SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934
Date of Report - January 24, 1994
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Exact name of Registrant as specified in its charter)
New York 1-3268 14-0555980
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification
Number)
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
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CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Item 5. Other Events.
Catskill Incident.
1. PSC Reference is made to (i) Registrant's Annual
Report, on Form 10-K, for the fiscal year ended December 31,
1992, as amended by amendment No. 1 to Annual Report on Form 10-
K/A, dated July 15, 1993 (as amended the "10-K Report") and to
the caption "Catskill Incident" in Item 3 (Legal Proceedings)
thereof, (ii) Registrant's Quarterly Report on Form 10-Q for the
quarter by period ended March 31, 1993 and to the caption
"Catskill Incident" in Item 1 (Legal Proceedings) on Part II
thereof, and (iii) Registrant's Current Report, on Form 8-K,
dated September 9, 1993, in Item 5 (Other Events) thereof for
discussions of the November 1992 explosion in a dwelling in
Registrant's gas service territory in Catskill, New York, which
resulted in personal injuries, including the death of an
occupant, and property damage; the approval of the Public Service
Commission of the State of New York ("PSC") of the commencement
of a penalty action against the Registrant; the Order of the PSC
("Compliance Order") mandating compliance by Registrant with the
PSC's gas safety code rules which require the replacement of
undermined cast iron pipes; and the results of an investigation
by the National Transportation Safety Board.
The PSC, by Order issued and effective January 7, 1994,
ordered that (i) an Agreement, dated as of December 6, 1993,
between Registrant and Staff of the PSC ("Agreement") is approved
and (ii) the Compliance Order is withdrawn. Pursuant to the
Agreement, which expires on December 31, 1998, the following
matters were effected:
1) The PSC agreed not to seek a penalty, fine or an
assessment from the Registrant, or otherwise seek indirectly to
achieve a similar result through the ratemaking process, in
connection with the Catskill incident.
2) Registrant agreed to certain improvements in its
gas operations and in the effectiveness of the working
relationship between Registrant and the Staff of the PSC,
including the following:
a) Development and implementation of a customer
services reorganization, a communications
program with the PSC, the establishment of
four (4) permanent customer service training
centers, a gas training and development
program, a quality assurance program, a
quality control program, and a program for
evaluating and replacing cast iron and
unprotected steel pipeline facilities.
Replacement expenditures for cast iron and
unprotected steel pipeline facilities will
aggregate at least $2,794,000 during a period
commencing 1994 through 1997 determined as
follows: The Agreement recognizes, as a base
amount, that Registrant's capital expendi-
tures for cast iron pipe replacement in 1992
amounted to $261,000. The Agreement obli-
gates Registrant to spend in excess of such
base amount at least $500,000 in each of the
years 1994 through 1996 and $250,000 in 1997.
b) The shareholders of the Company, in 1994,
will contribute an aggregate of $500,000
toward the costs of the Company's investment
in the four training centers and in the
replacement of cast iron and unprotected
steel pipeline facilities and in each of 1995
and 1996, the Company's shareholders will
contribute $500,000 toward the costs of the
replacement of cast iron and unprotected
steel pipeline facilities. The contribution
of shareholders in 1997 toward the costs of
the replacement of cast iron and unprotected
steel pipeline facilities is described in (c)
below.
c) The Agreement contains a Balanced Incentive
Program with respect to the Company's
investment in 1997 in the replacement of
cast-iron and unprotected steel pipeline
facilities. The Balanced Incentive Program
identifies 35 tasks that the Company has
agreed to complete by specified dates. If
the Company completes 31 or fewer of the
tasks in a timely manner, the 1997 sharehold-
er costs for the replacement of cast iron and
unprotected steel pipeline facilities will be
$500,000. If the Company completes 32, 33 or
34 of the tasks in a timely manner, the 1997
shareholder costs for the replacement of cast
iron and unprotected steel pipeline facili-
ties will be $250,000. If the Company
completes all 35 of the tasks in a timely
manner, the 1997 shareholder costs for the
replacement of cast iron and unprotected
steel pipeline facilities will be zero.
2. U.S. Department of Transportation As a result of
an investigation of the Catskill incident conducted by the Office
of Pipeline Safety ("OPS") (the OPS is part of the Research and
Special Program Administration of the U.S. Department of Trans-
portation "DOT") pursuant to the Natural Gas Pipeline Safety Act,
the OPS issued a Notice of Proposed Violation and Proposed Civil
Penalty in December 1992. By Final Order, issued December 2,
1993, the OPS found that Registrant failed to submit a telephonic
report of the Catskill incident to the DOT at the earliest
practicable moment following discovery of such incident as
required by applicable regulations. Registrant did notify the
DOT of the Catskill incident by telephone approximately nine
hours and forty-five minutes after such incident. The OPS
assessed Registrant a civil penalty of $5,000. Registrant will
not appeal such Final Order.
3. National Transportation Safety Board As described
in Registrant's Current Report, on Form 8-K, dated September 9,
1993, the National Transportation Safety Board ("NTSB") in its
investigation of the Catskill incident, by letter dated August
23, 1993, determined that the probable cause of such incident was
Registrant's failure to follow its procedures and the PSC's code
for the immediate replacement of exposed cast iron pipe. The
NTSB also recommended that Registrant undertake a remedial
program as described in said letter.
By letter, dated October 22, 1993, Registrant responded
that it would undertake such a program.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Registrant)
By
JOHN F. DRAIN
Vice President - Controller and Treasurer
Dated: January 24, 1994
