Edgar Filing: CH ENERGY GROUP INC

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ___)

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CH ENERGY GROUP, INC.
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(Name of Registrant as Specified In Its Charter)

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CH ENERGY GROUP, INC.
284 SOUTH AVENUE

POUGHKEEPSIE, NEW YORK 12601-4879

March 11, 2005

To the Holders of Common Stock:

I am pleased to invite you to the 2005 Annual Meeting of Shareholders of CH
Energy Group, Inc. (the "Corporation").

The Annual Meeting of Shareholders will be held at the Corporation's office
in Poughkeepsie, New York on Tuesday, April 26, 2005, at 10:30 AM. A Notice of
the Annual Meeting of Shareholders and Proxy Statement are attached.

We request that you mark, sign, date, and mail the enclosed proxy promptly.
Prompt return of your voted proxy will reduce the cost of further mailings. As
an alternative to returning your proxy by mail, you can also vote your shares by
proxy by calling the toll-free number on your proxy or by using the Internet at
http://www.eproxyvote.com/chg. Both methods of voting are available twenty-four
hours a day, seven days a week, and will be accessible until 12:01 AM on April
19, 2005. You may revoke your voted proxy at any time prior to the meeting or
vote in person if you attend the meeting.

The response from our shareholders in the past to annual proxy statements
has been outstanding, and this year we are once again looking forward to
receiving your proxy.

You are cordially invited to attend the Annual Meeting of Shareholders in
person. It is always a pleasure for me and the other members of the Board of
Directors to meet with our shareholders. We look forward to greeting as many of
you as possible at the meeting.

Steven V. Lant
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER

CH ENERGY GROUP, INC.

284 SOUTH AVENUE
POUGHKEEPSIE, NEW YORK 12601-4879

--------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------------------------------

To the Holders of Common Stock:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CH Energy
Group, Inc. (the "Corporation") will be held:

TIME ..................... 10:30 a.m. on Tuesday, April 26, 2005

PLACE .................... Office of the Corporation
284 South Avenue
Poughkeepsie, New York 12601-4879

ITEMS OF BUSINESS (1) To elect three Directors, each to serve for a
three-year term expiring in 2008;

(2) To ratify the appointment of
PricewaterhouseCoopers LLP as the Corporation's
independent registered public accounting firm
for the year beginning in 2005; and

(3) To act upon any other matters that may properly
come before the meeting.

RECORD DATE .............. Holders of Record of Common Shares on the close of
business on March 1, 2005, are entitled to vote at
the meeting.

ANNUAL REPORT ............ The Annual Report to Shareholders, as combined with
the Corporation's Annual Report on Form 10-K filed
with the Securities and Exchange Commission, is
enclosed.

PROXY VOTING ............. It is important that your shares be represented and
voted at the Annual Meeting of Shareholders. Please
MARK, SIGN, DATE, AND RETURN PROMPTLY the enclosed
proxy in the postage-paid envelope furnished for that
purpose. As an alternative to returning your proxy by
mail, you can also vote your shares by proxy by
calling the toll-free number on your proxy or by
using the Internet at www.eproxyvote.com/chg. Both
Internet and telephone voting are available
twenty-four hours a day, seven days a week, and will
be accessible until 12:01 AM on April 19, 2005. You
may revoke your voted proxy at any time prior to the
meeting or vote in person if you attend the meeting.
Any proxy may be revoked in the manner described in
the accompanying proxy statement at any time prior to
its exercise at the meeting.

By Order of the Board of Directors,

Lincoln E. Bleveans
CORPORATE SECRETARY

March 11, 2005

TABLE OF CONTENTS

PAGE

PROXY STATEMENT ............................................................. 1

CURRENT DIRECTORS, CLASSES, AND TERMS OF OFFICE ............................. 3

PROPOSAL NO. 1 - ELECTION OF DIRECTORS ...................................... 4

GOVERNANCE OF THE CORPORATION 7

REPORT OF THE AUDIT COMMITTEE 14

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION .............. 16

EXECUTIVE COMPENSATION 21

PROPOSAL NO. 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM .......................... 28

OTHER MATTERS ............................................................... 29

PROXY STATEMENT

The enclosed proxy is being solicited by the Board of Directors of CH
Energy Group, Inc. (the "Corporation") for use in connection with its Annual
Meeting of Shareholders to be held on April 26, 2005 (the "Annual Meeting").

This proxy statement and enclosed proxy are being sent to the Corporation's
shareholders on or about March 11, 2005. The mailing address of the principal
executive office of the Corporation is 284 South Avenue, Poughkeepsie, New York
12601-4879.

The Corporation is the holding company parent of Central Hudson Gas &
Electric Corporation ("Central Hudson") and Central Hudson Enterprises
Corporation ("CHEC"), and their respective subsidiaries.

SHAREHOLDERS ENTITLED TO VOTE

The record of shareholders entitled to notice of, and to vote at, the
Annual Meeting was taken at the close of business on March 1, 2005. At that
date, there were 15,762,000 shares of common stock ($0.10 par value) of the
Corporation ("Common Stock") outstanding. Each share of Common Stock is entitled
to one vote. No other class of securities is entitled to vote at the Annual
Meeting.

PROXIES

HOW YOU CAN VOTE
----------------

Shareholders of record can give a proxy to be voted at the Annual Meeting
(i) by telephone, (ii) electronically, using the Internet, at
http://www.eproxyvote.com/chg, or (iii) by mail. Shareholders who hold their
shares in "street name" must vote their shares in the manner prescribed by their
brokers.

The telephone and Internet voting procedures have been set up for
shareholder convenience and have been designed to authenticate shareholder
identity, to allow shareholders to give voting instructions, and to confirm that
those instructions have been recorded properly. If shareholders of record wish
to vote by proxy, by telephone or by using the Internet, please refer to the
specific instructions set forth on the enclosed proxy. If shareholders wish to
vote using a paper format and return their signed proxy before the Annual
Meeting, their shares will be voted as directed.

Whether shareholders choose to vote by telephone, electronically using the
Internet, or by mail, each proxy will be voted in accordance with the
shareholder's instructions with respect to (i) the election of directors and
(ii) ratifying the appointment of PricewaterhouseCoopers LLP as the
Corporation's independent registered public accounting firm.

IF SHAREHOLDERS DO NOT SPECIFY ON THEIR PROXY (OR WHEN GIVING THEIR PROXY
BY TELEPHONE OR BY USING THE INTERNET) HOW THEY WANT TO VOTE THEIR SHARES, IT IS
THE INTENTION OF THE PERSONS NAMED ON THE PROXY TO VOTE "FOR" THE ELECTION OF
THE NOMINEES FOR DIRECTOR AS SET FORTH UNDER "PROPOSAL NO. 1 - ELECTION OF
DIRECTORS" AND TO VOTE "FOR" THE RATIFICATION OF APPOINTMENT OF THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM AS SET FORTH UNDER "PROPOSAL NO. 2 -
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM"
HEREIN. ABSTENTIONS AND BROKER NON-VOTES ARE VOTED NEITHER "FOR" NOR "AGAINST"
AND HAVE NO EFFECT ON THE VOTE BUT ARE COUNTED IN THE DETERMINATION OF A QUORUM.

\REVOCATION OF PROXIES

A shareholder may revoke his or her proxy at any time before it is
exercised in any of three ways:

(a) by submitting written notice of revocation to the Corporate Secretary;

(b) by submitting another proxy by telephone, electronically, using the
Internet, at http://www.eproxyvote.com/chg, or by mail that is later
dated and (if by mail) that is properly signed; or

COST OF PROXY SOLICITATION

The cost of preparing, printing, and mailing the notice of meeting, proxy
statement, proxy, and annual report will be borne by the Corporation. Proxy
solicitation other than by use of the mail may be made by regular employees of
the Corporation by telephone and personal solicitation. Banks, brokerage houses,
custodians, nominees, and fiduciaries are requested to forward soliciting
material to their principal(s) and to obtain authorization for the execution of
proxies, and may be reimbursed for their out-of-pocket expenses incurred in that
connection. In addition, the Corporation has retained D. F. King & Co., Inc. of
New York, New York, a proxy solicitation organization, to assist in the
solicitation of proxies. The fee of such organization in connection therewith is
estimated to be $7,500, plus reasonable out-of-pocket expenses.

SHAREHOLDER COMMUNICATIONS

Highlights of the 2005 Annual Meeting of Shareholders will be published on
the Corporation's Internet site at www.chenergygroup.com and in the
Corporation's May 2005 Report to Shareholders. The text of the remarks of the
Chairman of the Board, President and Chief Executive Officer at the Annual
Meeting will also be published on the same Internet site.

Shareholders may obtain information relating to financial and statistical
reports of the Corporation and information relating to their own share ownership
by contacting the Corporation's Director of Shareholder Relations at
845-486-5383 or by writing to the Director of Shareholder Relations at 284 South
Avenue, Poughkeepsie, New York 12601-4879.

Shareholder communications related to any aspect of the Corporation's
business are also welcome. Space for comments is provided on the proxy given to
shareholders of record.

Shareholders may also submit written communications to the Corporation in
care of the Corporate Secretary at 284 South Avenue, Poughkeepsie, New York
12601-4879. Although all communications may not be answered on an individual
basis, they do assist the Directors and management in addressing the needs of
shareholders.

Each such communication received by the Corporate Secretary from a
shareholder is reviewed by him to determine how it should be handled. Not all
communications from shareholders are communicated directly to the Board of
Directors.

If the subject matter of a communication from a shareholder is a concern or
complaint regarding the accuracy or integrity of the Corporation's accounting,
auditing, or financial reporting, the Corporate Secretary follows the procedures
established by the Board of Directors for "Receiving and Handling Concerns or
Complaints Regarding Accounting, Auditing or Financial Reporting." These
procedures are set forth in Section IV of the Corporation's Code of Business
Conduct and Ethics, which is available on the Corporation's Internet site at
www.chenergygroup.com.

A shareholder may send a written communication to the Board of Directors or
to specific individual Directors by addressing the communication to the Board of
Directors or to an individual Director and submitting the communication to the
Corporation in care of the Corporate Secretary at 284 South Avenue,
Poughkeepsie, New York 12601-4879.

The Vice Chairman of the Board of Directors, Heinz K. Fridrich, is an
independent Director and has been designated by the Board to preside at the
executive sessions of the non-management Directors.

If interested parties wish to make a concern known to the non-management
Directors, they may do so in a writing submitted in accordance with the
procedures established by the Board of Directors for "Receiving and Handling
Concerns or Complaints Regarding Accounting, Auditing or Financial Reporting."
These procedures are set forth in Section IV of the Corporation's Code of
Business Conduct and Ethics, which is available on the Corporation's Internet
site at www.chenergygroup.com. Each such writing submitted in accordance with
these procedures will be communicated directly to Mr. Fridrich.

SHAREHOLDER PROPOSALS

A shareholder who would like to have a proposal included in the
Corporation's 2006 Proxy Statement must submit the proposal so that the
Corporate Secretary receives it no later than October 31, 2005. The rules of the
Securities and Exchange Commission contain procedures governing shareholder
proposals that may be included in a proxy statement. In addition, the
Corporation's By-laws must be followed.

The By-laws require any shareholder wishing to make a nomination for
Director or to introduce a proposal or other business at the Corporation's 2006
Annual Meeting of Shareholders to give the Corporation advance written notice
thereof no earlier than January 28, 2006, and no later than February 27, 2006.

A copy of the Corporation's By-laws may be obtained by writing to the
Corporate Secretary, CH Energy Group, Inc., 284 South Avenue, Poughkeepsie, New
York 12601-4879.

CURRENT DIRECTORS, CLASSES, AND TERMS OF OFFICE

The Corporation's Restated Certificate of Incorporation and By-laws require
that the Board of Directors be divided into three classes as nearly equal in
number as possible with staggered terms so that, at each Annual Meeting of
Shareholders, one class of Directors will stand for election to a three-year
term. The Directors currently in classes are listed below; their respective
terms of office expire as of the Annual Meeting of Shareholders in the years
listed below:

CLASS I - 2007
--------------
Edward F. X. Gallagher
Steven V. Lant
Jeffrey D. Tranen

CLASS II - 2005
---------------
Steven M. Fetter
Stanley J. Grubel

CLASS III - 2006
----------------
Heinz K. Fridrich
E. Michel Kruse

On December 17, 2004, the Board of Directors increased the number of
Directors by one to a total of nine, and elected Margarita K. Dilley as a
Director. Ms. Dilley, as a Director elected by the Board, serves without a class
designation until the Annual Meeting. If elected at the Annual Meeting, Ms.
Dilley will be a Class II Director with a term expiring at the Annual Meeting of
Shareholders in 2008. Paul J. Ganci, formerly a Class III director, resigned
from the Board of Directors effective January 1, 2005. On February 11, 2004, the
Board of Directors decreased the number of Directors by one to a total of eight.

The nominees for Director receiving a plurality of the votes cast at the
Annual Meeting in person or by proxy shall be elected.

The nominees for these Directorship positions are set forth in Proposal No.
1 below. Although the Board of Directors does not contemplate that the nominees
will be unable to serve, should such a situation arise prior to the Annual
Meeting, the proxies will be voted in accordance with the best judgment of the
persons acting thereunder.

PROPOSAL NO. 1 - ELECTION OF DIRECTORS

The Board of Directors proposes the following nominees to be elected to the
Board of Directors at the Annual Meeting, their terms to expire at the Annual
Meeting of Shareholders in the year noted below or until a successor is elected
and qualified. The Board of Directors recommends a vote in favor of each such
nominee:

CLASS II - 2008
---------------
Margarita K. Dilley
Steven M. Fetter
Stanley J. Grubel

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS
PROPOSAL NO. 1.

NOMINEES AND OTHER DIRECTORS

The following table sets forth (i) the name and age of each nominee and of
each Director of the Corporation whose term of office continues after the Annual
Meeting, (ii) the principal occupation and employment of each person during the
past five years, (iii) positions and offices with the Corporation held by each
person, and (iv) the period during which each has served as a Director of the
Corporation. Each nominee is currently serving as a Director of the Corporation.

PRINCIPAL OCCUPATION AND BUSINESS PERIOD OF
EXPERIENCE DURING THE PAST POSITIONS OR OFFICES WITH SERVICE AS
NAME AND AGE FIVE YEARS(1) THE CORPORATION(1) DIRECTOR BEGAN
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NOMINEES FOR ELECTION AS CLASS II DIRECTORS SERVING FOR A TERM EXPIRING IN 2008

Margarita K. Dilley ............... Consultant; Vice President, Chief Director 2004
47 Financial Officer and director of
Astrolink International LLC,
[PHOTO OMITTED] 1998-2004; Director of Strategy
& Corporate Development and
Treasurer of INTELSAT, 1992-
1998; Treasurer, Comsat
Corporation, 1987-1992
Washington, D.C.

Steven M. Fetter .................. President, Regulation UnFettered; Director; Chairman of the 2002
52 Board member and Chairman of the Audit Committee of the
National Regulatory Research Board of Directors
[PHOTO OMITTED] Institute (at Ohio State University),
Keystone Center Energy Program,
Regulatory Information Technology
Consortium; Group Head and Managing
Director, Global Power Group,
FitchRatings, 1998-2002; Chairman and
Commissioner of the Michigan Public
Service Commission, 1987-1993; Acting
Associate Deputy Under Secretary of
Labor, U.S. Department of Labor, 1987
Fair Haven, NJ

Stanley J. Grubel ................. Consultant; Director, Asyst Director; Chairman of the 1999;
62 Technologies, Inc., CA; Vice Compensation Committee served as
President and General Manager, of the Board of Directors a Director
[PHOTO OMITTED] Philips Semiconductor of Central
Manufacturing, Inc., 2000-2001; Hudson
Chief Executive Officer, MiCRUS, beginning in
1995-2000 1999(2)
Irvington, NY

INCUMBENT CLASS III DIRECTORS SERVING FOR A TERM EXPIRING IN 2006

Heinz K. Fridrich ................. Industry Professor Emeritus, Director; Vice Chairman 1999;
71 University of Florida at Gainesville; of the Board of Directors served as
Director, Veeco Instruments, NY; and Chairman of the a Director
[PHOTO OMITTED] Director, Solectron Corp., CA Governance and of Central
Fernandina Beach, FL Nominating Committee Hudson
of the Board of Directors beginning in
1988(2)

E. Michel Kruse ................... Retired; Chairman and Senior Director; Chairman of the 2002
60 Advisor - Financial Institutions Strategy and Finance
Group of UBS Warburg, 2000-2002; Committee of the
[PHOTO OMITTED] Chief Executive of BHF- Bank AG, Board of Directors
Frankfurt, Germany, 1997-1999;
Chief Financial Officer and Vice
Chairman of the Board of The
Chase Manhattan Corporation,
1992-1996
Greenwich, CT

INCUMBENT CLASS I DIRECTORS SERVING FOR A TERM EXPIRING IN 2007

Edward F. X. Gallagher ............ Chairman of a group of Director 1999; served
71 transportation companies, including as a Director
Gallagher Truck Center, Leprechaun of Central
[PHOTO OMITTED] Lines, and TLC Tours Hudson
Newburgh, NY beginning in
1984(2)

Steven V. Lant .................... Present positions since April 2004; Chairman, President and 2002
48 President and Chief Executive Chief Executive Officer of
Officer of the Corporation, the Corporation; Chairman
[PHOTO OMITTED] 2003-2004; Chief Operating and Chief Executive
Officer and Chief Financial Officer of Central Hudson;
Officer of the Corporation, Chairman, President and
2002-2003; Chief Financial Chief Executive Officer
Officer of the Corporation, of of CHEC; Director of
Central Hudson, and of Central the Corporation, of
Hudson Energy Services, Inc. Central Hudson, and
("CH Services"), 2001-2002; Chief of CHEC
Financial Officer and Treasurer of
the Corporation, of Central Hudson,
and of CH Services, 1999-2001
Poughkeepsie, NY

Jeffrey D. Tranen ................. Senior Managing Director, Lexecon Director 2004
58 Inc., MA; Director, Doble
Engineering Company, MA;
[PHOTO OMITTED] Director, Oglethorpe Power
Corporation, GA, 2000-2004;
Director, Earthfirst Technologies
Incorporated, FL, 2001-2002;
President and Chief Operating
Officer, Sithe Northeast Inc.,
New York, 1999-2000; President
and Chief Executive Officer,
California Independent System
Operator, CA, 1997-1999
New York, NY

---------
(1) Based on information furnished to the Corporation as of December 31, 2004.

(2) Resigned as a Director of Central Hudson, effective December 15, 1999, when
Central Hudson became a subsidiary of Energy Group.

GOVERNANCE OF THE CORPORATION

The Board of Directors has eight members, seven of whom are independent
under the categorical standards for independence contained in the Listed Company
Manual of the New York Stock Exchange. Only independent Directors serve on the
Corporation's Audit Committee, Governance and Nominating Committee, and
Compensation Committee.

During 2004, the Board of Directors held eleven meetings and the Committees
held a total of twenty-three meetings. Seven Directors then serving on the Board
attended all of the Board meetings, two Directors then serving on the Board
attended 91% of all the Board meetings and one Director then serving on the
Board attended 82% of all Board meetings. Director attendance for meetings of
each of the Compensation Committee and the Governance and Nominating Committee
was 100%. Director attendance for Audit Committee meetings ranged from 89% to
100%. Director attendance for Strategy and Finance Committee meetings ranged
from 80% to 100%.

The Board of Directors has adopted statements of governance principles set
forth in a document entitled "Corporate Governance." Section I of this document
sets forth the Corporation's statement of "Our Principles and Culture." Section
II of this document sets forth the Corporation's statement of "Our Governance
Guidelines." The entire document is available on the Corporation's Internet site
at www.chenergygroup.com. A copy of the Corporation's governance principals may
be obtained by writing to the Corporate Secretary, CH Energy Group, Inc., 284
South Avenue, Poughkeepsie, New York 12601-4879.

COMMITTEES OF THE BOARD OF DIRECTORS

The Corporation's standing Committees are the Audit Committee, the
Compensation Committee, the Governance and Nominating Committee, and the
Strategy and Finance Committee. The Audit Committee, the Compensation Committee,
the Governance and Nominating Committee, and the Strategy and Finance Committee
are described below. Based on the recommendation of the Governance and
Nominating Committee, the Executive Committee designated by the Board of
Directors at the 2003 Annual Meeting of the Board, although permitted by the
By-laws, was dissolved by Board action on April 26, 2004. The Board of Directors
has not designated an Executive Committee to serve since that date.

AUDIT COMMITTEE

The members of the Audit Committee are Margarita K. Dilley, Steven M.
Fetter, Heinz K. Fridrich, Edward F. X. Gallagher, and E. Michel Kruse. Mr.
Fetter is the Chairman of the Audit Committee. The Audit Committee met nine
times in 2004.

The Board of Directors has determined that these Committee members have no
financial or personal ties to the Corporation (other than director compensation
and equity ownership as described in this proxy statement) and meet the New York
Stock Exchange categorical standards for independence.

The Board of Directors has also determined that E. Michel Kruse meets the
Securities and Exchange Commission criteria for an "audit committee financial
expert" and the New York Stock Exchange standard of having accounting or related
financial management expertise. Mr. Kruse's extensive background and experience
includes serving as the Chief Financial Officer and Vice Chairman of the Board
of The Chase Manhattan Corporation. In addition, the Board of Directors has
determined that Margarita K. Dilley meets the Securities and Exchange Commission
criteria for an "audit committee financial expert" and the New York Stock
Exchange standard of having accounting or related financial management
expertise. Ms. Dilley's extensive background and experience includes serving as
the Chief Financial Officer of Astrolink International LLC.

The function of the Audit Committee is to assist the Board of Directors in
its oversight of (a) the accounting and financial reporting processes of the
Corporation, and (b) the auditing of the financial statements of the
Corporation, and is discussed in the Report of the Audit Committee, which is set
forth beginning on page 14 of this proxy statement.

The Audit Committee operates under a written Charter which sets out the
functions and responsibilities of this Committee. A copy of the Charter is
available on the Corporation's Internet site at www.chenergygroup.com, and may
be obtained by writing to the Corporate Secretary, CH Energy Group, Inc., 284
South Avenue, Poughkeepsie, New York 12601-4879.

COMPENSATION COMMITTEE

The members of the Compensation Committee are Steven M. Fetter, Stanley J.
Grubel, and Jeffrey D. Tranen. Mr. Grubel is the Chairman of the Compensation
Committee. The Compensation Committee met four times in 2004.

The function of the Compensation Committee is (a) to assist the Board of
Directors in its oversight of the executive compensation and benefits programs
of the Corporation and (b) to produce, in accordance with the rules of the
Securities and Exchange Commission, an annual report on executive compensation
for inclusion in the Corporation's annual proxy statement.

The Compensation Committee operates under a written Charter which sets out
the functions and responsibilities of this Committee. A copy of the Charter is
available on the Corporation's Internet site at WWW.CHENERGYGROUP.COM, and may
be obtained by writing to the Corporate Secretary, CH Energy Group, Inc., 284
South Avenue, Poughkeepsie, New York 12601-4879.

GOVERNANCE AND NOMINATING COMMITTEE

The members of the Governance and Nominating Committee are Steven M.
Fetter, Heinz K. Fridrich, and E. Michel Kruse. Mr. Fridrich is the Chairman of
the Governance and Nominating Committee. The Governance and Nominating Committee
met five times in 2004.

The function of the Governance and Nominating Committee is to assist the
Board of Directors in (a) organizing itself to effectively carry out its
responsibilities and (b) nominating for election to the Board persons who have
experience, backgrounds, and skills appropriate for the current needs of the
Corporation.

The Governance and Nominating Committee operates under a written Charter
which sets out the functions and responsibilities of this Committee. A copy of
the Charter is available on the Corporation's Internet site at
www.chenergygroup.com, and may be obtained by writing to the Corporate
Secretary, CH Energy Group, Inc., 284 South Avenue, Poughkeepsie, New York
12601-4879.

STRATEGY AND FINANCE COMMITTEE

The members of the Strategy and Finance Committee are Edward F. X.
Gallagher, Stanley J. Grubel, E. Michel Kruse, Steven V. Lant, and Jeffrey D.
Tranen. Mr. Kruse is the Chairman of the Strategy and Finance Committee.

The function of the Strategy and Finance Committee is to assist the Board
of Directors in its oversight of the Corporation's strategic direction, business
and financial planning, evaluation of contingencies, financing policies, and
consistent implementation of action plans.

The Strategy and Finance Committee operates under a written Charter which
sets out the functions and responsibilities of this Committee. A copy of the
Charter is available on the Corporation's Internet site at

www.chenergygroup.com, and may be obtained by writing to the Corporate
Secretary, CH Energy Group, Inc., 284 South Avenue, Poughkeepsie, New York
12601-4879.

DIRECTOR NOMINATION PROCESS

The Governance and Nominating Committee of the Board of Directors is
responsible for identifying, evaluating, and recommending to the Board nominees
for election as Directors of the Corporation.

The Governance and Nominating Committee seeks to nominate persons for
election to the Board of Directors who have experience, backgrounds, and skills
appropriate for the current needs of the Corporation. In carrying out the
nomination process, the Committee works to identify potential candidates and
welcomes recommendations from other members of the Board, members of management,
shareholders, and other interested persons. From time to time, the Committee
also may retain a professional search firm to assist in identifying and
evaluating candidates. In this connection, Margarita K. Dilley, who was recently
elected as a Director of the Corporation and who is standing for election as a
Class II Director at this Annual Meeting, was recommended to the Governance and
Nominating Committee by the professional search firm of Russell Reynolds
Associates, Inc. as a potential candidate for election to the Board.

On an annual basis, the Governance and Nominating Committee reviews the
current size, composition, and organization of the Board and of its Committees,
determines future needs, and makes recommendations to the Board as appropriate.
The Committee evaluates Director candidates, including incumbent Directors, and
seeks to recommend nominees who would strengthen the Board and fill needs for
particular skills or attributes among the Directors. This evaluation is
performed in the context of Board-approved "Criteria for Selecting New
Directors" and of Sections 2, 3, 4, and 5 of the Corporation's Governance
Guidelines. These Sections of the Governance Guidelines relate to the functions
of the Board, the responsibilities and duties of Directors, the desired
qualifications of Directors, and the requirement that a majority of Directors be
independent in accordance with the Listed Company Manual of the New York Stock
Exchange. The Corporation's "Criteria for Selecting New Directors" and its
Governance Guidelines are available on the Corporation's Internet site at
www.chenergygroup.com. All potential candidates, including persons recommended
by security holders, are evaluated in the same manner and according to the same
standards.

When the Governance and Nominating Committee identifies a candidate that
merits in-depth consideration, the Committee invites the Chairman of the Board,
President and Chief Executive Officer to assess the person's qualifications and
to discuss his views about the person with the Committee; this assessment may
involve the Chairman of the Board, President and Chief Executive Officer meeting
with the person.

When a candidate is identified by the Governance and Nominating Committee
as a potential nominee for election as a new Director of the Corporation, at
least two members of the Governance and Nominating Committee meet with the
person in face-to-face interviews. Subsequently, the Committee meets to discuss
and consider candidates' qualifications and then chooses, by majority vote of
the Committee members, the persons it wishes to recommend to the Board as
nominees for election as Directors of the Corporation.

A shareholder wishing to recommend a person for consideration as a
potential candidate for election to the Board of Directors may do so by sending
a written communication to the Governance and Nominating Committee in care of
the Corporate Secretary at 284 South Avenue, Poughkeepsie, New York 12601-4879.
The submission to the Governance and Nominating Committee must include (a) a
written statement signed by the potential candidate confirming that he or she
wishes to be considered as a candidate and would be willing and able to serve as
a Director if elected and (b) a writing signed by the shareholder that includes
sufficient information and specificity to (i) enable the Committee to confirm
the writer's status as a shareholder of the Corporation and (ii) allow the
Committee to evaluate the potential candidate in the context of the
Corporation's "Criteria for Selecting New Directors" and its Governance
Guidelines.

BOARD MEMBER ATTENDANCE AT ANNUAL MEETING OF SHAREHOLDERS

Directors are expected to attend the Annual Meeting of Shareholders, and it
is the practice of the Corporation to introduce each Director at the Annual
Meeting of Shareholders.

Each of the current members of the Corporation's Board of Directors, except
for Ms. Dilley, attended the 2004 Annual Meeting of Shareholders. Ms. Dilley
became a member of the Board of Directors in December 2004.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Only independent Directors served on the Compensation Committee in 2004.
Mr. Grubel served as the Chairman of the Compensation Committee in 2004. Messrs.
Fetter and Tranen continue to be members of the Compensation Committee. No
inside Directors serve on this Committee. No Compensation Committee interlock
relationships existed in 2004 for the Corporation or its subsidiary companies.

CODE OF BUSINESS CONDUCT AND ETHICS

The Corporation has a Code of Business Conduct and Ethics which sets forth
the commitment of the Corporation to conduct its business in accordance with the
highest ethical standards and all applicable laws, rules, and regulations. The
Code of Business Conduct and Ethics, adopted by the Board of Directors, states
the guiding principles by which the Corporation operates and conducts its daily
business with its shareholders, customers, suppliers, government authorities,
and employees. These principles apply to all Directors, officers, and employees.

Employees are encouraged to report any conduct that they believe in good
faith to be an actual or apparent violation of the Code of Business Conduct and
Ethics.

Section II of the Code of Business Conduct and Ethics, in accordance with
Section 406 of the Sarbanes-Oxley Act of 2002, constitutes the Corporation's
Code of Ethics for Senior Financial Officers. This section, in conjunction with
the remainder of the Code of Business Conduct and Ethics, is intended to promote
honest and ethical conduct, full and accurate reporting, and compliance with
laws as well as other matters. A copy of the Code of Business Conduct and Ethics
is available on the Corporation's Internet site at www.chenergygroup.com. The
Corporation has also filed a copy of the Code of Business Conduct and Ethics
with the Securities and Exchange Commission as an exhibit to the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2003. A copy of the
Corporation's Code of Business Conduct and Ethics may be obtained free of charge
by writing to the Corporate Secretary, CH Energy Group, Inc., 284 South Avenue,
Poughkeepsie, New York 12601-4879.

If the Corporation's Board of Directors amends Section II of the Code of
Business Conduct and Ethics or grants any waiver to Section II of the Code of
Business Conduct and Ethics, which waiver relates to issues concerning actual or
apparent conflicts of interest, disclosures in the Corporation's Securities and
Exchange Commission filings or public communications, compliance with laws,
rules, or regulations, or internal compliance with the Code of Business Conduct
and Ethics within the Corporation, the Corporation will post such information on
its Internet site at www.chenergygroup.com.

COMPENSATION OF DIRECTORS OF THE BOARD

In May 2004, the Compensation Committee recommended, and the Board
approved, a new compensation program for non-employee Directors. This new
program was made effective as of June 1, 2004, with respect to annual cash
retainer compensation, and as of January 1, 2004, with respect to equity
compensation.

Under the program that was in effect prior to June 1, 2004, each
non-employee Director received an annual retainer of $22,000 and $1,250 for
attendance at each meeting of the Board and each meeting of any Committee of the
Board of which the Director was a member or an invitee. In addition, 600 phantom
shares of the Corporation's Common Stock were credited each year to each
non-employee Director's account under the Directors and Executives Deferred
Compensation Plan.

The new program is designed to enhance the Corporation's ability to attract
and retain highly qualified Directors and to align their interests with the
long-term interests of the Corporation's shareholders. In this regard, the
Compensation Committee recommended that the new program consist of both a cash
component,

designed to compensate non-employee Directors for their service on the Board and
its Committees, and an equity component, designed to align the interests of
non-employee Directors and shareholders. The Corporation eliminated the
per-meeting fee component of the program. As in the past, Directors who are
employees of the Corporation receive no compensation for their services on the
Board.

CASH COMPENSATION. Under the new program, each non-employee Director is
entitled to receive an annual cash retainer of $50,000. Effective as of January
1, 2005, this cash retainer will be paid quarterly in advance in four equal
installments to each person serving as a non-employee Director at the time when
the particular quarterly payment is made.

For 2004, the five persons who served as non-employee Directors during the
entire year (i.e., all non-employee Directors other than Messrs. Ganci and
Tranen) received their annual cash retainer compensation for the first five
months of the year under the prior program and their annual cash retainer
compensation for the remainder of the year under the new program. As a result,
each of these Directors received a total of $38,338 as their annual cash
retainer compensation with respect to 2004.

Mr. Tranen was elected as a non-employee Director in February 2004. He
received annual cash retainer compensation for four months under the prior
program and for seven months under the new program. As a result, he received a
total of $36,500 as his annual cash retainer compensation with respect to 2004.

Mr. Ganci retired from his employment with the Corporation effective May 1,
2004. He continued to serve on the Board as a non-employee Director through
December 31, 2004. He received annual cash retainer compensation for one month
under the prior program and annual cash retainer compensation for seven months
under the new program. As a result, he received a total of $31,000 as his annual
cash retainer compensation with respect to 2004.

The amounts of the additional annual retainers paid in 2004 to non-employee
Directors for service as a Committee Chair or as Vice Chairman of the Board were
not changed by the new compensation program. Mr. Fridrich received an annual
retainer in the amount of $7,500 for his service as Vice Chairman of the Board
and an annual retainer of $7,500 for his service as Chairman of the Governance
and Nominating Committee. Mr. Grubel received an annual retainer of $7,500 for
his service as Chairman of the Compensation Committee. Mr. Fetter received an
annual retainer of $10,000 for his service as Chairman of the Audit Committee.
Mr. Kruse received an annual retainer of $7,500 for his service as Chairman of
the Strategy and Finance Committee.

EQUITY COMPENSATION. As noted above, under the prior program, each
non-employee Director received annual equity compensation consisting of 600
phantom shares of the Corporation's Common Stock. These shares were credited to
each Director's account under the Directors and Executives Deferred Compensation
Plan. The program required that the credit remain invested in phantom shares
until the termination of the Director's service on the Board and be paid only in
cash after termination of Board service.

Under the new program, effective as of January 1, 2004, the equity
component of annual compensation for each non-employee Director is fixed at a
number of phantom shares of the Corporation's Common Stock having an aggregate
value approximately equal to $50,000. These shares are credited to each
Director's account under the Directors and Executive Deferred Compensation Plan.
The program requires this credit to remain invested in phantom shares until the
termination of the Director's service on the Board and to be paid only in cash
after termination of Board service. Effective as of January 1, 2005, the number
of phantom shares to be credited to each Director's account will be calculated
on the basis of the closing price of the Corporation's Common Stock on the first
Tuesday following the first Monday of January in each year. The phantom shares
will be credited in four equal installments to the account of each person
serving as a non-employee Director at the time when the particular quarterly
installment is credited.

For 2004, each non-employee Director serving on the Board on January 1,
2004, received a credit under the prior program of 600 phantom shares. Mr.
Tranen received a credit of 550 phantom shares. Mr. Ganci received a credit of
400 phantom shares.

For purposes of the new program, the 600 phantom shares awarded under the
prior program to non-employee Directors other than Mr. Tranen and Mr. Ganci were
valued on the basis of the closing price of the Corporation's Common Stock on
January 5, 2005. Mr. Tranen's and Mr. Ganci's phantom shares were valued on the
basis of the closing price of the Corporation's Common Stock on the first
business day following the respective dates on which they became non-employee
Directors.

Taking into account the value of the phantom shares that had already been
awarded, additional phantom shares were credited to the account of each
non-employee Director, other than Mr. Tranen and Mr. Ganci, in order to provide
the Director with a total value of approximately $50,000 in equity compensation
for the year. Mr. Tranen and Mr. Ganci received credits for additional phantom
shares in order to provide them with total equity compensation for the year of
$45,833 and $33,330, respectively. The additional phantom shares were all valued
on the basis of the closing price of the Corporation's Common Stock on May 21,
2004, which was the date of the regularly scheduled Board meeting at which the
Board adopted the new compensation program for non-employee Directors. In
aggregate, each non-employee Director other than Mr. Tranen and Mr. Ganci
received 1,107 phantom shares as equity compensation for 2004. Mr. Tranen and
Mr. Ganci received aggregate amounts of 992 phantom shares and 730 phantom
shares, respectively. For additional information regarding the Directors and
Executives Deferred Compensation Plan, please see the subcaption "Directors and
Executives Deferred Compensation Plan" at page 23 of this proxy statement.

STOCK PLAN FOR OUTSIDE DIRECTORS

In 2003, the Corporation amended the Stock Plan for Outside Directors
("Stock Plan") to provide that no further benefits would be earned under the
Stock Plan for service as a non-employee Director following July 1, 2003. In
addition, the Stock Plan was amended to provide each current non-employee
Director with a one-time opportunity to elect to receive, in lieu of receiving
any benefits under the Stock Plan, a credit of phantom shares of Common Stock to
his or her account under the Directors and Executives Deferred Compensation
Plan, which credit was in an amount equal to the actuarial equivalent of the
benefits he or she had earned under the Stock Plan. All of the then-current
non-employee Directors elected to receive the phantom shares of Common Stock.
Therefore, the Stock Plan currently is maintained solely for the benefit of
non-employee Directors who retired from the Board prior to July 1, 2003. The
Stock Plan was also amended to provide that all distributions to those retired
non-employee Directors will be made in cash rather than in shares of Common
Stock.

For additional information, see the subcaption "Directors and Executives
Deferred Compensation Plan" at page 23 of this proxy statement.

LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

The Corporation's Long-Term Performance-Based Incentive Plan, approved by
shareholders at the 2000 Annual Meeting of Shareholders and subsequently
amended, became effective January 1, 2000 (as amended, the "Incentive Plan").
The purposes of the Incentive Plan are to provide key executives with long-term
compensation incentives that are tied to performance and to create increased
shareholder value, and for non-employee Directors, to provide additional equity
compensation. With respect to non-employee Directors, the Incentive Plan
permits, upon authorization of the Compensation Committee, an annual grant of a
non-qualified stock option for the purchase of 1,000 shares of Common Stock to
each non-employee Director. If such grant were made, the option would have an
exercise price equal to the fair market value of Common Stock on the date of
grant, would have a term of ten years, and would have been exercisable on and
after the date of grant. The Compensation Committee has determined that,
consistent with the Corporation's goals and objectives, it will likely be more
appropriate in the future for non-employee Directors to receive phantom shares
of Common Stock under the Directors and Executives Deferred Compensation Plan
rather than stock options pursuant to the Incentive Plan. For additional
information, see the subcaption "Compensation of Directors of the Board" on page
10 of this proxy statement and the subcaption "Directors and Executives Deferred
Compensation Plan" at page 23 of this proxy statement.

SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS

The following table lists the number of shares of equity securities of the
Corporation beneficially owned by each of the Directors, each executive officer
listed in the table under the caption "Executive Compensation," by beneficial
owners of more than 5% of the Corporation's Common Stock, and by all Directors
and executive officers of the Corporation and of its subsidiary companies as a
group:

AMOUNT AND NATURE OF % OF THE
BENEFICIAL OWNERSHIP CORPORATION'S
OF THE CORPORATION'S COMMON
NAME OF BENEFICIAL OWNER COMMON STOCK (1)(2) STOCK (3)
------------------------ -------------------- -------------
Margarita K. Dilley ....................... 0 --
Steven M. Fetter .......................... 1,275 Less than 1%
Heinz K. Fridrich ......................... 8,625 Less than 1%
Edward F. X. Gallagher .................... 8,111 Less than 1%
Stanley J. Grubel ......................... 5,672 Less than 1%
E. Michel Kruse ........................... 1,100 Less than 1%
Steven V. Lant ............................ 10,418 Less than 1%
Jeffrey D. Tranen ......................... 0 --
Joseph J. DeVirgilio, Jr. ................. 3,969 Less than 1%
Donna S. Doyle ............................ 2,201 Less than 1%
Paul J. Ganci (4) ......................... 24,146 Less than 1%
Carl E. Meyer ............................. 6,985 Less than 1%
Arthur R. Upright ......................... 4,022 Less than 1%
Gabelli Asset Management Inc. (5) ......... 1,495,150 9.24%
Manulife Financial Corporation (6) ........ 1,016,533 6.45%
All Directors and Executive Officers
as a Group (19 Persons) ................. 81,390 Less than 1%

----------
(1) Based on information furnished to the Corporation by the Directors and
executive officers of the Corporation as of December 31, 2004.

(2) Includes shares of Common Stock that may be acquired through the exercise
of options that are exercisable currently. The persons who have such
options and the number of shares which may be acquired is as follows: Mr.
Fetter (1,000); Mr. Fridrich (4,000); Mr. Gallagher (4,000); Mr. Ganci
(19,100); Mr. Grubel (4,000); Mr. Kruse (1,000); Mr. Lant (5,360); all
other executive officers as a group (10,000).

(3) The percentage ownership calculation for each beneficial owner has been
made on the basis of the amount of outstanding shares of the Corporation's
Common Stock as of the record date.

(4) Includes 624 shares owned by the spouse of Mr. Ganci. The shares owned by
Mrs. Ganci are considered to be beneficially owned by Mr. Ganci only for
the purpose of this proxy statement and Mr. Ganci disclaims any beneficial
interest in these shares for all other purposes.

(5) Based upon a Schedule 13 D/A filed with the Securities and Exchange
Commission on December 5, 2002, by Gabelli Asset Management Inc. on behalf
of: Gabelli Funds, LLC, GAMCO Investors, Inc., MJG Associates, Inc.,
Gabelli & Co. Inc. Profit Sharing Plan, Gabelli Foundation, Inc., and
Gabelli Group Capital Partners, Inc. As reported on said Schedule 13 D/A,
as of September 30, 2002, the Corporation's Common Stock is beneficially
owned as follows: Gabelli Funds--369,400 (2.28%), GAMCO--1,116,250 (6.90%),
Gabelli Foundation, Inc.--6,000 (0.04%), Gabelli & Co. Inc. Profit Sharing
Plan--2,000 (0.01%), MJG Associates--1,500 (0.01%). GAMCO does not have the
authority to vote 51,800 of the reported shares. The principal business
address for each of the foregoing, other than MJG Associates and Gabelli
Foundation is One Corporate Center, Rye, New York 10580. The principal
business address for MJG Associates is 8 Sound Shore Drive, Greenwich,
Connecticut 06830. The principal business address for Gabelli Foundation is
165 West Liberty Street, Reno, Nevada 89501.

(6) Based upon a Schedule 13G filed with the Securities and Exchange Commission
on February 7, 2005, by Manulife Financial Corporation. As reported on said
Schedule 13G, as of December 31, 2004, the Corporation's Common Stock is
beneficially owned as follows: Manulife Financial Corporation--3,833
(.0002%) and Manulife Financial Corporation's indirect wholly owned
subsidiary John Hancock Financial Services, Inc.'s indirect wholly owned
subsidiary, John Hancock Advisers, LLC--1,012,700 (6.45%). Manulife
Financial

Corporation does not have the authority to vote the shares held by John
Hancock Advisers, LLC. The principal business address for Manulife
Financial Corporation is 200 Bloor Street, East, Toronto, Ontario, Canada
M4W 1E5. The principal business address for John Hancock Financial
Services, Inc. is John Hancock Place, P.O. Box 111, Boston, Massachusetts
02117. The principal business address for John Hancock Advisers, LLC is 101
Huntington Avenue, Boston, Massachusetts 02199.

STOCK EQUIVALENTS OWNERSHIP OF DIRECTORS

The following table sets forth the number of phantom shares of Common
Stock, as of December 31, 2004, credited to the accounts of the Corporation's
participating non-employee Directors under the Directors and Executives Deferred
Compensation Plan, including reinvested dividends (rounded to the nearest whole
number). Under the Directors and Executives Deferred Compensation Plan, payments
are made in cash and are generally made following termination of service as a
Director based on the market value of the Common Stock at the time of
termination. For additional information, see the subcaption "Directors and
Executives Deferred Compensation Plan" at page 23 of this proxy statement.

NAME NUMBER OF PHANTOM SHARES
---- ------------------------
Margarita K. Dilley 0
Steven M. Fetter 1,665
Heinz K. Fridrich 2,547
Edward F. X. Gallagher 2,539
Stanley J. Grubel 2,147
E. Michel Kruse 1,538
Jeffrey D. Tranen 2,207
Total(a) 12,643

----------
(a) The total for each individual is less than 1% of the outstanding shares of
Common Stock, and the total for the group of all participating non-employee
Directors (7 persons) is less than 1% of the outstanding shares of Common
Stock, both percentages calculated as of the record date.

INSURANCE

The Corporation provides liability insurance for its Directors and
officers. Federal Insurance Company (CHUBB), Associated Electric and Gas
Insurance Services, Ltd., Energy Insurance Mutual, and American International
Companies are the principal underwriters of the current coverage, which extends
until June 1, 2005. The annual cost of this coverage is approximately $1.08
million.

CERTIFICATIONS

In May 2004, the Corporation submitted a New York Stock Exchange "Section
12(a) CEO Certification" to the New York Stock Exchange. The Chief Executive
Officer and the Chief Financial Officer certifications required by Section 302
of the Sarbanes-Oxley Act of 2002 were filed as exhibits to the Corporation's
Annual Report on Form 10-K for the year ended December 31, 2004.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors is comprised of Directors who
meet the New York Stock Exchange categorical standards for independence. The
Audit Committee operates under a written Charter adopted by the Board of
Directors, which is available at the Corporation's Internet site at
www.chenergygroup.com.

In performing its duties, the Audit Committee (i) reviews the scope of the
audit by the Corporation's independent accountants, PricewaterhouseCoopers LLP,
and related matters pertaining to the examination of the financial statements;
(ii) reviews and evaluates, at least once a year, the qualifications,
independence and performance of the independent accountants (which includes an
evaluation of the lead partner of the independent accountants); (iii) examines
the adequacy of the Corporation's internal control over financial reporting and
the Corporation's and its subsidiary companies' internal audit activities; (iv)
reviews the nature and extent of audit and non-audit services and pre-approves
such services provided by the Corporation's independent accountants; (v)
consults at least three times a year with the independent accountants regarding
financial issues; (vi) makes recommendations to the Board of Directors on the
foregoing matters as well as on the appointment of the Corporation's independent
accountants; (vii) meets regularly with the Corporation's Internal Auditing
Manager and Controller; and (viii) reviews quarterly and annual financial
statements filed with the Securities and Exchange Commission.

In 2004, the Audit Committee met with management periodically during the
year to consider the adequacy of the Corporation's internal control over
financial reporting and the objectivity of its financial reporting. The Audit
Committee discussed these matters with the Corporation's independent accountants
and with appropriate Corporation financial personnel and internal auditors. The
Audit Committee also discussed with the Corporation's senior management and
independent accountants the process used for certifications by the Corporation's
Chief Executive Officer and the Chief Financial Officer, which certifications
are required for certain of the Corporation's filings with the Securities and
Exchange Commission.

The Audit Committee also met privately at its regular meetings with both
the independent accountants and the Internal Auditing Manager, as well as with
the Controller.

For 2004, the Audit Committee has:

1. reviewed and discussed the audited financial statements with
management;

2. discussed with the independent accountants the matters required to be
discussed by Statement on Auditing Standards No. 61 (Codification of
Statements on Auditing Standards), as may be modified or supplemented;

3. received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as may be modified
or supplemented, and has discussed with and affirmed the independence
of PricewaterhouseCoopers LLP from the management of the Corporation
and its subsidiary companies; and

4. received the reports of the Chief Executive Officer and the Chief
Financial Officer relating to their evaluation of the Corporation's
internal control over financial reporting.

Based on the review and discussions referred to above and additional
matters deemed relevant and appropriate by the Audit Committee, the Audit
Committee recommended to the Corporation's Board of Directors that the audited
financial statements be included in the Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 2004, for filing with the Securities and
Exchange Commission.

Steven M. Fetter, Chairman
Margarita K. Dilley
Heinz K. Fridrich
Edward F. X. Gallagher
E. Michel Kruse

The Audit Committee also considered whether the provision of services for
which fees were paid under the captions "Audit-Related Fees," "Tax Fees," and
"All Other Fees" is compatible with maintaining the independence of
PricewaterhouseCoopers LLP.

In April 2000, the appointment of PricewaterhouseCoopers LLP to examine the
Corporation's financial statements for the five-year period beginning in 2000
was ratified by the shareholders of the Corporation. Representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting. The
PricewaterhouseCoopers representa-

tives will be given the opportunity to make a statement if desired and will be
available to respond to appropriate questions from shareholders.

Information on fees billed by PricewaterhouseCoopers LLP during 2004 and
2003 is provided below:

PRINCIPAL ACCOUNTING FEES AND SERVICES

PRICEWATERHOUSECOOPERS LLP 2004 2003
-------------------------- -------- --------
Audit Fees .............................................. $535,100 $329,250
Audit-Related Fees ...................................... $ 20,000 $ 10,000
(Includes Securities and Exchange Commission
Comment Letter review (2004) and consulting
related to the Sarbanes-Oxley Act of 2002 (2003))
Tax Fees ................................................ $ 44,755 $ 30,130
Includes review of consolidated federal and state
income tax returns and consultation regarding
IRS audit issues
All Other Fees .......................................... $ 2,310 $ 1,400
-------- --------
Includes software licensing fee for accounting
research tool and consultation regarding
competitive business subsidiaries
TOTAL ................................................... $602,165 $370,780

The Audit Committee has adopted guidelines regarding pre-approval of the
services to be provided by the Corporation's independent accountants. These
guidelines require that the Audit Committee review and approve, prior to the
start of the fiscal year, (i) an engagement letter for audit services from the
independent accountants, outlining the scope of the audit services to be
provided during the next fiscal year and including a fee proposal for such
services, and (ii) a list of and a budget for non-audit services that management
recommends be provided by the independent accountants during the next fiscal
year.

Management and the independent accountants will confirm that the
recommended non-audit services are permissible under all applicable
requirements. The Corporation has adopted a list of specific audit and non-audit
services that may be provided by the independent accountants.

If the scope or cost of the audit or non-audit services requires changes
during the fiscal year, the Audit Committee's procedures enable the Chairman of
the Audit Committee to approve such changes, up to certain dollar limits, and to
report on any such changes at the next Audit Committee meeting. The
Corporation's Vice President of Accounting and Controller is responsible for
tracking all independent accountant fees against the budgets for audit and
non-audit services and reporting on such budget issues at least annually to the
Audit Committee.

In 2004, the Audit Committee approved all of the fees set forth in the
table above under the captions "Audit-Related Fees," "Tax Fees," and "All Other
Fees."

REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors is composed entirely
of persons determined by the Corporation's Board of Directors to be independent
directors under the applicable categorical standards of the New York Stock
Exchange. Each member of the Committee also qualifies as (i) a non-employee
director under Rule 16b-3 promulgated under Section 16 of the Securities
Exchange Act of 1934, as amended and (ii) as an outside director for purposes of
Section 162(m) of the Internal Revenue Code. The Committee submits this report
to summarize the policies that the Compensation Committee applied in making
executive compensation decisions with respect to 2004.

COMPENSATION OBJECTIVES AND METHODOLOGY

The Compensation Committee seeks to achieve an executive compensation
program that attracts, retains, and motivates executive officers to create
long-term shareholder value. The design of the executive compensation program is
intended to incorporate base salary, annual short-term incentives, long-term
incentives, and retirement benefits which, in aggregate, result in total
remuneration that is approximately at the median for persons with similar
responsibilities in the relevant competitive marketplace.

In consultation with an independent compensation consulting firm, the
Compensation Committee annually reviews data from proxy statements and the
consulting firm's independent database to assess the Corporation's relative
competitive position on the following components of executive compensation:

o base salary;

o annual short-term incentives; and

o long-term incentives.

In making this assessment of relative compensation levels in the
marketplace, the Committee recognizes that job responsibilities of persons with
particular titles may vary substantially from company to company, and that a
person's title is not necessarily descriptive of a person's duties. In this
regard, and to provide an appropriate breadth of information on compensation
levels and types of job responsibilities, the Committee's independent consultant
uses its own proprietary database to assess the compensation practices of 37
electric and natural gas utilities and energy services companies in the United
States (the "Comparator Group") to identify for the Committee the compensation
levels being paid in the relevant competitive marketplace to persons with
responsibilities that are similar in scope to the responsibilities of the
Corporation's executive officers.

With respect to the compensation of each executive officer, the Committee
considers the person's level and complexity of responsibility, experience and
skills, and over-all performance in his or her position. In this connection,
Steven V. Lant, as Chairman of the Board, President and Chief Executive Officer,
provides the Compensation Committee with an annual evaluation of the performance
of each executive officer. After reviewing these evaluations, and after making
its own assessment of the performance of each such executive officer, the
Compensation Committee recommends to the independent directors on the Board, and
the independent directors approve, the compensation level for each such
executive officer of the Corporation. In 2004, the independent directors of the
Board did not reject, or modify in any material way, any recommendation made to
them by the Compensation Committee.

COMPONENTS OF COMPENSATION

BASE SALARIES AND SHORT-TERM INCENTIVES
---------------------------------------

Base salaries for executives are determined on the basis of each person's
performance, job responsibilities, level of experience and skill, and
information received from the Corporation's independent consulting firm
regarding salaries paid to persons with comparable responsibilities at companies
in the Comparator Group. The Compensation Committee also gives attention to
maintaining appropriate internal salary relationships among the Corporation's
executive officers.

Short-term incentives are developed to reward achievement of each year's
business plan objectives and to promote achievement of the Corporation's
strategy of achieving long-term shareholder value. The intent is to offer senior
executives the opportunity to earn targeted incentive cash payments that are
calculated as a percentage of each person's annual base salary. These
percentages are determined by the Compensation Committee according to each
person's position and level of responsibility. In 2004, the targeted percentages
were set by the Compensation Committee in the range of 20% to 30% of the
applicable base salary for individual executive officers other than Mr. Lant.
These percentages of base salary can be earned as incentive cash payments if
incentive performance targets for the year are achieved. Performance is measured
according to target measures established each year for thresh-

old performance, targeted performance, and superior performance. The incentive
compensation opportunity will vary, from zero to 150% of the targeted percentage
of base salary, according to the level of overall performance achieved for the
year relative to the established measures of performance. Each individual's
short-term incentive compensation amount is based on overall achievement of the
annual incentive performance targets, but it may be adjusted upwards or
downwards by up to 50% based upon an assessment of the individual's performance.

The Compensation Committee establishes annual incentive performance targets
which are primarily quantitiative and financial in nature. For 2004, the targets
related to earnings per share and, at the subsidiary level, to the achievement
of specified operational milestones. The aggregate annual cash compensation,
consisting of salary and short-term incentive awards, for executive officers
other than Mr. Lant is targeted at approximately the median level of the cash
compensation paid to persons with similar responsibilities within the Comparator
Group.

LONG-TERM INCENTIVES
--------------------

Long-term incentives have included two components in recent years: (i)
options to purchase the Corporation's Common Stock, and (ii) performance shares
that vest depending upon the Corporation's performance over a three-year
performance period.

For 2004, the Compensation Committee recommended to the independent
directors on the Board, and the independent directors agreed, that the long-term
incentives would consist solely of performance shares and that no stock options
would be issued. The number of performance shares granted to an executive
officer is based on a percentage of the individual's base salary that was in
effect at the beginning of the fiscal year. The percentages ranged, in 2004,
from 15% to 35% of the base salary for executive officers other than Mr. Lant.
These percentages are determined for each officer by the Committee according to
the person's position and level of responsibility, and are targeted at the
median amount of long-term incentive compensation that is available to persons
with similar responsibilities within the Comparator Group.

The performance shares vest after completion of a three-year performance
cycle. The number of performance shares is subject to being increased or
decreased depending on the performance of Corporation during the three-year
performance cycle; this performance is measured by comparing the annualized
total shareholder return of the Corporation with the aggregate total shareholder
return of the companies in the Edison Electric Institute Index of combination
natural gas and electric investor-owned utilities (the "EEI Index") over the
relevant three-year performance cycle.

Performance shares may be granted on a year-to-year basis, with the result
that there are normally over-lapping three-year performance cycles in effect on
a concurrent basis.

Increases or decreases in the number of performance shares to be delivered
at the end of a performance cycle depend on the quintile ranking of the
Corporation's total shareholder return relative to the total shareholder return
of the companies in the EEI Index. This comparison of performance with the EEI
Index results in executive officers receiving percentages of awarded performance
shares at the end of performance cycles as follows:

CORPORATION'S QUINTILE RANKING % OF PERFORMANCE SHARES
------------------------------ -----------------------
5 150%
4 125%
3 100%
2 50%
1 0%

Additional information concerning these performance shares is set forth on
page 23 herein.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

Mr. Lant became the President and Chief Executive Officer of the
Corporation on July 1, 2003. He became Chairman of the Board of Directors and
the Corporation's principal executive officer on April 27, 2004, following the
Annual Meeting of Shareholders. Mr. Lant's predecessor, Paul J. Ganci, stepped
down from his position as Executive Chairman of the Board at the conclusion of
the Annual Meeting of Shareholders on April 27, 2004.

The Compensation Committee evaluated the performance of Mr. Lant during
2004 and made recommendations to the independent directors of the Board
regarding Mr. Lant's compensation for 2004. These recommendations were approved
by the independent directors of the Board without material modification.

The Compensation Committee's analysis took into consideration the salary,
short-term incentives, and long-term incentives provided to the chief executive
officers of companies in a peer group of 12 utility and energy companies
operating within the United States. The criteria for inclusion of companies in
this custom peer group were that a company have between 50% and 175% of this
Corporation's annual revenues and have at least 5% of its assets invested in
non-regulated businesses. This peer group was formed on the basis of advice and
information provided to the Committee by its independent compensation consulting
firm.

The Comparator Group used for other executive officers was not used for Mr.
Lant because (i) the Committee believed his responsibilities in the position of
Chief Executive Officer match-up well with the responsibilities of chief
executive officers of other public companies, and (ii) the Committee believed it
more effective to develop a custom peer group of companies, based on size of
revenues and diversification of business activities, that more closely
corresponds to the market for executive talent perceived as relevant to Mr.
Lant's compensation.

The Comparator Group and the custom peer group are not the same as the
group of companies used in the EEI Index for comparing the Corporation's
five-year cumulative return (See page 27 herein). While the Committee believes
the EEI Index is appropriate for comparing shareholder returns, the Committee
believes the Comparator Group and the custom peer group are more appropriate
sources for information relevant to the competitive marketplace facing the
Corporation with respect to executive talent.

As Chief Executive Officer, Mr. Lant participates in the same programs and
receives compensation based on the same criteria as the other executive officers
of the Corporation. In addition, Mr. Lant's compensation also reflects the
greater policy and decision making of the Chief Executive Officer position, and
the higher level of responsibility that he bears with respect to the strategic
direction and the financial and operating results of the Corporation. In setting
Mr. Lant's compensation for 2004, the Compensation Committee also took into
consideration the relative size of the Corporation in relation to the other
companies in the custom peer group and the fact that Mr. Lant is just beginning
his service as Chief Executive Officer.

BASE SALARY
-----------

Mr. Lant's base salary was $350,000 as of January 1, 2004. This salary was
increased to $435,000 on May 1, 2004, to reflect Mr. Lant's assumption of duties
as the Chairman of the Board and the Corporation's principal executive officer.

ANNUAL INCENTIVE COMPENSATION
-----------------------------

For 2004, the percentage of Mr. Lant's base salary used in determining his
annual short-term incentive award was 45%. This percentage was applied on a
pro-rata basis to Mr. Lant's salary of $350,000 for the period from January 1,
2004, to April 30, 2004, and to his increased salary of $435,000 from May 1,
2004, to December 31, 2004. The annual incentive award to Mr. Lant for 2004 is
shown as his bonus amount in the Summary Compensation Table. In addition to the
factors discussed above, this bonus amount was based on the Corporation's
performance with respect to an earnings per share target and on the Committee's
assessment of Mr. Lant's responsiveness to problems and opportunities, and Mr.
Lant's performance with regard to the successful transitioning of executive
responsibilities from Mr. Ganci to himself during 2004.

LONG-TERM INCENTIVE COMPENSATION
--------------------------------

For 2004, the percentage of Mr. Lant's base salary used in determining his
long-term incentive award was 40% of his salary on January 1, 2004, I.E.,
$350,000. On this basis, Mr. Lant was granted 6,500 performance shares in 2004.
Additional details concerning these performance shares are set forth on page 23
herein.

SECTION 162(M) OF THE INTERNAL REVENUE CODE ("TAX CODE")
--------------------------------------------------------

The Compensation Committee and the Board of Directors have considered the
federal income tax deduction limitations established under Section 162(m) of the
Tax Code, which provide that, unless an appropriate exemption applies, a federal
income tax deduction for the Corporation for remuneration of any officer named
in the caption "Executive Compensation" (See page 21 herein) will not be allowed
to the extent this remuneration in any taxable year exceeds $1 million. To the
extent Tax Code Section 162(m) would limit the Corporation's federal income tax
deductions, the Compensation Committee intends to qualify the performance-based
compensation of the Executive Officers for full deductibility whenever possible
and consistent with the goals of the Compensation Committee's policies.

Stanley J. Grubel, Chairman
Steven M. Fetter
Jeffrey D. Tranen

EXECUTIVE COMPENSATION

The Summary Compensation Table set forth below includes compensation
information on the Chairman of the Board, President and Chief Executive Officer,
the former Executive Chairman of the Board, and each of the Corporation's other
four most highly compensated executive officers, whose salary and any bonus in
2004 exceeded $100,000, for services rendered to the Corporation and its
subsidiary or affiliated companies.

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
ANNUAL -----------------------
COMPENSATION (G) (H)
----------------------------- SECURITIES LTIP (I)
(A) (B) (C) (D) UNDERLYING PAYOUTS ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY($)(1) BONUS($)(2) OPTIONS(#)(3) ($)(4) COMPENSATION($)(5)
---------------------------- ---- ------------ ----------- ------------- -------- ------------------

STEVEN V. LANT, Chairman, 2004 $413,258 $171,105 $ 0 $ 0 $6,500
President and Chief Executive 2003 $327,500 $205,000 $ 4,400 $ 51,262 $6,000
Officer of the Corporation, 2002 $283,583 $225,385 $ 0 $ 0 $5,500
Chairman and Chief Executive
Officer of Central Hudson,
Chairman, President and
Chief Executive Officer of
CHEC

PAUL J. GANCI, Executive 2004 $263,088 $ 81,000 $ 0 $ 46,547 $3,600
Chairman of the Board of the 2003 $480,000 $320,000 $10,200 $129,913 $6,000
Corporation, Executive 2002 $440,667 $515,554 $ 0 $ 0 $5,500
Chairman of the Board of
Central Hudson and of CHEC(6)

CARL E. MEYER, Executive Vice 2004 $282,000 $ 62,816 $ 0 $ 0 $6,500
President of the Corporation and 2003 $274,500 $105,786 $ 3,600 $ 51,262 $6,000
President and Chief Operating 2002 $266,889 $200,268 $ 0 $ 0 $5,500
Officer of Central Hudson

JOSEPH J. DEVIRGILIO, JR., 2004 $220,000 $ 49,088 $ 0 $ 0 $6,500
Executive Vice President - 2003 $207,875 $ 68,846 $ 2,000 $ 31,470 $6,000
Corporate Services and 2002 $195,733 $118,538 $ 0 $ 0 $5,500
Administration of the
Corporation and of Central
Hudson; Executive Vice
President of CHEC

ARTHUR R. UPRIGHT, Senior 2004 $210,000 $ 53,550 $ 0 $ 0 $6,500
Vice President of the 2003 $193,000 $ 66,625 $ 2,000 $ 31,470 $6,000
Corporation; Senior Vice 2002 $190,644 $111,127 $ 0 $ 0 $5,500
President - Regulatory Affairs,
Financial Planning and
Accounting of Central Hudson

DONNA S. DOYLE, Vice President 2004 $195,000 $ 49,725 $ 0 $ 0 $6,500
of Accounting and Controller 2003 $178,250 $ 59,341 $ 900 $ 11,631 $5,371
of the Corporation and of 2002 $159,494 $ 64,800 $ 0 $ 0 $5,423
Central Hudson

----------
(1) This base salary amount reflects salary earned by the named executives for
the applicable fiscal year and includes amounts deferred under (i) Central
Hudson's Flexible Benefits Plan, which Plan is established pursuant to
Section #

125 of the Tax Code, which permits those electing to participate to defer
salary, within specified limits, to be applied to qualified medical and/or
child care benefit payments, (ii) Central Hudson's Savings Incentive Plan
("SIP"), a "defined contribution" plan which meets the requirements of the
Tax Code, including Tax Code Section 401(k), which, among other things,
permits, within limits, participants to tax-defer base salary, and, within
limits, provides for Central Hudson contributions to participants, and
(iii) the Corporation's Directors and Executives Deferred Compensation Plan
(more fully described herein under the sub-caption "Directors and
Executives Deferred Compensation Plan").

(2) The bonus amounts include amounts deferred under the Corporation's
Directors and Executives Deferred Compensation Plan (more fully described
herein under the sub-caption "Directors and Executives Deferred
Compensation Plan"). The Compensation Committee determined that bonus
amounts earned in 2002 would be equal to twice the annual incentive
opportunity in light of the fact that the Corporation did not make
long-term incentive plan grants in 2002.

(3) Indicates the number of shares of Common Stock underlying stock options
granted during the year.

(4) In 2004, no payouts were made pursuant to the Corporation's Long-Term
Performance-Based Incentive Plan as no awards under said plan were made in
2002 other than with respect to Mr. Ganci upon his retirement from
employment. See footnote (2) to the table entitled "Long-Term Incentive
Plan--Awards in Fiscal Year 2004." The LTIP Payout column indicates the
dollar value of performance shares awarded, based on achievement versus a
defined index multiplied by the closing price of Common Stock on December
31 of the year in which a performance period concludes, plus accrued
dividends over the three-year performance period then concluded.

(5) These are amounts contributed by Central Hudson under the SIP for the
benefit of the named individual.

(6) Mr. Ganci served as the Corporation's Executive Chairman of the Board
through April 27, 2004, when Mr. Lant was appointed Chairman of the Board
in addition to his positions as President and Chief Executive Officer.

(7) Mr. Lant became Chairman of the Board on April 27, 2004, following the
Annual Meeting of Shareholders. He became Chairman and Chief Executive
Officer of Central Hudson on May 5, 2004, and Chairman, President and Chief
Executive Officer of CHEC on May 10, 2004.

No stock options were granted in fiscal year 2004.

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2004 AND FISCAL YEAR END
OPTION VALUES

The following table sets forth information concerning the exercise of stock
options by the Corporation's named executive officers during the last fiscal
year and the value of unexercised options on an aggregated basis.

(A) (B) (C) (D) (E)
NUMBER OF
SHARES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN THE
NUMBER OF OPTIONS AT MONEY OPTIONS AT
SHARES FISCAL YEAR END FISCAL YEAR END
ACQUIRED (#) ($)
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
-------------------------------------------------------------------------------------------------

Steven V. Lant ............... 720 10,008 2,160/6,560 9,526/6,350
Paul J. Ganci ................ 3,560 55,768 19,100/-- 39,249/--
Carl E. Meyer ................ 2,880 21,701 --/5,760 --/6,350
Joseph J. DeVirgilio, Jr. .... 1,760 13,534 --/3,320 --/3,881
Arthur R. Upright ............ 1,760 9,381 --/3,320 --/3,881
Donna S. Doyle ............... 640 4,877 --/1,380 --/2,125

LONG-TERM INCENTIVE PLAN -- AWARDS (1) IN FISCAL YEAR 2004

The following table sets forth the number of Performance Shares awarded to
each of the named executives in 2004 under the Corporation's Long-Term
Performance-Based Incentive Plan:

(C)
(B) PERFORMANCE
NUMBER OF OR OTHER PERIOD ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK PRICE BASED PLANS
(A) PERFORMANCE UNTIL MATURATION (D) (E) (F)
NAME SHARES OR PAYOUT THRESHOLD (#) TARGET (#) MAXIMUM (#)
--------------------------------------------------------------------------------------------------------------------------------

Steven V. Lant ............... 6,500 January 1, 2007 3,250 6,500 9,750
Paul J. Ganci ................ 9,500 January 1, 2007(2) 4,750 9,500 14,250
Carl E. Meyer ................ 3,000 January 1, 2007 1,500 3,000 4,500
Joseph J. DeVirgilio, Jr. .... 1,600 January 1, 2007 800 1,600 2,400
Arthur R. Upright ............ 1,600 January 1, 2007 800 1,600 2,400
Donna S. Doyle ............... 900 January 1, 2007 450 900 1,350

----------

(1) Payment of these Performance Shares is based on achieving specified levels
of designated performance objectives during a three-year performance cycle.
Payout can range from 0% to 150% of Performance Shares granted, with 50%
and 150% as the threshold and maximum payouts, respectively. In addition,
cash dividends on Common Stock that is subject to Performance Shares are
automatically deferred and reinvested in additional shares of Common Stock,
which reinvested dividends are applied to the Performance Shares earned.
Columns (d), (e), and (f) do not include values associated with reinvested
dividends.

(2) Mr. Ganci received payment of a pro-rated award of Performance Shares plus
accrued dividends under the Long-Term Performance-Based Incentive Plan in
the sum of $46,547 upon his retirement from employment on May 1, 2004, for
the quarter ended March 31, 2004, in accordance with the procedure adopted
in 2001 for retiring executives.

PENSIONS/DEFERRED COMPENSATION PLANS

DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN

The Directors and Executives Deferred Compensation Plan applies to
Directors, officers, and other executives of the Corporation and of its
subsidiary companies. It permits the participants to elect to defer a percentage
of their compensation for services rendered to the Corporation and/or its
subsidiary companies. Under the Directors and Executives Deferred Compensation
Plan, compensation is defined to include (a) base salary, (b) certain bonuses
and performance shares, (c) payments from (i) the Supplementary Retirement Plan
described herein and (ii) Change of Control agreements described herein, and (d)
Directors' fees for services rendered as a member of the Board of Directors and
any Committee of the Board. The Corporation can make discretionary contributions
to the Directors and Executives Deferred Compensation Plan. Compensation
deferred in accordance with the Directors and Executives Deferred Compensation
Plan is paid to Directors and officers (adjusted to reflect investment earnings
and losses) at the time the Director or officer ceases being a member of the
Board of Directors or an officer of the Corporation or its subsidiary companies,
or prior to such time under certain circumstances, either in a lump sum or over
a period of time depending on the circumstances of cessation and/or distribution
elections.

Effective as of January 1, 2004, the equity component of annual
compensation for each non-employee Director is fixed at a number of phantom
shares of the Corporation's Common Stock having an aggregate value approximately
equal to $50,000, which phantom shares are credited to each Director's account
under the Directors and Executive Deferred Compensation Plan. The program
requires this credit to remain invested in phantom shares until the termination
of the Director's service on the Board and to be paid only in cash after
termination of Board service. In aggregate, each non-employee Director other
than Mr. Tranen and Mr. Ganci received 1,107 phantom shares as equity
compensation for 2004. Mr. Tranen and Mr. Ganci received aggregate amounts of
992 phantom shares and 730 phantom shares, respectively. For additional
information regarding Director compensation, please see the subcaption
"Compensation of Directors of the Board" at page 10 of this proxy statement.

CENTRAL HUDSON RETIREMENT INCOME PLAN

The Retirement Income Plan of Central Hudson Gas & Electric Corporation
(the "Retirement Plan") is a "defined benefit" plan which is intended to meet
the qualification requirements of the Tax Code and generally covers all
employees of Central Hudson and those subsidiary companies that have adopted the
Retirement Plan, including the named executive officers.

There are several components to the benefit provided under the Retirement
Plan. First, the Retirement Plan provides retirement benefits generally related
to a participant's annual base salary for each year of eligible employment.
These benefits depend upon length of service, age at retirement, and eligible
earnings during years of participation in the Retirement Plan and any
predecessor plans. This portion of a participant's benefit is determined based
on the accumulation over that participant's career of a percentage of each
year's eligible earnings. For periods on and after October 1, 1989, the
percentage is 2% of eligible earnings, except that for years in which the
participant is over 50 years of age, the percentage is increased to 2.5%.
Second, the Retirement Plan provides a benefit for service prior to October 1,
2003, based on a percentage of a participant's average earnings at October 1,
2003 (being 50% of each of the base salaries at October 1, 2000, and 2003 and
100% of each of the base salaries at October 1, 2001, and 2002), and the number
of years of service while a member of the Retirement Plan prior to October 1,
2003, all subject to certain limitations. Finally, a cash balance account
benefit is also available upon retirement under the Retirement Plan, and
provides for a credit to those participants in the Retirement Plan on January 1,
1987, of 10% of their base salary on that date, a credit to those participants
in the Retirement Plan on September 30, 1991, of 5% of their base salary as of
that date, a credit to those participants in the Retirement Plan on September
30, 1997, of 5% of their base salary as of that date and a further credit to
those participants in the Retirement Plan on September 30, 1999, of 5% of their
base salary as of that date with, in all four cases, annual interest earned
thereon.

While the amount of the accrual with respect to a specified person is not
and cannot readily be separately or individually calculated by the actuaries for
the Retirement Plan, estimated annual benefits under the Retirement Plan upon
retirement at age 65 for the named executive officers, assuming continuation of
current annual salary levels and giving effect to applicable benefit limitations
in the Tax Code, are as follows: Mr. Lant - $170,000; Mr. DeVirgilio - $170,000;
Ms. Doyle - $111,409; Mr. Meyer - $168,550; and Mr. Upright - $152,463. In 2004,
Mr. Ganci received monthly payments totalling $84,892 under the Retirement Plan
and a one-time, lump sum payment of $76,318 from the Retirement Plan's cash
balance account, in each case following his May 1, 2004, retirement from
employment.

CENTRAL HUDSON RETIREMENT BENEFIT RESTORATION PLAN

The Central Hudson Retirement Benefit Restoration Plan ("RBRP") is an
unfunded, unsecured pension benefit plan for a select group of highly
compensated employees. The RBRP provides an annual retirement benefit to those
participants in the Retirement Plan who hold the following offices with the
Corporation and Central Hudson: Chairman of the Board, Chief Executive Officer,
President, Vice President (including all levels thereof), Corporate Secretary,
Chief Financial Officer, Treasurer, Controller, and Assistant Treasurer. This
benefit is equal to the difference between (i) that received under the
Retirement Plan, giving effect to applicable salary and benefit limitations
under the Tax Code, and (ii) that which would have been received under the
Retirement Plan, without giving effect to the limitations under the Tax Code.
Enhanced benefits are payable under certain circumstances following a Change of
Control. Mr. Ganci was paid $115,732 under the RBRP in 2004. The named executive
officers have a current salary level which, if continued to retirement at age
65, would provide a benefit under the RBRP. The estimated annual benefits under
the RBRP upon retirement at age 65 for those individuals, assuming the
continuation of current annual salary levels, are as follows: Mr. Lant -
$137,692; Mr. DeVirgilio - $17,469; Ms. Doyle - $0; Mr. Meyer - $54,231; and Mr.
Upright - $1,365.

SUPPLEMENTARY RETIREMENT PLAN

The Corporation's Supplementary Retirement Plan ("SRP") covers a select
group of highly compensated employees as an incentive for them to remain with
the Corporation or its subsidiary companies. Under the SRP, an annual benefit is
payable for 10 years, commencing on retirement, to eligible participants
(generally those who retire at age 60 or older and with 10 or more years of
service) of the following percentage of annual base compensation at retirement:
60 to 63 - 10%; 63 to 65 - 15%; 65 or over - 20%. Mr. Upright is fully vested in
the SRP. Enhanced benefits are payable under certain circumstances following a
Change of Control (as described below). Estimated annual benefits under the SRP
upon retirement at age 65 for the named individuals, assuming continuation of
current annual salary levels, are as follows: Mr. Lant - $70,000; Mr. DeVirgilio
- $48,400; Ms. Doyle - $40,000; Mr. Meyer - $56,400; and Mr. Upright - $43,800.
Mr. Ganci was paid $72,000 under the SRP for the year 2004.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS

The Corporation has an Employment Agreement ("Agreement") with each of the
named executive officers. Until a Change of Control (as defined in the
Agreement) occurs, each Agreement is automatically renewed for one year on each
July 31, unless a notice not to extend is given.

If a Change of Control occurs during the term of an Agreement, then the
Agreement becomes operative for a fixed three-year period. Upon a Change of
Control, each Agreement provides generally that such officers' terms and
conditions of employment then in effect (including position, location, base
salary, bonus, and benefits) will not be adversely changed during the three-year
period after a Change of Control. If such officer's employment is terminated (i)
by the Corporation or a subsidiary for reasons other than death, cause, or
disability (as those terms are defined in each Agreement), (ii) by such officer
for good reason (as that term is defined in each Agreement), (iii) by such
officer regardless of reason during the thirty-day period beginning on the first
anniversary of the Change of Control, (iv) upon certain terminations prior to a
Change of Control, or (v) in connection with or in anticipation of a Change of
Control, such officer, in addition to all amounts accrued to the date of
termination, will receive a lump-sum payment equal to the sum of (a) the
officer's base salary through the date of termination to the extent not
previously paid, (b) a proportionate bonus based on the higher of the officer's
most recent annual bonus and the officer's annual bonus for the last fiscal year
("Highest Annual Bonus"), (c) accrued vacation, (d) outplacement services, and
(e) three times the sum of the officer's base salary and the officer's Highest
Annual Bonus. In addition, such officer would be entitled to continued employee
welfare benefits and to a credit for pension purposes for the three years from
the date of the termination.

In the event any payments made to any such officers as a result of a Change
of Control, whether under an Agreement or otherwise, would subject such officer
to the excise tax on certain "excess parachute payments" payable under Tax Code
Section 4999, or interest or penalties with respect to this tax, the officer
generally will be entitled to be made whole for the payment of any taxes,
interest, or penalties. Each such officer, while covered by an Agreement, is not
entitled to participate in the Corporation's Change of Control Severance Policy.
In the event of a Change of Control, the Agreements will supersede any
individual employment and/or severance agreements entered into by the
Corporation with such officers, except in certain instances.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and Directors, and any person who owns more than 10% of a
registered class of the Corporation's equity securities (collectively "Reporting
Persons"), to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission. These Reporting Persons
are required by Securities and Exchange Commission regulations to furnish the
Corporation with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of these forms furnished to the Corporation and written
representations from the Corporation's officers and Directors, Messrs. Fetter,
Fridrich, Gallagher, and Kruse and retired Director Jack Effron filed one late
Form 4 (each reporting a grant of 600 deferred fee phantom stock units). Mr.
Tranen filed one late Form 4 (reporting a grant of 550 deferred fee phantom
stock units). All of these Form 4 filings have since been made.

PERFORMANCE GRAPH

The line graph set forth below provides a comparison of the Corporation's
cumulative total shareholder return on its Common Stock with the Standard &
Poor's 500 Index ("S&P 500") and as a Corporation-determined peer comparison
with the EEI Index. Shareholder return is the sum of the dividends paid and the
change in the market price of stock.

Year CH Energy Group, Inc. S&P 500 Index EEI Index
1998 100 100 100
1999 77.8 121 81.4
2000 112.5 110 120.5
2001 115 97 109.9
2002 129.1 75.5 93.7
2003 136.3 97.2 115.7

YEAR ENDING DECEMBER 31,
--------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
--------------------------------------------------------------------------------
CHG $100 $ 77.8 $112.5 $115.0 $129.1 $136.3

EEI Index $100 $ 81.4 $120.5 $109.9 $ 93.7 $115.7

S&P 500 $100 $121.0 $110.0 $ 97.0 $ 75.5 $ 97.2
--------------------------------------------------------------------------------
ASSUMES $100 INVESTED DECEMBER 31, 1999

PROPOSAL NO. 2 - RATIFICATION OF
APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed PricewaterhouseCoopers LLP, an
independent registered public accounting firm, as the Corporation's independent
public accountants for 2005. Although shareholder approval of the Audit
Committee's appointment is not required by law, the Board of Directors believes
that it is good corporate governance to give shareholders an opportunity to
ratify this selection. If this proposal is not approved at the Annual Meeting,
the Audit Committee may reconsider its selection.

Even if the appointment is ratified, the Audit Committee may, in its
discretion, change the appointment at any time during the year if it determines
that such a change would be in the best interests of the Corporation and its
shareholders.

Approval of this Proposal No. 2 requires the affirmative of a majority of
the votes cast in person or by proxy.

Representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting and will have an opportunity to make a statement if they desire to do
so. They will be available to respond to appropriate questions.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL
NO. 2.

OTHER MATTERS

The Board of Directors does not know of any matters to be brought before
the Annual Meeting other than those referred to in the notice hereof. If any
other matters properly come before the Annual Meeting, it is the intention of
the persons named in the form of proxy to vote the proxy in accordance with
their judgment on such matters.

By Order of the Board of Directors,

Lincoln E. Bleveans
CORPORATE SECRETARY

March 11, 2005

[This Page Intentionally Left Blank]

ROUTE TO CH ENERGY GROUP, INC.

[MAP OMITTED]

FROM NEW YORK CITY AREA:

o Taconic State parkway North to Interstate 84 (I-84)

o I-84 West to Exit 13 (Route 9)

o Turn right off ramp onto Route 9 North

o Route 9 approximately 12 miles to the Academy Street / South Avenue Exit

o Bear left at end of ramp and go under overpass

o Turn right into CH Energy Group, Inc. entrance

FROM CONNECTICUT:

o I-84 West to Exit 13 (Route 9)

o Continue as above

FROM PENNSYLVANIA:

o I-84 East to Exit 13 (Route 9)

o Turn left off ramp onto Route 9 North

o Continue as above

FROM NEW JERSEY AND UPSTATE NEW YORK:

o New York State Thruway (I-87) to Exit 18 (New Paltz)

o Turn right onto Route 299

o Route 299 approximately 5 miles, turn right onto Route 9W South

o Route 9W approximately 2 miles, bear right for FDR/Mid-Hudson Bridge

o After crossing bridge take first right (Route 9 South)

o Bear right off exit ramp into CH Energy Group, Inc. entrance

ADMISSION TICKET
Present to the CH Energy Group, Inc.
representative at the entrance to the auditorium.

ANNUAL MEETING OF SHAREHOLDERS
April 26, 2005, 10:30 a.m.
CH ENERGY GROUP, INC.
284 South Avenue, Poughkeepsie, NY

--------------------------------------------------------------------------------
AGENDA

o Election of Directors
o Ratification of Appointment of Independent Registered Public Accounting Firm

--------------------------------------------------------------------------------

IT IS IMPORTANT THAT ALL SHARES BE REPRESENTED AT THIS MEETING, WHETHER
OR NOT YOU ATTEND THE MEETING IN PERSON.
TO MAKE SURE ALL SHARES ARE REPRESENTED,
WE URGE YOU TO COMPLETE AND MAIL THE PROXY CARD BELOW.

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IF PLANNING TO ATTEND THE ANNUAL MEETING,
PLEASE MARK THE APPROPRIATE BOX ON THE REVERSE SIDE.
PRESENT THIS ADMISSION TICKET TO THE REPRESENTATIVE
AT THE ENTRANCE TO THE ANNUAL MEETING ROOM.

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FOLD AND DETACH HERE
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CH ENERGY GROUP, INC.
PROXY OF COMMON SHAREHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

P The undersigned hereby appoints STEVEN V. LANT, HEINZ K. FRIDRICH, and E.
R MICHEL KRUSE, or any one or more of them, as proxy, with full power of
O substitution, to vote, as designated on the reverse hereof, all shares of
X Common Stock owned of record by the undersigned on March 1, 2005, at the
Y Annual Meeting of Shareholders of CH Energy Group, Inc. to be held at the
office of the Corporation, 284 South Avenue, in the City of Poughkeepsie,
Dutchess County, New York, on April 26, 2005, or any adjournment thereof,
upon all such matters as may properly come before the meeting, including
the following proposals described in the Proxy Statement, dated March 11,
2005, a copy of which has been received by the undersigned.

THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED WITH REGARD TO
PROPOSAL NO. 1 AND PROPOSAL NO. 2. IN THE ABSENCE OF DIRECTION, THIS PROXY
WILL BE VOTED "FOR" PROPOSAL NO. 1 AND PROPOSAL NO. 2.

1. Proposal No. 1: Election of Directors, Nominees: CLASS II: 2008

01. Margarita K. Dilley
02. Steven M. Fetter
03. Stanley J. Grubel

2. Proposal No. 2: Ratification of Appointment of
Independent Registered Public Accounting Firm

Comments (If Any) / Change of Address

---------------------------------------------------

If you have written in the above space, please
mark the corresponding box on the reverse side
of this card.

--------------------
SEE REVERSE SIDE
--------------------

[LOGO OMITTED]
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8682
EDISON, NJ 08818-8682

You may vote the shares held in this account by telephone or electronically
using the Internet. Voting by telephone or using the Internet will eliminate the
need to mail voted proxy card(s) representing shares held in the account;
therefore if voting using the internet or by telephone, please do not mail your
card. Both voting systems preserve the confidentiality of every vote and will
confirm the voting instructions with you. You may also change selections on any
or all of the proposals to be voted. To vote by telephone or using the Internet,
please have this proxy card and your social security number available. Please
follow the steps below:

-------------------------------------

EVERY VOTE IS IMPORTANT TO US. THANK YOU FOR VOTING.

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VOTE-BY-INTERNET [GRAPHIC OMITTED]

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1. LOG ON TO THE INTERNET AND GO TO
HTTP://WWW.EPROXYVOTE.COM/CHG 24 HOURS A DAY, 7 DAYS A WEEK UNTIL
12:01 AM ON 4/19/05.

2. FOLLOW THE DETAILED INSTRUCTIONS LOCATED ON THE WEB PAGE.
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--------------------------------------------------------------------------------

VOTE-BY-TELEPHONE [GRAPHIC OMITTED]

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1. USING A TOUCH-TONE TELEPHONE, DIAL TOLL-FREE
1-877-PRX-VOTE (1-877-779-8683) 24 HOURS A DAY, 7 DAYS A WEEK UNTIL
12:01 AM ON 4/19/05.

2. FOLLOW THE DETAILED INSTRUCTIONS ON THE TELEPHONE MENU.

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As an added convenience, you may sign up to receive next year's annual report
and proxy materials via the internet. Next year when the materials are
available, we will send you an e-mail with instructions which will enable you to
review these materials on-line. To sign up for this optional service, visit
www.econsent.com/chg.

DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
--------------------------------------------------------------------------------

|
| 1535
|
+----

[X] PLEASE MARK
VOTES AS IN THIS
EXAMPLE.

---------------------------------------------------------------
CH ENERGY GROUP, INC.
---------------------------------------------------------------
The Directors recommend a vote "FOR" Proposals No. 1 and No. 2.

1. Election of Class II Directors 2008 (see reverse)

01. Margarita K. Dilley FOR WITHHOLD
02. Steven M. Fetter [_] [_]
03. Stanley J. Grubel

--------------------------------------------------------
FOR, except vote withheld from the following nominee(s):

FOR AGAINST ABSTAIN
2. Ratification of Appointment [_] [_] [_]
of Independent Registered
Public Accounting Firm

If you plan to attend the Annual Meeting, place an X in this box. [_]

If you wish us to discontinue Annual Report mailing for this account,
place an X in this box. [_]

If you indicated a change of address or comments on reverse side,
place an X in this box. [_]

3. IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.

NOTE: Please sign exactly as name above. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.

Signature: ______________________________________________ Date ________________