<PAGE>
               SECURITIES AND EXCHANGE COMMISSION

                     Washington, D. C. 20549

                            FORM 10-K

                         ---------------
(Mark One)

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended......................December 31, 1996

                               or

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from...............to..................
Commission file number.....................................1-3268

            CENTRAL HUDSON GAS & ELECTRIC CORPORATION      
     (Exact name of registrant as specified in its charter)

            New York                       14-0555980     
(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, $5.00 par value           New York Stock Exchange

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

                       Title of each class

                   Cumulative Preferred Stock:

                          4 1/2% Series
                          4.75% Series
                          


<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.

                            Yes   X          No      

          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.  [ X ]

          The aggregate market value of the voting stock held by
non-affiliates of the Registrant as of February 14, 1997 was      
$567,630,454 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 14, 1997, was 17,532,987.


               DOCUMENTS INCORPORATED BY REFERENCE

          The following documents are incorporated by reference
in the respective Parts of this Form 10-K noted below:

          1.   Certain portions of Registrant's Annual Report to
               Shareholders, for the fiscal year ended December
               31, 1996, are contained in Exhibit 13 hereto and
               are incorporated by reference in Parts I, II and
               IV of this Report.

          2.   Registrant's definitive Proxy Statement, dated
               February 24, 1997, used in connection with its
               Annual Meeting of Shareholders to be held on April 
               1, 1997, is incorporated by reference in Part III
               hereof.










<PAGE>
                        TABLE OF CONTENTS
                                                                  
                                                            Page

Table of Contents
                             PART I                          

Item 1    BUSINESS                                          1 

          Generally                                         1

               Electric Sales to IBM                        2

          Construction Program and Financing                2

          Rates                                             3

               Generally                                    3
               Rate Proceedings - Electric and Gas          3
               Cost Adjustment Clauses                      4

          Fuel Supply and Cost                              4 

               Residual Oil                                 5
               Coal                                         5
               Natural Gas                                  6 
               Nuclear                                      6

          Research and Development                          6

          Environmental Quality                             6

               Air                                          7
               Water                                        7
               Toxic Substances and Hazardous Wastes        8
               Other                                        10

          Regulation                                        10 

               Generally                                    10
               Alternative Electric Power Generation        11
               Energy Efficiency Programs                   11









                               (i)
<PAGE>
                   TABLE OF CONTENTS (Cont'd)

                                                            Page

Item 1    BUSINESS (Cont'd)                                   

          Other Matters                                     11 

               Municipal Utilities                          11
               PASNY Economic
                Development Power                           12
               Company Electric Economic
                Development Rate                            12
               Marketing                                    12
               Labor Relations                              13
               Affiliates                                   13

          Executive Officers of the Company                 13

Item 2   PROPERTIES                                         16

          Electric                                          16

               General                                      16
               Load and Capacity                            18
               Roseton Plant                                21
               Nine Mile 2 Plant                            21

          Gas                                               22

               General                                      22
               Current Gas Supply                           22
               Sufficiency of Supply and
                Future Gas Supply                           22
               Other                                        23

          Other Matters                                     23














                              (ii)
<PAGE>
                   TABLE OF CONTENTS (Cont'd)

                                                           Page
Item 3   LEGAL PROCEEDINGS                                  24

               Asbestos Litigation                          24
               Environmental Litigation                     25
               Environmental Claims - Newburgh
                Manufactured Gas Site                       25
               Catskill Incident                            26
               Wappingers Falls Incident                    27
               Income Tax Assessments                       28

Item 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
          HOLDERS                                           28

                             PART II                     

Item 5    MARKET FOR THE COMPANY'S COMMON EQUITY AND
          RELATED STOCKHOLDER MATTERS                       28

Item 6    SELECTED FINANCIAL DATA                           29 

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

Item 8    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA       29

          (a)  Financial Statements and Report of
                Independent Accountants                     29
          (b)  Supplementary Financial Information          30
          (c)  Other Financial Statements and Schedule      30

Item 9    CHANGES IN AND DISAGREEMENTS WITH
          ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
          DISCLOSURE                                        30

                            PART III                     

Item 10   DIRECTORS AND EXECUTIVE OFFICERS OF THE
          COMPANY                                           31

Item 11   EXECUTIVE COMPENSATION                            31

Item 12   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
          OWNERS AND MANAGEMENT                             31

Item 13   CERTAIN RELATIONSHIPS AND RELATED 
          TRANSACTIONS                                      31


                              (iii)
<PAGE>
                   TABLE OF CONTENTS (Cont'd)

                                                           Page

                             PART IV                     

Item 14   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
          REPORTS ON FORM 8-K                               32

          (a)  Documents filed as part of this Report:        

               1.  Financial Statements                     32
               2.  Financial Statement Schedule             32
               3.  Exhibits                                 32

          (b)  Reports on Form 8-K                          33

          (c)  Exhibits Required by Item 601 of 
                 Regulation S-K                             33

          (d)  Financial Statement Schedule required
               by Regulation S-X which is excluded 
               from the Company's Annual Report to
               Shareholders for the fiscal year ended
               December 31, 1996                            33

SIGNATURES                                                  34

INDEX TO FINANCIAL STATEMENTS                              F-1

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE                               F-2

CONSENT OF INDEPENDENT ACCOUNTANTS                         F-2

FINANCIAL STATEMENT SCHEDULE FOR THE YEARS
 1996, 1995 AND 1994                         

SCHEDULE II - RESERVES                                     F-3

EXHIBIT INDEX                                              E-1

EXHIBITS                                                








                              (iv)
<PAGE>
                             PART I

          Item 1 - BUSINESS

Generally

          Registrant ("Company") is a 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.  The Company generates,
purchases and distributes electricity and purchases and
distributes gas.  The Company, 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 626,000. 
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 territory.  The number of Company
employees at December 31, 1996 was 1,237.

          The Company'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.

          Total revenues and operating income before income taxes
(expressed as percentages) derived from electric and gas
operations for each of the last three years were as follows:

          Percent of            Percent of Operating
          Total Revenues        Income before Income Taxes

          Electric   Gas        Electric     Gas

1996      81%        19%        88%          12%
1995      80%        20%        90%          10%
1994      80%        20%        89%          11%

          Consumption of electricity in New York State has
stabilized and, with an increase in supply, there is an excess of
electric generating capacity in the State.  And, as the utility
industry moves toward competition, large customers may have
increased opportunities to purchase electricity and natural gas
from sources other than the local utility.  In some instances, 
smaller customers may have the same options as larger customers. 

                              - 1 -
<PAGE>
          For further information on factors affecting the
industry, see the caption "Competition" in "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" (hereinafter "MD&A"), which MD&A, together with the
Company's Consolidated Financial Statements for the fiscal year
ended December 31, 1996, including the notes ("Notes") thereto,
are hereinafter collectively called "Company's 1996 Financial
Statements", and are incorporated herein by reference as Exhibit
13 hereto ("Exhibit 13").  Under said caption "Competition"
reference is made to the subcaption "New York - Electric -
Competitive Opportunities Proceeding" and the discussion therein
of the current settlement negotiations regarding the October 1,
1996 submissions of the New York utilities as part of the Public
Service Commission of the State of New York's ("PSC") Competitive
Opportunities Proceeding.  The date for closing of the record in
these discussions has been extended from March 8, 1997 to May 9,
1997.

          Additional information concerning revenues and
operating profits, and information concerning identifiable assets
for the electric and gas segments, which are the significant
industry segments of the Company, are set forth in Note 9   
appearing on pages 70 and 71 of the Company's 1996 Financial
Statements, which Note 9 is incorporated herein by reference.

          Electric Sales to IBM:  Reference is made to the
caption "Other Developments - Electric Sales to IBM" on page 17
of the MD&A, which caption is incorporated herein by reference,
for a discussion of the impact on the Company as a result of
sales to its largest customer, International Business Machines
Corporation ("IBM").

Construction Program and Financing

          The Company is engaged in a construction program which
is presently estimated to involve total cash expenditures during 
the period 1997 through 2001 of approximately $267.8 million. 
The Company's principal construction projects consist of those 
designed to improve the reliability, efficiency and environmental
compatibility of the Company's generating facilities and those
required to expand, reinforce and replace the Company's
transmission, substation, distribution and common facilities.

          For estimates of construction expenditures, internal
funds available, mandatory and optional redemption of long-term
securities, and working capital requirements for the five-year
period 1997-2001, see the subcaption "Construction Program" under
the caption "Capital Resources and Liquidity" of the MD&A
appearing on pages 12 through 14 of Exhibit 13 hereto, which
subcaption is incorporated herein by reference.

                              - 2 -
<PAGE>
          For a discussion of the Company's capital structure,
financing program and short-term borrowing arrangements, see
Notes 4 through 6 to the Company's 1996 Financial Statements, and
the subcaptions "Capital Structure," "Financing Program" and
"Short-Term Debt" under the caption "Capital Resources and
Liquidity" of the MD&A appearing, in the case of said Notes, on
pages 52 through 58 of Exhibit 13 hereof and, in the case of said
subcaptions, on pages 14 through 16 of Exhibit 13 hereto, which
Notes and subcaptions are incorporated herein by reference.

          The Company's Certificate of Incorporation and its
various debt instruments do not contain any limitations upon the
issuance of authorized, but unissued, Preferred Stock and Common
Stock or of unsecured short-term debt.

          The Company's various debt instruments include
limitations as to the amount of additional funded indebtedness
which the Company can issue.  The Company believes such
limitations will not impair its ability to issue any or all of
the debt described under the above referenced subcaption
"Financing Program", incorporated herein by reference.

Rates

          Generally:  The electric and gas rates of the Company
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
are regulated by the Federal Energy Regulatory Commission
("FERC").

          The Company's present retail rate structure consists of
various rate and service classifications covering residential,
commercial and industrial customers.  During 1996, the average
price of electricity to such customers was 8.55 cents per kWh,
representing a decrease of approximately 0.70% as compared to the
8.61 cents average price during 1995.
     
          Rate Proceedings - Electric and Gas:  For information
regarding the Company's most recent electric and gas cases filed
with the PSC, see caption "Rate Proceedings" in the MD&A on pages
16 and 17 of Exhibit 13 hereto, which caption is incorporated
herein by reference.








                              - 3 -
<PAGE>
          Cost Adjustment Clauses:  For information with respect
to the Company's electric and gas cost adjustment clauses, see
the discussions under the caption "Rates, Revenues and Regulatory
Matters" in Note 1 to the Company's 1996 Financial Statements
appearing on page 44 of Exhibit 13 hereto, which caption is
incorporated herein by reference.

Fuel Supply and Cost

          The Company's two primary fossil fuel-fired electric
generating stations are the Roseton Plant (described in Item 2
below under the subcaptions "Electric - General" and "Electric -
Roseton Plant") and the Danskammer Plant (referred to in Item 2
below under the subcaption "Electric - General").  The Roseton
Plant which is fully equipped to burn both residual oil and
natural gas, has had its two units operated on an alternating
basis for six months at a time since August 1, 1994.  Commencing
in 1994, Units 1 and 2 of the Danskammer Plant, which are
equipped to burn residual oil or natural gas, have only operated
when the demand for power was high or purchased power and energy
exchange contracts were uneconomical.  Units 3 and 4 of the
Danskammer Plant are capable of burning coal, natural gas, or
residual oil.

          For the 12 months ended December 31, 1996, the sources
and related costs of electric generation for the Company were as
follows:
                                             Aggregate
Sources of               Percentage of       Costs in 1996
Generation               Energy Generated         ($000)    

Purchased Power               38.5%           $ 55,432
Coal                          37.7              40,592
Gas                            0.9               1,913
Nuclear                       14.0               4,137    
Oil                            5.5               9,800   
Hydroelectric                  3.4                 964   

                             100.0%
                             ======
Fuel Handling Costs                              1,877     
Deferred Fuel Cost                                (318)

                                              $114,397       
                                              ========






                              - 4 -
<PAGE>
          Residual Oil:  Contractual oil storage arrangements for
the Roseton and Danskammer Plants with Amerada Hess Corporation
("Hess") were terminated as of January 31, 1996 due to those
Plants' reduced operations.  At December 31, 1996, there were
506,723 barrels of fuel oil in inventory in Company-owned tanks
for use in the Danskammer and Roseton Plants, which amount
represents an average daily supply of 33 days.  The oil storage
capacity as of December 31, 1996 for these Plants was 16,251 and
1,079,000 barrels, respectively.  The Company's share of the
Roseton Plant's oil storage capacity is 377,650 barrels.

          During 1996, there were no purchases of fuel oil made
for the Danskammer Plants.

          During 1996, the Roseton Plant's fuel oil requirements
were supplied under two contracts.  The prices under each
contract were determined on the basis of published market indices
in effect at the time of delivery.  The term of one contract
expired on August 31, 1996, and the second contract became
effective on September 1, 1996, and continues through August 31,
1998.  These contracts also permit the Company to make certain
spot purchases from others.

          Coal:  During 1996, the Company provided for the
majority of its coal requirements under two agreements with
domestic coal suppliers.  Coal was transported to the Danskammer
Plant under agreements with two railroads.  The two supply
agreements, as well as both rail agreements, expired on December
31, 1996.  The Company also purchased a portion of its 1996 coal
supply on the spot market.

          In order to provide for its future requirements for
coal to be burned in Units 3 and 4 at the Danskammer Plant, the
Company, effective January 1, 1997, entered into two long-term
supply contracts for the purchase of an aggregate of 720,000 tons
per year of low sulfur (0.7% maximum) coal.  The Company will
also purchase a portion of its coal supply on the spot market.

          One contract provides for the delivery of coal by water
from sources in Venezuela and Columbia, South America.  The base
price of purchases under this contract is fixed for the period
which ends on December 31, 1997, and thereafter, the price will
be negotiated by the parties.  The contract term expires on
December 31, 1999.

          The second contract, which provides for the delivery of
domestic coal by rail, expires on December 31, 1998.  The base
price of purchases is fixed for the term of that contract.



                              - 5 -
<PAGE>
          The Company has also entered into a long-term rail
contract for the delivery of coal.  This contract covers the
period January 1, 1997 - December 31, 2001.  During the first two
years of this contract, rail rates are fixed, and thereafter,
such rates will be negotiated by the parties.

          Natural Gas:  For information regarding the Company's
natural gas supply and capacity, see the caption "Natural Gas
Supply" in Note 8 to the Company's 1996 Financial Statements
appearing on pages 64 and 65 of Exhibit 13 hereto, which caption
is incorporated herein by reference.

          Nuclear:  For information regarding fuel reloading at
the Nine Mile 2 Plant, see the caption "Nuclear Operations" in
the MD&A on pages 22 and 23 of Exhibit 13 hereto, such caption
being incorporated herein by reference.

Research and Development

          The Company is engaged in the conduct and support of
research and development ("R&D") activities that are focused on
providing enhanced customer services at lower costs.  Individual
projects aim to improve existing energy technologies and to
develop new technologies related to the production, distribution
and conservation of energy.  New York law requires electric and
gas utilities to contribute to research undertaken by the New
York State Energy Research and Development Authority as well. 
The Company leverages its R&D expenditures by contributing to and
seeking funding for projects sponsored by various state and
national research consortia and those sponsored by the Company.

          The Company's expenditures, net of revenues from
royalties, for electric and gas research and development projects
amounted to $4.1 million in 1995 and $3.3 million in 1996.  The
Company projects that its 1997 expenditures for research and
development will total approximately $3.4 million.

Environmental Quality

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

                              - 6 -
<PAGE>
          Air:  State regulations affecting the Company'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, nitrogen oxides and suspended particulates must
be complied with in the area surrounding the Company's generating
plants.  Based on the operation of its continuous emission stack
monitoring systems and its ambient air quality monitoring system
in the area surrounding the Roseton and Danskammer Plants, the
Company believes that present air quality standards for nitrogen
oxides, sulfur dioxide and particulates are satisfied in those
areas.

          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
New York State Department of Environmental Conservation
("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 sulfur
dioxide and nitrogen oxides 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 fuel is also
burned at Roseton.

          Reference is made to the caption, "Environmental
Matters - Clean Air Act Amendments" in Note 8 of the Company's
1996 Financial Statements on pages 65 and 66 of Exhibit 13
hereto, which caption is herein incorporated by reference, for a
discussion of the impact of the Clean Air Act Amendments of 1990
("CAA Amendments") on the Company's efforts to attain and
maintain national ambient air quality standards for emissions
from its fossil-fueled electric power plants.

          Except as set forth above, the Company is unable to
predict the effect (including cost) of these programs on its
power plant operations since the details of the CAA Amendments
are yet to be completely established by implementing regulations
to be issued over a period of years by the EPA and the NYSDEC.

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





                              - 7 -
<PAGE>
          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 industrial waste
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.

          The Company 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 permits are the subject of separate
renewal proceedings currently pending before the NYSDEC.  In the
Roseton Plant proceeding, the subject of the restriction on use
of water for cooling purposes at that Plant (as referred to in
Item 3 below, under the caption "Environmental Litigation") is
also being discussed.  Such SPDES permits may be renewed in 1998,
but the Company can make no estimate as to the conditions, if
any, to which such SPDES permits may be subject.  It is the
Company's belief that the expired SPDES permits continue in full
force and effect pending issuance of the new SPDES permits.

          Toxic Substances and Hazardous Wastes:  The Company 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 (the "Registry") six
locations at which gas manufacturing plants owned or operated by 
the Company or by predecessors to the Company were once located. 
Two other sites, which formerly contained gas manufacturing
plants, have been identified by the Company.  The Company 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.










                              - 8 -
<PAGE>
          All of these eight sites were studied 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, the Company concluded that no remedial
actions were required at any of these sites.  In 1991, the NYSDEC
advised the Company that four of the six sites had been deleted
from such Registry.  In 1992, the NYSDEC advised the Company 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 may be required to determine
whether or not wastes on site are hazardous.  If, as a result of
such potential new analytical tests, or otherwise, remedial
actions were ultimately required at these 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 Company if the Company could not recover all, or
a substantial portion thereof, through rates.  

          Reference is made to the subcaption "Environmental
Matters - Former Manufactured Gas Plant Facilities" on pages 66
and 67 of Note 8 to the Company's 1996 Financial Statements,
which subcaption is herein incorporated by reference, for a
discussion of litigation filed against the Company, involving one
of the eight sites, by the City of Newburgh, New York and the
Company's response thereto.

          In August 1992, the NYSDEC notified the Company that
the NYSDEC suspected that the Company's offices at Little Britain
Road in New Windsor, Orange County, New York, may constitute an
inactive hazardous waste disposal site.  Pursuant to a Consent
Order entered into between the Company and the NYSDEC, the
Company performed a preliminary site assessment and, on January
31, 1996, a draft final report ("site assessment report")
prepared by the Company's consultant was submitted to the NYSDEC
for its review, evaluation and comment.  As a result of the
NYSDEC's review of this site assessment report, the Company
agreed to perform additional testing.  The draft report on this
additional testing was submitted to the NYSDEC on December 6,
1996.  These reports both indicated that a limited amount of
subsurface soil contamination was detected near one corner of the
site and that contaminants were also detected in the ground water
beneath the site.  Operations conducted on the site by the
Company since it purchased the property in 1978 are not believed
to have contributed to either the soil or the ground water
contamination.  The Company can make no (i) prediction regarding
what action the NYSDEC may take with regard to the draft reports,
or (ii) prediction as to the outcome of recovery attempts against
third parties by the Company.  However, the Company believes that
the cost of such site assessment and remediation, if any, will
not be material.
                              - 9 -
<PAGE>
          Other:  The Company estimates that expenditures
attributable, in whole or in substantial part, to environmental
considerations totaled $9.9 million in 1996, of which about $1.7
million related to capital projects and $8.2 million were charged
to expense.  It is estimated that in 1997 the total of such
expenditures will be approximately $9.7 million.

          The Company is not involved as a party 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 below under Item 3 hereof under the captions
"Environmental Litigation" and "Environmental Claims - Newburgh
Manufactured Gas Site", and as described above under the
subcaption "Environmental Quality - Toxic Substances and Hazard-
ous Wastes". 

Regulation

          Generally:  The Company is subject to regulation by the
PSC with respect to, among other things, service rendered
(including the rates charged), major transmission facility
siting, energy planning, accounting procedures and issuance of
securities.

          Certain of the Company's 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 the Company's transmission and
sale for resale of electric energy in interstate commerce.

          The Company is not subject to the provisions of the
Natural Gas Act.

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














                             - 10 -
<PAGE>
          Alternative Electric Power Generation:  Pursuant to the
provisions of the federal Public Utility Regulatory Policies Act
of 1978 ("PURPA"), and the New York Public Service Law, the
Company is required to enter into long-term contracts to purchase
electric power generated by small hydro, alternative energy and
cogeneration facilities which meet qualification standards
established by such statutes and the regulatory programs 
promulgated thereunder.  With respect to facilities qualified
under PURPA, the Company must pay its avoided cost (i.e., the
cost the Company would otherwise incur to generate the increment
of power purchased) for electric power purchased from qualified
facilities, which, under the New York Public Service Law, is "at
rates just and reasonable to electric [...] corporation
ratepayers."  As of December 31, 1996, the Company's avoided cost
at the 115 KV transmission level was approximately 3.0 cents per
kWh.

          As of December 31, 1996, 19 MW of generation,
qualifying for avoided cost payments by the Company, was
interconnected with the Company's system.  The opportunity under
PURPA and the New York Public Service Law to require the Company
to purchase power from qualifying facilities could serve as an
inducement to the Company's industrial and commercial customers
to install their own qualifying on-site generation facilities to
reduce their purchases of electric power from the Company which
would result in losses of revenues from such customers.  However,
as of December 31, 1996, no significant customer has indicated to
the Company the intention to pursue such alternative.

          Energy Efficiency Programs:  In response to the PSC's
directives, the Company filed with the PSC the Company's Energy
Efficiency Program for 1997 on November 14, 1996, which projected
a reduction of 502 kW in the Company's 1997 summer peak load
demand.  In its Order, issued and effective on February 27, 1997,
the PSC approved the Company's 1997 Energy Efficiency Program
subject to modification based upon rulings that the PSC may make
in the Competitive Opportunities Proceeding, described above
under the caption "Business - Generally."

Other Matters

          Municipal Utilities:  Article 14-A of the New York
General Municipal Law permits any municipality to construct,
lease, purchase, own, acquire, use and/or operate any utility 
service for the benefit of its inhabitants, and, in furtherance
thereof, permits any municipality to acquire, through purchase or
condemnation, the public utility service of any public utility
company.



                             - 11 -
<PAGE>
          The current and projected excess supply of electricity
in the Northeastern United States and in Canada has significantly
depressed wholesale prices, and the increased level of
competition in the electric utility industry could cause
municipalization efforts to intensify.  The Company is not aware
of any municipalization efforts in its franchise area.

          PASNY Economic Development Power:  The New York State
Economic Development Power Allocation Board is authorized by law
to solicit applications for "economic development power" by
municipalities or municipal agencies on behalf of businesses 
which normally use a minimum peak electric demand of 400 kW for 
purposes of economic development, particularly job creation. 
"Economic Development Power" ("EDP") is electric power generated
at the Fitzpatrick Nuclear Generating Station of the Power
Authority of the State of New York ("PASNY") which is available
for such purpose.  Should such power be allocated to a customer
within the Company's service territory, the Company would be
required to wheel such power to the user at a cost-based rate,
which must be approved by the PSC and/or by the FERC.  

          As of December 31, 1996, the Company is not aware of
any of its electric customers having applied for such EDP.

          Company Electric Economic Development Rate:  In 1994,
the PSC approved the Company's proposed tariff amendments to
provide an economic development electric rate discount for large
industrial customers (which exhibit new annual electric load of
500 kW or more) taking substation or transmission service which
locate or expand their business operations within the Company's
service territory.  Certain energy efficiency guidelines must
also be met by eligible customers.  Qualifying customers pay
lower electric prices for the increased load, with savings on
current rates for ten years.  Customers must apply for the
discount by October 1, 1999.  As of December 31, 1996, the
Company had four industrial customers participating under this
rate structure.

          Marketing:  The Company promotes the use of gas and
electricity by encouraging the purchase of energy efficient gas
and electric appliances, particularly gas heaters and fireplaces,
ground source heat pumps, electric water heaters and night
security, area and flood lighting.








                             - 12 -
<PAGE>
          Labor Relations:  The Company has agreements with the
International Brotherhood of Electrical Workers for its 868   
unionized employees, representing production and maintenance
employees, customer relations representatives, service workers
and clerical employees, excluding persons in managerial,
professional or supervisory positions, which agreements were
renegotiated effective July 1, 1994 and continue through June 30,
1998.  The agreements provide for an average general wage
increase of 3.2% in each of the first three years of such
agreements and a 3.5% increase in the fourth year of such
agreements, and certain additional fringe benefits.  

          Affiliates:  On June 30, 1996, a merger was effected
between two wholly-owned subsidiaries of the Company whereby
Central Hudson Cogeneration, Inc. was merged into Central Hudson
Enterprises Corporation, with the latter being the surviving
corporation.  Said merger had previously been approved by the
PSC.

          Central Hudson Enterprises Corporation:  Central Hudson
Enterprises Corporation is engaged in the business of conducting
energy audits, providing services related to the design,
financing, installation and maintenance of energy conservation
measures and cogeneration systems for private businesses,
institutional  organizations and governmental entities and
participates in cogeneration, small hydro and alternate energy
production projects, directly or through one or more of its
affiliates, including the Cencogen - West Delaware Corporation.

          CH Resources, Inc., Phoenix Development Company, Inc.,
and Greene Point Development Corporation:  These corporations,
each a wholly-owned subsidiary of the Company, were established
to either hold real property for the future use of the Company or
to participate in energy-related ventures. Currently, such
subsidiaries either do not hold assets or hold assets of little
market value.

Executive Officers of the Company

          The names of the current officers of the Board of
Directors and the executive officers of the Company, their
positions held and business experience during the past five (5)
years and ages (at December 31, 1996) are as follows:








                              - 13 -
<PAGE>
                            Principal Occupation or
                            Employment and Positions
Name of Officer and       and Offices with the Company 
   Position Held         during the past five (5) years       Age

                      Officers of the Board


John E. Mack, III,       Present positions, except Chairman    62
  Chairman of the Board  of the Committee on Finance,
  and Chief Executive    April 1996
  Officer; Chairman of                   
  the Executive,  
  Retirement and Finance
  Committees

Jack Effron,             Present position since April 1994;    63
  Chairman of Committee  President of Efco Products, a 
  on Compensation and    bakery ingredients corporation; 
  Succession             member of the St. Francis Health 
                         Care Foundation; Chairman of the 
                         Chief Executive's Network for 
                         Manufacturing of the Council of 
                         Industry of Southeastern New York

Heinz K. Fridrich        Present position since April 1995;    63
  Chairman of Committee  Courtesy Professor, University of
  on Audit               Florida at Gainesville, since 1994;
                         Vice President - Manufacturing  
                         International Business Machines
                         Corporation, March 1992 - September
                         1993; Board of Trustees; Mount St.
                         Mary College, March 1992 - 1993


                Executive Officers of the Company

Paul J. Ganci,           Present position                      58
  President and Chief    
  Operating Officer


Carl E. Meyer,           Present position since April 1996;    49
  Sr. Vice President -   Vice President - Customer Services,
  Customer Services      November 1992 - April 1996; Vice
                         President - Engineering and
                         Production, March 1992 - November
                         1992



                             - 14 -
<PAGE>
                            Principal Occupation or
                            Employment and Positions
Name of Officer and       and Offices with the Company 
   Position Held         during the past five (5) years       Age


         Executive Officers of the Company - (Continued)


Allan R. Page,           Present position since April 1996;    49
  Sr. Vice President -   Vice President - Corporate Services,
  Corporate Services     November 1992 - April 1996; Vice
                         President - Customer Services, March
                         1992 - November 1992

Joseph J. DeVirgilio,    Present position                      45
  Jr., Vice President -  
  Human Resources and    
  Administration

Ronald P. Brand,         Present position since November       58
  Vice President -       1992; Assistant Vice President -
  Engineering and        Engineering, March 1992 - November
  Environmental Affairs  1992

Benon Budziak,           Present position since February       64
  Vice President -       1994; Assistant Vice President - 
  Fossil Production      Fossil Production, November 1992 - 
                         February 1994; Manager - Fossil 
                         Production, March 1992 - November
                         1992

Ellen Ahearn,            Present position since April 1994;    42
  Secretary              Assistant Secretary and Internal 
                         Auditing Manager, August 1992 - 
                         April 1994; Internal Auditing Manager,
                         March 1992 - August 1992

Steven V. Lant,          Present positions since April 1993;   39
  Treasurer and          Assistant Treasurer and Assistant
  Assistant Secretary    Secretary, March 1992 - April
                         1993;









                             - 15 -
<PAGE>
                            Principal Occupation or
                            Employment and Positions
Name of Officer and       and Offices with the Company 
   Position Held         during the past five (5) years       Age

         Executive Officers of the Company - (Continued)


Donna S. Doyle           Present position since April 1995;    48
  Controller             Assistant Controller April 1994 -
                         April 1995; Manager of Taxes, Budgets
                         and Customer Accounting, April 1993 -
                         April 1995; Manager of Plant and
                         Depreciation and General Accounting,
                         March 1992 - April 1993

Arthur R. Upright,       Present position since February       53
  Assistant Vice         1994; Manager Cost and Rate
  President - Cost       and Financial Planning, March 1992 
  and Rate and           - February 1994
  Financial Planning     

Gladys L. Cooper         Present position since September      45
  Assistant Vice         1995; leave of absence for
  President -            educational purposes August 1992 -
  Governmental           September 1995; Secretary, March
  Relations              1992 - April 1994                     



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


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

          Item 2 - PROPERTIES

Electric

          General:  The net capability of the Company's electric
generating plants as of December 31, 1996, the net output of each
plant for the year ended December 31, 1996, and the year each
plant was placed in service or rehabilitated are as set forth
below:





                             - 16 -
<PAGE>
<TABLE>
<CAPTION>                                                    (MW)*
Electric                                                 Net Capability   1996 Unit
Generating                               Year Placed        (95-96)      Net Output
Plant            Type of Fuel            In Service     Summer   Winter     (MWh)  
<S>              <C>                     <C>            <C>      <C>     <C>
Danskammer       Residual Oil, Natural   1951-1967        505      502    2,133,513
Plant            Gas and Coal

Roseton Plant    Residual Oil            1974             422      423      300,459
(35% share)**    and Natural Gas

Neversink        Water                   1953              22       24       88,155
Hydro Station

Dashville        Water                   1920               5        5       11,464
Hydro Station

Sturgeon Pool    Water                   1924              16       16       80,685
Hydro Station

High Falls       Water                   1986               3        3       10,704
Hydro Station

Coxsackie        Kerosene or             1969              22       25        1,806
Gas Turbine      Natural Gas

So. Cairo        Kerosene                1970              20       23          887
Gas Turbine
Nine Mile 2      Nuclear                 1988             101      103      779,106
Plant (9% share)                                       ------   ------    ---------
                                         Total          1,116    1,124    3,406,779
*   Reflects maximum one-hour net capability of the Company's ownership of generation
    resources and, therefore, does not include firm purchases or sales.
**  Since August 1, 1994, the Roseton Plant units have been scheduled to operate           
    alternately on a six-month cycle.

                                          - 17 -
</TABLE>
<PAGE>
                 The Company has a contract with PASNY which
entitles the Company to 49 MW net capability from the Blenheim-
Gilboa Pumped Storage Hydroelectric Plant through 2002.

                 See Item 1 above, under the subcaption
"Regulation - Alternative Electric Power Generation," with
respect to alternative electric power generation interconnected
with the Company's system.

                 The Company owns 83 substations having an
aggregate transformer capacity of 4.6 million KVA.  The
transmission system consists of 588 pole miles of line and the
distribution system of 7,269 pole miles of overhead lines and 829
trench miles of underground lines.

                 Load and Capacity:  The Company's maximum one-
hour demand within its own territory, for the year ended December
31, 1996, occurred on August 23, 1996 and amounted to 838 MW. 
The Company's maximum one-hour demand within its own territory,
for that part of the 1996-1997 winter capability period through
February 20, 1997 occurred on January 17, 1997 and amounted to   
766 MW.

                 Based on current projections of peak one-hour
demands for the three-year period comprising the 1997 summer
capability period through the winter capability period of 1999-
2000 the Company estimates that it will have capacity available
to satisfy its projected peak demands plus the estimated
installed reserve generating capacity requirements which it is
required to maintain as a member of the New York Power Pool
("NYPP"), described below.  The following table sets forth the
amounts of any excess capacity by summer and winter capability
periods for such three-year period:


















                             - 18 -
<PAGE>
          
<TABLE>
<CAPTION>                                                            
                                   Peak +                   Excess of Capacity over
                   Forecasted      Installed   Available    Peak Plus NYPP Installed
 Capability          Peak          Reserve of  Capacity     Reserve Requirements
   Period             (MW)         18% (MW)      (MW)        (MW)       Percent
<S>       <C>         <C>                  <C>          <C>         <C>
1997     Summer       905           1,068       1,183        115          10.8  
1997-98  Winter       830           1,068*      1,191        123          11.5
1998     Summer       925           1,092       1,183         91           8.3
1998-99  Winter       845           1,092*      1,191         99           9.1
1999     Summer       940           1,109       1,183         74           6.7
1999-00  Winter       865           1,109*      1,191         82           7.4

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

     The foregoing table reflects the reduction in capacity requirements as a result of
     the Company's Energy Efficiency Programs described above in Item 1 under the
     subcaption "Regulation - Energy Efficiency Programs".
     













                                          - 19 -
</TABLE>
<PAGE>
     The Company is a member of the NYPP consisting of the major
investor-owned electric utility companies in the State and PASNY. 
The members of the NYPP, by agreement, provide for coordinated
operation of their bulk power electric systems with a view to the
use of the most economical source of electricity, for the
maintenance of a reserve margin equal to at least 18% of each
member's forecasted peak load and for the sale and interchange of
electric generating capability and energy among such members. 
The members of the NYPP also provide for the cooperative
development of long-range plans for the expansion on an
integrated basis of the bulk power supply system for New York
State, compatible with environmental standards, and appropriately
related to interstate and international capacity and reliability
considerations.

     As part of the ongoing discussions regarding the
restructuring of the electric industry in New York State referred
to under the caption "Competition" in the MD&A on pages 6 through
11 of Exhibit 13 hereto, proposals have been made to restructure
the NYPP.  In a filing with FERC, dated January 31, 1997, the
member systems of the NYPP proposed a new market structure that
would include as its key elements the establishment of an
Independent System Operator ("ISO"), the New York State
Reliability Council ("NYSRC"), and the New York Power Exchange
("NYPE").  The ISO, NYSRC and NYPE would collectively replace the
NYPP.

     The ISO's principal mission would be to maintain the
reliability of the New York State bulk power systems and to
provide transmission service on a comparable and non-
discriminatory basis.  The ISO would be open to buyers, sellers,
consumers and environmental groups and transmission providers;
each of these groups would be represented on the Board of
Directors of the ISO, which is proposed to be a not-for-profit
New York corporation.  The NYSRC's mission would be 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 would develop the
procedures necessary to operate the system within these
reliability rules.  The NYSRC is proposed to be governed by a
committee comprised of transmission providers and representatives
of buyers, sellers, and consumer and environmental groups.  The
NYPE is proposed to be established as a non-profit corporation
that would provide a vehicle through which buyers and sellers
could participate in the markets for energy, capacity and
ancillary services.

     The Company is unable to predict the outcome of this FERC
filing.


                             - 20 -
<PAGE>
     Roseton Plant:  The Roseton Plant is located in the
Company's franchise area at Roseton, New York, and is owned by
the Company, Consolidated Edison Company of New York ("Con
Edison") and 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").  The Company 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.

     For more information with respect to the Roseton Plant, see
the caption "Roseton Plant" in Note 8 to the Company's 1996
Financial Statements appearing on pages 62 and 63 of Exhibit 13
hereto, which caption is incorporated herein by reference.

     The 345 kV transmission lines and related facilities to
connect the Roseton Plant with other points in the system of the
Company and with the systems of Con Edison and Niagara Mohawk to
the north and west of such Plant are 100%-owned by the Company. 
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 the Company for such use
by the other parties.  In addition, the Company has contract
rights which entitle the Company 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, the Company agreed to provide PASNY
capacity in the 345 kV transmission lines the Company 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: Reference is made to the caption "Nuclear
Operations" in the MD&A, on pages 22 and 23 of Exhibit 13 hereto
and Note 2 to the Company's 1996 Financial Statements, on pages
48 through 50 of Exhibit 13 hereto, which caption and Note are
incorporated herein by reference, for a discussion of the
Company's ownership interest in, costs for, and certain operating
matters relating to the Nine Mile 2 Plant.







                             - 21 -
<PAGE>
Gas

     General:  The Company's gas system consists of 161 miles of
transmission pipelines and 963 miles of distribution pipelines.

     Current Gas Supply:  For information on the Company's gas
suppliers and gas storage capability, see the caption "Natural
Gas Supply" in Note 8 to the Company's 1996 Financial Statements
and the subcaption, "Recent Developments - New York - Natural
Gas" in the MD&A appearing on pages 64 and 65 of Exhibit 13
hereto, which caption and subcaption are incorporated herein by
reference.

     During 1996, natural gas was available to firm gas customers
at a price competitive with that of alternative fuels.  As
compared to 1995, in 1996, firm retail gas sales, normalized for
weather, increased by 2.85% and the average number of firm gas
customers increased by 1.05% or 629.  Sales to interruptible
customers decreased 78% in 1996 as compared to 1995.  Due to
Sharing Arrangements, as described in the caption "Sharing
Arrangements," in the MD&A appearing on page 24 of Exhibit 13
hereto, which caption is incorporated herein by reference, that
are in place for interruptible gas sales variations from year to
year, the reduction in interruptible gas sales has a minimal
impact on earnings.

     For the year ended December 31, 1996, the total amount of
gas purchased from all sources was 1,091,909 Mcf., which includes
461,417 Mcf. purchased directly for use as a boiler fuel at the
Roseton Plant.

     The Company 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 the Company's customers for the year
ended December 31, 1996 occurred on December 31, 1996 and 
amounted to 91,823 Mcf.  The Company's peak-day gas capability in
1996 was 116,865 Mcf.  The peak daily demand for natural gas by
the Company's customers for that part of the 1996-1997 heating
season through February 20, 1997, occurred on January 18, 1997
and amounted to 101,175 Mcf.





                             - 22 -
<PAGE>
     Other:  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 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, moreover, 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 by-passing the distribution utility.  The
PSC has authorized New York State distribution gas utilities to
transport customer-owned gas through its facilities upon request
of a customer.  Currently, interstate pipeline transmission
companies are located in certain areas where the Company provides
retail gas service (the Towns of Carmel, Pleasant Valley,
Coxsackie, and LaGrange).

     For a discussion of the PSC proceeding relating to issues
associated with the restructuring of the natural gas market, see
also the subcaption "Competition - New York - Natural Gas" in the
MD&A, on page 11 of Exhibit 13 hereto, and the caption "Natural
Gas Supply" in  Note 8 to the Company's 1996 Financial Statements
appearing on pages 64 and 65 of Exhibit 13 hereto, which
subcaption and caption are incorporated herein by reference.

Other Matters

     The Danskammer Plant and the Roseton Plant and all of the
other principal generating plants and important property units of
the Company 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 the Company
consisting of flowage or other riparian rights.  The Company'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 the
Company are subject to rights-of-way and easements which do not
interfere with the Company's operations.  In the case of certain
distribution lines, the Company 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 the Company
pursuant to long-term contractual arrangements.







                             - 23 -
<PAGE>
     All of the physical properties of the Company (other than
property, such as material and supplies, excluded in the
Company'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 it is the Company's practice to pay regularly
as and when due.

     The Company's properties have been well maintained and are
in good operating condition.

     During the three-year period ended December 31, 1996, the
Company made gross property additions of $164.2 million (which
includes $6 million in property additions related to the Roseton
Plant restoration due to fire damage, which amount was reimbursed
by insurance) and property retirements and adjustments of $36.8
million, resulting in a net increase (including Construction Work
in Progress) in utility plant of $127.4 million, or 9.3%.

     Item 3 - LEGAL PROCEEDINGS

Asbestos Litigation

     For a discussion of suits against the Company involving
asbestos, see the caption "Asbestos Litigation" in Note 8 to the
Company's 1996 Financial Statements appearing on pages 67 and 68
of Exhibit 13 hereto, which caption is incorporated herein by
reference.

     Since 1987, the Company has been involved as a defendant in
the "mass tort" asbestos litigation in the United States District
Courts for the Southern and Eastern Districts of New York and the
New York State Supreme Court, County of New York.  This
litigation involves thousands of plaintiffs who seek large
amounts of compensatory and punitive damages from numerous
defendants for deaths and injuries allegedly caused by exposure
to asbestos.  The Company has been a defendant in approximately
1,000 such individual lawsuits.   Many of these lawsuits have
been disposed of without any payment by the Company, or for
immaterial amounts.  While the amounts demanded in all the
remaining lawsuits total several billion dollars, it is the
Company's opinion, based on its experience in such litigation and
on information and relevant circumstances known to it at this
time, that these lawsuits will not have a material adverse effect
on the Company's financial position.  However, if the Company
were ultimately held liable under these lawsuits and insurance
coverage were not available, the cost thereof could have a
material adverse effect (a reasonable estimate of which cannot be
made at this time) on the financial condition of the Company if

                             - 24 -
<PAGE>
the Company could not recover all or a substantial portion
thereof in rates.  The Company 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 reimbursement for its defense costs and
liability.  The Company's insurance does not extend to punitive
damages. 

Environmental Litigation

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

     Such Consent Order provides for certain operating
restrictions at the Roseton Plant relating to the use of river
water for plant cooling purposes, which have not imposed, and are
not expected to impose, material additional costs on the Company. 
The Consent Order was extended by agreement of the parties until
February 1, 1997.  The parties have now agreed to extend the
Consent Order until February 1, 1998, subject to Court approval. 
For a description of the pending NYSDEC proceeding involving
renewal of the SPDES permit for the Roseton Plant (which expired
on October 1, 1992), see Item 1 above under the subcaption
"Environmental Quality - Water."

Environmental Claims - Newburgh Manufactured Gas Site

     Reference is made to the subcaption "Environmental Matters -
Former Manufactured Gas Plant Facilities" on pages 66 and 67 of
Exhibit 13 hereto of Note 8 to the Company's 1996 Financial
Statements, which subcaption is herein incorporated by reference,
for a discussion of litigation filed against the Company by the
City of Newburgh, New York, on May 26, 1995 in the United States
District Court, Southern District of New York, and the Company's
response thereto.

     Additional testing pursuant to the Order of Consent,
referred to under such subcaption, will be made, in the Spring of
1997, of the Company's property, the property of the City of
Newburgh and the bottom of the Hudson River adjoining the City of
Newburgh's property.







                              - 25 -
<PAGE>
Catskill Incident

     Reference is made to the caption "Other Matters" in Note 8
of the Company's 1996 Financial Statements, on pages 68 and 69 of
Exhibit 13 hereto, which caption is herein incorporated by
reference, for a description of an explosion in a dwelling in the
Company'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 have been commenced against the Company arising out
of such incident, including the following:

     By complaint, dated February 2, 1994, Carl Fatzinger, as
executor of the estate of Mildred Fatzinger, and Virginia
Fatzinger commenced an action in the Supreme Court of the State
of New York, Greene County, against the Company and two other
defendants.  The complaint seeks an unspecified amount of
compensatory and punitive damages based on theories of
negligence, absolute liability and gross negligence for the death
of Mildred Fatzinger, personal injuries to Virginia Fatzinger and
property damage alleged to have been caused by said explosion.

     By complaint, dated October 18, 1993 and filed in the
Supreme Court of the State of New York, Greene County, Frank
Reyes commenced an action against the Company for unspecified
personal injuries and property damage alleged to have been caused
by said explosion.  The complaint seeks $2,000,000 in
compensatory damages and $2,000,000 in punitive damages from the
Company, based on theories of negligence and gross negligence.

     The Company is investigating these claims and presently has
insufficient information on which to predict their outcome.  The
Company believes that it has adequate insurance with regard to
the claims for compensatory damages.  The Company's insurance,
however, does not extend to punitive damages.  If punitive
damages were ultimately awarded in either or both of these
lawsuits, such award(s) could have a material adverse effect on
the financial condition of the Company.  At this time, the
Company can make no prediction as to any other litigation which
may arise out of this incident.










                             - 26 -
<PAGE>
Wappingers Falls Incident

     Reference is made to the caption "Other Matters" in Note 8
to the Company's 1996 Financial Statements, on pages 68 and 69 of
Exhibit 13 hereto, which caption is herein incorporated by
reference, for a description of two consecutive fires and
explosions which occurred on February 12, 1994, destroying a
residence and commercial establishment in the Village of
Wappingers Falls, New York, in the Company's service territory.  

     Lawsuits have been commenced against the Company arising out
of such incident, including the following:

     On August 31, 1994, the Company was served with a summons
and complaint in an action brought by John DeLorenzo against the
Company 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 of
negligence, for personal injuries and property damage alleged to
have been caused by the incident.

     On October 13, 1994, the Company was served with a summons
and complaint in an action brought by Edward Baecher d/b/a NTC
Auto Body against the Company, the Town of Wappingers Falls, the
Village of Wappingers Falls, and the Wappingers Falls 
Fire Department in the Supreme Court of the State of New York,
County of Dutchess.  The complaint seeks recovery from the
Company of compensatory and punitive damages in the sum of
$1,000,000, based on the theory of negligence, for property
damages alleged to have caused by the incident.

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

     The Company is investigating these claims and presently has
insufficient information on which to predict their outcome.  The
Company believes that it has adequate insurance with regard to
the claims for compensatory damages.  The Company's insurance,
however, does not extend to punitive damages.  If punitive
damages were ultimately awarded, in any of these lawsuits, such
award(s) could have a material adverse effect on the financial
condition of the Company.  At this time, the Company can make no
prediction as to any other litigation which may arise out of this
incident.

                             - 27 -
<PAGE>
Income Tax Assessments

     Reference is made to the subcaption "Tax Matters -
Assessments" in Note 8 to the Company's 1996 Financial
Statements, on page 68 of Exhibit 13 hereto, which subcaption is
incorporated herein by reference, for a discussion of the
examination by the Internal Revenue Service ("IRS") of the
Company's federal income tax returns for 1987 and 1988.

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

     No matter was submitted to a vote of security holders during
the fourth quarter of the Company's fiscal year covered by this
Report.

                             PART II

     Item 5 -  MARKET FOR THE COMPANY'S COMMON EQUITY AND
               RELATED STOCKHOLDER MATTERS               

     The information set forth under the caption "Common Stock
Dividends and Price Ranges" in the MD&A, on page 28 of Exhibit 13
hereto, is incorporated herein by reference.

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

     For information regarding the replacement, effective January
1, 1997, of the Company's Automatic Dividend Reinvestment and
Stock Purchase, Customer Stock Purchase and Employee Stock
Purchase Plans, by a single new Stock Purchase Plan, see Note 5
of the Company's 1996 Financial Statements appearing on pages 53
through 55 and page 15 of the MD&A caption "Financing Program" of
Exhibit 13 hereto, which Note is incorporated herein by
reference.

     For a complete description of the Company's new Stock
Purchase Plan, reference is made to the Prospectus, dated
December 9, 1996, which is part of the Company's Registration
Statement on Form S-3 (Registration No. 333-11521), relating to
783,582 shares of Common Stock registered under the Securities
Act of 1933 for issuance under said Plan.







                             - 28 -
<PAGE>
          On January 28, 1997, the Company commenced the monthly
repurchase, in an amount of approximately 20,000 shares per
month, of its issued and outstanding common stock pursuant to a
program approved by the PSC and which is described in Note 5
appearing on pages 53 through 55 of the Company's 1996 Financial
Statements, of Exhibit 13 which Note 5 is incorporated herein by
reference.

          Item 6 -   SELECTED FINANCIAL DATA

          The information required hereunder is incorporated
herein by reference to the material on pages 4 and 5 of Exhibit
13 hereto.

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

          The information required hereunder is incorporated
herein by reference to the material appearing on pages 6 through
28 of Exhibit 13 hereto.

          Item 8 -   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          (a)  Financial Statements and Report of Independent
               Accountants

          The Company's 1996 Financial Statements, together with
the report thereon of Price Waterhouse LLP, dated January 24,
1997, appearing on pages 29 through 72 of Exhibit 13 hereto, are
incorporated by reference in this Annual Report on Form 10-K. 
The Financial Statement Schedule incorporated by reference as
part of this Annual Report on Form 10-K should be read in
conjunction with the Company's 1996 Financial Statements. 
Financial Statement Schedules not included with this Form 10-K
Annual Report have been omitted because they are not applicable
or the required information is shown in the Company's 1996
Financial Statements.

          The Company's 1996 Financial Statements include the
accounts of the Company and its subsidiaries.  Intercompany
balances and transactions have been eliminated.  The Company's
subsidiaries are each wholly-owned and consist of landholding,
cogeneration or energy management companies.  The net income of
the Company's subsidiaries is reflected in the Company's
Consolidated Statement of Income as Other Income Other-net; such
Consolidated Statement of Income is contained on pages 36 and 37
of Exhibit 13 hereto.



                             - 29 -
<PAGE>
          The following information is being furnished in
accordance with Regulation S-X, Section 210.5-02:

          Weighted average                      December 31,
          interest rate on                   1996   1995   1994 
          the Company's
          short-term debt
          outstanding                        5.94%    -    6.69%


          (b)  Supplementary Financial Information

          The supplementary financial information specified by
Item 302 of Regulation S-K is found under the caption "Selected
Quarterly Financial Data (Unaudited)," of the Company's 1996
Financial Statements on page 73 of Exhibit 13 hereto, which
caption is incorporated herein by reference pursuant to Item 8
(a) above.

          (c)  Other Financial Statements and Schedule

          Other financial statements and schedule required under
Regulation S-X are filed pursuant to Item 14 of this Annual
Report on Form 10-K.


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

          None.




















                             - 30 -
<PAGE>
                            PART III

          Item 10 -  DIRECTORS AND EXECUTIVE OFFICERS OF THE 
                     COMPANY                                

          The information with respect to the Directors of the
Company required hereunder is incorporated by reference to the 
caption "Election of Directors" in the Company's definitive proxy
statement, dated February 24, 1997, to be used in connection with
its Annual Meeting of Shareholders to be held on April 1, 1997,
which proxy statement has previously been submitted to the
Securities and Exchange Commission pursuant to that Commission's
Regulation S-T.

          The information with respect to the executive officers
of the Company required hereunder is incorporated by reference to
Item 1 of this Annual Report on Form 10-K, under the caption
"Executive Officers of the Company."

          Item 11 -  EXECUTIVE COMPENSATION

          The information required hereunder is incorporated by
reference to the caption "Executive Compensation" in the
Company's definitive proxy statement, dated February 24, 1997, to
be used in connection with its Annual Meeting of Shareholders to
be held on April 1, 1997.

          Item 12 -  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL 
                     OWNERS AND MANAGEMENT                   

          The information required hereunder is incorporated by
reference to the caption "Security Ownership" in the Company's 
definitive proxy statement, dated February 24, 1997, to be used
in connection with its Annual Meeting of Shareholders to be held
on April 1, 1997.

          Item 13 -  CERTAIN RELATIONSHIPS AND RELATED 
                     TRANSACTIONS                     

          There were no relationships or transactions of the type
required to be described by this Item.










                             - 31 -
<PAGE>
                             PART IV

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

(a)  Documents filed as part of this Report:

          1.   Financial Statements

               See subpart 1 of Index to Financial Statements on
page F-1 of this Report.

          2.   Financial Statement Schedule

               See subpart 2 of Index to Financial Statements on
page F-1 of this Report.

          3.   Exhibits


          Incorporated herein by reference to the Exhibit Index
beginning on page E-1 of 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

     Directors' Deferred Compensation Plan, effective October 1,
     1980.  (Exhibit (10)(iii)1)

     Trust Agreement between Registrant and Dutchess Bank & Trust
     Company, as trustee, dated as of January 1, 1984, pursuant
     to Registrant's Savings Incentive Plan.  (Exhibit
     (10)(iii)2)

     First Amendment, dated December 31, 1990, to Trust Agreement
     between Registrant and The Bank of New York, as successor
     trustee, dated as of January 1, 1984, pursuant to
     Registrant's Savings Incentive Plan.  (Exhibit (10)(iii)3)

     Agreement, made March 14, 1994 by and between Registrant and
     Mellon Bank, N.A., amending and restating, effective April
     1, 1994, Registrant'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)18, 19 and 20)




                             - 32 -
<PAGE>
     Executive Deferred Compensation Plan of the Company,
     effective March 1, 1992 together with Amendment thereto
     dated December 17, 1993.  (Exhibits (10)(iii)8 and 15)

     Retirement Benefit Restoration Plan of the Company,
     effective May 1, 1993, together with Amendment thereto dated
     July 23, 1993.  (Exhibits (10)(iii)10 and 11)

     Executive Incentive Compensation Plan of the Company,
     effective January 1, 1993, together with Amendment thereto
     dated April 4, 1995. (Exhibits (10)(iii)17 and 21)
       
     Stock Plan for Outside Directors of the Company, dated
     November 17, 1995 (Exhibit (10)(iii)22)

     Management Incentive Program of the Company, effective April
     1, 1994 (Exhibit (10)(iii)23)

(b)  Reports on Form 8-K

          During the period to the date hereof, the following
Report on Form 8-K was filed by the Company:

          Report, dated October 15, 1996, reporting that pursuant
to the October 1995 Order on Consent entered into between the
Company and the New York Department of Environmental Conservation
("NYSDEC"), as referred to in the caption "Environmental Claims -
Newburgh Manufactured Gas Site" in Item 3, of Part I of this
Annual Report on Form 10-K for the fiscal year ending December
31, 1996, the Company filed, on October 10, 1996, a progress
report with the NYSDEC for the investigation and remediation
program being conducted on the Company's former coal gasification
plant site and the City of Newburgh's adjacent and nearby
property.  Contemporaneous with such filing the Company's issued
a press release which was filed therewith as Exhibit 99 and
incorporated therein by reference.

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

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

(d)       Financial Statement Schedule required by Regulation S-X
          which is excluded from the Company's Annual Report to
          Shareholders for the fiscal year ended December 31,
          1996

               Incorporated herein by reference to subpart 2 of
Index to Financial Statements on page F-1 of this Report.


                             - 33 -
<PAGE>
                           SIGNATURES

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

                            CENTRAL HUDSON GAS & ELECTRIC
                            CORPORATION

                            By                            
                                   (John E. Mack, III,
                                 Chairman of the Board
                                  and Chief Executive Officer)

Dated:  February 28, 1997

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

     Signature                   Title            Date

(a) Principal Executive 
     Officer or Officers:

                            
(John E. Mack, III)            Chairman of
                               the Board and 
                               Chief Executive
                               Officer          February 28, 1997

(b) Principal Accounting
     Officer:

                            
(Donna S. Doyle)               Controller       February 28, 1997

                               
(c) Principal Financial
    Officer:

                       
(Steven V. Lant)               Treasurer and
                               Assistant
                               Secretary        February 28, 1997




                             - 34 -
<PAGE>
                    SIGNATURES - (Continued)

     Signature                   Title            Date

(d) Directors:

                                              
(L. Wallace Cross)             Director         February 28, 1997


                             
(Jack Effron)                  Director         February 28, 1997


                                              
(Frances D. Fergusson)         Director         February 28, 1997


                                              
(Heinz K. Fridrich)            Director         February 28, 1997


                                              
(Edward F. X. Gallagher)       Director         February 28, 1997


                                              
(Paul J. Ganci)                Director         February 28, 1997


                                              
(Charles LaForge)              Director         February 28, 1997


                                              
(John E. Mack, III)            Director         February 28, 1997


                                              
(Edward P. Swyer)              Director         February 28, 1997











                             - 35 -
<PAGE>
                  INDEX TO FINANCIAL STATEMENTS
            CENTRAL HUDSON GAS & ELECTRIC CORPORATION
                                               
                                                  Page(s) in
                                                  Exhibit 13
                                                  of this Report*
1.   Financial Statements

     Report of Independent Accountants                 29  

     Consolidated Balance Sheet at                          
       December 31, 1996 and 1995                      32-35

     Consolidated Statement of Income for                   
       the three years ended December 31, 1996         36-37

     Consolidated Statement of Retained  
       Earnings for the three years 
       ended December 31, 1996                         38

     Consolidated Statement of Cash Flows for               
       the three years ended December 31, 1996         39-40

     Notes to Consolidated Financial Statements        41-72     

     Selected Quarterly Financial Data (Unaudited)     73 

                                                   Page(s) in
                                                   Form 10-K 

     Report of Independent Accountants on                 
       Financial Statement Schedule                    F-2

     Consent of Independent Accountants                F-2   

2.   The Financial Statement Schedule
       for the Years 1996, 1995 and 1994           F-3 - F-5

     Schedule II     -  Reserves                                 




                 
     *Incorporated by reference to the indicated pages of Exhibit 
    13 to this Report.





                               F-1
<PAGE>
                REPORT OF INDEPENDENT ACCOUNTANTS
                 ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of
Central Hudson Gas & Electric Corporation

Our audits of the consolidated financial statements referred to
in our report dated January 24, 1997 appearing in the 1996 Annual
Report to Shareholders of Central Hudson Gas & Electric
Corporation (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed
in Item 14(d) of this Annual Report on Form 10-K.  In our
opinion, this Financial Statement Schedule presents fairly, in
all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements.

PRICE WATERHOUSE LLP

New York, New York
January 24, 1997

               CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the
Prospectus constituting part of the Registration Statement, on
Form S-3 (Registration No. 333-11521), relating to Central Hudson
Gas & Electric Corporation's Stock Purchase Plan, of our report
dated January 24, 1997 appearing in the Annual Report to
Shareholders which is incorporated in this Annual Report on Form
10-K.  We also consent to the incorporation by reference therein
of our report on the Financial Statement Schedule, which appears
above.


PRICE WATERHOUSE LLP

New York, New York
February 28, 1997











                               F-2
<PAGE>
<TABLE>                                 CENTRAL HUDSON GAS & ELECTRIC CORPORATION                    SCHEDULE II
                                                        RESERVES                                     Sheet 1
                                              YEAR ENDED DECEMBER 31, 1996
<CAPTION>
   Column A                   Column B                Column C               Column D       Column E
                                                      Additions            
                                                            Charged to       Payments       Balance
                              Balance at     Charged to       other           charged        at end
                              beginning       cost and      accounts -          to             of
Description                   of period       expenses       describe        reserves        period 
<S>                           <C>            <C>            <C>            <C>            <C>
Operating Reserves:
  Reserve for injuries
   and damages                $2,575,064     $1,063,750     $    -         $1,000,655     $ 2,638,159
  Workers compensation
   deductible                  2,186,505          -            181,000 (a)    205,718       2,161,787
  Storm reserve                  500,000          -              -            500,000          -
  Nine Mile 2 Plant
   miscellaneous reserve         762,532      1,601,386         14,608 (b)  2,423,208         (44,682)

  Total Operating Reserves    $6,024,101     $2,665,136     $  195,608     $4,129,581     $ 4,755,264

Reserve for Uncollectible     
 Accounts                     $2,500,000     $4,335,676     $              $3,635,676     $ 3,200,000

Note:
 (a)  Charged to clearing account for workers compensation insurance and subsequently distributed, together with
      other insurance premium costs, to various asset and expense accounts.  
 (b)  Charged to regulatory asset account representing future recovery from ratepayers.






                                                            F-3
</TABLE>
<PAGE>
<TABLE>                                 CENTRAL HUDSON GAS & ELECTRIC CORPORATION                    SCHEDULE II
                                                        RESERVES                                     Sheet 2      
                                              YEAR ENDED DECEMBER 31, 1995                                  
<CAPTION>
   Column A                   Column B                Column C               Column D       Column E
                                                      Additions            
                                                            Charged to       Payments       Balance
                              Balance at     Charged to       other          charged         at end
                              beginning       cost and      accounts -          to             of
Description                   of period       expenses       describe        reserves        period 
<S>                           <C>            <C>            <C>            <C>            <C>
Operating Reserves:
  Reserve for injuries
   and damages                $1,770,126     $  907,300     $   79,200 (a) $  181,562     $2,575,064
  Workers compensation
   deductible                  1,077,391         -           1,454,000 (b)    344,886      2,186,505
  Pensions and benefits
   carrying charge reserve       465,338         -            (465,338)(c)      -              -    
  Storm Reserve                  500,000         -               -              -            500,000
  Nine Mile 2 Plant
   miscellaneous reserves      1,850,552      2,137,029         23,526 (d)  3,248,575        762,532

Total Operating Reserves      $5,663,407     $3,044,329     $1,091,388     $3,775,023     $6,024,101

Reserve for Uncollectible
 Accounts                     $2,000,000     $3,220,608     $    -         $2,720,608     $2,500,000

Notes:
 (a)  Charged to clearing account for costs of operation of automobiles, trucks, etc., and subsequently distributed,
      together with other costs of operation and maintenance, to various asset and expense accounts.
 (b)  Charged to clearing account for workers compensation insurance and subsequently distributed, together with
      other insurance premium costs, to various asset and expense accounts.
 (c)  The pensions and benefits carrying charge reserve has been reclassified as a regulatory liability.
 (d)  Charged to regulatory asset account representing future recovery from ratepayers.

                                                            F-4
</TABLE>
<PAGE>
<TABLE>
                                        CENTRAL HUDSON GAS & ELECTRIC CORPORATION                    SCHEDULE II
                                                        RESERVES                                     Sheet 3 
                                              YEAR ENDED DECEMBER 31, 1994                                  
<CAPTION>
   Column A                   Column B                Column C               Column D       Column E
                                                      Additions            
                                                            Charged to       Payments       Balance
                              Balance at     Charged to       other          charged         at end
                              beginning       cost and      accounts -          to             of
Description                   of period       expenses       describe        reserves        period 
<S>                           <C>            <C>            <C>            <C>            <C>
Operating Reserves:
  Reserve for injuries
   and damages                $1,939,151     $  615,010     $   32,190 (a) $  816,225     $1,770,126
  Workers compensation
   deductible                    879,057         -             379,038 (b)    180,704      1,077,391
  Pensions and benefits
   carrying charge reserve        92,360        372,978          -              -            465,338
  Storm reserve                    -            500,000          -              -            500,000
  Nine Mile 2 Plant
   operation and maintenance
   expense reserve              (564,549)     2,476,805         46,762 (c)    108,466      1,850,552

  Total Operating Reserves    $2,346,019     $3,964,793     $  457,990     $1,105,395     $5,663,407

Reserve for Uncollectible     
 Accounts                     $2,000,000     $3,305,977     $    -         $3,305,977     $2,000,000

Notes:
 (a)  Charged to clearing account for costs of operation of automobiles, trucks, etc., and subsequently distributed,
      together with other costs of operation and maintenance, to various asset and expense accounts.
 (b)  Charged to clearing account for workers compensation insurance and subsequently distributed, together with
      other insurance premium costs, to various asset and expense accounts.
 (c)  Charged to regulatory asset account representing future recovery from ratepayers.
                                                            F-5
</TABLE>