<PAGE>
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 - February 10, 1998
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
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Item 5. Other Events.
Amended Settlement Agreement
Reference is made to Registrant's Annual Report, on
Form 10-K, for the fiscal year ended December 31, 1997 ("Annual
Report"), and Part II thereof under the caption
"Competition/Deregulation" in Item 7 thereof, and to the caption
"Amended Settlement Agreement" in Note 1 of the Notes to
Consolidated Financial Statements contained in Item 8 thereof for
a discussion of the settlement negotiations undertaken as part of
the Public Service Commission of the State of New York's ("PSC")
Competitive Opportunities Proceeding and the Amended Settlement
Agreement entered into by the Registrant, the PSC Staff and
certain other interested parties as part of such Proceeding.
By an abbreviated order, issued and effective February
19, 1998 ("Order"), the PSC has adopted the terms of said Amended
Settlement Agreement (which then became effective on that date),
subject to certain modifications and conditions as set forth in
the Order. Such modifications and conditions include the
following:
a) The PSC has reserved its authority to require an
auction and transfer of Registrant's fossil-fueled electric
generating assets referred to in said Amended Settlement
Agreement prior to June 30, 2001, if such accelerated auction and
transfer is found by the PSC to be in the public interest.
b) The PSC directed the PSC Staff to report to the
PSC recommendations to assure that Registrant does not incur
imprudent generation costs which could be avoided by such
divestiture of fossil-fueled electric generating assets prior to
June 30, 2001.
c) "Strandable costs" of the Registrant as proposed
in Amended Settlement Agreement have been clarified to be those
"production expenditures of the [Registrant] made in fulfilling
its obligation to serve and provide safe, reliable electric
service to customers within its franchise territory which are not
expected to be recoverable in a competitive electricity market
..."
d) The PSC has added a provision dealing with mergers
and acquisitions; namely, pursuant to a petition filed jointly or
individually by the Registrant, the Registrant shall have the
flexibility to retain, on a cumulative basis, all savings
associated with an acquisition or merger with another utility for
a period of five years from the date of closing of any such
merger or acquisition up to the amount of acquisition premium
paid over the lesser of book value or fair market value of assets
merged or acquired. Savings in the excess of the recovery will
be disposed of by order of the PSC.
The modifications and conditions contained in the Order
were unconditionally accepted by letter of Registrant dated,
February 26, 1998, and the parties to said Amended Settlement
Agreement entered into a modification of said Agreement, dated
February 26, 1998, to reflect the terms of the Order.
Filed herewith as Exhibit 10(1) and incorporated herein
by reference is the Order.
Filed herewith as Exhibit 10(2) is said modifications
of said Amended and Restated Settlement Agreement and is
incorporated herein by reference.
Filed herewith as Exhibit 99(1) and incorporated herein
by reference is a copy of Registrant's acceptance of said Order.
Consent of Independent Accountants
Reference is made to Registrant's Annual Report, on
Form 10-K, for the fiscal year ended December 31, 1997 ("Annual
Report"), filed with the Commission on February 10, 1998.
Filed herewith as Exhibit 99 (2) and incorporated
herein by reference is the Consent, dated February 10, 1998 of
Registrant's independent accountants, Price Waterhouse LLP, 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 its report dated January
23, 1998 (except as to Note 1 of the Consolidated Financial
Statements which is as of February 4, 1998), appearing in the
Annual Report, and its consent to the reference to it under the
heading "Legal Opinions and Experts" in such Prospectus.
Item 7. Financial Statements and Exhibits.
(c) Exhibits. Following is the list of Exhibits
furnished in accordance with the provisions of Item 601 of
Regulation S-K, filed as part of this Current Report on Form 8-K:
Exhibit No.
(Regulation S-K
Item 601
Designation)
__________________
Exhibits
(10)(1) Order of the Public Service Commission of the
State of New York, issued and effective February 19,
1998, adopting the terms of the Registrant's Amended
Settlement Agreement, subject to certain modifications
and conditions, as discussed in Part II of Registrant's
Annual Report, on Form 10-K, for the fiscal year ended
December 31, 1997, under the caption
"Competition/Deregulation" in Item 7 of such Report and
Note 1 of the Notes to Consolidated Financial
Statements contained in Item 8 of such Report.
(10)(2) Modification to the Amended and Restated
Settlement Agreement, dated February 26, 1998, signed
by the Registrant, the staff of the Public Service
Commission of the State of New York, the New York State
Consumer Protection Board and Pace Energy Project.
(99)(1) Registrant's acceptance, dated February 26,
1998, of the Order of the Public Service Commission of
the State of New York, issued and effective February
19, 1998, adopting the terms of Registrant's Amended
and Restated Settlement subject to modifications and
conditions.
(99)(2) Consent of the independent accountants of
Registrant, Price Waterhouse LLP, 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 its report dated
January 23, 1998 (except as to Note 1 of the
Consolidated Financial Statements which is as of
February 4, 1998), appearing in Registrant's Annual
Report, on Form 10-K, for the fiscal year ended
December 31, 1997 and its consent to the reference to
it under the heading "Legal Opinions and Experts" in
such Prospectus.
<PAGE>
EXHIBIT INDEX
Following is the index of Exhibits furnished in
accordance with the provisions of Item 601 of Regulation S-K,
filed as part of this Current Report on Form 8-K:
Exhibit No.
(Regulation S-K
Item 601
Designation
_______________
(10)(1) Order of the Public Service Commission of the
State of New York, issued and effective February 19, 1998,
adopting the terms of the Registrant's Amended and Restated
Settlement Agreement, subject to certain modifications and
conditions, as discussed in Part II of Registrant's Annual
Report, on Form 10-K, for the fiscal year ended December 31,
1997, under the caption "Competition/Deregulation" in Item 7 of
such Report and Note 1 of the Notes to Consolidated Financial
Statements contained in Item 8 of such Report.
(10)(2) Modification to the Amended and Restated
Settlement Agreement, dated February 26, 1998, signed by the
Registrant, the staff of the Public Service Commission of the
State of New York and the New York State Consumer Protection
Board.
(99)(1) Registrant's acceptance, dated February 26,
1998, of the Order of the Public Service Commission of the State
of New York, issued and effective February 19, 1998, adopting the
terms of Registrant's Amended and Restated Settlement subject to
modifications and conditions.
(99)(2) Consent, dated February 10, 1998 of the
independent accountants of Registrant, Price Waterhouse, LLP, 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 its report dated January
23, 1998 (except as to Note 1 of the Consolidated Financial
Statements which is as of February 4, 1998), appearing in
Registrant's Annual Report, on Form 10-K, for the fiscal year
ended December 31, 1997 and its consent to the reference to it
under the heading "Legal Opinions and Experts" in such
Prospectus.<PAGE>
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: (SGD.)DONNA S. DOYLE
DONNA S. DOYLE
Controller
Dated: February 27, 1998
</PAGE>
<PAGE>
EXHIBIT 10(1)
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
At a session of the Public Service
Commission held in the City of
Albany on February 4, 1998
COMMISSIONERS PRESENT:
John F. O'Mara, Chairman
Maureen O. Helmer
Thomas J. Dunleavy
CASE 96-E-0909 - In the Matter of Central Hudson Gas & Electric
Corporation's Plans for Electric Rate/Restructuring Pursuant to
Opinion No. 96-12.
ORDER ADOPTING TERMS OF SETTLEMENT
SUBJECT TO MODIFICATIONS AND CONDITIONS
(Issued and Effective February 19, 1998)
BY THE COMMISSION:
INTRODUCTION
On March 12, 1997, Central Hudson Gas & Electric
Corporation (Central Hudson) filed a Settlement Agreement
(Agreement) pursuant to Opinion No. 96-12. Evidentiary hearings
were held from May 6-9, 1997 before Administrative Law Judge
Rafael A. Epstein. On July 1, 1997, Judge Epstein issued a
recommended decision which concluded that the Settlement
Agreement did not adequately serve the policy objectives
enunciated in Opinion No. 96-12.
At our session of September 17, 1997, we considered the
recommended decision and the exceptions of the parties. We
determined that the Settlement Agreement was unacceptable because
it did not address sufficiently (1) Central Hudson's future
corporate structure, in particular the ultimate disposition of
its fossil generation assets, (2) whether significant
expenditures should be made for time-of-use metering, and (3) the
level of the systems benefit charge (SBC) fund.
In response to our concerns, the parties conducted a
further series of negotiations which culminated in the production
of the Amended and Restated Settlement Agreement (revised
Agreement), dated January 2, 1998. The revised Agreement, which
is Appendix A to this order, was signed by Central Hudson, Staff,
and the Pace Energy Project.
The terms of the revised Agreement generally offer a
sound regulatory framework for Central Hudson, its competitors,
and its customers in the transition to fully competitive
generation and energy service markets. In particular, Central
Hudson agrees to divest its fossil generation assets through an
auction process and to reallocate to the SBC fund the amount
previously earmarked for time-of-use metering. However, we are
requiring modifications and adding conditions as follows:
(1) The revised Agreement (provision VII(H)) provides
that Central Hudson, in the event it does not participate in the
auction, shall receive 5% of the gross proceeds of an auction up
to the net book value of the assets being auctioned, even if they
are disposed of at a loss. This provision is not adopted.
Instead we will authorize Central Hudson to realize an incentive
only if the auction results in a net gain. That incentive will
be equal to 10% of the total proceeds above net book value up to
the $17.5 million cap, net of tax.
(2) No specific provision is made for parties to
comment on the details of Central Hudson's auction plan. We
believe that the parties to the revised Agreement intended to
provide an opportunity for such comments and we adopt the revised
Agreement with that understanding.
(3) We reserve authority to require an auction and
transfer of fossil generation prior to June 30, 2001, the end of
the rate plan, if we find that it is in the public interest.
Central Hudson is expected to use its best efforts to minimize
the costs associated with its bond indenture, and to evaluate
carefully market conditions to maximize net proceeds from an
auction. Staff is directed to monitor Central Hudson through
June 2001, and report to us with recommendations, if necessary,
to make sure the company is not incurring imprudent generation
costs which could be avoided by divestiture prior to June 30,
2001.
(4) In the event Central Hudson auctions and transfers
generation prior to June 30, 2001, Central Hudson will be
required to implement a mechanism that will ensure bundled prices
no higher than those charged, on average, in a representative
period prior to divestiture, will remain available to Central
Hudson's customers for the balance of the term of the revised
Agreement. This modification is not intended to limit in any
way the company's ability to file for a general revenue decrease
to be effective prior to June 30, 2001. In this connection, we
note with approval Central Hudson's right in the revised
Settlement to acquire capacity and/or energy from the generation
facilities it is divesting. The revised Agreement, as adopted,
would remain in effect through June 30, 2001, except to the
extent specific provisions extend beyond that by their own terms.
(5) The first paragraph of provision XIII(B) of the
revised Agreement is adopted subject to the requirement that
pending the Court's action on the anticipated stipulation between
the Commission and the company, Central Hudson will take no
action to support the pending appeal except to the extent it must
do so to avoid forfeiting the right to appeal.
(6) We do not accept provision VI(B)29, which provides
for the same law firm to represent Regco and an affiliate on the
same matter, where their interests may be adverse.
(7) The revised Agreement makes no provision for
remediation by us of violations of the prescribed codes of
conduct or for a dispute resolution process, with timelines, to
address complaints by marketers. Such provisions are added, as
set forth in Appendix B to this order.
(8) The revised Agreement is adopted subject to the
modification that a provision dealing with mergers and
acquisitions is added. The new provision is as follows:
Pursuant to a petition filed jointly or
individually by the company, Central Hudson
shall have the flexibility to retain, on a
cumulative basis, all savings associated with
the acquisition or merger with another
utility for a period of five years from the
date of closing of any such merger or
acquisition up to the amount of acquisition
premium paid over the lesser of book value or
fair market value of assets merged or
acquired. Savings in the excess of that
recovery will be disposed of by order of the
Commission.
(9) The revised Agreement is adopted subject to the
expectation that several minor language problems in it will be
corrected by agreement among the signatories and substitute
language will be submitted in compliance with this order. The
referenced problems are listed in Appendix C.
(10) The revised Agreement is adopted on the condition
Central Hudson agrees to accept the Commission order, issued June
23, 1997, concerning the farmer and food processor pilot program
(Case 96-E-00948).
<PAGE>
STATE ENVIRONMENTAL
QUALITY REVIEW ACT EVALUATION
In conformance with the State Environmental Quality
Review Act (SEQRA), on May 3, 1996, the Commission issued a Final
Generic Environmental Impact Statement (FGEIS) which evaluated
the action adopted in the generic proceeding regarding
competitive opportunities for electric service, Case 94-E-0952.
Recognizing that individual utility restructuring proposals might
bring to light new concerns, each utility was also required to
file an environmental assessment of its restructuring plans.
Central Hudson filed an Environmental Assessment Form (EAF)
concerning the March 12, 1997 Agreement on June 17, 1997.
Central Hudson's EAF, the parties' comments, and other
information were evaluated in order to determine whether the
potential impacts resulting from adoption of the revised
Agreement's terms would be within the bound and thresholds of the
FGEIS adopted in 1996. The analysis considered several areas of
potential impacts, including the effects of rate reductions and
reduced demand side management on electricity sales and air
quality. Arguably, all of the potential environmental impacts of
the revised Agreement need not be considered, given that some
result from Type II exempt rate actions. Nonetheless, the
analysis examined all areas in which impacts would reasonably be
expected.
Based on these analyses, the potential environmental
impacts of the revised Agreement are found to be within the range
of thresholds and conditions set forth in the FGEIS. Therefore,
no further SEQRA action is necessary in connection with the
revised Agreement. A full EAF will be attached to the final
opinion and order.
DISCUSSION
Taking into account our overall responsibility to set
just and reasonable rates, Central Hudson's statutory burden of
proof, and our settlement guidelines, and having considered the
evidence, arguments, and EAF information, it is clear that the
terms of the revised Agreement, subject to the modifications and
conditions discussed in this order, are reasonable and in the
public interest, and provide significant improvement over the
Agreement.
While the revised Agreement does not provide rate
reductions as large as those realized in other restructuring
proceedings, this is because Central Hudson's average rates are
already the lowest in the State. Moreover, large industrial
customers will realize a 5% rate reduction, and the rates for all
other customers will be frozen through June 30, 2001. The
revised Agreement also enables customers to receive the benefits,
during the transition period, of all cumulative earnings in
excess of those necessary to produce a 10.6% return on equity.
Consequently, ratepayers are assured that the company will not
have excess earnings during the transition. Furthermore, the
revised Agreement provides for the highest back-out rate among
the electric rate/restructuring plans thereby promoting ESCO
competition.
In addition, the revised Agreement eliminates the
requirement that all customers opting for retail access during
the transition period have time-differentiated meters installed
by Central Hudson, adds a customer-incentive plan to assure a
high quality of service, closes pending revenue requirement
issues related to April 1997 storm damage restoration costs and a
previously unresolved prudence issue, and identifies the manner
by which ISO costs will be recovered.
Accordingly, the terms of the revised Agreement are
adopted subject to the modifications and conditions we have
enunciated and the revised Agreement's terms are incorporated by
reference into this order. Inasmuch as the terms of the revised
Agreement are inter-related, as are our modifications and
conditions, if any term, condition, or understanding is modified,
vacated, or otherwise materially affected on judicial review, we
may re-examine our entire decision.
Subsequent to the issuance of this abbreviated order,
we shall issue a more comprehensive opinion and order describing
the bases for our decision, and containing the final EAF. The
statute of limitations for filing petitions for rehearing or
clarification of our decision will be deemed to run from the date
of issuance of that opinion.
The Commission orders:
1. The terms of the revised Agreement filed in this
proceeding dated January 2, 1998, subject to the modifications
and conditions in this order, are adopted in their entirety and
are incorporated as part of this order.
2. The potential environmental impacts of these terms
are within the bounds and thresholds evaluated in the 1996 FGEIS,
and, therefore, no further SEQRA action is necessary in
connection with the revised Agreement.
3. Central Hudson Gas and Electric Corporation
(Central Hudson) must submit a written statement of unconditional
acceptance of the modifications and conditions contained in this
order, signed and acknowledged by a duly authorized officer by
February 26, 1998. This statement, along with substitute
language responding to Appendix C, should be filed with the
Secretary of the Commission and served on all parties in this
proceeding.
4. Central Hudson is directed to file on not less than
one day's notice, to become effective February 27, 1998, such
tariff amendments as are necessary to effectuate the rate
reductions contemplated by the revised Agreement, as adopted, as
well as the requirements of Opinion No. 97-5. Central Hudson
shall serve copies of its tariff filing upon all parties to the
proceeding. Any comments on the filing must be received at the
Commission's offices within ten days of service of the proposed
amendments. The amendments shall not become effective on a
permanent basis until approved by the Commission.
5. In the event Central Hudson submits an auction plan
under section VII of the revised Agreement, and such plan, if
adopted, could result in divestiture prior to June 30, 2001,
Central Hudson shall, at the time the auction plan is filed,
propose a mechanism, consistent with the modification previously
described in this order, to ensure bundled prices will not
increase for the balance of the term of the revised Agreement.
6. To the extent exceptions to the recommended
decision issued in this proceeding on July 1, 1997 are not moot,
or are otherwise granted, they are denied.
7. Central Hudson, in cooperation with Staff, shall
monitor the environmental impacts of electric restructuring
resulting from this order.
8. This proceeding is continued.
By the Commission,
(SIGNED) JOHN C. CRARY
Secretary
<PAGE>
CASE 96-E-0909 APPENDIX B
Page 1 of 2
(1) Regco shall establish a complaint process consistent with
the following. If any competitor or customer of Regco
believes that Regco has violated the standards of
competitive conduct established in this section of the
agreement, such competitor or customer may file a complaint
in writing with Regco. Regco will respond to the complaint
in writing within twenty (20) business days after receipt of
the complaint, including a detailed factual report of the
complaint and a description of any course of action proposed
to be taken. After the filing of such response, Regco and
the complaining party will meet, if necessary, in an attempt
to resolve the matter informally. If Regco and the
complaining party are not able to resolve the matter
informally within 15 business days from Regco's response,
either party may refer the matter promptly to the Commission
for disposition. (The Commission reserves the right to
adjust the times for responding to complaints and referring
complaints to the Commission.)
(2) The Commission may impose on Regco remedial action for
violations of the standards of competitive conduct. If the
Commission concludes that Regco has engaged in material
violations of the standards of competitive conduct during
the course of this Plan, it shall provide it notice of and a
reasonable opportunity to remedy such conduct or explain why
such conduct is not a violation. If Regco fails to remedy
such conduct within a reasonable period after receiving such
notice, the Commission may take remedial action with respect
CASE 96-E-0909 APPENDIX B
Page 2 of 2
to Holdco to prevent Regco from further violating the
standard(s) at issue. Such remedial action may include
directing Holdco to divest the unregulated subsidiary, or
some portion of the assets of the unregulated subsidiary,
that is the subject of Regco's material violation(s), but
exclude directing Holdco to divest Regco or imposing a
service territory restriction on the unregulated subsidiary.
If Holdco is directed to divest an unregulated subsidiary,
it may not thereafter, without prior Commission approval,
use a new or existing subsidiary to conduct within Regco's
service territory the same business activities as the
divested subsidiary (e.g., energy services). Regco and
Holdco may exercise any and all legal and/or equitable
relief from such remedial actions, including, but not
limited to injunctive relief. Neither Central Hudson nor
any affiliate or subsidiary will challenge the Commission's
legal authority to implement the provisions of this
subparagraph.
CASE 96-E-0909 APPENDIX C
OTHER REQUIRED REVISIONS
1. The definition of strandable costs in section III of the
revised Agreement should be consistent with the elements of
strandable costs in section VIII.
2. The meaning of the acronym "NTAC" in section III should be
corrected.
3. The options available to S.C. No. 13 customers in section V,
Item D should be clarified for the period of time between the
approval of new tariffs and the availability of retail
access, as should the obligations of these customers, if any,
to enter into partial/full requirements contracts.
4. Section VI, Item B-13 should be clarified to state whether
sales in and outside of the company's service territory can
be made if they do not benefit Regco's customers.
5. For section XIII, Item A and in general, the signatories
should clarify whether they are satisfied all items listed as
continuing beyond the term of the revised agreement are
accurate and consistent throughout.
</PAGE>
<PAGE>
EXHIBIT 10(2)
STATE OF NEW YORK
PUBLIC SERVICE COMMISSION
- --------------------------------------x
:
In the Matter of Central Hudson :
Gas & Electric Corporation's : Case 96-E-0909
Plans for Electric Rate/ :
Restructuring Pursuant to :
Opinion No. 96-12. :
:
- --------------------------------------x
MODIFICATIONS TO AMENDED AND
RESTATED SETTLEMENT AGREEMENT
WHEREAS, by Order Adopting Terms of Settlement Subject to
Modifications and Conditions (Issued and Effective February 19,
1998), the Commission stated that the terms of the Amended and
Restated Settlement Agreement ("revised Agreement") dated January
2, 1998 "...generally offer a sound regulatory framework for
Central Hudson, its competitors, and its customers in the
transition to fully competitive generation and energy service
markets;" and
WHEREAS, the Commission also stated in such Order that it
was "requiring modifications and adding conditions" to the
revised Agreement, which modifications and conditions were
enumerated as items (1) through (10) in such Order; and
WHEREAS, the Commission adopted "...the terms of the revised
Agreement...subject to the modifications and conditions
enunciated" and incorporated "...the revised Agreement's terms
...by reference into" the Order; and
WHEREAS, the signatories to the revised Agreement have
conferred and agreed to the modifications and conditions
identified in Commission's Order and have executed this document
to memorialize all the modifications to the revised Agreement;
NOW, THEREFORE, the signatories agree to modify the revised
Agreement as follows:
1. The revised Agreement shall be deemed to contain each
of the ten modifications, conditions or understandings
enumerated by the Commission at pages 2-4 of the Order,
as if incorporated in full therein.
2. The revised Agreement shall be deemed to include the
provisions of Appendix B of the Order, as if set forth in
full therein.
3. With respect to the provisions of Appendix C of the Order,
the revised Agreement shall be deemed to be modified as
follows:
A. The definition of "Strandable Costs" (p. 13 of revised
Agreement) shall be modified to read: "Those production
expenditures made by Central Hudson in fulfilling its
obligation to serve and provide safe, reliable electric
service to customers within its franchise territory
which are not expected to be recoverable in a
competitive electricity market. The description and
components of Fossil Generation Strandable Costs are
contained in Part VIII, A."
B. The definition of "NTAC" (p. 10 of the revised
Agreement) shall be revised to read "...(NYPA")
Transmission Adjustment Charge...."
C. Part V, D. (p. 34-36 of the revised Agreement) shall be
revised by the insertion of the following material at
the end of the carry-over paragraph on the top of page
35 of the revised Agreement (before the paragraph which
begins "Options ii' or iii' above...."): "Until such
time as Retail Access becomes available to S.C. No. 13
customers pursuant to the procedures set forth in
Section V, J., S.C. No. 13 customers will not be
required to enter into full or partial requirements
contracts with Central Hudson to receive the 5% base
rate reduction. Effective February 27, 1998, S.C. No.
13 energy, demand and RKVA will be billed at 95% of the
full monthly rates. The discount is not applicable to
that portion of a customer's load served under the
Growth Incentive Discount or Power for Jobs Special
Provisions contained within S.C. No. 13. At the time
Retail Access becomes an approved tariff option for
S.C. No. 13 customers, S.C. No. 13 customers will be
required to contract with Central Hudson to either
continue to receive the 5% discount or to select the
50% CTC Retail Access tariff option."
D. Part VI, B., 13 (p. 51-53 of the revised Agreement) is
modified by changing the period to a comma at the end
of the first paragraph thereof and adding: "to the
extent that the provision of such energy products or
services benefits Regco's customers."
E. Part XIII, A. (p. 92-93 of the revised Agreement), is
modified to read, in its entirety, as follows: "This
Agreement shall become effective as of the Effective
Date and shall continue in effect until June 30, 2001;
provided however that the obligations of Parts V. K.,
VI. B., VII. G., H. and I., VIII. B., X. A., B., C., E.
and F., XII. A., XIII. B. and C., and Attachments H and
I of this Agreement shall survive the termination of
this Agreement; and provided further that the
provisions of Parts IV. F., G., I. and L. shall remain
effective until such time as the Commission authorizes
a general rate change to become effective pursuant to
Part IV. A., or pursuant to condition (4) of the
Commission's February 19, 1998 Order."
4. This Agreement may be executed in counterparts.
WHEREFORE, the signatories to the revised Agreement have
executed these modifications as of February 26, 1998.
Central Hudson Gas & Electric Corporation
By: (SGD.) ARTHUR R. UPRIGHT
Staff of the Department of Public Service
By: (SGD.) PHILIP S. TEUMIN
Pace Energy Project
By: (SGD.) DAVID R. WOOLEY
New York State Consumer Protection Board
By: (SGD.) TIMOTHY S. CAREY
</PAGE>
<PAGE>
EXHIBIT 99(1)
February 26, 1998
Hon. John C. Crary
Secretary
Public Service Commission
of the State of New York
Three Empire State Plaza
Albany, NY 12223
Dear Secretary Crary:
Re: Commission Case No. 96-E-0909
In the Commission's Order Adopting Terms of Settlement
Subject to Modifications and Conditions (Issued and Effective
February 19, 1998), the Commission stated that the Amended and
Restated Settlement Agreement ("revised Agreement") dated January
2, 1998, "...generally offer[s] a sound regulatory framework for
Central Hudson, its competitors, and its customers in the
transition to fully competitive generation and energy service
markets...." The Commission also stated in such Order that it
was "requiring modifications and adding conditions" to the
revised Agreement, which modifications and conditions were
enumerated as items (1) through (10) in such Order. In addition,
the Commission further stated that it adopted "...the terms of
the revised Agreement...subject to the modifications and
conditions [it] enunciated" and incorporated "...the revised
Agreement's terms ...by reference into" the Order.
Furthermore, Ordering Paragraph "3." of the Order (Mimeo, p.
7) provides that Central Hudson:
"...must submit a written statement of
unconditional acceptance of the modifications
and conditions contained in this order,
signed and acknowledged by a duly authorized
officer by February 26, 1998. This
statement, along with substitute language
responding to Appendix C, should be filed
with the Secretary of the Commission and
served on all parties in this proceeding."
In response to these provisions, the signatories to the
revised Settlement submit herewith a document entitled
"Modifications to Amended and Restated Settlement Agreement."
This document reflects the unconditional agreement of the revised
Agreement's signatories to I) the "modifications and conditions"
set forth in the Commission's Order, ii) the provisions of
Appendix B of that Order and iii) to language implementing the
provisions of Appendix C of the Order.
In addition, the Commission's condition (10) states that the
revised Agreement was being adopted "on the condition [that]
Central Hudson agrees to accept the Commission Order, issued June
23, 1997, concerning the farmer and food processor pilot program
(Case 96-E-00948 [sic])." In response to this provision, please
be advised that Central Hudson agrees to accept the Commission
Order of June 23, 1997 in Case No. 96-E-0948 insofar as that
Order is applicable to Central Hudson. In this connection, it is
noted that the revised Agreement contains a Retail Access Program
that will supersede (see, revised Agreement, Part V. C. at p. 33)
the farmer and food processor pilot program of Case 96-E-0948.
In adopting and approving the revised Agreement (with
modifications), the Commission reserved its options in the event
of subsequent judicial action altering a portion of the
agreements. Central Hudson trusts that the Commission accords
the same option to other signatories to the agreements.
Attaining the revised Agreement (and the Modifications
Agreement) was possible because the participants committed
significant resources to discussing, defining and memorializing
mutual objectives and because these agreements contain mutual
concessions and commitments. We are encouraged by the
cooperation shown in developing these agreements that all
participants will continue to implement these agreements in the
same spirit.
Central Hudson's success as a low cost provider of regulated
utility services has established core values that will guide us
in the transition to competition and continue to be lodestars to
its transition to the new, holding company authorized in the
revised Agreement. In addition to providing the springboard for
continued growth in shareholder value by restructuring Central
Hudson, the adoption of the revised Agreement by the Commission
and of the "Modifications Agreement" by the signatories
establishes a broad and far-reaching program for implementing the
Commission's competitive vision and benefitting consumers in the
Mid-Hudson Valley. Central Hudson looks forward to implementing
the new initiatives with a focus on customer values in a
government-private partnership oriented around market-developed
solutions and innovations.
Very truly yours,
(SGD.) ARTHUR R. UPRIGHT
ARUpright/mag
cc.: All Active Parties In Case No. 96-E-0909
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<PAGE>
EXHIBIT 99(2)
EXHIBIT (99)(2)
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 23, 1998 (except as to Note 1 of the Consolidated
Financial Statements which is as of February 4, 1998) appearing
in the Annual Report of Central Hudson Gas & Electric
Corporation, on Form 10-K, for the fiscal year ended December 31,
1997, as filed with the Securities and Exchange Commission on
February 10, 1998. We also consent to the reference to us under
the heading "Legal Opinions and Experts" in such Prospectus.
PRICE WATERHOUSE LLP
New York, New York
February 10, 1998
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