Fortis and Central Hudson File Settlement Agreement

Fortis and Central Hudson File Settlement Agreement 
Includes Substantive Customer Benefits and Protections 
ST. JOHN'S, NEWFOUNDLAND AND LABRADOR -- (Marketwire) -- 01/28/13 --
(TSX:FTS) - Nearly $50 million to fund customer and community
benefits, plus a one-year electric and natural gas customer delivery
rate freeze, and customer protections, including the continuation of
Central Hudson Gas & Electric Corporation ("Central Hudson") as a
stand-alone utility company, are cornerstones of a settlement of all
issues among the signatories (the "Settlement Agreement") filed with
the New York State Public Service Commission (the "Commission")
regarding the acquisition of Central Hudson, the utility subsidiary
of CH Energy Group, Inc. ("CH Energy Group") (NYSE:CHG), by Fortis
Inc. ("Fortis") (TSX:FTS). Other signatory parties to the Settlement
Agreement are the Staff of the New York State Department of Public
Service, Multiple Intervenors and the Utility Intervention Unit of
the New York State Department of State. The Settlement Agreement
indicates that the acquisition is in the public interest pursuant to
New York State Public Service Law, Section 70 and, therefore, the
aforementioned parties recommend approval of the Settlement Agreement
by the Commission. Support was also received from several counties
for the portions of the Settlement Agreement of relevance to the
respective counties' interests. Closing of the acquisition is now
expected to take place during the second quarter of 2013, subject to
receiving approval from the Commission.  
"This Settlement Agreement provides multiple and substantive benefits
to our customers and the communities we serve," said Steven V. Lant,
Chairman of the Board and President of CH Energy Group. "The proposed
terms also retain substantial autonomy for Central Hudson, allowing
us to continue our mission of serving our customers well, while
providing opportunities to improve service through a close
association with the Fortis family of utility companies. We are
pleased and excited to have reached this step toward finalizing the
transaction with Fortis." 
"Fortis worked closely with management of Central Hudson through this
thorough regulatory approval process and has gained increased
knowledge about the utility's operating philosophy and the regulatory
oversight requirements in New York State," said Stan Marshall,
President and Chief Executive Officer, Fortis Inc. "This Settlement
Agreement will provide tangible benefits to Central Hudson's
customers and will strengthen the utility's ability to meet the
energy needs of its current and future customers."  
The Settlement Agreement will moderate future customer rate increases
by providing $35 million to cover expenses that normally would be
recovered in customer rates, for example significant restoration
expenses related to Superstorm Sandy, the October 2011 snowstorm and
Tropical Storm Irene, and other similar expenses. Also, under the
terms of the Settlement Agreement, Central Hudson customers will save
a guaranteed $9.25 million over five years resulting from the
elimination of costs the utility now incurs as a public company.
Additionally, the Settlement Agreement requires that customer
delivery rates be frozen until July 1, 2014 and requires the
establishment of a $5 million Customer Benefit Fund for economic
development and low-income assistance programs for communities and
residents of the Mid-Hudson Valley.  
Becoming part of the Fortis family of utilities, which currently
serve more than two million customers, will bring benefits to Central
Hudson, explained Lant. "Central Hudson will be in the position to
benefit from shared experiences and knowledge from other Fortis
utility companies, as all of us seek to continuously improve our
operations," he said. "In addition, Fortis has greater access to
capital that will enhance Central Hudson's ability to make
significant investments in the electric and gas system to improve
customer service and system reliability, including those recommended
in the Governor's Energy Highway initiative."  
Central Hudson will continue to maintain its name and Poughkeepsie
headquarters, as well as all of its employees and the utility's
substantial civic and community presence in the Mid-Hudson Valley.
The Settlement Agreement also provides financial protections for CH
Energy Group, Central Hudson and its customers as part of the larger
Fortis organization, and Central Hudson will continue to have annual
independent financial audits. Within one year, the Board of Directors
of Central Hudson will transition to a majority of independent
directors, increase members from the Hudson Valley and New York
State, and include representatives from Fortis. 
"Fortis remains focused on closing the acquisition and providing the
benefits to Central Hudson customers as quickly as possible,"
concluded Marshall. 
The definitive merger agreement was announced between CH Energy Group
and Fortis in February 2012. CH Energy Group shareholders approved
the transaction in June 2012, and several other required regulatory
approvals by U.S. federal agencies were subsequently received. For
more information and to view the Settlement Agreement, visit
www.CentralHudson.com or www.FortisInc.com. 
About CH Energy Group  
CH Energy Group, Inc. is an energy delivery company headquartered in
Poughkeepsie, NY. Regulated transmission and distribution subsidiary
Central Hudson Gas & Electric Corporation serves approximately
300,000 electric and about 75,000 natural gas customers in eight
counties of New York State's Mid-Hudson River Valley, delivering
natural gas and electricity in a 2,600-square-mile service territory
that extends north from the suburbs of metropolitan New York City to
the Capital District at Albany. CH Energy Group also operates Central
Hudson Enterprises Corporation (CHEC), a non-regulated subsidiary
composed primarily of Griffith Energy Services, which supplies
petroleum products and related services to approximately 56,000
customers in the Mid Atlantic Region. 
About Fortis  
Fortis Inc. is the largest investor-owned distribution utility in
Canada, serving more than 2 million gas and electricity customers.
Its regulated holdings include electric utilities in five Canadian
provinces and two Caribbean countries and a natural gas utility in
British Columbia. It owns non-regulated hydroelectric generation
assets across Canada and in Belize & Upstate New York. It also owns
hotels and commercial real estate in Canada. 
Fortis includes forward-looking information in this material within
the meaning of applicable securities laws in Canada ("forward-looking
information"). The purpose of the forward-looking information is to
provide management's expectations regarding the acquisition of CH
Energy Group by Fortis and the expected timing and benefits thereof,
the Corporation's future growth, results of operations, performance,
business prospects and opportunities, and it may not be appropriate
for other purposes. All forward-looking information is given pursuant
to the safe harbour provisions of applicable Canadian securities
legislation. The words "anticipates", "believes", "budgets", "could",
"estimates", "expects", "forecasts", "intends", "may", "might",
"plans", "projects", "schedule", "should", "will", "would" and
similar expressions are often intended to identify forward-looking
information, although not all forward-looking information contains
these identifying words. The forward-looking information reflects
management's current beliefs and is 
based on assumptions developed
using information currently available to the Corporation's
management. Although Fortis believes that the forward-looking
statements are based on information and assumptions which are
current, reasonable and complete, these statements are necessarily
subject to a variety of risks and uncertainties, including the
ability to obtain New York State Public Service Commission regulatory
approval and to satisfy conditions to closing and the ability to
realize the expected benefits of the acquisition of CH Energy Group
by Fortis.  For additional information on risk factors that have the
potential to affect the Corporation, reference should be made to the
Corporation's continuous disclosure materials filed from time to time
with Canadian securities regulatory authorities and to the heading
"Business Risk Management" in the Corporation's annual and quarterly
Management Discussion and Analysis and the "Risk Factors" section of
the Annual Information Form. Except as required by law, the
Corporation undertakes no obligation to revise or update any
forward-looking information as a result of new information, future
events or otherwise after the date hereof.
Contacts:
Mr. Barry Perry
Vice President Finance and Chief Financial Officer
Fortis Inc.
(709) 737-2822
 
 
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