of Central Hudson Energy Services, will retire on
August 1, 2002 after 32 years with CH Energy Group and its principal affiliates,
Central Hudson Gas & Electric Corporation and Central Hudson Energy Services.

Paul J. Ganci, Chairman of the Board and Chief Executive Officer, praised Page
for his significant contributions to CH Energy Group.

"Allan has been an essential and valuable force in the implementation of our
strategy to become a regional energy delivery and services company in the
Northeast. Under his leadership as president of CHES, our unregulated business
subsidiaries grew to serve more than 75,000 customers in 11 states," he said.
"CH Energy Group's succession plan will provide a smooth transition of
leadership and I want to thank Allan for his efforts in developing a solid
management team at CHES."

Page joined Central Hudson in July 1970, after receiving bachelor degrees in
Civil Engineering and Physics from Union College. He also holds a bachelor
degree in Electrical Engineering and a master's degree in Industrial
Administration, also from Union. He is a licensed professional engineer in the
state of New York.

Page plans to maintain his residence in the City of Poughkeepsie and to continue
active involvement in the local business and volunteer communities.

"Everyone at CH Energy Group extends best wishes to Allan in the years ahead, as
he fulfills his professional and personal goals," Ganci said.