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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 - June 11, 1996
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.
Reference is made to Registrant's Annual Report, on
Form 10-K, for the fiscal year ended December 31, 1995 ("Annual
Report"), and to the caption "Other Matters - Competition" in
Item I of Part I thereof for a discussion of (i) the Competitive
Opportunities Proceeding currently underway before the State of
New York Public Service Commission ("PSC") and (ii) the petition
filed by Sithe Energies, Inc., requesting the PSC to commence a
new proceeding to adopt a program that would encourage the merger
of New York's investor-owned electric utilities into two
companies and the establishment of a "blue-ribbon" panel to
consider the closure of some or all of their nuclear generating
facilities ("Sithe Petition").
By Opinion and Order, issued and effective May 20, 1996
("Order"), the PSC set forth its policy direction with respect to
competition in the electric industry, pertinent aspects of which
are noted below:
1. Competition in the generation and energy services
section of the electric industry will be pursued.
2. The PSC stated that it expects wholesale
competition to begin in early 1997 and retail
competition to begin in early 1998.
3. By October 1, 1996 filings must be made by each of
the major electric utilities in the State,
including Registrant (except for Niagara Mohawk
Power Corporation ("Niagara Mohawk") and Long
Island Lighting Company ("LILCO"), because their
rates and structures are currently being
considered in other proceedings and forums), with
the PSC and thereafter, as to the proposals in (a)
below, with the Federal Energy Regulatory
Commission ("FERC"), as follows:
(a) proposals to distinguish and classify
transmission and distribution facilities;
together with a transmission pricing proposal
consistent with moving toward retail access;
and
(b) proposals, at a minimum, setting forth the
utility's proposed corporate structure,
retail access proposals, long-term rate
plans, proposals to implement PSC-mandated
public programs, potential market power
problems and proposals to mitigate such
problems and proposals for delivery of energy
services.
In addition, the PSC ordered all seven of the major
electric utilities, by October 1, 1996, to file with the PSC and
thereafter with the FERC, a proposal setting forth the details of
the ownership, governance, practices and procedures of an
Independent System Operator (to supplement the New York Power
Pool, described in the caption - "Electric - Load and Capacity"
of Item 2 of Part I of the Annual Report, as the grid operator
for the integrated transmission system in the State of New York)
and a Market Exchange that will establish visible spot market
prices for electric energy.
As to the proposal of the Power Authority of the State
of New York that it purchase all transmission facilities and
become the Independent System Operator, the Order provides for
further examination of such proposal.
With respect to strandable costs, the Order provides
that utilities should have a reasonable opportunity to seek
recovery of such costs consistent with the goals of lowering
rates, fostering economic development, increasing customer
choices and maintaining reliable service. Strandable costs would
be recovered by a non-bypassable distribution charge imposed by
the transmission and distribution company. The Order takes the
position that recovery of a utility's full stranded investment is
not required by law. The Order provides that utilities must take
steps to mitigate strandable costs, the actual recoverable amount
of which and the timing of recovery will be determined
individually for each utility as part of the rate plans to be
filed on October 1, 1996.
With respect to corporate structure, the Order
encourages total divestiture of generation facilities in order to
prevent market power. However, the Order does not require
divestiture "immediately" of generation facilities, stating that
incentive for divestiture should be worked out individually for
each Company in conjunction with its required October 1, 1996
filing.
With respect to the obligation to serve customers, the
Order directs that transmission and distribution companies will
remain obligated to serve all customers "at least in the short
term".
With respect to PSC-mandated environmental and public
policy programs, the Order provides that the costs of such
programs that would not otherwise be recovered in a competitive
market will be recovered by a non-bypassable system benefits
charge to be considered in the context of individual utility
filings.
With respect to the Sithe Petition, pursuant to the
Order the PSC declined to take any action.
The Company is reviewing the Order and considering all
options for responding to the Order including potential
litigation challenging the Order in whole or in part. The
Company can make no prediction as to what effect the Order may
have on it or whether the Order may be challenged by one or more
parties.
SIGNATURES
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:_______________________________________
DONNA DOYLE
Controller
Dated: June 11, 1996
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