UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ~~September~~March 3031, ~~2012~~2013

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________

Commission File Number	Registrant, State of Incorporation Address and Telephone Number	IRS Employer Identification No.


0-30512	CH Energy Group, Inc. (Incorporated in New York) 284 South Avenue Poughkeepsie, New York 12601-4839 (845) 452-2000	14-1804460


1-3268	Central Hudson Gas & Electric Corporation (Incorporated in New York) 284 South Avenue Poughkeepsie, New York 12601-4839 (845) 452-2000	14-0555980

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 registrants were required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

CH Energy Group, Inc.	Yes þ		No o
Central Hudson Gas & Electric Corporation	Yes þ		No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

CH Energy Group, Inc.	Yes þ		No o
Central Hudson Gas & Electric Corporation	Yes þ		No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

CH Energy Group, Inc.		Central Hudson Gas & Electric Corporation
Large Accelerated Filer þ		Large Accelerated Filer o
Accelerated Filer o		Accelerated Filer o
Non-Accelerated Filer o		Non-Accelerated Filer þ
Smaller Reporting Company o		Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

CH Energy Group, Inc.	Yes o		No þ
Central Hudson Gas & Electric Corporation	Yes o		No þ

As of the close of business on ~~October~~April 3130, ~~2012~~2013 (i) CH Energy Group, Inc. had outstanding 14,~~948~~973,~~216~~794 shares of Common Stock ($0.10 per share par value) and (ii) all of the outstanding 16,862,087 shares of Common Stock ($5 per share par value) of Central Hudson Gas & Electric Corporation were held by CH Energy Group, Inc.

CENTRAL HUDSON GAS & ELECTRIC CORPORATION MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H)(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTIONS (H)(2)(a), (b) AND (c).

FORM 10-Q FOR THE QUARTER ENDED ~~SEPTEMBER~~MARCH 3031, ~~2012~~2013

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1 – Financial Statements (Unaudited)

CH Energy Group, Inc.		PAGE
	Consolidated Statement of Income –
	Three and Nine Months Ended September 30, 2012 and 2011	1
	Three Months Ended March 31, 2013 and 2012	1
	Consolidated Statement of Comprehensive Income –
	Three and Nine Months Ended September 30, 2012 and 2011	2
	Three Months Ended March 31, 2013 and 2012	2
	Consolidated Statement of Cash Flows –
	Nine Months Ended September 30, 2012 and 2011	3
	Three Months Ended March 31, 2013 and 2012	3
	Consolidated Balance Sheet –
	September 30, 2012, December 31, 2011 and September 30, 2011	5
	March 31, 2013, December 31, 2012 and March 31, 2012	4
	Consolidated Statement of Equity –
	Nine Months Ended September 30, 2012 and 2011	7
	Three Months Ended March 31, 2013 and 2012	6

Central Hudson Gas & Electric Corporation
	Statement of Income –
	Three and Nine Months Ended September 30, 2012 and 2011	8
	Three Months Ended March 31, 2013 and 2012	7
	Statement of Comprehensive Income –
	Three and Nine Months Ended September 30, 2012 and 2011	8
	Three Months Ended March 31, 2013 and 2012	7
	Statement of Cash Flows –
	Nine Months Ended September 30, 2012 and 2011	9
	Three Months Ended March 31, 2013 and 2012	8
	Balance Sheet –
	September 30, 2012, December 31, 2011 and September 30, 2011	10
	March 31, 2013, December 31, 2012 and March 31, 2012	9
	Statement of Equity –
	Nine Months Ended September 30, 2012 and 2011	12
	Three Months Ended March 31, 2013 and 2012	11

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1312

Table of Contents

	TABLE OF CONTENTS
		PAGE

ITEM 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	52

ITEM 3	Quantitative and Qualitative Disclosure About Market Risk	79

ITEM 4	Controls and Procedures	79

	TABLE OF CONTENTS
		PAGE
ITEM 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	55
ITEM 3	Quantitative and Qualitative Disclosure About Market Risk	87
ITEM 4	Controls and Procedures	87

PART II – OTHER INFORMATION

ITEM 1	Legal Proceedings	8880
ITEM 1A	Risk Factors	8880
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	8981
ITEM 4	Mine Safety Disclosures	8981
ITEM 6	Exhibits	8981
SIGNATURES		9082
EXHIBIT INDEX		9183

_______________________________________________

FILING FORMAT

This Quarterly Report on Form 10-Q is a combined quarterly report being filed by two different registrants: CH Energy Group, Inc. ("CH Energy Group") and Central Hudson Gas & Electric Corporation ("Central Hudson"), a wholly owned subsidiary of CH Energy Group. Except where the content clearly indicates otherwise, any reference in this report to CH Energy Group includes all subsidiaries of CH Energy Group, including Central Hudson. Central Hudson makes no representation as to the information contained in this report in relation to CH Energy Group and its subsidiaries other than Central Hudson.

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1 – Financial Statements (Unaudited)

CH ENERGY GROUP CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) ~~(In Thousands, except per share amounts)~~

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Operating Revenues
Electric	$	148,916		$	149,706		$	393,617		$	418,511
Natural gas		18,306			18,462			100,276			127,941
Competitive business subsidiaries:
Petroleum products		47,168			47,951			182,939			194,612
Other		4,680			4,636			13,880			13,730
Total Operating Revenues		219,070			220,755			690,712			754,794
Operating Expenses
Operation:
Purchased electricity and fuel used in electric generation		57,177			60,734			139,600			168,797
Purchased natural gas		5,873			6,337			37,977			63,425
Purchased petroleum		42,930			43,564			158,659			167,558
Other expenses of operation - regulated activities		56,015			55,480			174,737			181,460
Other expenses of operation - competitive business subsidiaries		10,519			10,986			34,307			34,841
Merger related costs		1,037			-			9,499			-
Depreciation and amortization		10,626			10,064			31,793			30,250
Taxes, other than income tax		12,776			11,760			38,372			36,687
Total Operating Expenses		196,953			198,925			624,944			683,018
Operating Income		22,117			21,830			65,768			71,776
Other Income and Deductions
Income from unconsolidated affiliates		(59	)		25			43			644
Interest on regulatory assets and other interest income		1,594			1,037			5,236			4,334
Impairment of investments		-			(3,582	)		-			(3,582	)
Regulatory adjustments for interest costs		326			319			976			1,032
Business development costs		(2	)		(529	)		(65	)		(1,027	)
Other - net		(402	)		340			(886	)		(550	)
Total Other Income		1,457			(2,390	)		5,304			851
Interest Charges
Interest on long-term debt		6,201			6,620			18,638			20,090
Penalty for early retirement of debt		-			2,982			-			2,982
Interest on regulatory liabilities and other interest		1,665			1,553			4,952			4,568
Total Interest Charges		7,866			11,155			23,590			27,640
Income before income taxes, non-controlling interest and preferred dividends of subsidiary		15,708			8,285			47,482			44,987
Income Taxes		6,548			3,478			21,345			16,998
Net Income from Continuing Operations		9,160			4,807			26,137			27,989
Discontinued Operations
Income from discontinued operations before tax		-			166			-			987
Gain from sale of discontinued operations		-			2,070			-			1,527
Income tax expense from discontinued operations		-			(1,527	)		-			(1,454	)
Net Income from Discontinued Operations		-			3,763			-			3,968
Net Income		9,160			8,570			26,137			31,957
Net Income attributable to non-controlling interest:
Dividends declared on Preferred Stock of subsidiary		103			242			521			727
Preferred Stock Redemption Premium		-			-			342			-
Net Income Attributable to CH Energy Group		9,057			8,328			25,274			31,230
Dividends declared on Common Stock		-			8,263			16,572			25,021
Change in Retained Earnings	$	9,057		$	65		$	8,702		$	6,209

(In Thousands, except per share amounts)

	Three Months Ended March 31,
	2013		2012
Operating Revenues
Electric	$	138,163	$	129,272
Natural gas		56,300		55,850
Competitive business subsidiaries:
Petroleum products		99,019		84,632
Other		4,892		4,318
Total Operating Revenues		298,374		274,072
Operating Expenses
Operation:
Purchased electricity and fuel used in electric generation		50,409		45,059
Purchased natural gas		23,399		24,614
Purchased petroleum		81,529		70,305
Other expenses of operation - regulated activities		66,792		59,886
Other expenses of operation - competitive business subsidiaries		13,303		12,422
Merger related costs		387		5,219
Depreciation and amortization		11,187		10,624
Taxes, other than income tax		14,947		13,730
Total Operating Expenses		261,953		241,859
Operating Income		36,421		32,213
Other Income and Deductions
Income from unconsolidated affiliates		199		52
Interest on regulatory assets and other interest income		1,385		1,719
Regulatory adjustments for interest costs		324		319
Other - net		127		(9	)
Total Other Income (Deductions)		2,035		2,081
Interest Charges
Interest on long-term debt		6,430		6,218
Interest on regulatory liabilities and other interest		1,915		1,584
Total Interest Charges		8,345		7,802

Income before income taxes, non-controlling interest and preferred dividends of subsidiary		30,111		26,492
Income Taxes		11,165		11,669

Net Income		18,946		14,823

Net Income attributable to non-controlling interest:
Dividends declared on Preferred Stock of subsidiary		92		242
Preferred Stock Redemption Premium		764		-
Net Income Attributable to CH Energy Group		18,090		14,581

Dividends declared on Common Stock		8,310		8,279
Change in Retained Earnings	$	9,780	$	6,302

The Notes to Financial Statements are an integral part hereof.

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Table of Contents

CH ENERGY GROUP CONSOLIDATED STATEMENT OF INCOME (CONT'D) (UNAUDITED) ~~(In Thousands, except per share amounts)~~

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Common Stock:
Average shares outstanding - Basic		14,920		15,126		14,903		15,416
Average shares outstanding - Diluted		15,127		15,314		15,110		15,604
Income from continuing operations attributable to CH Energy Group common shareholders:
Earnings per share - Basic	$	0.61	$	0.30	$	1.70	$	1.77
Earnings per share - Diluted	$	0.60	$	0.30	$	1.67	$	1.75
Income from discontinued operations attributable to CH Energy Group common shareholders:
Earnings per share - Basic	$	-	$	0.25	$	-	$	0.26
Earnings per share - Diluted	$	-	$	0.24	$	-	$	0.25
Amounts attributable to CH Energy Group common shareholders:
Earnings per share - Basic	$	0.61	$	0.55	$	1.70	$	2.03
Earnings per share - Diluted	$	0.60	$	0.54	$	1.67	$	2.00
Dividends Declared per Share	$	-	$	0.54	$	1.11	$	1.64

(In Thousands, except per share amounts)

CH ENERGY GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) (In Thousands)

	Three Months Ended March 31,
	2013		2012
Common Stock:
Average shares outstanding - Basic		14,942		14,882
Average shares outstanding - Diluted		15,156		15,143

Amounts attributable to CH Energy Group common shareholders:
Earnings per share - Basic	$	1.21	$	0.98
Earnings per share - Diluted	$	1.19	$	0.96
Dividends Declared per Share	$	0.555	$	0.555

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Net Income	$	9,160	$	8,570	$	26,137	$	31,957
Other Comprehensive Loss:
Net unrealized gains/(losses) on investments held by equity method investees - net of tax of ($56) and ($17) in 2012 and ($37) and ($10) in 2011, respectively		84		56		26		15
Other comprehensive income		84		56		26		15
Comprehensive Income		9,244		8,626		26,163		31,972
Comprehensive income attributable to non-controlling interest		103		242		863		727
Comprehensive income attributable to CH Energy Group	$	9,141	$	8,384	$	25,300	$	31,245

CH ENERGY GROUP CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

(In Thousands)

	Three Months Ended March 31,
	2013			2012
Net Income	$	18,946		$	14,823

Other Comprehensive Income:

Net unrealized losses on investments held by equity method investees - net of tax of $8 and $38, respectively		(12	)		(58	)

Other comprehensive loss		(12	)		(58	)

Comprehensive Income		18,934			14,765

Comprehensive income attributable to non-controlling interest		856			242

Comprehensive income attributable to CH Energy Group	$	18,078		$	14,523

The Notes to Financial Statements are an integral part hereof.

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Table of Contents

CH ENERGY GROUP CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) ~~(In Thousands)~~

	Nine Months Ended September 30,
	2012			2011
Operating Activities:
Net income	$	26,137		$	31,957
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		28,302			28,614
Amortization		3,491			3,120
Deferred income taxes - net		24,055			15,061
Bad debt expense		4,996			6,049
Impairment of investments		-			3,582
Undistributed equity in earnings of unconsolidated affiliates		(42	)		(644	)
Pension expense		17,909			20,725
Other post-employment benefits ("OPEB") expense		5,210			5,203
Regulatory liability - rate moderation		(1,107	)		(7,849	)
Revenue decoupling mechanism recorded		(2,405	)		4,956
Regulatory asset amortization		3,535			3,524
Gain on sale of assets		(71	)		(897	)
Changes in operating assets and liabilities - net of business acquisitions:
Accounts receivable, unbilled revenues and other receivables		3,451			2,380
Fuel, materials and supplies		963			(843	)
Special deposits and prepayments		5,267			2,779
Income and other taxes		255			(1,773	)
Accounts payable		(5,020	)		(18,092	)
Accrued interest		2,211			1,566
Customer advances		5,440			(508	)
Pension plan contribution		(28,494	)		(32,536	)
OPEB contribution		(3,269	)		(1,184	)
Revenue decoupling mechanism (refunded) collected		141			2,388
Regulatory asset - storm deferral		(942	)		(3,441	)
Regulatory asset - manufactured gas plant ("MGP") site remediation		2,920			3,761
Regulatory asset - Temporary State Assessment		(3,568	)		(2,169	)
Deferred natural gas and electric costs		3,498			22,164
Other - net		19,713			6,895
Net cash provided by operating activities		112,576			94,788
Investing Activities:
Proceeds from federal grants		-			14,744
Proceeds from sale of assets		111			42,234
Additions to utility and other property and plant		(80,372	)		(61,755	)
Acquisitions made by competitive business subsidiaries		(550	)		(2,255	)
Other - net		(3,681	)		(3,022	)
Net cash used in investing activities		(84,492	)		(10,054	)
Financing Activities:
Redemption of long-term debt		(36,495	)		(20,464	)
Proceeds from issuance of long-term debt		48,000			33,400
(Repayments) borrowings of short-term debt - net		(6,500	)		5,000
Dividends paid on Common Stock		(24,841	)		(25,290	)
Redemption of Preferred Stock		(12,180	)		-
Dividends paid on Preferred Stock of subsidiary		(764	)		(727	)
Shares repurchased		(2,993	)		(48,612	)
Other - net		(593	)		(647	)
Net cash used in financing activities		(36,366	)		(57,340	)
Net Change in Cash and Cash Equivalents		(8,282	)		27,394
Cash and Cash Equivalents at Beginning of Period		15,281			29,420
Cash and Cash Equivalents at End of Period	$	6,999		$	56,814

(In Thousands)

	Three Months Ended March 31,
	2013			2012
Operating Activities:
Net income	$	18,946		$	14,823
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		9,940			9,499
Amortization		1,247			1,125
Deferred income taxes - net		3,156			11,598
Bad debt expense		964			2,500
Undistributed equity in earnings of unconsolidated affiliates		(199	)		(52	)
Pension expense		6,022			7,233
Other post-employment benefits ("OPEB") expense		1,989			1,996
Regulatory liability - rate moderation		-			(1,033	)
Revenue decoupling mechanism recorded		4,203			(950	)
Regulatory asset amortization		1,682			1,722
Regulatory asset storm deferral adjustment		4,000			-
Gain on sale of assets		(22	)		(79	)
Changes in operating assets and liabilities - net of business acquisitions:
Accounts receivable, unbilled revenues and other receivables		(28,872	)		(7,932	)
Fuel, materials and supplies		6,842			5,425
Special deposits and prepayments		(5,100	)		(4,407	)
Income and other taxes		5,657			17
Accounts payable		(3,369	)		(2,144	)
Accrued interest		2,944			997
Customer advances		(12,587	)		(5,212	)
Pension plan contribution		(26,165	)		(28,165	)
Revenue decoupling mechanism collected (refunded)		1,485			(1,310	)
Regulatory asset - storm deferral		(2,813	)		(3,042	)
Regulatory asset - manufactured gas plant ("MGP") site remediation		(2,214	)		951
Regulatory asset - Temporary State Assessment		(2,526	)		(3,332	)
Deferred natural gas and electric costs		(4,376	)		7,883
Other - net		14,231			4,500
Net cash (used in) provided by operating activities		(4,935	)		12,611
Investing Activities:
Proceeds from sale of assets		26			96
Additions to utility and other property and plant		(28,478	)		(25,887	)
Other - net		38			(637	)
Net cash used in investing activities		(28,414	)		(26,428	)
Financing Activities:
Redemption of long-term debt		-			(36,000	)
Proceeds from issuance of long-term debt		-			48,000
Borrowings of short-term debt - net		36,500			64,500
Dividends paid on Common Stock		(8,301	)		(8,269	)
Redemption of Preferred Stock		(9,625	)		-
Dividends paid on Preferred Stock of subsidiary		(92	)		(242	)
Shares repurchased		-			(2,993	)
Other - net		(95	)		(593	)
Net cash provided by financing activities		18,387			64,403
Net Change in Cash and Cash Equivalents		(14,962	)		50,586
Cash and Cash Equivalents at Beginning of Period		30,508			15,281
Cash and Cash Equivalents at End of Period	$	15,546		$	65,867

Supplemental Disclosure of Cash Flow Information:
Interest paid	$	3,667		$	5,351
Federal and state income taxes paid	$	-		$	16
Additions to plant included in liabilities	$	3,783		$	4,126

The Notes to Financial Statements are an integral part hereof.

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Table of Contents

CH ENERGY GROUP CONSOLIDATED ~~STATEMENT~~BALANCE OFSHEET ~~CASH FLOWS~~ (~~CONT'D~~UNAUDITED) ~~(In Thousands)~~

	Nine Months Ended September 30,
	2012		2011
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	16,866	$	22,276
Federal and state income taxes paid	$	118	$	1,037
Additions to plant included in liabilities	$	4,856	$	3,997
Merger related transaction costs in liabilities	$	956	$	-

(In Thousands)

	March 31,		December 31,		March 31,
	2013		2012		2012
ASSETS
Utility Plant
Electric	$	1,074,858	$	1,067,352	$	1,017,986
Natural gas		326,061		320,258		301,609
Common		163,993		162,352		151,086
Gross Utility Plant		1,564,912		1,549,962		1,470,681

Less: Accumulated depreciation		420,696		414,137		400,894
Net		1,144,216		1,135,825		1,069,787

Construction work in progress		61,367		58,053		66,518
Net Utility Plant		1,205,583		1,193,878		1,136,305

Non-Utility Property & Plant
Griffith non-utility property & plant		33,808		33,574		31,456
Other non-utility property & plant		524		524		524
Gross Non-Utility Property & Plant		34,332		34,098		31,980

Less: Accumulated depreciation - Griffith		23,223		23,001		22,220
Net Non-Utility Property & Plant		11,109		11,097		9,760

Current Assets
Cash and cash equivalents		15,546		30,508		65,867
Accounts receivable from customers - net of allowance for doubtful accounts of $6.0 million, $6.5 million and $7.0 million, respectively		120,237		91,457		96,574
Accrued unbilled utility revenues		16,428		17,155		14,283
Other receivables		8,331		9,582		9,096
Fuel, materials and supplies		17,654		24,496		19,689
Regulatory assets		35,165		32,329		49,683
Fair value of derivative instruments		2,944		121		9
Unamortized debt expense		428		344		407
Special deposits and prepayments		26,559		21,362		25,777
Accumulated deferred income tax		8,182		12,205		8,456
Total Current Assets		251,474		239,559		289,841

Deferred Charges and Other Assets
Regulatory assets - pension plan		140,349		146,935		151,737
Regulatory assets - other		109,710		109,779		119,559
Fair value of derivative instruments		2,881		693		-
Goodwill		38,981		38,981		37,752
Other intangible assets - net		11,663		12,324		12,564
Unamortized debt expense		4,682		4,764		4,628
Investments in unconsolidated affiliates		2,241		2,536		2,559
Other investments		18,240		17,847		15,212
Other		5,478		6,556		5,884
Total Deferred Charges and Other Assets		334,225		340,415		349,895
Total Assets	$	1,802,391	$	1,784,949	$	1,785,801

The Notes to Financial Statements are an integral part hereof.

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CH ENERGY GROUP CONSOLIDATED BALANCE SHEET (~~UNAUDITED~~CONT'D) (~~In Thousands~~UNAUDITED)

	September 30,		December 31,		September 30,
	2012		2011		2011
ASSETS
Utility Plant
Electric	$	1,045,949	$	1,008,394	$	988,319
Natural gas		311,841		305,664		301,989
Common		157,878		147,286		142,201
Gross Utility Plant		1,515,668		1,461,344		1,432,509
Less: Accumulated depreciation		401,966		388,784		385,198
Net		1,113,702		1,072,560		1,047,311
Construction work in progress		67,415		58,847		63,996
Net Utility Plant		1,181,117		1,131,407		1,111,307
Non-Utility Property & Plant
Griffith non-utility property & plant		32,535		31,669		30,795
Other non-utility property & plant		524		524		6,181
Gross Non-Utility Property & Plant		33,059		32,193		36,976
Less: Accumulated depreciation - Griffith		22,896		22,006		21,656
Less: Accumulated depreciation - other		-		-		1,121
Net Non-Utility Property & Plant		10,163		10,187		14,199
Current Assets
Cash and cash equivalents		6,999		15,281		56,814
Accounts receivable from customers - net of allowance for doubtful accounts of $6.8 million, $7.0 million and $6.5 million, respectively		85,542		90,937		90,155
Accrued unbilled utility revenues		12,071		15,299		11,320
Other receivables		6,881		9,512		8,618
Fuel, materials and supplies		24,151		25,114		25,530
Regulatory assets		36,454		49,526		43,407
Income tax receivable		-		432		2,822
Fair value of derivative instruments		760		349		42
Unamortized debt expense		407		407		407
Special deposits and prepayments		16,588		21,795		19,836
Accumulated deferred income tax		987		5,895		12,956
Total Current Assets		190,840		234,547		271,907
Deferred Charges and Other Assets
Regulatory assets - pension plan		140,702		159,020		121,238
Regulatory assets - other		109,887		114,980		105,899
Fair value of derivative instruments		1,120		931		-
Goodwill		37,752		37,512		36,538
Other intangible assets - net		11,590		13,173		12,682
Unamortized debt expense		4,444		4,128		4,610
Investments in unconsolidated affiliates		2,427		2,777		3,043
Other investments		17,677		14,461		14,422
Other		5,468		6,989		6,175
Total Deferred Charges and Other Assets		331,067		353,971		304,607
Total Assets	$	1,713,187	$	1,730,112	$	1,702,020

(In Thousands, except share amounts)

	March 31,			December 31,			March 31,
	2013			2012			2012
CAPITALIZATION AND LIABILITIES
Capitalization
CH Energy Group Common Shareholders' Equity
Common Stock (30,000,000 shares authorized: $0.10 par value; 16,862,087 shares issued) 14,960,976 shares, 14,954,884 shares and 14,914,853 shares, respectively	$	1,686		$	1,686		$	1,686
Paid-in capital		349,514			349,428			348,306
Retained earnings		257,883			248,103			248,693
Treasury stock - 1,901,111 shares, 1,907,203 shares and 1,947,234 shares, respectively		(89,891	)		(90,141	)		(91,978	)
Accumulated other comprehensive income		368			380			296
Capital stock expense		-			(166	)		(328	)
Total Equity		519,560			509,290			506,675
Preferred Stock of subsidiary		-			9,027			21,027
Long-term debt		479,926			486,926			494,002
Total Capitalization		999,486			1,005,243			1,021,704
Current Liabilities
Current maturities of long-term debt		38,076			31,076			1,006
Notes payable		56,000			19,500			71,000
Accounts payable		39,155			52,812			36,183
Accrued interest		8,875			5,931			7,330
Dividends payable		8,310			8,301			8,521
Accrued vacation and payroll		8,187			7,984			7,291
Customer advances		15,722			28,309			17,315
Customer deposits		7,115			7,135			7,235
Regulatory liabilities		14,568			10,736			8,959
Fair value of derivative instruments		517			1,259			22,118
Accrued environmental remediation costs		4,267			7,117			7,064
Accrued income and other taxes		6,146			635			817
Deferred revenues		3,936			4,801			3,853
Other		21,170			15,105			16,200
Total Current Liabilities		232,044			200,701			214,892
Deferred Credits and Other Liabilities
Regulatory liabilities - OPEB		9,696			7,975			8,974
Regulatory liabilities - other		108,704			97,485			101,535
Operating reserves		3,456			3,827			3,181
Fair value of derivative instruments		93			218			1,688
Accrued environmental remediation costs		8,250			8,324			10,559
Accrued OPEB costs		58,730			58,412			53,757
Accrued pension costs		88,170			113,227			95,896
Tax reserve		2,047			2,000			3,174
Other		21,028			20,643			20,520
Total Deferred Credits and Other Liabilities		300,174			312,111			299,284
Accumulated Deferred Income Tax		270,687			266,894			249,921
Commitments and Contingencies
Total Capitalization and Liabilities	$	1,802,391		$	1,784,949		$	1,785,801

The Notes to Financial Statements are an integral part hereof.

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Table of Contents

CH ENERGY GROUP CONSOLIDATED ~~BALANCE~~STATEMENT ~~SHEET~~OF ~~(CONT'D)~~EQUITY (UNAUDITED) ~~(In Thousands, except share amounts)~~

	September 30,			December 31,			September 30,
	2012			2011			2011
CAPITALIZATION AND LIABILITIES
Capitalization
CH Energy Group Common Shareholders' Equity
Common Stock (30,000,000 shares authorized: $0.10 par value; 16,862,087 shares issued) 14,947,899 shares, 14,894,964 shares and 14,885,037 shares outstanding, respectively	$	1,686		$	1,686		$	1,686
Paid-in capital		349,136			351,053			350,693
Retained earnings		251,093			242,391			236,551
Treasury stock - 1,914,188 shares, 1,967,123 shares and 1,977,050 shares, respectively		(90,417	)		(92,908	)		(93,210	)
Accumulated other comprehensive income		380			354			474
Capital stock expense		(166	)		(328	)		(328	)
Total Equity		511,712			502,248			495,866
Preferred Stock of subsidiary		9,027			21,027			21,027
Long-term debt		493,473			446,003			446,466
Total Capitalization		1,014,212			969,278			963,359
Current Liabilities
Current maturities of long-term debt		1,041			37,006			70,373
Notes payable		-			6,500			5,000
Accounts payable		34,094			43,904			47,915
Accrued interest		8,544			6,333			7,964
Dividends payable		-			8,511			8,505
Accrued vacation and payroll		7,208			6,702			6,956
Customer advances		27,967			22,527			18,801
Customer deposits		7,473			6,647			6,651
Regulatory liabilities		7,732			11,161			12,444
Fair value of derivative instruments		5,181			19,791			12,778
Accrued environmental remediation costs		10,130			6,652			5,227
Accrued income and other taxes		891			-			-
Deferred revenues		3,860			4,801			3,699
Other		19,466			17,905			14,565
Total Current Liabilities		133,587			198,440			220,878
Deferred Credits and Other Liabilities
Regulatory liabilities - OPEB		12,139			6,988			12,038
Regulatory liabilities - other		105,109			108,887			110,280
Operating reserves		3,633			3,383			3,414
Fair value of derivative instruments		154			-			3,193
Accrued environmental remediation costs		8,238			11,036			11,937
Accrued OPEB costs		51,700			53,055			46,426
Accrued pension costs		99,869			121,911			76,414
Tax reserve		1,988			3,172			9,668
Other		20,418			18,802			18,831
Total Deferred Credits and Other Liabilities		303,248			327,234			292,201
Accumulated Deferred Income Tax		262,140			235,160			225,582
Commitments and Contingencies
Total Capitalization and Liabilities	$	1,713,187		$	1,730,112		$	1,702,020

(In Thousands, except share amounts)

	CH Energy Group Common Shareholders
	Common Stock				Treasury Stock
	Shares Issued		Amount		Shares (Repurchased) / Issued			Amount			Paid-In Capital			Capital Stock Expense			Retained Earnings			Accumulated Other Comprehensive Income / (Loss)			Non-controlling Interest		Total Equity
Balance at December 31, 2011		16,862,087	$	1,686		(1,967,123	)	$	(92,908	)	$	351,053		$	(328	)	$	242,391		$	354		$	-	$	502,248
Comprehensive income:
Net income																		14,823								14,823
Dividends declared on Preferred Stock of subsidiary																		(242	)							(242	)
Change in fair value:
Investments																					(58	)				(58	)
Dividends declared on common stock																		(8,279	)							(8,279	)
Treasury shares activity - net						19,889			930			(2,747	)													(1,817	)
Balance at March 31, 2012		16,862,087	$	1,686		(1,947,234	)	$	(91,978	)	$	348,306		$	(328	)	$	248,693		$	296		$	-	$	506,675

Balance at December 31, 2012		16,862,087	$	1,686		(1,907,203	)	$	(90,141	)	$	349,428		$	(166	)	$	248,103		$	380		$	-	$	509,290
Comprehensive income:
Net income																		18,946								18,946
Preferred Stock Redemption												(28	)		166			(764	)							(626	)
Dividends declared on Preferred Stock of subsidiary																		(92	)							(92	)
Change in fair value:
Investments																					(12	)				(12	)
Dividends declared on common stock																		(8,310	)							(8,310	)
Treasury shares activity - net						6,092			250			114														364
Balance at March 31, 2013		16,862,087	$	1,686		(1,901,111	)	$	(89,891	)	$	349,514		$	-		$	257,883		$	368		$	-	$	519,560

The Notes to Financial Statements are an integral part hereof.

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Table of Contents

CHCENTRAL ~~ENERGY~~HUDSON ~~GROUP CONSOLIDATED~~ STATEMENT OF ~~EQUITY~~INCOME (UNAUDITED) ~~(In Thousands, except share amounts)~~

	CH Energy Group Common Shareholders
	Common Stock				Treasury Stock
	Shares Issued		Amount		Shares Repurchased			Amount			Paid-In Capital			Capital Stock Expense			Retained Earnings			Accumulated Other Comprehensive Income / (Loss)		Non-controlling Interest			Total Equity
Balance at December 31, 2010		16,862,087	$	1,686		(1,062,825	)	$	(44,887	)	$	350,360		$	(328	)	$	230,342		$	459	$	172		$	537,804
Comprehensive income:
Net income																		31,957								31,957
Dividends declared on Preferred Stock of subsidiary																		(727	)							(727	)
Change in fair value:
Investments																					15					15
Reclassification to liabilities held for sale																							(172	)		(172	)
Dividends declared on common stock																		(25,021	)							(25,021	)
Treasury shares activity - net						(914,225	)		(48,323	)		333														(47,990	)
Balance at September 30, 2011		16,862,087	$	1,686		(1,977,050	)	$	(93,210	)	$	350,693		$	(328	)	$	236,551		$	474	$	-		$	495,866
Balance at December 31, 2011		16,862,087	$	1,686		(1,967,123	)	$	(92,908	)	$	351,053		$	(328	)	$	242,391		$	354	$	-		$	502,248
Comprehensive income:
Net income																		26,137								26,137
Preferred Stock Redemption															162			(342	)							(180	)
Dividends declared on Preferred Stock of subsidiary																		(521	)							(521	)
Change in fair value:
Investments																					26					26
Dividends declared on common stock																		(16,572	)							(16,572	)
Treasury shares activity - net						52,935			2,491			(1,917	)													574
Balance at September 30, 2012		16,862,087	$	1,686		(1,914,188	)	$	(90,417	)	$	349,136		$	(166	)	$	251,093		$	380	$	-		$	511,712

(In Thousands)

	Three Months Ended March 31,
	2013		2012
Operating Revenues
Electric	$	138,163	$	129,272
Natural gas		56,300		55,850
Total Operating Revenues		194,463		185,122

Operating Expenses
Operation:
Purchased electricity and fuel used in electric generation		50,409		45,059
Purchased natural gas		23,399		24,614
Other expenses of operation		66,792		59,886
Depreciation and amortization		9,955		9,468
Taxes, other than income tax		14,750		13,491
Total Operating Expenses		165,305		152,518

Operating Income		29,158		32,604

Other Income and Deductions
Interest on regulatory assets and other interest income		1,373		1,706
Regulatory adjustments for interest costs		324		319
Other - net		99		112
Total Other Income		1,796		2,137

Interest Charges
Interest on long-term debt		5,956		5,728
Interest on regulatory liabilities and other interest		1,845		1,527
Total Interest Charges		7,801		7,255

Income Before Income Taxes		23,153		27,486

Income Taxes		8,784		10,753

Net Income		14,369		16,733

Preferred Stock Redemption Premium		764		-
Dividends Declared on Cumulative Preferred Stock		92		242

Income Available for Common Stock	$	13,513	$	16,491

CENTRAL HUDSON STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

(In Thousands)

	Three Months Ended March 31,
	2013		2012
Net Income	$	14,369	$	16,733
Other Comprehensive Income		-		-
Comprehensive Income	$	14,369	$	16,733

The Notes to Financial Statements are an integral part hereof.

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Table of Contents

CENTRAL HUDSON STATEMENT OF ~~INCOME~~CASH FLOWS (UNAUDITED) ~~(In Thousands)~~

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012			2011		2012			2011
Operating Revenues
Electric	$	148,916		$	149,706	$	393,617		$	418,511
Natural gas		18,306			18,462		100,276			127,941
Total Operating Revenues		167,222			168,168		493,893			546,452
Operating Expenses
Operation:
Purchased electricity and fuel used in electric generation		57,177			60,734		139,600			168,797
Purchased natural gas		5,873			6,337		37,977			63,425
Other expenses of operation		56,015			55,480		174,737			181,460
Depreciation and amortization		9,466			8,909		28,336			26,790
Taxes, other than income tax		12,701			11,644		38,034			36,303
Total Operating Expenses		141,232			143,104		418,684			476,775
Operating Income		25,990			25,064		75,209			69,677
Other Income and Deductions
Interest on regulatory assets and other interest income		1,581			1,023		5,197			4,310
Regulatory adjustments for interest costs		326			319		976			1,032
Other - net		(313	)		513		(697	)		(300	)
Total Other Income		1,594			1,855		5,476			5,042
Interest Charges
Interest on long-term debt		5,719			5,872		17,177			17,668
Interest on regulatory liabilities and other interest		1,666			1,529		4,898			4,517
Total Interest Charges		7,385			7,401		22,075			22,185
Income Before Income Taxes		20,199			19,518		58,610			52,534
Income Taxes		7,840			7,853		22,847			20,858
Net Income		12,359			11,665		35,763			31,676
Preferred Stock Redemption Premium		-			-		342			-
Dividends Declared on Cumulative Preferred Stock		103			242		521			727
Income Available for Common Stock	$	12,256		$	11,423	$	34,900		$	30,949

(In Thousands)

CENTRAL HUDSON STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) (In Thousands)

	Three Months Ended March 31,
	2013			2012
Operating Activities:
Net income	$	14,369		$	16,733
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		9,369			8,977
Amortization		586			491
Deferred income taxes - net		3,466			12,071
Bad debt expense		589			2,125
Pension expense		6,022			7,233
OPEB expense		1,989			1,996
Regulatory liability - rate moderation		-			(1,033	)
Revenue decoupling mechanism recorded		4,203			(950	)
Regulatory asset amortization		1,682			1,722
Regulatory asset storm deferral adjustment		4,000			-
Changes in operating assets and liabilities - net:
Accounts receivable, unbilled revenues and other receivables		(17,846	)		(7,437	)
Fuel, materials and supplies		5,069			4,648
Special deposits and prepayments		(3,926	)		(3,203	)
Income and other taxes		5,492			(942	)
Accounts payable		(5,075	)		(2,855	)
Accrued interest		2,466			504
Customer advances		(7,841	)		(3,374	)
Pension plan contribution		(26,165	)		(28,165	)
Revenue decoupling mechanism collected (refunded)		1,485			(1,310	)
Regulatory asset - storm deferral		(2,813	)		(3,042	)
Regulatory asset - MGP site remediation		(2,214	)		951
Regulatory asset - Temporary State Assessment		(2,526	)		(3,332	)
Deferred natural gas and electric costs		(4,376	)		7,883
Other - net		10,909			1,478
Net cash (used in) provided by operating activities		(1,086	)		11,169

Investing Activities:
Additions to utility plant		(27,890	)		(25,783	)
Other - net		(408	)		(777	)
Net cash used in investing activities		(28,298	)		(26,560	)

Financing Activities:
Redemption of long-term debt		-			(36,000	)
Proceeds from issuance of long-term debt		-			48,000
Borrowings of short-term debt - net		27,000			57,500
Redemption of Preferred Stock		(9,653	)		-
Dividends paid to parent - CH Energy Group		(5,000	)		-
Dividends paid on cumulative Preferred Stock		(92	)		(242	)
Other - net		(108	)		(602	)
Net cash provided by financing activities		12,147			68,656

Net Change in Cash and Cash Equivalents		(17,237	)		53,265
Cash and Cash Equivalents - Beginning of Period		24,352			2,521
Cash and Cash Equivalents - End of Period	$	7,115		$	55,786

Supplemental Disclosure of Cash Flow Information:
Interest paid	$	3,601		$	5,312
Federal and state income taxes paid	$	-		$	-
Additions to plant included in liabilities	$	3,783		$	4,126

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Net Income	$	12,359	$	11,665	$	35,763	$	31,676
Other Comprehensive Income		-		-		-		-
Comprehensive Income	$	12,359	$	11,665	$	35,763	$	31,676

The Notes to Financial Statements are an integral part hereof.

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Table of Contents

CENTRAL HUDSON ~~STATEMENT~~BALANCE OFSHEET ~~CASH FLOWS~~ (UNAUDITED) ~~(In Thousands)~~

	Nine Months Ended September 30,
	2012			2011
Operating Activities:
Net income	$	35,763		$	31,676
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		26,728			25,463
Amortization		1,608			1,328
Deferred income taxes - net		24,096			19,975
Bad debt expense		4,501			5,075
Pension expense		17,909			20,725
OPEB expense		5,210			5,203
Regulatory liability - rate moderation		(1,107	)		(7,849	)
Revenue decoupling mechanism recorded		(2,405	)		4,956
Regulatory asset amortization		3,535			3,524
Changes in operating assets and liabilities - net:
Accounts receivable, unbilled revenues and other receivables		(2,468	)		1,690
Fuel, materials and supplies		866			(2,550	)
Special deposits and prepayments		5,583			1,563
Income and other taxes		(339	)		(682	)
Accounts payable		(4,220	)		(10,420	)
Accrued interest		1,730			1,346
Customer advances		985			(3,597	)
Pension plan contribution		(28,494	)		(32,536	)
OPEB contribution		(3,269	)		(1,184	)
Revenue decoupling mechanism collected		141			2,388
Regulatory asset - storm deferral		(942	)		(3,441	)
Regulatory asset - MGP site remediation		2,920			3,761
Regulatory asset - Temporary State Assessment		(3,568	)		(2,169	)
Deferred natural gas and electric costs		3,498			22,164
Other - net		17,293			10,658
Net cash provided by operating activities		105,554			97,067
Investing Activities:
Additions to utility plant		(78,792	)		(57,434	)
Other - net		(4,058	)		(3,705	)
Net cash used in investing activities		(82,850	)		(61,139	)
Financing Activities:
Redemption of long-term debt		(36,000	)		-
Proceeds from issuance of long-term debt		48,000			33,400
Borrowings of short-term debt - net		(1,500	)		-
Redemption of Preferred Stock		(12,180	)		-
Dividends paid to parent - CH Energy Group		(22,000	)		(33,000	)
Dividends paid on cumulative Preferred Stock		(764	)		(727	)
Other - net		(622	)		(647	)
Net cash used in financing activities		(25,066	)		(974	)
Net Change in Cash and Cash Equivalents		(2,362	)		34,954
Cash and Cash Equivalents - Beginning of Period		2,521			9,622
Cash and Cash Equivalents - End of Period	$	159		$	44,576
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	15,795		$	17,036
Federal and state income taxes paid	$	-		$	-
Additions to plant included in liabilities	$	4,856		$	3,997
Regulatory asset - storm deferral costs in liabilities	$	-		$	9,396

(In Thousands)

	March 31,		December 31,		March 31,
	2013		2012		2012
ASSETS
Utility Plant
Electric	$	1,074,858	$	1,067,352	$	1,017,986
Natural gas		326,061		320,258		301,609
Common		163,993		162,352		151,086
Gross Utility Plant		1,564,912		1,549,962		1,470,681

Less: Accumulated depreciation		420,696		414,137		400,894
Net		1,144,216		1,135,825		1,069,787

Construction work in progress		61,367		58,053		66,518
Net Utility Plant		1,205,583		1,193,878		1,136,305

Non-Utility Property and Plant		524		524		524
Net Non-Utility Property and Plant		524		524		524

Current Assets
Cash and cash equivalents		7,115		24,352		55,786
Accounts receivable from customers - net of allowance for doubtful accounts of $4.2 million, $4.6 million and $5.4 million, respectively		77,609		60,155		65,922
Accrued unbilled utility revenues		16,428		17,155		14,283
Other receivables		4,630		5,206		6,086
Fuel, materials and supplies - at average cost		14,194		19,264		16,389
Regulatory assets		35,165		32,329		49,683
Fair value of derivative instruments		2,941		95		-
Unamortized debt expense		428		344		407
Special deposits and prepayments		22,496		18,473		21,311
Accumulated deferred income tax		1,256		5,313		2,019
Total Current Assets		182,262		182,686		231,886

Deferred Charges and Other Assets
Regulatory assets - pension plan		140,349		146,935		151,737
Regulatory assets - other		109,710		109,779		119,559
Fair value of derivative instruments		2,881		693		-
Unamortized debt expense		4,682		4,764		4,628
Other investments		17,743		17,368		14,745
Other		2,734		3,740		2,218
Total Deferred Charges and Other Assets		278,099		283,279		292,887

Total Assets	$	1,666,468	$	1,660,367	$	1,661,602

The Notes to Financial Statements are an integral part hereof.

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CENTRAL HUDSON BALANCE SHEET (~~UNAUDITED~~CONT'D) (~~In Thousands~~UNAUDITED)

	September 30,		December 31,		September 30,
	2012		2011		2011
ASSETS
Utility Plant
Electric	$	1,045,949	$	1,008,394	$	988,319
Natural gas		311,841		305,664		301,989
Common		157,878		147,286		142,201
Gross Utility Plant		1,515,668		1,461,344		1,432,509
Less: Accumulated depreciation		401,966		388,784		385,198
Net		1,113,702		1,072,560		1,047,311
Construction work in progress		67,415		58,847		63,996
Net Utility Plant		1,181,117		1,131,407		1,111,307
Non-Utility Property and Plant		524		524		681
Less: Accumulated depreciation		-		-		36
Net Non-Utility Property and Plant		524		524		645
Current Assets
Cash and cash equivalents		159		2,521		44,576
Accounts receivable from customers - net of allowance for doubtful accounts of $5.1 million, $5.2 million and $5.2 million, respectively		62,225		61,610		66,859
Accrued unbilled utility revenues		12,071		15,299		11,320
Other receivables		3,075		5,301		4,679
Fuel, materials and supplies - at average cost		20,171		21,037		22,577
Regulatory assets		36,454		49,526		43,407
Fair value of derivative instruments		711		320		-
Unamortized debt expense		407		407		407
Special deposits and prepayments		12,735		18,258		15,697
Accumulated deferred income tax		-		-		6,593
Total Current Assets		148,008		174,279		216,115
Deferred Charges and Other Assets
Regulatory assets - pension plan		140,702		159,020		121,238
Regulatory assets - other		109,887		114,980		105,899
Fair value of derivative instruments		1,120		931		-
Unamortized debt expense		4,444		4,128		4,610
Other investments		17,205		14,047		14,008
Other		2,274		3,065		2,217
Total Deferred Charges and Other Assets		275,632		296,171		247,972
Total Assets	$	1,605,281	$	1,602,381	$	1,576,039

(In Thousands, except share amounts)

	March 31,			December 31,			March 31,
	2013			2012			2012
CAPITALIZATION AND LIABILITIES
Capitalization
Common Stock (30,000,000 shares authorized: $5 par value; 16,862,087 shares issued and outstanding)	$	84,311		$	84,311		$	84,311
Paid-in capital		199,952			199,980			199,980
Retained earnings		198,682			190,169			182,456
Capital stock expense		(4,633	)		(4,799	)		(4,961	)
Total Equity		478,312			469,661			461,786

Cumulative Preferred Stock not subject to mandatory redemption		-			9,027			21,027

Long-term debt		452,950			459,950			465,950
Total Capitalization		931,262			938,638			948,763

Current Liabilities
Current maturities of long-term debt		37,000			30,000			-
Notes payable		27,000			-			59,000
Accounts payable		29,639			45,002			27,299
Accrued interest		8,249			5,782			6,686
Dividends payable - Preferred Stock		-			-			242
Accrued vacation and payroll		6,424			6,708			5,671
Customer advances		10,243			18,084			11,231
Customer deposits		7,042			7,069			7,170
Regulatory liabilities		14,568			10,736			8,959
Fair value of derivative instruments		517			1,259			22,118
Accrued environmental remediation costs		3,838			6,660			6,562
Accrued income and other taxes		8,635			3,142			1,564
Other		14,549			12,095			10,764
Total Current Liabilities		167,704			146,537			167,266

Deferred Credits and Other Liabilities
Regulatory liabilities - OPEB		9,696			7,975			8,974
Regulatory liabilities - other		108,704			97,485			101,535
Operating reserves		2,647			2,696			2,148
Fair value of derivative instruments		93			218			1,688
Accrued environmental remediation costs		7,240			7,293			9,407
Accrued OPEB costs		58,730			58,412			53,757
Accrued pension costs		88,170			113,227			95,896
Tax reserve		2,047			2,000			3,174
Other		20,071			19,705			19,564
Total Deferred Credits and Other Liabilities		297,398			309,011			296,143

Accumulated Deferred Income Tax		270,104			266,181			249,430

Commitments and Contingencies

Total Capitalization and Liabilities	$	1,666,468		$	1,660,367		$	1,661,602

The Notes to Financial Statements are an integral part hereof.

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CENTRAL HUDSON ~~BALANCE~~STATEMENT ~~SHEET~~OF ~~(CONT'D)~~EQUITY (UNAUDITED) ~~(In Thousands, except share amounts)~~

	September 30,			December 31,			September 30,
	2012			2011			2011
CAPITALIZATION AND LIABILITIES
Capitalization
Common Stock (30,000,000 shares authorized: $5 par value; 16,862,087 shares issued and outstanding)	$	84,311		$	84,311		$	84,311
Paid-in capital		199,980			199,980			199,980
Retained earnings		178,865			165,965			162,847
Capital stock expense		(4,799	)		(4,961	)		(4,961	)
Total Equity		458,357			445,295			442,177
Cumulative Preferred Stock not subject to mandatory redemption		9,027			21,027			21,027
Long-term debt		465,950			417,950			417,903
Total Capitalization		933,334			884,272			881,107
Current Liabilities
Current maturities of long-term debt		-			36,000			69,400
Notes payable		-			1,500			-
Accounts payable		26,721			35,731			42,229
Accrued interest		7,913			6,183			7,313
Dividends payable - Preferred Stock		-			242			242
Accrued vacation and payroll		5,786			5,556			5,568
Customer advances		15,589			14,604			10,157
Customer deposits		7,408			6,582			6,587
Regulatory liabilities		7,732			11,161			12,444
Fair value of derivative instruments		5,181			19,791			12,778
Accrued environmental remediation costs		9,675			6,117			4,552
Accrued income and other taxes		2,003			1,274			1,184
Accumulated deferred income tax		5,373			156			-
Other		17,285			14,855			11,481
Total Current Liabilities		110,666			159,752			183,935
Deferred Credits and Other Liabilities
Regulatory liabilities - OPEB		12,139			6,988			12,038
Regulatory liabilities - other		105,109			108,887			110,280
Operating reserves		2,444			2,120			2,235
Fair value of derivative instruments		154			-			3,193
Accrued environmental remediation costs		7,174			9,726			10,483
Accrued OPEB costs		51,700			53,055			46,426
Accrued pension costs		99,869			121,911			76,414
Tax reserve		1,988			3,172			9,668
Other		19,466			17,955			17,884
Total Deferred Credits and Other Liabilities		300,043			323,814			288,621
Accumulated Deferred Income Tax		261,238			234,543			222,376
Commitments and Contingencies
Total Capitalization and Liabilities	$	1,605,281		$	1,602,381		$	1,576,039

(In Thousands, except share amounts)

	Central Hudson Common Shareholders
	Common Stock				Treasury Stock
	Shares Issued		Amount		Shares Repurchased		Amount		Paid-In Capital			Capital Stock Expense			Retained Earnings			Accumulated Other Comprehensive Income / (Loss)		Total Equity
Balance at December 31, 2011		16,862,087	$	84,311		-	$	-	$	199,980		$	(4,961	)	$	165,965		$	-	$	445,295
Net income																16,733					16,733
Dividends declared:
On cumulative Preferred Stock																(242	)				(242	)
Balance at March 31, 2012		16,862,087	$	84,311		-	$	-	$	199,980		$	(4,961	)	$	182,456		$	-	$	461,786

Balance at December 31, 2012		16,862,087	$	84,311		-	$	-	$	199,980		$	(4,799	)	$	190,169		$	-	$	469,661
Net income																14,369					14,369
Preferred Stock Redemption										(28	)		166			(764	)				(626	)
Dividends declared:
On cumulative Preferred Stock																(92	)				(92	)
On Common Stock to parent - CH Energy Group																(5,000	)				(5,000	)
Balance at March 31, 2013		16,862,087	$	84,311		-	$	-	$	199,952		$	(4,633	)	$	198,682		$	-	$	478,312

The Notes to Financial Statements are an integral part hereof.

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CENTRAL HUDSON STATEMENT OF EQUITY (UNAUDITED) (In Thousands, except share amounts)

	Central Hudson Common Shareholders
	Common Stock				Treasury Stock
	Shares Issued		Amount		Shares Repurchased		Amount		Paid-In Capital		Capital Stock Expense			Retained Earnings			Accumulated Other Comprehensive Income / (Loss)		Total Equity
Balance at December 31, 2010		16,862,087	$	84,311		-	$	-	$	199,980	$	(4,961	)	$	164,898		$	-	$	444,228
Net income															31,676					31,676
Dividends declared:
On cumulative Preferred Stock															(727	)				(727	)
On Common Stock to parent - CH Energy Group															(33,000	)				(33,000	)
Balance at September 30, 2011		16,862,087	$	84,311		-	$	-	$	199,980	$	(4,961	)	$	162,847		$	-	$	442,177
Balance at December 31, 2011		16,862,087	$	84,311		-	$	-	$	199,980	$	(4,961	)	$	165,965		$	-	$	445,295
Net income															35,763					35,763
Preferred Stock Redemption												162			(342	)				(180	)
Dividends declared:
On cumulative Preferred Stock															(521	)				(521	)
On Common Stock to parent - CH Energy Group															(22,000	)				(22,000	)
Balance at September 30, 2012		16,862,087	$	84,311		-	$	-	$	199,980	$	(4,799	)	$	178,865		$	-	$	458,357

The Notes to Financial Statements are an integral part hereof.

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – Summary of Significant Accounting Policies

Basis of Presentation

This Quarterly Report on Form 10-Q is a combined report of CH Energy Group, Inc. ("CH Energy Group") and its regulated electric and natural gas subsidiary, Central Hudson Gas & Electric Corporation ("Central Hudson"). The Notes to the Consolidated Financial Statements apply to both CH Energy Group and Central Hudson. CH Energy Group's Consolidated Financial Statements include the accounts of CH Energy Group and its wholly owned subsidiaries, which include Central Hudson and CH Energy Group's non-utility subsidiary, Central Hudson Enterprises Corporation ("CHEC"). Operating results of CHEC include its wholly owned subsidiary, Griffith Energy Services, Inc. ("Griffith"). Discontinued operations on CH Energy Group's Consolidated Statements of Income include the operating results of CHEC's subsidiaries which were sold in 2011, including Lyonsdale Biomass, LLC ("Lyonsdale"), Shirley Wind, LLC ("Shirley Wind"), CH-Auburn, LLC ("CH-Auburn") and CH-Greentree, LLC ("CH-Greentree"). Intercompany balances and transactions have been eliminated in consolidation. See Note 5 – "Acquisitions, Divestitures and Investments" for further information.

The Financial Statements were prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which for regulated public utilities, includes specific accounting guidance for regulated operations. For additional information regarding regulatory accounting, see Note 2 – "Regulatory Matters."

Pending Acquisition by Fortis Inc.

On February 21, 2012, CH Energy Group announced that it had entered into an agreement and plan of merger under which it agreed, subject to shareholder approval and the approval of applicable regulatory authorities, to be acquired by Fortis Inc. ("Fortis") for $65 per share of common stock in cash. On June 19, 2012, shareholders of CH Energy Group approved the proposed acquisition of the Company by Fortis. On July 3, 2012, the Federal Energy Regulatory Commission ("FERC") approved the acquisition of CH Energy Group by Fortis. On July 17, 2012, the Committee on Foreign Investment in the United States approved the acquisition of CH Energy Group by Fortis. On October 2, 2012, the Federal Trade Commission permitted the 30-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to the acquisition of the Company by Fortis to expire. ~~The~~On ~~transaction~~April ~~remains~~20, ~~subject~~2012, toCH ~~review~~Energy byGroup, ~~the~~Central ~~New~~Hudson, ~~York~~Fortis, ~~State~~FortisUS ~~Public~~Inc. ~~Service~~("FortisUS"), ~~Commission~~and Cascade Acquisition Sub Inc. ("~~PSC~~Petitioners")~~. On~~, ~~April~~submitted ~~20,~~a ~~2012~~joint ~~Fortis~~petition ~~and~~to ~~Central~~the ~~Hudson~~New ~~jointly~~York ~~filed~~State aPublic ~~petition~~Service ~~requesting~~Commission ("PSC" or "Commission") for approval of the proposed transaction under Section 70 of the Public Service Law. Pursuant to a procedure schedule established by the Administrative Law Judges, the PSC Staff and other parties to the proceeding filed testimony and comments on October 12, 2012. ~~Management~~ On ~~continues~~January 25, 2013, a Joint Proposal with the Company, Fortis, PSC Staff, Multiple Intervenors, the Department of State Utility Intervention Unit, and Dutchess, Orange and Ulster counties as signatories, was submitted to ~~believe~~the PSC. The signatory parties have concluded that, ~~PSC~~based on the terms of the Joint Proposal, the acquisition is in the public interest pursuant to New York State Public Service Law, Section 70, and recommend approval ~~will~~by the Commission. The deadline for submission of public comments in the proceeding was extended to May 1, 2013 by the Commission in a notice issued March 22, 2013. On April 24, 2013, the Commission issued a notice stating that the Administrative Law Judges ("ALJs") assigned to this matter would prepare a Recommended Decision ("RD") for the Commission. On May 3, 2013 the Recommended Decision of the two Administrative Law Judges – an advisory document – was issued by the PSC. The RD states that, in its current form, the Joint Proposal does not meet the public interest test as required by New York State Public Service Law, Section 70, but also states that the ALJs recommend the Commission consider adopting the Joint Proposal subject to modifications that would alter the transaction's balance of risks and benefits. Briefs on exceptions to the RD are due May 17, 2013 and briefs opposing exceptions are due on May 24, 2013. While no assurance regarding the closing can be ~~obtained~~given until a final PSC Order is issued, the Company continues to anticipate that the Commission will review and approve the merger in the second quarter of 2013. Under the terms of the merger agreement, Fortis must close the transaction if all conditions precedent are met, including PSC approval, and a material adverse effect has not occurred. Closing of the transaction would follow shortly after issuance of the final PSC Order approving the merger. Management believes this will ~~close~~occur ~~during~~in the ~~first~~second quarter of 2013.

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Unaudited Financial Statements

The accompanying Consolidated Financial Statements of CH Energy Group and Financial Statements of Central Hudson are unaudited but, in the opinion of management, reflect adjustments (which include normal recurring adjustments) necessary for a fair statement of the results for the interim periods presented. These unaudited quarterly Financial Statements do not contain all footnote disclosures concerning accounting policies and other matters which would be included in annual Financial Statements and, accordingly, should be read in conjunction with the audited Financial Statements (including the Notes thereto) included in the combined CH Energy Group/Central Hudson Annual Report on Form 10-K for the year ended December 31, ~~2011~~2012 (the "Corporations' 10-K Annual Report").

~~CH Energy Group's and Central Hudson's balance sheets as of September 30, 2011 are not required to be included in this Quarterly Report on Form 10~~-~~Q; however, these balance sheets are included for supplemental analysis purposes.~~12-

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CH Energy Group's and Central Hudson's balance sheets as of March 31, 2012 are not required to be included in this Quarterly Report on Form 10-Q; however, these balance sheets are included for supplemental analysis purposes.

Reclassification

Certain amounts in the ~~2011~~2012 Financial Statements have been reclassified to conform to the ~~2012~~2013 presentation. ~~For more information regarding reclassification of discontinued operations, see Note 5 – "Acquisition, Divestitures and Investments."~~

The Company reclassified amounts related to in-process work for cost of removal of plant assets from accumulated depreciation to deferred costs, regulatory liabilities. This reclassification resulted in a reduction to the March 31, 2012 balance of $10.6 million.

Revenue Recognition

CH Energy Group's deferred revenue balances as of ~~September~~March 3031, ~~2012~~2013, December 31, ~~2011~~2012 and ~~September~~March 3031, ~~2011~~2012 were $3.9 million, $4.8 million and $3.79 million, respectively. The deferred revenue balance will be recognized in CH Energy Group's operating revenues over the 12-month term of the respective customer contract.

As required by the PSC, Central Hudson records gross receipts tax revenues and expenses on a gross income statement presentation basis (i.e., included in both revenue and expenses). Sales and use taxes for both Central Hudson and Griffith are accounted for on a net basis (excluded from revenue).

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Fuel, Materials & Supplies

The following is a summary of CH Energy Group's and Central Hudson's inventories (In Thousands):

	~~CH Energy Group~~	CH Energy Group							~~Central Hudson~~			Central Hudson
	September 30,			December 31,			September 30,		September 30,		December 31,			September 30,
		March 31,				December 31,			March 31,			March 31,				December 31,		March 31,
	2012			2011			2011		2012		2011			2011
		2013				2012			2012			2013				2012		2012
Natural gas	$	~~8,889~~$	2,759	$	~~11,711~~	$	$7,638	~~13,106~~	$	87,~~889~~322	$	~~11,711~~$	2,759	$	~~13,106~~	$	7,638	$	7,322
Petroleum products and propane		~~2,882~~	2,098		~~3,422~~		3,942	~~2,177~~		-2,115		~~494~~	-		~~494~~		-		-
Fuel used in electric generation		~~286~~	293		~~285~~		295	~~287~~		286		~~285~~	293		~~287~~		295		286
Materials and Supplies		12,094			9,696			9,960		10,996		8,547			8,690
Materials and supplies			12,504				12,621			9,966			11,142				11,331		8,781
Total	$	~~24,151~~$	17,654	$	~~25,114~~	$	$24,496	~~25,530~~	$	2019,~~171~~689	$	~~21,037~~$	14,194	$	~~22,577~~	$	19,264	$	16,389

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Depreciation and Amortization

Current accounting guidance related to asset retirements precludes the recognition of expected future retirement obligations as a component of depreciation expense or accumulated depreciation. Central Hudson, however, is required to use depreciation methods and rates approved by the PSC under regulatory accounting. These depreciation rates include a charge for the cost of future removal and retirement of fixed assets. In accordance with current accounting guidance for regulated operations, Central Hudson continues to accrue for the future cost of removal for its rate-regulated natural gas and electric utility assets. In accordance with current accounting guidance related to asset retirements, Central Hudson has classified $5344.08 million, $5243.64 million, and $5242.67 million of cost of removal as regulatory liabilities as of ~~September~~March 3031, ~~2012~~2013, December 31, ~~2011~~2012, and ~~September~~March 3031, ~~2011~~2012, respectively. This liability represents the portion of the cost of removal charge in excess of the amount reported as an Asset Retirement Obligation under GAAP.

See Note 6 - "Goodwill and Other Intangible Assets" for further discussion of amortization of intangibles (other than goodwill).

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Earnings Per Share

In the calculation of earnings per share (basic and diluted) of CH Energy Group's Common Stock, earnings for CH Energy Group are reduced by the Preferred Stock dividends of Central Hudson.

The average dilutive effect of CH Energy Group's stock options, performance shares and restricted shares are as follows:

Three Months Ended

~~Nine Months Ended~~

September 30,

March 31,

2012

2011

2012

2011

2013

2012

~~207~~213,~~160~~908

~~188~~260,~~177~~259

~~207,160~~

~~187,931~~

Certain stock options can be excluded from the calculation of diluted earnings per share because the exercise prices of those options were greater than the average market price per share of Common Stock. As of December 31, 2012, no stock options are outstanding. There were no options excluded during the three ~~and nine~~ months ended ~~September~~March 3031, 2012 ~~or 2011~~.

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Parental Guarantees

CH Energy Group and CHEC have issued guarantees to counterparties to assure the payment, when due, of certain obligations incurred by CH Energy Group subsidiaries, in physical and financial transactions.

	September 30, 2012
	March 31, 2013
Transaction Description	Maximum Potential Payments			Outstanding Liabilities(1)
Heating oil, propane, other petroleum products, weather and commodity hedges (In Thousands)	$	30,650	~~26,250~~	$	8,555	~~$6,579~~

(1)	Balance included in CH Energy Group's Consolidated Balance Sheet.

Management is not aware of any existing condition that would require payment under the guarantees.

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Common Stock Dividends

On ~~October~~March 427, ~~2012~~2013, the Board of Directors of CH Energy Group declared a quarterly dividend of 55.5 cents per share payable ~~November~~May 1, ~~2012~~2013, to shareholders of record as of ~~October~~April 1510, ~~2012~~2013. ~~Although this dividend was declared at the beginning of the fourth quarter, it represents the third quarter 2012 dividend declaration.~~

CH Energy Group's ability to pay dividends is affected by the ability of its subsidiaries to pay dividends. The Federal Power Act limits the payment of dividends by Central Hudson to its retained earnings. More restrictive is the PSC's limit on the dividends Central Hudson may pay to CH Energy Group which is 100% of the average annual income available for common stock, calculated on a two-year rolling average basis. Based on this calculation, Central Hudson was restricted to a maximum payment of $4445.61 million in dividends to CH Energy Group for the year ended December 31, ~~2011~~2012. Central Hudson's dividend would be reduced to 75% of its average annual income in the event of a downgrade of its senior debt rating below "BBB+" by more than one rating agency if the stated reason for the downgrade is related to any of CH Energy Group's or Central Hudson's affiliates. Further restrictions are imposed for any downgrades below this level. During the three months ended March 31, 2013, Central Hudson had declared and paid dividends of $5.0 million to parent CH Energy Group. CH Energy Group's other subsidiaries do not have express restrictions on their ability to pay dividends.

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NOTE 2 – Regulatory Matters

Summary of Regulatory Assets and Liabilities

The following table sets forth Central Hudson's regulatory assets and liabilities (In Thousands):

	September 30,		December 31,		September 30,
	March 31,		December 31,		March 31,
	2012		2011		2011
	2013		2012		2012
Regulatory Assets (Debits):
Current:
Deferred purchased electric and natural gas costs	$	7,277	$	10,775	$	8,155
Deferred purchased electric and natural gas costs (Note 1)	$	15,743	$	11,367	$	2,892
Deferred unrealized losses on derivatives		5,181		19,791		12,778
Deferred unrealized losses on derivatives (Note 14)		517		1,259		22,118
PSC General and Temporary State Assessment and carrying charges		108,~~823~~854		86,~~123~~260		1211,~~481~~547
RDM and carrying charges		~~3,123~~-		~~791~~3,393		-3,068
Residual natural gas deferred balances		4,554		4,554		4,554
Deferred debt expense on re-acquired debt		601		~~625~~601		~~600~~628
Deferred and accrued costs - MGP site remediation and carrying charges		4,605		4,577		4,549
Deferred and accrued costs - MGP site remediation and carrying charges (Note 12)		4,605		4,605		4,586
Other		~~290~~291		290		290
		36,454		49,526		43,407
		35,165		32,329		49,683
Long-term:
Deferred pension costs		140,702		159,020		121,238
Deferred pension costs (Note 10)		140,349		146,935		151,737
Deferred unrealized losses on derivatives		154		-		3,193
Deferred unrealized losses on derivatives (Note 14)		93		218		1,688
Carrying charges - pension reserve		810,~~278~~303		49,~~986~~182		46,~~055~~158
Deferred and accrued costs - MGP site remediation and carrying charges		12,371		14,260		14,086
Deferred and accrued costs - MGP site remediation and carrying charges (Note 12)		10,109		10,739		13,459
Deferred debt expense on re-acquired debt		4,~~887~~586		54,~~332~~737		5,~~071~~172
Deferred Medicare Subsidy taxes		7,~~725~~933		7,~~307~~808		7,~~171~~450
Residual natural gas deferred balances and carrying charges		63,~~466~~809		95,~~829~~443		108,~~810~~168
Income taxes recoverable through future rates		4037,~~067~~119		4229,~~997~~908		3747,~~716~~820
Energy efficiency incentives		2,719		2,719		-2,719
Deferred storm costs and carrying charges		1319,~~282~~717		1523,~~416~~274		1215,~~838~~178
Other		13,~~938~~322		1215,~~134~~751		1011,~~959~~747
		250,589		274,000		227,137
		250,059		256,714		271,296
Total Regulatory Assets	$	~~287~~285,~~043~~224	$	~~323~~289,~~526~~043	$	~~270~~320,~~544~~979
Regulatory Liabilities (Credits):
Current:
Excess electric depreciation reserve	$	-	$	~~1,107~~-	$	~~2,008~~74
RDM and carrying charges		-2,330		-		~~3,520~~-
Deferred unrealized gains on derivatives		711		-		-
Deferred unrealized gains on derivatives (Note 14)		2,941		95		-
Income taxes refundable through future rates		4,~~836~~431		54,~~062~~669		45,~~938~~120
Deferred unbilled gas revenues		24,~~185~~866		45,~~992~~972		13,~~978~~765
		7,732		11,161		12,444
		14,568		10,736		8,959
Long-term:
Customer benefit fund		2,~~321~~419		2,~~623~~390		32,~~139~~566
Deferred cost of removal		52,986		52,565		52,630
Deferred cost of removal (Note 1)		44,795		43,392		42,748
Rate Base impact of tax repair project and carrying charges		89,~~260~~159		9,~~413~~099		108,~~170~~083
Excess electric depreciation reserve and carrying charges		1,586		2,678		2,653
Excess electric depreciation reserve carrying charges		1,586		1,586		2,688
Deferred unrealized gains on derivatives		1,120		931		-
Deferred unrealized gains on derivatives (Note 14)		2,881		693		-
Income taxes refundable through future rates		2024,~~312~~194		2921,~~648~~062		2433,~~189~~769
Deferred OPEB costs		129,~~139~~696		67,~~988~~975		128,~~038~~974
Carrying charges - OPEB reserve		811,~~740~~222		59,~~405~~949		46,~~379~~482
Other		912,~~784~~448		59,~~624~~314		135,~~120~~199
		117,248		115,875		122,318
		118,400		105,460		110,509
Total Regulatory Liabilities	$	~~124~~132,~~980~~968	$	~~127~~116,~~036~~196	$	~~134~~119,~~762~~468
Net Regulatory Assets	$	~~162~~152,~~063~~256	$	~~196~~172,~~490~~847	$	~~135~~201,~~782~~511

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The significant new regulatory assets and liabilities include:

Storm Costs: Central Hudson is authorized to request and the PSC has historically approved deferral accounting for incremental storm restoration costs which meet the following criteria: (1) the expense must be incremental to the amount provided in rates, (2) the incremental costs must be material and extraordinary in nature, and (3) the utility's earnings are below the authorized rate of return on common equity. The balance shown for storm costs as of September 30, 2012 relates to the impacts of Tropical Storm Irene as well as a significant snow storm event in late October 2011. These amounts are based on actual rate year results for the rate year ended June 30, 2012. Management believes the costs deferred as of September 30, 2012 are probable of future recovery. See Other Regulatory Matters and PSC Proceedings for further details on these storm events.

2010 Rate Order

From July 1, 2010 through June 30, 2013, Central Hudson is operating under the terms of the 2010 Rate Order, which provides for the following:

Description		2010 Rate Order
Electric delivery revenue increases		$11.8 million⁽¹⁾ 7/1/10 $9.3 million⁽¹⁾ 7/1/11 $9.1 million 7/1/12
Natural gas delivery revenue increases		$5.7 million 7/1/10 $2.4 million 7/1/11 $1.6 million 7/1/12
ROE		10.0%
Earnings sharing		Yes⁽²⁾
Capital structure – common equity		48%
Targets with true-up provisions - % of revenue requirement to defer for shortfalls
Net plant balances		100%
Transmission and distribution ROW maintenance		100%
RDMs – electric and natural gas⁽³⁾		Yes
New deferral accounting for full recovery
Fixed debt costs		Yes⁽⁴⁾
Transmission sag mitigation		Yes
New York State Temporary Assessment		Yes
Material regulatory actions⁽⁵⁾		Yes⁽⁵⁾
Property taxes – Deferral for 90% of excess/deficiency relative to revenue requirement		Yes⁽⁶⁾

(1)	Moderated by $12 million and $4 million bill credits, respectively.

(2)	ROE > 10.5%, 50% to customers, > 11.0%, 80% to customers, > 11.5%, 90% to customers.

(3)	Electric is based on revenue dollars; gas is based on usage per customer.

(4)	Deferral authorization in RY2 and RY3 only.

(5)	Legislative, governmental or regulatory actions with individual impacts greater than or equal to 2% of net income of the applicable department.

(6)	The Company's pre-tax gain or loss limited to $0.7 million per rate year.

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Other PSC Proceedings

InOn ~~late~~April ~~August~~20, ~~2011~~2012, CH Energy Group, Central Hudson, Fortis, FortisUS, and Cascade Acquisition Sub Inc., submitted a joint petition to the PSC for approval of the acquisition of CH Energy Group by Fortis and related transactions. The petition describes how the acquisition of Central Hudson by Fortis will produce benefits for constituencies that include customers, employees and communities in Central Hudson's service territory ~~was~~as ~~affected~~well byas ~~Tropical~~positive ~~Storm~~public ~~Irene,~~benefits. The ~~disrupting~~petition ~~service~~categorizes the public benefits into three major areas: 1) FortisUS' commitments and intention to ~~approximately~~preserve ~~180~~and build on the existing strength of Central Hudson,~~000~~ ~~customers~~2) mitigation of any potential negative aspects of the merger consistent with the PSC's disposition of specific issues that have arisen in prior utility merger proceedings in New York State and 3) identifiable monetary benefits resulting from assignment of costs to shareholders and cost savings made possible by the merger. OnThe ~~November~~petition ~~28,~~includes ~~2011,~~proposals and commitments that effectively mitigate any potential risks to Central Hudson's ~~filed~~customers from foreign holding company ownership and excess rate risk. On January 25, 2013, a ~~petition~~Joint Proposal with the Company, Fortis, PSC ~~seeking~~Staff, toMultiple ~~defer~~Intervenors, ~~for~~the ~~future~~Department ~~recovery~~of ~~with~~State ~~carrying~~Utility ~~charges~~Intervention ~~$11~~Unit, and Dutchess, Orange and Ulster counties as signatories, was submitted to the PSC.4 The ~~million~~signatory parties have concluded that, based on the terms of ~~incremental~~the ~~electric~~Joint ~~storm~~Proposal, ~~restoration~~the ~~expense~~acquisition ~~above~~is in the ~~respective~~public ~~rate~~interest ~~allowance~~pursuant ~~during~~to the ~~twelve~~New ~~months~~York ~~ended~~State ~~June~~Public 30Service Law, ~~2012~~Section 70, ~~which~~and isrecommended approval by the ~~second~~Commission. On ~~rate~~May ~~year~~3, ~~established~~2013 the Recommended Decision of the two Administrative Law Judges – an advisory document – was issued by the PSC. The RD states that, in its ~~approval~~current ofform, athe Joint Proposal indoes ~~Case~~not ~~09-E-0588. These~~meet ~~incremental~~the ~~costs~~public ~~represent~~interest ~~the~~test ~~amount~~as ~~Central~~required ~~Hudson~~by ~~deferred~~New onYork ~~its~~State ~~books~~Public asService ofLaw, ~~October~~Section 3170, ~~2011~~but ~~based~~also states that the ALJs recommend the Commission consider adopting the Joint Proposal subject to modifications that would alter the transaction's balance of risks and benefits. Briefs on ~~actual~~exceptions ~~costs~~to ~~incurred,~~the ~~bills~~RD ~~received~~are due May 17, 2013 and anbriefs ~~estimate~~opposing ~~for~~exceptions ~~bills~~are ~~outstanding~~due on May 24, 2013. ~~The~~While ~~Company~~no ~~believes~~assurance regarding the ~~incremental~~closing ~~costs~~can ~~associated~~be ~~with~~given ~~this~~until ~~storm~~a ~~meet~~PSC Order is issued by the Commission, a decision from the PSC's ~~criteria~~regarding ~~for~~the ~~deferral~~Joint Proposal and a subsequent closing is expected in the second quarter of 2013. AsSee Item 7 - "Management's Discussion and Analysis of ~~September~~Financial ~~30,~~Condition ~~2012,~~and Results of Operations" under the ~~deferred~~caption ~~balance~~"Regulatory ~~related~~Matters to– ~~this~~PSC ~~storm~~Proceedings" ~~event~~for ~~was~~further ~~$11.0~~discussion ~~million~~regarding ~~based~~the onterms ~~final~~of ~~bills~~the ~~received~~Joint Proposal and schedule.

On October 29, 2011, Central Hudson experienced an unusual fall storm with snow accumulations of up to 20 inches in the service territory, resulting in electric service outages to over 150,000 customers, extensive damage to the electric system and significant restoration costs. Following Tropical Storm Irene, the October snowstorm represented the second extraordinary storm event that occurred within the second rate year established by the PSC in its Rate Plan adopting the terms of a Joint Proposal in Case 09-E17-0588. On April 24, 2012, Central Hudson filed a petition with the PSC to defer for future recovery with carrying charges $8.6 million of total incremental electric storm restoration expense. The Company believes that it is entitled to fully recover all of these incremental expenses and has filed its petition with the PSC to reflect that position. However, because the petition requests the PSC to deviate from its prior precedents, the amount the PSC may grant could be lower. Accordingly, management deferred only the portion of the incremental costs that strictly follows Commission practice used in the Company's previous requests to defer incremental storm costs. Approximately $3.7 million, $1.1 million, $2.1 million and $0.1 million of incremental restoration expense associated with this storm was expensed in December 2011, March 2012, June 2012 and July 2012, respectively, so that the return on common equity for the twelve months ending June 30, 2012 does not exceed the authorized rate of return of 10%. As of September 30, 2012, the deferred balance related to this storm event was $1.6 million.

On April 20, 2012, CH Energy Group, Central Hudson, Fortis, FortisUS Inc. ("FortisUS"), and Cascade Acquisition Sub Inc. ("Petitioners"), submitted a joint petition to the PSC for approval of the acquisition of CH Energy Group by Fortis and related transactions. The petition describes how the acquisition of Central Hudson by Fortis will produce benefits for constituencies that include customers, employees and communities in Central Hudson's service territory as well as positive public benefits. The petition categorizes the public benefits into three major areas: 1) FortisUS' commitments and intention to preserve and build on the existing strength of Central Hudson, 2) mitigation of any potential negative aspects of the merger consistent with the PSC's disposition of specific issues that have arisen in prior utility merger proceedings in New York State and 3) identifiable monetary benefits resulting from assignment of costs to shareholders and cost savings made possible by the merger. The petition includes proposals and commitments that effectively mitigate any potential risks to Central Hudson's customers from foreign holding company ownership and rate increase risk. The petitioners have quantified the economic value of the proposals in the merger to be in excess of $20 million. Central Hudson believes the merger is in the public interest and should be approved on the basis of the proposals set forth in the petition. See Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the caption "Regulatory Matters – PSC Proceedings" for further discussion.

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On October 29, 2012, Central Hudson's service territory was impacted by Superstorm Sandy, and approximately 103,000 electric customers were affected. The Sandy storm costs were included in the estimate of $22 million storm costs identified in the $35 million of regulatory liabilities to be funded by Fortis. Consistent with the Joint Proposal, on February 6, 2013, Central Hudson filed a petition with the PSC seeking expedited Commission approval to recover $9.7 million of incremental electric storm restoration expense, with carrying charges. These storm costs represent the amount Central Hudson deferred on its books as of December 31, 2012 based on actual costs incurred, bills received and an estimate for bills outstanding and are above the respective rate allowance during the twelve months ended June 30, 2013, which is the third rate year established by the PSC in its approval of a Joint Proposal in Case 09-E-0588. The Company believes the incremental costs associated with this storm meet the PSC's criteria for deferral: 1) the amount is incremental to the amount in rates; 2) the incremental amount is material and extraordinary in nature and 3) the utility's earnings are below the authorized rate of return on common equity. As of March 31, 2013, the deferred balance related to this storm event was $9.8 million.

On October 29, 2011, Central Hudson experienced an unusual fall storm with snow accumulations of up to 20 inches in the service territory, resulting in electric service outages to over 150,000 customers, extensive damage to the electric system and significant restoration costs. Following Tropical Storm Irene, the October snowstorm represented the second extraordinary storm event that occurred within the rate year. Central Hudson filed a petition with the PSC to defer for future recovery with carrying charges the $8.6 million of total incremental electric storm restoration expense. However, because the petition requested the PSC to deviate from its prior precedents, the Company was aware that the amount the PSC granted could have been lower. Accordingly, management deferred only the portion of the incremental costs that strictly follows Commission practice used in the Company's previous requests to defer incremental storm costs. Approximately $3.7 million and $3.3 million of incremental restoration expense associated with this storm was expensed in 2011 and 2012, respectively, so that the return on common equity for the twelve months ending June 30, 2012 did not exceed the authorized rate of return of 10%.

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In late August 2011, Central Hudson's service territory was affected by Tropical Storm Irene, disrupting service to approximately 180,000 customers. On November 28, 2011 Central Hudson filed a petition with the PSC seeking to defer for future recovery with carrying charges for the estimated $11.4 million of incremental electric storm restoration expense above the respective rate allowance during the twelve months ended June 30, 2012. The Company believes the incremental costs associated with this storm meet the PSC's criteria for deferral.

On April 22, 2013, the Commission issued Orders approving deferral of $8.9 million and denying deferral of $3.7 million of the incremental electric storm restoration expense related to Tropical Storm Irene and the October snowstorm. Regarding the majority of the disallowed costs, the PSC's decision stated that the Company did not meet the third prong requirement which requires the Company not be in an over earnings position. The Commission adopted a staff recommendation to exclude ratemaking normalization adjustments for purposes of calculating authorized electric regulatory earnings, and therefore denied a portion of these petitioned deferrals based on this third prong criterion. In addition, the PSC's Order stated that approximately $0.6 million of the costs related to Tropical Storm Irene should have been allocated to a separate storm, Tropical Storm Lee, and that this separate amount did not meet the materiality threshold for recovery. Central Hudson expects to file a petition for reconsideration and rehearing on the PSC's April 22, 2013 Orders challenging the exclusion of the Company's normalization adjustments used to measure earnings. The petition will seek rehearing for reconsideration and recovery of $3.7 million of costs denied by the Commission for deferral accounting treatment. The Company believes that it is entitled to fully recover all of these incremental electric storm restoration expenses; however Central Hudson cannot predict the final outcome of this proceeding.

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NOTE 3 - New Accounting Guidance

Newly adopted and soon to be adopted accounting guidance is summarized below, including explanations for any new guidance issued in ~~2012~~2013 (except that which is not currently applicable) ~~which~~and isthe expected ~~to have a material~~ impact on CH Energy Group and its subsidiaries.

Impact	Category	Accounting Reference	Title	Issued Date	Effective Date
1	~~Comprehensive~~Balance ~~Income~~Sheet (Topic ~~220~~210)	ASU No. 2011-0511	~~Presentation~~Disclosures ofabout ~~Comprehensive~~Offsetting ~~Income~~Assets and Liabilities	~~Jun~~Dec-11	Jan-1213
1	~~Intangibles~~Balance -Sheet ~~Goodwill and Other~~ (Topic ~~350~~210)	ASU No. ~~2011~~2013-0801	~~Testing~~Clarifying ~~Goodwill~~the ~~for~~Scope ~~Impairment~~of Disclosures about Offsetting Assets and Liabilities	~~Sept~~Jan-1113	Jan-1213
1	Comprehensive Income (Topic 220)	ASU No. ~~2011~~2013-1202	~~Deferral~~Reporting of ~~the~~Amounts ~~Effective~~Reclassified ~~Date for Amendments to the Presentation of Reclassifications of Items~~ Out of Accumulated Other Comprehensive Income	~~Dec~~Feb-1113	~~Jan~~Dec-12
1	Fair Value Measurements (Topic 820)	ASU No. 2011-04	Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in US GAAP and IFRS	May-11	Jan-12
2	Liabilities (Topic 405)	ASU No. 2013-04	Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date	Feb-13	Dec-13
2	Intangibles - Goodwill and Other (Topic 350)	ASU No. 2012-02	Amendments for Testing Indefinite-Lived Intangible Assets for Impairment	Jul-12	Sept-12
2	Balance Sheet (Topic 210)	ASU No. 2011-11	Disclosures about Offsetting Assets and Liabilities	Dec-11	Jan-13

Impact Key:
(1)	No current impact on the financial condition, results of operations and cash flows of CH Energy Group and its subsidiaries when adopted on the effective date noted. Additional disclosures have been added or presentation of information modified where required.
(2)	No anticipated impact on the financial condition, results of operations and cash flows of CH Energy Group and its subsidiaries upon future adoption.

~~In July 2012, the FASB issued ASU No. 2012~~-~~02 which was amended guidance to ASU No. 2011~~20-08. The amendment simplifies how entities test indefinite-lived intangible assets other than goodwill for impairment. After an assessment of certain qualitative factors, if it is determined to be more likely than not that an indefinite-lived asset is impaired, entities must perform the quantitative impairment test. Otherwise, the quantitative test is optional. The amended guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted.

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NOTE 4 – Income Tax

In September of 2010, Central Hudson filed a request with the Internal Revenue Service ("IRS") to change the Company's tax accounting method related to costs to repair and maintain utility assets. The change was effective for the tax year ending December 31, 2009. This change allows Central Hudson to take a current tax deduction for a significant amount of repair costs that were previously capitalized for tax purposes.

In September 2012, Central Hudson filed corporate income tax returns for the year ended December 31, 2011. With that filing, the Company included an election to adopt the provisions of Revenue Procedure 2011-43 ("Rev Proc"), which provided IRS guidance related to the repair deduction previously taken on electric transmission and distribution property. Adoption of the provisions of the Rev Proc resulted in reduced federal and state net operating income tax loss ("NOL") carryforwards. The Company believes the remaining electric repair deduction meets and complies with the requirements included in the Rev Proc. As such, tax reserves related to the electric transmission and distribution repair deductions have been reclassified to deferred tax liability accounts.

IRS guidance with respect to repairs taken on Gas Transmission and Distribution repairs is still pending. Therefore, remaining reserves related to the gas repair deduction continue to be shown as "Tax Reserve" under the Deferred Credits and Other Liabilities section of the Central Hudson Balance Sheet.

Other than the uncertain tax position related to the Company's accounting method change for gas transmission and distribution repairs, there are no other uncertain tax positions. The following is a summary of activity related to uncertain tax positions (In Thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2012			2011			2012			2011
	2013			2012
Balance at the beginning of the period	$	32,~~178~~000		$	103,~~934~~172		$	~~3,172~~		$	~~11,486~~
Adjustments related to tax accounting method change		~~(1,190~~47	)		~~(1,266~~2	)		~~(1,184~~	)		~~(1,818~~	)
Balance at the end of the period	$	12,~~988~~047		$	93,~~668~~174		$	~~1,988~~		$	~~9,668~~

Jurisdiction		Tax Years Open for Audit
Federal(1)		2007 - ~~2011~~2012
New York State		2009 - ~~2011~~2012

(1) Federal tax filings for the years 2007 - ~~2010~~2011 are currently under audit.

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Reconciliation - CH Energy Group

The following is a reconciliation between the amount of federal income tax computed on income before taxes at the statutory rate and the amount reported in CH Energy Group's Consolidated Statement of Income (In Thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2012			2011			2012			2011
	2013			2012
Net income attributable to CH Energy Group	$	918,~~057~~090		$	814,~~328~~581		$	~~25,274~~		$	~~31,230~~
Preferred Stock dividends of Central Hudson		~~103~~92			242			~~521~~			~~727~~
Preferred Stock Redemption Premium		-764			-			~~342~~			-
Federal income tax		-7,465			~~(524~~-	)		-			~~153~~
State income tax		~~(255~~544	)		17408			(5	)		~~289~~
Deferred federal income tax		52,~~818~~833			110,~~927~~452			~~19,136~~			~~13,998~~
Deferred state income tax		~~985~~323			~~531~~809			~~2,214~~			~~1,104~~
Income before taxes	$	1530,~~708~~111		$	1026,~~521~~492		$	~~47,482~~		$	~~47,501~~
Computed federal tax at 35% statutory rate	$	510,~~498~~539		$	39,~~682~~272		$	~~16,619~~		$	~~16,625~~
State income tax net of federal tax benefit		~~791~~879			~~623~~1,293			~~2,457~~			~~1,588~~
Depreciation flow-through		~~784~~891			~~757~~797			~~2,363~~			~~2,322~~
Cost of Removal		(~~600~~616	)		(~~458~~596	)		~~(1,796~~	)		~~(1,373~~	)
Merger Transaction Costs		~~412~~84			-1,705			~~3,400~~			-
Production tax credits		-			(51	)		-			(149	)
Other		(612	)		(802	)
Federal grant		-			(2,580	)		-			(2,580	)
Total income tax	$	11,165		$	11,669
Other		(337	)		(22	)		(1,698	)		(889	)
Effective tax rate - federal		34.2	%		39.4	%
Total income tax	$	6,548		$	1,951		$	21,345		$	15,544
Effective tax rate - state		2.9	%		4.6	%
Effective tax rate - federal		37.0	%		13.3	%		40.3	%		29.8	%
Effective tax rate - combined		37.1	%		44.0	%
Effective tax rate - state		4.6	%		5.2	%		4.7	%		2.9	%
Effective tax rate - combined		41.6	%		18.5	%		45.0	%		32.7	%

~~Merger~~The ~~related~~decrease ~~transaction costs that are facilitative~~ in ~~nature~~the ~~are~~effective ~~considered~~tax ~~nondeductible~~rate for ~~tax purposes. Merger related transaction costs incurred in~~ the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012~~2013 ~~totaling~~as ~~$1.0~~compared ~~million~~to ~~and~~2012 ~~$8.6~~was ~~million~~primarily ~~have~~driven ~~been~~by ~~determined~~the todecrease bein ~~facilitative~~merger ~~and~~related ~~therefore nondeductible~~costs. ~~Additionally,~~Merger ~~the~~related ~~effective~~transaction ~~rate~~costs ~~for~~that ~~the~~are ~~three~~facilitative ~~and~~in ~~nine~~nature ~~months~~are ~~ended~~considered ~~September~~nondeductible ~~30,~~for ~~2011 were impacted by the~~ tax ~~benefit~~purposes. Merger related totransaction ~~federal~~costs ~~grants~~incurred ~~received. These~~for ~~were~~ the ~~major~~three ~~reasons~~months ~~for~~ended ~~the~~March ~~increase~~31, in2013 ~~the~~were ~~effective~~$0.2 ~~tax~~million ~~rate~~and for the three ~~and nine~~ months ended ~~September~~March 3031, 2012 aswere ~~compared~~$4.3 million which have been determined to ~~the~~be ~~prior~~facilitative ~~year~~and therefore nondeductible.

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Reconciliation - Central Hudson

The following is a reconciliation between the amount of federal income tax computed on income before taxes at the statutory rate and the amount reported in Central Hudson's Statement of Income (In Thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2012			2011			2012			2011
	2013			2012
Net income	$	1214,~~359~~369		$	1116,~~665~~733		$	~~35,763~~		$	~~31,676~~
Federal income tax		-5,318			~~133~~-			-			~~348~~
State income tax		-			218			-			535
Deferred federal income tax		2,565			9,320
Deferred federal income tax		6,934			6,739			19,928			18,020
Deferred state income tax		901			1,433
Deferred state income tax		906			763			2,919			1,955
Income before taxes	$	23,153		$	27,486
Income before taxes	$	20,199		$	19,518		$	58,610		$	52,534
Computed federal tax at 35% statutory rate	$	8,104		$	9,620
Computed federal tax at 35% statutory rate	$	7,070		$	6,831		$	20,514		$	18,387
State income tax net of federal tax benefit		901			1,433
State income tax net of federal tax benefit		906			905			2,919			2,303
Depreciation flow-through		891			797
Depreciation flow-through		784			757			2,363			2,322
Cost of Removal		(616	)		(596	)
Cost of Removal		(600	)		(458	)		(1,796	)		(1,373	)
Other		(496	)		(501	)
Other		(320	)		(182	)		(1,153	)		(781	)
Total income tax	$	8,784		$	10,753
Total income tax	$	7,840		$	7,853		$	22,847		$	20,858
Effective tax rate - federal		34.0	%		33.9	%
Effective tax rate - federal		34.3	%		35.2	%		34.0	%		35.0	%
Effective tax rate - state		3.9	%		5.2	%
Effective tax rate - state		4.5	%		5.0	%		5.0	%		4.7	%
Effective tax rate - combined		37.9	%		39.1	%
Effective tax rate - combined		38.8	%		40.2	%		39.0	%		39.7	%

NOTE 5 – Acquisitions, ~~Divestitures~~ and Investments

Acquisitions

During the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013, ~~Griffith~~CH ~~acquired~~Energy ~~fuel~~Group ~~distribution~~or ~~companies~~Central asHudson ~~follows~~made ~~(Dollars~~no ~~in Thousands):~~acquisitions.

	# of			Total				Total
	Acquired	Purchase		Intangible				Tangible
Quarter Ended	Companies	Price		Assets(1)		Goodwill		Assets
March 31, 2012	1	$	275	$	265	$	240	$	10
June 30, 2012	-		-		-		-		-
September 30, 2012	1		275		275		-		-
Total	2	$	550	$	540	$	240	$	10
(1) Including goodwill.

Amortizable intangible assets acquired in the current year consist of customer relationships, which will be amortized over a 15-year period, and covenants not to compete, which will be amortized over a 5-year period. The weighted average amortization period of amortizable intangible assets acquired in the current year is 14 years.

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Divestitures

In the first quarter of 2011, Griffith reduced its environmental reserve by $0.6 million based on the completion of an environmental study. The reserve adjustment related to the 2009 divestiture of operations in certain geographic locations. In the second quarter of 2011, Griffith recorded an expense adjustment of $0.1 million relating to divested operations. As such, income of $0.3 million, net of tax, has been reflected in income from discontinued operations in the CH Energy Group Consolidated Income Statement for the nine months ended September 30, 2011.

During 2011, CHEC divested four of its renewable energy investments. The results of operations of Lyonsdale, Shirley Wind, CH-Auburn and CH-Greentree for the prior period are presented in discontinued operations in the CH Energy Group Consolidated Statement of Income. Management has elected to include cash flows from discontinued operations of those investments with those from continuing operations in the CH Energy Group Consolidated Statement of Cash Flows. The details of each of the sales transactions by investment are as follows (In Thousands):

	CH-Auburn		Shirley Wind		Lyonsdale		CH-Greentree
Date of Sale	9/16/2011		8/11/2011		5/1/2011		12/29/2011
Assets:
Current Assets	$	174	$	623	$	2,099	$	-
Other Assets		-		461		-		-
Property, Plant and Equipment:
Property, plant and equipment		4,667		32,564		10,670		5,500
Less: Accumulated depreciation		626		657		4,191		1,205
Total property, plant and equipment, net		4,041		31,907		6,479		4,295
Assets sold	$	4,215	$	32,991	$	8,578	$	4,295
Liabilities:
Current Liabilities	$	85	$	6	$	322	$	-
Other Liabilities		1,736		-		-		-
Liabilities sold	$	1,821	$	6	$	322	$	-
Net Assets Sold	$	2,394	$	32,985	$	8,256	$	4,295

Proceeds from these sales were used primarily for the repurchase of outstanding Common Stock of CH Energy Group. Additionally, a portion of the proceeds from the sale of Shirley Wind were used to pay down private placement debt at CH Energy Group, which provided corporate financing for the construction of this project.

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The table below provides additional detail of the financial results of the discontinued operations (In Thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
Revenues from discontinued operations	$	-	$	1,112		$	-	$	6,654
Income from discontinued operations before tax		-		166			-		987
Gain from sale of discontinued operations		-		2,070			-		1,527
Income tax benefit from discontinued operations		-		(1,527	)		-		(1,454	)

Investments

The value of CHEC's investments as of ~~September~~March 3031, ~~2012~~2013 is as follows (In Thousands):

CHEC Investment

Description

Intercompany Debt

Equity Investment

Total

Griffith Energy Services

100% controlling interest in a fuel distribution business

2440,~~500~~000

3440,~~765~~682

5980,~~265~~682

Cornhusker Holdings

12% equity interest plus subordinated debt investment in an operating corn-ethanol plant

CH-Community Wind

50% equity interest in a joint venture that owns 18% interest in two operating wind projects

Other

Partnerships and an energy sector venture capital fund

2,~~426~~241

2440,~~500~~000

3742,~~191~~923

6182,~~691~~923

~~These investments are not considered a part of the core business; however, management intends to retain these investments at this time.~~-23-

NOTE 6 – Goodwill and Other Intangible Assets

Goodwill, customer relationships and covenants not to compete associated with acquisitions are included in intangible assets. In accordance with current accounting guidance related to goodwill and other intangible assets, goodwill and other intangible assets that have indefinite useful lives are not amortized, but instead are periodically reviewed for impairment.

In the fourth quarter of 2011, management performed a qualitative assessment of any potential impairment of Griffith's goodwill. The last quantitative analysis of impairment was performed as of September 30, 2010, which reflected that the fair value of Griffith exceeded its carrying value by approximately $34.2 million. Additionally, management believes that no event has occurred which would trigger impairment since the last quantitative test performed. Based on these factors and other factors considered in its qualitative analysis, management believes that it is more likely than not that the fair market value of Griffith is more than the carrying value and, therefore, the first and second steps of the impairment test prescribed in guidance were not necessary.

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The remaining investments identified as CH-Community Wind and Other are not considered a part of the core business; however, management intends to retain these investments at this time.

NOTE 6 – Goodwill and Other Intangible Assets

Goodwill, customer relationships, trademarks and covenants not to compete associated with acquisitions are included in intangible assets. In accordance with current accounting guidance related to goodwill and other intangible assets, goodwill and other intangible assets that have indefinite useful lives are not amortized, but instead are periodically reviewed for impairment.

In the fourth quarter of 2012, management performed a qualitative assessment of any potential impairment of Griffith's goodwill. The last quantitative analysis of impairment was performed as of September 30, 2010, which reflected that the fair value of Griffith exceeded its carrying value by approximately $34.2 million. Additionally, management believes that no event has occurred which would trigger impairment since the last quantitative test performed. Based on these factors and other factors considered in its qualitative analysis, management believes that it is more likely than not that the fair market value of Griffith is more than the carrying value and, therefore, the first and second steps of the impairment test prescribed in guidance were not necessary.

The components of amortizable intangible assets of CH Energy Group are summarized as follows (In Thousands):

	September 30, 2012						December 31, 2011				September 30, 2011
		March 31, 2013							December 31, 2012							March 31, 2012
	~~Gross Carrying Amount~~	Gross Carrying Amount		~~Accumulated Amortization~~		Accumulated Amortization	~~Gross Carrying Amount~~		~~Accumulated~~Gross ~~Amortization~~Carrying Amount		~~Gross Carrying Amount~~	Accumulated Amortization		~~Accumulated Amortization~~		Gross Carrying Amount		Accumulated Amortization
Customer relationships	$	~~36,781~~$	37,709	$	~~25,407~~	$	$26,645	~~36,517~~	$	2337,~~571~~709	$	~~35,516~~$	26,017	$	~~22,978~~	$	36,526	$	24,188
Covenants not to compete		397			181			361		134		267			123
Trademarks			318				8			318			-				-		-
Total Amortizable Intangibles	$	37,178		$	25,588		$	36,878	$	23,705	$	35,783		$	23,101
Covenants not to compete			411				122			411			97				377		151
Total Amortizable Intangibles		$	38,438			$	26,775		$	38,438		$	26,114			$	36,903	$	24,339

	Three Months Ended September 30,						Nine Months Ended September 30,
		Three Months Ended March 31,
	2012			2011			2012		2011
		2013				2012
Intangibles Amortization Expense (In Thousands)	$	~~625~~$	661	$	~~598~~	$	$634	~~1,883~~	$	~~1,792~~

The estimated annual amortization expense for the remainder of the current year and for each of the next ~~five~~four years, assuming no new acquisitions or divestitures, is as follows (In Thousands):

	~~2013~~	2013		~~2014~~		2014	~~2015~~			~~2016~~2015			~~2017~~	2016				2017
Estimated Amortization Expense	$	~~2,515~~$	1,984	$	~~2,506~~	$	$2,636	~~2,251~~		$	~~887~~2,374		$	~~583~~$	988			$	683

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NOTE 7 – Short-Term Borrowing Arrangements

CH Energy Group and Central Hudson borrowings under its committed and uncommitted short-term borrowing arrangements are as follows (In Thousands):

	September 30, 2012			December 31, 2011			September 30, 2011
	March 31, 2013			December 31, 2012			March 31, 2012
CH Energy Group Holding Company Short-term borrowings	$	-29,000		$	519,~~000~~500		$	532,000
Central Hudson Short-term borrowings		-27,000			~~1,500~~-			-59,000
Total CH Energy Group	$	-		$	6,500		$	5,000
Intercompany Borrowing		-			-			(20,000	)
Total CH Energy Group Weighted Average Interest Rate		1.08	%		0.72	%		0.56	%
Total CH Energy Group	$	56,000		$	19,500		$	71,000
Total CH Energy Group Weighted Average Interest Rate		0.97	%		1.08	%		1.12	%

NOTE 8 – Capitalization – Common and Preferred Stock

For a schedule of activity related to common stock, paid-in capital and capital stock, see the Consolidated Statement of Equity for CH Energy Group and Central Hudson.

Effective July 31, 2007, CHthe ~~Energy Group's~~ Board of Directors of CH Energy Group extended and amended the Common Stock Repurchase Program of the Company (the "Repurchase Program"), which was ~~originally~~ authorized in 2002. As amended, the Repurchase Program authorized the repurchase of up to 2~~,000,000~~ million shares (excluding shares ~~repurchased~~purchased before July 31, 2007) or approximately 13% of the CH Energy Group's outstanding Common Stock, from time to time, through July 31, 2012. In accordance with the merger agreement with Fortis, which prohibited CH Energy Group from repurchasing additional shares subsequent to February 21, 2012, the Repurchase Program was not renewed. As of ~~September~~December 3031, 2012, CH Energy Group had purchased 948,676 shares under the Repurchase Program, which were not retired or cancelled, and the repurchases accordingly have been presented as an increase to treasury stock in CH Energy Group's Consolidated Balance Sheet.

-Effective 27July -1, 2011, employer matching contributions to an eligible employee's Savings Incentive Plan ("SIP") account could be paid in either cash or in CH Energy Group Common Stock, and CH Energy Group initially chose to meet its matching obligation in Common Stock. Since March 1, 2012, the Company has been contributing cash for all of its matching obligations, except for matching contributions associated with classified employees of Central Hudson. The classified employees will continue to receive matching contributions in CH Energy Group Common Stock. As of March 31, 2013, 44,786 shares had been issued from treasury related to employer matching contributions, of which 3,425 shares were issued in 2013.

On March 21, 2013, Central Hudson redeemed its two outstanding series of preferred stock. Registered holders of 4 1/2% Cumulative Preferred Stock received $107.00 per share plus accrued and unpaid dividends to the redemption date in the amount of $1.00 per share, for a total redemption price of $108.00 per share. Registered holders of 4.75% Cumulative Preferred Stock received $106.75 per share plus accrued and unpaid dividends to the redemption date in the amount of $1.056 per share, for a total redemption price of $107.806 per share. The premium paid in connection with the redemption of the preferred stock was recorded as a reduction of Retained Earnings on Central Hudson's Balance Sheet and as Premium on Preferred Stock Redemption on Central Hudson's Income Statement.

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AsThrough ~~part~~March ~~of this Repurchase Program~~31, ~~on August 16~~2013, ~~2011,~~Central CHHudson ~~Energy~~made ~~Group~~$5.0 ~~implemented~~million anof ~~accelerated~~dividend ~~share~~payments ~~repurchase~~in ~~program~~2013 ~~("ASR")~~to ~~through~~parent ~~which,~~ CH Energy Group ~~paid $30 million and received 554,017 shares~~. ~~Following~~In the ~~announcement~~prior ofyear, ~~the~~Central ~~proposed~~Hudson ~~acquisition~~made ofno CHdividend ~~Energy~~payments ~~Group by Fortis on February 21, 2012, the agent elected~~ to ~~terminate~~parent ~~the agreement. As a result of the termination,~~ CH Energy Group ~~paid an additional $2.6 million to the agent~~ in ~~final settlement of~~ the ~~ASR~~three ~~program. There~~months ~~was~~ended noMarch ~~change~~31, ~~in the number of shares purchased~~2012.

Subsequent to February 21, 2012, CH Energy Group is prohibited from purchasing additional shares under the merger agreement with Fortis. The shares repurchased prior to that date under this repurchase agreement have not been retired or cancelled, and the repurchases accordingly have been presented as an increase to treasury stock in CH Energy Group's Consolidated Balance Sheet.

Effective July 1, 2011, employer matching contributions to an eligible employee's Savings Incentive Plan ("SIP") account could be paid in either cash or in CH Energy Group Common Stock, and CH Energy Group initially chose to meet its matching obligation in Common Stock. Since March 1, 2012, the Company has been providing cash for all of its matching obligations, except for matching contributions associated with classified employees of Central Hudson. The classified employees will continue to receive matching contributions in CH Energy Group Common Stock. As of September 30, 2012, 45,567 shares had been issued from treasury related to employer matching contributions, of which 26,011 shares were issued in 2012 with 3,953 shares issued during the third quarter of 2012.

On May 18, 2012, Central Hudson redeemed two of its four outstanding series of preferred stock. Registered holders of Cumulative Preferred Stock, Series D (4.35%) received $102.00 per share plus accrued and unpaid dividends. Registered holders of 4.96% Cumulative Preferred Stock, Series E received $101.00 per share plus accrued and unpaid dividends. The redemption was funded from the proceeds of the sale of Medium Term Notes on March 30, 2012. See Note 9 – "Capitalization – Long-Term Debt" for further information. The premium paid in connection with the redemption of the preferred stock was recorded as a reduction of Retained Earnings on Central Hudson's Balance Sheet and as Premium on Preferred Stock Redemption on Central Hudson's Income Statement.

Through September 30, 2012, Central Hudson made $22.0 million of dividend payments in 2012 to parent CH Energy Group, of which $9.0 million was paid during the three months ended September 30, 2012. Central Hudson made $33.0 million of dividend payments to parent CH Energy Group in the nine months ended September 30, 2011.

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NOTE 9 – Capitalization – Long-Term Debt

On March 30, 2012, Central Hudson issued $48.0 million of its Series G registered unsecured Medium Term Notes. The notes bear interest at the rate of 4.776% per annum on a principal amount of $48.0 million and mature on April 1, 2042.

The proceeds from the sale of the Notes were used by Central Hudson to refinance $36.0 million of its 6.64% Series D Medium Term Notes that matured on March 28, 2012, and to redeem its Cumulative Preferred Stock, Series D, with an aggregate redemption price of $6.1 million, and its 4.96% Cumulative Preferred Stock, Series E, with an aggregate redemption price of $6.1 million. See Note 8 – "Capitalization – Common and Preferred Stock" for further information.

NYSERDA

Central Hudson's outstanding Series B NYSERDA Bonds total $33.7 million at ~~September~~March 3031, ~~2012~~2013. These bonds are tax-exempt multi-modal bonds that are currently in a variable rate mode. In its Orders, the PSC has authorized deferral accounting treatment for variations in the interest costs from these bonds. As such, variations between the actual interest rates on these bonds and the interest rate included in the current delivery rate structure for these bonds are deferred for future recovery from or refund to customers and therefore do not impact earnings.

To mitigate the potential cash flow impact from unexpected increases in short-term interest rates on Series B NYSERDA Bonds, on March 28, 2012, Central Hudson purchased an interest rate cap based on an index of short-term tax-exempt debt. The rate cap is two years in length with a notional amount aligned with Series B and will expire on April 1, 2014. The cap is based on the monthly weighted average of an index of tax-exempt variable rate debt, multiplied by 175%. Central Hudson would receive a payout if the adjusted index exceeds 5.0% for a given month. The rate cap replaced an expiring rate cap with substantially similar terms. See Note 14 – "Accounting for Derivative Instruments and Hedging Activities" for fair value disclosures related to this instrument.

Central Hudson is currently evaluating what actions, if any, it may take in the future in connection with its Series B NYSERDA Bonds. Potential actions may include converting the debt to another interest rate mode or refinancing with taxable bonds.

NOTE 10 – Post-Employment Benefits

Central Hudson provides certain health care and life insurance benefits for retired employees through its post-retirement benefit plans. Central Hudson pension benefits include a Retirement Income Plan ("RIP") and a non-qualified Supplemental Executive Retirement Plan ("SERP").

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In its Orders, the PSC has authorized deferral accounting treatment for any variations between actual pension and other post-employment benefits ("OPEB") expense and the amount included in the current delivery rate structure. As a result, post-retirement benefit plans at Central Hudson do not have any impact on earnings. The following information is provided in accordance with current accounting requirements.

The following are the components of Central Hudson's net periodic benefit costs for its pension and OPEB plans for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012 (In Thousands):

Pension Benefits

OPEB(1)

Three Months Ended September 30,

Three Months Ended March 31,

2012

2011

2012

2011

2013

2012

2013

2012

Service cost

23,~~741~~073

2,~~448~~741

~~639~~760

~~657~~644

Interest cost

65,~~179~~732

6,~~537~~177

1,~~313~~382

1,~~723~~662

Expected return on plan assets

(67,~~770~~698

)

(6,~~860~~768

)

(1,~~597~~723

)

(1,~~748~~734

)

Amortization of:

Prior service cost (credit)

~~501~~433

~~536~~501

(1,~~462~~465

)

(1,~~467~~466

)

Transitional obligation

~~628~~2

641

Recognized actuarial loss

54,~~788~~840

65,~~523~~788

1,~~451~~582

2,~~227~~326

Net Periodic Benefit Cost

86,~~439~~380

98,~~184~~439

~~972~~538

2,~~033~~073

	Pension Benefits						OPEB(1)
	Nine Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Service cost	$	8,223		$	7,345		$	1,927		$	2,003
Interest cost		18,534			19,611			4,637			5,187
Expected return on plan assets		(20,306	)		(20,580	)		(5,065	)		(5,170	)
Amortization of:
Prior service cost (credit)		1,502			1,608			(4,394	)		(4,399	)
Transitional obligation		-			-			1,910			1,924
Recognized actuarial loss		17,364			19,569			6,103			7,603
Net Periodic Benefit Cost	$	25,317		$	27,553		$	5,118		$	7,148

(1)	The OPEB amounts for all periods presented reflect the effect of the Medicare Prescription Drug Improvement and Modernization Act of 2003.

The balance of Central Hudson's accrued pension costs (i.e., the under-funded status) is as follows (In Thousands):

	September 30,			December 31,			September 30,
		March 31,			December 31,			March 31,
	2012			2011			2011
		2013			2012			2012
Accrued pension costs	$	$	~~100~~88,~~520~~828	$	$	~~122~~113,~~562~~885	$	$	7796,~~065~~547

These balances include the difference between the projected benefit obligation ("PBO") for pensions and the market value of the pension assets, and the liability for the non-qualified Supplemental Executive Retirement Plan ("SERP").

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The following reflects the impact of the recording of funding status adjustments on the Balance Sheets of CH Energy Group and Central Hudson (In Thousands):

	September 30,			December 31,			September 30,
	March 31,			December 31,			March 31,
	2012			2011			2011
	2013			2012			2012
Prefunded pension costs prior to funding status adjustment	$	3344,~~447~~956		$	3025,~~270~~172		$	3949,~~291~~996
Additional liability required		(133,~~967~~784	)		(~~152~~139,~~832~~057	)		(~~116~~146,~~356~~543	)
Total accrued pension costs	$	(~~100~~88,~~520~~828	)	$	(~~122~~113,~~562~~885	)	$	(7796,~~065~~547	)
Total offset to additional liability - Regulatory assets - Pension Plan	$	133,~~967~~784		$	~~152~~139,~~832~~057		$	~~116~~146,~~356~~543

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Gains or losses and prior service costs or credits that arise during the period but that are not recognized as components of net periodic pension cost would typically be recognized as a component of other comprehensive income, net of tax. However, Central Hudson has PSC approval to record regulatory assets rather than adjusting comprehensive income to offset the additional liability.

Contribution levels for the RIP and OPEB plans are determined by various factors including the discount rate, expected return on plan assets, benefit changes, and corporate resources. In addition, OPEB plan contribution levels are also impacted by medical claims assumptions used and mortality assumptions used.

Contributions for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012 were as follows (In Thousands):

	Retirement Income Plan				OPEB
	Nine Months Ended				Nine Months Ended
	Three Months Ended				Three Months Ended
	September 30,				September 30,
	March 31,				March 31,
	2012		2011		2012		2011
	2013		2012		2013		2012
Contributions	$	2826,000	$	3228,~~028~~000	$	~~3,269~~-	$	~~1,184~~-

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Retirement Plan Policy and Strategy

Central Hudson's Retirement Plan investment policy seeks to achieve long-term growth and income to match the long-term nature of its funding obligations. Management has transitioned to a liability-driven investment ("LDI") strategy for its pension plan assets. Management's objective is to reduce the volatility of the plan's funded status ~~volatility~~ and the level of contributions by more closely aligning the characteristics of plan assets with liabilities.

Asset allocation targets in effect for the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013 as well as actual asset allocations as of ~~September~~March 3031, ~~2012~~2013 and December 31, ~~2011~~2012 expressed as a percentage of the market value of the Retirement Plan's assets, are summarized in the table below:

Asset Class	~~September~~December 3031, 2012			Minimum			Target Average			Maximum			~~December~~March 31, ~~2011~~2013
Equity Securities		4950.65	%		45	%		50	%		55	%		3551.82	%
Debt Securities		4847.74	%		45	%		50	%		55	%		5447.4	%
Other(1)		12.71	%		-	%		-	%		-	%		91.84	%

(1)	Consists of temporary cash investments, as well as receivables for investments sold and interest, and payables for investments purchased, which have not settled as of that date.

The above asset allocations as of ~~September~~December 3031, 2012 and March 31, 2013 reflect the transition to a LDI strategy resulting in an asset allocation of approximately 50% equity and 50% long duration fixed income assets. ~~The~~ asset allocations as of December 31, 2011 were driven by the ongoing transition and were compounded by 2011 market activity. In 2011, a reduction in interest rates made the long duration bonds held in debt securities more valuable and a decrease in stock price performance reduced the value of the pension plan's equity investments. Due to market value fluctuations, RIP assets will require rebalancing from time to time to maintain the ~~target~~ asset allocation within target ranges. Management is currently monitoring ongoing market activity and the impact on the pension plan asset allocations to determine if a rebalancing will be necessary.

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Central Hudson cannot assure that the RIP's return objectives or funded status objectives will be achieved.

NOTE 11 – Equity-Based Compensation

CH Energy Group has adopted the CH Energy Group, Inc. 2011 Long-Term Equity Incentive Plan (the "2011 Plan"). The 2011 Plan reserves for awards to be granted up to a maximum of 400,000 shares of Common Stock plus any shares remaining available under the 2006 Long-Term Equity Incentive Plan (the "2006 Plan") as of April 26, 2011 and any shares that are subject to awards granted under the 2006 Plan that are forfeited, cancelled, surrendered or otherwise terminated without the issuance of shares on or after that date. Awards may consist of incentive stock options, nonqualified stock options, stock appreciation rights, restricted shares, restricted share units, performance shares, dividend equivalents and other awards that CH Energy Group may authorize.

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The 2011 Plan will continue in effect until February 9, 2021, unless sooner terminated by the Board of Directors. Termination will not affect grants and awards then outstanding.

In December 2012, the board approved the non-refundable accelerated payment of 80% of earned performance shares for certain executive officers for the February 8, 2010 grant and the acceleration of the vesting of 80% of restricted shares outstanding for certain executive officers issued under the February 10, 2010 grant award. In accordance with accounting rules, the modification of the restricted share grant is treated as a cancellation of the original award and issue of a new award with the new grant date fair value and incremental expense recognized. The incremental expense resulting from this modification was not material.

Performance Shares

A summary of the status of outstanding performance shares granted to executives under the 2006 and 2011 Plans are as follows:

Grant Date	Grant Date Fair Value		Performance Shares Granted	~~Performance Shares Granted~~	Performance Shares Outstanding at March 31, 2013		~~Performance Shares Outstanding at September 30, 2012~~
February 8, 2010	$	38.62	48,740		4837,~~740~~348	(1)		~~43,220~~
February 7, 2011	$	49.77	40,320		40,320			~~40,320~~
February 6, 2012	$	5658.15	39,440		39,440			~~39,440~~
February 5, 2013	$	65.02	35,780		35,780

(1)

CH Energy Group treasury stock of 613 shares in 2011 and 4,128 in 2012 were issued in satisfaction of the pro-rated payout of an officer who retired in 2011 and the accelerated payment to certain executive officers in 2012, respectively.

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The ultimate number of shares earned under the awards is based on metrics established by the Compensation Committee at the beginning of the award cycle. Participants may elect to defer receipt of shares earned in accordance with terms and subject to conditions of the Directors and Executives Deferred Compensation Plan. Ultimate payouts from the Directors and Executives Deferred Compensation Plan are made in the form of cash or shares. Accordingly, these awards are classified as liabilities and are adjusted to fair value as of the end of each reporting period.

Performance shares granted February 8, 2010 and shown as outstanding as of March 31, 2013 in the table above, were paid out in April 2013. Those recipients electing not to defer this compensation under the CH Energy Group Directors and Executives Deferred Compensation Plan received shares issued from CH Energy Group's treasury stock totaling 11,354 shares.

Restricted Shares and Restricted Stock Units

The following table summarizes information concerning restricted shares and stock units outstanding as of ~~September~~March 3031, ~~2012~~2013:

Grant Date	Type of Award	Shares or Stock Units Granted	Grant Date Fair Value		Vesting Terms	Unvested Shares Outstanding at ~~September~~March 3031, ~~2012~~2013
October 1, 2009	Shares	14,375	$	43.86	Ratably over 5 years	85,~~625~~750
November 20, 2009	Stock Units	13,900	$	41.43	1/3 each year in Years 5, 6 and 7	13,900
February 8, 2010	Shares	3,060	$	38.62	End of 3 years	~~2,655~~-	(1)
February 10, 2010	Shares	5,200	$	38.89	End of 3 years	~~5,200~~-	(2)
November 15, 2010	Shares	3,000	$	46.53	Ratably over 3 years	21,000
February 7, 2011	Shares	1,500	$	49.77	1/3 each year in Years 3, 4 and 5	1,500
February 7, 2011	Shares	2,230	$	49.77	End of 3 years	2,230
February 6, 2012	Shares	2,170	$	5658.15	End of 3 years	2,170
February 5, 2013	Shares	2,035	$	65.02	End of 3 years	2,035

(1) The vesting of 405 shares was accelerated as approved by the Board of Directors.

(1)	The vesting of 405 shares was accelerated as approved by the Board of Directors. The remaining 2,655 shares vested on February 8, 2013.
(2)	The vesting of 3,520 shares was accelerated as approved by the Board of Directors. The remaining 1,680 shares vested on February 8, 2013.

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Compensation Expense

The following table summarizes expense for equity-based compensation by award type for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012~~2013 and ~~2011~~2012 (In Thousands):

	CH Energy Group	~~CH Energy Group~~					Central Hudson	~~Central Hudson~~
		Three Months Ended September 30,						Three Months Ended September 30,
	Three Months Ended March 31,						Three Months Ended March 31,
		2012			2011			2012			2011
	2013			2012			2013			2012
Performance shares		$	~~312~~617		$	~~659~~1,538		$	~~272~~502		$	~~546~~525
Restricted shares and stock units		$	~~114~~105		$	~~116~~114		$	6572		$	6665
Recognized tax benefit of restricted shares and stock units		$	4641		$	46		$	2629		$	26

	CH Energy Group				Central Hudson
	Nine Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Performance shares	$	2,663	$	2,213	$	1,483	$	1,843
Restricted shares and stock units	$	341	$	343	$	195	$	198
Recognized tax benefit of restricted shares and stock units	$	137	$	140	$	77	$	78

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Compensation expense for performance shares is recognized over the three year performance period based on the fair value of the awards at the end of each reporting period and the time elapsed within each grant's performance period. The fair value of performance shares is determined based on the shares' current market value at the end of each reporting period, estimated forfeitures for each grant, and expected payout based on management's best estimate including analysis of historical performance in accordance with the defined metrics of each grant. Compensation expense is recorded as performance shares are earned over the relevant three-year life of the performance share grant prior to its award. The portion of the compensation expense related to an employee who retires during the performance period is the amount recognized up to the date of retirement.

Compensation expense for restricted shares and stock options is recognized over the defined vesting periods based on the grant date fair value of the awards. Stock option expense recognized over the three and nine months ended September 30, 2012 and 2011 was not material.

CH Energy Group compensation expense related to performance share awards increased during the nine months ended September 30, 2012 compared to the same period in 2011 primarily as a result of the increased price per share of CH Energy Group common stock. The market price of CH Energy Group stock increased approximately $8 per share immediately following the February 21, 2012 announcement that CH Energy Group had entered into a merger agreement with Fortis. CH Energy Group's equity-based compensation expense for the nine months ended September 30, 2012 included approximately $0.9 million attributable to the increase in stock price on outstanding performance share awards, which has been recognized at the holding company as a transaction cost resulting from the proposed acquisition of CH Energy Group by Fortis and not allocated to its subsidiaries.

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Compensation expense for restricted shares is recognized over the defined vesting periods based on the grant date fair value of the awards. As of December 31, 2012, there are no stock options outstanding. Stock option expense recognized over the three months ended March 31, 2012 was not material.

The market price of CH Energy Group stock increased approximately $8 per share immediately following the February 21, 2012 announcement that CH Energy Group had entered into a merger agreement with Fortis. CH Energy Group's equity-based compensation expense for the three months ended March 31, 2013 and 2012 included approximately $0.1 million and $1.0 million attributable to the increase in stock price on outstanding performance share awards, which has been recognized at the holding company as a transaction cost resulting from the proposed acquisition of CH Energy Group by Fortis and not allocated to its subsidiaries.

NOTE 12 – Commitments and Contingencies

Electricity Purchase Commitments

On June 30, 2010 and September 9, 2010, Central Hudson entered into agreements with Entergy Nuclear Power Marketing, LLC to purchase electricity (but not capacity) on a unit-contingent basis at defined prices from January 1, 2011 through December 31, 2013. ~~The electricity purchased under these current contracts with Entergy is estimated to represent approximately 13% of Central Hudson's full-service customer requirements on an annual basis.~~ For the ~~nine~~three months ended ~~September~~March 3031, ~~2011~~2012, energy supplied under these agreements cost approximately $145.72 million. For the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013, energy supplied under these agreements cost approximately $154.93 million~~. These~~, ~~contracts~~which ~~meet~~represents ~~the~~approximately ~~definition~~14% of aCentral ~~normal~~Hudson's ~~purchase~~full-service ~~and~~customer ~~are therefore excluded from current accounting~~ requirements ~~related~~on toan ~~derivatives~~annual basis.

These contracts meet the definition of a normal purchase and are therefore excluded from current accounting requirements related to derivatives. In the event the above noted counterparty is unable to fulfill its commitment to deliver under the terms of the agreements, Central Hudson would obtain the supply from the New York Independent System Operator ("NYISO") market, and under Central Hudson's current ratemaking treatment, recover the full cost from customers. As such, there would be no impact on earnings.

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Central Hudson must also acquire sufficient peak load capacity to meet the peak load requirements of its full service customers. This capacity is made up of contracts with capacity providers, purchases from the NYISO capacity market and its own generating capacity.

Environmental Matters

Central Hudson

Air

There has been no change to this matter in ~~2012~~2013, however, the relevant disclosure is provided as required. In 1999, the New York State Attorney General ("Attorney General") alleged that Central Hudson "may have constructed, and continues to operate, major modifications to the Danskammer Point Steam Electric Generating Station ("Danskammer Plant") without obtaining certain requisite preconstruction permits." In March 2000, the Environmental Protection Agency ("EPA") assumed responsibility for the investigation. Central Hudson believes any permits required for these projects were obtained in a timely manner. Central Hudson sold the Danskammer Plant to Dynegy in January 2001. While Central Hudson could have retained liability after the sale, depending on the type of remedy, Central Hudson believes that the statutes of limitation relating to any alleged violation of air emissions rules have lapsed.

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·	Former Manufactured Gas Plant Facilities

Central Hudson and its predecessors owned and operated manufactured gas plants ("MGPs") to serve their customers' heating and lighting needs. These plants manufactured gas from coal and oil beginning in the mid to late 1800s with all sites ceasing operations by the 1950s. This process produced certain by-products that may pose risks to human health and the environment.

The New York State Department of Environmental Conservation ("DEC"), which regulates the timing and extent of remediation of MGP sites in New York State, has notified Central Hudson that it believes Central Hudson or its predecessors at one time owned and/or operated MGPs at seven sites in Central Hudson's franchise territory. The DEC has further requested that Central Hudson investigate and, if necessary, remediate these sites under a Consent Order, Voluntary Cleanup Agreement, or Brownfield Cleanup Agreement. The DEC has placed all seven of these sites on the New York State Environmental Site Remediation Database. As authorized by the PSC, Central Hudson is currently permitted to defer for future recovery the differences between actual costs for MGP site investigation and remediation and the associated rate allowances, with carrying charges to be accrued on the deferred balances at the authorized pre-tax rate of return.

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MGP site investigation and remediation can be divided into various stages of completion based on the milestones of activities completed and reports reviewed. Central Hudson accrues for remediation costs based on the amounts that can be reasonably estimated at a point in time. These stages, the types of costs accrued during various stages and the sites currently in each stage, include:

· Investigation – Begins with preliminary investigations and is completed upon filing and approval by DEC of a Remedial Investigation ("RI") Report. Central Hudson accrues for estimated investigation costs, Remediation Alternative Analysis ("RAA"), and Remedial Design ~~("RD")~~ costs.

Ø	Site #6 – Kingston (NY) – Remedial Investigation in Progress

- The revised RI report iswas ~~being~~submitted ~~revised~~ to ~~incorporate~~ the DEC's for review and approval in November 2012. The DEC provided general and specific comments ~~with~~to the ~~anticipated~~revised ~~submittal~~RI report in a letter dated February 27, 2013. Central Hudson submitted a comment response letter to the ~~fourth~~DEC ~~quarter~~on ofMarch ~~2012~~28, 2013.

- Amounts accrued represent an estimate of costs to complete the RAA and the RDRemedial Design.

· Remedial Alternative Analysis – Engineering analysis of alternatives for remediation based on the RI is compiled into a RAA Report. Upon completion of the RAA and the filing with the DEC, management accrues for an estimate of remediation costs developed and quantified in the RAA based on DEC approved methods, as well as an estimate of post-remediation operation, maintenance and monitoring costs ("OM&M"). These amounts represent a significant portion of the total costs to remediate and are subject to change based on further investigations, final remedial design and associated engineering estimates, regulatory comments and requests, remedial design changes/negotiations, and changed or unforeseen conditions during the remediation or additional requirements following the remediation. Prior to the completion of the RAA, management cannot reasonably estimate what cost, ~~if any,~~ will be incurred for remediation or post-remediation activities.

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Ø	Site #5 – North Water Street (Poughkeepsie, NY) – Remedial Alternatives Analysis in progress

- DEC approved an Interim Remedial Measure ("IRM") associated with the southern portion of this site. The IRM activities ~~commenced~~were completed in ~~September~~ 2012. The IRM Construction Completion Report ("CCR") and ~~are~~Interim ~~anticipated~~Site Management Plan ("SMP") were submitted to bethe ~~completed~~DEC infor ~~fall~~review ofand approval in December 2012 and February 2013, respectively.

- ~~Amounts~~In ~~accrued~~addition, ~~represent~~Central anHudson ~~estimate~~has ~~for~~recently ~~completion~~retired ofand ~~the~~removed ~~RAA~~propane ~~and~~air RDfacilities asformerly ~~well~~located ason site. The DEC approved a work plan to investigate the ~~estimated~~former ~~cost~~propane tank area on February 7, 2013. The investigation is tentatively planned to commence in the spring of 2013. Depending on the ~~IRM~~results of this investigation some level of future remediation may be required in this area.

~~· Remedial Design~~ - ~~Upon~~Amounts ~~approval~~accrued ofrepresent ~~the~~an ~~RAA~~estimate ~~and~~for ~~final~~completion ~~decision~~ of ~~remediation~~the ~~approach~~RAA ~~based on alternatives presented, a RD is developed~~ and ~~filed~~Remedial ~~with the DEC for approval~~Design.

· Remediation – Completion of the work plan as defined in the approved RD. Upon completion, final reports are filed with the DEC for approval and may include a Construction Completion Report ("CCR"), Final Engineering Report ("FER"), or other reports required by the DEC based on the work performed.-33-

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·	Remedial Design - Upon approval of the RAA and final decision of remediation approach based on alternatives presented, a Remedial Design is developed and filed with the DEC for approval.

·	Remediation – Completion of the work plan as defined in the approved Remedial Design. Upon completion, final reports are filed with the DEC for approval and may include a CCR, Final Engineering Report ("FER"), or other reports required by the DEC based on the work performed.

Ø	Site #4 – Catskill (NY) – Remediation in Progress

-	Remediation activities commenced in September 2012 and are anticipated to be completed in the summer of 2013.

- Amounts accrued represent an estimate of costs to complete the ~~RD,~~ remediation, and OM&M.

· Post-Remediation Monitoring – Entails the OM&M as directed by the DEC based on the approved final report of remediation. The activities are typically defined in a ~~Site Management Plan ("~~SMP"), which is approved by the DEC. The extent of activities during this phase may increase or decrease based on the results of ongoing monitoring being performed and future potential usage of the property.

Ø	Site #1 – Beacon (NY) – Post-Remediation Monitoring Complete

-	SMP submitted to the DEC and release letter for the site was received under a March 26, 2013 cover letter.

-	No further costs expected and no amounts accrued as of March 31, 2013 related to this site.

-	If the building at this site were to be removed, further investigation and testing would be required related to the soil under the building, which may require additional remediation. Management cannot currently estimate the costs that may be incurred related to this.

Ø	Site #2 – Newburgh (NY) – Post-Remediation In Progress

-	Amounts accrued represent an estimate of costs for OM&M and execution of the draft SMP.

- Central Hudson has recently retired and removed propane air facilities located on Area A. ~~Additional~~A ~~investigation~~draft ~~and~~figure ~~testing~~associated ~~will~~with bea ~~required~~future work plan to investigate the former propane tank area was submitted to the DEC in February 2013. Additionally, ~~which~~draft ~~may~~figures ~~require~~proposing ~~additional~~recovery well installation in Area A and B and a proposal to expand the recovery well system near NMW-46 (Area B) were also submitted to the DEC for approval. Depending on the results from the former propane tank area investigation some level of future remediation may be required in this area. Management cannot currently estimate the costs that may be incurred related to ~~this~~potential ~~additional~~remediation ~~investigation~~of ~~and~~the ~~testing~~former propane tank area.

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Ø	Site #3 – Laurel Street (Poughkeepsie, NY) – Post-Remediation In Progress

-	The results of the sampling event completed in January 2013 were submitted to the DEC on February 19, 2013. The DEC approved a request from Central Hudson to reduce the frequency of sampling from a quarterly to semi-annual frequency on February 20, 2013.

-	Central Hudson continues to work with the DEC to complete an Environmental Easement for the portion of the site owned by Central Hudson.

-	Amounts accrued represent an estimate of costs for OM&M.

Ø· ~~Site~~No #1Action ~~– Beacon (NY) – Post-Remediation Monitoring Complete~~Required

-Ø ~~SMP~~Site ~~submitted~~#7 to– ~~DEC~~Bayeaux ~~and~~Street ~~release~~(Poughkeepsie, ~~letter~~NY) ~~for~~– No further investigation or remedial action is currently required. However, per the DEC this site ~~expected~~still remains on the list for potential future investigation.

- No further costs expected and no amounts accrued as of September 30, 2012 related to this site.

- If the building at this site were to be removed, further investigation and testing would be required related to the soil under the building, which may require additional remediation. Management cannot currently estimate the costs that may be incurred related to this.

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Ø Site #7 – Bayeaux Street (Poughkeepsie, NY) – No action required

- No further investigation or remedial action is currently required. However, per the DEC this site still remains on the list for potential future investigation.

A summary of amounts accrued and spent are detailed in the chart below (In Thousands):

Site #

Liability Recorded as of 12/31/1112

Amounts Spent in ~~2012~~2013(1)

Liability Adjustment

Liability Recorded as of 93/3031/1213

Current Portion of Liability at 93/3031/1213

Long-Term Portion of Liability at 93/3031/1213

1, 2, 3, 4

1412,~~590~~210

~~592~~3,628

~~1,091~~883

159,~~089~~465

82,~~645~~916

6,~~444~~549

5, 6

1,~~253~~743

~~354~~68

~~861~~(62

)

1,~~760~~613

~~1,030~~922

~~730~~691

1513,~~843~~953

~~946~~3,696

~~1,952~~821

1611,~~849~~078

93,~~675~~838

7,~~174~~240

(1) Amounts spent in ~~2012~~2013 as shown above do not include legal fees of approximately $158 thousand.

Based on a cost model analysis completed in 2012 of possible remediation and future operating, maintenance, and monitoring costs for sites #2 through #6, Central Hudson believes there is a 90% confidence level that the total costs to remediate these sites will not exceed $152.0 million over the next 30 years. The cost model involves assumptions relating to investigation expenses, results of investigations, remediation costs, potential future liabilities, and post-remedial operating, maintenance and monitoring costs, and is based on a variety of factors including projections regarding the amount and extent of contamination, the location, size and use of the sites, proximity to sensitive resources, status of regulatory investigations, and information regarding remediation activities at other MGP sites in New York State. The cost model also assumes that proposed or anticipated remediation techniques are technically feasible and that proposed remediation plans receive DEC and New York State Department of Health ("NYSDOH") approval.

Future remediation activities, including OM&M and related costs may vary significantly from the assumptions used in Central Hudson's current cost estimates, and these costs could have a material adverse effect (the extent of which cannot be reasonably determined) on the financial condition, results of operations and cash flows of CH Energy Group and Central Hudson if Central Hudson were unable to recover all or a substantial portion of these costs via collection in rates from customers and/or through insurance.

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Central Hudson expects to recover its remediation costs from its customers. The current components of this recovery include:

-	Current Rate Order includes cash recovery from customers of $13.6 million spread equally over the three year settlement period ending June 30, 2013;

-	As part of the 2010 Rate Order, Central Hudson maintained previously granted deferral authority and subsequent recovery for amounts spent over the rate allowance.

- Total MGP Site Investigation and Remediation costs recovered through rates and other regulatory mechanisms from July 1, 2007 through ~~September~~March 3031, ~~2012~~2013 was approximately $2325.96 million, with $1.72 million ~~and $4.1 million~~ recovered in the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012, respectively~~2013.

- The total spent in the three ~~and nine~~ months ended ~~September~~March 3031, ~~2012~~2013 related to site investigation and remediation was approximately $03.57 million ~~and $0~~.~~6 million, respectively.~~

- The regulatory asset balance as of ~~September~~March 3031, ~~2012~~2013 was $1714.07 million, which represents the difference between amounts spent or currently accrued as a liability and the amounts recovered through rate allowance, as well as carrying charges accrued. Upon completion of investigation at sites #5 and #6, when remediation and post-remediation costs will be able to be reasonably estimated and therefore will be recorded as a liability, this regulatory asset balance will likely increase significantly. Management projects that the investigation at these sites will likely be completed within the next two years.

Central Hudson has put its insurers on notice and intends to seek reimbursement from its insurers for its costs. Certain of these insurers have denied coverage. In addition to the rate allowance amounts noted above, Central Hudson recovered approximately $2.3 million from insurance. There were no ~~amounts~~insurance ~~recovered~~recoveries in the ~~third~~first quarter of ~~2012~~2013. However, we do not expect insurance recoveries to offset a meaningful portion of total costs.

·	Little Britain Road property owned by Central Hudson

~~There has been no change to this site in 2012, however, the relevant disclosure is provided as required.~~ In 2000, Central Hudson and the DEC entered into a Voluntary Cleanup Agreement ("VCA") whereby Central Hudson removed approximately 3,100 tons of soil and conducted groundwater sampling. Central Hudson believes that it has fulfilled its obligations under the VCA and should receive the release provided for in the VCA, but the DEC has proposed that additional groundwater work be done to address groundwater sampling results that showed the presence of certain contaminants at levels exceeding the DEC criteria. Central Hudson believes that such work is not necessary and has completed a soil vapor intrusion study showing that indoor air at the facility met Occupational Safety and Health Administration ("OSHA") and NYSDOH standards. In October 2011, the DEC requested a 'non-committal' meeting with Central Hudson to discuss the site and possible next steps. At the annual MGP meeting with Central Hudson in October 2012, the DEC discussed the Little Britain Road property requesting an upcoming meeting to discuss the site and possible next steps. Central Hudson responded that we are available for such a meeting. A meeting date has yet to be established.

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At this time Central Hudson does not have sufficient information to estimate the need for additional remediation or potential remediation costs. Central Hudson has put its insurers on notice regarding this matter and intends to seek reimbursement from its insurers for amounts, if any, for which it may become liable. Central Hudson cannot predict the outcome of this matter.

·	Eltings Corners

~~There has been no change to this site in 2012, however, the relevant disclosure is provided as required.~~ Central Hudson owns and operates a maintenance and warehouse facility. In the course of Central Hudson's hazardous waste permit renewal process for this facility, sediment contamination was discovered within the wetland area across the street from the main property. In cooperation with the DEC, Central Hudson continues to investigate the nature and extent of the contamination. Additional off-site sediment and on-site groundwater sampling was performed during 2012 in accordance with a supplemental work plan approved by the DEC. Results ~~It's~~from ~~unknown~~the ason-site groundwater sampling activities were submitted to ~~whether~~the orDEC ~~not~~in January of 2013. Following their review, the DEC issued a letter dated March 28, 2013 relieving Central Hudson from any further ~~investigation~~on-site ~~will~~groundwater sampling. The sediment sampling results are expected to be ~~required. Thus,~~submitted to the DEC in the spring of 2013. Further sediment investigation is expected to take place in 2013. The extent of the contamination as well as the timing and costs for any future remediation efforts cannot be reasonably estimated at this time.

CHEC

During the ~~nine~~three months ended ~~September~~March 3031, ~~2012~~2013, ~~Griffith~~the amount spent ~~$0.3~~by ~~million~~Griffith on remediation efforts in Maryland, Virginia and Connecticut were immaterial.

Griffith's reserve for environmental remediation is $1.54 million as of ~~September~~March 3031, ~~2012~~2013, of which $0.54 million is expected to be spent in the next twelve months.

In connection with the 2009 sale of operations in certain geographic locations, Griffith agreed to indemnify the purchaser for certain claims, losses and expenses arising out of any breach by Griffith of the representations, warranties and covenants Griffith made in the sale agreement, certain environmental matters and all liabilities retained by Griffith. Griffith's indemnification obligation is subject to a number of limitations, including a five-year limitation within which certain claims must be brought, an aggregate deductible of $0.8 million applicable to certain types of non-environmental claims and other deductibles applicable to certain specific environmental claims, and caps on Griffith's liability with respect to certain of the indemnification obligations. The sale agreement includes an aggregate cap of $5.7 million on Griffith's obligation to indemnify the purchaser for breaches of many of Griffith's representations and warranties and for certain environmental liabilities. In 2009, the Company reserved $2.6 million for environmental remediation costs it may be obligated to pay based on its indemnification obligations under the sale agreement. To date, Griffith has paid approximately $1.12 million under its environmental remediation cost obligation. In the first quarter of 2011, Griffith reduced the reserve by $0.6 million based on the completion of an environmental study. The balance as of ~~September~~March 3031, ~~2012~~2013 related to the divestiture is $0.98 million. Management believes this is the most likely amount Griffith would pay with respect to its indemnification obligations under the sale agreement.

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Certain Litigation Related to the Fortis Transaction

Following the announcement of the proposed acquisition of CH Energy Group by Fortis on February 21, 2012, several complaints were filed by purported CH Energy Group shareholders in the Supreme Court of the State of New York, County of New York (the "New York County Court") and the Supreme Court of the State of New York, County of Dutchess, challenging the proposed merger. The Dutchess County actions have been transferred to the New York County Court, and all actions have been joined under the master caption In re CH Energy Group, Inc. Shareholder Litigation, Index No. 775,000/2012.

On April 9, 2012, a master amended complaint was filed in the joined litigation related to the proposed acquisition of CH Energy Group by Fortis. The master amended complaint, which was filed on behalf of a putative class of CH Energy Group public shareholders, names as defendants CH Energy Group, its directors, Fortis, FortisUS, and Cascade Acquisition Sub, Inc. and generally alleges that the individual defendants breached their fiduciary duties in connection with the proposed transaction and that the entity defendants aided and abetted that breach. The master amended complaint further alleges that the preliminary proxy filed in connection with the proposed transaction with Fortis contains material misstatements and omissions. The master complaint seeks, among other things, an order preliminarily and permanently enjoining the proposed transaction with Fortis, damages, and plaintiffs' fees and expenses.

On May 9, 2012, the parties executed a memorandum of understanding that embodies their agreement in principle on the structure of a proposed settlement. The proposed settlement, which is subject to certain conditions, including court approval following notice to a proposed settlement class consisting of all CH Energy Group shareholders during the period from February 19, 2012 through the date of the consummation of the proposed merger (the "Class"), would, among other things, dismiss all causes of action asserted in the master amended complaint and release all claims that members of the Class may have arising out of or relating in any manner to the proposed merger. Pursuant to the terms of the proposed settlement, defendants agreed to make certain disclosures to shareholders. In the meantime, the plaintiffs and their counsel have agreed, among other things, to stay the litigation and not to initiate any proceedings (including, but not limited to, a motion for a preliminary injunction) other than those incident to effecting the settlement.

~~Absent court approval of the proposed settlement, the defendants intend to vigorously defend themselves against the action.~~-38-

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Absent court approval of the proposed settlement, the defendants intend to vigorously defend themselves against the action.

Other Matters

Asbestos Litigation

As of ~~September~~March 3031, ~~2012~~2013, of the 3,~~335~~338 asbestos cases brought against Central Hudson, 1,~~163~~166 remain pending. Of the cases no longer pending against Central Hudson, 2,017 have been dismissed or discontinued without payment by Central Hudson, and Central Hudson has settled 155 cases. Central Hudson is presently unable to assess the validity of the remaining asbestos lawsuits; however, based on information known to Central Hudson at this time, including Central Hudson's experience in settling asbestos cases and in obtaining dismissals of asbestos cases, Central Hudson believes that the costs which may be incurred in connection with the remaining lawsuits will not have a material adverse effect on the financial position, results of operations or cash flows of either CH Energy Group or Central Hudson.

Central Hudson and Griffith are involved in various other legal and administrative proceedings incidental to their businesses, which are in various stages. While these matters collectively could involve substantial amounts, based on the facts currently known, it is the opinion of management that their ultimate resolution will not have a material adverse effect on either of CH Energy Group's or the individual segment's financial positions, results of operations or cash flows.

CH Energy Group and Central Hudson expense legal costs as incurred.

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NOTE 13 – Segments and Related Information

CH Energy Group's reportable operating segments are the regulated electric utility business and regulated natural gas utility business of Central Hudson and the unregulated fuel distribution business of Griffith. Other activities of CH Energy Group, which do not constitute a business segment, include CHEC's renewable energy investments and the holding company's activities, which consist primarily of financing its subsidiaries, and are reported under the heading "Other Businesses and Investments."

Certain additional information regarding these segments is set forth in the following tables. General corporate expenses and Central Hudson's property common to both electric and natural gas segments have been allocated in accordance with practices established for regulatory purposes.

Central Hudson's and Griffith's operations are seasonal in nature and weather-sensitive and, as a result, financial results for interim periods are not necessarily indicative of trends for a twelve-month period. Demand for electricity typically peaks during the summer, while demand for natural gas and heating oil typically peaks during the winter.

~~In the following segment charts for CH Energy Group, information related to Griffith and Other Businesses and Investments represents continuing operations unless otherwise noted.~~-39-

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CH Energy Group Segment Disclosure

(In Thousands)

	Three Months Ended September 30, 2012
	Three Months Ended March 31, 2013
	Segments								Other
	Central Hudson								Businesses
			Natural						and
	Electric		Gas			Griffith			Investments			Eliminations			Total
Revenues from external customers	$	~~148~~138,~~916~~163	$	1856,~~306~~300		$	51103,~~848~~911		$	-		$	-		$	~~219~~298,~~070~~374
Intersegment revenues		32		1116			-			-			(4118	)		-
Total revenues		~~148~~138,~~919~~165		1856,~~307~~416			51103,~~848~~911			-			(4118	)		~~219~~298,~~070~~374
Operating income (loss)		2516,~~456~~967		~~534~~12,191			(27,~~799~~791	)		(~~1,074~~528	)		-			2236,~~117~~421
Interest and investment income		1,~~304~~182		~~277~~191			-			~~491~~656			(~~478~~644	) (1)		1,~~594~~385
Interest charges		56,~~824~~166		1,~~561~~635			~~469~~644			~~490~~544			(~~478~~644	) (1)		78,~~866~~345
Income (Loss) before income taxes		2012,~~916~~306		~~(717~~10,847	)		(37,~~272~~233	)		(~~1,219~~275	)		-			1530,~~708~~111
Net Income (Loss) Attributable to CH Energy Group		13,287		(1,031	)		(1,930	)		(1,269	)		-			9,057
Net Income Attributable to CH Energy Group		7,263		6,250			4,268			309			-			18,090
Segment assets at September 30		1,240,553		364,728			100,668			7,658			(420	)		1,713,187
Segment assets at March 31		1,296,078		370,390			122,695			13,928			(700	)		1,802,391

(1)	This represents the elimination of inter-company interest income (expense) generated from lending activities between CH Energy Group (the holding company), and its subsidiaries (CHEC and Griffith).

CH Energy Group Segment Disclosure

(In Thousands)

	Three Months Ended September 30, 2011
	Three Months Ended March 31, 2012
	Segments								Other
	Central Hudson								Businesses
			Natural						and
	Electric		Gas			Griffith			Investments			Eliminations			Total
Revenues from external customers	$	~~149~~129,~~706~~272	$	1855,~~462~~850		$	5288,~~587~~950		$	-		$	-		$	~~220~~274,~~755~~072
Intersegment revenues		3		~~139~~90			-			-			(~~142~~93	)		-
Total revenues		~~149~~129,~~709~~275		1855,~~601~~940			5288,~~587~~950			-			(~~142~~93	)		~~220~~274,~~755~~072
Operating income (loss)		2420,~~807~~125		~~257~~12,479			(34,~~169~~947	)		(655,338	)		-			2132,~~830~~213
Interest and investment income		~~752~~1,436		~~271~~270			-			~~611~~697			(~~597~~684	) (1)		1,~~037~~719
Interest charges		5,~~878~~716		1,~~523~~539			~~610~~696			~~3,741~~535			(~~597~~684	) (1)		117,~~155~~802
Income (Loss) before income taxes		2016,~~377~~224		~~(859~~11,262	)		(34,~~826~~268	)		(75,~~407~~262	)		-			826,~~285~~492
Net Income (Loss) Attributable to CH Energy Group		1210,~~060~~278		~~(637~~6,213	)		(2,~~269~~518	~~) (3)~~		(~~826~~4,428	) ~~(2)~~		-			814,~~328~~581
Segment assets at September 30		1,211,879		364,160			98,890			29,371			(2,280	)		1,702,020
Segment assets at March 31		1,284,078		377,524			109,457			16,417			(1,675	)		1,785,801

(1)	This represents the elimination of inter-company interest income (expense) generated from lending activities between CH Energy Group (the holding company), and its subsidiaries (CHEC and Griffith).
(2)	Includes income from discontinued operations of $3,775.
(3)	Includes loss from discontinued operations of $12.

(1)	This represents the elimination of inter-company interest income (expense) generated from lending activities between CH Energy Group (the holding company), and its subsidiaries (CHEC and Griffith).

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CH Energy Group Segment Disclosure

(In Thousands)

	Nine Months Ended September 30, 2012
	Segments							Other
	Central Hudson							Businesses
			Natural					and
	Electric		Gas		Griffith			Investments			Eliminations			Total
Revenues from external customers	$	393,617	$	100,276	$	196,819		$	-		$	-		$	690,712
Intersegment revenues		8		111		-			-			(119	)		-
Total revenues		393,625		100,387		196,819			-			(119	)		690,712
Operating income		57,952		17,257		177			(9,618	)		-			65,768
Interest and investment income		4,362		835		-			1,764			(1,725	) (1)		5,236
Interest charges		17,406		4,669		1,692			1,548			(1,725	) (1)		23,590
Income (Loss) before income taxes		45,084		13,526		(1,502	)		(9,626	)		-			47,482
Net Income (Loss) Attributable to CH Energy Group		28,400		6,500		(886	)		(8,740	)		-			25,274
Segment assets at September 30		1,240,553		364,728		100,668			7,658			(420	)		1,713,187

(1) This represents the elimination of inter-company interest income (expense) generated from lending activities between CH Energy Group (the holding company), and its subsidiaries (Central Hudson and Griffith).

CH Energy Group Segment Disclosure

(In Thousands)

	Nine Months Ended September 30, 2011
	Segments							Other
	Central Hudson							Businesses
			Natural					and
	Electric		Gas		Griffith			Investments			Eliminations			Total
Revenues from external customers	$	418,511	$	127,941	$	208,342		$	-		$	-		$	754,794
Intersegment revenues		13		344		-			-			(357	)		-
Total revenues		418,524		128,285		208,342			-			(357	)		754,794
Operating income		53,695		15,982		2,314			(215	)		-			71,776
Interest and investment income		3,373		937		-			2,112			(2,088	) (1)		4,334
Interest charges		17,626		4,559		2,100			5,443			(2,088	) (1)		27,640
Income (Loss) before income taxes		39,916		12,618		235			(7,782	)		-			44,987
Net Income Attributable to CH Energy Group		23,775		7,174		449	(3)		(168	) (2)		-			31,230
Segment assets at September 30		1,211,879		364,160		98,890			29,371			(2,280	)		1,702,020

(1)	This represents the elimination of inter-company interest income (expense) generated from temporary lending activities between CH Energy Group (the holding company), and its subsidiaries (CHEC and Griffith).
(2)	Includes income from discontinued operations of $3,658.
(3)	Includes income from discontinued operations of $310.

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NOTE 14 - Accounting for Derivative Instruments and Hedging Activities

Accounting for Derivatives

Central Hudson has been authorized to fully recover risk management costs through its natural gas and electricity cost adjustment charge clauses. Risk management costs are defined by the PSC as "costs associated with transactions that are intended to reduce price volatility or reduce overall costs to customers. These costs include transaction costs, and gains and losses associated with risk management instruments." The related gains and losses associated with Central Hudson's derivatives are included as part of Central Hudson's commodity cost and/or price-reconciled in its natural gas and electricity cost adjustment charge clauses, and are not designated as hedges. Additionally, Central Hudson has been authorized to fully recover the interest costs associated with its variable rate debt, which includes costs and gains or losses associated with its interest rate cap contracts. As a result, these derivative activities at Central Hudson do not impact earnings.

On March 18, 2011, Central Hudson entered into a total return master swap agreement with Bank of America with the intent to enter into future swap contracts to exchange total returns on CH Energy Group, Inc. common stock for fixed payments to Bank of America. The purpose was to reduce the volatility to earnings from phantom shares under CH Energy Group's Directors and Executives Deferred Compensation Plan. Based on the terms and conditions of the swap agreement, the fair value of the swaps were designated as Level 2 within the fair value hierarchy. Quarterly valuations were made on the last business day of the quarter, at which time a net cash settlement was recorded. On September 28, 2012, the total return master swap agreement expired, and the final valuation resulted in an immaterial settlement. On a year to date basis, the total return swap resulted in income of $0.5 million.

Derivative activity related to Griffith's heating oil contracts is not material.

The percentage of Central Hudson's electric and gas requirements ~~closed~~covered with fixed price forward purchases is as follows:

Central Hudson	% of Requirement Hedged (1)
Electric Derivative Contracts:
October 2012 – December 2012		33.1	%
April 2013 – December 2013		34.0	%
2013		14.3	%
2014		28.8	%
2014		14.4	%
2015		21.7	%
2015		7.2	%
2016		7.2	%
2017		7.1	%
Natural Gas Derivative Contracts:
November 2012 – March 2013		31.9	%
November 2013 – March 2014		2.3	%

(1) Projected coverage as of ~~September~~March 3031, ~~2012~~2013.

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Derivative Risks

The basic types of risks associated with derivatives are market risk (that the value of the derivative will be adversely impacted by changes in the market, primarily the change in interest and exchange rates) and credit risk (that the counterparty will not perform according to the terms of the contract). The market risk of the derivatives generally offset the market risk associated with the hedged commodity.

The majority of Central Hudson and Griffith's derivative instruments contain provisions that require the Company to maintain specified issuer credit ratings and financial strength ratings. Should the company's ratings fall below these specified levels, it would be in violation of the provisions, and the derivatives' counterparties could terminate the contracts and request immediate payment.

To help limit the credit exposure of their derivatives, both Central Hudson and Griffith have entered into master netting agreements with counterparties whereby contracts in a gain position can be offset against contracts in a loss position. Of the eighteen total agreements held by both companies, eleven contain credit-~~risk related contingent features. As of September 30, 2012, the amount that would be required to settle these instruments if the contingent features were triggered is immaterial.~~41-

CHTable Energy Group and Central Hudson have elected gross presentation for their derivative contracts under master netting agreements and collateral positions. On September 30, 2012, neither Central Hudson nor Griffith had collateral posted against the fair value amount of ~~derivatives.~~Contents

To help limit the credit exposure of their derivatives, both Central Hudson and Griffith have entered into master netting agreements with counterparties whereby contracts in a gain position can be offset against contracts in a loss position. Of the nineteen total agreements held by both companies, eleven contain credit-risk related contingent features. As of March 31, 2013, the amount that would be required to settle these instruments if the contingent features were triggered is immaterial.

CH Energy Group and Central Hudson have elected gross presentation for their derivative contracts under master netting agreements and collateral positions. On March 31, 2013, neither Central Hudson nor Griffith had collateral posted against the fair value amount of derivatives.

The net presentation for CH Energy Group's and Central Hudson's derivative assets and liabilities as of March 31, 2013, December 31, 2012 and March 31, 2012 are as follows (In Thousands):

							Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Financial Position		Net Amount of Assets Presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
As of March 31, 2013
Derivative Contracts:
Central Hudson - electric	$	5,822	$	-	$	5,822	$	608	$	-	$	5,214
Total Central Hudson Assets	$	5,822	$	-	$	5,822	$	608	$	-	$	5,214
Griffith - heating oil	$	3	$	-	$	3	$	-	$	-	$	3
Total CH Energy Group Assets	$	5,825	$	-	$	5,825	$	608	$	-	$	5,217

As of December 31, 2012
Derivative Contracts:
Central Hudson - electric	$	693	$	-	$	693	$	664	$	-	$	29
Central Hudson - gas		95		-		95		18		-		77
Total Central Hudson Assets	$	788	$	-	$	788	$	682	$	-	$	106
Griffith - heating oil	$	26	$	-	$	26	$	-	$	-	$	26
Total CH Energy Group Assets	$	814	$	-	$	814	$	682	$	-	$	132

As of March 31, 2012
Derivative Contracts:
Central Hudson - electric	$	-	$	-	$	-	$	-	$	-	$	-
Total Central Hudson Assets	$	-	$	-	$	-	$	-	$	-	$	-
Griffith - heating oil	$	9	$	-	$	9	$	-	$	-	$	9
Total CH Energy Group Assets	$	9	$	-	$	9	$	-	$	-	$	9

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							Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Financial Position		Net Amount of Assets Presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
As of March 31, 2013
Derivative Contracts:
Central Hudson - electric	$	608	$	-	$	608	$	608	$	-	$	-
Central Hudson - gas		2		-		2		-		-		2
Total Central Hudson Liabilities	$	610	$	-	$	610	$	608	$	-	$	2
Griffith - heating oil	$	-	$	-	$	-	$	-	$	-	$	-
Total CH Energy Group Liabilities	$	610	$	-	$	610	$	608	$	-	$	2

As of December 31, 2012
Derivative Contracts:
Central Hudson - electric	$	1,367	$	-	$	1,367	$	664	$	-	$	703
Central Hudson - gas		110		-		110		18		-		92
Total Central Hudson Liabilities	$	1,477	$	-	$	1,477	$	682	$	-	$	795
Griffith - heating oil	$	-	$	-	$	-	$	-	$	-	$	-
Total CH Energy Group Liabilities	$	1,477	$	-	$	1,477	$	682	$	-	$	795

As of March 31, 2012
Derivative Contracts:
Central Hudson - electric	$	23,792	$	-	$	23,792	$	-	$	-	$	23,792
Central Hudson - gas		14		-		14		-		-		14
Total Central Hudson Liabilities	$	23,806	$	-	$	23,806	$	-	$	-	$	23,806
Griffith - heating oil	$	-	$	-	$	-	$	-	$	-	$	-
Total CH Energy Group Liabilities	$	23,806	$	-	$	23,806	$

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