Central Hudson and Fortis File Response to Recommended Decision

  Central Hudson and Fortis File Response to Recommended Decision

Business Wire

POUGHKEEPSIE, N.Y. -- May 17, 2013

CH Energy Group, Inc. subsidiary Central Hudson Gas & Electric Corporation and
FortisInc. today filed a response to the Recommended Decision issued by the
Administrative Law Judges earlier this month regarding the proposed merger of
CH Energy Group and Fortis.

“Fortis is providing substantial and lasting benefits for our customers by
ensuring that Central Hudson continues to operate as a stand-alone company but
with the strengthened financial resources that will enable us to maintain and
likely enhance service levels,” saidCHEnergy Group Chairman, President and
CEO Steven V. Lant. “Themerger provides customers with approximately $50
million in benefits. Also, customer rates will remain unchanged until July
2014 through a voluntary ‘rate freeze’ provision.

“Continued regulation by the New York State Public Service Commission, as well
as decision making by the existing local management team and a new Board of
Directors with increased representation from New York and the Hudson Valley,
will ensure that Central Hudson remains focused on meeting the existing and
future needs of our customers,” Lant emphasized.

Lant commented that while the Recommended Decision did not find fault with
most of the provisions of the proposed merger and corrected many of the
erroneous assertions posed by the local groups and individuals opposing the
transaction, the conclusions reached were inconsistent with the factual
record. By way of example, he noted that the Recommended Decision failed to
consider the analysis conducted by the Staff of the Public Service Commission
and other parties, such as the Staff’s due diligence and independent review of
the Fortis stand-alone corporate governance model and the degree of local
autonomy this model provides. Lant also noted that the Recommended Decision
incorrectly equated the Fortis stand-alone model with the shared services
model incorporated in other New York mergers.

“In our meetings with various organizations and community leaders, many
individuals have expressed their support for the merger as they recognize how
an association with Fortis willbenefit the Mid-Hudson Valley area we serve,”
saidLant. Central Hudson and Fortis continue to reach out to customers,
community and business leaders, elected officials and the media to discuss the
facts of the transaction and to outline the benefits that an association with
Fortis will bring.

Reply briefs to responses to the Recommended Decision are due to the Public
Service Commission by May24,2013. Closing remains subject to the approval of
the Public Service Commission. Central Hudson and Fortis expect the
transaction to close by the end of the second quarter of 2013.

“Central Hudson will continue to operate as it does today, with the same group
of dedicated employees who are committed to serving our customers and our
communities,” saidLant. “We will continue to advocate for this transaction,
as it is truly in the best interest of our employees, customers and the
communities of the Hudson Valley.”

Summary of benefits:

The Joint Proposal provides nearly $50 million in customer benefits,
including:

  *$35 million to offset costs associated with restoring electric service to
    customers following major storms and to mitigate other expenses that would
    normally be paid for by customers;
  *$9.25 million in guaranteed savings to customers over the course of the
    next five years alone as the expenses associated with being a publicly
    traded company end;
  *$5 million set aside in a Customer Benefit Fund to be used for economic
    development and low-income assistance programs for communities and
    residents of the Mid-Hudson Valley;
  *Customer delivery rates will be frozen until July 1, 2014;
  *Customers will continue to work with current employees, as all jobs at
    Central Hudson will be retained;
  *Financial protections for CH Energy Group and Central Hudson as part of
    the larger Fortis organization; and
  *A transition within the Board of Directors of Central Hudson to increase
    members from New York State and the Hudson Valley within one year.

About CH Energy Group, Inc.: CH Energy Group, Inc. is predominantly a
regulated transmission and distribution utility, headquartered in
Poughkeepsie, NY. 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 energy products and services to approximately 56,000
customers in the Mid-Atlantic Region, as well as several renewable energy
investments.

Forward-Looking Statements –

Statements included in this news release and any documents incorporated by
reference which are not historical in nature are intended to be, and are
hereby identified as, “forward-looking statements” for purposes of the safe
harbor provided by Section 21E of the Exchange Act. Forward-looking statements
may be identified by words including “anticipates,” “intends,” “estimates,”
“believes,” “projects,” “expects,” “plans,” “assumes,” “seeks,” and similar
expressions. Forward-looking statements including, without limitation, those
relating to CH Energy Group’s and Central Hudson’s future business prospects,
revenues, proceeds, working capital, investment valuations, liquidity, income,
and margins, as well as the acquisition by a subsidiary of Fortis Inc. and the
expected timing of the transaction, are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
indicated in the forward-looking statements, due to several important factors,
including those identified from time to time in the forward-looking
statements. Those factors include, but are not limited to: the possibility
that various conditions precedent to the consummation of the proposed Fortis
transaction will not be satisfied or waived including regulatory approvals of
the proposed Fortis transaction on the timing and terms thereof; the impact of
delay or failure to complete the proposed Fortis transaction on CH Energy
Group stock price; deviations from normal seasonal weather and storm activity;
fuel prices; energy supply and demand; potential future acquisitions;
legislative, regulatory, and competitive developments; interest rates; access
to capital; market risks; electric and natural gas industry restructuring and
cost recovery; the ability to obtain adequate and timely rate relief; changes
in fuel supply or costs including future market prices for energy, capacity,
and ancillary services; the success of strategies to satisfy electricity,
natural gas, fuel oil, and propane requirements; the outcome of pending
litigation and certain environmental matters, particularly the status of
inactive hazardous waste disposal sites and waste site remediation
requirements; and certain presently unknown or unforeseen factors, including,
but not limited to, acts of terrorism. CH Energy Group and Central Hudson
undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events, or otherwise. Given
these uncertainties, undue reliance should not be placed on the
forward-looking statements.

Additional Information about the Fortis Transaction and Where to Find It

In connection with the proposed acquisition of CH Energy Group by Fortis, CH
Energy Group filed a definitive proxy statement with the SEC on May 9, 2012,
and has filed other relevant materials with the SEC as well. Investors and
security holders of CH Energy Group are urged to read the proxy statement and
other relevant materials filed with the SEC because they contain important
information about the proposed acquisition and related matters. Investors and
stock shareholders may obtain a free copy of the proxy statement and other
documents filed by CH Energy Group, at the SEC’s Web site, www.sec.gov. These
documents can also be obtained by investors and stockholders free of charge
from CH Energy Group at CH Energy Group’s website at www.chenergygroup.com, or
by contacting CH Energy Group’s Shareholder Relations Department at (845)
486-5204.

Contact:

CH Energy Group, Inc.
Investors:
Stacey Renner, 845-486-5730
or
Media:
Denise D. VanBuren, 845-471-8323