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. ___)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to ss. 240.14a-12

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

------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:

---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

---------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
---------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------------

CH ENERGY GROUP, INC.
284 SOUTH AVENUE

POUGHKEEPSIE, NEW YORK 12601-4879

March 3, 2004

To the Holders of Common Stock:

I am pleased to invite you to the 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 27, 2004, 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
20, 2004. 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.

Paul J. Ganci
EXECUTIVE CHAIRMAN OF THE BOARD

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 27, 2004

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

ITEMS OF BUSINESS . (1) To elect three Directors whose terms expire in April
2007; and
(2) 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, 2004, 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
http://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 20,
2004. 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 3, 2004

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 .............................................. 13

REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION ..................................................... 15

EXECUTIVE COMPENSATION ..................................................... 18

OTHER MATTERS .............................................................. 25

APPENDIX A--AUDIT COMMITTEE CHARTER ........................................ 26

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 27, 2004 (the "Annual Meeting").
This proxy statement and enclosed proxy are being sent to the Corporation's
shareholders on or about March 3, 2004. 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, 2004. 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, they can specify whether their shares should be voted for
the Board of Directors' nominees for Director, as shown on the proxy.

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" 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 $7,000, plus reasonable out-of-pocket expenses.

SHAREHOLDER COMMUNICATIONS

Highlights of the 2004 Annual Meeting of Shareholders will be published on
the Corporation's Internet site at www.chenergygroup.com and in the
Corporation's May 2004 Report to Shareholders. The text of the remarks of the
Executive Chairman of the Board and of the 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 2005 Proxy Statement must submit the proposal so that the
Corporate Secretary receives it no later than November 2, 2004. 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 2005
Annual Meeting of Shareholders to give the Corporation advance written notice
thereof no earlier than January 28, 2005, and no later than February 27, 2005.

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 - 2004
Edward F. X. Gallagher
Steven V. Lant

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

CLASS III - 2006
Heinz K. Fridrich
Paul J. Ganci
E. Michel Kruse

On February 20, 2004, the Board of Directors increased the number of
Directors by one to a total of eight, and elected Jeffrey D. Tranen as a
Director. Mr. Tranen, as a Director elected by the Board, serves without a class
designation until the Annual Meeting. If elected at the Annual Meeting, Mr.
Tranen will be a Class I Director with a term expiring at the Annual Meeting of
Shareholders in 2007.

Three Class I Directors are to be elected by a plurality of the votes cast
at the Annual Meeting by the holders of shares entitled to vote.

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

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
------------------------------------------------------------------------------------------------------------------------------------
NOMINEES FOR ELECTION AS CLASS I DIRECTORS SERVING FOR A TERM EXPIRING IN 2007

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

Steven V. Lant ............... Present positions; except Chief Operating President and Chief 2002
47 Officer and Chief Financial Officer of the Executive Officer of the
[PHOTO OMITTED] Corporation, 2002-2003; Chief Financial Corporation(3); Chief
Officer of the Corporation, of Central Hudson, Executive Officer of
and of Central Hudson Energy Services, Inc. Central Hudson; President
("CH Services"), 2001-2002; Chief Financial and Chief Executive Officer
Officer and Treasurer of the Corporation, of of CHEC; Director of the
Central Hudson, and of CH Services, 1999-2001; Corporation, of Central
Chief Financial Officer, Treasurer, and Hudson, and of CHEC
Corporate Secretary of Central Hudson,
1998-1999
Poughkeepsie, NY

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

INCUMBENT CLASS II DIRECTORS SERVING FOR A TERM EXPIRING IN 2005

Steven M. Fetter ............. President, Regulation UnFettered; Board member, Director; Chairman of the 2002
51 National Regulatory Research Institute (at Audit Committee of the
[PHOTO OMITTED] Ohio State University), Keystone Center Board of Directors
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 Technologies, Inc., Director; Chairman of the 1999,
60 CA; Vice President and General Manager, Compensation Committee served as
[PHOTO OMITTED] Philips Semiconductor Manufacturing, Inc., of the Board of Directors a Director
2000-2001; Chief Executive Officer, MiCRUS, of Central
1995-2000 Hudson
White Plains, NY beginning in
May 1999(2)

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
------------------------------------------------------------------------------------------------------------------------------------
INCUMBENT CLASS III DIRECTORS SERVING FOR A TERM EXPIRING IN 2006

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

Paul J. Ganci ................ Present positions since July 2003; Chairman, Executive Chairman of the Board 1999,
66 President and Chief Executive Officer of the of the Corporation(3); served as a
[PHOTO OMITTED] Corporation, 2002-2003; Chairman of the Executive Chairman of the Director of
Board and Chief Executive Officer of the Board of Central Hudson; Central
Corporation, 1998-2002 Executive Chairman of the Board Hudson
Poughkeepsie, NY of CHEC beginning
1989

E. Michel Kruse .............. Retired; Chairman and Senior Advisor - Director; Chairman of the Strategy 2002
60 Financial Institutions Group of UBS Warburg, and Finance Committee of the
[PHOTO OMITTED] 2000-2002; 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

------------------------------
(1) Based on information furnished to the Corporation as of December 31, 2003.
With respect to Jeffrey D. Tranen, based on information furnished by that
specific individual as of February 19, 2004.
(2) Resigned as a Director of Central Hudson, effective December 15, 1999.
(3) On January 30, 2004, the Corporation announced the appointment of Mr. Lant
as Chairman of the Board of Directors of the Corporation, effective April
27, 2004, following the Annual Meeting of Shareholders. Mr. Ganci will step
down from his position as Executive Chairman of the Board at the conclusion
of the Annual Meeting. Mr. Lant will continue to serve as President and
Chief Executive Officer of the Corporation.

GOVERNANCE OF THE CORPORATION

The Board of Directors has eight members, six of whom are independent under
the definition of 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 2003, the Board of Directors held nine meetings and the Committees
held a total of twenty-six meetings. All Directors then serving on the Board
attended all of the Board meetings and all of the meetings of the Committees on
which they served.

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.

COMMITTEES OF THE BOARD OF DIRECTORS

In 2003, the Board of Directors restructured its standing Committees to
better reflect the Board's current focus and recent legislative and rule changes
promulgated by the U.S. Congress, the Securities and Exchange Commission, and
the New York Stock Exchange. The functions of the former Compensation and
Succession Committee, which consisted only of independent Directors, are now
handled by the Governance and Nominating Committee and by the Compensation
Committee. The former Business Development Committee and the former Finance
Committee were reconstituted as the Strategy and Finance Committee. The
Corporation's standing Committees are the Audit Committee, the Compensation
Committee, the Executive 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.

AUDIT COMMITTEE

The members of the Audit Committee are 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 seven times in 2003.

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 standard 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.

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 13 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
attached to this proxy statement as Appendix A. A copy of the Charter is also
available on the Corporation's Internet site at www.chenergygroup.com.

COMPENSATION COMMITTEE

The members of the Compensation Committee are Steven M. Fetter and Stanley
J. Grubel. Mr. Grubel is the Chairman of the Compensation Committee. The
Compensation Committee (and its predecessor committee, the Compensation and
Succession Committee) met seven times in 2003.

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.

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
(and its predecessor committee, the Special Committee on Corporate Governance)
met five times in 2003.

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.

STRATEGY AND FINANCE COMMITTEE

The members of the Strategy and Finance Committee are Edward F. X.
Gallagher, Paul J. Ganci, Stanley J. Grubel, E. Michel Kruse, and Steven V.
Lant. 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.

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, Jeffrey D. Tranen, who was recently
elected as a Director of the Corporation and who is standing for election as a
Class I 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 Executive Chairman of
the Board and the President and Chief Executive Officer to assess the person's
qualifications and to discuss their views about the person with the Committee;
this assessment may involve the Executive Chairman of the Board and/or the
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 Mr. Tranen, attended the 2003 Annual Meeting of Shareholders. Mr. Tranen
became a member of the Board of Directors in February 2004.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Only independent Directors served on the Compensation Committee in 2003.
Mr. Fetter served as the Compensation Committee's Chairman for the first three
quarters of 2003. Mr. Grubel became the Chairman for the fourth quarter of 2003
and continues to serve in that capacity. Mr. Fetter continues to be a member of
the Compensation Committee. No inside Directors serve on this Committee. No
Compensation Committee interlock relationships existed in 2003 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.

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

Director compensation is tied to the median practice of comparable
companies. Each non-employee member of the Corporation's Board of Directors
("Outside Director") (Messrs. Ganci and Lant are employee-Directors) receives 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 is a
member or an invitee. Mr. Fridrich also receives an annual retainer in the
amount of $7,500 for his role as Vice Chairman of the Board and $7,500 for his
role as Chairman of the Governance and Nominating Committee. Mr. Grubel receives
an annual retainer of $7,500 for his role as Chairman of the Compensation
Committee. Mr. Fetter receives an annual retainer of $10,000 for his role as
Chairman of the Audit Committee. Mr. Kruse receives an annual retainer of $7,500
for his role as Chairman of the Strategy and Finance Committee. In addition, 600
phantom shares of the Corporation's Common Stock are credited each year to each
Outside Director's account under the Directors and Executives Deferred
Compensation Plan. For additional information, see the subcaption "Directors and
Executives Deferred Compensation Plan" at page 20 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 thereunder
for service as an Outside Director following July 1, 2003. In addition, the
Stock Plan was amended to provide each current Outside 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. The Stock
Plan was further amended to provide that all benefits distributed under the plan
in the future would be distributed in cash rather than in shares of Common
Stock. All of the then-current Outside Directors elected to receive the phantom
shares of Common Stock. Prior to its amendment, the Stock Plan provided that
each Outside Director received 50 shares of Common Stock for each full quarter
of each year of service as an Outside Director. The shares were awarded on a
quarterly basis. When an Outside Director ceased to be a Director for any reason
(other than for cause), that Director continued to receive shares of Common
Stock on a quarterly basis for each full quarter of past service (25 shares for
each completed service quarter prior to April 26, 2002, and 50 shares for each
completed service quarter thereafter). Service as a Director of Central Hudson
was included for calculation purposes in the Stock Plan. No distribution would
have been made to a Director's estate under the Stock Plan if a Director had
died.

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 Outside Directors, to provide additional equity
compensation. With respect to Outside 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 Outside 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. In 2003, a stock option for the purchase of 1,000
shares of Common Stock was granted to each Outside Director under the Incentive
Plan. The Compensation Committee has determined that, consistent with the
Corporation's goals and objectives, it will likely be more appropriate in the
future for Outside Directors to receive phantom shares of Common Stock under the
Directors and Executives Deferred Compensation Plan than stock options pursuant
to the Incentive Plan. For additional information, see the subcaption "Directors
and Executives Deferred Compensation Plan" at page 20 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 OF CORPORATION'S
THE CORPORATION'S COMMON
NAME OF BENEFICIAL OWNER COMMON STOCK(1) STOCK(2)
--------------------------------------------------------------------------------
Steven M. Fetter 262 Less than 1%
Heinz K. Fridrich 4,450 Less than 1%
Edward F. X. Gallagher 3,923 Less than 1%
Paul J. Ganci (3) 22,685 Less than 1%
Stanley J. Grubel 5,596 Less than 1%
E. Michel Kruse 1,100 Less than 1%
Steven V. Lant 6,094 Less than 1%
Jeffrey D. Tranen 0 --
Carl E. Meyer 3,655 Less than 1%
Joseph J. DeVirgilio, Jr. 3,729 Less than 1%
Arthur R. Upright 3,488 Less than 1%
Donna S. Doyle 1,907 Less than 1%
Gabelli Asset Management Inc. (4) 1,495,150 9%
All Directors and Executive
Officers as a Group (19 persons) 61,388 Less than 1%

------------------------------
(1) Based on information furnished to the Corporation by the Directors and
executive officers of the Corporation as of December 31, 2003. With respect
to Jeffrey D. Tranen, based on information furnished by that specific
individual as of February 19, 2004.
(2) 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.
(3) Includes 3,603 shares owned by the spouse of Mr. Ganci and 7,118 shares
owned by a trust for which Mr. and Mrs. Ganci are co-trustees. The shares
owned by Mrs. Ganci and the trust 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.
(4) 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.

STOCK EQUIVALENTS OWNERSHIP OF DIRECTORS

The following table sets forth the number of phantom shares of Common
Stock, as of December 31, 2003, credited to the accounts of the Corporation's
participating Outside 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 20 of this proxy statement.

NAME NUMBER OF PHANTOM SHARES
--------- ------------------------
Steven M. Fetter .............. 493
Heinz K. Fridrich ............. 1,335
Edward F. X. Gallagher ........ 1,326
Stanley J. Grubel ............. 952
E. Michel Kruse ............... 372
Total(a) ...................... 4,478

------------------------------
(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 Outside
Directors (5 persons) is less than 1% of the outstanding shares of Common
Stock, both percentages calculated as of the record date. Mr. Tranen,
elected to the Board of Directors on February 20, 2004, had no phantom
shares of Common Stock credited to his account as of the date of this proxy
statement.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board of Directors is comprised of Directors who
meet the New York Stock Exchange standards for independence. The Audit Committee
operates under a written Charter adopted by the Board of Directors, which is
attached to this proxy statement as Appendix A.

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 2003, the Audit Committee met with management periodically during the
year to consider the adequacy of the Corporation's internal controls 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 principal executive
officers 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 2003, 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 principal executive officers 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, 2003, for filing with the Securities and
Exchange Commission.

The Audit Committee has 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 representatives 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 2003 and
2002 is provided below:

PRINCIPAL ACCOUNTANT FEES AND SERVICES

PricewaterhouseCoopers LLP 2003 2002
-------------------------- -------- --------
Audit Fees ............................................ $329,250 $285,000
Audit-Related Fees .................................... $ 10,000 $ 1,000
Includes Sarbanes-Oxley compliance and
Audit Committee Charter consultation
Tax Fees .............................................. $ 30,130 $ 51,560
Includes review of consolidated federal and
state income tax returns and consultation
regarding IRS audit issues
All Other Fees ........................................ $ 1,400 $ 9,415
-------- --------
Includes software licensing fee for accounting
research tool and consultation regarding
impacts of reorganization of competitive
business subsidiaries
TOTAL ................................................. $370,780 $346,975

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 2003, 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."

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

REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION

The following disclosure is made over the name of each member of the
Compensation Committee, on the date hereof, and shall be considered a report of
the Compensation Committee:

It is the objective of the Compensation Committee to develop a compensation
program that will attract, retain, and motivate directors and executive officers
to create long-term shareholder value. For executives, the design of the
executive compensation program incorporates base salary, annual short-term
incentives, long-term incentives, and retirement benefits which, in aggregate,
result in total remuneration that is approximately the median for
comparably-sized electric and natural gas utilities and energy services
companies in the United States, as shown by the Hay Group National Utility
Database.

Specific annual short-term incentives are developed which reward
achievement of that year's business plan goals, such goals being consistent with
the strategy of the Corporation to create shareholder value. These incentive
goals are established by the Compensation Committee and are primarily
quantitative and financial in nature. Individuals' short-term incentives are
based on overall achievement of business plan goals, but may be adjusted upwards
or downwards based upon an assessment of the individual's performance.

Long-term incentives may include two components:

(1) Stock options, the value of which is directly tied to the long-term
increase in the market value of the Corporation's Common Stock. The
exercise price of all stock options is equal to the fair market value
of the Corporation's Common Stock on the date of grant. The total
number of option shares awarded to each executive generally is based on
a target dollar amount divided by the option's exercise price. The
target amount is the product of the executive's base salary multiplied
by a percentage. The percentage is determined by the Committee based
upon a competitive analysis of peer group comparators, Corporation
objectives, and the objective of providing long-term, at-risk
compensation as a substantial portion of total compensation; and

(2) Performance shares, the number and value of which are directly tied to
the total return of the Corporation's Common Stock relative to the
performance of the Edison Electric Institute Index of combination
natural gas and electric investor-owned utilities (the "EEI Index"),
measured over a three-year performance

cycle. Performance share awards are made each year, resulting in
overlapping three-year performance cycles. The total number of
performance shares awarded to each executive generally is based on the
executive's salary multiplied by a target percentage. The percentage is
determined by the Committee based on a competitive analysis of peer
group comparators, Corporation objectives, and the objective of
providing long-term, at-risk compensation as a substantial portion of
total compensation.

The compensation of individual executives is determined by evaluating the
contribution of each executive to achievement of the Corporation's business plan
and the responsibility level of the executive's position. The Compensation
Committee also reviews executive succession plans in the determination of
executive compensation. The Compensation Committee annually evaluates the
performance of the Executive Chairman of the Board in light of the approved
corporate goals and objectives relevant to his or her compensation. Based on
this evaluation, the Compensation Committee recommends, for approval by a
majority of the independent Directors of the Board, the compensation level for
the Executive Chairman of the Board (Mr. Ganci). On an annual basis, the
Executive Chairman of the Board evaluates the performance of the President and
Chief Executive Officer (Mr. Lant). The Executive Chairman of the Board provides
such evaluation to the Compensation Committee. After reviewing the Executive
Chairman's evaluation, and after making its own assessment of the performance of
the President and Chief Executive Officer, the Compensation Committee
recommends, for approval by a majority of the independent directors of the
Board, the compensation level for the President and Chief Executive Officer.

Commencing with 2004, annual salary determinations recommended by the
Compensation Committee and approved by a majority of the independent Directors
of the Board become effective as of January 1 of each year. Before 2004, annual
salary determinations were effective as of the Annual Meeting of Shareholders
each year.

COMPENSATION OF THE EXECUTIVE CHAIRMAN OF THE BOARD AND THE PRESIDENT AND CHIEF
EXECUTIVE OFFICER

BASE SALARY

The Committee recommended to the Board of Directors and a majority of the
independent Directors of the Board approved the base salaries shown in the
Summary Compensation Table. The Committee's analysis, consistent with the
Committee's compensation policy outlined above, was based on consideration of
the total compensation provided to principal executive officers in a peer group
consisting of comparably-sized electric and natural gas utilities and energy
services companies in the United States, and also consideration of the
Corporation's accomplishments in the prior year and the Committee's assessment
of the individual performance of the Executive Chairman of the Board and of the
President and Chief Executive Officer during that year.

ANNUAL INCENTIVE COMPENSATION

The awards to the Executive Chairman of the Board and to the President and
Chief Executive Officer, as shown in the Summary Compensation Table, were based
on the Corporation's achieving a specified earnings per share target and the
Committee's assessment of the executive's responsiveness to problems and
opportunities.

LONG-TERM INCENTIVE COMPENSATION

The long-term incentive compensation shown in the Summary Compensation
Table for the Executive Chairman of the Board and for President and Chief
Executive Officer was based on the Corporation's total shareholder return
achievement relative to the EEI Index for the applicable three-year performance
cycle of the long-term incentive program.

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 tax
deduction for the Corporation for remuneration of any officer named in the
caption "Executive

Compensation" 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

EXECUTIVE COMPENSATION

The Summary Compensation Table set forth below includes compensation
information on the Executive Chairman of the Board, the President and Chief
Executive Officer, and each of the Corporation's other four most highly
compensated executive officers, whose salary and any bonus in 2003 exceeded
$100,000, for services rendered to the Corporation and its subsidiary or
affiliated companies.

SUMMARY COMPENSATION TABLE

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

PAUL J. GANCI, Executive 2003 $476,500 $320,000 10,200 129,913 $6,000
Chairman of the Board of 2002 $440,667 $515,554 0 -- $5,500
the Corporation, Executive 2001 $415,000 $ 60,000 8,900 -- $5,250
Chairman of the Board of
Central Hudson and of
CHEC(6)

STEVEN V. LANT, President and 2003 $315,500 $205,000 4,400 51,262 $6,000
Chief Executive Officer(7) 2002 $283,583 $225,385 0 -- $5,500
of the Corporation, Chief 2001 $203,500 $ 35,547 3,600 -- $5,250
Executive Officer of Central
Hudson, and President and
Chief Executive Officer
of CHEC

CARL E. MEYER, Executive 2003 $260,888 $105,786 3,600 51,262 $6,000
Vice President of the 2002 $266,889 $200,268 0 -- $5,500
Corporation and President 2001 $257,500 $ 35,156 3,600 -- $5,250
and Chief Operating Officer
of Central Hudson

JOSEPH J. DEVIRGILIO, JR., 2003 $193,997 $ 68,846 2,000 31,470 $6,000
Senior Vice President of the 2002 $195,733 $118,538 0 -- $5,500
Corporation and of Central 2001 $186,163 $ 38,700 2,200 -- $5,250
Hudson, Executive Vice
President of CHEC

ARTHUR R. UPRIGHT, Senior Vice 2003 $189,000 $ 66,625 2,000 31,470 $6,000
President of the Corporation 2002 $190,644 $111,127 0 -- $5,500
and of Central Hudson 2001 $176,516 $ 26,488 2,200 -- $5,250

DONNA S. DOYLE, Vice President 2003 $164,250 $ 59,341 900 11,631 $5,371
of Accounting and Controller 2002 $159,494 $ 64,800 0 -- $5,423
of the Corporation and of 2001 $144,000 $ 10,884 800 -- $5,250
Central Hudson

------------------------------
(1) This base salary amount 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 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 number of shares of Common Stock underlying stock options granted
during the year. (4) Indicates performance shares awarded, based on
achievement versus a defined index, multiplied by the closing
price of Common Stock on December 31, 2003.
(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 Chairman of the Board and its
President and Chief Executive Officer through June 30, 2003, when Mr. Lant
was appointed President and Chief Executive Officer. Mr. Ganci has
continued to serve as the Corporation's Executive Chairman of the Board
since July 2003.
(7) Mr. Lant served as Chief Financial Officer and Chief Operating Officer of
the Corporation through June 30, 2003. On July 1, 2003, Mr. Lant became the
President and Chief Executive Officer of the Corporation. Mr. Lant was the
Chief Financial Officer of Central Hudson and the President, Chief
Financial Officer, and Chief Operating Officer of CHEC through June 30,
2003. On July 1, 2003, he became the Chief Executive Officer of Central
Hudson and President and Chief Executive Officer of CHEC.

OPTION GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS

NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS GRANTED TO EMPLOYEES IN EXERCISE PRICE GRANT DATE
NAME (#)(1) FISCAL YEAR ($/SH) EXPIRATION DATE PRESENT VALUE $(2)
---- --------------- --------------- -------------- --------------- ------------------

Paul J. Ganci 10,200 34.5 $48.62 1/1/13 66,402
Steven V. Lant 4,400 14.9 $48.62 1/1/13 28,644
Carl E. Meyer 3,600 12.2 $48.62 1/1/13 23,436
Arthur R. Upright 2,000 6.8 $48.62 1/1/13 13,020
Joseph J. DeVirgilio, Jr. 2,000 6.8 $48.62 1/1/13 13,020
Donna S. Doyle 900 3.0 $48.62 1/1/13 5,859

------------------------------
(1) Under the Corporation's Long-Term Performance-Based Incentive Plan,
non-qualified stock options were granted to the named executives in this
table. These options were granted for a term of ten years from the date of
grant. All options were granted on January 1, 2003, and are exercisable as
follows: 40% can be exercised on or after January 1, 2005, and an
additional 20% can be exercised on or after each following January 1 for
three years. None of these options were exercisable in 2003.
(2) The fair market value per share of stock options granted in 2003 is $6.51.
The fair market values were estimated using the Black-Scholes option
pricing model, with the following weighted average assumptions: a risk-free
interest rate of 4.40%; expected lives of ten years; expected stock
volatility of 17.50%; and a dividend yield of 4.40%. The values shown in
this column reflect assumptions and are not intended to represent either
historical appreciation or anticipated future appreciation of the
Corporation's Common Stock.

AGGREGATED STOCK OPTION EXERCISES IN FISCAL YEAR 2003

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 (#) ($)
ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
---- ------------ -------------- --------------- ------------------

Paul J. Ganci 5,340 55,429 7,120/15,540 $41,795/$37,039
Steven V. Lant 2,160 24,062 2,880/6,560 $16,905/$14,861
Carl E. Meyer 2,160 22,421 2,880/5,760 $16,905/$14,861
Arthur R. Upright 1,320 17,571 1,760/3,320 $10,331/$9,081
Joseph J. DeVirgilio, Jr. 1,320 11,881 1,760/3,320 $10,331/$9,081
Donna S. Doyle 480 4,661 640/1,380 $9,575/$3,303

LONG-TERM INCENTIVE PLAN AWARDS(1) IN FISCAL YEAR 2003

The following table sets forth the number of Performance Shares granted to
each of the named executives in 2003 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 (#)
---- ----------- ---------------- ------------- ---------- -----------

Paul J. Ganci 5,100 January 1, 2006 2,550 5,100 7,650
Steven V. Lant 2,200 January 1, 2006 1,100 2,200 3,300
Carl E. Meyer 1,800 January 1, 2006 900 1,800 2,700
Joseph J. DeVirgilio, Jr. 900 January 1, 2006 450 900 1,350
Arthur R. Upright 900 January 1, 2006 450 900 1,350
Donna S. Doyle 400 January 1, 2006 200 400 600

------------------------------
(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.

PENSIONS/DEFERRED COMPENSATION PLANS

DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN

The Directors and Executives Deferred Compensation Plan ("Deferred 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 Deferred 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 Deferred
Plan. Compensation deferred in accordance with the Deferred Plan is paid to
Directors and officers (adjusted to reflect investment earn-

ings 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. Outside Directors of the Corporation and certain of its
subsidiaries are entitled to an annual credit to their account under the
Deferred Plan of 600 phantom shares of Common Stock. This credit is required to
remain invested in phantom shares of Common Stock until the value is
distributed, in cash, following the Outside Director's termination of service
from the Board of Directors. For 2003, pro-rated credits of phantom shares of
Common Stock were made to reflect the fact that stock options were awarded in
2003 and benefits were earned under the Stock Plan during the first six months
of 2003.

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. In 2003, the Corporation made a $10 million contribution to the
Retirement Plan.

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. Ganci - $156,514; Mr. Lant - $165,000; Mr.
Meyer - $165,000; Mr. DeVirgilio - $165,000; Mr. Upright - $151,873; and Ms.
Doyle - $107,679.

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. 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. Ganci -
$172,458; Mr. Lant - $96,890; Mr. Meyer - $56,831; Mr. DeVirgilio - $13,072; Mr.
Upright - $409; and Ms. Doyle - $0.

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%. Enhanced benefits are payable
under certain circumstances following a Change of Control (as described below).
No amounts were paid under the SRP for the named executive officers for the year
2003. 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. Ganci - $98,000; Mr. Lant - $70,000; Mr. DeVirgilio - $42,000; Mr.
Meyer - $55,200; Mr. Upright - $40,600; and Ms. Doyle - $36,400.

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, Grubel, and Kruse, and Jack Effron, a Director whose term
ended at the 2003 Annual Meeting of Shareholders, filed one late Form 4 (each
reporting a grant of 50 shares of common stock and a grant of 1,000 stock
options). Mr. DeVirgilio filed one late Form 4 (reporting a cash-out of a
fractional share) and Mr. Upright filed one late Form 4 (reporting the exercise
of 1,320 stock options). 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.

(THE DATA BELOW REPRESENTS A GRAPH IN THE PRINTED PIECE)

YEAR ENDING DECEMBER 31,
1998 1999 2000 2001 2002 2003
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

YEAR ENDING DECEMBER 31,
--------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
--------------------------------------------------------------------------------

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, 1998

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 3, 2004

APPENDIX A--AUDIT COMMITTEE CHARTER

CHARTER FOR THE
AUDIT COMMITTEE
CH ENERGY GROUP, INC.

PURPOSE:

The purpose of the Audit Committee is to assist the Board of Directors in
its oversight of (a) the accounting and financial reporting processes of the
Company, and (b) the auditing of the financial statements of the Company.
Specifically, the Committee shall assist the Board in overseeing:

o the integrity of the Company's financial statements;

o the Company's compliance with legal and regulatory requirements
regarding accounting, auditing and financial reporting;

o the independent auditor's qualifications and the independence of the
Company's independent auditor;

o the performance of the Company's independent auditor; and

o the performance of the Company's internal audit function.

In addition, the Committee shall prepare the Audit Committee Report that is
required by the rules of the Securities and Exchange Commission ("SEC") to be
included in the annual proxy statement of the Company.

COMMITTEE MEMBERSHIP:

The Audit Committee shall be comprised of no fewer than three (3) members
of the Board.

The members of the Audit Committee shall be appointed by the Board annually
for terms of one year, after receipt by the Board from the Governance and
Nominating Committee of recommendations regarding persons to be appointed to the
Committee.

The Chair of the Audit Committee shall be appointed by the Board annually
for a term of one year, after receipt by the Board from the Governance and
Nominating Committee of a recommendation regarding the person to be appointed as
Chair of the Committee.

Each member of the Audit Committee, including the Chair of the Committee,
shall serve at the discretion of the Board.

Each member of the Audit Committee shall meet:

(i) the independence requirements of the listing standards of the New
York Stock Exchange;

(ii) the non-employee director definition of Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended; and

(iii) the qualifications for service as a Director of the Company as set
forth in Section 3 of the Company's Governance Guidelines.

Each member of the Audit Committee shall be financially literate. At least
one member of the Audit Committee shall be an "audit committee financial expert"
within the meaning of applicable Securities and Exchange Commission and New York
Stock Exchange rules in effect from time to time (the "SEC Rules" and the "NYSE
Rules").

The Board of Directors shall determine whether any members of the Audit
Committee, and any candidates for membership on the Audit Committee, are audit
committee financial experts within the meaning of the term as

it is defined by the Sarbanes Oxley Act of 2002 and the applicable SEC Rules.
The Board shall review these determinations on an annual basis.

The Board of Directors shall determine whether each member of the Audit
Committee, and any candidate for membership on the Audit Committee, is
financially literate. The Board shall review these determinations with respect
to members of the Audit Committee on an annual basis. The meaning of the
qualification of financial literacy shall be determined by the Board in the
exercise of its business judgment.

No member of the Audit Committee may serve simultaneously on the audit
committee of more than two other public companies.

MEETINGS:

The Audit Committee shall meet at least quarterly, and at such other
times as it deems necessary to fulfill its duties. The Audit Committee shall
meet separately and periodically in executive sessions with management, with the
internal auditor and with the independent auditor. Reports of Audit Committee
meetings and of any actions taken by the Audit Committee shall be made by the
Committee Chairman or his or her designee to the Board at its next regularly
scheduled meeting following the Audit Committee's meeting or action. As a matter
of general practice, and subject to the discretion of the Audit Committee, the
Chair of the Audit Committee normally informs the Executive Chairman of the
Board and the President and Chief Executive Officer on a reasonably prompt basis
about the substance of discussions that took place in the periodic executive
session meetings with management, with the internal auditor and with the
independent auditor.

AUTHORITY AND RESPONSIBILITY:

(i) The Audit Committee shall directly appoint, retain, compensate,
evaluate and, when appropriate, terminate the Company's independent
auditor;

(ii) The Audit Committee shall resolve any disagreement between
management and the Company's independent auditor regarding financial
reporting;

(iii) The Company's independent auditor shall report directly to the Audit
Committee;

(iv) The Audit Committee shall pre-approve all auditing and permitted
non-audit services performed by the Company's independent auditor;

(v) The Audit Committee shall establish procedures for the receipt,
retention and treatment of complaints from employees and others of
the Company on accounting, internal accounting controls or auditing
matters, as well as for confidential, anonymous submissions by
Company employees of concerns regarding questionable accounting or
auditing matters;

(vi) The Audit Committee shall obtain advice and assistance from outside
legal, accounting or other advisors as it deems necessary to carry
out its duties;

(vii) The Audit Committee shall receive appropriate funding, as determined
by the Audit Committee, from the Company for payment of compensation
to the outside legal, accounting or other advisors employed by the
Audit Committee;

(viii) The Audit Committee shall, at least annually, obtain and review a
report by the Company's independent auditor describing: (a) the
firm's internal quality-control procedures; (b) any material issues
raised by the most recent internal quality-control review, or peer
review, of the firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding five
years, respecting one or more independent audits carried out by the
firm, and any steps taken to deal with any such issues; and (c) all
relationships between the independent auditor and the company (to
assist the Committee in assessing the independent auditor's
independence);

(ix) The Audit Committee shall discuss the annual audited financial
statements and quarterly financial statements with management and
with the independent auditor, including the Company's disclosures
under "Management's Discussion and Analysis of Financial Condition
and Results of Operations;"

(x) The Audit Committee shall discuss earnings releases, as well as
financial information and earnings guidance provided to analysts and
rating agencies. The Audit Committee's discussion of earnings
releases as well as financial information and earnings guidance may
be general in nature (i.e., discussion of the types of information
to be disclosed and the types of presentation to be made). The Audit
Committee need not discuss in advance each earnings release or each
instance in which the Company provides financial information or
earnings guidance to analysts, rating agencies or the public;

(xi) The Audit Committee shall discuss policies with respect to risk
assessment and risk management;

(xii) The Audit Committee shall review with the independent auditor any
audit problems or difficulties and management's response;

(xiii) The Audit Committee shall set clear hiring policies for employees or
former employees of the independent auditor; and

(xiv) The Audit Committee shall evaluate the Committee's performance and
the performance of individual Committee members at least annually.

PROCEDURES:

In accordance with Section 3.3 of the Company's By-Laws, the Audit
Committee may operate according to such procedures as it deems expedient for
carrying out its responsibilities. In this connection, the Audit Committee
shall, at a minimum, follow the following procedures:

1. INDEPENDENT AUDITOR

(a) AUDIT PLAN--The Committee shall review the independent auditor's annual
audit plan (including the scope of the audit and the quarterly reviews)
and shall discuss with the independent auditor any significant changes
required in the annual audit plan.

(b) REVIEW OF AUDIT ISSUES--The Committee shall review with the independent
auditor and, as appropriate under the circumstances, with the internal
auditor and/or with management:

o all critical accounting policies and practices to be used;

o any alternative treatments of financial information within GAAP
that have been discussed with management, ramifications of the use
of such alternative treatments and the treatment preferred by the
independent auditor; and

o all other material written communications between the independent
auditor and the management of the Company.

(c) COMPETENCE OF INDEPENDENT AUDITOR--Once each year (and otherwise as the
Chair may consider appropriate) the Committee shall review and evaluate
the qualifications and performance of the independent auditor:

o this review shall include an evaluation of the lead partner of the
independent auditor.

(d) INDEPENDENCE OF INDEPENDENT AUDITORS--Once each year (and otherwise as
the Chair may consider appropriate), the Committee shall review and
evaluate the independence of the independent auditor, including a
review of the services provided by the independent auditor and related
fees. As part of this process:

o The Committee shall require the independent auditor to report
periodically in writing on all its relationships with the Company
and its management, as well as the firm's compliance with all
independence requirements under applicable professional standards,
SEC Rules and NYSE Rules. The

Committee shall discuss any potential independence issues raised in
the report with the Board and recommend actions that it deems
appropriate to maintain adequate auditor independence.

o The Committee shall require management to report at least annually
in writing regarding compliance with the Company's policy
prohibiting hiring of members of the independent auditor engagement
team for positions with a financial reporting oversight role.

2. FINANCIAL STATEMENTS AND DISCLOSURES

(a) FINANCIAL STATEMENTS--In connection with its review of the Company's
annual audited financial statements and quarterly financial statements,
the Audit Committee shall make a recommendation to the Board with
respect to the appropriateness of the financial statements for
inclusion in the Company's Annual Report and in the Company's Quarterly
Reports.

(b) ACCOUNTING DISCLOSURES AND RELATED MATTERS--At the completion of the
annual audit and at such other times as the Committee may deem
appropriate, the Committee shall review with the independent auditor,
with management and/or with the internal auditor, as appropriate:

o major issues regarding accounting principles and financial
statement presentations, including any significant changes in the
Company's selection or application of accounting principles, and
major issues as to the adequacy of the Company's internal controls
and any special audit steps adopted in light of material control
deficiencies;

o analyses prepared by management and/or the independent auditor
setting forth significant financial reporting issues and judgments
made in connection with the preparation of the financial
statements, including analyses of the effects of alternative GAAP
methods on the financial statements;

o the effect of regulatory and accounting initiatives, as well as
off-balance sheet structures on the financial statements of the
Company; and

o the general types of information to be disclosed, and the general
types of presentations to be made, in earnings press releases
(paying particular attention to any use of "pro forma," or
"adjusted" non-GAAP information), and in financial information and
earnings guidance provided to analysts, rating agencies and the
public.

(c) INTERNAL CONTROL OVER FINANCIAL REPORTING--Periodically, as
appropriate, the Committee shall review with management, the
independent auditor, and/or with the internal auditor as appropriate:

o any significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting;

o any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's
internal control over financial reporting; and

o any significant changes in internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, the internal control over financial reporting;
and

o the Management's Annual Report on Internal Control Over Financial
Reporting prepared by management pursuant to the requirements of
SEC Regulation S-K, Item 308(a).

3. INTERNAL AUDITOR

(a) INTERNAL AUDIT PLAN AND FINDINGS--The Audit Committee shall review and
approve at least annually the internal audit plan of the internal
auditor and shall discuss significant findings made by the internal
auditor.

(b) ORGANIZATION--The Audit Committee shall review and approve at least
annually the responsibilities, budget and staffing of the internal
audit function.

4. OTHER

(a) In addition to the responsibilities and duties described in this
Charter, the Audit Committee shall undertake such other duties as the
Board delegates to it.

(b) In carrying out its responsibilities and duties, the Audit Committee
may authorize or conduct investigations regarding any matter within the
scope of its authority, responsibilities and duties.

(c) Unless otherwise authorized by an amendment to this Charter, the Audit
Committee may not delegate any of its authority to any subcommittee.

(d) This Charter shall govern the operations and procedures of the Audit
Committee.

(e) The Audit Committee shall review and re-examine this Charter annually
and make recommendations to the Board for any proposed changes.

ROUTE TO CH ENERGY GROUP, INC.

[GRAPHIC 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 27, 2004, 10:30 a.m.

CH ENERGY GROUP, INC.
284 South Avenue, Poughkeepsie, NY

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

o Election of Directors
--------------------------------------------------------------------------------

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.

--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------

o FOLD AND DETACH HERE o
--------------------------------------------------------------------------------

P
R
O
X
Y

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

The undersigned hereby appoints PAUL J. GANCI, HEINZ K. FRIDRICH, STANLEY J.
GRUBEL, E. MICHEL KRUSE, and STEVEN M. FETTER or any one or more of them, as
proxy, with full power of substitution, to vote, as designated on the reverse
hereof, all shares of Common Stock owned of record by the undersigned on March
1, 2004, at the 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 27, 2004, or any adjournment
thereof, upon all such matters as may properly come before the meeting,
including the following proposal described in the Proxy Statement, dated March
3, 2004, 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. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED "FOR"
PROPOSAL NO. 1.

1. Proposal No. 1: Election of Directors, Nominees:

CLASS I: 2007
01. Edward F.X. Gallagher
02. Steven V. Lant
03. Jeffrey D. Tranen

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

CH ENERGY GROUP, INC. [LOGO]

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. To
vote by telephone or using the Internet, please follow the steps below:

O HAVE THIS PROXY CARD AND YOUR SOCIAL SECURITY NUMBER AVAILABLE.

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

Every Vote is important to us. Thank you for voting.

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

VOTE-BY-INTERNET [GRAPHIC]

--------------------------------------------------------------------------------
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 04/20/04.

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

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

VOTE-BY-TELEPHONE [GRAPHIC]

--------------------------------------------------------------------------------
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
04/20/04.

2. FOLLOW THE DETAILED INSTRUCTIONS ON THE TELEPHONE MENU.
--------------------------------------------------------------------------------

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.

IF VOTING USING THE INTERNET OR BY TELEPHONE, PLEASE DO NOT MAIL YOUR CARD.

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

/X/ PLEASE MARK 1535
VOTES AS IN THIS
EXAMPLE.

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

1. Election of Class I Directors-2007 (see reverse)

FOR WITHHOLD
01. Edward F. X. Gallagher
02. Steven V. Lant / / / /
03. Jeffrey D. Tranen

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

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. / /

2. 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 ____________