Exhibit 10.3

                               GUARANTY AGREEMENT

      THIS GUARANTY  AGREEMENT  ("GUARANTY") is given as of January 16, 2008, by
CH ENERGY GROUP, INC., a New York corporation ("GUARANTOR"),  for the benefit of
MANUFACTURERS  AND  TRADERS  TRUST  COMPANY  ("LENDER"),  with  respect  to  the
obligations of GRIFFITH ENERGY SERVICES, INC. ("BORROWER").

                                    RECITALS

      The BORROWER has  requested  that the LENDER  provide the BORROWER  with a
line of credit in the maximum  principal  amount of Twenty-Five  Million Dollars
($25,000,000.00) (as such line of credit may be amended,  increased or decreased
from time to time, the "LOAN"). The LENDER has agreed to provide the LOAN to the
BORROWER  pursuant to the terms of a Demand Note of even date  herewith from the
BORROWER to the order of the LENDER (as the same may be amended or modified from
time to time, the "NOTE"),  but only if the GUARANTOR provides to the LENDER the
guaranties of payment and performance set forth in this GUARANTY.  The GUARANTOR
is willing to provide this  GUARANTY to the LENDER in order to induce the LENDER
to provide the LOAN to the BORROWER.

      NOW,  THEREFORE,  in  consideration  of these  premises and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the GUARANTOR hereby agrees to provide to the LENDER the following
guaranties and indemnifications.

      Section 1.  Guaranty. The GUARANTOR guarantees: (a) the payment of any and
all sums now or  hereafter  due and  owing to the  LENDER by the  BORROWER  as a
result of or in  connection  with any and all  existing or future  indebtedness,
liability,  or obligation of every kind,  nature,  type, and variety owed by the
BORROWER to the LENDER from time to time, arising out of or related to the LOAN,
including all renewals, refinancings, extensions, substitutions, amendments, and
modifications  thereof, no matter when or how created,  arising,  evidenced,  or
acquired, and whether or not presently  contemplated or anticipated,  including,
but not limited to, all amounts of principal, interest, charges, reimbursements,
advancements,  escrows,  and fees;  (b) that all sums now or  hereafter  due and
owing by the  BORROWER to the LENDER in  connection  with the LOAN shall be paid
when and as due,  whether by reason of  installment,  maturity,  acceleration or
otherwise, time being of the essence; and (c) the timely, complete,  continuous,
and strict  performance  and  observance  by the  BORROWER of each of the terms,
covenants, agreements and conditions contained in any and all existing or future
documents,  instruments,  agreements,  and writings of every kind, nature, type,
and variety which evidence,  reflect, embody, give rise to or secure any and all
existing and future  indebtedness,  liabilities,  and obligations of any kind of
the BORROWER to the LENDER in connection  with the LOAN ("LOAN  DOCUMENTS").  As
used in this GUARANTY,  the term "OBLIGATIONS" shall refer to the obligations of
payment, performance, and indemnification which the GUARANTOR has undertaken and
assumed  pursuant to this  GUARANTY,  both as  described  in this Section and in
other Sections of this GUARANTY.

      Section 2.  Nature Of Guaranty.  This  GUARANTY:  (a) is (i)  irrevocable,
(ii) absolute and unconditional,  (iii) direct, immediate, and primary, and (iv)
one of payment and not just collection;  and (b) makes the GUARANTOR a surety to
the LENDER with respect to the  OBLIGATIONS  and the  equivalent of a co-obligor
with the BORROWER. Without limiting the foregoing, it is specifically understood
that any  modification,  limitation  or discharge of any of the  liabilities  or
obligations of the BORROWER,  any other guarantor or any other obligor under any
of the  LOAN  DOCUMENTS,  arising  out of,  or by  virtue  of,  any  bankruptcy,
arrangement,  reorganization  or similar  proceeding for relief of debtors under
federal or state law initiated by or against the BORROWER,  any other  guarantor
or any obligor under any of the LOAN DOCUMENTS shall not modify,  limit, lessen,
reduce,  impair,  discharge,  or otherwise affect the liability of the GUARANTOR
hereunder in any manner whatsoever,  and this GUARANTY shall remain and continue
in full force and effect.

      Section 3.  Accuracy Of Representations. The GUARANTOR guaranties that all
representations  and warranties  made by the BORROWER or by the GUARANTOR to the
LENDER prior to or after the date of this  GUARANTY are and will  continue to be
true,  correct,  accurate,  and complete and not knowingly  misleading,  and the
GUARANTOR  agrees to indemnify and hold the LENDER harmless from any loss, cost,
or expense which the LENDER

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may suffer,  sustain or incur as a result of any  representation or statement of
the BORROWER or of the GUARANTOR being materially false, incorrect,  inaccurate,
incomplete, or knowingly misleading.

      Section 4.  Representations  Of Guarantor.  To induce the LENDER to accept
this GUARANTY for the purposes for which it is given,  the GUARANTOR  represents
and warrants to the LENDER as follows:

            (a)   The  GUARANTOR  is  a  corporation  duly  organized,   validly
existing and in good standing under the laws of the state of its  incorporation,
and each subsidiary of the GUARANTOR is a corporation  duly  organized,  validly
existing and in good standing under the laws of the state of its  incorporation.
The GUARANTOR and its subsidiaries have the lawful power to own their properties
and to engage in the businesses they conduct,  and each is duly qualified and in
good standing as a foreign  corporation in the jurisdictions  wherein the nature
of  the  business   transacted  by  it  or  property  owned  by  it  makes  such
qualification necessary.

            (b)   Any  financial  statements  submitted by the  GUARANTOR to the
LENDER, including any schedules and notes pertaining thereto, have been prepared
in  accordance  with  generally  accepted  accounting  principles   consistently
applied,  and fully and fairly present the financial  condition of the GUARANTOR
and its  subsidiaries at the dates thereof and the results of operations for the
periods covered  thereby,  and there has been no material  adverse change in the
consolidated  financial  condition  or  businesses  of  the  GUARANTOR  and  its
subsidiaries from the dates thereof to the date hereof,  other than as disclosed
to the LENDER.

            (c)   Neither  the  GUARANTOR  nor  any  of its  subsidiaries  is in
default  with respect to any of its  existing  indebtedness,  and the making and
performance  of this GUARANTY will not  (immediately,  with the passage of time,
the giving of  notices,  or both),  (i)  violate  the  charter or by-laws of the
GUARANTOR,  (ii) violate any laws, (iii) result in a default under any contract,
agreement,  or instrument to which the GUARANTOR or any of its subsidiaries is a
party or by which the  GUARANTOR or any of its  subsidiaries  or its property is
bound, or (iv) result in the creation or imposition of any security interest in,
or lien or  encumbrance  upon,  any of the assets of the GUARANTOR or any of its
subsidiaries except in favor of the LENDER.

            (d)   The  GUARANTOR  has the power and  authority to enter into and
perform this GUARANTY, and to incur the OBLIGATIONS, and has taken all corporate
action necessary to authorize the execution,  delivery,  and performance of this
GUARANTY.

            (e)   This GUARANTY when  delivered  will be,  valid,  binding,  and
enforceable in accordance with its terms.

            (f)   The incurring or  satisfaction of the OBLIGATIONS has not left
and will not leave the GUARANTOR insolvent,  with an unreasonably small capital,
or unable to pay existing or future debts as they mature.

      Section 5.  Reporting  Requirements.   The  GUARANTOR  shall  submit  the
following items to the LENDER:

            (a)   Within  forty-five  (45)  calendar  days after the end of each
fiscal quarter of the GUARANTOR,  the GUARANTOR shall submit: (i) a consolidated
statement of stockholders' equity and a consolidated statement of changes in the
financial  position of the GUARANTOR and  subsidiaries  for such fiscal quarter;
(ii) a consolidated  income statement of the GUARANTOR and subsidiaries for such
fiscal  quarter;  and (iii) a  consolidated  balance  sheet of the GUARANTOR and
subsidiaries as of the end of such fiscal quarter.

            (b)   Within  ninety (90) calendar days after the end of each fiscal
year of the GUARANTOR,  the GUARANTOR shall submit: (i) a consolidated statement
of stockholders' equity and a consolidated statement of changes in the financial
position  of the  GUARANTOR  and  subsidiaries  for  such  fiscal  year;  (ii) a
consolidated  income Statement of the GUARANTOR and subsidiaries for such fiscal
year; and (iii) a consolidated  balance sheet of the GUARANTOR and  subsidiaries
as of the end of such fiscal year.

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<PAGE>

            (c)   All  financial  statements  shall  be  in  reasonable  detail,
including all supporting  schedules and comments  necessary to verify or confirm
entries in the financial statements.  All financial statements shall be prepared
in accordance with generally accepted accounting principles consistently applied
and may be prepared by the GUARANTOR'S regular bookkeeper or accountant,  except
for the year-end financial  statements  described in subsection (b) above, which
shall be audited  by an  independent  certified  public  accountant,  reasonably
acceptable to the LENDER. The costs of supplying the financial  statements shall
be paid by the GUARANTOR.

            (d)   Notwithstanding the aforegoing to the contrary, so long as the
GUARANTOR is subject to the reporting  requirements  of the Securities  Exchange
Act of 1934,  a copy of the  GUARANTOR'S  report  on Form  10-Q  filed  with the
Securities  and  Exchange  Commission  for such fiscal  quarter will satisfy the
requirements of subsection  5(a) above and a copy of the  GUARANTOR'S  report on
Form 10-K filed with the Securities and Exchange Commission for such fiscal year
will satisfy the requirements of subsection 5(b) above.

      Section 6.  Lender Need Not Pursue Other Rights. The LENDER shall be under
no  obligation  to pursue any of the LENDER'S  rights and  remedies  against the
BORROWER or any of the  collateral of the BORROWER  securing the  obligations of
the BORROWER to the LENDER or against any other  guarantor or any  collateral of
any other guarantor before pursuing the LENDER'S rights and remedies against the
GUARANTOR.

      Section 7.  Certain Rights Of Lender.  The GUARANTOR hereby assents to any
and all terms and agreements  between the LENDER and the BORROWER or between the
LENDER and any other guarantor,  and all amendments and  modifications  thereof,
whether presently existing or hereafter made and whether oral or in writing. The
LENDER  may,  without  compromising,  impairing,  diminishing,  or  in  any  way
releasing the GUARANTOR from the OBLIGATIONS and without  notifying or obtaining
the prior approval of the GUARANTOR, at any time or from time to time: (a) waive
or excuse a default  by the  BORROWER  or any other  guarantor,  or delay in the
exercise by the LENDER of any or all of the  LENDER'S  rights or  remedies  with
respect to such default or defaults; (b) grant extensions of time for payment or
performance  by the BORROWER or any other  guarantor;  (c) release,  substitute,
exchange,  surrender,  or  add  collateral  of  the  BORROWER  or of  any  other
guarantor,  or waive, release, or subordinate,  in whole or in part, any lien or
security  interest held by the LENDER on any real or personal  property securing
payment or performance,  in whole or in part, of the obligations of the BORROWER
to the LENDER or of any other  guarantor;  (d) release the BORROWER or any other
guarantor;  (e) apply payments made by the BORROWER or by any other guarantor to
any sums owed by the BORROWER to the LENDER,  in any order or manner,  or to any
specific account or accounts,  as the LENDER may elect; and (f) modify,  change,
renew,  extend, or amend in any respect the LENDER'S agreement with the BORROWER
or any other guarantor,  or any document,  instrument,  or writing  embodying or
reflecting the same,  including without limitation  modifications which increase
the amount of the OBLIGATIONS or extend the maturity of the OBLIGATIONS.

      Section 8.  Waivers By Guarantor.  The GUARANTOR  waives:  (a) any and all
notices  whatsoever  with respect to this GUARANTY or with respect to any of the
obligations of the BORROWER to the LENDER, including, but not limited to, notice
of (i) the LENDER'S  acceptance hereof or the LENDER'S  intention to act, or the
LENDER'S  action,  in  reliance  hereon,  (ii) the present  existence  or future
incurring of any of the  obligations  of the BORROWER to the LENDER or any terms
or amounts thereof or any change  therein,  (iii) any default by the BORROWER or
any  surety,  pledgor,  grantor  of  security,  guarantor  or any person who has
guarantied or secured in whole or in part the obligations of the BORROWER to the
LENDER,  and (iv) the obtaining or release of any guaranty or surety  agreement,
pledge, assignment, or other security for any of the obligations of the BORROWER
to the LENDER;  (b)  presentment  and demand for payment of any sum due from the
BORROWER  or any other  guarantor  and  protest  of  nonpayment;  (c) demand for
performance by the BORROWER or any other guarantor; and (d) any and all defenses
based on suretyship or impairment of collateral.

      Section 9.  Unenforceability  Of  Obligations  Of Borrower.  This GUARANTY
shall be valid, binding, and enforceable even if the obligations of the BORROWER
to the LENDER which are guarantied hereby are now or hereafter become invalid or
unenforceable for any reason.

      Section 10. No Conditions Precedent.  This GUARANTY shall be effective and
enforceable  immediately upon its execution.  The GUARANTOR acknowledges that no
unsatisfied conditions precedent to the effectiveness and

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<PAGE>

enforceability  of this GUARANTY  exist as of the date of its execution and that
the  effectiveness  and  enforceability  of  this  GUARANTY  are  not in any way
conditioned or contingent upon any event, occurrence,  or happening, or upon any
condition existing or coming into existence either before or after the execution
of this GUARANTY.

      Section 11. No  Duty To  Disclose.  The  LENDER  shall  have no present or
future duty or  obligation  to discover  or to  disclose  to the  GUARANTOR  any
information,   financial  or  otherwise,  concerning  the  BORROWER,  any  other
guarantor,  or any collateral securing either the obligations of the BORROWER to
the LENDER or of any other  person who may have  guarantied  in whole or in part
the obligations of the BORROWER to the LENDER. The GUARANTOR waives any right to
claim or  assert  any such duty or  obligation  on the part of the  LENDER.  The
GUARANTOR agrees to obtain all information which the GUARANTOR  considers either
appropriate  or relevant to this GUARANTY from sources other than the LENDER and
to become and  remain at all times  current  and  continuously  apprised  of all
information concerning the BORROWER, other guarantors,  and any collateral which
is  material  and  relevant  to the  obligations  of the  GUARANTOR  under  this
GUARANTY.

      Section 12. Existing Or Future Guaranties.  The execution of this GUARANTY
shall not  discharge,  terminate  or in any way impair or  adversely  affect the
validity or  enforceability  of any other guaranty given by the GUARANTOR to the
LENDER.  The execution and delivery by the GUARANTOR of any future  guaranty for
the benefit of the LENDER shall not discharge,  terminate,  or in any way impair
or  adversely  affect the  validity  or  enforceability  of this  GUARANTY.  All
guaranties provided by the GUARANTOR to the LENDER are intended to be cumulative
and shall  remain in full  force and  effect  unless  and until  discharged  and
terminated in accordance with any expressly  stated  termination  provisions set
forth therein.

      Section 13. Cumulative  Liability.  The liability of the  GUARANTOR  under
this  GUARANTY  shall be  cumulative  to,  and not in lieu of,  the  GUARANTOR'S
liability  under  any other  LOAN  DOCUMENT  or in any  capacity  other  than as
GUARANTOR hereunder.

      Section 14. Obligations Are Unconditional.  The payment and performance of
the OBLIGATIONS shall be the absolute and  unconditional  duty and obligation of
the GUARANTOR,  and shall be independent of any defense or any rights of setoff,
recoupment or counterclaim  which the GUARANTOR might otherwise have against the
LENDER, and the GUARANTOR shall pay and perform these  OBLIGATIONS,  free of any
deductions and without abatement,  diminution or setoff.  Until such time as the
OBLIGATIONS  have been fully paid and performed,  the  GUARANTOR:  (a) shall not
suspend or discontinue any payments  provided for herein;  (b) shall perform and
observe all of the covenants and agreements contained in this GUARANTY;  and (c)
shall not  terminate or attempt to terminate  this  GUARANTY for any reason.  No
delay by the LENDER in making demand on the GUARANTOR  for  satisfaction  of the
OBLIGATIONS shall prejudice or in any way impair the LENDER'S ability to enforce
this GUARANTY.

      Section 15. Defenses Against  Borrower.  The GUARANTOR waives any right to
assert  against  the LENDER any defense  (whether  legal or  equitable),  claim,
counterclaim,  or right of setoff or  recoupment  which the GUARANTOR may now or
hereafter have against the BORROWER or any other guarantor.

      Section 16. Events  Authorizing  Acceleration  Of  The  Obligations.   The
occurrence  of any of the following  (each an "EVENT OF DEFAULT")  shall entitle
the  LENDER,   without  notice  or  demand,  to  accelerate  and  call  due  the
OBLIGATIONS, even if the LENDER has not accelerated and called due the sums owed
to the LENDER by the  BORROWER:  (a) the  commencement  by the  BORROWER  or the
GUARANTOR  of a  voluntary  case  or  proceeding  under  any  federal  or  state
bankruptcy,  insolvency or similar law; (b) the  commencement  of an involuntary
case or proceeding  against the BORROWER or the  GUARANTOR  under any federal or
state  bankruptcy,  insolvency,  or  similar  law,  and  either (i) such case or
proceeding is not dismissed within ninety (90) calendar days after commencement,
or (ii) an order for relief is entered in such case;  (c) the  appointment  of a
receiver, assignee,  custodian, trustee or similar official under any federal or
state  insolvency or  creditors'  rights law for any property of the BORROWER or
the  GUARANTOR;  (d) a failure of the  GUARANTOR  to  perform  any  covenant  or
agreement  contained  in this  GUARANTY  or in any other  agreement  between the
GUARANTOR  and the  LENDER;  (e) any  representation  or  warranty  made in this
GUARANTY or in any report or financial  statement  furnished in connection  with
this  GUARANTY,  shall prove to have been false or misleading  when made; or (f)
the liquidation or dissolution of the BORROWER or of the GUARANTOR.

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<PAGE>

      Section 17. Expenses  Of  Collection  And  Attorneys'  Fees.  Should  this
GUARANTY be referred to an attorney for collection,  the GUARANTOR shall pay all
of the  holder's  reasonable  costs,  fees  and  expenses  resulting  from  such
referral, including reasonable attorneys' fees, which the holder may incur, even
though judgment has not been confessed or suit has not been filed.

      Section 18. Interest Rate After  Judgment.  If judgment is entered against
the  GUARANTOR  on this  GUARANTY,  the amount of the judgment  entered  (which,
unless  applicable  law  specifically  provides to the  contrary,  includes  all
principal,  prejudgment  interest,  late charges,  prepayment charges if any are
provided for, collection expenses,  attorneys' fees, and court costs) shall bear
interest at the highest rate after default  authorized by the LOAN  DOCUMENTS as
of the date of entry of the judgment to the extent  permitted by applicable law.
In the event any statute or rule of court specifies the rate of interest which a
judgment on this GUARANTY may bear or the amount on which such interest rate may
apply and such rate or amount  is less  than that  called  for in the  preceding
sentence absent a restriction  under applicable law, the GUARANTOR agrees to pay
to the order of the LENDER an amount as will equal the interest  computed at the
highest rate after default provided for in the LOAN DOCUMENTS which would be due
on the judgment amount (which, for this purpose,  shall be considered to include
all principal, prejudgment interest, late charges, prepayment charges if any are
provided for,  collection  expense fees,  attorneys' fees, and court costs) less
the interest due on the amount of the judgment which bears judgment interest.

      Section 19. Enforcement  During  Bankruptcy.  Enforcement of this GUARANTY
shall  not be  stayed  or in any way  delayed  as a result  of the  filing  of a
petition under the United States Bankruptcy Code, as amended,  by or against the
BORROWER.  Should the LENDER be required to obtain an order of the United States
Bankruptcy  Court to begin  enforcement  of this GUARANTY  after the filing of a
petition under the United States Bankruptcy Code, as amended,  by or against the
BORROWER,  the  GUARANTOR  hereby  consents to this relief and agrees to file or
cause to be filed all  appropriate  pleadings  to evidence and  effectuate  such
consent and to enable the LENDER to obtain the relief requested.

      Section 2O. Remedies  Cumulative.  All of the LENDER'S rights and remedies
shall be  cumulative  and any  failure  of the  LENDER  to  exercise  any  right
hereunder  shall not be  construed as a waiver of the right to exercise the same
or any other right at any time, and from time to time, thereafter.

      Section 21. Continuing Guaranty. This GUARANTY is a continuing guaranty of
all existing and future obligations of the BORROWER to the LENDER and may not be
terminated by the GUARANTOR  until after the  termination of the LOAN DOCUMENTS,
in accordance with the provisions thereof,  and the payment (which payment shall
not be subject to  challenge or contest) in full of all of the  OBLIGATIONS  and
all of the BORROWER'S  obligations  and liabilities to the LENDER under the LOAN
DOCUMENTS.

      Section 22. Reinstatement. If at any time any payment, or portion thereof,
made by, or for the account of, the BORROWER or the  GUARANTOR on account of any
of the obligations and liabilities  under any of the LOAN DOCUMENTS is set aside
by any  court or  trustee  having  jurisdiction  as a  voidable  preference,  or
fraudulent conveyance or must otherwise be restored or returned by the LENDER to
the BORROWER or any other person or entity under any  insolvency,  bankruptcy or
other federal and/or state laws or as a result of any  dissolution,  liquidation
or  reorganization  of the  BORROWER or any other  person or entity,  or for any
other reason,  the GUARANTOR hereby agrees that this GUARANTY shall continue and
remain in full  force and  effect or be  reinstated,  as the case may be, all as
though such payment(s) had not been made.

      Section 23. Rights Of  Subrogation,  Etc. In the event the GUARANTOR  pays
any sum to or for the  benefit  of the LENDER  pursuant  to this  GUARANTY,  the
GUARANTOR   may  not  enforce  any  right  of   contribution,   indemnification,
exoneration,  reimbursement,  subrogation  or other right or remedy  against the
BORROWER,  any other guarantor,  or any collateral,  whether real, personal,  or
mixed, securing the obligations of the BORROWER to the LENDER or the obligations
of any other guarantor to the LENDER until such time as the LENDER has been paid
in full and has no further claim against the BORROWER,  any other guarantor,  or
any collateral.  The GUARANTOR waives and releases any claim which the GUARANTOR
hereafter  may have  against the LENDER if some  action of the  LENDER,  whether
intentional or negligent, impairs, destroys, or in any way adversely affects any
right of contribution, indemnification, exoneration, reimbursement, subrogation,
or the like which the  GUARANTOR  may have upon the payment of any sum to or for
the benefit of the LENDER pursuant to this GUARANTY.

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      Section 24. Subordination  Of  Certain  Indebtedness.   If  the  GUARANTOR
advances  any  sums to the  BORROWER  or its  successors  or  assigns  or if the
BORROWER or its  successors or assigns shall  hereafter  become  indebted to the
GUARANTOR,  such sums and  indebtedness  shall be subordinate in all respects to
the amounts then or thereafter due and owing to the LENDER by the BORROWER.

      Section 25. Setoff.  The  LENDER  shall have the right to setoff and apply
against the  OBLIGATIONS any sums which the GUARANTOR at any time has on deposit
with the LENDER  whether such  deposits are general or special,  time or demand,
provisional or final,  and the GUARANTOR hereby pledges and grants to the LENDER
a security interest in all such deposits.

      Section 26. Renewals,  Etc. This  GUARANTY  shall apply to all sums now or
hereafter   owed  by  the  BORROWER  to  the  LENDER  and  to  all   extensions,
modifications, amendments, renewals, substitutions, and refinancings thereof.

      Section 27. Choice Of Law.  The laws of the State of Maryland  (excluding,
however,  conflict of law  principles)  shall govern and be applied to determine
all issues  relating  to this  GUARANTY  and the rights and  obligations  of the
parties  hereto,  including  the  validity,  construction,  interpretation,  and
enforceability of this GUARANTY and its various  provisions and the consequences
and legal effect of all  transactions  and events which resulted in the issuance
of this  GUARANTY  or which  occurred  or were to occur as a direct or  indirect
result of this GUARANTY having been executed.

      Section 28. Consent To Jurisdiction;  Agreement As To Venue. The GUARANTOR
irrevocably  consents  to the  non-exclusive  jurisdiction  of the courts of the
State of Maryland and of the United  States  District  Court for the District of
Maryland,  if a basis for federal jurisdiction exists. The GUARANTOR agrees that
venue shall be proper in any circuit court of the State of Maryland  selected by
the LENDER or in the United States  District  Court for the District of Maryland
if a basis for federal jurisdiction exists and waives any right to object to the
maintenance  of a suit in any of the  state or  federal  courts  of the State of
Maryland on the basis of improper venue or of inconvenience of forum.

      Section 29. Proofs Of Sums Due On  Guaranty.  In any action or  proceeding
brought by the LENDER to collect the sums owed on this  GUARANTY,  a certificate
signed by an  officer  of the  LENDER  setting  forth  the  unpaid  balances  of
principal, and any accrued interest, default interest, attorneys' fees, and late
charges  owed  with  respect  hereto  shall be  presumed  correct  and  shall be
admissible  in  evidence  for the purpose of  establishing  the truth of what it
asserts. If the GUARANTOR wishes to contest the accuracy of the figure set forth
in any such certificate, the GUARANTOR shall have the burden of proving by clear
and convincing evidence that the certificate is inaccurate or incorrect.

      Section 30. Actions  Against  Lender.  Any action brought by the GUARANTOR
against the LENDER which is based,  directly or indirectly,  on this GUARANTY or
any matter in or  related to this  GUARANTY,  including  but not  limited to the
obligations of the BORROWER to the LENDER, the  administration,  collection,  or
enforcement  thereof,  shall  be  brought  only in the  courts  of the  State of
Maryland. The GUARANTOR may not file a counterclaim against the LENDER in a suit
brought by the LENDER  against the  GUARANTOR in a state other than the State of
Maryland  unless  under the rules of  procedure of the court in which the LENDER
brought the action the counterclaim is mandatory, and not merely permissive, and
will  be  considered  waived  unless  filed  as a  counterclaim  in  the  action
instituted  by the LENDER.  The  GUARANTOR  agrees that any forum other than the
State of  Maryland  is an  inconvenient  forum  and that a suit  brought  by the
GUARANTOR  against  the  LENDER in a court of any state  other than the State of
Maryland should be forthwith  dismissed or transferred to a court located in the
State of Maryland by that court.

      Section 31. Invalidity  Of Any  Part.  If any  provision  or  part  of any
provision of this  GUARANTY  shall for any reason be held invalid,  illegal,  or
unenforceable in any respect, such invalidity,  illegality,  or unenforceability
shall not affect any other  provisions  or the  remaining  part of any effective
provisions of this  GUARANTY,  and this  GUARANTY  shall be construed as if such
invalid,  illegal,  or  unenforceable  provision  or part thereof had never been
contained  herein,  but only to the  extent of its  invalidity,  illegality,  or
unenforceability.

                                        6

<PAGE>

      Section 32. Amendment  Or Waiver.  This  GUARANTY may be amended only by a
writing duly executed by the  GUARANTOR and the LENDER.  No waiver by the LENDER
of any of the  provisions  of this  GUARANTY or any of the rights or remedies of
the LENDER with respect  hereto  shall be  considered  effective or  enforceable
unless in writing.

      Section 33. Notices.  Any notice required or permitted by or in connection
with this GUARANTY shall be in writing and shall be made by facsimile (confirmed
on the date the  facsimile is sent by one of the other  methods of giving notice
provided for in this Section) or by hand delivery,  by Federal Express, or other
similar overnight delivery service, or by certified mail, unrestricted delivery,
return  receipt  requested,  postage  prepaid,  addressed  to the  LENDER or the
GUARANTOR at the appropriate address set forth below or to such other address as
may be  hereafter  specified by written  notice by the LENDER or the  GUARANTOR.
Notice  shall be  considered  given as of the date of the  facsimile or the hand
delivery,  one (1)  calendar  day after  delivery to Federal  Express or similar
overnight  delivery  service,  or three  (3)  calendar  days  after  the date of
mailing,  independent of the date of actual delivery or whether delivery is ever
in fact made, as the case may be, provided the giver of notice can establish the
fact that notice was given as provided herein. If notice is tendered pursuant to
the provisions of this Section and is refused by the intended recipient thereof,
the notice,  nevertheless,  shall be  considered to have been given and shall be
effective as of the date herein provided.

      If to the LENDER:

            MANUFACTURERS AND TRADERS TRUST COMPANY
            One Research Court, Suite 400
            Rockville, Maryland 20850
            Attn.: Russell S. Cotner, Banking Officer
            Fax No.: (240) 632-2621

      If to the GUARANTOR:

            CH ENERGY GROUP, INC.
            284 South Avenue
            Poughkeepsie, NY 12601
            Attn.: Stacey A. Renner, Treasurer
            Fax No.: (845) 486-5894

      With A Courtesy Copy To:

            THOMPSON HINE LLP
            P.O. Box 8801
            2000 Courthouse Plaza NE
            Dayton, Ohio 45401-8801
            Attn.: David A. Neuhardt, Esquire
            Fax No.: (937) 443-6635

The failure of the LENDER to send the above  courtesy  copy shall not impair the
effectiveness of notice given to the GUARANTOR in the manner provided herein.

      Section 34. Binding  Nature.  This GUARANTY  shall inure to the benefit of
and be enforceable by the LENDER and the LENDER'S successors and assigns and any
other person to whom the LENDER may grant an interest in the  obligations of the
BORROWER to the LENDER,  and shall be binding upon and  enforceable  against the
GUARANTOR and the GUARANTOR'S successors, and assigns.

      Section 35. Joint And Several Nature.  In the event there exists more than
one  GUARANTOR,  all  liabilities  hereunder  shall be joint  and  several.  The
liability of the GUARANTOR  shall be joint and several with the liability of any
other guarantor not a party to this GUARANTY.

                                        7

<PAGE>

      Section 36.  Assignability.  This  GUARANTY or an interest  therein may be
assigned  by the  LENDER,  or by any other  holder,  at any time or from time to
time, without any prior notice to or consent from the GUARANTOR.

      Section 37. Final Agreement.  This GUARANTY  contains the final and entire
agreement  between the LENDER and the GUARANTOR  with respect to the guaranty by
the GUARANTOR of the BORROWER'S obligations to the LENDER. There are no separate
oral or written understandings between the LENDER and the GUARANTOR with respect
thereto.

      Section 38. Tense, Gender,  Defined Terms,  Captions.  As used herein, the
plural includes the singular,  and the singular includes the plural.  The use of
any gender  applies to any other  gender.  If more than one person has  executed
this GUARANTY,  the term AGUARANTOR@ means all such persons  collectively or any
one or more of such persons individually or collectively, as the case may be and
as the  context  may  require.  All  defined  terms are  completely  capitalized
throughout this GUARANTY. All captions are for the purpose of convenience only.

      Section 39. Seal  And  Effective  Date.  This  GUARANTY  is an  instrument
executed under seal and is to be considered  effective and enforceable as of the
date set  forth on the  first  page  hereof,  independent  of the date of actual
execution.

      Section 40. Waiver Of Trial By Jury.  The  GUARANTOR  and the  LENDER,  by
their execution and acceptance,  respectively,  of this GUARANTY, agree that any
suit,  action,  or  proceeding,  whether  claim  or  counterclaim,   brought  or
instituted  by either party hereto or any successor or assign of any party on or
with  respect  to this  GUARANTY  or  which  in any  way  relates,  directly  or
indirectly,  to this GUARANTY or any event,  transaction,  or occurrence arising
out of or in any way  connected  with  this  GUARANTY,  or the  dealings  of the
parties with respect thereto,  shall be tried only by a court and not by a jury.
EACH  PARTY  HEREBY  EXPRESSLY  WAIVES  ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH
SUIT, ACTION, OR PROCEEDING.

      IN WITNESS  WHEREOF,  the  GUARANTOR  has executed  this GUARANTY with the
specific intention of creating a document under seal.

WITNESS:                               GUARANTOR:

                                       CH ENERGY GROUP, INC.

/s/ Mary C. Whalen                     By: /s/ Stacey A. Renner [SEAL]
------------------------                   --------------------
                                           Name: Stacey A. Renner
                                           Title: Treasurer

                                        8

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF New York, CITY/COUNTY OF Dutchess, TO WIT:

      I HEREBY  CERTIFY that on this 16th day of January,  2008,  before me, the
undersigned Notary Public of the aforesaid State,  personally appeared Stacey A.
Renner, and acknowledged himself to be the Treasurer of CH ENERGY GROUP, INC., a
New York corporation, and that he, as such Treasurer, being authorized so to do,
executed the foregoing  instrument for the purposes therein contained by signing
the name of CH ENERGY GROUP, INC., by himself as Treasurer.

      IN WITNESS MY Hand and Notarial Seal.

                                       /s/ Donna M. Giametta [SEAL]
                                       ---------------------
                                       NOTARY PUBLIC

My Commission Expires:                         DONNA M. GIAMETTA
                                       Notary Public, State of New York
----------------------                          No.01GI5067398
                                          Qualified in Ulster County
                                       Commission Expires Oct. 15, 2010

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